The University of Northampton had a £16m deficit in the latest financial year.
The cost of the new Waterside campus, loan repayments and staff pension contributions are among the reasons the university has had to raid its reserves to the tune of just under £5m in the latest 2018/19 financial year to make ends meet.
The financial statements, which go up to the end of July last year and were made public on the university’s website this month, show that the cost of the new £330m campus - which opened in summer 2018 - has taken its toll on the university’s balance sheet.
According to the accounts its income for the year was £125.5m while its expenditure was £141.9m.
Its reserves now sit at £32.5m - down from £37m - and its assets are now at £34.3m, down from £50.1m the year before.
The accounts also reveal the university, which took out £299.5m worth of borrowing over 40 years to pay for the new campus, had sanctions put on it by the treasury last summer because its cash surpluses were below the required levels to service the debt. The sanctions meant any new capital expenditure on the waterside campus had to be signed off by the government. They were lifted in October.
However the annual report for 2018/19 says the board remains confident in the university’s financial model.
It says: “The board and the university executive continue to monitor the university’s overall financial model and remain confident that it is sound. However, a number of factors during 2018/19 led to a need to produce efficiency savings. These included: Lower than predicted student numbers, caused by demographic decline and the growth agenda of higher ranking and competitor universities; The need to fund the TPS and USS pension scheme increases, producing an increase of £2m in costs from September 2019; The increased rate of student non-continuation from one year of study to the next. This causes concern about the impact on the students themselves and the reputation of the University, aside from a negative impact on the budget.”
The university, which is run by long-standing vice chancellor Nick Petford, laid off 38 staff last year as part of its efficiency savings. The annual report reveals the cost of the redundancies was £256,270.
It also makes public the £40.5m price the university sold its previous Park Avenue Campus for. Persimmon Homes paid £15.5m in a staged payment to the university in November 2018.
The university is holding a colossal financial burden of the campus loans - with a £231m bond from the treasury and a further £68.5m was borrowed from the Public Works Loan Board (PWLB). Capital repayments on the bond begin in 2024 and repayments on the PWLB loans have already started.
The premises cost of the new campus put an additional £6.2m on its annual expenditure, which altogether rose by 6.6 per cent from the previous year, at the same time as income slightly dropping. The accounts say this is a one-off cost.
The lion’s share of the university’s income came in the £99.6m from tuition fees, which made up 79 per cent of the money coming in.
The report says applications in 2018/19 are 7.6 per cent down on the previous year in part due to a national demographic drop and also the competitive growth agenda of other universities.
Its biggest expense is the wage bill for its 1,600 staff, which stood at £67.8m. £50.8m was spent on operating costs and £11.4m was spent on debt.
This year the vice-chancellor did not receive a performance bonus and his salary including pension contributions was down to £243,000 from £262,000 the previous year.
When asked for a response to the finances recorded in the annual report a university spokesman said: “Inevitably such an ambitious and complex construction project has temporarily altered our normal annual expenditure and this is reflected in the financial statements for the year ending July 31, 2019. Aside from the outlay costs, last year the university also paid off other expenditures associated with the completion of Waterside – such as consultancy fees – which have added to the premises cost in the short term.
“We are entirely confident that the university is sustainable. Universities are operating in a challenging environment with increased competition, a freeze in undergraduate tuition fees and significant increased cost pressures. However student recruitment remains strong, with particular opportunities emerging from the international market that can mitigate fluctuations in domestic student numbers. Staff costs are not expected to increase in the financial year 2019/20 due to careful management of resources.”
Up until July 31 the university’s chair of the board was Sylvia Hughes, who was a member of the cabinet at Northamptonshire County Council when it financially collapsed in spring 2018. The new chair of the board is Mark Mulcahey.
In 2017/18 financial year the university had a £6.3m deficit.