Sector’s reliance on overseas income grows

The figures are revealed in a study by the Higher Education Funding Council for England, which evaluates the sector’s overall financial health.

It says that by the end of the 2009-10 academic year, fees from non-European Union students accounted for 9.6 per cent of all income, the highest level to date.

The report, which considers annual accounts for 2009-10 and financial forecasts for 2010-11, also notes that most universities expect overseas fee income to rise, with 21 institutions looking at an increase of more than 25 per cent this year.

The statistics come amid vocal concern over government plans to restrict student visas and show that dependence on overseas student fees varies between institutions, with just 20 universities – mainly from London and the South East – accounting for nearly 50 per cent of the sector’s total.

Overall, the report states that the academy was in strong financial shape last year, with its total surplus reaching £716 million or 3.2 per cent of income – better than any previous year for which Hefce holds records (1994-95 onwards).

Total income for institutions was £22.2 billion, representing a 5.7 per cent increase on the previous year, according to the document, Financial health of the higher education sector: 2009-10 financial results and 2010-11 forecasts.

The main reason for this is identified as the “significant” rise in tuition-fee income from home and international students.

“At the end of 2009-10, the sector had strong cash balances and healthy reserve levels, which will provide some cushion for the likely risks the sector now faces,” the report states.

Of the 129 universities and higher education colleges in the sector, 20 institutions recorded real-terms reductions in income compared with 2008-09, while another 20 recorded cash increases of more than 10 per cent.

However, the report adds that the sector as a whole has made some “slightly optimistic assumptions” about the levels of Hefce funding for this year, with financial forecasts allowing for a 1.2 per cent cut, whereas the latest announcements from the government imply a 2.6 per cent fall.

The figures in the report show that universities are also planning for a 3.6 per cent drop in public funding this year for teacher training and a 2.5 per cent cut in state income for health training.

Meanwhile, another figure in the report reveals that for the first time the sector has lost money (£69 million) due to “exceptional items” – for example, the profit or loss from the sale of property or the cost of restructuring. The study says that this reflects the large amount of restructuring going on in the academy.

simon.baker@tsleducation.com