The University of Plymouth has returned to profit but has seen its income fall by £13million as it faces a decline in student numbers.

The institution’s newly published accounts show it has made an after-tax profit of £4.1million for 2019/20, after posting a loss of £17million a year earlier.

That loss was partly explained by the university having to pay out £21.9million in “restructuring costs” associated with redundancy payments and pension costs for 566 staff who left during 2018 and 2019.

This figure turned out to be more than £6million more than the university previously reported. A further 44 staff left in 2020, costing an additional £167,000.

Inside the University of Plymouth's main Roland Levinsky building

Nevertheless the university is now back in the black, but it has seen its income drop from £241.5million to £228million. The university’s accounts show this is partly because it has suffered a £6.9million drop in tuition fees, which the university says “reflects the decrease in student numbers resulting from the demographic dip and competition within the sector to attract and retain new students”.

The university said its strategy to focus on quality might “impact undergraduate student numbers” whilst looking to grow both the postgraduate and international student total.

Nevertheless, undergraduates continue to form the majority of the student body, and this is reflected in undergraduate income, making up 89.7% of tuition fee income, up from 85.4% a year earlier.

Postgraduate income has increased slightly by £100,000 compared to the prior year. But educational contract income continues to fall, from £9.2millon in 2018/19 to £2.3million in 2019/20, but this is partly because health qualifications such as nursing are being moved to a tuition fee-based funding scheme.

The university has about 35,000 students, but only about 18,000 of them are in Plymouth, the rest are throughout the UK and even abroad. It has about 2,500 staff.

Writing in the university’s Annual Report and Financial Statements, a joint message from Vice-Chancellor and chief executive Judith Petts and Colin Drummond, Pro-Chancellor and chair of the Board of Governors, said: “This year, the unprecedented global pandemic has brought huge uncertainty and upheaval to an already competitive higher education landscape, not least one challenged by the continuing demographic dip in the undergraduate age population, which is particularly evident in the South West.

“Despite the three-month Government lockdown, which radically changed how the institution worked and immediately impacted continuing business, the university’s robust, long-term approach to planning and sustainable investment has ensured delivery of a surplus after tax for 2019/20 of £4.1million. This is against income of £228million, which is a 5.6% reduction relative to 2018/19 and supported by a cash and investments balance of £135.3million as at July 31, 2020.”

Elsewhere in the report it says: “The higher education sector continues to be increasingly volatile and highly competitive, and this has been further exacerbated by the unprecedented global pandemic, which has brought huge uncertainty and upheaval to the sector.

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“There continues to be the challenge of the demographic dip in undergraduate age population, which is particularly evident in the South West, and a fees and funding regime that is not inflation proofed and subject to further uncertainty in light of the Government’s current review of post-18 education and funding.

“This is notwithstanding the impact of Brexit on the UK economy and the higher education sector. These challenges, along with increasing pressure on servicing pension liabilities, make it increasingly challenging to generate surpluses required for longer-term sustainability.”

It added: “Long-term institutional sustainability, by building financial resilience, is a key strategic objective for the university, and we continue to realise our future ambitions through the implementation of the longer-term strategy ‘University 2030: A Future of Excellence’.

“As part of this, the Financial Strategy aims to generate sufficient funds for continued investment in the university campus and technology.

“The campus strategy is reviewed regularly to consider changing requirements and student expectations and to ensure the university remains in a robust financial position to provide resilience in a volatile and uncertain environment.”