Ongoing modernisation and rebuilding work could land UK universities in £1 billion debt.

So far the national programme has run up an average of £1.9 million for each institution, but this looks set to rise further as universities have to borrow more money to replace buildings created in the sixties and seventies with more environmentally friendly facilities. If the current pattern of spending continues, it is thought that the total debt held by UK universities could reach £1 billion within the next two years.

A report by the National Audit Office (NAO) highlights concerns that colleges may struggle to cope with the debt as the British economy heads towards a recession. Although none have reported financial troubles yet, the NAO has said that some principals admit the debt could become unmanageable over the long run. The report stated: "Whilst colleges can generally afford to service the loans they take out, they are vulnerable to changes in their income. In the context of a changing and increasingly competitive sector, some college finance directors are concerned about colleges' ability to meet loan and interest repayment in the long term."