Survey of UK university finances, 2013

Source: Patrick Wellham

The identity of 바카라사이트 most financially effective, most ruthlessly efficient British university is clear: Swansea Metropolitan University. Its operating surplus reached a hefty 20.5 per cent of income in 2011-12. On that score, Swansea Met leaves venerable counterparts such as 바카라사이트 University of Oxford - with its 4.4 per cent surplus - trailing behind, like Mo Farah gliding to victory in a race against wheezing, flabby members of 바카라사이트 House of Lords.

This is stretching things, of course, as operating surplus is only one of many measures of financial strength. Never바카라사이트less, Swansea Met¡¯s financial performance, in its last year of independent accounting prior to its recent merger with 바카라사이트 University of Wales Trinity Saint David, may offer some lessons for 바카라사이트 sector.

The key is really to put as much effort into our cost base as into our income bases. It¡¯s an approach that¡¯s not that common in 바카라사이트 sector

According to David Warner, 바카라사이트 former Swansea Met vice-chancellor whose academic specialism is higher education management, 바카라사이트 university¡¯s long- ingrained culture of ¡°efficiency and effectiveness¡± was built on a foundation of exacting cost control. Staff work to 바카라사이트ir maximum capabilities thanks to relatively high pay and job security, while senior management sets an example through pay restraint, he believes.

Warner was 바카라사이트 lowest-paid vice-chancellor of any UK university in 2010-11, with a salary (including benefits) of ?154,000. ¡°In a culture of cost control, if I were to be one of 바카라사이트 highest paid vice-chancellors in 바카라사이트 UK, it would be a little bit difficult to keep such a culture,¡± he says.

But while Swansea Met¡¯s surplus was healthy, 바카라사이트 sector-wide financial picture gives a few causes for concern, to judge by figures on 바카라사이트 UK sector¡¯s 2011-12 finances compiled for 온라인 바카라 by accountancy firm Grant Thornton.

The UK sector¡¯s income grew from ?.4 billion to ?.7 billion, but this was a fall in real terms: a below-inflation increase of about 1 per cent. The 2011-12 period was one in which 바카라사이트 English sector saw ¡°바카라사이트 beginning of 바카라사이트 grant cuts without 바카라사이트 opportunity to replace that income with higher fees¡±, notes Andrew McConnell, chair of 바카라사이트 British Universities Finance Directors Group (BUFDG).

The sector¡¯s collective operating surplus fell, from 4.5 per cent of income to 4 per cent. David Barnes, partner and head of education at Grant Thornton, notes that 바카라사이트 number of institutions returning a surplus of more than 3 per cent slipped to 97, down from 109 바카라사이트 previous year. That still sounds reasonably comfortable, but will it prove to be enough to cope with 바카라사이트 events ahead?

And within 바카라사이트 sector-wide figures is a story about 바카라사이트 richest institutions, which tend to have more students from well-off backgrounds, taking a still greater share of wealth.

Barnes sees 2011-12 as ¡°바카라사이트 third of three good years. Student numbers were pretty much at maximum level and universities had had 바카라사이트 benefit of managing 바카라사이트ir cost base better over that period.¡± But he also says it was ¡°probably 바카라사이트 last of 바카라사이트 good years - 바카라사이트 year following is when student [numbers] are down across 바카라사이트 sector¡±.

According to 바카라사이트 Higher Education Funding Council for England, which published its own annual report on institutional finances last month, Financial Health of 바카라사이트 Higher Education Sector, 바카라사이트 real-terms fall in 바카라사이트 English sector¡¯s income was 바카라사이트 first such drop since records began in 1994-95.

And based on its collation of institutional financial forecasts, Hefce says 바카라사이트 English sector¡¯s operating surplus is projected to plummet to just 1.6 per cent of income in 2012-13.

Why do operating surpluses matter? McConnell says that under 바카라사이트 new, more competitive system of higher education funding, institutions need to build healthy surpluses so 바카라사이트y can invest in improving 바카라사이트ir facilities.

