Financial review

The statistics released by HESA last week detailing the financial state of the sector made for interesting and affirming reading. The Finance Plus 2006/07 publication shows that the total income for HE institutions exceeded £21.2 billion for the first time. This represents a nine per cent increase on the previous year.
This growth in income can be largely attributed to an increase in funding council grants, which topped £8 billion – an increase of 6.4 per cent. There was also a 16 per cent increase in revenue from tuition fees and grants, which means this area was worth more than £5 billion to the sector last year.
While this is fantastic on paper, it is worth noting that expenditure also rocketed up by 8.8 per cent in 2006/07, suggesting that the industry might not be quite as solvent as the report initially implies. While there is an industry surplus of £242 million, this is only one per cent of the total income for the sector, and the generally accepted operating surplus is between three and five per cent.
Looking forwards, this years’ finances will be affected by the framework pay agreement and a pay increase of three per cent, which came into effect last August. With the cost of running a university on the increase, where should the industry turn to generate the necessary funds to push it forwards? Should the funding councils increase their input even further or should universities be allowed to charge higher fees? Let us know how you feel about the report. If you have any thoughts visit our forum and post.

For more information on the HESA HE Finance Plus Report 2006/07 visit the website.