AUT 2005 - HE income1 Higher education income Stephen Court AUT senior research officer AUT LA Presidents’ briefing 7 July 2005

AUT 2005 - HE income 1

Higher education income

Stephen CourtAUT senior research officer

AUT LA Presidents’ briefing

7 July 2005


UK HEI income 2003-4 (1)

FC grant: teaching 26%

FC grant: research 8%

FC grant: recurrent special 3%

FC grant: capital 1%

FC grant: total 39%

Tuition fees & ed grants 24%



Research: research councils 5%

Research: charities 4%

Research: govt & EU 3%

Research: business & industry 1.5%

Total research grants & contracts 16%

Other inc: services - UK govt 2%



Other inc: services: business & indus 1%

Other inc: residences & catering 6%

Other inc: health & hospitals 2%

Other inc: other operating 5.5%

Total other inc 20%

Total endowment & investment 1.5%



FC grant: total 39%

Tuition fees & ed grants 24%

Total research grants & contracts 16%

Total other inc 20%

Total endowment & investment 1.5%


Public sources of income as proportion of total UK HEI income

2003-4

Grand total HEI income

Public: Funding Council grants

*

Public: tuition fees &

contracts**

Public: research grants & contracts

***

Public:other

services#

Public: other

~Public:

total

Public as % Grand

total

£m £m £m £m £m £m £ %

UK 16,867 6,428 2,005 1,576 450 341 10,801 64.0%

Source: HESA HE Finance Plus 2003/4; % calculations by AUT

* Excludes FE provision

** Full-time Home & EU HE fees standard & non-standard; excludes part-time, non-EU overseas & non-credit-bearing

*** OST Research Councils; UK central & local govt etc; EU sources

# KT Partnerships; UK cent & loc govt; EU

~ local govt; health; deferred capital grants


UK HEI expenditure 2003-4

Staff costs: academic 33%

Staff costs: other 26%

Other operating expenses (academic, research, facilities, services, residences, fellowships, heat etc, books, fellowships)

36%

Depreciation 5%

Interest 1%


Level of surplus

• The operating surplus for UK HEIs remained at a very similar level in 2002-3 and 2003-4, at around 1.5% of income.

• The historical cost surplus for UK HEIs in 2003-4

increased from 2.5% to 3.2% of income.


Total income Operating surplusOperating surplus as

% of income

2002/03 2003/04 2002/03 2003/04 2002/03 2003/04

£m £m £m £m % %

Total UK 15,691 16,867 218 241 1.4% 1.4%

Source: HESA HE Finance Plus 2003/04; percentage calculations by AUT


Historical cost surplusHistorical cost surplus as

% of income

2002/03 2003/04 2002/03 2003/04

£m £m % %

Total UK 406 528 2.6% 3.1%

Source: HESA HE Finance Plus 2003/04; percentage calculations by AUT


HEIs in deficit

• In 2004, out of 170 HEIs, the proportion with an operating deficit in the UK was 24%.

• The largest deficit was nearly £9m at Cambridge, followed by Aberdeen (£6.7m), Leeds Metropolitan (£4.9m) and Glasgow (£4.4m).


HEFCE grant

• Grant allocations by the Higher Education Funding Council for England, plus fee income, for English HEIs increasing by 5.8% in 2005-6


DfES grant to HEFCE & TTA

DfES grant to HEFCE & TTA

England standard fees (est. after

2005-6)

England top-up fees (est.)

England grant & fees total (est. after 2005-6)

£mchange

% £mchange

% £m £mchange

%

2004-05 5,422 860 6,282

2005-06 5,798 6.9% 942 9.5% 6,740 7.3%

2006-07 6,116 5.5% 1,032 9.5% 4357,583

13.2%

2007-08 6,428 5.1% 1,130 9.5% 892 8,450 11.7%

Source: DfES annual funding guidance letters to HEFCE; HEPI estimates; AUT estimates; HEFCE 2005/16; percentage calculations by AUT


English HEI forecasts

• The forecasts of HEIs* in England for increase in grant and fee levels are considerably lower. * (made in June/July 2004 before the outcome of the 2004 Spending Review, and not including the impact of variable fees from 2006)

• HEIs are forecasting a 5.6% increase in staff costs in 2005-6, followed by 4.7% in 2006-7 and 4.4% in 2007-8.


