Financial Position

We are fortunate to be in a stable financial position, having returned modest surpluses in recent years. We have adequate cash balances and we expect to break even this year. This is not the norm: 45% of higher education providers are expected to be in deficit in the 2025-26 without mitigating action, according to the Office for Students. Some have been in deficit for three consecutive years or more.

As we look at the external environment for higher education, it is difficult to see how, or when, the international student market will return to recent levels. The recent inflation-linked increase in undergraduate fees has been largely offset by the increase in employers' National Insurance contributions. While we are in stable financial health currently, we must continue to carefully manage our costs and grow income from other sources so we can balance budgets, return surpluses and invest in the University.

The financial position of many UK universities is under pressure because income has not kept pace with the cost of teaching, research and day-to-day operations. Home undergraduate tuition fees were largely fixed for more than a decade, meaning their value has fallen significantly after inflation. The House of Commons Education Committee reported that the 2025/26 fee level is worth around 38% less than in 2012/13 terms. At the same time, universities face higher costs for energy, maintenance, equipment, pay, pensions and regulation. Many institutions have relied on international student fees to help cover shortfalls, but this income is more variable and affected by global demand and government policy.

Universities have been making this case through Universities UK (UUK), mission groups and direct engagement with government. Sector evidence, including analysis commissioned from PwC by UUK, has highlighted that the current funding model is no longer sustainable. The Government has begun to respond: maximum undergraduate tuition fees in England rose to £9,535 in 2025/26, and ministers have indicated that fee caps will rise with forecast inflation in 2026/27 and 2027/28, subject to expectations on quality and student outcomes.

However, the sector’s position is that these steps do not fully address the underlying gap between income and the real cost of teaching and research. UUK has argued that recent government policy decisions still leave universities facing a significant net funding reduction over the period to 2029/30.

The University has also made this case locally and nationally. Ahead of the 2024 General Election, we published our first manifesto for Lincolnshire’s parliamentary candidates, calling for recognition of the role universities play in opportunity, productivity and regional economic growth.

The University has been reviewing how efficiently we deliver our teaching, including our portfolio, assessment methods and student-to-staff ratios. Protecting the student experience is an absolute priority and where any changes could have a material impact on students, we will consult locally and engage with the Students' Union. We are also looking at how we deliver our Professional Services, across central services and colleges, more efficiently so that we can continue to support and enhance the student experience. The principles of approach as we adapt to the sector's financial pressures are set out in the University's refreshed strategy.