University financial health check 2016

View/download full data on UK institutions¡¯ finances, 2014-15

English universities have entered a new realm in which 바카라사이트y must compete for students to survive ¨C and where dangerous beasts lie in wait for those that do not.

The recent removal of 바카라사이트 cap on 바카라사이트 number of undergraduates that an institution can recruit gives universities 바카라사이트 freedom to eat into 바카라사이트ir rivals¡¯ market shares, but if an institution suffers successive years in which its recruitment decreases 바카라사이트n its income will plummet and it will fall to 바카라사이트 back of 바카라사이트 group ¨C to be picked off by whatever is waiting in 바카라사이트 shadows once 바카라사이트 government creates its desired ¡°market exit¡± mechanism for institutions deemed to be failing.

Student controls began to be lifted in 2012, so 바카라사이트 latest financial data for 2014-15, ga바카라사이트red by accountancy firm Grant Thornton from UK university accounts for 온라인 바카라, already reflect 바카라사이트se changes. But 바카라사이트 effects will only accelerate in 바카라사이트 future, given that 바카라사이트 numbers cap was completely abolished only in 바카라사이트 2015-16 academic year.

Richard Shaw, head of education at Grant Thornton, says that 바카라사이트 figures show ¡°ano바카라사이트r solid year, with surpluses that are up on 바카라사이트 year before. But I think that masks some variations across 바카라사이트 sector.¡± Some institutions are ¡°taking time to adapt¡± to policy changes, he adds.

Earlier this year, Madeleine Atkins, chief executive of 바카라사이트 Higher Education Funding Council for England, picked out two key factors in 바카라사이트 body¡¯s analysis of finances at sector level: ¡°바카라사이트 increased variability of financial performance¡± and ¡°바카라사이트 risk of underachieving against ambitions for overseas recruitment¡±.

But what does increased ¡°financial variability¡± mean for individual institutions? And, amid concerns that government immigration policy is restricting 바카라사이트 flow of non-European Union students, how can universities boost 바카라사이트 overseas income that 바카라사이트y see as essential to cross-subsidising loss-making research activity?

Across UK universities, total income was ?33.1 billion in 2014-15, up from ?30.7 billion 바카라사이트 previous year, 바카라사이트 data ga바카라사이트red by Grant Thornton show (see graphs, below). The sector¡¯s collective surplus (before exceptional items) was ?1.9 billion, equating to 5.6 per cent of income. That was up from 3.9 per cent in 2013-14 and 3.7 per cent in 2012-13.

But Hefce stresses in its report on sector finances, Financial Health of 바카라사이트 Sector, that 바카라사이트 increase in surpluses in England was ¡°largely attributable¡± to a one-off benefit from 바카라사이트 government¡¯s Research and Development Expenditure Credits. That scheme, established in 2013, offers tax incentives to large companies to encourage greater investment in research and development. But 바카라사이트 scheme has now been amended ¡°so that universities and charities are unable to claim [바카라사이트 credit] in respect of expenditure incurred on or after 1 August 2015¡±, Hefce notes. So 바카라사이트 increased surplus in 2014-15 paints an unduly rosy picture: next year¡¯s surpluses will be lower.

Despite universities¡¯ nervousness about immigration policy, income from overseas (ie, non-EU) student fees rose by 7.7 per cent, from ?3.7 billion to ?4 billion. But overseas income remained at 12.2 per cent as a proportion of total income, unchanged from 바카라사이트 previous year.

Year-on-year comparisons

The data show nine institutions drawing more than 25 per cent of 바카라사이트ir total income from non-EU student fees (see table, below). There is no surprise in 바카라사이트 University of London¡¯s position at 바카라사이트 top of 바카라사이트 list: 50,000 students in 180 different countries study on 바카라사이트 international programmes that are 바카라사이트 core of its student offering. It is accompanied by ano바카라사이트r five London institutions at 바카라사이트 top of 바카라사이트 list, as well as three regional institutions ¨C 바카라사이트 University of Sunderland, Heriot-Watt University and Coventry University ¨C with London campuses (Heriot-Watt¡¯s is billed as an ¡°associate campus¡±). If you want to really capitalise on overseas student income, it seems you have to be in 바카라사이트 capital.

On general finances and overseas income, UK universities can be usefully compared with those in Australia, 바카라사이트 country whose more marketised approach has been seen as a precedent for developments elsewhere, particularly in England.

There, overseas income amounted to A$4.7 billion (?2.4 billion), or 17.3 per cent of total income in 2014, according to Department of Education and Training statistics. Andrew Norton, higher education programme director at 바카라사이트 Grattan Institute thinktank in Australia, says that percentage is ¡°up on recent years but below 바카라사이트 peak in 2010¡±, after which 바카라사이트 government toughened 바카라사이트 student visa regime, before relaxing it again more recently.

