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Universities forecast drop in student numbers

Some 56 per cent of English universities have based their budget forecasts for 2012-13 on the expectation that the number of home and EU students will fall with the introduction of higher tuition fees.

The figures are revealed in the report, Financial Health of the Higher Education Sector, published by the Higher Education Funding Council for England on 28 July. The document covers the universities’ 2009-2010 financial results and their forecasts for the following three years.

The report says that while universities expect home and EU undergraduate student numbers to decrease by an average of 1.9 per cent in 2012-13, overseas student numbers are expected to rise by between 3 per cent and 6 per cent each year until 2012-13.

However, HEFCE stresses that the figures may be uncertain since the forecasts were submitted (in April) before publication of the White Paper on higher education, which may alter student-number estimates.

The main risk to the accuracy of the forecasts, says the document, would be a significant fall in student participation from 2012.

“The sector is forecasting a small reduction, but there is no certainty over the likely level of student numbers in the future,” reads the report.

However, in an interview with the Sunday Times on 31 July, Steve Smith, departing president of Universities UK, the vice-chancellors’ umbrella group, estimated that student numbers are likely to fall by at least 10 per cent in 2012-13.

The document shows that the total income for higher education institutions in England in 2009-10 was £22.22 billion, which would rise to £22.72bn in 2010-11.

In the first year of the new tuition fee system, however, total income is expected to decrease to £22.64bn. The main reason for the fall, says the council, is that “public funding reductions will start to bite before HEIs are able to charge higher fees for home and EU undergraduates”.

In the two succeeding academic years, total income is forecast to rise to £23.36bn and £24.10bn, respectively.

HEFCE’s report also confirms that HEIs in England are entering tougher times.

Their operating surplus is expected to drop from 3.2 per cent of total income in 2009-2010 to an estimated 1.8 per cent in 2010-2011, and to just 1 per cent in 2011-12. Thereafter, it is expected to rise 1.9 per cent in 2012-13 and 2.3 per cent the following year.

The document also breaks down the institutions’ income from different funding sources.

In 2009-10, funding council grants for universities accounted for £7.28bn. In the years until 2013-14, this amount is expected to drop to £7.15bn, £6.61bn, £5.54bn and £4,33bn.

On the other hand, income from academic fees and support grants is seen as increasing from £5.01bn in 2009-10 to £6.93bn in 2012-13 and up to £8.31bn in 2013-14.

Income from overseas students is forecast to increase from £2.13bn in 2009-10 to £3.02bn in 2013-14.

“Over the past 10 years the sector has seen its overall financial position strengthen, but this has been on the back of significant income growth rather than cost reductions,” reads the report.

“The future is likely to be less predictable for some institutions and they will need to respond decisively to the new funding and policy priorities”.