More than quarter of UK HE institutions post deficits

Latest sector-wide figures likely to increase concerns about financial sustainability

March 22, 2019
A bag of money being pulled away
Source: iStock/t_kimura

More than a quarter of UK higher education institutions posted a deficit last year, with nine recording a deficit of at least 10 per cent of their income, the latest data show.

According to finance figures published by the Higher Education Statistics Agency, the total number of providers in deficit rose from 40 in 2016-17 to 47 in 2017-18. In 2015-16, 24 had been in deficit. Data for England show that 32 out of 134 HEIs posted a deficit, up from 24 the year before and just 10 in 2015-16.

Some of the figures for individual institutions may provoke the biggest concerns about the overall financial health of the sector, especially in the light of the upcoming review of post-18 education in England and the uncertainties surrounding Brexit.

In England, 13 institutions posted a deficit that was more than 5 per cent of their income in 2017-18; in the previous year a total of nine breached this threshold and in 2015-16 it was just one.

Among the larger English universities posting sizeable deficits as a proportion of income were the University of Bradford (11 per cent of income, £12.1 million), London Metropolitan University (10 per cent of income, £9.5 million) and the University of Reading (10 per cent of income, £31.7 million).

Across the UK, a total of 62 institutions saw two subsequent years of deterioration in their surplus or deficit, with 20 of those moving into deficit over the period.

In the UK, the largest percentage deficit was recorded by the Glasgow School of Art, whose Mackintosh building has been significantly damaged by two serious fires, at 65 per cent of income (£26.4 million) after spending £29 million on the restoration project. A spokeswoman for the School said that the income to cover these costs had been received in a previous year.

The financial figures for the sector come in the same week that the University of Cambridge told staff that it was seeking cost savings after announcing that it was on course to post a £30 million cash operating deficit this year.

Cambridge made a surplus of £54 million last year, or 2.7 per cent of income, but it was one of those institutions whose proportional surplus has fallen year-on-year since 2015-16, when it was 3.7 per cent of income.

The Hesa finance release, which has made provider-level figures freely available for the first time as an open data release, also shows that even in Scotland – where tuition is free for domestic students – fee income was greater than grants from funding bodies in 2017-18.

Income from tuition fees and education contracts for the whole UK was £18.9 billion out of a total of £38.2 billion. Fees from non-EU students made up 14 per cent of all income (£5.2 billion) while fees from EU-domiciled students (other than the UK) was £1.1 billion, or 3 per cent of total income.

A total of £6.2 billion of income came from research grants and contracts, of which 15 per cent was from European Union sources.

Total spending in UK higher education institutions was £37.2 billion, of which 54 per cent went on staff costs.

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Reader's comments (1)

And this is before any tuition fee cut, which is almost certain not to be fully replaced given the demands on the Treasury. Perhaps institutions should look to invest in raising staff morale and collegiality rather than expensive new buildings. This would have the bonus of truly increased student satisfaction.