Universities at risk of falling short on investment

England’s universities risk being “unable to deliver the scale of investment” needed to “remain internationally competitive”.

March 27, 2015

That is the warning from the Higher Education Funding Council for England, which says in a report on 2013-14 sector finances, published today, that without increased surpluses and continued government support such a risk is present.

The sector’s results from that year show “a financially sound position overall”, says the report, titled “Financial health of the higher education sector: financial results and TRAC outcomes 2013-14”.

The funding council also says that there “continue to be significant variations in the financial performance of individual institutions across the sector”. A chart in the report shows that two institutions saw their income fall by more than 10 per cent in in 2013-14, while four saw their income grow by more than 15 per cent.

In 2013-14, operating surpluses across the English sector totalled £992 million, equivalent to 3.9 per cent of income, Hefce says. This was up £49 million from the previous year, when surpluses were also equivalent to 3.9 per cent of income.

The funding council notes that capital investment rose in 2013-14, up 23 per cent to £3.25 billion. The higher tuition fees regime is widely seen to have led universities to spend heavily on capital in the hope that new facilities will attract students, just as public capital funding is declining.

Hefce says on capital spending: “To help fund this expenditure, the sector used £1,552 million from its own cash reserves (equivalent to 6.1 per cent of total income) and borrowed an additional £501 million.

“This caused total sector borrowing to rise to £6.7 billion at the end of July 2014 (equivalent to 26.3 per cent of income).”

The funding council continues: “Without increased surpluses and continued government support, there is a risk that the sector will be unable to deliver the scale of investment required to meet student demands, build capacity and ensure that the sector can remain internationally competitive.

“Government support also fosters confidence to others to continue to invest in the sector, including willingness of banks to lend money, although the sector’s capacity to lever in funding from other sources, including additional borrowing, is limited and may not be sufficient to meet the sector’s long-term investment needs.”

Hefce also says that “no institutions are currently close to the risk of insolvency”.


You've reached your article limit

Register to continue

Registration is free and only takes a moment. Once registered you can read a total of 6 articles each month, plus:

  • Sign up for the editor's highlights
  • Receive World University Rankings news first
  • Get job alerts, shortlist jobs and save job searches
  • Participate in reader discussions and post comments

Reader's comments (1)

It is probably not the time to make it more complicated for international students to study abroad: http://www.bbc.co.uk/schoolreport/31949374

Have your say

Log in or register to post comments

Most Commented

question marks PhD study

Selecting the right doctorate is crucial for success. Robert MacIntosh and Kevin O'Gorman share top 10 tips on how to pick a PhD

Pencil lying on open diary

Requesting a log of daily activity means that trust between the institution and the scholar has broken down, says Toby Miller

India, UK, flag

Sir Keith Burnett reflects on what he learned about international students while in India with the UK prime minister

Application for graduate job
Universities producing the most employable graduates have been ranked by companies around the world in the Global University Employability Ranking 2016
Construction workers erecting barriers

Directly linking non-EU recruitment to award levels in teaching assessment has also been under consideration, sources suggest