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REPORTS

Report of the Council on the financial position of the Chest, recommending allocations for 2001-02

The COUNCIL beg leave to report to the University as follows:

1. The purpose of this Allocations Report is to assess the financial position of the University and to recommend allocations from the Chest for the financial year 2001-02. At the end of the Report some general comments are made about this process, with recommendations for changes which are intended to give the Regent House a better overview of the University's total finances, rather than concentrating, as now, on unrestricted (Chest) income and expenditure. However, the major part of this Report has been prepared along the lines followed in previous years.

Chest income and expenditure for the current year, 2000-01

2. When the Council reported in June 2000 (Reporter, 1999-2000 p. 782) they expected that the total income for the year 2000-01 would be £376.8m, of which £184.4m would be Chest income and £192.4m would be non-Chest, or restricted income.1 The overall position was expected to be a deficit of £2.2m on the Chest and a surplus of £5.5m on non-Chest.

1 Note: Chest income consists of Funding Council grants, home and overseas fees, endowment income, research grant overheads, transfers from CUP and UCLES, and 'other operating income'. Non-Chest income consists of trust funds, special funds, the direct cost element of research grants and contracts, self-supporting accounts, services rendered, and residences and catering.

3. The revised estimate for the current year shows an increased deficit on the Chest. The Council regret this increase, but believe that it can be supported for one or two years, while action is taken to balance the University's overall financial position (see paragraph 48).

  Revised Estimate Original estimate Change
  £m £m £m %
Chest income 186.5 184.4 2.1 1.1
Chest expenditure 190.9 186.6 4.3 2.3
 
Net deficit (4.4) (2.2) (2.2)  
 

4. The details of the changes can be summarized as follows:

Income

· Additional grants from HEFCE largely offset by additional £1m expenditure (i.e. funding for the Institute of Zoology);
· Increase in transfer of income from non-operational property management, reflecting a reduction in the repair provisions after a period of major refurbishment (£0.6m);
· Reduction in overheads recovered from research grants, reflecting level of grants somewhat below estimate (£0.2m);
· A change in presentation which shows additional income from Lynxvale Ltd (the University's wholly-owned design/build subsidiary) wholly offset by additional expenditure (£0.7m);
· A reduction in interest receivable on cash balances following reduction in interest rate levels and a reduction in cash flow due to claims delays caused by problems with the financial system (£0.3m);
· Increases in Home and European Union (HEU) and international academic fees (£0.4m).

Expenditure

· The offsets referred to above (£1.7m);
· Additional expenditure on the University Financial System (£0.6m);
· Returns to the chest of £2.3m:
- £1.3m of the staff disengagement reserve. This reserve has been built up for some years and has not been utilized
- £0.8m due to delay in implementing the new Senior Lecturer posts
- £0.2m overestimate on student housing reserve
· The cost of promotions exceeded estimate by £0.3m. There was also a re-allocation of the inflationary savings on the pay award to assistant staff;
· Additional allocations of £1m each to equipment and furniture, minor works fund, strategic planning reserve, and a provision for convergence costs of Homerton. It is hoped that there should be no net costs of the Homerton merger (see the Joint Report of the Council and the General Board on Teaching and Research in Education, and on Homerton College, Reporter, p.216) but it is felt prudent to allocate a reserve.

Other income and expenditure (see note to paragraph 2 above)

5. This includes surpluses from trading activities, trust and special funds, and the departmental element of research grants and contracts.

When the original estimate for 2000-01 of a £5.5m surplus was prepared, the actual figures for 1999-2000 had not been produced. The anticipated surplus of £1.5m for 1999-2000 turned into an actual deficit of £3.6m. On that basis, in the absence of any detailed forecasts, it is prudent to revise the 2000-01 surplus down from £5.5m to £1.5m.

Forecasts for 2001-02

Overall position of the Chest

6. The estimate for 2001-02 shows an increased anticipated deficit of £5.1m. The Council feel that this level of planned deficit is acceptable for a further year.

  2001-02 2000-01 Change  
  £m £m £m %
Chest income 199.3 186.5 12.8 6.9
Chest expenditure 204.4 190.9 13.5 7.1
 
  (5.1) (4.4) (0.7)  
 

Preparing the estimates

7. As in previous years the estimates have generally been prepared on the historic basis. Officers have used the previous year's estimated expenditure figures, updated to show the effect of the year 2000 pay award, based on approved establishments. They have added in a global estimate for future pay awards in April/July 2001 and April/July 2002 and have incorporated £2.0m of recurrent new needs already agreed by the Council and the General Board (see below). Some expenditure is entirely driven by external demand (for example, utilities costs, insurance premiums, removal expenses - which depend on the number of staff recruited from outside Cambridge - and support for overseas students) and the figures have been adjusted to incorporate increases or decreases in these items.

