Universities solvent despite cuts in funds and students

6 Nov 12
Universities recruited fewer students than they expected in the first year of higher tuition fees but should be financially secure for the next couple of years, a report on higher education finances has revealed.
By Richard Johnstone | 6 November 2012

Universities recruited fewer students than they expected in the first year of higher tuition fees but should be financially secure for the next couple of years, a report on higher education finances has revealed.

The Higher Education Funding Council for England said some institutions were experiencing difficulties in recruiting in 2012/13, and enrolments would be lower than planned. But it was not clear whether this reduction would be a one-off or permanent, the report said.

From this academic year, universities’ state support has been cut, making them more dependent on income from students, while tuition fees have been allowed to rise to a maximum of £9,000.

Latest figures from the University and Colleges Admissions Service show that admissions in September fell by 54,200 over the previous year to 340,500.

The HEFCE report, Financial health of the higher education sector: 2011/12 to 2014/15 forecasts, said no institution was at risk of insolvency in the next couple of years, with many having healthy reserves. However, this liquidity would be needed if universities were to manage the greater volatility and unpredictability in the new funding system, alongside increased competition from international higher education institutions.

HEFCE chief executive Sir Alan Langlands added: ‘Universities and colleges are projecting sound financial results to 2014/15. However, these forecasts were made in June 2012, prior to the latest student recruitment cycle. Some institutions have experienced difficulties in achieving their recruitment targets, and may face budgetary pressures as a result.

‘Despite this, the overall financial position is satisfactory, although reductions in public funding, especially for capital investment, mean that institutions will need to deploy more of their own resources to maintain their estates. This will ensure the long-term sustainability of educational and research programmes and a high-quality student experience.’

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