Cambridge University is seeking financial help from the Government, vice-Chancellor reveals

Cambridge University, the UK’s wealthiest higher education institution, is seeking financial help from the Government, its vice-Chancellor has revealed.

The 800-year-old university is facing losses running to hundreds of millions of pounds as a result of the coronavirus pandemic, Prof Stephen Toope said.

Even in the best case scenario, the university can expect a “significant financial detriment” as a result of disruption caused by Covid-19, he added.

In an email to Cambridge staff and students, seen by The Telegraph, Prof Toope explained that the university is “actively seeking Government support” so it can avoid taking various “unpalatable” measures such as pay freezes, voluntary pay reductions and redundancies. 

Cambridge is the richest university in the UK, with a multi-billion pound endowment fund as well as vast holdings of land and assets that it has built up over hundreds of years.

The central university’s endowment fund is valued at £3.4 billion, according its most recent annual accounts.  Cambridge holds total reserves of over £5.2 billion which includes the value of fixed assets such as buildings, its latest accounts say.

The university has an annual expenditure of £2.3 billion, of which £1.1 billion is spent on staff costs. In addition to this, each of its 31 colleges has its own endowment, land holdings and assets which are collectively worth several billions. Trinity, its wealthiest college, holds over £1.2 billion in reserves.

Prof Toope told students that the university is expecting a drop in the number of international students – whose high tuition fees are used to subsidise research and other teaching costs – as well as a drop in research funding.

The value of the university’s endowment is expected to fall, he explained, and pension contributions will rise  due to the decrease in value of the fund.

The university is also preparing for a decline in the income it receives from its commercial operations including the publisher Cambridge University Press and the exam board Cambridge Assessment.

“Even a downturn that resolves itself swiftly, with a relatively quick return to business as usual, would cause the Collegiate University a reduction in cash-flow of several hundreds of millions of pounds,” Prof Toope said.

“An extended downturn, with long-lasting economic effects, would require significant changes within the academic University.”

He said that the university wants to avoid resorting to pay freezes, pay cuts and redundancies, adding: “So we are actively seeking government support, while at the same time identifying potential, and significant, operating cost savings.”

In April Universities UK, which represents British vice-Chancellors, demanded a £2 billion bailout as they say that without a Government-backed cash injection some institutions face “financial failure”.

Earlier this month ministers agreed to give universities £100 million of research funding and tuition fees earlier than usual but stopped short of giving them the more extensive bailout they had asked for.

Nick Hillman, director of the Higher Education Policy Institute, said: “There is a lot of frustration in top end universities like Cambridge that the Government package so far doesn’t get to the route of the problem.

“Either they need more Government support or they need to look at things like staffing levels and the very generous pension scheme.”

Earlier this month, Cambridge University announced that all lectures will be online next academic year due to social distancing requirements.

When asked about this by MPs on the Liaison Committee, the Prime Minister said he hopes all universities understand that face-to face tuition is "preferable", adding that it is "important for their students and for social justice".

A Cambridge University spokesperson said that the university is exploring whether it can furlough staff, adding that it would pay them 100 per cent of their salaries while they are on leave.