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The University has responded to suggestions that the loans it has taken out to fund buildings on campus are the cause of the financial pressures which it is seeking to address.

As part of the consultation process on the University's proposal in response to its financial position, the campus trades unions have received specific and detailed briefings from the Director of Finance, Allan Spencer.

He said: "We have been pleased to set out in detail for colleagues the financial implications of the loans that support the development of the University.

"An analysis of the loan costs needs to take into account the income streams and reductions in spending that capital investment have enabled.

"Furthermore, the costs of buildings have been specifically reviewed by Council and authorised by them as a sound and prudent way of helping the University to grow its income."

Writing this week to UCU (the University and College Union), the Director of Finance made clear that the vast majority of the loans - some £40m - that the University had on its books at July 2009 were for the building of student residences and were directly covered by student rents.

In other words, these loans did not present Sussex with a net cost, as the income from rent paid for the capital and interest. This is the normal financing approach for student residences.

The remaining loans as at July 2009 related to specific projects that

• had long-term pay-back built in to them (i.e. £2m for the construction of the Sussex Innovation Centre), or
• resulted in reduced costs to the University (i.e. £6m for the renewal of the campus heating system, which led to significantly reduced energy costs year on year), or
• received Sussex funding to match government grants in the early 2000s for academic buildings that enabled the University to generate streams of research or teaching income (e.g. the Sussex Centre for Genome Damage and Stability).

The University has now negotiated an additional loan facility of £50m for the future to cover the Northfield residences. The costs of these are again entirely covered by residential income over the years ahead and therefore will have no net effect on the University.

Of this £50m loan, £10m is available to be used, if needed, to support other key academic projects such as the new academic building on the site of Arts D and E. These funds will be drawn on only if required.

Furthermore, any interest costs would not start to be charged until 2011-12 at the earliest, so these new loan costs play no part in the University's current deficit position.