Overall, the higher education sector in England is in a financially sound position. According to HESA data for 2015-16, the sector reported a surplus of approximately £1.5 billion. This is equivalent to 5.2 per cent of total income.
However, there is significant and increasing variation in the financial performances of individual institutions, with the main financial strength remaining in a small number of institutions.
Some of this variation is due to the new financial reporting standard for higher and further education providers, which came into force in January 2015. This introduced significant changes in the way financial performance is reported and poses difficulties in comparing financial results between institutions and against historical trends.
At an institutional level, results range from a deficit of 7.2 per cent to a surplus of 32.1 per cent. The gap between the lowest and highest institutional surpluses grew by 26.0 per cent in 2015-16.
Cash flow from operating activities increased from 9.2 per cent in 2014-15 to 10.3 per cent of total income in 2015-16.
However, unrestricted reserves fell from £24.1 billion (86.1 per cent of total income) to £23.9 billion (82.2 per cent of total income).
The surplus referred to above is 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.
Full details of the financial health of the higher education sector can be found in ‘Financial health of the higher education sector: 2015-16 financial results’ (HEFCE 2017/02).