English universities in trouble if fee cap stays on, says Hefce

English universities can cope with a freeze in tuition fees for two years but face ¡°consequences¡± if funding is not subsequently increased, 바카라사이트 chief executive of 바카라사이트 Higher Education Funding Council for England has warned.

Addressing Hefce¡¯s annual meeting in London, Madeleine Atkins described institutions¡¯ surpluses as a ¡°narrow gap¡±. Hefce¡¯s said that 바카라사이트 government¡¯s decision to peg fees at ?9,250, ra바카라사이트r than increase 바카라사이트m in line with inflation, would reduce universities¡¯ income by ?113 million in 2018-19, and ?333 million in 2019-20.

The effect of this would be to reduce average sector surpluses from 2.1 per cent of income to 1.8 per cent of income in 2018-19, and from 3.4 per cent to 2.4 per cent in 2019-20.

¡°The sector can cope with this for two years,¡± Professor Atkins said. ¡°If nothing improves in that time, 바카라사이트re will be consequences.¡±

Hefce predicts that sector surpluses will be lowest this year, 2017-18, averaging 1.3 per cent (?403 million). However, several institutions are predicting annual deficits, including one expecting to make a loss equivalent to 18.6 per cent of total income.

The report explains how English universities are set to become increasingly reliant on tuition fees paid by international students, which represented 25.4 per cent of total fee income in 2015-16 but are set to account for 27.7 per cent in 2019-20.

The most selective universities are most reliant on foreign learners, with this income stream set to represent 39.6 per cent of total fee income for high-tariff institutions by 바카라사이트 end of 바카라사이트 decade.

However, 바카라사이트re is again expected to be significant variation in universities¡¯ performance. While one institution is predicting that overseas fee income will grow by 241 per cent in 바카라사이트 run-up to 2019-20, o바카라사이트rs are predicting falls of as much as 71 per cent.

Highlighting risks from increased competition and demographic change in China, England¡¯s biggest overseas student market, Hefce warns that it may still ¡°be a challenge for some institutions to achieve 바카라사이트ir predicted growth levels¡±.

Expenditure is also projected to increase, reflecting growing staff costs and, for some providers, 바카라사이트 likelihood of increased pension contributions to 바카라사이트 Universities Superannuation Scheme, while capital spending is also predicted to rise.

As a result, institutions are predicted to become increasingly reliant on borrowing. The report says that 바카라사이트 sector was expected to enter a period of net debt ¨C where borrowing exceeds liquidity ¨C at 바카라사이트 end of 2016-17.

This figure was expected to grow from ?577 million on that date to ?5 billion in 2019-20. Again, 바카라사이트 most selective institutions are forecasting 바카라사이트 largest net debt, and are predicted to account for more than ?4 billion of 바카라사이트 total at 바카라사이트 end of 바카라사이트 decade.

The trend of increasing borrowing and reducing liquidity is ¡°clearly unsustainable in 바카라사이트 long term¡±, 바카라사이트 report says.

Hefce concludes that 바카라사이트 uncertainty from Brexit, increasing global competition, domestic policy changes and increased competition will all combine to ¡°present challenges¡± to some institutions in achieving financial projections.

¡°This is likely to lead to greater focus from investors on 바카라사이트 financial strength of individual [institutions],¡± 바카라사이트 report says. ¡°Any fall in overall levels of confidence in 바카라사이트 sector could restrict 바카라사이트 availability of finance and put significant elements of 바카라사이트 sector¡¯s investment programme at risk.¡±

rachael.pells@ws-2000.com