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Explaining our University's finances

Professor Dame Nancy Rothwell

Professor Dame Nancy Rothwell

Earlier this year we published our financial statements which showed that our University is performing well, despite unprecedented uncertainty for the higher education sector.  While we have made progress against many of our strategic Manchester 2020 goals, there are also areas where our performance needs to improve and where we will need to focus to overcome significant emerging challenges.

It is timely therefore to provide a further explanation about the University’s finances – where our money comes from, which parts of the University generate income and how it is spent. 

In income terms, our University is amongst the top four in the UK with an income of £987.2m in 2015-16.  We have the largest tuition fee income in the UK higher education sector with over 40% of our income coming from tuition fees and education contracts.  While over the past three years our tuition fee income has increased by 30%, government funding for education has decreased by 36%.

Fee income is broken down into that for home students, which is currently fixed at a maximum of £9,000 per annum for undergraduate study, and international students where there is no fixed fee level. Fees for post-graduate study for both home and international students are variable.  At our University, international fee income over the past three years has increased by 25%, though for the UK overall applications are levelling off.

At present, students from the EU but outside of the UK pay home fees and are eligible for government loans, and our income from this group was approximately £18.5m in 2015-16.  When the UK leaves the EU, it is likely that universities will have to charge EU students the same fee as other international students and they will also no longer be eligible for the loan. 

Another major source of income for the University comes from research grant income which for 2015-16 rose by 4.8% (including capital) to £273.5m, placing us 5th nationally and with our share of research grants and contracts rising to 4.7%.

We did particularly well with the Science and Technology Facilities Council (first position) and both the Biotechnology and Biological Sciences Research Council and UK industry (second position). Our biggest increase was from the Medical Research Council where our income more than doubled to £33m due to some key capital investments.

Across our three Faculties, the sources of income varies. Humanities, for example, has a greater proportion of income from student fees than research, while Biology, Medicine and Health relies more on research income and Engineering and Science shows a more balanced mix of both student income and research. These differences also reflect the additional costs associated with teaching lab-based subjects, the higher levels of funding associated with capital intensive research and, of course, student numbers.

The largest proportion of our income (58%) is spent within the Faculties on staff, students and facilities, but many of our activities are managed and funded separately from the Faculties as this is much more efficient.

Hence Faculties pay a contribution to the many activities that are required to run our University – things like energy, cleaning, insurance, counselling and occupational health to name but a few. Some of these costs are beyond our control and are likely to rise as inflation is predicted to go up and the cost of imported goods increases due to the low value of the pound.

Our financial statements show that our University is in a reasonably healthy financial position. They also show our assets (c. £1.5 billion) which represent our land, buildings, equipment etc. Our cash reserves are reasonably strong but include borrowing (notably the £300 million bond for the capital programme) and liabilities - mainly the pension funds deficit. It is clear therefore that we will need to generate significant financial headroom to give us the investment capability we need to meet our Manchester 2020 goals.  Unlike many of our international competitors who have deep pockets thanks to their endowments or government funding, we will have to make tough decisions about where we invest and where we make efficiencies and savings, especially in uncertain times.

You can read our Financial Statements for 2015/16 at:

Professor Dame Nancy Rothwell - President and Vice-Chancellor.