Soas University of London is being forced to slash budgets and prepare significant staff cuts after being caught in a financial crisis hastened by the coronavirus pandemic, the Guardian can reveal. Staff say they fear that management is cutting costs to make the college, formerly called the School of Oriental and African Studies, a palatable takeover target for an overseas institution or one of its London rivals, as the latest financial figures show that it to be carrying multi-million pound deficits and risks running out of cash next year. Soas’s auditors warned this month that the impact of the coronavirus outbreak on student recruitment meant “a material uncertainty exists that may cast significant doubt on the school’s ability to continue as a going concern” over the next 12 months. One Soas academic said the school’s senior managers had “been unable to make significant changes over the last few years, and now it has ended in a big crisis. This is a serious failure of management.” Last week Soas’s senior academics were ordered to identify staff cuts to be submitted on Friday, in a brutal exercise that one said was reminiscent of “corporate takeovers in the 1980s”, asking departments to balance their budgets while modelling a 50% drop in new international students. Heads of departments were sent spreadsheets with increased contributions to the central budget along with projected losses, and asked to specify which posts would be cut for their department to break even. In some cases, managers have presented cuts to courses to be taught next year and told department leaders to define the minimum number of staff needed. One department, the centre for international foundation courses and English language study (IFCELS), has been told to make so many cuts that it will in effect disappear, along with its 55 staff. Soas’s highly regarded international development department – ranked eighth in the world – is also said to be among the hardest hit, while the anthropology and sociology department is likely to lose between a third and a half of its academic staff. “I think people are in shock,” said one staff member. “This all happened while we are still coping with Covid-19.” The crisis has struck as Soas faces a change in leadership, with the departing director, Valerie Amos, to be replaced by an interim director, Graham Upton, a former vice-chancellor of Oxford Brookes University who has performed troubleshooting roles at a number of institutions. Earlier this month Soas sold valuable property in Russell Square, central London, for £9m, while a memo from Upton revealed that Soas has been struggling to maintain sufficient credit from banks to remain solvent. The memo, labelled “highly confidential”, states: “The school is structurally unprofitable, having run deficit budgets for the past three years with a fourth in prospect, and this has brought our cash flow to a point where our auditors have questioned whether we can be seen as a ‘going concern’. “The recent sale of the Russell Square terraces has provided a short-term solution to our cash flow problems but this is an emergency measure which does not solve our longer-term viability problems. Our auditors, our bankers, the Office for Students [OfS] and the board of trustees all now require a change to the school’s basic operating model.” So far Soas and the OfS, the higher education regulator for England, have made little public comment, despite the scale of the financial turmoil, partly for fear of alarming potential students applying to start in autumn. The school’s internal forecasts show falls in tuition fee income ranging from £9m to £18m next year, with the budget attempting to cover £14.9m losses based on 50% less from international students and 15% less from domestic and EU students.. One department head said that so far “very few” applicants had taken up offers they had received from Soas, compared with previous years, because of the Covid-19 outbreak. Soas’s annual accounts for 2018-19 were delayed by five months beyond the OfS’s deadline for publication, and finally signed off by its trustees on 15 May. The accounts reveal a headline deficit of £19.1m in 2018-19, but excluding changes in pension liabilities, the annual deficit was £6.2m, driven by a £2m fall in tuition fees from UK and EU students, as the number of undergraduates enrolled fell to its lowest level since 2012. Andrew McGettigan, an expert on university financing, said he warned the school about its cash position in December 2018, and that Soas’s strategy to embrace a smaller undergraduate intake would leave it exposed to shocks. “Soas’s present situation is the result of a failed strategy. The cash position is even worse than planned and the shock is much bigger than I warned about,” McGettigan said. A spokesperson for Soas said: “Soas is taking decisive action now to ensure we can continue to provide an excellent student experience to our new and returning students … “Our Board of Trustees has approved the accounts with SOAS as a going concern. Our auditors have made a statement about material uncertainty around future income from student recruitment in the context of Covid-19 … These are sector-wide not Soas specific risks. Proposals are being developed to be implemented by September 2020 and will be subject to consultation. “We are modelling a range of scenarios in relation to the anticipated impact of Covid-19 on upcoming student recruitment which could reduce our income by between £8-16m. “We have no plans to merge with another institution.” An OfS spokesperson said: “The OfS is aware of this situation and is closely monitoring Soas’s development of plans for restructuring. The interests of current and future students are always our primary concern and we will continue to keep under review whether any further regulatory action is needed to protect them.”