UK: Crisis, what crisis?

So far, British universities are taking a sanguine approach to the financial crisis. John Denham, the Higher Education Secretary, claimed that no institution was in jeopardy despite 12 English universities having £77 million (US$133.3 million) at stake through the failure of Icelandic banks. Oxford has £30 million, 5% of its overall cash deposits, invested in three of Iceland's troubled banks and subsidiaries while Cambridge faces losses of £11 million, 3% of its deposits.

The Higher Education Funding Councils for England, Scotland and Wales are responsible for keeping the financial health of higher education institutions that receive public funding under review, although universities are independent charities and take their own banking and investment decisions.

England's council, Hefce, said: "Certainly no university faces a level of exposure that would raise questions about its continuing solvency. Students, businesses, charities and others may deal with universities with exactly the same level of confidence as before."

A spokesman for the Russell Group of 21 of the country's research-led universities, including Oxbridge, said there had been no reports of major difficulties. He pointed out that Oxford and Cambridge were among the wealthiest institutions.

The Open University has investments of £6.5 million in UK subsidiaries of Icelandic banks, less than 4% of its cash holdings and 1.5% of its expenditure budget this year. Vice-chancellor Professor Brenda Gourley said although the funds at risk were significant, they posed no threat to the university's operations and staff and suppliers would be paid as normal.

Manchester and Manchester Metropolitan universities are hopeful of getting back £5 million and £10 million respectively from their investments in the stricken banks. Three Welsh universities have £8.1 million at risk.

These reassurances came just after the announcement of the last instalment of a three-year pay deal. Lecturers voted to accept the 3.2% offer which provided an overall total pay rise of at least 15% for the sector. But the Universities and Colleges Employers Association warned institutions were being hit by high inflation and energy costs, so meeting this award would place serious constraints on future pay settlements, possibly on pensions, and thereby impact on the sector's finances in years to come.

diane.spencer@uw-news.com