48 | SPECIAL REPORT | FUNDING AND FINANCE
C R ITICAL CURRENCY
As HEFCE grants continue to dwindle, universities are compelled to resourcefully locate new income streams. But, as the general election approaches, can they entirely bank on them? Damon Jones audits the balance of sector funding
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TOP: Graeme Byrne, Director of Development at UEA
ecent analysis depicts HE’s fiscal fortunes as delicately poised. According to HEFCE’s 2014 report, English institutions are forecast
to enjoy a 4.2% rise in total income of £1,018m in 2013/14, but “without making significant surpluses”. Despite higher tuition fees boosting coffers, litle is held in their reserves. Successive reductions in government grants, set to continue in 2015/16, have caused severe ramifications for teaching income, which is now increasingly dependent on tuition fees and, particularly, lucrative overseas students, creating both opportunities and new vulnerabilities in the marketplace. Around 40% of 2012/2013 university income derived
from tuition fees in 2012/2013, according to the Higher Education Statistics Agency (HESA), with 12.1% of these paid by non EU visitors. Coupled with a reduction in grants awarded by other funding bodies, educators are exposed to the caprice of HE’s emergent ‘market forces’ like never before – leaving them scrambling to define and exploit new and dependable sources of cash. Sounding a cautionary note, HEFCE reckons that “operating on such fine margins means that even small changes on income could have a material impact on the sector’s performance,” – causing major financial woes for the less solvent. “By far the most significant change has been how
most teaching funds are now provided: from an annual grant provided by HEFCE to students' fees paid up-front as loans by government,” summarises Nolan Smith, HEFCE’s Head of Finance and Investment. “Universities are finding ways to diversify their income streams, to reduce their reliance on public funding. For example, the sector has seen income from non-EU students more than double in real terms over the last decade, which has been possible due to the excellent reputation UK higher education holds internationally. Also, across the sector, we have
seen numerous initiatives to improve operations.” Despite fears surrounding the stability of tuition
fees as revenue streams, Smith notes that application numbers have continued to rise, although he warns that reductions in number controls could increase competition between institutions, leading to potential volatility. “Universities and colleges have a diverse range of income streams,” he says. “All institutions need to ensure that they remain financially sustainable and they will monitor the risks associated with all areas of their business.” Many have taken steps to address concerns over potential dependencies, for example, by providing various provisions to international students, such as working with partners or offering transnational courses. “The landscape has become even more competitive
– whether we’re looking at the recruitment of students here and abroad, or applying for limited funding from research councils, charities and foundations,” agrees Graeme Byrne, Director of Development at the University of East Anglia (UEA). Offseting perceived instability and exploring new opportunities “means atracting income from a broader range of income streams, to include philanthropy and enterprise,” he says. Multiple funding sources are regularly accessed
to fund landmark projects which, in terms of their myriad backers, have been compared by some commentators to Hollywood blockbusters. The University of Dundee’s Discovery Centre, which opened in October 2014, is a prime example. Recipient of a Wellcome-Wolfson biomedical science award, matched University funding, and £12m from the UK Research Partnership Investment fund, the development was also sponsored by 15 other organisations and charitable trusts – not to mention donations from the public and alumni. Philanthropy of this kind – primarily driven by
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