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London Guildhall University has called in consultants to assess plans to solve its long-term financial and accommodation problems.

The university and the Higher Education Funding Council for England will jointly fund a study to "consider the financial position of the university and its plans to pursue the estates strategy, to recoup the shortfall in recruitment and to rebuild the financial reserves to a prudent level".

The institution, formerly City of London Polytechnic, has been dogged by inherited liabilities and scattered, low-quality buildings which incur heavy maintenance costs. At one time its inherited liabilities were estimated to be 12 per cent of the total for the university sector. It has also suffered recruitment difficulties. This year's shortfall will force a Pounds 500,000 cut in expenditure.

The funding council has offered to capitalise the inherited liabilities. This should allow plans for developments on two sites and withdrawal from some buildings whose leases are up in the near future to be implemented. The consultants will report in November.

South Bank University heads of school have been told not to enter into major commitments until new budgets have been drawn up to meet an income shortfall from under-recruitment.