Cambridge is worth 170 Guildhalls

Cambridge University is worth 170 London Guildhalls or four Edinburgh Universities, according to a THES analysis. Cambridge, followed by Oxford, tops the tables for assets, endowments, reserves and liquidity thanks to some 800 years of accumulated wealth.

United States universities measure their wealth by their endowments. Harvard's total some 13.3 billion pounds, followed by Yale and the University of Texas at 7 billion pounds each, and Stanford and Princeton at 6 billion pounds each.

The THES's league tables following are compiled from balance sheets provided by the Higher Education Statistics Agency that show the value of university, but not college assets. To get a clearer picture of Oxford and Cambridge's wealth, the universities have supplied rough estimates of college assets. These are principal]y based on the value of endowments, with buildings excluded. This means estimates are likely to be conservative.

Cambridge's college assets are about 1.5 billion pounds and its university assets 1.2 billion pounds. Oxford has college assets of 1.2-l.5 billion pounds and university assets of about 807 million pounds. At the opposite end of the scale, the University of Wales, Lampeter, has net assets of under 15 million pounds, while London Guildhall University (LGU) has net assets valued at 16 million pounds. League tables compiled from the balance sheets - which show only university wealth - reveal that in a higher education sector of 170 institutions, Oxford and Cambridge account for nearly 40 per cent of endowments and nearly 15 per cent of the sector's net assets, reserves and liquidity.

But an Oxford spokesperson said: "The real funding needs of the higher education sector are to do with the fact that, in general, publicly funded teaching and research loses money; endowment income and entrepreneurial activity cannot fill the gap. In addition, pay is seriously deficient." Joanna Womack, treasurer of Cambridge, said: "You cannot judge a university by the size of its balance sheet. There are tremendous costs involved in running a large research university - to build a new supercomputer alone costs about 20 million pounds. And Cambridge has to compete for academics in a global market."

Ten universities, Oxford and Cambridge plus a small group some way behind, account for more than a third of the universities' assets, reserves and liquidity. Edinburgh, Glasgow, Birmingham, King's, Imperial, Bristol, UCL, Manchester, Liverpool, Nottingham, the Open University, City, Cardiff, Wolverhampton, the University of the West of England and Surrey appear in the top tens on five measures.

Surrey has managed to generate a great deal of surplus in a short time, placing it in the big league. In response to government cuts in the 1980s, it created the Surrey Research Park out of its Appeals and Foundation Fund. This has proved phenomenally successful. UWE has made its mark because it has been able to increase student numbers over the past few years and put money aside for a 90 million pound capital programme. Wolverhampton has built up reserves to fund teaching and research facilities.

Old universities dominate the top half of the league tables, but on the table for how many days an institution could survive if its funding were cut, Oxford and Cambridge are demoted to ninth and seventh respectively. City, Keele and Robert Gordon top this table. Nicholas Maude, finance director of LGU, said: "We have limited property and capital reserves. We did not inherit a vast estate from the local authority when we became a university in 1992. When you look at reserves as a proportion of income, although the situation needs improving, we are in line with other London universities. We are a teaching institution and the infrastructure is underfunded."

Which university has the deepest pockets? (page 6)

Surrey University is the rising star of higher education. It makes it into the top ten of two league tables of financial strength. Its reserves of more than 100 million pounds are the seventh highest of any university in the United Kingdom. And for a university that dates back only to 1966 in its present form, it has built up impressive endowments, its 61 million pounds placing it tenth. On endowments Surrey outstrips half of the universities of the research-led Russell Group - Warwick, Southampton, Sheffield, Nottingham, Bristol, Newcastle, Leeds, Imperial College, London, Cardiff and the London School of Economics.

Surrey vice-chancellor Patrick Dowling said: "the developments that have led to today's significant level of reserves being attained, can be traced to the effects of the swingeing financial cuts of the early 1980s, which saw Surrey and other technological universities suffer serious cutbacks in recurrent grant levels." In response, Surrey not only restructured by placing more emphasis on postgraduate education, it also set up the Surrey Research Park and it pulled off a number of astute land and property deals. The university now generates 72 per cent of its own income.

The University of Wolverhampton and the University of the West of England also make it into the top ten in terms of liquidity - the amount of cash a university could lay its hands on quickly. UWE has been one of the most successful of the new universities in recruiting students over the past few years. It has exceeded its target numbers for the past three years. Other universities merit a mention - in particular Robert Gordon, whose 2.3 million pound endowment is the largest among new universities.

