Analysis: Which university has the deepest pockets?

July 13, 2001

There are many measures of a university's academic stature, but what about its financial strength? In the first of a two-part series examining the wealth of UK institutions, Alison Goddard and Claire Sanders reveal the mega-rich and the rising and falling stars.

Surrey University is the rising star of higher education. It makes it into the top ten of two league tables of financial strength. Its reserves of more than £100 million are the seventh highest of any university in the United Kingdom.

And for a university that dates back only to 1966 in its present form, it has built up impressive endowments, its £61 million placing it tenth. On endowments Surrey outstrips half of the universities of the research-led Russell Group - Warwick, Southampton, Sheffield, Nottingham, Bristol, Newcastle, Leeds, Imperial College, London, Cardiff and the London School of Economics.

Surrey vice-chancellor Patrick Dowling said: "The developments that have led to today's significant level of reserves being attained can be traced to the effects of the swingeing financial cuts of the early 1980s, which saw Surrey and other technological universities suffer serious cutbacks in recurrent grant levels."

In response, Surrey not only restructured by placing more emphasis on postgraduate education, it also set up the Surrey Research Park and it pulled off a number of astute land and property deals. The university now generates 72 per cent of its own income.

The University of Wolverhampton and the University of the West of England also make it into the top ten in terms of liquidity - the amount of cash a university could lay its hands on quickly. UWE has been one of the most successful of the new universities in recruiting students over the past few years. It has exceeded its target numbers for the past three years.

Other universities merit a mention - in particular Robert Gordon, whose £2.3 million endowment is the largest among new universities.

A number of universities that might have been expected to be in the top ten are missing. Of the Russell Group universities, Leeds, Southampton, Newcastle, the LSE, Warwick and Sheffield are absent. Durham, one of the oldest universities in the UK, is also well down on some tables.

Leeds is just outside the top ten, ranked 11th in terms of endowments and reserves. Further down is Southampton, which a spokesperson said was handicapped by poor endowments: "We only achieved university status in 1952, which is late for a Russell Group university."

Warwick is 60th in terms of endowments, with just £3.2 million. A spokesperson said: "We are young and just beginning to get the big endowments in. Despite this, we still generate 65 per cent of our own income."

Durham finds itself quite far down tables of net assets and liquidity. A spokesperson said: "We are a medium-sized university working to do the best we can with limited resources. The liquidity situation reflects a substantial investment programme in new developments."

A spokesperson for Newcastle, which comes 22nd in terms of reserves and endowments, said: "The figures underestimate Newcastle's financial position because they exclude the £45.8 million in our development trust.

"While the university's total income has increased by 11 per cent over the past four years, some other members of the Russell Group have increased theirs by 16 per cent."

Christopher Edwards, the new vice-chancellor of Newcastle, is leading a review to make the university more competitive.

A spokesperson for Sheffield said that the university had never had large reserves because it preferred to invest rather than to build reserves. Nevertheless, it had turned in healthy surpluses over the past two years.

In three years, the university will mark its 100th birthday with a major push for more endowments. "Obviously we did better when the steel industry thrived here. Our endowments have suffered as Sheffield industry declined," the spokesperson said.

The LSE said that the institution's size had counted against it in some tables and that a major building programme had reduced its reserves and liquidity.

Complete tables: all UK universities, five measures of wealth


Net assets show an institution's worth at any given time. The balance sheets used by The THES were supplied by the Higher Education Statistics Agency and are for July 31 2000.

Net assets, which are sometimes referred to as total funds, show the value of an institution's fixed assets such as buildings, its endowment assets, its current assets such as stocks and shares and investments after liabilities and monies owed to creditors have been subtracted. A university's net assets will include whatever it owns in spin-off companies. They reflect the size of a university as well as its wealth.

The only university recording net assets of more than £1 billion is Cambridge, with its £1.2 billion. Oxford's net assets are worth £807 million, which put it some distance from the third richest, Edinburgh and its £685 million.

The ten universities with the biggest assets account for more than 35 per cent of the sector's assets. The highest ranked new university on the list is Manchester Metropolitan at number 17. The university, with 31,000 full-time equivalent students, is the UK's largest in terms of student numbers apart from The Open University.

