Six 'at risk' of financial failure, reports Hefce

September 1, 2006

Six higher education institutions have been identified as being "at risk" of financial failure, according to a report from funding chiefs, writes Phil Baty.

The annual report from the Higher Education Funding Council for England's assurance service for 2005-06 reports that four institutions were placed on the council's at-risk list during the period, with a further two added after the end of the accounting year in March 2006.

The 2006 position is slightly worse than 2005, when a total of five institutions were at risk, but it is an improvement on 2004, when ten were on the list.

Although Hefce insisted that the risks were being "dealt with" and that the financial climate of the sector was generally stable, the University and College Union predicted that the Government's "relentless pursuit of a market in higher education" with variable tuition fees would eventually force some universities to close. It would also damage the widening access agenda because some students would be able to afford to attend local universities only.

Sally Hunt, UCU joint general secretary, said: "In an economy as rich as ours, where both the Prime Minister and Chancellor recognise the need for world-class higher education, this can never be acceptable."

A Hefce spokesman said: "The institutions are not in our highest risk category and are not considered to be at immediate risk, although they might be in the near future if mitigating actions are not taken.

"The level of institutions considered to be at risk in the near future if mitigating action is not taken continues to remain low, at less than 5 per cent overall."

The report reveals concerns that universities' operating surpluses are low, at 1.8 per cent of total income, which Hefce said was "insufficient to sustain necessary levels of investment".


Hefce's assurance service is responsible for checking whether universities have "effective systems of governance, internal control and risk management".

The service carried out 35 reviews of institutions during the year. Overall, the service judged the "level of assurance" to be high, 39 per cent of the universities inspected, compared with 10 per cent in 2004-05.

But there was a rise in the number of recommendations for improvements: 225 in the 35 reports, compared with 118 in 2004-05. Six per cent of these were classed "fundamental" or "fundamental and urgent".

The report also reveals concerns about the reliability of universities'

student number figures. Hefce could "obtain satisfactory assurance over the reliability" of the Higher Education Student Early Statistics return for only 15 of the 22 institutions reviewed.

Eight members of staff contacted Hefce with whistleblowing complaints under the Public Interest Disclosure Act, compared with 12 the year before.

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