London duo faced cash meltdown

WESTMINSTER and Guildhall universities were close to financial disaster last year as they struggled to control serious budgetary deficits, according to a new compilation of accounts from London universities.

Financial information compiled by City University also reveals that top-flight research institutions like the London School of Economics and Kings College had surprisingly low net asset reserves.

The THES has seen an internal study, produced by City University's finance department, which used universities' public accounts for 1995/96 to compare their general financial health.

One indicator used was to see how many days a university could run living off total reserves if all funding sources were cut off suddenly. The figures represent a theoretical and not an actual situation.

The London Guildhall ratio was -17 days, meaning that it would have had to close immediately if all funding ceased. Westminster and East London were both on 11 days while Kings appears relatively strong on 95 days. The average was 73 days. City University topped the list with 196 days.

A second indicator is more revealing, since it shows the number of days a university can run off its net current assets. This takes into account the amount of outstanding loans and overdrafts but not long-term commitments.

Here Westminster had -11 days, South Bank -4 days while East London could run for two days. Guildhall was stronger with 20 days, better than Kings College's six days, the LSE's ten and the School of Oriental and African Studies's five. The average was 36 days.

Guildhall had an overall deficit in total general reserves of just over Pounds 2 million, though this is not the deficit accruing in one year, while Westminster had a Pounds 2.28 million surplus. Kings comes out on top with Pounds 41.2 million compared to an average ofPounds 16 million.

Roderick Floud, provost of Guildhall, said that the university had since cut between Pounds 4 million and Pounds 5 million from expenditure. He said: "These figures are potentially misleading since they compare new universities with old institutions."

Westminster's vice chancellor Geoffrey Copland said: "The fact that Westminster and Guildhall are at the bottom is because of the legacy of poor buildings and an historic lack of investment. In this year we also had to spend Pounds 2.1 million on early retirements."