• Degrees of change



    It's a changing landscape for higher education institutions. KEITH NORMAN explains how Lloyds Bank's 20-year experience in the sector is rising to that challenge.

    The outcome of the Government’s funding review into higher education saw central funding to the sector slashed and responsibility transferred to students. Although education remains free at point of entry, the change which came into effect in September 2012 has had a massive impact.

    With research income from private sources under pressure due to the continued downward pressure on the economy as a whole, and despite the Government ring-fencing research income, there’s definitely a trend towards polarisation of institutions into those offering world-leading research and those that are on the periphery. This creates additional strain on budgets.


    Changes to funding profile

    In the short-term, higher education institutions are facing a timing difference in receipt of funding. Previously, central government funding was remitted on a monthly basis, whereas funding from the Student Loan Company is now paid three times a year. As this change in their funding profile rolls out, Lloyds Bank is working alongside institutions to support their cash flow requirements.


    If we look to the longer-term, the effect of the changes will be seen in more demanding and discerning students, seeking value for the student tuition fees of up to £9,000 a year they are paying. Students will effectively move into much more of a consumer role and universities will have to adapt to that by focusing on improving the student experience.

    That, of course, pre-supposes that you’ve managed to entice them there in the first place. Universities will need to outline in Key Information Sets the course content, contact time, employability statistics and results from the national students’ survey making the sector far more transparent to prospective students. Maintaining or improving the quality of their teaching will be critical in enhancing their reputation as an institution that future employers will recognise as providing quality education and students are becoming more conscious of this aspect when considering future employability prospects.

    Many institutions placed plans for infrastructure improvements on hold in recent years as they awaited the introduction of higher student fees to monitor the effect on student recruitment. As that crystallises, I think we’ll see that latent demand for infrastructure projects returning and increasing into 2013.


    Long-term funding needs

    Here at Lloyds Bank, we’ve had a sector-specific team to look after the needs of universities since 1992. During that time, we’ve supported over 70 universities throughout the UK with long-term funding solutions to support their capital expenditure plans and investment in infrastructure.


    The sector is also eligible to participate in the Government’s new Funding for Lending Scheme, which offers discounted funding and which Lloyds Bank is heavily engaged with. We’re also working with the European Investment Bank (EIB). Towards the end of 2010, we negotiated and secured a £165m fund with the EIB, which we distributed to universities and colleges in the shape of 16-year committed funding.

    In a climate where the focus for bank debt was increasingly short-term, this was clearly very attractive.


    Strategic support

    Universities are not only educators and research hubs, they are key employers and play a central role in the communities they are part of. This fits with Lloyds Bank’s overall ethos of supporting local communities, creating employment and driving economic recovery. By supporting the sector and passing on the benefits of government-sponsored lending initiatives, we can be part of that.


    In addition to financial support, we are working closely with a number of universities to assist their move to a more business-like culture. It’s a big change in strategic direction for many and our experience across business offers a huge boost.

    Case Study

    [Company name] University of Salford
    [Region] North West
    [Industry] Education
    [Product] Funding 

    “One of the attractions of working with Lloyds Bank is that they understand universities,” states Adrian Graves, Registrar and Secretary, University of Salford. "They've got a very clear understanding of the way that universities work, the way our finances work and of our strategic imperatives."


    The university has responded to the changes enveloping the sector by investing in new facilities with the support of longterm banking partner, Lloyds Bank.


    “The overall funding package was for £45m, which included £10m from the EIB,” says Interim Finance Director, David Reeve. “It was a competitive tendering process, but Lloyds Bank offered the best support and the closest customer relationship.”

    “The funding will enable us to build a state of the art building for our creative industries activities,” Adrian continues. “At the heart of that is assisting the university to be more competitive.”


9/24/2020 7:44:05 PM