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The BOARD OF SCRUTINY beg leave to report to the University as follows:
1. The Fourth Report of the Board of Scrutiny brings to a close the first full term for the founding members of the Board and thus gives the Board an opportunity to review their own progress and conduct as well as fulfilling their statutory duty to report to the Regent House. In their Third Report (§2, Reporter, 1997-98, p. 818), the Board expressed regret about the extremely slow progress being made by the Council in relation to the proposed changes to Chapter VII of Statute A. It is pleasing to report that the amendments were accepted by the Regent House in July 1998 (Grace 2 of 29 July 1998) and were approved by the Queen in Council on 10 February 1999. The Board now believe that the constitutional arrangements for the Board's composition and remit well equip them for future years.
2. The impression mentioned in the Third Report of 'mills grinding extremely slowly' remains with us. For example, the Third Report was published on 17 June 1998 and brought to Discussion on 7 July 1998, and the Council's response was published on 9 December 1998; such response may be commenting on events which took place in the Michaelmas Term 1996. This is retrospection in the extreme. The Board hope that in future the Council can respond by the division of the Michaelmas Term. The academical year 1997-98, which is the period now under review, was turbulent, with regrettable accusations in Discussions of bad faith both from members of the Regent House and from various members of the central bodies. The Board are pleased to note that by the close of the period the atmosphere had become in the main less febrile; we hope that the undoubted differences of opinion can be resolved in a manner appropriate to a community of scholars.
3. The Board have met on ten occasions, and as in previous years members of the Board have met formally with the Vice-Chancellor, the Registrary, the Secretary General, the Treasurer, and the Chairman of the Work and Stipends Committee, and informally with these and many other officers. In the light of this we were surprised by the Council's 'hope that there may be more contact through the year between the officers of the Board and those of the Council … [to] aid the Board in their understanding of the way in which the Council need to respond to business' (Reporter, 1998-99, p. 219). In general our meetings with the officers have been characterized by openness and frank discussion and we wish to thank the officers for their time.
4. In Recommendation I of our Second Report we drew attention to the under-resourcing of the University Offices. We note that steady progress has been made in the unification of the University Offices, improving efficiency and flexibility. We continue, however, to be concerned at signs of excessive pressure on some officers which appears to have caused significant delays, especially in the area of Research Grants and of Work and Stipends. We therefore welcome the recently advertised new Directorships in the central administration, although we have concerns (see ¶24 below) about the status of these posts.
5. We were concerned in Recommendations IV and VI of the Second Report and in Recommendation VI of the Third Report to encourage the publication of the accounts of associated bodies in conformity with the relevant Statements of Recommended Practice (SORPs), and we welcome the progress made in this area. However, we believe that further progress in consolidation is necessary and we return to this point below (¶¶10-16).
6. In Recommendation IX of the Second Report we encouraged greater use of World Wide Web services for the dissemination of information, and we note that good progress has been made. Of especial importance has been the availability of the Reporter on the Web. The success of this is underlined by the inconvenience caused in December by the late online publication of an ordinary issue, which was caused by staff illness. We urge the central administration to provide resources for adequate staffing and to increase the coverage on the Web of the Special Numbers and in particular the Annual Reports of the Council and the General Board.
7. We are grateful for full and detailed information published in the Council's Notice (Reporter, 1998-99, pp. 221-2) in response to Recommendation VII of the Third Report on auxiliary services. We believe that the published information which demonstrates the limited current coverage of the services underlines the case that modest increases of resources to these services would yield a disproportionate benefit for staff, and especially younger staff. We therefore welcome the announcement of a review of the Dental Service (Reporter, 1998-99, p. 492) and would welcome reviews of the other services, in particular the Counselling Service and Child Care provision.
8. In our Third Report we dealt in detail with various aspects of the conduct of the last Research Assessment Exercise (RAE) and in Recommendation VIII requested wide consultation. We therefore welcome the appointment of Professor Skinner, Pro-Vice-Chancellor, to lead RAE2001, and the assurances that the organizational infrastructure is being put into place.