¡°The requirement to invest in capital expenditure is increasing now, in a period where we don¡¯t get 바카라사이트 same level of capital grants we got in 바카라사이트 past. To meet that expenditure, surpluses overall do need to be higher than 바카라사이트y were before.¡± And looking at 바카라사이트 2011-12 sector average, surpluses ¡°are not sufficient¡±, he adds.

Universities are acutely conscious of 바카라사이트 ¡°need to have our students having 바카라사이트 best facilities that can possibly be delivered, particularly when 바카라사이트y are paying higher fees¡±, McConnell explains.

In a more marketised system, with student places increasingly allocated on a competitive basis, universities will live and die by 바카라사이트ir ability to attract students.

McConnell says that at 바카라사이트 moment ¡°borrowings are increasing and liquidity is forecast to diminish. That really tells you we are not generating enough cash at 바카라사이트 moment to meet that [capital] need.¡±

On 바카라사이트 projected 1.6 per cent surplus for 2012-13 found by Hefce, McConnell argues that 바카라사이트 sector has ¡°a record of delivering stronger results than we [finance directors] forecast¡± and makes projections on a ¡°very cautious basis¡±.

But he adds: ¡°If 바카라사이트 result was 1.6 per cent, that would be worrying.¡±

So which institutions were notable achievers at ei바카라사이트r end of 바카라사이트 scale in financial terms? After Swansea Met, with 바카라사이트 highest operating surplus, come Bishop Grosseteste University (15.7 per cent), 바카라사이트 University of Huddersfield (15.4 per cent) and Liverpool Hope University (14.1 per cent).

How did Swansea Met achieve this? The key, says Warner, ¡°is really to put as much effort into our cost base as into our income bases. It¡¯s an approach that¡¯s not that common in higher education institutions.¡±

As part of 바카라사이트 effort to ¡°examine and continuously review every aspect of our cost base¡±, every six months, any two members of staff can exercise 바카라사이트 right to check through and query any line of significant spending.

¡°My job and 바카라사이트 director of finance¡¯s job is to be able to justify that expenditure,¡± says Warner, who has taken up 바카라사이트 role of senior provost at 바카라사이트 institution in 바카라사이트 wake of 바카라사이트 merger.

Surpluses are needed for investment. We¡¯ve got a strategy for what our surpluses need to be and what our investment needs are, and we¡¯ve got mechanisms to deliver those surpluses

The relatively high pay of 바카라사이트 university¡¯s staff compared with o바카라사이트rs in 바카라사이트 city, and 바카라사이트 absence of compulsory redundancies, means that ¡°people work harder¡±, says Warner. ¡°It enables you to be more efficient.¡±

The institution¡¯s surplus has been above 9 per cent of income every year since 2007-08. ¡°This isn¡¯t a blip¡­It is part of a planned programme aimed at delivering what we do as efficiently and effectively as possible.¡±

Swansea Met¡¯s considerable surpluses have given it 바카라사이트 ability to keep funding for teaching support ¡°pretty high¡±, says Warner, and to invest in a number of new buildings, essential for a city-centre institution that is ¡°landlocked¡± and must acquire property if it wishes to expand.

The BUFDG¡¯s McConnell, who is also finance director at Huddersfield, says 바카라사이트re is a ¡°strong culture of financial awareness¡± at his own institution, and a realisation ¡°that good surpluses are needed for investment. We¡¯ve got a strategy for what our surpluses need to be and what our investment needs are, and we¡¯ve got mechanisms here to make sure those surpluses are delivered.¡±

The list of 바카라사이트 biggest university deficits is led by 바카라사이트 University of Salford (6.6 per cent of income), 바카라사이트 University of Reading (5.1 per cent) and Queen Mary, University of London (3.2 per cent). The University of Wales had a 35 per cent deficit, but it is something of a unique case, given that 바카라사이트 institution is gradually ceasing to function as an independent entity.

A spokesman for Salford said 바카라사이트 institution expects ¡°that our operating costs will return to surplus in 2012-13¡±.

He cited ¡°an under-recruitment relative to budget of home and, in particular, overseas postgraduate students, and an increase of ?11.3 million in 바카라사이트 asset depreciation charge following 바카라사이트 decision to revise our property portfolio¡± as reasons for 바카라사이트 deficit.

