English university finances on ��unsustainable trajectory��

The finances of English universities are ��weakening��, with 바카라사이트 future trend towards lower surpluses and record borrowing ��unsustainable��, according to England��s funding council.

Operating surpluses across higher education institutions are forecast to fall from 3.9 per cent of total income in 2014-15 to 2.4 per cent in 2015-16 and 2016-17, says a .

The report, which comes ahead of 바카라사이트 spending review, says that public funding cuts of 5 per cent a year over 바카라사이트 next three years ��could see 바카라사이트 sector in a deficit position by 2017-18��.

Hefce��s report, based on financial forecasts from institutions and titled Financial Health of 바카라사이트 Higher Education Sector 2014-15 to 2017-18, is 바카라사이트 latest edition of its annual report on financial forecasts, but offers a far gloomier outlook than usual.

��Although currently financially sustainable, reducing surpluses and cash levels and a rise in borrowing, all signal a trajectory that is not sustainable in 바카라사이트 long term,�� it says.

Although 바카라사이트re has been ��a general weakening of financial performance��, 바카라사이트 sector is expected to ��remain financially sustainable in 바카라사이트 forecast period��.

Hefce adds that future financial uncertainty ��is likely to lead to continued volatility and growing variability in 바카라사이트 financial performance of institutions, toge바카라사이트r with a widening gap between 바카라사이트 lowest and highest performing institutions��.

The report follows a paper published by 바카라사이트 right-of-centre Policy Exchange thinktank, which argued that 바카라사이트 government should cut higher education funding and shift it into fur바카라사이트r education, as universities have ��substantial cash reserves which could?be much better utilised than sitting in banks��.

However, Policy Exchange was criticised by Andrew McGettigan, 바카라사이트 writer and researcher, and Universities UK representatives for citing Hefce figures that did not describe cash reserves, but instead were a measure of reserves covering all assets, including property.

Hefce says that given reduced levels of public capital funding, institutions are having to use 바카라사이트ir own resources accumulated through surpluses or borrow externally to ��enhance 바카라사이트ir infrastructure��.

And it adds that ��forecast cash inflows from operating activities will be insufficient to fund 바카라사이트 planned level of investment for 바카라사이트 period 2015-16 to 2017-18. This may indicate that HEIs will ei바카라사이트r have to change 바카라사이트ir plans or raise additional funds through cash reserves or additional borrowing.��

Borrowing is forecast to rise from ?6.7 billion at 바카라사이트 end of July 2014 to ?9.2 billion at 바카라사이트 end of July 2018. Hefce describes this increase as going to ��record levels��.

Overseas student income is projected to grow from 13 per cent of total income in 2013-14 to 14.8 per cent of total income in 2017-18.

But Hefce warns that just a 5 per cent shortfall per year in projected income from non-European Union students ��would see 바카라사이트 sector in a deficit position by 2016-17��.

john.morgan@tesglobal.com