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HEFCE closed at the end of March 2018. The information on this website is historical and is no longer maintained.

Many of HEFCE's functions will be continued by the Office for Students, the new regulator of higher education in England, and Research England, the new council within UK Research and Innovation.

The HEFCE domain - - will continue to function until September 2018. At this point we will close the site entirely and all its information will only be available from the National Web Archive.


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These findings are part of a new HEFCE publication, ‘Financial health of the higher education sector: 2014-15 to 2017-18 forecasts’.

In two of the next four years operating surpluses are projected to fall below 2.5 per cent of total income. In addition, the impact of the £150 million funding reduction announced by HEFCE in July 2015 is unlikely to be fully reflected in institutional projections.

The latest projections show that the sector expects fee income from non-European Union students to rise from £3.3 billion in 2013-14 to £4.6 billion in 2017-18. A downturn in overseas recruitment would have a significant adverse impact on the sector’s income and surplus projections. While the sector has been successful in recent years in attracting more overseas students, increased competition from other countries means that the future projected growth may not be achieved.

The report shows that small changes to institutions’ income projections or expenditure levels could have a material impact. For example, a 5 per cent reduction per year in public funding could see the sector in a deficit position by 2017-18.

Higher education institutions are planning to deliver a substantial increase in capital investment in the period from 2014-15 to 2017-18. At over £17.1 billion, this represents an average annual investment of £4.3 billion, nearly 60 per cent higher than the previous four-year average. Despite this, nearly a third of institutions are planning to reduce their expenditure on infrastructure over the forecast period, which is further evidence of the widening gap between institutions.

A significant amount of this investment (£13.9 billion) is expected to be funded from the sector’s own cash reserves or through additional borrowing. Some institutions will need to increase surpluses beyond projected levels to deliver these investment plans. If surpluses do not increase, there is a risk to the quality of higher education infrastructure, which will harm the long-term sustainability of the sector.

The trend of falling liquidity (cash) and increasing sector borrowing continues in this forecast period, with the sector expecting its liquid funds to fall from £7.7 billion as at 31 July 2014 to £5.0 billion as at 31 July 2018. At the same time, borrowing is projected to increase from £6.7 billion to £9.2 billion over the same period. The trend of increasing borrowing and reducing liquidity is unsustainable in the long term.

Professor Madeleine Atkins, HEFCE’s Chief Executive, said:

‘Higher education is vital to economic and social prosperity. In a globally competitive environment, universities and colleges in England must maintain and build on their reputation for excellence in teaching, research and knowledge exchange. It remains crucial to maintain confidence in the financial health of the sector so as to stimulate increased investment and protect the student interest properly.

‘The latest financial forecasts show that the gap between the highest- and lowest-performing institutions is widening and there are risks that need careful monitoring and mitigation if institutions are to secure their long-term future sustainability.’

‘As charities, higher education institutions are obliged to ensure that they remain sustainable and do not expose themselves to undue risk. Strong liquidity is important given the levels of uncertainty and risk that currently exist in the sector, and HEFCE will continue to monitor the financial position closely as part of our commitment to supporting students and institutions.’