University spending rising faster than income

Spending by English universities rose faster than their income did in the year before £9,000 tuition fees were introduced, while institutions again increased their reliance on fees paid by overseas students.

March 8, 2013

Although the rises in spending at England’s universities are below or in line with inflation, they are under intense pressure from the government to reduce their costs. The issue could be a factor in current talks over the 2015-16 spending review, in which the Treasury is thought to be seeking a cut of around £1 billion from the Department for Business Innovation and Skills budget.

Expenditure by English universities rose by 2 per cent to £22.2 billion in 2011-12, outstripping the 1.5 per cent rise in their income to £23.3 billion, according to figures on finances published yesterday by the Higher Education Statistics Agency.

The rise in spending included a 0.8 per cent rise in staff costs (to £12.3 billion) and a 3.5 per cent increase in “other operating expenses” (to £8.3 billion). The latter category includes payments to non-contract staff, expenses for equipment that has not been capitalised, plus spending on maintenance contracts and telephone costs.

Scottish universities saw a 0.4 per cent increase in their income. They increased their spending by a lower margin than England’s universities, 0.8 per cent, and their staff costs actually fell by 0.9 per cent. In Wales, income rose by 2.4 per cent while spending rose by 2.7 per cent. And in Northern Ireland, income grew by 1.2 per cent while spending fell by 2.8 per cent.

At England’s universities income from funding body grants fell by 7.2 per cent (falling 6.1 per cent in Scotland). Income from tuition fees and education contracts rose by 8 per cent (rising 6.5 per cent in Scotland).

Income from research grants and contracts rose by 2.3 per cent (falling 0.4 per cent in Scotland). Endowment and investment income rose by 20.4 per cent in England, but still accounted for a small proportion of overall income.

At England’s universities, fees paid by non-EU students accounted for 11.9 per cent of total income, up from 11 per cent the previous year.

But the rise in Scotland was even sharper. Overseas fees accounted for 11.8 per cent of total income at Scottish universities, up from 10.7 per cent the previous year.

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