For Staff

Thoughts on 'austerity' budget - June 2010

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There were no surprises for us - unfortunately - in the coalition's out of season 'austerity' Budget.

Swingeing cuts in public spending - of up to 25 per cent for 'unprotected' areas, including universities - were as anticipated some nine months ago when we embarked on the economies exercise.

We set a target then of identifying savings of £35m and asked every school and service to draw up plans to contribute towards these savings.  I would have wished for nothing more than to have been proved wrong, but as it turns out, the figure of £35m equates almost exactly to the 25 per cent cut in core funding we now face.

This means that all the professionalism, hard work and dedication of our staff - in making hard choices, planning and coping with less - to protect the University from the shockwave of the recession and public expenditure cuts is now paying off. It means we remain in control of our future - however challenging that will actually be when the funding axe finally falls.

The detail of how the cuts will be distributed across our funding department, Business, Innovation and Skills, hasn't yet been announced, or the split between support for teaching and learning and research, capital funding, science and student support. That will be revealed in the comprehensive spending review on October 20, when we have been promised precise figures for the next four years. 

So we are on course, on target and in control. As I reported last month, we are now some three-quarters of the way towards achieving our £35m savings target.  The overwhelming view of staff I have spoken to in dozens of meetings across faculties and services is to have as much certainty as possible about the future, to be strategic about cuts (and investment) and to get on with research and teaching.  I am sure that is right, and that the alternative - successive years of morale-sapping chipping away - is an appalling prospect.  This approach has been endorsed by Senate and Council, and has dictated our planning and the pace of change. 

We will look to increase income where possible.  The Browne review on university funding and student finance, not now expected until after the party conferences in October, is unlikely to present a solution.  We might once have hoped that any increase in variable fees would generate additional resources for universities, but it is increasingly clear it would be dangerous to rely on that outcome. 

You may have been told that some schools are facing difficulty because of the financial system we use to distribute government funding, the 'resource allocation model' (RAM). This is not correct. Schools receive the government funding appropriate to their students numbers and research performance.  There are no cross-subsidies; they have to stand on their own feet. 

This is the simple principle underlying our financial management; it protects us all by ensuring that problems are contained within schools, and then dealt with. The difficulty is not the model, it's the recession; income is falling - dramatically - while costs continue to rise. It follows that schools must remain financially and academically sustainable in their own right through the difficulties ahead. 

This has been a huge challenge but, as you know, most schools emerged from the recent planning round with certainty about their finances and sustainable academic strategies. For a variety of reasons and causes, a number of them need to do more work, and they have opted to enter into reviews to get the kind of support they need to develop a sustainable future.

The safest haven in difficult financial times is academic excellence. Schools which are popular and recruit well internationally, did well in the research assessment exercise and have aligned their costs with income are financially sustainable. This is the impact of 'full economic costing' of research; you can't be a big, well-resourced, space-intensive science department without the appropriate grant income to support that infrastructure. We are in good company; some of the best universities in the land are struggling with that challenge. 

We have the means to shape our organisation to get through these difficult times.  Months of intensive discussions with campus unions earlier this year resulted in a process for organisational change, acknowledged by unions and employers as a model of best practice across the sector. The detailed review processes within it give us a structured, consultative and collegiate way of avoiding job losses wherever possible and ensuring, above all, that staff will be fully informed and engaged about their future. 

I appreciate that the speed of events has felt uncomfortable at times and that we could have been better at keeping staff up to date. We will strive to do better. The fact remains that the University is in the best position possible despite a terrible economic situation.  I would not wish to be working in an organisation that had not anticipated the awful blow dealt by politicians last week. I have never accepted the wisdom of cuts of this magnitude to universities. We should not be arguing for unique treatment, but I will continue to lobby this government as hard as the last on the important contribution made by our students, our staff and by universities across the land.