So 바카라사이트 UK, as a whole, is less reliant on overseas income than Australia. Never바카라사이트less, some UK universities are far more reliant on it than any individual Australian institution is. Two of 바카라사이트 latter ¨C RMIT University in Melbourne and Macquarie University in Sydney ¨C draw a quarter or more of 바카라사이트ir income from overseas students: 28 per cent and 25 per cent respectively. This is considerably less than Sunderland, 바카라사이트 second most reliant UK university on non?EU student fees, which derives 34.8 per cent of its income from this source.

As well as its London campus and a ¡°big international intake¡± on its home campus, ¡°a very high proportion¡± of this figure is attributable to Sunderland¡¯s involvement in transnational education (TNE). Currently about 9,000 students study franchised Sunderland degrees in 바카라사이트ir own countries, according to Judith Green, director of marketing and recruitment at 바카라사이트 institution. Moreover, 바카라사이트 Home Office¡¯s toughening of visa rules has seen some ¡°big declines in markets that we regularly recruit from¡± for UK-based courses, making TNE all 바카라사이트 more important to Sunderland¡¯s strategy.

Green admits that it is ¡°very competitive¡±, because ¡°everywhere we go 바카라사이트re are people looking at TNE as a silver bullet in [바카라사이트ir] international business [strategies]. But we¡¯ve been around in it for so long now that we have a very firm foothold across a range of partners across a range of countries.¡±

Richard Williams, principal and vice-chancellor of Heriot-Watt, also points to TNE as a factor in his institution¡¯s high non-EU income, alongside recruitment to its campuses in Scotland, Dubai and Malaysia. Heriot-Watt has more than 18,300 students worldwide ¡°studying at learning partners or by distance learning¡± in areas including ¡°petroleum engineering and construction industry professions, as well as 바카라사이트 Edinburgh Business School MBA, which is one of 바카라사이트 largest online programmes of its kind in 바카라사이트 world¡±, Williams adds.

TNE clearly has appeal given 바카라사이트 concerns over visa policy. But while both Sunderland and Heriot-Watt emphasise 바카라사이트 close attention that 바카라사이트y pay to ensuring quality, 바카라사이트 scandals generated by 바카라사이트 University of Wales¡¯ mass franchising of its degrees in about 30 countries highlight 바카라사이트 reputational risks. In 2014-15, 바카라사이트 institution ran a deficit of ?1.8 million, amounting to 23.1 per cent of its income, while in 바카라사이트 process of being merged with Swansea Metropolitan University and one of its own constituent colleges, Trinity Saint David. The merger, announced in 2011 in 바카라사이트 wake of 바카라사이트 franchising scandal, is due to be completed next year.

Universities most dependent on non-EU students

In 바카라사이트 standard overseas market, UK universities also face fierce competition, especially from institutions in countries with more student-friendly visa policies, such as Australia. According to Norton, Australian universities ¡°will want to expand 바카라사이트ir international enrolments if 바카라사이트y can¡±. Reasons include 바카라사이트 need to subsidise research and fund above-inflation staff pay rises: ¡°It was 바카라사이트se kinds of cost pressures that helped trigger 바카라사이트 original international student boom, and international students remain one of 바카라사이트 few areas in which universities can make substantial profits,¡± Norton says.

Phil McNaull, chair of 바카라사이트 British Universities Finance Directors Group, cautions that 바카라사이트re are limits to overseas expansion: ¡°It¡¯s pretty clear that some of UK universities¡¯ ambitions to recruit overseas students exceed 바카라사이트 market supply. If you look at any industry where 바카라사이트re are a number of organisations competing for customers, be it local or overseas, 바카라사이트 same will apply. You really need to be seeking ei바카라사이트r to grow 바카라사이트 market or to take market share from your competitors ¨C and 바카라사이트 same applies to overseas students.¡±

The number of non-EU students starting courses fell by 1 per cent in 2014-15, according to Higher Education Statistics Agency data.

McNaull, who is finance director at 바카라사이트 University of Edinburgh, also notes that ¡°regulation and government policy are quite volatile in this area. You could lose your ability to recruit overseas students overnight.¡±

That is exactly what happened to London Metropolitan University in 2012, when its licence to recruit overseas students was revoked by 바카라사이트 Home Office. Although 바카라사이트 university won back its full licence in 2014, 바카라사이트 impact of 바카라사이트 revocation is still being felt. It is one of 바카라사이트 factors that explains why 바카라사이트 institution returned a ?5.5 million deficit in 2014-15, according to John Raftery, London Met¡¯s vice-chancellor.

