Universities must not sleepwalk into financial problems

The report¹ says that if surpluses do not increase then there is a risk that the higher education infrastructure will deteriorate with threats to the student experience and long-term sustainability.

UCU said it welcomed the news in the report that no university is currently at risk of insolvency. However, the union said the government needed to pay attention to the warnings of funding shortfalls if UK higher education was to remain one of our success stories at home and abroad.

UCU said government cuts to funding for teaching and research are largely to blame for the fall in universities' income. It added that staff were bearing the brunt of the cuts as the proportion of spending on staff costs continues to fall.

The higher education sector saw its first real-terms reduction in total income in 2011-12 and forecasts suggest further shortages are on the way. Today's report comes just days after the government announced it would be freezing university fees 2014-15, which means another drop in income for universities, but savings for the government.²

UCU general secretary, Sally Hunt, said: 'Higher education is one of our success stories both domestically and on the global stage. We simply cannot afford to sleepwalk into financial difficulties. Students may now be paying more than ever for a degree, but, thanks to government cuts, universities actually have less money and even leaner years are forecasted.

'It is clear from universities' 2011-12 financial statements that a large part of the blame lies with government reductions in recurrent funding for teaching and research in that year. With the proportion of spending on staff costs falling yet again, it is also clear that staff - universities' most important resource - are bearing the brunt of the cuts.'

Notes

¹Financial health of the higher education sector: 2011-12 results and 2012-13 forecasts, Higher Education Funding Council for England (HEFCE)

² On Monday, David Willetts, the universities and science minister, announced that university tuition fees would remain at the same level as in 2013-14. Under the previous system, the cap rose in line with inflation. The lack of inflation-proofing means an drop in real-terms income for universities. However, the reduction in real-terms value of fees means savings for the government, which subsidises student loans heavily and would have to spend more money on student loans if fees rose.