A transformation fund for UK universities could come in the form of loans, meaning institutions will need to consider how they can pay these back, according to a sector financial adviser.��

Universities UK (UUK) has been calling on the government to create a fund to support cash-strapped institutions to save money by implementing efficiency measures.��

In a report published in June, a task force convened by the group reiterated calls for policymakers to set money aside to “derisk and catalyse the exploration of innovative collaborative structures” as some institutions consider mergers and other models to ease their financial problems.��

Speaking in a webinar convened by the Higher Education Policy Institute on 25 June, Matthew Atkinson, interim chief financial officer at the University of Nottingham and an independent adviser to the higher education sector, predicted that such a fund could be on the way.��

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“I do think there will be mergers in the sector and I do think there will be a transformation fund, and I’m working with UUK on how that might be put together,” he said.��

However, he continued, “I do think that that money will be in the form of a loan and therefore you have to think about how you pay it back if you’re going to use that transformation facility.”

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The greater a university’s financial woes, the harder it could find it to afford to implement cost-saving mechanisms, including redundancies, added Nigel Carrington, former vice-chancellor of the University of the Arts London and chair of UUK’s efficiency task force.��

The government will set out its plans for reform of the higher education sector in a post-16 White Paper expected imminently.��

Meanwhile, UUK continues to look at how universities can implement efficiency measures to save money.��

Asked whether universities can  UUK estimates the sector is experiencing as a result of policies introduced by the Labour government, panellists were confident.��

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“£1.4 billion is three per cent of the sector turnover, and if you can’t save three per cent, you’re probably not doing it right,” said Atkinson.��

“However, as part of that saving, because this sector is so valuable, government needs to support it properly,” he continued. “What you shouldn’t be doing is cut, cut, cut, cut, cut.”

Speaking about Dundee University, which was this week given an additional £40 million by the Scottish government following the publication of a report that blamed the institution’s financial crisis on mismanagement, Atkinson said the university had “in effect…been nationalised”.��

“That is moral hazard for the Scottish government,” he said. “It does set some expectations in England and I believe there may be some universities who are having some kind of temporary support at the moment. We don’t know who they are.”

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Carrington added, “I think the Dundee bailout proves the point that a university can’t really be allowed to explode.��

“The interests of the students are obviously inconsistent with failure, and I think government knows that failure would result in a political storm beyond imagining.

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“For me, this is one of the reasons we need to work with government, with a transformation fund which, very carefully managed, would enable universities to sort themselves out before they got into the mess that results in that implosion that’s very expensive.”

helen.packer@timeshighereducation.com