University of Northampton feels the financial pinch with £16m deficit revealed in annual accounts

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.