A number of universities that might have been expected to be in the top ten are missing. Of the Russell Group universities, Leeds, Southampton, Newcastle, the LSE, Warwick and Sheffield are absent. Durham, one of the oldest universities in the UK, is also well down on some tables. Leeds is just outside the top ten, ranked 11th in terms of endowments and reserves. Further down is Southampton, which a spokesperson said was handicapped by poor endowments: "We only achieved university status in 1952, which is late for a Russell Group university."

Warwick is 60th in terms of endowments, with just 3.2 million pounds. A spokesperson said: "We are young and just beginning to get the big endowments in. Despite this, we still generate 65 per cent of our own income." Durham finds itself quite far down tables of net assets and liquidity. A spokesperson said: "We are a medium-sized university working to do the best we can with limited resources. The liquidity situation reflects a substantial investment programme in new developments."

A spokesperson for Newcastle, which comes 22nd in terms of reserves and endowments, said: "The figures underestimate Newcastle's financial position because they exclude the 45.8 million pounds in our development trust. "While the university's total income has increased by 11 per cent over the past four years, some other members of the Russell Group have increased theirs by 16 per cent." Christopher Edwards, the new vice-chancellor of Newcastle, is leading a review to make the university more competitive.

A spokesperson for Sheffield said that the university had never had large reserves because it preferred to invest rather than to build reserves. Nevertheless, it had turned in healthy surpluses over the past two years. In three years, the university will mark its 100th birthday with a major push for more endowments. "Obviously we did better when the steel industry thrived here. Our endowments have suffered as Sheffield industry declined," the spokesperson said.

The LSE said that the institution's size had counted against it in some tables and that a major building programme had reduced its reserves and liquidity.

Net assets show an institution's worth at any given time. The balance sheets used by the THES were supplied by the Higher Education Statistics Agency and are for July 31 2000. Net assets, which are sometimes referred to as total funds, show the value of an institution's fixed assets such as buildings, its endowment assets, its current assets such as stocks and shares and investments after liabilities and monies owed to creditors have been subtracted. A university's net assets will include whatever it owns in spin-off companies. They reflect the size of a university as well as its wealth.

The only university recording net assets of more than 1 billion pounds is Cambridge, with its 1.2 billion. Oxford's net assets are worth 807 million, which put it some distance from the third richest, Edinburgh and its 685 million.

The ten universities with the biggest assets account for more than 35 per cent of the sector's assets. The highest-ranked new university on the list is Manchester Metropolitan at number 17. Tne university, with 31,000 full-time equivalent students, is the UK's largest in terms of student numbers apart from the Open University. The other new universities in the top 30 are Coventry, Leeds Metropolitan, Wolverhampton and Brighton. The Open University sits at number 30 with net assets of nearly 119 million pounds.

Recently, a number of universities have revalued their assets. Cambridge has added 235 million pounds to its net assets by doing this. Oxford has not, and its revaluation reserves are worth just 4 million. However, even allowing for revaluation the league table changes little - Cambridge is still streets ahead of its rivals.

Calculated by adding general endowments to general reserve

A university's accumulated surplus since its establishment is measured in its reserves. Universities with large reserves are those that have had a large surplus over a long time and have reinvested well. A university's reserves are equivalent to a company's accumulated profit. A large reserve is seen as a sign of self-sufficiency.

Surrey's ranking of seventh in this league table is an example of how successful it has been at generating large surpluses since it became a university in 1966. It comes ahead of Edinburgh, which was founded in 1582.

As on many other measures, Cambridge leads this table. Its reserves, 375 million pounds, are the largest of any university. Oxford is just edged into third place behind Birmingham. These three universities are way ahead of their nearest rival, King's College, London, whose reserves are less than half those of Oxford and about a third of Cambridge's.

Manchester Metropolitan is the first new university to appear on this list, just as on the net assets list. It sits at number 22 with nearly 47 million pounds, which again is in part a reflection of size. Robert Gordon, Kingston and De Montfort all come in the top 30.

Calculated by adding specific and general endowments

These are funds donated over years to universities for a specific purpose, such as a chair, or for general use. It is endowments that give the big US universities independence from public funds.

In rankings of endowments, the Oxbridge institutions surpass all other universities. Cambridge is again significantly ahead of Oxford. Cambridge's total endowments have a capital value of 661 million pounds. Oxford's are short of this by nearly 150 million, amounting to 513 million. Although there are no precise figures for the capital value of the college endowments, Oxford is working towards producing a figure later this year. It puts the capital value of college endowments at between 1.2 and 1.5 billion pounds. Cambridge has a ballpark figure of 1.5 billion pounds, with Trinity College's wealth overshadowing that of most other colleges.