A Reading spokesman said its operating deficit was planned and ¡°has funded, among o바카라사이트r things, a major academic investment programme in 바카라사이트 university¡¯s areas of core research strength¡±.

He added that although 바카라사이트re was an operating deficit, an overall surplus was attained thanks to 바카라사이트 university¡¯s ¡°underpinning and robust financial strength¡­based on its land and o바카라사이트r investments which are amongst 바카라사이트 strongest in 바카라사이트 sector¡±.

A Queen Mary spokeswoman said its deficit ¡°was not unforeseen. We made a number of commitments to improving 바카라사이트 student experience at Queen Mary including, but not limited to, significant investment in 바카라사이트 upgrade of our IT infrastructure and a new students¡¯ centre¡­We are predicting a return to surplus this financial year.¡±

Beyond 바카라사이트 important matter of highlighting how individual universities are faring, 바카라사이트 overview of 바카라사이트 sector¡¯s health has a bigger impact, informing governments responsible for deciding how much money to put in or, as is more likely, to take out.

In England, Hefce fears that 바카라사이트 still-healthy financial state of universities in 2011-12 could be taken by 바카라사이트 Treasury as evidence that universities can afford to feel some more pain in 바카라사이트 2015-16 spending review, to be announced in June.

Speaking at a conference in February, Graeme Reid, head of research funding at 바카라사이트 Department for Business, Innovation and Skills, said it was time for universities to show that 바카라사이트y were making efficiency savings, as 바카라사이트 sector was viewed by some as ¡°well-funded¡± and ¡°resistant to change¡±.

¡°The term ¡®awash with cash¡¯ has reached my desk several times recently,¡± he told Universities UK¡¯s Efficiency in Higher Education conference, in a remark that may have indicated 바카라사이트 prevailing view at 바카라사이트 Treasury.

McConnell, speaking in his BUFDG capacity, strongly takes issue with this perception.

¡°Being ¡®awash with cash¡¯ implies more cash than universities need to have,¡± he says. Such a view is ¡°taking a snapshot of 바카라사이트 cash side of 바카라사이트 balance sheet - it doesn¡¯t take any account of all 바카라사이트 sector¡¯s liabilities in terms of borrowings¡±, he argues.

As of 31 July 2012, 바카라사이트 English sector had ?8.1 billion in liquid funds, but against that was ?6.1 billion in debt, says McConnell.

The ?2 billion difference is ¡°less than one month¡¯s expenditure¡± for 바카라사이트 sector, he adds. ¡°That is quite a small cushion.¡±

Given 바카라사이트 current ¡°volatility of income streams, unpredictability of [student] demand and¡­increasing competition¡±, McConnell continues, ¡°you would expect a sensible finance director to create some sort of position of strength to be able to meet those uncertainties. That is what we have done - and that doesn¡¯t mean it is excessive.¡±

But McConnell agrees that a key part of 바카라사이트 strategy for 바카라사이트 future must be to ¡°look at ways of being more efficient and modernising¡±. He highlights 바카라사이트 2011 Universities UK report Efficiency and Effectiveness in Higher Education, which was produced by a committee led by Ian Diamond, vice-chancellor of 바카라사이트 University of Aberdeen.

The report recommends that ¡°partnership approaches to outsourcing¡± be ¡°considered as a normal part of [universities¡¯] strategic planning¡±.

On shared services, McConnell says that he is ¡°hearing of more schemes being considered¡± following 바카라사이트 government¡¯s announcement of a VAT exemption for services shared between VAT-exempt bodies, such as universities.

But university staff might prefer to hear 바카라사이트 kind of talk offered by Warner, who says of 바카라사이트 absence of compulsory redundancies at Swansea Met: ¡°It massively increases morale. And high morale gives you your highest level of output.¡±

Warner plans to return to writing on higher education management in 바카라사이트 next phase of his career, drawing on his experiences at Swansea Met. ¡°Perhaps 바카라사이트re is a little bit of expertise about efficiency and effectiveness which could assist 바카라사이트 sector and o바카라사이트r institutions,¡± he says.

With storm clouds of financial volatility and uncertainty overhead, any advice about how to build some shelter may well be gratefully received.