Cambridge deficit set to grow

August 6, 2004

Cambridge and the Open universities are once again among the top five higher education institutions with the biggest deficits.

Although Cambridge has cut its deficit by almost £1.5 million, it was still the sector's fifth highest in 2002-03 at £2.3 million.

And the university admitted this week that it was likely to slip further into the red in 2003-04.

The OU improved its financial position by some £3.3 million between 2001-02 and 2002-03 but still recorded the UK's second highest deficit at £4.5 million.

Greenwich University recorded the highest deficit. It was £3.5 million in the black in 2001-02 but has slipped to £7.5 million in the red in 2002-03.

A Greenwich spokesman said it was due to revaluing property on the now-closed Woolwich campus and the cost of administrative restructuring.

When those items were removed, the university was still in the black and expected to record a surplus for 2003-04.

Nottingham Trent University also had exceptional items skewing its balance sheet. The university's surplus fell from £18.7 million to just Pounds 907,000. The previous year's figures reflected the proceeds of the sale of student accommodation, a spokesman said.

Andrew Reid, Cambridge's finance director, said that the university's deficit was due to a 25 per cent rise in sponsored research in the past two years. Research funding does not cover total overhead costs and so the university is left out of pocket.

A considerable amount had also been spent on accounting and administrative systems and support as well as new buildings, Mr Reid said.

He predicted that the 2003-04 deficit would be higher still, as Cambridge had recommenced contributions to its pension scheme. They had been suspended because the fund was overfinanced.

Mr Reid agreed it was embarrassing that rival Oxford recorded a £13.3 million surplus, but said that in a like-for-like comparison, the universities' financial positions were much closer.

Miles Hedges, the OU's finance director, said the institution's deficit represented only 2 per cent of its turnover. It was the result of a small operating surplus and the planned use of reserves to finance curriculum development in priority areas, including extending its e-learning capabilities.

But Mr Hedges said the university was more worried about the future impact of the Government's decision not to allow part-time students the same remission from tuition fees as their full-time counterparts.

The OU, which pioneered part-time study from home, fears that many of its students will elect to take full-time courses at other universities when top-up fees of up to £3,000 a year are introduced in 2006. This is because they will not have to repay fees until after graduation.

Part-timers will continue to pay upfront.

"We are continuing to debate with ministers and the funding council to try to ensure we get equitable treatment for part-time students," Mr Hedges said.

Overall, 48 institutions reported a deficit in 2002-03, down from 62 the previous year. There were 123 in the black, an increase of 14.

chris.johnston@thes.co.uk

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