‘Un­re­al­is­tic’ univer­si­ties could go bust

Ex­perts’ damn­ing ver­dict on cam­pus fi­nances:

Daily Mail - - Brexit In Crisis - By Sarah Har­ris

UNIVER­SI­TIES risk go­ing bust due to ‘over-am­bi­tious’ re­cruit­ment tar­gets, a stark fi­nance re­port warns.

The higher ed­u­ca­tion watch­dog said in­sti­tu­tions have made un­re­al­is­tic fore­casts that the num­bers of UK and for­eign stu­dents will con­tinue to rocket.

The Of­fice for Stu­dents also warned those guilty of poor plan­ning would not be bailed out by the tax­payer.

The ex­pec­ta­tion that greater num­bers will keep com­ing to cam­pus is at odds with Bri­tain’s shift­ing age de­mo­graph­ics, with the num­ber of 18-yearolds set to fall steadily un­til 2020.

Hopes for more for­eign stu­dents also fail to re­flect un­cer­tainty around Brexit, or any changes in im­mi­gra­tion pol­icy which fol­low.

The OfS is­sued its warn­ings after track­ing the fi­nan­cial data of 183 English univer­si­ties and other higher ed­u­ca­tion providers. It found the in­sti­tu­tions are in ‘rea­son­able fi­nan­cial health’, but the gen­eral pic­ture ‘masks con­sid­er­able vari­a­tions in fi­nan­cial per­for­mance’.

Last sum­mer 13 in­sti­tu­tions re­ported ‘liq­uid­ity’ of less than 20 days, leav­ing them with less lee­way to cope with emer­gen­cies.

The OfS stressed that growth fore­casts for stu­dent num­bers and re­lated fee in­come are ‘likely to be un­achiev­able’.

Over­all, the sec­tor is hop­ing for a 10 per cent rise in stu­dent num­bers over the next four years – equiv­a­lent to an in­crease of 171,000 full-time stu­dents across Eng­land.

The fig­ure in­cludes an in­flux of around 78,000 full-time UK and EU un­der­grad­u­ates.

This is de­spite the fact that Bri­tain’s pop­u­la­tion of 18-yearolds is pre­dicted to drop by 5 per cent in the same pe­riod. After 2020 the num­bers will start to rise again, but there will still be around 41,000 fewer 18year-olds in 2021 than in 2017.

In­ter­na­tional stu­dent num­bers are fore­cast to grow by 56,000 in four years, with in­come from their fees pro­jected to rise by £1.7bil­lion, or 37.9 per cent – sug­gest­ing an ‘an­tic­i­pated in­crease’ in av­er­age charges, the re­port says. In­ter­na­tional stu­dents al­ready pay as much as £35,000 for un­der­grad­u­ate de­grees.

The OfS re­port said the pre­dic­tions show a ‘ sig­nif­i­cant level of over-am­bi­tion across the sec­tor’, adding: ‘A provider whose fi­nan­cial vi­a­bil­ity and sus­tain­abil­ity is un­der­pinned by re­liance on fee in­come based on stu­dent re­cruit­ment tar­gets which prove to be un­re­al­is­tic is ex­pos­ing it­self to sig­nif­i­cant risk.’

Sir Michael Bar­ber, chair­man of the OfS, said univer­si­ties must ‘look at stu­dent num­bers re­al­is­ti­cally rather than overop­ti­misti­cally’, and added: ‘It re­mains our po­si­tion that we will not bail out univer­si­ties or other higher ed­u­ca­tion providers fac­ing fi­nan­cial fail­ure.’

It emerged in November that a UK univer­sity was given an emer­gency loan of al­most £1mil­lion by the OfS – but the reg­u­la­tor stressed this sup­port is no longer pos­si­ble un­der new rules. Over­all, univer­sity sur­pluses fell from £1.12bil­lion in 2016-17 to £1.02bil­lion in 2017-18. The sec­tor re­ported bor­row­ing of £12bil­lion, equiv­a­lent to 36.8 per cent of in­come and £2.1bil­lion more than the pre­vi­ous year.

The De­part­ment for Ed­u­ca­tion yes­ter­day wel­comed the re­port show­ing univer­si­ties are in ‘rea­son­able fi­nan­cial health’, but said ‘pro­tec­tion plans’ were re­quired in the event of clo­sures.

Univer­si­ties UK said: ‘This re­port high­lights univer­si­ties are op­er­at­ing in a chal­leng­ing en­vi­ron­ment with in­creased com­pe­ti­tion, a freeze in tu­ition fees and in­creased cost pres­sures.’

‘We will not bail them out’

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