Overall, the sector expects income to rise by 3 per cent in 2012-13 but projected rises in expenditure will cause operating surpluses to fall from £972 million in 2011-12 to £659 million (in cash terms) in 2012-13.
The financial results projected by the sector in the remainder of forecast period (2013-14 to 2015-16) are sound overall, although across the sector there is a wide variation in the projected financial performance of institutions.
Overall, increasing levels of income from home, European Union (EU) and international students are projected, with teaching-related income – which includes public funding and tuition fees – expected to rise from £12.9 billion in 2011-12 to £14.7 billion (in real terms) in 2015-16.
2009-10 to 2011-12: actual income
2012-13 to 2015-16: forecast income
Student number projections submitted by institutions to support financial forecasts indicate that the sector remains cautious about home and EU recruitment in the forecast period. These show that the sector expects full-time undergraduate home and EU student numbers (across all years of study) to be 3 per cent lower in 2015-16 compared with 2011-12.
The sector continues to project significant levels of capital investment throughout the forecast period. To achieve this, institutions are expecting to finance much higher proportions of capital investment from internal cash than in the past.
In an increasingly competitive environment, and with reduced levels of publicly funded capital grants, institutions will need to generate surpluses and operating cash inflows to finance sufficient future investment in facilities to attract home and international students.
2009-10 to 2011-12: actual
2012-13 to 2015-16: forecast
Based on the financial forecasts, no institutions are presently close to the risk of insolvency. This is supported by the independent opinions of institutions’ external auditors, and both the projected continuation of positive cash in-flows and healthy cash-backed reserves suggest there is no risk of insolvency for the foreseeable future.
Strong liquidity is necessary for institutions to efficiently manage the potential increased volatility and unpredictability of the new funding system and the increasing competition from international higher education institutions.
The uncertainties over student recruitment, both at home and overseas, together with the uncertainty about the medium-term effects of the UK economy, are likely to produce greater volatility of forecasts than in the past.
The following reports show an overview of the current financial health and future financial sustainability of the English higher education sector.
Page last updated 5 November 2013