9. We are disappointed at the negative response to Recommendation IX of our Third Report, recommending a Report from the Council and the General Board on policies regarding the overall balance of support as between the University's various Schools. The need for reassurance on these policies is exemplified by the widespread perception (articulated by Professor Whittington in Reporter, 1998-99, p. 332) that the recent savings exercise bore more heavily on the Humanities Schools than on the Schools of Science and Technology. This perception needs to be addressed.
10. We welcome progress in bringing the University's accounts into conformity with the Statement of Recommended Practice for Higher Education Institutions (the HEI SORP), and we particularly welcome the announcement that a depreciation policy for University buildings will be adopted for the 1998-99 accounts (Reporter, 1998-99, p. 220). We welcome the Council's statement that the accounts of both the University and its two principal subsidiaries, the Cambridge University Press and the Local Examinations Syndicate, conform to the relevant accounting SORPs (Reporter, 1998-99, p. 221). However, the accounts of these subsidiaries continue to be published separately and with different accounting year-ends. The HEI SORP states: 'Where an institution has subsidiary undertakings, the financial statements should be prepared in accordance with FRS 2 [Financial Reporting Standard 2, Accounting for Subsidiary Undertakings]. The financial statements of all subsidiary undertakings to be used in preparing the consolidated financial statements should, wherever practicable, be prepared to the same financial year end and for the same accounting period as the parent institution'. It seems to us that the Cambridge University Press and the Local Examinations Syndicate are subsidiaries for the purposes of FRS 2, in that they are both associated bodies whose Syndics are appointed by the University Council. We recommend, therefore, that the Council state on which of the allowable exceptions listed in the HEI SORP they rely in continuing their practice of non-consolidation.
11. Departures from the SORP and from generally accepted accounting practices, even if adequately explained, have the potential to mislead users of accounts. We wish to draw attention to the description in the Treasurer's report of the 'Surplus Transferred to Quinquennial Equalization Fund' - some £0.9m - as the 'bottom line' (Reporter, 1998-99, Special No. 9, p. 2). Surely, the 'bottom line' is the 'Surplus on Ordinary Activities Before Transfers' of £10.7m, which is, according to the Treasurer's report, 'in accordance with the requirements of the revised Statement of Recommended Practice'. The transfer to the Quinquennial Equalization Fund described as 'the accumulated result of surpluses or deficits on non-restricted income and expenditure in the current and previous years' is an amount after deductions in respect of 'surplus on funds and reserves held centrally' and 'surplus on funds and reserves held by Departments', a practice which appears to conflate budgeting and accounting. In that committed amounts seem to have been deducted previously, these surpluses represent uncommitted amounts, which may have been allocated but have nothing to do with performance in this financial year.
12. We appreciate that the Treasurer's comments are part of her commitment to greater transparency in the accounts and that it could be argued that the naming of the reserve funds to which the transfers are made is irrelevant so long as there are transfers to be made. We suspect from the Treasurer's comments, however, that those responsible for financial planning consider that the outcome for the year was £0.9m and have made decisions on that basis.
13. The University justifies these deductions from income by reference to the difficulty of retrieving funds once given; the Council argue that there is no central control over Departments and that it is inappropriate to remove discretionary control from Departments (Reporter, 1998-99, p. 465). Yet these reserves are only one part of a budgetary process which has as its main element in the Allocations Report an amount that could be adjusted to take account of unspent reserves. The University administration's detachment and the Departments' implied autonomy seem incompatible with the obligation of the University to ensure compliance with the Financial Memorandum.
14. In the context of a savings exercise, the concept of Departmental reserves continues to be a concern. With a surplus of £10.7m, and prior year's Quinquennial Equalization Fund and Departmental and Other Reserves of £8.6m and £50.9m respectively, it is difficult to believe that the increased funds required to raise the salary levels of the highest paid academics could only be met by a staff cull.
15. We recommend that the University review its practice of reducing its stated income and take account of the requirements of FRS 12 [Financial Reporting Standard 12, Accounting for Provisions, Contingent Liabilities and Contingent Assets].
16. We note that the classification of income and expenditure is based generally on the requirements of the Annual Return of Income and Expenditure made to the Higher Education Funding Council for England. We were surprised, however, to discover that salaries for unestablished posts are included in Other Expenses rather than in Staff Costs. To include such costs in other expenses on the basis of contractual terms obscures the University's commitment to its employees and makes analysis and comparison flawed without substantial additional information which is not provided in the accounts. We urge, therefore, that all stipends, salaries, and wages should be included in Staff Costs.
