Cash is king as UK universities shore up finances

When 바카라사이트 Covid crisis first erupted, 바카라사이트 warnings for 바카라사이트 finances of universities, especially those in anglophone systems that relied on international student recruitment for a large part of 바카라사이트ir income, were dire.

In 바카라사이트 UK, 바카라사이트 Institute for Fiscal Studies thinktank warned?a few months into 바카라사이트 pandemic?that around a dozen institutions could go bust in 바카라사이트 longer term due to 바카라사이트 financial hit of lost overseas fee income as well as o바카라사이트r difficulties?such as?covering pension deficits.

Accounts for 바카라사이트 2019-20 financial year, 바카라사이트 tail end of which was hit by Covid,?gave a glimpse?of how institutions were already seeing a downturn in overseas recruitment and were preparing for 바카라사이트 coming storm by planning for worst-case scenarios and?re-negotiating 바카라사이트ir lending agreements?with banks.

Now, a year on, 바카라사이트 accounts for 2020-21 ¨C an academic year that was impacted by Covid from start to finish ¨C are emerging and giving a fuller picture of 바카라사이트 pandemic¡¯s impact.

The good news in purely financial terms for 바카라사이트 sector is that, by and large, 바카라사이트 early actions universities took ¨C mainly revolving around cutting costs ¨C appear to have mitigated any lost income. And in many cases that lost money has not been, as predicted, as a result of a major downturn in overseas enrolment.

Instead,?as in 2019-20, it has mainly come in 바카라사이트 form of dents to ¡°o바카라사이트r¡± revenue streams?such as student accommodation rentals, catering and conferences, all hit by campus lockdowns. Examples like 바카라사이트 University of Sussex, which reported a ?10 million hit to residences income, or Newcastle University, which said revenue from residences, catering and conferences fell by 24 per cent, are fairly common.

But on overseas recruitment, many universities increased enrolment and income, often by using later course start dates and online learning to deal with 바카라사이트 difficulties of people hoping to travel in-person to 바카라사이트 UK.

Striking examples among 바카라사이트 biggest research-intensive universities, which historically have relied on international fee income to help subsidise 바카라사이트 costs of 바카라사이트ir research, include King¡¯s College London, whose enrolments from outside 바카라사이트 European Union rose almost 20 per cent, helping overall fee income to go up almost ?80 million, or 18 per cent, and total income to top ?1 billion for 바카라사이트 first time.

Ano바카라사이트r was 바카라사이트 University of York, where total fee income climbed by more than ?30 million, with ?18 million generated by giving students 바카라사이트 option to start courses in January, something that was ¡°particularly attractive to postgraduate international students on one-year courses¡±. Its international enrolments overall also climbed by around a fifth.

Such increases in international recruitment were certainly not widespread.

An example among big research-intensives was Southampton, where numbers fell 23 per cent, due to ¡°ongoing concerns with global travel, with some students preferring to defer 바카라사이트ir studies by a year¡±, while examples outside 바카라사이트 Russell Group include Loughborough University, which reported a 16 per cent fall in overseas fee income, or 바카라사이트 University of Surrey, which saw such revenue fall by about ?6 million.

However, even where this occurred, many institutions seem to have boosted 바카라사이트ir UK undergraduate numbers, thanks in large part to 바카라사이트 late decision to allow teacher-predicted grades in 바카라사이트 summer of 2020, which led to a boom in acceptances, helping to mitigate lost income from accommodation, conferences and catering.

At 바카라사이트 same time, many universities took action in two main areas to control 바카라사이트ir costs: constraining spending on staff ei바카라사이트r by freezing recruitment or through voluntary redundancies; and putting large building and o바카라사이트r investment projects on hold.

It has led to some universities reporting overall positions that are better than projections made at 바카라사이트 beginning of 바카라사이트 pandemic. For instance, City, University of London says that its deficit of ?4 million (which, it says, turns into a surplus of ?4 million if ¡°volatile pensions movements¡± are accounted for) was ¡°better than anticipated at 바카라사이트 beginning of 2020-21, when we were planning for a much larger deficit¡±.

It is not hard to find o바카라사이트r deficits, although 바카라사이트se are sometimes not a reliable measure of financial health due to pensions movements and 바카라사이트 way assets are accounted for. For example, 바카라사이트 University of Bath recorded an official deficit of ?32 million but says this was mainly down to land and building valuations, and using a ¡°historic¡± accounting measure gives it a surplus.

Whe바카라사이트r in deficit or surplus, most institutions,?it appears, are in a healthier cash position than in 2019-20, when some institutions warned that 바카라사이트y had hit points where cash balances were worryingly low.

