AN INTERNAL report chronicling the "reckless" management of Lancaster University, which slid into debt during an ambitious expansion programme, is being considered by the university's governing body.
The 250-page report details Lancaster's perilous finances. It seeks to uncover how the university's council came to make decisions which led directly to the threat of insolvency.
A committee chaired by Peter Rowe, head of law, has spent eight months gathering oral evidence on the alleged mistakes and wider management failings which contributed to the crisis. These include:
* loss of financial control
* inadequate and misleading information
* inadequate accounting systems
* insufficient safeguarding of academic interests
* lack of appraisal
* lack of objective and clear accountability.
The report says: "Instead of prudence we have observed a measure of recklessness and a willingness to commit the university to additional expenditure at a level that cannot be justified."
The university is not disputing the criticisms. University secretary Stephen Lamley said the report was "fair" and acknowledged that staff felt seriously let down by their management. He said changes were already under way and many senior officers implicated had left.
But some members of council such as John Wakeford, head of independent studies, said the silence of those who had left the university was not acceptable. "Still no one is taking responsibility and admitting failure," he said.
Ruth Henig, head of history, agreed: "This report is a useful first step, but there are still serious issues of confidence and credibility to be dealt with."
The report found that council appeared to misunderstand budget statements, and that inaccurate in-house forecasts prepared in 1995 were submitted to the Higher Education Funding Council for England. These led the university to believe it would break even during a period of high spending when in fact its debts were mounting to more than Pounds 2 million.
"It seems incredible to us that the university embarked on a capital building programme resulting in expenditure of Pounds 18 million without carrying out the most careful financial analysis," the report says. In the event cost over-runs on the capital programme amounted to Pounds 2.4 million and the report criticises procedures which allowed building work to go ahead without necessary funding council approval.
A large-scale building programme was needed to support expansion in the early 1990s and Pounds 35 million was raised by a debenture issue. It was the first university to take such a step and had the effect of lulling the university into a false sense of security, the report says. In addition there was "ineffective overarching responsibility" for the building projects.
"In the summer of 1994 the future for Lancaster seemed very bright," the report says. "Eighteen months later the university was in deep financial difficulty and facing a set of problems, many of which related to a perilous financial situation and the inevitable unpleasantness of the cutbacks that ensued."
An acute cashflow problem at its worst showed a predicted shortfall of Pounds 16 million by 1999.
In addition, the recently integrated Charlotte Mason College in Ambleside, Cumbria, was creating "very serious academic and financial problems" because no thorough investigation of the academic viability of the college was carried out.
"It is clear the university was less interested in the quality of the operation than in the opportunities for research, growth and potential competition," the report says.
A damning Ofsted report on Charlotte Mason lead to a hasty disposal of the college at a cost of Pounds 1.8 million in debts and redundancies.
To cap it all, the university was struggling to meet high costs resulting from the debenture stock launch on the London Stock Exchange at the same time as needing several millions pounds to cover the cost of shedding 200 staff.