No other university can come anywhere near these figures. A distant third on the table is Edinburgh, with endowments worth 164 million pounds.

Many universities and colleges, 41 of them, have no endowments at all. They include the Open University and ten other new universities. The old universities with the smallest endowments are Salford, which comes in position 78, and Aston, at 79. Each has just over 1 million pounds. The new universities with the largest endowments are Derby (due to an accounting anomaly) and Robert Gordon at 63.

Calculated by adding investments and cash and then deducting overdraft

This is a measure of the cash a university has as well as what could be turned into cash in the short term.

Cambridge tops this table, but it is only just ahead of Oxford, which in turn is not far ahead of the Open University. Further down, Wolverhampton is at number eight and UWE at number ten. Robert Gordon and the University of Glamorgan also make it into the top 20, pipping Russell Group universities such as Southampton, Sheffield and Leeds. Kingston, another new university doing very well, comes in at 21 above Edinburgh.

A number of major London colleges do badly on this table. King's is at the bottom and Imperial and UCL are not far above that. This can mean that the universities are using their reserves to fund capital expenditure while long-term borrowing comes on stream, as is the case for King's. A spokesperson for King's said, "There was a complex series of property transactions but the net effect is that we ended up using short term bank loans to finance our capital expenditure commitments as an interim measure."

Calculated by dividing liquidity by expenditure minus depreciation and multiplying by 365

This league table provides more information on liquidity by allowing for size. A large institution could look as if it has done well in terms of liquidity, but when this is put against expenditure the picture may not be so rosy. Both Oxford and Cambridge lose their edge on this table, although they still fall in the top ten.

Eight of the top ten are old universities and four are new (a number of institutions share the same number of days cover). The bottom ten positions are divided equally between old and new universities. Those with minus figures have depleted their liquid reserves to cover other expenditures. This means that their short-term borrowings exceed their liquid assets. This, however, does not mean that they are financially weak because many universities in this position have large net assets. Rather, it shows that they are using short-term financing arrangements in advance of setting up longer term financing to fund capital expenditures.

Keele University's days cover is inflated because it includes a large part of the funds raised by its bond issue. Most of these funds are for specific purposes and not for general use. A spokesperson for Leeds, which has cover for 34 days, said: "Like many universities, we plan to have cover for about a month. In our case, it is 34 days. We believe this to be financially prudent, allowing us to invest at the same time as ensure that we have sufficient liquidity."

Tom Wilson, head of the universities' department at lecturers' union Natfhe:

"It is obviously wrong that the wealth of the sector is concentrated in two universities. This underlies Natfhe's Fairer Funding campaign, which has been calling for more equal distribution of assets and funding. If it is right to means-test students on [parents'] wealth, it must be equally right to means-test universities. Why are funding allocations to Oxbridge blind to their relative wealth? It makes it hard to win the case for more funding when politicians and the public see that some recipients are already comparatively wealthy. Poorer institutions are penalised."

The Higher Education Funding Council for England:

"There is not a lot the Higher Education Funding Council can do about the historical imbalance in wealth. There are constraints on the way we distribute funds. We fund similar activities at similar rates and do not take into account wealth from other sources. Wealthy universities do have inbuilt advantages - they can borrow at more attractive interest rates, for example."

Universities UK:

"Diversity of wealth is another dimension of autonomy. Even if all universities started from the same base today, different approaches to raising external funds would mean different levels of accumulated reserves. What is important is that the public funding streams are sufficient to support students and the university infrastructure."

David Triesman, general secretary of the Association of University Teachers:

"Universities are rather like pensions, the longer they have been going the wealthier they are. What is important is that universities such as Oxford and Cambridge ensure that they are accessible to all students. They should target inner-city schools and bright pupils as young as 12 or 13 to make them realise that they could go to Oxbridge."

Is your university in surplus or in deficit?

A small group of new universities has built up small but steady surpluses, bucking the trend towards deficit in the rest of the sector. These lean, mean machines say they have to build surpluses because they do not have the assets or reserves of older universities to fall back on. They are the new universities whose student numbers have remained steady, or even increased, while new universities as a whole have under-recruited by 22,000 over the past seven years.

