£23m loan to secure grant

April 11, 2003

Imperial College London has borrowed £23 million from the European Investment Bank in order to bring in three times as much in government cash.

The college had secured funding from the Science Research Investment Fund, but had to raise a quarter of the cash itself. To do this, it has taken out this loan, which it will repay over 15 years with an initial three-year repayment holiday.

The loan is the first to be made as part of a £100 million package announced by the bank last week.

An Imperial spokesman said: "Like most universities, our income - the block grant from the Higher Education Funding Council for England plus tuition fees - barely covers day-to-day expenses. Research grants are generally directed to specific projects and cover only direct costs plus a small contribution to general overheads, and our reserves are small and fully committed. We find it extremely difficult to fund capital investment in the research infrastructure without resorting to borrowing."

The bank's vice-president, Peter Sedgwick, said: "This investment is in support of the UK government's policy to promote enterprise, skills and innovation, and meets the aims of the EIB's Innovation 2010 Initiative programme.

"In cooperation with Hefce, we will invest in the modernisation of high-performing university research facilities and science-based education infrastructure. In the longer term, this will contribute, through commercial development spin-offs, to introducing innovation among local small and medium-sized enterprises."

Universities that secured the most money from the Srif fund had previously described their success as a poisoned chalice, because they had to raise a quarter of the cash themselves. University College London's recent financial problems were attributed to its success in winning grants from Srif.

Imperial will spend its loan on redeveloping the research building at St Mary's hospital; constructing a London e-science centre and a centre for experimental hydrodynamics; and refurbishing the chemistry, biochemistry and physics departments.

The loan will also help to pay for an increase in the power supply to Imperial's South Kensington campus.

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