More than a third of Britain's elite universities were forced to make further cuts last year, while Russell Group's severance packages increased by more than a fifth, according to analysis by the Financial Times.
Ten of the 24 universities in the group said they would implement voluntary severance plans in 2024, offering employees compensation packages in exchange for voluntary redundancies.
The cost of redundancies has risen after a sharp drop in the number of lucrative foreign students. Analysis of annual financial statements shows that the 22 Russell Group universities paid out a total of £70m last academic year, a 29% increase on £54m for the 2022-23 academic year. Two universities did not provide data.
The findings show that top higher education institutions face growing financial pressures in the sector.
The cuts at Russell Group mirror cost-cutting across the industry, which has led universities to announce course closures, travel and entertainment bans and redundancies.
Russell Group chief executive Tim Bradshaw said cuts were needed to make institutions financially sustainable but insisted the government should do more to help the sector, as the industry's research is an integral part of the UK’s growth and innovation agenda.
“In addition to the steps universities are taking, we also need government help to create a sustainable funding system for higher education,” he said.
Vivian Stern, chief executive of Universities UK, the main industry lobby group, said the belt-tightening was a sign of institutions getting their house in order but also brought potential risks.
She added: "The danger is that no one is paying attention to the overall consequences of this issue and the risk of system-wide problems."
A union spokesman added that multiple layoffs had weakened employee morale. Joe Grady, general secretary of the University and College Union, which represents lecturers, noted that "year-on-year cycles of restructuring and redundancies" had failed to bring stability.
The Department for Education said "difficult decisions" were being taken to stabilize universities amid constraints on public finances, adding that the Office for Students regulator was closely monitoring the sector's financial sustainability.
"While (academic) institutions are autonomous, we are committed to restoring the university as an engine of opportunity, growth and aspiration," it added.
Consolidation in the sector threatens more expensive and less popular courses such as chemistry, while leading to potential "cold spots" in course supply, said Paul Kate, senior adviser for education at PwC.
Stern said the sharp decline in international student numbers - which are around three times the annual UK fees (£9,250) they typically pay - has caught universities off guard after having been encouraged to recruit international students to make up for a decade-long fee freeze.
According to Home Office figures, UK study visa applications fell from 474,000 in 2023 to 408,000 in 2024, following the previous Conservative government's decision to remove the right for graduate students to bring family members.
The situation has been exacerbated by the currency crisis in Nigeria, a key growth market, and competition from other popular destinations such as Australia and the United States, which have reopened following the Covid-19 pandemic.
An OfS report estimates net profits across the sector will fall by £3.4bn by 2025-26, with nearly three-quarters of universities expected to run a financial deficit.
In the 2023-24 financial year, 4,900 employees across 21 Russell Group members received severance payments, an increase of more than a fifth on the previous year. Cardiff, Edinburgh and Glasgow did not reveal details of the number of staff receiving the payment.
The group has spent more than £348m (at 2023-24 prices) on redundancy programs since the outbreak, when many international students are unable to travel.
Nottingham and Newcastle saw the biggest pay increases, paying out nearly £14 million and nearly £6 million respectively to former staff, almost 10 times the previous year.
In Newcastle, job cuts and a recruitment freeze are accompanied by a ban on overtime, outside hospitality and travel.
Newcastle said part of its higher severance payout was related to the closure of accommodation blocks. Nottingham declined to comment.
The University of Exeter also significantly increased its severance package to £8.8m last academic year from £1.3m in 2022-23 due to a tuition fee freeze and falling international student numbers.
"At Exeter, we anticipate these challenges and are acting proactively, taking coordinated action across our operations to ensure we maintain a strong financial position," a university spokesman added.