Survey finds fall in optimism for UK HE finances
Published 31/03/2017
A survey of finance directors at 39 higher education institutions across the UK reveals a drop in optimism of financial positioning over the last year.
According to the Investing to Compete study, carried out by Deloitte in collaboration with Universities UK, 62% of HEIs are less optimistic about their finances than they were a year ago.
Consequences of Brexit, tightening immigration policy around international students and changes in the regulatory environment all contributed to the sector’s loss in confidence, the report found.
“We’re very concerned about the quantity of scale of change that’s happening in the market”
The level of uncertainty in the market means a “generation of finance directors and VCs are forced to be more agile than their predecessors,” said Julie Mercer, global education leader at Deloitte
“We’re very concerned about the quantity of scale of change that’s happening in the market,” Mercer told The PIE News. “From regulatory changes and other things impacted by what’s going on in the local economy to the impact of Brexit on the attractiveness of institutions to students and staff overseas.”
The Teaching Excellence Framework specifically has left universities less assured in their ability to increase tuition fees for domestic students as they look at the real-term value of £9,000 tuition fees noted Mercer. Even though the £9,000 fee cap will rise with inflation from 2017/18.
The shifting public perception of university pathways to employment towards a greater interest in apprenticeships has also raised concerns in the sector.
“Increasing income and diversifying income is crucial for universities over the next five years, because there are a finite number of UK students,” said Mercer.
Among the ways survey respondents plan to increase revenue is growing international student numbers, offering higher levels of apprenticeships and building federations with other education stakeholders.
“Post-graduate international students especially are a very important stream of income for universities” Mercer observed adding that “some universities are highly dependent on international numbers to balance the books.”
A recent report on the financial health of UK HE by the Higher Education Funding Council of England shows that international student tuition already accounts for a quarter of total universities’ tuition income.
“Looking at universities finances and sustainability some would be in a challenging position if you remove international student fees,” said Mercer.
“Increasing income and diversifying income is crucial for universities over the next five years, because there are a finite number of UK students”
Prospects for international student growth remain uncertain, though, with increasing volatility in student markets and HESA figures showing flatlining non-EU enrolments.
“This will only add to the level of uncertainty as HEIs plan for the future, with a number of factors posing as potential risks to their operating environment,” the report states.
Not surprisingly, 62% of respondents said ‘now is not a good time to be taking greater risk into their balance sheet’.
Still, 69% of finance directors said investment priorities remain unchanged and aim to improve campus facilities and technology to compete for both domestic and international students.
“Improving the campus, faculty and facilities as well as student accommodation are all linked to creating a distinctive student experience,” noted Mercer. “It’s so students will be wowed by facilities that are available, it’s master planning.”
Technology both for back-end operations as well as classroom delivery and research technology will also be improved. “It’s a wave of investment in technology that hasn’t happened in number of years, it’s a natural refresh,” said Mercer.
The post Survey finds fall in optimism for UK HE finances appeared first on The PIE News.