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The System That Cannot Pay For Itself

Chapter 4

Why Are The Big Numbers In Brackets?

If universities are in trouble, why can't they just cut costs?

Every commentator on the university crisis eventually arrives at the same suggestion, delivered as though nobody inside the sector had considered it: spend less.

This chapter explains why the suggestion keeps failing. A university's cost base is not a set of choices made annually. It is staff on contracts, buildings that must be heated and maintained whether or not they are full, systems bought on multi-year licences in dollars, pension obligations settled elsewhere, and borrowing agreed against a plan that assumed different numbers.

These costs do not respond to strategy on the timescale that strategy documents assume. The estate in particular refuses to stay in the background: it is simultaneously the institution's largest fixed cost, its net-zero liability and its recruitment shop window.

Which is how a sector full of restructuring plans keeps reporting numbers in brackets.

The cost shock did not create the fragility, but neither did fragility make the shock imaginary.

Regulated to Fail, Chapter 4

The two deficits, and what covers them

What each activity costs against what it earns. Teaching British students loses money. Research loses more. One column pays for both.

Surplus or deficit by activity, TRAC 2023–24Publicly funded teaching runs a deficit of £1,693 million at 89.2 per cent cost recovery, and research a deficit of £5,367 million at 66.0 per cent. Non-publicly funded teaching — largely international students — returns a surplus of £3,232 million at 143.1 per cent. The sector position is a deficit of £2,003 million.← Loses moneyMakes money →Teaching British students89.2% of full economic cost recovered−£1,693mResearch66.0% of full economic cost recovered−£5,367mOther trading activity98.1% of full economic cost recovered−£136mInternational and other uncapped teaching143.1% of full economic cost recovered+£3,232mOther non-commercial906.4% of full economic cost recovered+£1,962mSector position: −£2,003m95.7% of full economic cost recovered, against 93.6% the year before.
  • Deficit
  • Surplus

Source: Annual TRAC 2023-24: sector summary and analysis by TRAC peer group (Office for Students, retrieved 2026-08-14); Research financial sustainability: issues paper (UK Research and Innovation, retrieved 2026-01)

Measure: £ million surplus or deficit; cost recovery as a percentage of full economic cost. Coverage: 128 higher education institutions in England and Northern Ireland. 2023–24.

What this chart does not show (5)
  • TRAC uses full economic cost, not cash accounting. A TRAC deficit is not the same as a cash loss in the year.
  • Covers 128 institutions in England and Northern Ireland only. Scotland and Wales are not included.
  • 'Other (non-commercial)' shows a very high recovery rate because it carries little attributed cost; it is not a meaningful trading surplus.
  • Sector aggregates conceal a wide spread. Individual institutions differ sharply from these figures.
  • The five activity lines sum to -£2,002m against a published sector total of -£2,003m. The £1m difference is rounding in the source table, not an error here.

How the figures were prepared: Figures reproduced as published. No rebasing or adjustment. Percentages are cost recovery against full economic cost.

View as a table
TRAC 2023–24, 128 institutions in England and Northern Ireland.
ActivitySurplus / (deficit)Cost recovery
Publicly funded teaching−£1,693m89.2%
Research−£5,367m66%
Other (income-generating)−£136m98.1%
Non-publicly funded teaching+£3,232m143.1%
Other (non-commercial)+£1,962m906.4%
Sector position−£2,003m95.7%

Where this goes next

This is the question the chapter opens with and the mechanism it identifies. What it concludes — and what follows from it — is in the book.

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