But other universities are drowning. There are now more universities in deficit than at any time since the Higher Education Statistics Agency started compiling data in 1993-94. At a time when many students are being crippled by fees and the loss of grants, the extra money being generated is not making its way into universities. Government funding has not kept pace with rising staff costs. This has pushed already hard-up universities into deficit. In 1999-2000, total expenditure rose by 6.6 per cent - or 789 million pounds, of which 484 million was staff costs. At the end of July 2000, 74 institutions reported a deficit. This compares with 49 institutions in 1998-99 and 39 the previous year. In 1999-2000, % universities broke even or reported a surplus.

League tables compiled by the THES from Hesa data for the four years from 1996-97 to 1999 2000 show that about a quarter of old universities were in deficit in 1996-97. In 1999-2000, well over a third were in deficit. Of new universities, a third were in deficit in 1996. Now well over half are.

In all four years, just six universities have appeared regularly in the top 20 when ranked by surplus. Kingston, Glasgow Caledonian and Glamorgan all come consistently in the top 20, along with Oxford, Manchester and the London School of Economics.

A spokesperson for Glamorgan said: "A strong financial position will stand us in good stead in the immediate future, given the continuing requirement to deliver efficiency gains if we are to carry on investing in our facilities and future development. This is particularly the case while levels of student funding in Wales continue to lag behind those in the rest of the United Kingdom."

Kingston had planned its surplus to cover the costs of building developments and the upgrade of technical equipment, a spokesperson said. "In the coming year, Kingston plans to operate a deficit so its infrastructure can be improved to cope with an anticipated growth in student numbers. This deficit will be eliminated in the next few years."

Cambridge appears in the top 20 only in 1996-97 and 1999-2000. But the size of the surplus of the old universities dwarfs that of the new. For 1999-2000, King's College London reported a surplus of nearly 38 million pounds. A King's spokesperson said that this was a result of the sale of properties as part of the merger with the United Medical and Dental Schools of Guy's and St Thomas's. Over the past four years Oxford's surplus has been in the region of 17 million pounds - falling just once to about 14 million. Cambridge has a surplus of 12.1 million for 1999-2000.

Kingston's surplus is near 4 million pounds, and Glasgow Caledonian has a surplus of 2.5 million. At the other end of the table, Liverpool John Moores University and the University of Ulster appear in the bottom 20 for all four years. Aberdeen, Hull, Keele, the School of Oriental and African Studies, Goldsmiths College and the University of Wales, Bangor, appear in three out of four years.

It is possible for universities to be in deficit but still to have healthy balance sheets. Ulster has a healthy balance sheet. It attributes its deficit to the depreciation charge on its revalued assets. Not all universities revalue their assets, thus keeping depreciation charges off their expenditure columns. A spokesperson for LJMU said: "This year we have achieved a balanced budget after a planned deficit last year that enabled the university to restructure and support a number of voluntary redundancies and early retirements."

Spokesperson for the DFES:

"Funding for higher education in England will increase by 10 per cent in real terms over the next three years - by 412 million pounds in 2001-02, by 268 million in 2002-03 and by 298 million in 2003-04. "We have listened to concerns from the higher education sector about pay and the need to recruit and retain high quality staff. That is why this settlement includes 50 million pounds in 2001-02, rising to 110 million in 2002-03 and 170 million in 2003-04, to support increases in academic and non-academic pay."

Spokesperson for UUK:

"The national pay settlements have been running ahead of income; it is hard for universities to make short-term adjustments to meet the wages bill. There have been years of underinvestment in the teaching infrastructure - in buildings, equipment and rewards. Our spending review submission will make it clear that this deteriorating situation must be addressed."

David Triesman, general secretary of the Association of University Teachers:

"The Government must invest 1.8-1.9 billion pounds in the teaching infrastructiure. Universities need to be more efficient in generating income. Many have no real understanding of intellectual property rights and do not sufficiently exploit spin-offs."

Spokesperson for The Higher Education Funding Council for England:

"A deficit in any one year may not be a problem. This may be planned as the institution restructures or funds developments. Where we do have concerns about the financial position of an institution, we work with them to address those problems to help them secure long-term viability. There is no indication that any institution is in a position where it cannot survive."

Tom Wilson, head of the universities' department at lecturers' union Natfhe:

"Funding problems are probably closely linked to recruitment difficulties, which are a direct result of change in student support in 1997. The only way to reboost demand is to improve student support. The deficits mean an annual wave of redundancies in the new universities that have no reserves to speak of and employ relatively few fixed-term contract staff who would otherwise act as a buffer."

Click for related articles: Falling behind US, The Guardian, 10/7/01; Eviscerating Oxford, The Spectator, 14/7/01 - includes spin-off in The Times, 13/7/01; Oxbridge slow learners, The Times, 17/7/01.