Welsh surviving on 'wafer thin' reserves

May 10, 2002

Welsh higher education institutions are facing a cash crisis that will put them at a standstill for the next three years, funding chiefs have warned.

They will be operating on "wafer-thin" reserves unless they get a cash injection from the state, new forecast figures from the Higher Education Funding Council for Wales show.

It means universities will be left with no money to invest in new buildings, laboratory equipment or equal pay until 2004-05.

Funding council officials say nearly half the sector is running at an operating deficit. The number of institutions in debt grew from five to six in 2000-01, when reserves for the sector almost disappeared completely.

Although the HEFCW grant is set to grow over the next three years, the increase will not be enough to bring the sector's operating surplus up to the funding council's minimum target of 1 per cent of total income.

Funding chiefs fear that any economic or other change for the worse in the near future might tip the entire sector into the red.

Phil Gummett, HEFCW 's head of higher education, said: "The key point is that although overall the sector is in a break-even position, that is not the case for six institutions. Even taking the broader view, there is insufficient money for future investment.

"That is not a good position to be in with staff costs rising faster than inflation and when the sector is facing demands for big changes and expensive initiatives such as implementing equal pay."

The funding council has already warned the Welsh Assembly that plans for sweeping reorganisation in Welsh higher education, including the possibility of some mergers, will not be achievable without more money.

Mr Gummett said: "It is going to be very tight. Our job as a funding council is to try to see ways forward to release additional sums of money so that we can achieve the assembly's strategic aims."

Swansea University has dropped restructuring plans in the face of strong opposition from academics and administrators.

Streamlining proposals contained in a consultation paper would have cut the number of the university's departments and schools from 30 to ten.

But the plans were turned down by Swansea's senate. A university spokesman denied claims by union leaders that the plans were abandoned to satisfy demands from the Quality Assurance Agency, which is assessing Swansea's application for degree-awarding powers.

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