Click here to go to the main StudentGems site

Tuesday, 14 April 2009

University finances are heading for a toxic time

You'd expect the Government to be looking at ways to prevent the worst effects of the recession from damaging our world-class institutions. Instead, it is demanding that universities do more to help the Government out of the economic mess it played a significant part in creating. The Higher Education minister, David Lammy, even told universities to "focus your minds on what else your institutions can contribute."

It seems that universities are due to go through a much tougher time than the Government cares to admit, which will result in some unappealing decisions being made.
One of the biggest problems universities have had to deal with is the larger than expected pay deal for staff. Universities were contracted in 2006 to match the salary rises in 2008-2009. These rises, and the reccession have lead to a "ticking time bomb" situation, where universities must choose to put more money in to staff pensions, or cut back further.

Many universities rely on equity for a return as part of their income to find their financial plan, and will find that both dividends and income are down. Not only would this impact on the quality of teaching and research, but it also exposes one of the Govenment's main devices to combat the recession - to bring forward capital projects - as a pipe dream.

It is also to be expected that partnerships with businesses and charities will slow or cease to exist. This could mean less collaborative degree funding, fewer research projects funded by charities and business. and a reduction in the use of facilities for events and conferences - income streams that universities rely on.

One vice-chancellor has said: "He [John Denham] doesn't understand how universities are run or financed." This is worrying, as John Denham is the Secretary of State for Innovation, Universities and Skills.

The Government must review this quickly and thoroughly to ensure tha all potential effects are accounted for, and put together an effective plan to help universities though this 'toxic period'.

No comments: