HE overturns £50m deficit

May 2, 2003

The higher education sector was back in the black last year after a deficit of more than £50 million the year before. But although the figures published this week show that universities and colleges spent marginally less than they earned, producing a surplus of £64.3 million in 2001-02, the financial health of individual institutions varied significantly.

Universities UK was quick to point out that the surplus amounted to just 0.4 per cent of the sector's income.

Baroness Warwick, chief executive of UUK, said: "While we're pleased that the sector overall is out of deficit, the move into surplus does not in itself represent a hugely significant fluctuation and is still well below the 3-4 per cent minimum target recommended by the Higher Education Funding Council for England.

"A large number of institutions are still reporting deficits. We remain very concerned about the financial problems facing the sector and the impact this is having, and will continue to have, on the operations and management of our universities."

The Higher Education Statistics Agency, which compiled the figures, said last year's deficit was the first since its records began. Overall, however, the bank balance has been deteriorating since 1997, when the sector recorded a surplus of £283 million. That dwindled to £188 million the following year and was down to £69 million by 1999-2000.

The picture for individual universities this year is patchy. The University of Oxford recorded the biggest surplus at £16.5 million, although this was down from £20.5 million the previous year.

At the other end of the scale, the Open University's deficit rocketed from £5.6 million to £9 million over the year and Newcastle University moved from a break-even position to an £8 million deficit although its income rose by £24 million.

Sheffield University turned a £3.3 million surplus into a £3 million deficit, in stark contrast to Sheffield Hallam University, whose £1.5 million surplus grew to £2.8 million.

Greenwich University managed to reduce its deficit from £16.9 million to £4.2 million by raising tuition fees by 10 per cent and cutting staff costs by £6 million.

And King's College London turned an £18.7 million deficit into a £2.6 million surplus.

Overall, the latest data show that the sector's income increased by 7.3 per cent to £14.5 billion in 2001-02. Funding council grants increased by 6.6 per cent over the period and made up 39 per cent of the sector's income.

The rest is made up of research grants, contracts, tuition fees and education grants, and investment income.

Spending was up by 6.6 per cent during the year, in line with the two previous years. Staffing costs, by far the biggest element, rose by 5.8 per cent.

Looking forward, the sector expects costs to continue to rise by a similar percentage. It will therefore need to find another substantial increase in funding in 2002-03 to avoid sliding back into debt.

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