8. The main change, year-on-year, reflects the Council and General Board's views on New Needs and on Transfers to Reserves. Recommendations under these heads for 2001-02 are described below, as part of the analysis of Chest expenditure.

Chest income

9. Income is estimated to rise by 6.9 per cent to £199.3m.

 

  Estimate
2001-02
Revised estimate
2000-01
Change  
  £m £m £m %
HEFCE grant 129.0 121.5 7.5 6.2
TTA 3.9 1.2 2.7 225.0
Academic fees and support grants 39.3 37.5 1.8 4.8
Endowment income and interest receivable 7.8 7.8 - -
Other operating income 8.8 8.8 - -
Research grants and contracts overheads 10.5 9.7 0.8 8.2
 

 

199.3

186.5

12.8

6.9
 

The details of the changes are as follows:

HEFCE grant

10. The 6.2 per cent increase includes two major items (Institute of Zoology and Homerton funding) which are offset by increases in expenditure. The total funding, excluding these offsets, has increased by £4.3m or 3.5 per cent.

11. The HEFCE teaching grant to Cambridge for 2001-02 increases by 2.9 per cent. The grant is some £50.9m including sums which are part of the agreed College fee transfer. Many other Higher Education Institutions (HEIs) benefit from substantial extra monies in support of additional student places, and therefore receive higher percentage increases. Although universities have successfully lobbied for remission of the regular 1 per cent annual 'squeeze' on teaching funds, the future funding level is still in the hands of Government; it is likely that any extra resources will be unpredictable and have substantial strings attached.

12. The main quality-related component of research funding ('QR') for 2001-02 shows an increase of 2.3 per cent over 2000-01, less than for many comparable HEIs. This generally reflects the relative shift in the University's share of national research volume, compared with other institutions. However it is also affected by a change in the underlying HEFCE formula: the 'QR' funding related to income from UK Charities is now capped, which may have cost the University some £0.75m. This latter element of funding is in any case under review for the future; and the separate 'GR' element, some £0.9m to Cambridge, is being abolished from 2002. The overall level of 'QR' could change significantly from 2002-03, depending on the outcome of this year's Research Assessment Exercise, although the HEFCE have hinted that the existing level of funding will be maintained in real terms for those subjects which continue to be rated 5* and, if possible, 5.

Student numbers

13. Current projections assume that there will be little if any increase in the numbers of undergraduates admitted annually through the normal process. The Council will shortly be reviewing the position in consultation with the Colleges' Standing Committee, in the light of the results of the recent survey of the capacity of the Colleges which was conducted in the Lent Term 2001 by the Colleges' Committee. For the present the Council are assuming that the number of undergraduates in residence will continue to increase very slowly, at about 0.5 per cent a year: this projection includes the increased numbers arising from the new four-year course in Clinical Medicine intended for graduates transferring to medicine after their first degree, for which the first students will be admitted in October 2001.

14. The future position on postgraduate numbers continues to be difficult to predict. For 2000-01 the number of home postgraduates entering courses for the first time reached the highest level on record. It is however unclear to what extent this position is sustainable having regard to the increasing level of student debt and the consequential disincentive for home students to pursue postgraduate study. The new Gates Scholarships will provide further support for overseas postgraduates. After reviewing these factors, together with the University's increasing physical capacity as a result of its substantial building programme, the Council forecast the continuing growth of postgraduate numbers at a rate of about 2.5 per cent a year.

TTA

15. TTA grant funding and tuition fees for Homerton have been included in the 2001-02 estimate and account for the whole increase.

Funding from the TTA for Initial Teacher Training barely rises compared with this year, due to a fall in the student intake. Funds for In-Service Education of Teachers are subject to a bidding process, the results of which are not yet known.

Academic fees and support grants

16. Fees: home and EU students. The estimated income to the Chest from this source for 2001-02 is £19.3m, based on University Composition Fees for undergraduates which have been set by the Government at £1,075. The postgraduate fee for 2001-02 has been set by the Government at £2,805.

17. Fees: overseas students. The estimated income to the Chest from this source for 2001-02 is £19.1m, which assumes 857 undergraduate students and 1,593 postgraduates students. By Grace 2 of 28 February 2001 the University approved increases in Composition Fees for overseas students of 2.4 per cent for 2001-02, in line with the rates of increase announced by the Government for home undergraduate and postgraduate fees.

18. College fees. Following the agreement which was reached in 1999 between representatives of the University and the Colleges (Reporter, 2000-01, p. 259), the weighted average College fee payment made by the University to the Colleges in respect of home and EU students eligible for fee support from public funds was calculated for 2000-01 as £2,712. Under the agreement the rate of increase in the per capita payment is determined each year having regard to the underlying rates of increase in the components of the University's HEFCE grant but without regard to planned student numbers, and allowing for the annual reduction in the sums included in the block grant over a period of ten years of which 1999-2000 was the first. The uplift in the weighted average College fee payment made by the University to the Colleges in accordance with this agreement will be 0.51 per cent, leading to a weighted average College fee payment for 2001-02 of £2,725.

Endowment income and interest receivable

19. It is estimated that income from this source will be £7.8m, made up as follows:

  £m
Income from amalgamated Fund dividends on Chest income 4.7
Interest on short-term and other investments 1.8
Income from managed property rental 1.3
 

 

7.8
 

Other operating income

20. It is estimated that income from this source will be £8.8m, made up as follows:

  £m
Annual transfer from Local Examination Syndicate 3.8
Refund of VAT (recurrent) 2.1
Annual unearmarked donation from the Cambridge foundation 1.0
Deposit account 0.5
Lynxvale management fee 0.4
Amalgamated Fund administration fee 0.3
Miscellaneous 0.7
 

 

8.8
 

Research grants and contracts

21. Overheads of externally funded research. It is estimated that overheads accruing to the Chest will be £10.5m, which represents an 8.2 per cent increase over the income estimate for 2000-01. The estimate is based on a predicted volume increase of 5.0 per cent (plus inflation) in the year 2001-02, and is expected to be maintained at this level over the planning period (to 2004-05). The Chest share of the overheads earned is expected to be 60 per cent of the total for the period. Chest overheads are used to offset all centrally funded operation costs associated with research grants. The Research Policy Committee of the General Board has noted that:

· Cambridge lags significantly behind other comparable universities in its recovery of overheads on research grant funding;
· the number of companies that have chosen to pay a lower overhead in exchange for intellectual property rights is small.

The General Board have agreed that the standard minimum overhead target for recovery on industrial research funding should henceforth be 70 per cent of staff costs, with the University retaining the intellectual property rights. The Board intend to discuss the recovery of overheads on research funded by charity and other non-industrial sources and that such discussion will take account of the outcome of the Transparency Review and the development of a Resource Allocation Methodology.

Chest Expenditure

22. Expenditure is expected to rise by 7.1 per cent over 2000-01 (see below).

Chest Expenditure


  Estimate
2001-02
Revised estimate
2000-01
Change  
  £m £m £m %
Academic Departments 90.6 83.1 7.5 9.1
Academic services 16.2 15.4 0.8 5.2
General educational expenditure 4.5 5.1 (0.6) (11.8)
Maintenance of premises 26.7 25.0 1.7 6.8
Administration and central services 14.1 14.1 0.0 0.0
Student and staff facilities and amenities 1.7 1.6 0.1 6.2
Residences and catering operations 0.6 0.6 0.0 0.0
Severance costs and unfunded pensions 0.1 (0.9) 1.0 -
Miscellaneous expenditure 3.1 3.1 0.0 0.0
Provision for pay and price increases 5.2 5.0 0.2 4.0
College fee transfer (inc. Homerton) 29.5 26.5 3.0 11.3
Allocations for capital expenditure
(Minor Work,Planning and Consultancy)
8.7 11.5 (2.8) (24.3)
Strategic Planning Reserve 0.0 1.0 (1.0) -
Provision for salary restructuring 0.0 0.5 (0.5) -
Provision for new recurrent needs 4.8 1.5 3.3 -
Provision for non-recurrent expenditure 2.3 1.4 0.9 64.3
Estimated saving on stipends and wages (3.7) (3.6) (0.1) 2.8
 

 

204.4

190.9

13.5

7.1
 

Academic priorities

23. In considering funding priorities the Council and the General Board recognize the need to ensure that sufficient funds are available for new developments, including the running of new buildings, for strengthening the infrastructure, and to reward staff adequately at all levels. Within the proposed budget, earmarked funds will be allocated for additional staffing and other costs needed to support the running of:

· new buildings for Mathematics;
· the new building for the Computer Laboratory;
· the Betty and Gordon Moore Library; and
· the MRC/Hutchison Centre for Translational Cancer Research.

