Universities 'at risk' from cuts
An increasing number of universities could be at risk of going bust as a result of funding cuts and higher tuition fees, a new study concludes.
A report by the National Audit Office (NAO) calls for fresh guidelines on financial regulation for higher education, amid concerns that institutions will lose out from the Government's funding reforms.
While a number of universities are "financially strong", the report says, there is wide variation between institutions.
Last year, more than a quarter were falling below at least one benchmark designed to check an institution's financial health, while almost one in 10 (9%) have had a deficit in at least two of the last three years.
The NAO report examines the Higher Education Funding Council for England's (HEFCE) regulation of the financial health of universities.
It concludes that HEFCE has been cost-efficient and provided value for money during a time of increased investment in higher education, has taken a "light touch" approach, and in part relied on institutions themselves to report problems.
But in a new financial climate, in which funding for teaching has been significantly cut, and tuition fees are set to be tripled, HEFCE may need to review its processes, as its ability to support institutions could become stretched, the report says.
"The new funding framework, coupled with the squeeze in public funding, is likely to increase the level of risk within the sector," it said.
"While there are a number of financially strong institutions, there is wide variation in institutions' financial performance and over 25% of institutions in 2009/10 were performing below at least one of the financial benchmarks.
"Nine per cent of institutions have had a deficit in at least two of the last three years. The Funding Council's modelling indicates that while some institutions will benefit financially from the funding reforms, some will, by 2014/15, receive less public income and tuition fee income supportable by student loans."