Poor colleges get cash prop

August 16, 1996

Measures to bolster ailing former public sector institutions have been introduced by Welsh funding chiefs.

A "restructuring fund" worth Pounds 700,000 has been revised by the Higher Education Funding Council for Wales to target institutions forecasting deficits totalling more than Pounds 2 million by next academic year. And the council is planning to bring in strict rules governing the financial management of institutions to protect public money.

The moves are being made as higher education institutions across Wales take emergency action in an attempt to reduce an overall projected deficit of Pounds 4,7,000 by 1996/97.

Lecturers' union leaders are predicting around 50 compulsory teaching staff redundancies this year in addition to early retirements already taken, along with capital and equipment spending cutbacks.

Mid-year financial forecasts showed "old" universities in Wales expecting to be in the red by Pounds 2,082,000 and former public sector institutions, six colleges and one former polytechnic, by Pounds 2,195,000 next year.

The latter group of seven institutions are the most vulnerable because they have not been able to build up significant reserves to help them survive big cuts introduced in last year's budget.

The funding council's proposed financial memorandum does not permit institutions to operate in deficit without sufficient reserves for longer than three accounting periods.

It also tightens up regulations on institutional accountability and borrowing. New financial controls would give the council the power to suspend funding if an institution failed to comply with rules set out in the memorandum; and universities and colleges would be required to seek approval for borrowing on the grounds of their overall financial health, rather than just on the merits of a particular capital project.

In an effort to lend the former public sector institutions a helping hand, the council is asking them to bid for a share of Pounds 700,000 it has set aside for those forecasting significant financial health problems. A circular inviting bids by the end of September says the funds are intended for institutions requiring "significant staff reductions in order to secure the long term viability of the institution".

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