London merger: decision time

December 7, 2001

London Guildhall University governors face a crunch decision on Tuesday over whether to merge with the University of North London.

They have to consider a new business plan that was prepared to counter reservations made in October. LGU staff opposed to the merger plan are to picket the meeting.

UNL's governors, who have been keen on the merger all along, were due to meet this week.

The business plan fleshes out details of the documents presented in October. But some say the financial information provided masks the relative positions of the institutions by use of amalgamated figures.

Figures seen by The THES show that on July 31 2001, UNL had net current liabilities of £6.6 million, with more than £11 million due within one year. LGU, meanwhile, had net current assets of £3.7 million.

But figures presented in the business plan are reported to show a combined total of net current liabilities of £2.9m, which objectors said concealed how much LGU would end up bankrolling UNL.

But Roderick Floud, the provost of LGU, said: "This is all nonsense. We have had due diligence done... and that has not shown any significant difference between the institutions in terms of their financial state."

He said that in the year to July 31 2001, LGU had a surplus of some £750,000, while UNL's surplus was £800,000.

Projections of future student numbers are also raising concerns. Combined figures for the two universities have been static in recent years, growing by about 2,000, or less than 7 per cent, since 1997.

But after the merger, the institutions are assuming that numbers will rise by some 6,000 over the next five years, or about 20 per cent. Targets include increasing overseas student recruitment by 33 per cent for full-time students and an ambitious 230 per cent for part-time students, mainly from summer schools and distance learning.

Failure to achieve the predicted student numbers could have serious financial consequences for the new university. Staff believe that there is no guarantee that recruitment targets will be achieved. They believe overseas postgraduate numbers may be damaged by the September 11 effect, while the government's decision to remove the cap on undergraduate recruitment could hit new universities.

Professor Floud said: "We have predicted a rise in student numbers in line with the achievement of the government's 50 per cent participation target by 2010. We will expand by becoming a model of an institution devoted to widening participation."

LGU recruits mainly from south and east London and staff are worried that students would be unwilling to travel to north London. Evidence suggested that students were already considering transferring to the University of East London or South Bank University.

The business plan includes some £10 million of restructuring funds from the Higher Education Funding Council for England, spread over four years. A Hefce spokesman said: "We are in close consultation with the two universities and are looking at the business case."

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