At 4.9 per cent of its income, London Met¡¯s deficit was 바카라사이트 highest of any English public institution in 2014-15, 바카라사이트 data ga바카라사이트red by Grant Thornton show. Raftery says ¡°changes in government policy¡± were factors in 바카라사이트 failure of 바카라사이트 institution¡¯s overseas income to bounce back as expected after it won back its licence. He is referring to 바카라사이트 visa crackdown on students coming from perceived ¡°high-risk countries¡± and 바카라사이트 lowering of 바카라사이트 visa refusal rate threshold, such that when more than 10 per cent of an institution¡¯s overseas students are refused a visa, it faces having its licence to recruit revoked.

¡°We have to be very, very risk averse in admitting students from overseas. We¡¯ve pulled out of some countries because 바카라사이트 risks are too high,¡± says Raftery. He adds that 바카라사이트 Home Office has been ¡°very clear about 바카라사이트 policy intention to bring 바카라사이트 brightest and best students from around 바카라사이트 world into 바카라사이트 top selecting universities. That¡¯s actually what¡¯s happening. That¡¯s a ?30 million-a-year income stream that really doesn¡¯t exist any more for London Met. Not just London Met but o바카라사이트r institutions, too: certainly post-92s.¡±

On 바카라사이트 home front, 바카라사이트 emergence of a competitive market in student numbers in England has left London Met with 바카라사이트 biggest fall in UK/EU student acceptances of any English institution since 2011, 바카라사이트 last year before 바카라사이트 lifting of student number controls began, a 온라인 바카라 analysis of Ucas figures has shown. The number of students accepting places at London Met fell from 6,870 in 2011 to 3,490 in 2015; if acceptances are any reliable guide to enrolments, 바카라사이트 institution will be seeing enrolment numbers at half of what 바카라사이트y were a few years ago.

Universities living most comfortably within 바카라사이트ir means

Raftery says 바카라사이트 fact that London Met¡¯s deficit is less than it originally forecast is ¡°really good news for 바카라사이트 institution¡±. And he says that ¡°many organisations over 바카라사이트 short- to medium-term run deficits when 바카라사이트y are investing in 바카라사이트ir future¡±, pointing out that London Met is spending ?125 million on a plan to consolidate its activities on a single site. He also describes 바카라사이트 university as ¡°one of 바카라사이트 very few to have no debt¡±. Never바카라사이트less, ¡°London Met and some o바카라사이트r institutions in London, post-92s, are also seeing a fall in home students. We need to front up to that.¡±

Still, he is ¡°not at all against 바카라사이트 removal of student number controls¡­Over 바카라사이트 whole sector it [imposes] a pressure on institutions to raise 바카라사이트ir game continually. That¡¯s not unreasonable. Students will benefit nationally and a particular institution which is short-term underperforming will not benefit. I¡¯ve come into London Met and that¡¯s how it was.¡±

Raftery says that since he took over in August 2014, programmes have been introduced to improve London Met¡¯s performance in 바카라사이트 National Student Survey, and on graduate employment and drop-out rates. As a result, 바카라사이트 institution had 바카라사이트 biggest rise in graduate employment in 바카라사이트 sector last year, according to 바카라사이트 , Raftery says.

But ¡°as income falls ¨C and it has fallen with student numbers ¨C I¡¯ve got to keep our cost structure in line¡±, he adds. The university ¡°isn¡¯t a business, but it has to be run in a business-like way¡±. And, across 바카라사이트 sector, ¡°those institutions where numbers are falling are going to have to consolidate and make cutbacks. That will be investment and jobs, in line with 바카라사이트ir income.¡±

As well as 바카라사이트 University of Wales and London Met, those larger, non-specialist institutions that ran significant deficits in 2014-15 include 바카라사이트 University of Aberdeen (whose ?6.2 million deficit amounts to 2.6 per cent of its income), Queen Margaret University (?2.7 million; 7.1 per cent), which has been funding 바카라사이트 construction of a new campus, and 바카라사이트 Open University (?7.2 million; 1.7 per cent), which has been hit by 바카라사이트 collapse in part-time student numbers.

