NAO warns cuts pose University bankruptcy risk

Published on Monday, 07 March 2011 09:21
Posted by Scott Buckler

More universities in England could be put at risk of bankruptcy as a result of cuts and changes to funding, the National Audit Office (NAO) has warned

A report from the financial watchdog says some universities will benefit from the changes but some will have less money.

It says the public might need to be told more about universities at risk.

Universities minister David Willetts says the changes will increase universities' cash funding by 2014.
Grants cut

The NAO report says the sector has seen "strong growth in its income" in recent years.

But it says: "The new funding framework, coupled with the squeeze in public funding, is likely to increase the level of risk within the sector.

"While there are a number of financially strong institutions, there is wide variation in institutions' financial performance."

It notes: "The transition and the new environment itself will increase the risk within the sector, potentially raising the number of institutions at high risk of failing".

Teaching grants to universities are being cut and universities will be expected to fund their courses from higher tuition fees, which are being raised in 2012 from just over £3,000 a year to a maximum of £9,000.

The government has said it will protect funding for science-based courses and research.

The NAO examined the regulation of the financial health of England's universities by the Higher Education Funding Council for England (Hefce).

About one in 10 institutions had been in the red in at least two of the past three years, it said.

And a quarter of England's universities fell below at least one benchmark designed to check an institution's finances in 2009-10.

 

Source: ©NAO

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