Funding council expects losses

A third of universities and colleges expect to make financial losses this year, compared with 22 per cent that had an operating deficit in 1998-99.

Some 54 institutions will fail to make ends meet, according to the projections by the Higher Education Funding Council for England this week. The future years figures will change in the light of funding allocations announced by the government last week.

Funding chiefs have recommended that institutions aim for an operating surplus of 3 per cent. Only 10 per cent of institutions expect to meet this target in 2000-01. Overall, the sector expects to have an operating surplus of just 0.38 per cent - a tenth of that recommended.

Proportionally, universities and colleges expect to be less reliant on Hefce than they have been in the past decade. Money from tuition fees paid by overseas students and from research for industry and charities should form proportionally more of the sector's income.

Income from endowments has fallen in the past decade. In 1994, endowments accounted for 2.4 per cent of sector income. By 2003, that figure should fall to 1.8 per cent, according to the projections.

The figures show that 18 per cent of institutions gave inadequate information so funding chiefs could not judge whether they are meeting their targets for widening participation.

• Governors will receive full regional reports on further education colleges' financial health in a bid to stop more institutions sliding into the red.

David Melville, chief executive of the Further Education Funding Council, told the public accounts committee on Wednesday that the number of further education colleges in financial health category C increased from 65 last year to 72 this year.