One-fifth of universities and higher education institutions are in deficit, according to a recent report.
The ’Financial Health of the Higher Education Sector 2011’ report by accounting firm Grant Thornton, states that 26 UK Institutions currently have a deficit.
It also revealed that nearly half of all UK Institutions are achieving less than the three per cent of the operating surplus recommended by the Higher Education Funding Council of England (HEFCE).
A spokesman for HEFCE played down the concern, saying the sector had: “Strong cash balances and healthy reserve levels. These will help to weather potential future challenges”.
The report also discusses possible consequences of the changes to funding and raising of tuition fees, as it is estimated that universities outside of the prestigious Russell Group will face an 11 per cent cut in income by 2013-14.
This is due to reductions in teaching grants, a loss of research funding and lower demand for places.
However, the number of universities showing a surplus has increased, and fewer institutions are in deficit than the previous year.
The university and higher education sector employs 130,000 people and has a total turnover of £26.4 bn. Business Secretary, Vince Cable, has previously warned about instability of university finances.
Last autumn he sent out a warning about the financial state of some institutions.“We already have a lot of universities that are effectively broke,” he said.
“Various arrangements have been cobbled together to keep them going, and we can’t continue to do that.”A 40 per cent or £2.9 billion reduction in the overall resource budget for Higher Education (excluding research funding) by 2014/15 was announced in the 2010 Spending Review.
By Claire Sherlock