17. We note that the resolution of negotiations with the HEFCE means that 'all public funding should in future be channelled through the two Universities' (Reporter, 1998-99, Special No. 8, p. 4, §9). In this context, we think that it is reasonable to require College accounts to conform to the same standards as those of other publicly-funded educational institutions. We, therefore, recommend that the Finance Committee of the Council, in accordance with their powers under Statute G, III, 2(i), should ask the University to approve a form of accounts for the Colleges which would require College accounts in future to conform to the HEI SORP, whether as well as or instead of the 1926 statutory format.
18. We note that over the forty-one years covered by the table published in the Abstract of Accounts (Reporter, 1998-99, Special No. 9, p. 45) the surplus on the income account of the University's Amalgamated Fund has totalled about £16.5m. It is evident that there has for some time been a policy of using the income account to smooth distributions from year to year, but over the last few years there has almost invariably been a large surplus. We realize, of course, that the abolition of Advanced Corporation Tax relief for charities will result in a reduction of income, but this is a gradual effect over seven years; it is not clear that there is any need to smooth it over an even longer period than this.
19. It is clear that it is not the University's policy to correlate the level of distributions from the Fund directly with the income received. That is no doubt sensible, since it allows the investment policy of the Fund to pursue total return rather than a set yield. However, the stated policy of the Fund is to achieve 'the maximum current income' consistent with 'future growth of income at least equal to the rise in university costs' and 'a total return in excess of' a benchmark index. This suggests that the level of distributions from the Fund should be set so as to equal the excess of the total return on the benchmark over the rate of increase in the University's costs. Over the ten-year period 1988-97 the total return on the benchmark which the University uses (the WM Charity Universe) has been 8.8 per cent per annum in excess of inflation, whereas the distribution yield on the Fund's units is currently 3.8 per cent. Presumably the University's costs are not rising at a rate of 5 per cent per annum in real terms. It might be argued that the last decade has been a period of exceptional real returns on equities, but even over much longer periods the real return on the Amalgamated Fund has been far in excess of its distribution yield (with the result that the real value of units in the Fund has increased by 2.4 per cent per annum over the last forty years). This seems to be a form of surreptitious saving, for which we do not see the justification. We therefore recommend that the Council give consideration to whether the level of distributions from the Amalgamated Fund really is being set at the maximum level consistent with future growth of income in line with rises in the University's costs.
20. The Abstract of Accounts gives (Reporter, 1998-99, Special No. 9, p. 12) numbers of University staff in pay bands over £50,000. The Treasurer has supplied us with the following disaggregation of these numbers into clinical and non-clinical staff.
21. We recommend that such a disaggregation should be included in the Abstract of Accounts as a matter of course from now on.
22. The Board fully support the Council's remarks in paragraphs 1 and 2 of their Annual Report with respect to external pressures and funding (Reporter, 1998-99, Special No. 8, p. 3) and wish to reinforce the Council's concern about the increase in 'bureaucratic load' caused by external agencies. We note the statement in paragraph 4 (Reporter, 1998-99, Special No. 8, p. 3) that 'the Report cannot be a comprehensive review of all the Council's business' but below we wish to bring to the attention of the Regent House some areas of concern that we feel are not fully addressed in the Council's Report.
23. We have already (¶14 above) referred to the restructuring of academic pay and the savings exercise. We suggest that concern shown around the University about the effects of these might be ameliorated in future by increased medium-term planning within Schools and between the Schools and the central administration. We are assured by the Senior Officers that they concur with this view.
24. Following Recommendation II of our Third Report, we welcome the attention being given to the implementation of Management Information Systems exemplified by the creation of a new unestablished post of Director of Management Information Services as advertised in the Reporter of 3 June 1998, and we note that significant resources are being devoted to the implementation of the 'CAPSA' project (the integrated University Accounting Management Information System) which when successfully completed should bring important benefits both to Departments and to the central administration. However, we note that the University has not been informed officially of the name, salary, or tenure of the holder of the Directorship who has been in post since early in this calendar year. We urge the Council to regularize the situation for this and any other similar posts by the customary announcements in the Reporter.
25. The Board have received representations from members of the public and from University officers about various planning matters, in particular the Clarkson Road and Wilberforce Road Athletic Ground developments. We think it improper to comment in detail on these representations this year while the planning process in still under way and while the Director of Estate Management is newly in post.
26. We warmly welcome the Council's assurances over 'full consultation throughout the University' regarding long-term strategic planning, and have been assured by the Registrary that this will take place following the publication of plans currently under discussion by the Planning and Resources Committee.
27. We feel, given that 15,000 students are affected, that a more substantial report on Continuing Education issues would be appropriate. Indeed, we believe that Continuing Education should be given a higher profile within the University. It is striking that the minutiae of all Tripos examinations are published in the Reporter, but that during 1997-98 there is in the Reporter no indication of the contents or scope of the education and the qualifications being provided by Continuing Education to those 15,000 students.
28. In addition, we find it surprising that the Council make no mention of the withdrawal in the Michaelmas Term 1997 of a proposed joint course with Anglia Polytechnic University which was followed by adverse local and national publicity. We therefore welcome the announcement of the Review of Continuing Education (Reporter, 1998-99, Special No. 8, p. 5, §21) and we hope that its terms of reference will include funding, employment conditions, and the form, content, and timing of the Annual Report of the Board of Continuing Education.
29. The Board agree with the Council about the importance of collaboration with industry but have previously referred to '… the concern aroused in some Departments by the 'embedded company units' which may involve a Department's affiliation with just one company, at the cost of competition and with an attendant threat to intellectual freedom …' (Reporter, 1997-98, Third Report of the Board of Scrutiny, p. 820). The increase in concern was well demonstrated at the Discussion on 19 January 1999 of the Report, dated 7 December 1998, of the Council on the construction of a new building for the Computer Laboratory at West Cambridge (Reporter, 1998-99, p. 309).
30. The response to that Discussion has led to the welcome statement that on the topic of collaboration between the University and industry '… the Council have asked the General Board to develop a robust policy and procedures, seeking the advice of the Committee of Management for the Wolfson Industrial Liaison Office' (Reporter, 1998-99, p. 464, §3).
31. We urge the General Board to widen their development of such a policy by taking into account the undoubted success engendered by the Mott Report on the relationship between the University and science-based industry (Reporter, 1969-70, p. 370) which led to the foundation of the Trinity Science Park and the explosive growth of high-tech industry associated with the University. Many studies have attributed a large amount of this success to Mott's liberality with respect to individual Intellectual Property Rights (IPR), and we hope that the undoubted need for collaboration with major industries will not remove the possibility of individual or small-group entrepreneurship.
32. The topic of 'links with industry' must be seen not only to cover the relationship of the University with science- and technology-based industry but also with the publishing industry, and it is perhaps felicitous that the University's Working Party on Copyright, chaired by Professor W. R. Cornish (Herchel Smith Professor of Intellectual Property Law) will be publishing their report this summer. In addition, the University has received valuable advice commissioned by the Vice-Chancellor from Sir Alastair Morton on many aspects of IPR.
33. The Board recommend that the Council and the General Board present to the Regent House, by the Easter Term 2000, a Report on their policies regarding Intellectual Property Rights.
34. The Board receive the minutes of the Audit Committee and are therefore aware of fundamental changes in the frequency of meetings, in the membership of the Committee, and in the conduct of Internal Audit, all of which we welcome. We are therefore surprised that the Council's Annual Report makes no reference to these changes, which were initiated in the year under review. We are assured that such changes will be fully reported in this year's Annual Report.
35. The Board have been concerned about the lack of transparency with respect to the accounts of the Local Examinations Syndicate and the University Press, and therefore welcome moves towards greater disclosure. We urge further changes towards consolidated accounts which would avoid such difficulties as the Local Examinations Syndicate accounts showing a £9.3m transfer to the University and the University accounts showing an £8.3m receipt (the £1m difference being explained by a transfer to the Cambridge Commonwealth Trust).
36. We welcome the Council's support, indicated in paragraph 35 of their Annual Report (Reporter, 1998-99, Special No. 8), for 'family-friendly policies', but state our concern, expressed in more detail elsewhere in this Report (¶¶38-44), that this support is mere rhetoric.
37. The Board welcome the new appointments to the Pro-Vice-Chancellorships (Reporter, 1998-99, Special No. 8, p. 7, §40), especially as they bring to the posts experience from the Humanities. The Board express the hope that the Council will continue to exercise vigilance over issues of apparent conflict of interest involving representatives of the University, when dealing with industry and the professions.
38. For several years the Annual Reports of the General Board have acknowledged the increasingly pressing need to address the low levels of pay throughout the University. In the latter part of their Report for 1995-96, the General Board declared that they continued to be 'exercised' by this issue (Reporter, 1996-97, p. 304, §53). Similar concern was expressed a year later about 'the low levels of pay for all staff and the difficulties of recruitment that this causes at all levels, not only at the professorial level' (Reporter, 1997-98, Special No. 9, p. 21, §55).
39. Following the publication of their Report on the recruitment, reward, and retention of academic and academic-related officers (Reporter, 1997-98, p. 804) the General Board's Annual Report for 1997-98 rightly assigned a higher priority to these matters, reiterating the seriousness of 'low levels of pay for all staff' (Reporter, 1998-99, Special No. 8, p. 8, §§8-10).
40. Such long-standing expressions of concern might reasonably be thought to have encouraged the hope for an integrated policy on pay, and indeed for 'a more coherent strategy for recruiting and retaining staff' (ibid., §8). Unfortunately, the General Board's thinking on the matter has remained fragmented and selective at best. Instead, the Report of 3 June 1998, which in the absence of serious alternatives was approved with minor modifications in a recent ballot, addressed the low pay not of 'all staff' but only of some of those already at the top of their respective pay scales. Attempts to attract, reward, and retain distinguished Professors and Senior Lecturers are of course much to be welcomed. But nothing in the General Board's recent Reports suggests any tangible recognition of the indispensable contribution to teaching and research made by younger staff. The University's outstanding HEFCE ratings for research and teaching, and of course their budgetary implications, rest on the shoulders not merely of outstanding Professors, but depend to an equal or greater extent on the 'national' and 'international' excellence of every other member of staff. Similarly, the savings exercise required to finance enhanced rewards for a few senior staff has already entailed adverse ramifications for the University's overall establishment that will be borne by the Regent House as a whole.
41. The average cost of a modest terraced house in Cambridge is now six times the salary of a University Lecturer aged 30, whereas in 1985 it was three times that salary. A Lecturer fortunate enough to obtain for her small children two of the only seventeen available places in the University Nursery (Reporter, 1998-99, p. 221) will be asked to pay £8,800 of taxed income for the privilege. Needless to say, it is of course younger staff who are most likely to require mortgages and childcare. At the same time, the true and fair view of Cambridge academic life is seriously distorted by:
42. At a time when equal opportunity of access to institutions of higher education is rightly at the heart of government policy, this University's employment strategy for younger staff seems increasingly to militate against the recruitment and retention of academic staff without alternative sources of income.
43. We therefore recommend that the General Board present to the Regent House by the division of the Easter Term 2000 a Report on the recruitment, reward, and retention of all academic and academic-related staff, especially those not covered by the recently approved scheme for Professors and Senior Lecturers.
44. We also recommend that the General Board present to the Regent House by the division of the Lent Term 2000 a Report outlining their policy on the financial benefits of College Fellowships, and on external income earned by full-time employees of the University.
45. Since the Report of the General Board was published the Regent House have had an opportunity to vote on the various recommendations respecting Senior Lectureships and Professorships. The Board note the results and also note the helpful response of the General Board with respect to the Professorial awards, stating that they 'accept Professor Snodgrass's suggestion that statistical data, including the number of applications made, together with the percentage of applicants who are successful, should be published in the Reporter' (Reporter, 1998-99, p. 55).
46. We recommend that such statistical data include, in addition, (1) the distribution among the various Schools, and (2) the gender distribution.
47. The Board were pleased to be assured by General Board officers that the General Board are minded to publish details of the new model Contracts of Employment and to make clear whether the revised contracts apply to promoted staff as well as to new staff (Reporter, 1998-99, Special No. 8, §16).
48. While we welcome the monitoring and collecting of data on this matter, we should be very glad to know what actions and policies are being adopted in response to the information now available, especially in the light of recent government reports about gender inequality throughout the higher education sector. The Board feel that the programmes and developments described in this section of the General Board's Report (Reporter, 1998-99, Special No. 8, §§17-20) were, in actuality, somewhat less ambitious than the words used to describe them - the policies being welcome, the practice falling short.
49. The General Board's 'welcome for the development of more 'family-friendly' policies' (Reporter, 1998-99, Special No. 8, §21) and 'commitment to best practice on fixed term contracts' (Reporter, 1998-99, Special No. 8, §22) seem to be in immediate contra-distinction to the caveats expressed in these paragraphs. We received assurances from General Board officers that these matters were under active review by the Work and Stipends Committee, and we look forward to the crystallization of 'best practice'.
50. The Board are concerned about an apparent loss of momentum with respect to the Strategic Committee for the Natural Sciences Tripos (Reporter, 1998-99, Special No. 8, p. 12, §47) which, having been established in October 1998 (Reporter, 1998-99, p. 59, Grace 6 of 21 October), with a Chairman appointed in January 1999 (Reporter, 1998-99, p. 298), first met in late April 1999.
51. The Board are not convinced of the unquestioned desirability of joint courses (such as that in Law between the University and Paris II) for a residential, collegiate University, and urge the General Board to monitor the existing course for long enough to gain a thorough understanding of the benefits and drawbacks of such courses before adopting this model as 'a strategy for future joint arrangements' (Reporter, 1998-99, Special No. 8, p. 13, §51).
52. The Board urge the General Board to avoid the use of jargon terms such as 'Departmental H8 accounts' which are incomprehensible to the majority of the Regent House.
I. The Board recommend that the Council and the General Board present to the Regent House, by the Easter Term 2000, a Report on their policies regarding the overall balance of support as between the University's various Schools (¶9).
II. The Board recommend that the Council publish their reasons for not consolidating the accounts of the Cambridge University Press and the Local Examinations Syndicate with those of the University, and for not aligning their financial year-ends with that of the University (¶10).
III. The Board recommend that the University review its practice of reducing its stated income and take account of the requirements of FRS 12 [Financial Reporting Standard 12, Accounting for Provisions, Contingent Liabilities and Contingent Assets] (¶15).
IV. The Board recommend that the Finance Committee of the Council, in accordance with their powers under Statute G, III, 2(i), ask the University to approve a form of accounts for the Colleges which would require College accounts in future to conform to the HEI SORP, whether as well as or instead of the 1926 statutory format (¶17).
V. The Board recommend that the Council review their policy on the level of distributions from the Amalgamated Fund (¶19).
VI. The Board recommend that a disaggregation of the numbers of higher paid staff into clinical and non-clinical categories be included in the Abstract of Accounts (¶ 21).
VII. The Board recommend that the Council and the General Board present to the Regent House, by the Easter Term 2000, a Report on their policies regarding Intellectual Property Rights (¶¶29-33).
VIII. The Board recommend that the General Board present to the Regent House by the division of the Easter Term 2000 a Report on the recruitment, reward, and retention of all academic and academic-related staff, especially those not covered by the recently approved scheme for Professors and Senior Lecturers (¶¶38-44).
IX. The Board recommend that the General Board present to the Regent House by the division of the Lent Term 2000 a Report outlining their policy on the financial benefits of College Fellowships, and on external income earned by full-time employees of the University (¶¶38-44).
X. The Board recommend that statistical data published on Professorial awards should, in addition to the number of applications made and the percentage of applicants who are successful, include (1) the distribution among the various Schools and (2) the gender distribution (¶¶45-46).
8 June 1999
|RICHARD STIBBS, Chairman||BRIAN HEBBLETHWAITE||SIMON REDFERN|
|CLAIRE BARLOW||SUSAN LINTOTT||DAVID SMITH|
|MARKUS BOCKMUEHL||CAROLINE MALONE||ANTHONY SNODGRASS|
|ARNOLD BROWNE||MICHAEL POTTER||KATHLEEN WHEELER|
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Cambridge University Reporter, 23 June 1999
Copyright © 1999 The Chancellor, Masters and Scholars of the University of Cambridge.