Debt hits former polytechnics hardest

October 4, 1996

Debt levels are rising among higher education institutions, with the former polytechnics carrying the largest burden, according to a new financial guide to the sector. This reinforces funding council figures published this week on English institutions' worsening finances.

The average figure for total debt as a fraction of total income is only 22.8 per cent, but this masks wide variations, with 67 of 146 institutions above the average, and the older former polytechnics having an average of about 40 per cent.

The latest yearbook from Noble Financial Publishing, a division of the independent Edinburgh-based finance house Noble Group, says the former polytechnics' debt burden is not surprising, given their age and consequent need to build new facilities. Their debt levels have also risen the fastest, by 35 per cent in the last year, compared to just over 5 per cent among the ancient universities.

The foreword is by Graeme Davies, principal of Glasgow University and former chief executive of the Higher Education Funding Council for England, who says heads need to have a deep understanding of the financial position of their institution in relation to others, particularly those they see as peers. Comparisons can be used to develop strategic thinking. "Having ready access to reliable data such as those in this yearbook can help significantly increase the likelihood that subsequent managerial decisions will be soundly based and positive in their impact," he said.

But De Montfort University is highlighted as increasing its total income to move from 33rd place to 20th in just one year, while Bath University has increased the proportion of its income coming from research funding to move from 22nd to 13th place.

For the first time, the yearbook gives a crude indicator of average salaries. The overall average is Pounds 20,946, ranging from Pounds 30,659 at King's College London to Pounds 12,967 at Bradford University.

But the yearbook warns that there are disparities in classifying staff numbers, with some institutions including part-time staff, while others giving full-time equivalent figures.

* Noble's Higher Education Financial Yearbook 1996, price Pounds 195 (Pounds 170 to higher education institutions) is available from Noble Financial Publishing, 5 Darnaway Street, Edinburgh EH3 6DW.

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