A third of unis still in the red

January 14, 2000

A significant number of universities are facing financial problems, it was confirmed this week, as funding council chiefs began to analyse last year's accounts.

The Higher Education Funding Council for England said the accounts, which it received before Christmas, appeared to confirm forecasts that nearly a third of universities are running a "continuing deficit".

Ian Lewis, HEFCE's head of finance, said institutions faced a variety of financial pressures and it was in talks "with a small number about their position".

This week The THES learned that Hull, Leicester, Bangor and Aberystwyth all had deficits. Hull's stood at Pounds 5 million, Leicester's at Pounds 3 million, Bangor's at Pounds 1.5 million, and Aberystwyth's was Pounds 3 million before adjustments.

Other major institutions have seen their surpluses eroded by more than 50 per cent. Leeds

University's surplus, for instance, is Pounds 1.3 million compared with Pounds 7.7 million the previous year, and Durham's surplus has fallen from Pounds 5.6 million to Pounds 1.8 million.

Michael Pearson, chairman of the British Universities Finance Directors Group, said: "These figures confirm that the sector is under quite a squeeze at the moment, and it's getting tighter. These figures are a more reliable indicator than the forecasts because they have already been independently audited."

Hull blamed its deficit on a series of "one-off costs", including a Pounds 1.1 million early retirement scheme and Y2K preparations. Pro vice-chancellor Howell Lloyd said: "These short-term factors bear no relation to the real strength of the university's balance sheets. Our underlying position is very secure."

Yet a Pounds 3 million deficit remains despite these factors, blamed partly on a slump in recruitment after the financial crash in South East Asia and the general effects of cost inflation. "These are problems we share with a good many universities, simply because borrowing is so high. But there is nothing for Hull to worry about," said Professor Lloyd.

A working party, the Way Forward group, has been set up to examine Hull's financial problems. "They will be deciding on a five-year plan to prioritise our objectives. Finances are obviously important but they are not as pressing as academic issues," Professor Lloyd said.

Leicester blamed its deficit on "planned expenditure from reserves on one-off items", including buildings maintenance and upgrading computer systems.

Aberystwyth said a deficit of Pounds 3 million was actually Pounds 950,000, taking into account adjustments for depreciation of buildings. The university had spent Pounds 2.6 million on early retirements and had suffered a fall in the value of its assets.

Bangor said Pounds 800,000 of its Pounds 1.5 million deficit was the result of paying off staff as part of a restructuring scheme.

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