Universities risk becoming too heavily indebted thanks to over-optimistic predictions about future growth in student numbers, our Yorkshire Universities Development Plans Conference has heard. University of Huddersfield director of estates and facilities Colin Blair warned that the higher education sector’s long-term sustainability was threatened by a combination of inadequate surpluses, declining revenues and record borrowing.

Referring to official statistics on returns for institution across the sector, he said: “It’s quite worrying that a big chunk of the sector is returning less than three per cent. If you are taking on debt you need to be generating at least five to seven per cent surpluses.”

Such fine margins mean that small changes in student numbers could have a material impact on institutions’ financial performance, which he said was particularly worrying in the light of concerns that high levels of forecast growth in overseas student numbers may be increasingly difficult to achieve. Blair said: “It’s worrying for the universities that haven’t got their act together and are forecasting growth. It’s not a situation where you can borrow, and expect people to come.”

Universities would stop commissioning iconic buildings to attract students, he predicted: “If it wins design awards, it doesn’t matter one jot: what matters is that the standard of teaching is excellent.”

Pointing to figures showing a decline in the proportion of the sector’s stock that is categorised in the top A and B grades, Blair expressed concern that universities were concentrating too much on new build projects rather than maintenance. This approach threatened to store up problems for the future, he said: “You are not going to generate enough (revenue) to refurbish so you will have a shock if you have a bullet payment and have to replace the building.”

Blair said that Huddersfield had been able to finance its own £300 million capital plan, which consists of a mix of new build and refurbishment projects, without having to borrow. He said Huddersfield’s new Barbara Hepworth building is due to be finished in September 2019. He added that flexibility was key when designing university buildings because they often needed to be remodelled after five years due to shifting educational demands.

Dennis Hopper, director of facilities at The University of Leeds, told delegates that tenders were in for the construction of its 15,000 sq m new engineering & physical sciences building. The new building, the cost of which he admitted had increased from £90m to £110m, is the most technically complex and high-performance project the university has ever built. The building, which is in the north-east quarter of the city centre campus and provides a new home for astronomy and materials research amongst other disciplines, will be ready to start on site in the spring.

Before that, Hopper said the university’s £40m Nexus innovation centre building will be open in the autumn, providing a new and more striking entry to the campus. In addition, he said five development plots had been identified on the university’s southern campus. These include a potentially high-rise building to accommodate hotel, office or student accommodation on the plot closest to the ring road.

Laura Hallett, head of strategic projects & change at York St John University said that work was due to begin on its new £15m Creative Centre building in 2019.  She said that design work was under way on the 4,500 sq mt centre across three storeys, which consists of three buildings linked by an atrium. Featuring a showcase exhibition space, the centre is due to open in 2020.

She also revealed that the University is set to open a new campus in London. The University are currently looking to identify a circa 10,000 sq ft site. The campus would allow University students to supercharge their final year and develop meaningful relationships with industry and professional contacts in the City.

Dr Peter O’Brien, associate at Yorkshire Universities, said that universities have a ‘pivotal role’ to play in Yorkshire’s local economies.