One of the reasons Wye Park has taken a nosedive of late has been the cost of progressing the masterplan, and unseen extras such as tagging all those pesky greater crested newts that seem to have cropped up everywhere. But Imperial is a rich and powerful college, recipient of £300m a year in grants, much of it from the public purse. It can afford stuff like that, can’t it?
You’d think. But a look at the finances of this national institution makes for interesting reading. And when you do that you start to get an insight into why Sir Richard Sykes may well be looking at the Wye estate and wishing fervently he could turn it into cash. Imperial wants to get its hands on money at the moment, any way it can. Even by borrowing, in pretty hefty numbers too.
This change in policy is one more innovation of the Sykes era. Beforehand, as a report to the management board confirmed in 2002, as the Sykes regime took hold, ‘the College had previously been cautious about borrowing and had therefore always met its capital costs from existing reserves or the sale of assets’.
No more. At that time the board agreed to a new fund which should be allowed to borrow up to £100m to fund an ambitious capital programme. That is a substantial sum for an organisation which, today, still ‘only’ gets three times that amount in annual grants. But, surprise, surprise, it still isn’t enough. On April 28 this year the management board met again, and item three on the agenda was about borrowing once more. This time the members discussed a paper recommending the college should borrow £50m through a long-dated fixed interest loan. It heard that the organisation’s three year plan showed that its borrowing requirement would rise to some £150m in the next few years ‘and it would be prudent to take action now since the market was very favourable for long term borrowing at present’.
The board, in its own words,…
a. Noted that the establishment of the College Fund provided security against an increased level of debt because in extremis the Fund’s holding of non-core assets could be sold.
b. Agreed that the proposals in the Paper, together with the recommendation that the College’s absolute debt ceiling should be raised to £175m, should be submitted to the Council for approval and implementation.
The Council normally rubber stamps what the board sends it, but since the July minutes won’t appear until the autumn there is no way of confirming that now. But think of the sums. In four years the borrowing requirement has gone up from effectively zero to, first, £100m and now to £175m, more than half the college’s ‘real’ income in grants. And the get-out clause is simple… if times get bad, Imperial simply flogs off ‘non-core assets’ (does anyone have any doubts about whether Wye fits into that category by now?)
In business, this may be pretty standard stuff. But Imperial College is a public institution not a profit and loss private company, however much Richard Sykes wishes to view matters otherwise. Still, he’s trying to pump the business markets for cash too. Imperial’s ‘technology commercialisation’ company Imperial Innovations recently raised £25m from an institutional placing of shares and expects to raise up to £1.5m more from the public when it floats on the AIM exchange later this week.
Said Imperial’s rector, ‘Our universities are powerhouses of innovation and it is vital for the UK’s economy that we get our best ideas out of the laboratory and into the marketplace quickly. Imperial College is world renowned for carrying out leading edge research, and Imperial Innovations has a track record of making this research commercially viable. The flotation will provide Imperial Innovations with the capital to go on to develop its business further and that in turn will feed back into developing the College’s intellectual property.’
So that’s £175 of borrowing requirement (if the Council rubber stamps the idea), £25m for Imperial’s innovation arm, plus £300m to £400m from the sale of protected countryside at Wye for property development if Sykes had got his way. We’d have been talking about half a billion pounds or more at this stage. Where on earth, you wonder, was all this money supposed to go?
Well we know one local answer out in rural Kent anyway. Counting newts.