Welsh universities have plunged into a £130m financial black hole, with deficits ballooning by more than £54m despite years of cuts, bosses have revealed. The body representing Wales' eight institutions is calling for annual student tuition fees to be raised to more than £10,000, in line with England, to help plug the gap.
Universities Wales, whose membership encompasses the vice chancellors of all the universities in Wales plus the Open University here, says that after inflation, despite recent increases in fees, they still don't cover the average costs of teaching any subject area.
Fee review underway
Responding to the warning, the Welsh Government confirmed that it is "actively reviewing the position on tuition fees for 2027/28" taking account of decisions elsewhere in the UK. Currently the maximum student fee limit is set at £9,790 for courses starting on or after August 1, 2026 in England and Wales, but is set to rise to £10,050 for the 2027-28 academic year in England.
Student tuition fees are by far the largest form of income to universities, although they also get money from government, research, grants, endowments and commercial activities.
Deficit figures revealed
Universities Wales sent a stark financial warning to the Welsh Government as it laid out the latest figures showing combined operating deficits of £130m in 2024-25 (excluding non-cash adjustments related to pensions) compared to £76.6m in 2023-24. Figures for 2025-26 were not available but bosses warned the situation would only continue to worsen.
"England has already confirmed that the maximum fee will increase in line with inflation to £10,050 for 2027-28, but we remain concerned that there has been no commitment to a corresponding inflationary increase for Wales at this stage," Universities Wales said in a budget response to the Senedd finance committee.
It quoted Department for Education analysis confirming the costs of providing a degree exceeded the maximum fee in Wales by over £3,315 on average in 2023/24, with average costs ranging from £19,986 for medicine, dentistry and veterinary sciences to £9,475 for law.
Impact of cuts
The vast £130m+ operating deficit is despite widespread cuts and job losses with hundreds of Welsh university staff made redundant, degree courses shut and academic departments closed or merged in the last few years.
"The financial position for universities is extremely challenging and continuing to become more so," Universities Wales said as it also called for a review of devolved nation funding alongside increased funding.
Outlining the worsening situation, it noted that in 2022-23 one of the eight Welsh universities reported a negative cash inflow from operating activities before this climbed to five in 2024-25.
Call for funding review
Universities Wales said the sector is "of national importance" and "critical for tackling many of the key issues and challenges that Wales will face between now and the end of the Senedd term in 2030".
It says that even if the Welsh Government provides an inflationary uplift to core university funding as well as maximum possible tuition fees for 2027-28 "this will not be enough to sustain [the] sector and the underlying problems of sustainable funding will remain".
Laying out its case for more cash at a time of strained public and personal finances, Universities Wales said it would be money well spent. It also called for a review of devolved university funding.
They said: "Universities should be seen as a central pillar of Wales's economic growth strategy. Welsh universities generate more than £131m of economic benefit for every £10m of public investment."
The statement added: "With the latest published accounts showing a collective operating deficit for Welsh universities of more than £130m in 2024-25, we are calling for an inflationary uplift to core teaching funding alongside capital investment to support the maintenance and modernisation of university estates as immediate priorities....We remain very concerned about continuing levels of financial risk for universities and the impact of the changes for students and the Welsh economy."
On devolved funding, Universities Wales urged the Welsh Government to ensure institutions here get their fair share, stating: "It appears that Wales is not getting its proportionate share of the UK budget and continues to have difficulty in pursuing its own policies due to the complexity and quirks of the current rules set by HM Treasury."
Independent review launched
The dire financial forecast from Universities Wales comes as a wholesale review of university funding and organisation, launched by the new Plaid Cymru government, gets underway.
Institutions are wrestling with increased costs with a real terms fall in funding and there is concern that the numbers of higher-paying international students is falling.
The independent panel, chaired by former Trinity College Dublin Provost Professor Patrick Prendergast, has begun the review aimed at changing Welsh policy on university and student funding by the 2028-29 academic year. An initial report is due next summer.
Responding to the warnings from Universities Wales, a Welsh Government spokesperson said: "Higher education is a vital national asset for Wales, but we know the sector faces serious financial pressures. That is why we have launched our independent review of higher education, which will examine how the sector is funded and organised to secure a sustainable and successful system into the future. We are also actively reviewing the position on tuition fees for 2027/28, taking account of decisions elsewhere in the UK, what they mean for Wales and the implications this may have for learners."
