Let's talk about finances

As Finance Director, I am always talking about money, and I usually welcome an increased interest in higher education finances. However, recent media coverage has not brought positive news.    

Sector challenges 

Anyone who has been following developments will be aware that there are significant challenges facing the financial sustainability of the university sector in the UK.    

High inflation, flat government investment and home undergraduate fees, stalling overseas student growth, under-recovery of research, ageing estates, high inflation leading to increasing operating costs (including staff costs) and high costs of finance are putting significant pressures on institutions across the country.

Oxford’s advantages 

Here at Oxford, because of the unique funding situation, we are in a more fortunate position than other universities in a number of ways.  

The fact that a higher proportion of our income stems from research grants gives us less exposure to flat fees; we have a large endowment compared to the UK university sector (although not our international peers) which provides additional sources of funding over time; we receive additional surplus from Oxford University Press; and we have been fortunate to benefit from significant donations in recent years.    

Ongoing challenges 

Nevertheless, we are not immune to the challenges facing the wider sector.  

While high research income brings us significant benefits, it is not spread evenly across the University. Each part of Oxford has a different financial profile, with the Humanities and Social Sciences divisions receiving around half of their income from teaching – making them more exposed to fee income challenges.

And while it is true that we do have significant financial assets (including a £3.5bn endowment fund), all of the returns on these investments (£144m per year) are already assigned to specific activities – whether that is match-funding scholarships, or supporting other divisional and departmental priorities.    

Oxford, of course, is not immune to the impacts of inflation, and while income has increased by just over five per cent per annum over five years, our expenditure has increased at around the same rate – offsetting this additional revenue.   

The academic University spends virtually all its income, and even with the inclusion of Oxford University Press’s surplus, our total surplus in the 2022/23 financial year represented just 0.45% of our total income. This means our margins are in fact very small, and we have little to no excess to fund additional activity that does not have a related income stream.    

Careful management 

In this context, the University needs to take great care with its finances in the years ahead: agreeing how we invest in our people, our estate, technology, and all the areas that allow us to continue our world-class teaching and research in pursuit of our academic mission.   

Given the current financial environment, this will require careful management – ensuring we rise to all these challenges, and invest in the right places for the benefit of the institution.     

Join the webinar to find out more 

I am in a privileged position where I live these numbers day in, day out. However, I realise that this is not the case for everyone. That is why we are running a webinar later this month, to which all staff are invited.   

The online session will provide an overview of Oxford’s current financial picture, and start to explore some of the key challenges and opportunities for the University for managing our finances in the years ahead. The Vice-Chancellor will also join the webinar to ask questions of our finance colleagues.  

The event will take place on Friday 23 February from 10–11am. You can sign up now, or watch the recording once it has finished.   

We will then host an Open Forum in Trinity term, where we will have a more in-depth focus on University finances, giving us an opportunity to discuss the topic as a community, and offering you a chance for you to ask questions to the University’s leadership. The date of this event will be announced in the near future.   

The financial picture may be challenging, but we are not alone and I know that as a community we will navigate the best way through. The upcoming events are an important part of our financial conversation, and I look forward to discussing this more in the weeks and months ahead.