University finances are improving but the figures reveal a wide disparity between the haves and the have-nots. Chris Johnston and Alan Thomson report
The newly merged Manchester University will in October become the fifth member of an elite club of academic giants that dominate the higher education sector in the financial stakes.
Manchester, along with Cambridge and Oxford universities, University College London and Imperial College London attracts more than £400 million a year, according to the latest breakdown of university budgets.
Together, the big five universities account for a fifth of total income for the academic sector, which encompasses more than 150 other academic institutions. As some Manchester staff are already quipping, the famous golden triangle of universities in the Southeast will now become the "golden diamond" stretching across England.
Combining the budgets for the University of Manchester and the University of Manchester Institute of Science and Technology yields an annual budget of £490 million for 2002-03 - based on the latest figures from the Higher Education Statistics Agency.
This places Manchester ahead of the current leader of the pack, Cambridge, which attracted just over £460 million in 2002-03, a rise of 4 per cent on the previous year.
Cambridge remains almost £7 million ahead of archrival Oxford, despite the latter's £31.3 million (7 per cent) increase in income to just under £458 million.
UCL's income rose by 6 per cent to only £3,000 less than Oxford's in 2002-03, according to the Hesa statistics.
As in previous years, the biggest increases in university income have derived from two main sources: research grants and overseas students.
At UCL, Jack Foster, director of finance, said the college's research funding was up by 8 per cent to almost £160 million and overseas student income had risen by 17 per cent.
Imperial College attracted £409 million, a rise of 7 per cent. A spokesman attributed the increase to a jump in research income of 9.3 per cent to £167.7 million - keeping it at the top of the research table.
Imperial also saw a 10.7 per cent rise in the number of non-European Union fee-paying students.
A merged Manchester would take fifth place on £108.7 million, a considerable distance behind the top four.
Alan Gilbert, vice-chancellor of the new merged Manchester, told The Times Higher he expected the critical mass created by the new institution to have a major impact in research.
A £12 million discretionary fund has been created to allow the university to attract researchers of Nobel laureate stature in coming years. "There is a sense of excitement among academics about this experiment," he said.
The extent of the funding gap between the haves and have-nots is highlighted by the finances of institutions at the other end of the scale.
The University of Abertay Dundee, for example, earned £29.7 million during the same year while newly formed Gloucestershire University generated £41.2 million in income.
Yet the sector-wide figures paint a much healthier picture of university finances. They show that 48 institutions were in deficit in 2002-03, compared with 62 the previous year. Those reporting a surplus or breaking even, meanwhile, numbered 123, up from 109. Across the sector there was a surplus of £210 million on total income of some £15.6 billion.
Spending rose by 6.3 per cent, including a 7.3 per cent jump in staff costs. Stephen Court, senior research officer at the Association of University Teachers, said the increase reflected a 2.6 per cent increase in academic staff numbers to 146,875, as well as an average pay rise of 4.3 per cent and some incremental drift up the pay scale.
Mr Court said several employers had been forced to bail out pension schemes that were in deficit and some universities had spent significant amounts on voluntary redundancy and early retirement schemes.
UK dwarfed by US big budgets
Even the largest UK university budgets and endowments are dwarfed by the finances of US Ivy League institutions, writes David Jobbins.
Harvard University's income in 2003 totalled $2.47 billion (£1.3 billion). It relied on endowments and gifts totalling $562 million and a one-year 12.5 per cent increase on returns on its investments to end the year with a $40 million surplus. This increased assets from $21.3 billion to $23.1 billion. Sponsored research totalled $549 million.
The City University of New York, arguably the leading urban US public university, had revenues of $1.1 billion.
Public appeals are a way universities can make up shortfalls. Twenty-one US universities are seeking to raise $1 billion to offset declining state payments. Johns Hopkins University has already raised more than $1.4 billion of its target of $2 billion by 2007, while the Massachusetts Institute of Technology passed the $1.895 billion mark in its bid to raise $2 billion.
It is this sort of fundraising activity that the UK Government's endowment taskforce suggested that UK universities needed to embrace. There is little hope that a UK university could match the biggest US endowments. Official figures valued Harvard's endowments at $18.85 billion in June 2003, with $11 billion for Yale University and $8.7 billion for Princeton University.