London Met pays heavy price for licence loss

London Metropolitan University is expecting a £37 million loss in income this year in the wake of the revocation of its licence to sponsor international students.

The drop in revenue means that “austerity” at the university will continue for at least another three years, according to the vice-chancellor Malcolm Gillies.

The revelation comes as it emerged that full-time undergraduate entrant numbers at the institution have dropped by 43 per cent, according to figures from the Universities and Colleges Admissions Service released last week.

The figures relate almost entirely to UK and European Union students, although the university points out that it had over-recruited the year before.

London Met’s recently released accounts for 2011-12 show a huge adjustment in income expectations after the UK Border Agency withdrew its licence to sponsor overseas students in August last year.

It also blames the projected losses on “a difficult market” for UK and EU students in the first year of higher domestic tuition fees.

The institution’s revised predictions show an income of £125 million in 2012-13 - a drop of more than a fifth - and a budget deficit of £5.5 million rather than the surplus of £10.8 million previously expected.

Professor Gillies said that 2012-13 would be “a very tough year”.

The university will staunch its losses by rescheduling payment of the £17.5 million in fines it still owes the Higher Education Funding Council for England for failing to report student numbers correctly between 2005 and 2008.

Instead of paying Hefce back £10 million in 2012-13, it will repay £2.5 million a year from this year, a London Met spokeswoman said.

The university is trying to save money by cutting 40 per cent of its business school staff, it emerged in December. It is also in discussions about potential partnerships in Ghana, Spain, Singapore and Malaysia, the accounts say, while the spokeswoman added that it had undertaken a review “to drive better value for our partners … and ourselves”.

The accounts predict that the university will return to surplus in 2013-14, assuming London Met wins back its powers to sponsor international students this year. They also forecast a 21 per cent fall in home and EU undergraduates in the first two years of higher fees, an assumption that may be optimistic in light of the dramatic fall this year.

Professor Gillies said this year’s intake should not be compared with 2011-12, when London Met over-recruited 1,550 students - a mistake that cost it a further £5.9 million fine from Hefce. Compared with 2010-11, entrant numbers this year are down by 5.1 per cent.

david.matthews@tsleducation.com.