The European Investment Bank has announced a new mechanism that will allow it to open up lending to relatively smaller-scale capital projects at UK universities.
The non-profit bank, which makes long-term investments of up to half the value of a project’s total cost, hopes to sign up the first universities under the new scheme in the coming months.
“It’s a development we’ve put in place to ensure that more medium-sized schemes can benefit from the long-term low-cost funding, and can’t be hampered by any arbitrary line from our side,” Jonathan Taylor, the EIB vice-president responsible for the UK, told Times Higher Education.
For an undisclosed group of the UK’s 20 or so larger and most research-focused universities, the EIB has obtained “umbrella” approval to lend without going to its board, in cases where projects fit with the EIB’s mandate. In his experience, a fit with the mandate “is almost always the case”, Mr Taylor said.
The more streamlined system means a faster and cheaper turnaround for the bank, making feasible projects with a total value of around £70 million, down from the previous minimum of £100 million.
Since pledging in 2012 to commit £1 billion to UK higher education over five years, investment has picked up, exceeding the £200 million target in the past year, said Robert Schofield, the EIB’s lead on university lending in Western Europe.
While the bank has a remit to focus on research, innovation and the vocational contribution of universities – and this is where “conversations” over lending usually start – Mr Taylor emphasised that investment packages could be used to support a range of infrastructure and facilities.
The funding can go towards projects in student housing, catering, sports and teaching facilities as well as central services, he said.
“We’ve got a focus on supporting research investment where possible, but combined with that we understand the university perspective, and as part of upgrading the student experience, we’re talking about a whole range of things. It’s really on a case-by-case basis,” Mr Taylor said.
Last month the EIB signed a £55 million investment agreement with the University of Leicester that, in addition to upgrading the listed Stirling-Gowan Engineering Building, includes constructing a new library, improving energy efficiency and upgrading and improving sports and campus facilities.
Particularly in light of increased tuition fees, universities’ quest for capital investment is about maintaining cutting-edge research labs and facilities, rejuvenating ageing post-war campuses and making sure that institutions remain attractive to international students, said Mr Taylor.
There was no specific project that would be more or less attractive to the bank to fund, and it remains open to discussions with all universities, added Mr Schofield.
“I think the approach we’ve taken now has given us the luxury of not having to turn people away, [if they are] in the size and scale we are expecting among the top universities,” he said.
In the past year the universities of Birmingham, East Anglia, Strathclyde, Swansea and York also received EIB funding. Mr Taylor said that feedback suggested that institutions that had embarked on capital investment programmes were “delivering” and others were thinking “very urgently” about future plans. “Nobody wants to be left behind in this game,” he added.
Despite changes to the EIB’s lending, however, the relatively high minimum level of investment necessary may still exclude access to capital funding for smaller initiatives and for non-research-intensive institutions.