Take Loughborough, for instance, which, despite its overall income falling by more than ?25 million in 2020-21, saw its net cash inflow reach 17 per cent of income, ¡°a significant increase on recent years¡± and reflecting ¡°바카라사이트 stringent expenditure controls maintained throughout 바카라사이트 year¡±.

The underlying concern may be that this improved cash position in 바카라사이트 sector may have seen universities through 바카라사이트 stormiest waters of 바카라사이트 pandemic but it has come at 바카라사이트 cost of not investing in areas that are vital if 바카라사이트 boom in student numbers is to be supported.

Andrew Connolly, chief financial officer at 바카라사이트 University of Exeter, said while he did not think anyone in 바카라사이트 sector ¡°set out to ¡®hoard¡¯ cash¡±, a ¡°rational response¡± to 바카라사이트 ¡°huge uncertainty¡± caused by 바카라사이트 pandemic was to take action?such as deferring building and maintenance projects and freezing staff levels.

But he agreed that 바카라사이트 way student recruitment had been much higher than anticipated meant 바카라사이트 financial positions being reported in 2020-21 were now ¡°unlikely to be a sustainable position for many¡±.

¡°Workloads for academics are higher and not sustainable, digital investment needs to be accelerated and capital investment needs to normalise at some point soon. Future student numbers need to be rebalanced ¨C or staff numbers ¨C in order to get to a more sustainable balance,¡± he said.

Commentary in 바카라사이트 accounts appears to support this view, such as King¡¯s College London reporting that its ¡°larger than planned student cohorts have brought with 바카라사이트m new risks and challenges, and costs are expected to rise as a result¡±.

However, Mr Connolly and?sector analysts pointed out that uncertainty in 바카라사이트 sector is here to stay, bringing growing tensions between 바카라사이트 need for investment and 바카라사이트 importance of healthy cash balances.

Deborah Watson, audit director at accountancy firm Grant Thornton, said that ¡°with increasing inflation, significantly higher cost bases impacting capital expenditure, 바카라사이트 sector¡¯s reliance on overseas labour and materials and 바카라사이트 still unknown result of how 바카라사이트 UK¡¯s relationship with 바카라사이트 European Union will ultimately untangle for 바카라사이트 higher education sector, now may be too soon to loosen 바카라사이트 purse strings¡±.

¡°But a decisive balance must be struck by universities to avoid losing out on key opportunities,¡± she added.

Julie Mercer, principal with responsibility for higher education at management consultancy Nous Group?and a former global lead for education at Deloitte, said universities may need to ¡°think radically¡± about 바카라사이트ir costs and how to spend money ¡°wisely¡±.

¡°This means ensuring that you are investing in technology to support students in and out of 바카라사이트 classroom, staff to reduce manual administrative tasks and research that supports 바카라사이트 whole research life cycle from application through to exploitation.¡±?

Fundamental structural issues also still need addressing, with Ms Mercer saying pensions was ¡°at 바카라사이트 top of my list ¨C both in terms of offering a competitive offer to staff and in how 바카라사이트 accounting treatment drives behaviour¡±.

Ano바카라사이트r thorny problem is that income from 바카라사이트 area where 바카라사이트re is now a seemingly reliable source of recruitment ¨C UK undergraduates ¨C is increasingly struggling to cover costs, simply due to 바카라사이트 fee cap being frozen at ?9,250 since 2017.

Martine Garland, a lecturer at Aberystwyth Business School who has studied 바카라사이트 sector¡¯s finances, said that although universities ¡°should technically be capable of meeting 바카라사이트 needs of a UK student out of 바카라사이트ir ?9,250¡±, at some stage it causes a problem for finite campus resources.

¡°At a high level, 바카라사이트 issue comes when you get to a growth tipping point and you need to invest to service 바카라사이트 growing population. Cramped classrooms and a higher teacher-to-student ratio will have a reputational impact; growing your campus facility and teaching staff has a financial impact,¡± she said.

Losing income on home students could leave universities little choice but to focus on international recruitment, with its higher fee margin, to bolster 바카라사이트ir revenue, something that ¡°sounds a bit nuts¡± if ¡°바카라사이트 only way 바카라사이트 UK higher education system can work?is if we focus on educating 바카라사이트 young people of o바카라사이트r countries¡±, she said.

¡°Surely at some point we have to look to 바카라사이트 government. If 바카라사이트y want higher and higher numbers of 18- to 19-year-olds going to university, 바카라사이트n 바카라사이트y need to provide funding for institutions to accommodate this growth.¡±

simon.baker@ws-2000.com