King’s College London (KCL) has reported a day-to-day operating deficit of £19 million for the 2023-2024 financial year.
This marks a change from 2021-22 and 2022-23, when KCL had an operating surplus of £31 million in both years.
The report attributes this operating deficit to an acceleration in spending on “strategic investments”, adding that day-to-day operations showed “a financial performance consistent with our plans.”
KCL reported a headline surplus figure of £326.7 million. However, this figure was distorted by £323 million due to a significant release of KCL contributions to the Universities Superannuation Scheme (USS).
The USS is the pension scheme for academics across the UK. After a period of difficulty, with universities liable for its deficits, the fund reported a surplus for the first time since 2008, reducing universities’ liabilities.
The report described the release as having a “highly distortive effect” on headline figures.
Excluding this release, as well as income from donations and endowments, “the day-to-day operational activity and the revenue impact of investments would show a deficit of £19 million.”
KCL reported that total income increased by £40 million (3.3%) from £1.23 billion to £1.27 billion. This marked a downward trend from 2021-22 and 2022-23, where KCL’s income rose by 14.9% and 7%, respectively. By contrast, expenditure increased by £96m from £1.17 billion to £1.266 billion in 2023-24, an increase of 8%.
Lower student recruitment was a key reason for the underwhelming income figures. KCL recruited 1,400 fewer full-time students than expected. This resulted in a £40m shortfall against plans. The report notes that “our experience and that of other universities strongly suggests that the rapid growth in international students may be at an end.”
This is significant because international tuition fees comprise 55% of tuition fee income and 27% of KCL’s overall income. The report goes so far as to comment that “if there was a fundamental reversal in the trend of international student recruitment, King’s would be severely financially compromised.”
The report suggests that income growth only from tuition fees will not be a sustainable option in the future. KCL plans to combat this by “working to secure greater productivity in the way we work” and using their ‘considerable estate asset.”
The significant increase in expenditure “was caused by the acceleration in our strategic investments consistent with our three-year planning and increases in staff salaries.”
The cost of salaries and wages increased by £72 million, with the report adding that the national pay award to academics for 2023 was “higher than recent years”. KCL’s London Weighting allowance increased from £4,000 to £5,000 per full-time member of staff, partially offset by the lower USS employer contribution rates.
An increase in KCL staff numbers also contributed to the 10.8% rise in the cost of salaries and wages.
This allowance helps staff offset the additional expense of living in the capital. The report comments that “a repeat of this level of increase is not sustainable when compared with likely income increases in the coming year.”
KCL’s capital investment for fixed assets rose by £24 million from £77 million in 2022-23 to £101m in 2023-24.
In 2023-24, KCL completed major construction works on the St Thomas’ Hospital Campus. It is also making progress on projects such as the development of the Bush House South West Wing.
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