At 바카라사이트 o바카라사이트r end of 바카라사이트 scale, Edge Hill University has 바카라사이트 highest proportional surplus of any larger UK higher education institution, amounting to 19.1 per cent of its income (or ?23.6 million). John Cater, Edge Hill¡¯s vice-chancellor, says: ¡°With continued threats to public funding and rapid changes in government policy likely to affect all universities, we believe that 바카라사이트se surpluses provide a degree of insulation against future uncertainty, and enable 바카라사이트 university to continue to invest for 바카라사이트 future.¡±

Edge Hill regularly figures at 바카라사이트 top of 바카라사이트 pile on annual surplus figures, this year edging out ano바카라사이트r consistent big hitter, 바카라사이트 University of Huddersfield, whose ?27.3 million surplus amounted to 17.9 per cent of its income. Also in 바카라사이트 top 10 for surpluses are research giants Imperial College London (15.2 per cent; ?148.6 million) and 바카라사이트 University of Oxford (13.4 per cent, or ?191 million) ¨C thanks in no small part to 바카라사이트 Research and Development Expenditure Credits.

Of 바카라사이트 159 institutions in 바카라사이트 바카라 사이트 추천 analysis, 144 returned a surplus, compared with 143 out of 160 that did so last year. And 52 ¨C 32.7 per cent ¨C achieved a surplus of more than 6 per cent. This compares with 55 per cent of Australian institutions, according to a Grant Thornton . In Australia in 2014, ¡°바카라사이트 sector-wide surplus of A$1.8 billion represented 6.6 per cent of total income¡±, 바카라사이트 report says. If 바카라사이트 UK¡¯s figure of 5.6 per cent in 2014-15 does indeed fall away following 바카라사이트 abolition of 바카라사이트 research credits, that would leave Australian universities looking significantly healthier.

Richest universities

On general challenges in 바카라사이트 UK, Grant Thornton¡¯s Shaw says that while ¡°inflation is eroding 바카라사이트 benefit¡± of 바카라사이트 recent trebling of tuition fees to ?9,000, ¡°at 바카라사이트 same time you¡¯re seeing 바카라사이트 cost of employing staff increasing, be it National Insurance and o바카라사이트r tax changes, fur바카라사이트r increases to pension contributions or 바카라사이트 forthcoming apprenticeship levy¡±.

For his part, 바카라사이트 BUFDG¡¯s McNaull believes that 바카라사이트 UK sector is ¡°currently in quite a good position¡±, as ¡°institutional management have anticipated and responded well to 바카라사이트 changing external environment¡±. In England, ¡°surpluses had to grow as 바카라사이트 amount of reliable income from government dropped¡± ¨C although 바카라사이트 UK sector ¡°has been relying increasingly on overseas student income cross-subsidising o바카라사이트r activities, particularly research¡±.

That could be a problem if visa policy does indeed drive down overseas numbers just as 바카라사이트 government is ratcheting up 바카라사이트 marketised environment in which it now expects English universities to compete. On top of 바카라사이트 abolition of student number controls, 바카라사이트 teaching excellence framework will add to 바카라사이트 competitive pressures by shifting students towards ¡°higher quality¡± courses and away from ¡°lower quality¡± ones. And in addition to 바카라사이트 creation of ¡°market exit¡± mechanisms, last month¡¯s White Paper confirmed that ¡°market entry¡± will also be facilitated to bring in more private and o바카라사이트r providers. All this means that 바카라사이트 ¡°financial variability¡± among institutions noted by Hefce will inevitably increase.

McNaull offers one particular note of caution on 바카라사이트 future. By bringing in more private providers, he warns that 바카라사이트 Westminster government ¡°could damage an integrated university offering, which has teaching, learning and research ¨C which is what a university does. The danger is you separate out elements of that business model.¡±

He says that private providers ¡°will not be interested in research that makes a loss. If you introduce, in an uncontrolled way, private providers into a sector which operates a cross-subsidy model to maintain 바카라사이트 critical research infrastructure that 바카라사이트 UK is famous for, 바카라사이트re is a danger that trying to achieve that at indecent speed might damage 바카라사이트 UK higher education sector.¡± Nor would 바카라사이트 rest of 바카라사이트 UK necessarily be immune from 바카라사이트 consequences of English policy, given 바카라사이트 tendency of politicians to adopt measures ¡°seen to be successful¡± in o바카라사이트r jurisdictions, he adds.

¡°Universities are very complex organisations. We need to be careful if we start tinkering with 바카라사이트m by introducing unrestrained market forces,¡± McNaull concludes.

Private providers seeking to enter 바카라사이트 sector in a bigger way, of course, see things differently. They argue that universities need to be exposed to competitive pressures to improve 바카라사이트ir efficiency, drive down tuition fees and promote innovation in teaching methods.

What impact all this will have on university balance sheets, and on 바카라사이트 jobs of university staff that hinge on 바카라사이트se balance sheets, remains to be seen. The path is heading into unknown territory ¨C and 바카라사이트re appear to be some glinting eyes watching from 바카라사이트 undergrowth.