Higher Education Funding Council England (HEFCE)
Financial health of the higher education sector: variable performance trend continues
The financial results for the English higher education sector in 2016-17 were sound overall, but there is significant variation in the financial performance and position of individual universities and colleges.
This finding forms part of a report on the financial performance of the HEFCE-funded sector published today by HEFCE [Note 1]. Other findings include:
- Overall, the sector reported growth in income, from £29.1 billion in 2015-16 to £29.9 billion in 2016-17. However, cost increases caused surpluses to fall from £1.5 billion in 2015-16 to £1.1 billion in 2016-17 [Note 2].
- Cash flow from the sector’s operating activities amounted to 10 per cent of total income in 2016-17, a similar level to the previous year.
- At the end of 2016-17 the sectorhad net liquidity of £10.4 billion (equivalent to 140 days’ expenditure) and total borrowing of £9.9 billion (33.1 per cent of income). This compares with liquidity of £9.6 billion and borrowing of £8.9 billion at the equivalent point in 2016.
These results should be viewed against a backdrop of uncertainty relating to Brexit, pensions, increasing domestic and global competition, and a shifting policy agenda including the recently announced review of post-18 education. Another factor is the continued upward pressure on costs. All of these things have the potential to pose challenges for the sector in the years ahead.
HEFCE’s Chief Executive, Professor Madeleine Atkins, said:
‘The sector has, on average, reported sound financial results in 2016-17. However, we continue to see significant variation in the financial performance of individual universities and colleges.
‘Universities’ forecasts for the period to 2019-20, shared with HEFCE in July 2017, signal a general weakening of financial performance, with predictions of lower surpluses and cash levels and higher borrowing levels.
‘As the higher education landscape evolves, institutions will need to be alert to emerging risks and opportunities.
‘The sector has risen to these sorts of challenges in the past, forecasting prudently and showing itself to be adaptable to a more competitive and uncertain environment. However, any risks will need careful monitoring and mitigation to ensure long-term sustainability.’
- ‘Financial health of the higher education sector: 2016-17 financial results’ (HEFCE 2018/04) provides an overview of the financial results of the HEFCE-funded higher education sector in England. It does not cover further education or sixth form colleges, or alternative providers of higher education.
- ’Surplus’ refers to the sector’s total income less total expenditure, excluding other gains or losses (from investments and fixed asset disposals) and the share of surplus or deficit in joint ventures and associates.
- HEFCE has also today published details of the sector’s 2016-17 Annual Efficiency Return results. This provides a summary of efficiencies delivered by HEFCE-funded institutions in their 2016-17 Annual Efficiency Returns.
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