The other new universities in the top 30 are Coventry, Leeds Metropolitan, Wolverhampton and Brighton. The Open University sits at number 30 with net assets of nearly £119 million.

Recently, a number of universities have revalued their assets. Cambridge has added £235 million to its net assets by doing this. Oxford has not, and its revaluation reserves are worth just £4 million. However, even allowing for revaluation the league table changes little - Cambridge is still streets ahead of its rivals.


A university's accumulated surplus since its establishment is measured in its reserves. Universities with large reserves are those that have had a large surplus over a long time and have reinvested well. A university's reserves are equivalent to a company's accumulated profit. A large reserve is seen as a sign of self-sufficiency.

Surrey's ranking of seventh in this league table is an example of how successful it has been at generating large surpluses since it became a university in 1966. It comes ahead of Edinburgh, which was founded in 1582.

As on many other measures, Cambridge leads this table. Its reserves, £375 million, are the largest of any university. Oxford is just edged into third place behind Birmingham. These three universities are way ahead of their nearest rival, King's College, London, whose reserves are less than half those of Oxford and about a third of Cambridge's.

Manchester Metropolitan is the first new university to appear on this list, just as on the net assets list. It sits at number 22 with nearly £47 million, which again is in part a reflection of size. Robert Gordon, Kingston and De Montfort all come in the top 30.


These are funds donated over years to universities for a specific purpose, such as a chair, or for general use. It is endowments that give the big US universities independence from public funds.

In rankings of endowments, the Oxbridge institutions surpass all other universities. Cambridge is again significantly ahead of Oxford. Cambridge's total endowments have a capital value of £661 million. Oxford's are short of this by nearly £150 million, amounting to £513 million.

Although there are no precise figures for the capital value of the college endowments, Oxford is working towards producing a figure later this year. It puts the capital value of college endowments at between £1.2 billion and £1.5 billion. Cambridge has a ballpark figure of £1.5 billion, with Trinity College's wealth overshadowing that of most other colleges.

No other university can come anywhere near these figures. A distant third on the table is Edinburgh, with endowments worth £164 million.

Many universities and colleges, 41 of them, have no endowments at all. They include The Open University and ten other new universities. The old universities with the smallest endowments are Salford, which comes in position 78, and Aston, at 79. Each has just over £1 million. The new universities with the largest endowments are Derby (due to an accounting anomaly) and Robert Gordon at 63.


This is a measure of the cash a university has as well as what could be turned into cash in the short term.

Cambridge tops this table, but it is only just ahead of Oxford, which in turn is not far ahead of The Open University. Further down, Wolverhampton is at number eight and UWE at number ten. Robert Gordon and the University of Glamorgan also make it into the top 20, pipping Russell Group universities such as Southampton, Sheffield and Leeds.

Kingston, another new university doing very well, comes in at 21 above Edinburgh.

A number of major London colleges do badly on this table. King's is at the bottom and Imperial and UCL are not far above that. This can mean that the universities are using their reserves to fund capital expenditure while long-term borrowing comes on-stream, as is the case for King's.

A spokesperson for King's said, "There was a complex series of property transactions but the net effect is that we ended up using short term bank loans to finance our capital expenditure commitments as an interim measure."


This league table provides more information on liquidity by allowing for size.

A large institution could look as if it has done well in terms of liquidity, but when this is put against expenditure the picture may not be so rosy. Both Oxford and Cambridge lose their edge on this table, although they still fall in the top ten.

Eight of the top ten are old universities and four are new (a number of institutions share the same number of days cover). The bottom ten positions are divided equally between old and new universities.

Those with minus figures have depleted their liquid reserves to cover other expenditures. This means that their short-term borrowings exceed their liquid assets.

This, however, does not mean that they are financially weak because many universities in this position have large net assets. Rather, it shows that they are using short-term financing arrangements in advance of setting up longer term financing to fund capital expenditures.

Keele University's days cover is inflated because it includes a large part of the funds raised by its bond issue. Most of these funds are for specific purposes and not for general use.

A spokesperson for Leeds, which has cover for 34 days, said: "Like many universities, we plan to have cover for about a month. In our case, it is 34 days. We believe this to be financially prudent, allowing us to invest at the same time as ensure that we have sufficient liquidity."

Next week: The new universities that bucked the trend and built surpluses.

Complete tables: all UK universities, five measures of wealth

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