England HEI forecast: total

income from FC grants & fees

England HEI forecast: total income

England HEI forecast

expenditure on staff costs

£m change % £m change % £m change %

2004-05 9,295 14,410 8,456

2005-06 9,703 4.4% 15,083 4.7% 8,926 5.6%

2006-07 10,004 3.1% 15,698 4.1% 9,343 4.7%

2007-08 10,410 4.1% 16,316 3.9% 9,757 4.4%

HEFCE 2005/16; percentage calculations by AUT


Top-up fees in EnglandEngland HEI

forecast expenditure

on staff costs

Top-up income (minus

bursaries) Staff exp + top-ups

£m change % £m £m change %

2004-05 8,456

2005-06 8,926 5.6%

2006-07 9,343 4.7% 0.268 9,611 7.7%

2007-08 9,757 4.4% 0.6 10,357 7.8%


e.g. Exeter

Staff costs 2005-6

Staff costs

2006-7

at 4.7% inc

Extra from top-ups 2006-7

Staff costs + 66% top-up income

2006-7

Staff costs + 66% top-up inc

2006-7

£000 £000 £000 £000 Change %

80,387 84,165 4,680 87,254 8.5%


Funding for Wales

• Planned funding for HEFCW is to increase by 5.8% in 2005-6 - considerably above forecast RPI inflation.

• Much lower levels of increase after 2006 – but these exclude any Supplementary Income Stream or top-up income for 2007-8


HEFCW income HEFCW income

£m %

2004-05 361.9

2005-06 382.8 5.8%

2006-07 395.5 3.3%

2007-08 404.7 2.3%

Source: NAW Draft Budget Proposals Oct 04; percentage calculations by AUT


HEFCW grant

• The 2005-6 HEFCW recurrent allocations to Welsh HEIs are increasing overall by 4.95%. (HEFCW W05/12HE)

• The five main pre-92 HEIs are to receive an increase in HEFCW grant of between 3.3% and 7.8% - the latter being the increase for Lampeter.


HEFCW grant

2004-5 2005-6 Change

£m £ %

Aberystwyth 28.7 29.7 3.3

Bangor 29.1 30.3 4.1

Cardiff 95.3 100.8 5.8

Lampeter 5.5 5.9 7.8

Swansea 32.7 34.9 6.5

Wales Total 309.6 324.9 4.95

Source: HEFCW circular W05/12HE, Table 5


Funding for Scotland

• Funding for SHEFC for the period of the 2004 Spending Review is generous, rising by 8.3% in 2005-6.

• Total grant and fees for Scotland rising by 7.2% in 2005-6, then 10.6% in 2006-7 and 6.5% in 2007-8.


Financial year SHEFC grant Total fees SHEFC grant plus total fees

£m £m £m % change

2004-5 787 172 959

2005-6 853 176 1029 7.2%

2006-7 958 180 1138 10.6%

2007-8 1028 184 1212 6.5%

Source: Spending plans in Building a Better Scotland; Fees: AUT estimate


SHEFC grant

• The grant allocations to Scottish HEIs by SHEFC (SHEFC HE/08/05), show a lower rate of increase for 2005-6, of 3.4%.

• There are various reasons for this: the recurrent grants to institutions do not include all the funding SHEFC will allocate; the funding for SHEFC is in financial years, while the funding by SHEFC is in academic financial years.

• AUT(S) says there are various elements of funding made during the year which bring the level of funding increase to HEIs to ~6.5%.

Documents

AUT 2005 - HE income1 Higher education income Stephen Court AUT senior research officer AUT LA Presidents’ briefing 7 July 2005