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Key facts 2014-15

Sector operating surpluses (excluding RDEC) = £1.2 billion (4.3% of income)

TRAC sustainability gap (excluding RDEC) = £860 million (3.2% of income).

External borrowing = £7.8 billion

Liquidity = £8.3 billion

Overall position

The financial health of HEFCE-funded higher education institutions in England continues to show a sound position overall, according to data reported to HEFCE relating to the year ended July 2015.

At sector level, the financial outturn improved on the results reported in 2013-14 and those projected by HEIs in July 2015.

But the financial performances of individual institutions across the sector continue to vary significantly.

Overall the sector reported operating surpluses of £1.6 billion (5.8 per cent of income), which were £608 million higher than the level reported for 2013-14 (3.9 per cent of income).

However, these surpluses were boosted by a one-off injection of ‘exceptional income’ derived from the research and development expenditure credit scheme (RDEC).

Without this, HEFCE estimate that operating surpluses would be £1.2 billion (4.3 per cent of income).

Total sector borrowing and the sector’s liquid funds increased to £7.8 billion and £8.3 billion respectively, producing a net cash position of £0.5 billion at 31 July 2015.

This is relatively small compared with an overall income of £27.7 billion, and represents a fall from the levels reported at 31 July 2014 and 31 July 2013, which were £1.0 billion and £1.1 billion respectively.

A sustainability gap exists

Although the overall financial position is currently sound, there is a sector-wide sustainability gap of £522 million. This is the difference between the level of surplus achieved by the sector and the level required to cover its full economic costs.

Excluding RDEC, the sustainability gap is £860 million, equivalent to 3.2 per cent of income.

The sector’s surpluses on non-publicly funded teaching and other activities were insufficient to support the shortfall on its research activity.

The shortfall in the recovery of the full economic costs of the sector’s research activity, excluding RDEC income, came to £2.8 billion.

In the medium to long term, the sector needs to generate larger surpluses to make progress towards covering the full economic costs of all its activities and remain financially sustainable.

Page last updated 3 October 2016