Cambridge cash crisis: Elite university reveals that it will be £30MILLION in the red this year as its deficit grows

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Cambridge is facing a £30million deficit this year, despite being one of Britain’s richest universities.

It has received less Government funding, along with other universities – but warned that this had not been compensated for by tuition fees.

The 800-year-old institution, which wants to take more students, has also been unable to expand in the historic city.

News of its precarious financial position has shocked experts because the elite university benefits from generous donations and endowments from its star-studded alumni. But despite its advantages, even Cambridge is struggling in what some say is a sign of things to come for the university sector.

Cambridge is facing a £30million deficit this year because it has received less Government funding which hasn't been compensated for by tuition fees. The deficit was revealed in an email from the vice-chancellor 

The deficit was revealed in an email from vice-chancellor Stephen Toope to the university’s 150 academic departments.

It explains how the university faces a ‘growing budget deficit’ thanks to rising costs, the freeze on undergraduate tuition fees and a decline in some research funding. Professor Toope wrote: ‘The budget position is deteriorating rather than improving, as had previously been forecast, despite efforts to control spending over the last few years.’

He said the university’s finance team completed a ten-year budget projection last month that ‘confirmed we are now running an annual cash operating deficit of roughly £30million on a total combined... budget of £1.25billion’. The university stressed that it had a huge cash reserve and was in no danger of going bust, being able to afford to be in the red for years before the situation becomes a crisis.

In addition, the deficit only applies to the central university budget, which is responsible for most teaching and research. Its 31 individual colleges – which include Trinity, St John’s and King’s – all have their own separate budgets for their day-to-day running.

Many are known to be rich, although much of the money donated to them goes on maintaining their historic buildings.

Experts claim a number of universities are in financial trouble.

Many are thought to be former polytechnics struggling to recruit enough students.

A review into universities and tuition fees is expected to be published in the summer. Led by finance expert Philip Augar, it is expected to recommend that annual tuition fees in England are cut from £9,250 to £7,500.

News of its precarious financial position has shocked experts because the elite university benefits from generous donations and endowments from its star-studded alumni. Pictured: Trinity college 

In his email, Professor Toope said: ‘A deficit of this order – while manageable in the short term – is not sustainable in the longer term.’

The vice-chancellor warned that ‘across the world, universities face headwinds’ including ‘increased political and economic uncertainty, with a growing possibility that financial markets will decline, reducing the income generated by the university and college endowments’. In Britain, this would be ‘exacerbated by the uncertainty posed by Brexit’, he said.

He added: ‘If the review of post-18 education and funding recommends a significant reduction in tuition fees and the Government is not able or willing to make up for that reduction... the total income of the university sector would fall.’

Cambridge’s various financial streams – including endowment income, philanthropic gifts and income from its publisher, the Cambridge University Press – meant ‘budget pressures will be manageable’, he said.

But the university ‘must still act now so that we do not dig ourselves into a hole’.

According to the latest accounts, Cambridge – whose former students include Charles Darwin, professor Stephen Hawking and Sir David Attenborough, has a cash reserve of more than £4billion.

A spokesman said: ‘The university may not depend on Government and tuition-related funding as heavily as many other universities, but it still needs to be prudent.’