26 October 2017 
Matt Sisson, Projects and Membership Manager
HEFCE has published its annual assessment on The Financial Health of the HE Sector today, based on four-year forecasts submitted to HEFCE in July 2017. The analysis covers a range of financial indicators, as well as information on student recruitment, capital investment, and pensions deficits. Sector income is due to increase 7.5% in real terms to £33billion over the four years to 2019/20, with expenditure rising 9.6% over the same period. Sector borrowing is projected to rise from £8.9 billion at the end of 15/16 to £11.7 billion by the end of 19/20.
HEFCE has also attempted to model the impact of the recent tuition fee freeze, as most HEIs’ submission back in the summer, before the policy changed, had factored in inflationary increases. It notes that “while the impact is variable across institutions, the cap on fees would reduce the sector’s projected income by £113 million in 2018-19 and £333 million in 2019-20. If there were no changes to cost projections, this would reduce sector surpluses from 2.1 per cent of income in 2018-19 to 1.8 per cent of income and from 3.4 per cent of income in 2019-20 to 2.4 per cent of income.”
Overall the funding council believes the sector is in a “sound” financial position, but notes the “Reducing surpluses and cash levels, and a rise in borrowing, signalled a general weakening of financial performance and a trajectory that was not sustainable in the long term.” You can read the full report on the HEFCE website.