24. Additional provision will also be made to enhance the University-wide role of the Language Centre, following a review, and to cover the start-up costs of the new four-year graduate medical course, for which additional recurrent HEFCE funds will be received in due course.

25. The Council has, in addition, set aside £1.5m for promotions and £1.3m for new needs yet to be approved but for which funds will need to be drawn upon in 2001-02. This amount is very much lower than the total New Needs requests, collated by the Councils of the Schools and new sub-committees A and B.

26. Further smaller sums have been allocated recurrently to cover the increase in medical student numbers, the Preparing for Patients Course, various University Library initiatives, and the Academic Staff Development Committee's programme. The total, amounting to £2m, of new recurrent needs already approved by the Council and the General Board, incorporates all these, together with additional resources to run the University Financial System (CUFS) and computing support for the Schools of Arts and Humanities and Humanities and Social Sciences. In allocating the unearmarked sum made available for new needs the General Board, through the Resource Management Committee, expect to give a higher priority to further strengthening of the administrative support in Faculties and Departments, both to support CUFS and in the light of the recommendations of review committees.

27. The Council and the General Board have agreed that, as in 2000-01, academic promotions to personal Professorships, Readerships, and University Senior Lectureships should be primarily determined by the assessment of academic merit, without budgetary restriction. The Council hope that the sums set aside will prove adequate but, if necessary, they will ensure that funds are available to meet the additional cost of promotions recommended by the bodies concerned.

Personnel matters

28. The current academical year has been the first full year of operation of the integrated committee structure and the revised arrangements for central personnel administration introduced by the Council and the General Board.

29. In a consultative document (00/56) and the subsequent invitation to apply for funds (01/16), the HEFCE have set out proposals for providing additional funding for rewarding and developing staff in higher education. A conditional grant would be made available for three years to support additional activity or the extension of existing activity. For Cambridge, such funding (including the TTA allocation) would be worth in the order of £2.3m in 2001-02 rising to £5m by 2003-04. These figures are included in the estimates of income included in this Report. To obtain the grant, universities have to submit Human Resources Strategies by 1 June that address the key areas identified by the Funding Council (recruitment and retention, staff development, equal opportunity targets and equal pay, staffing reviews, performance reviews, and dealing with poor performance). The Human Resources Strategy must integrate with the institution's mission and strategic plan, cover the HEFCE-identified priority areas, and contain targets that can be used to assess the effectiveness of the expenditure of the grant monies. For the moment the additional funding is only being made available for three years, but there are indications that it might continue beyond 2003-04 depending on the outcome of monitoring and evaluation that the HEFCE will be undertaking in due course. The Council and the General Board are considering how to respond to the HEFCE. They will submit an interim strategy document by the Funding Council's deadline to secure the additional funds; they will subsequently seek the University's approval of the strategy in the usual way through a report.

30. Through the Personnel Committee and its working groups (on recruitment, reward, and retention, role analysis, academic promotion procedures, contract research staff, and appraisal), the Council and the General Board have taken forward work on a wide range of issues. Among the immediate proposals are the abolition of age-related salaries, improved financial assistance with re-location, the introduction of the Higher Education Role Analysis scheme (HERA) to provide a common grading methodology, and the harmonization of maternity provision across staff groups. The Committee will also be addressing issues such as market pay and harmonizing the existing arrangements for merit pay. Staff development and in particular management development for staff in supervisory and management positions in all institutions are further matters for priority consideration by the Committee. Through the Committee and the Colleges Standing Appointments Committee discussions have been opened over a range of matters affecting College Teaching Officers and University officers who undertake College duties; a consultative paper has been issued to Faculties and Departments (and to the Colleges). Inevitably many of the Committee's proposals will have cost implications and these are currently being analysed. The central bodies will report to the University on all these matters as appropriate.

31. With regard to pay, through the 'translation' of the Doctors' and Dentists' Review Body award, clinical academic staff have received an increase of 3.9 per cent. For other staff groups, including non-clinical academic staff, negotiations are continuing and (as noted above) an allowance of 3.25 per cent has been made in the financial assumptions underlying this Report. If the settlement is above that figure some adjustment will have to be made.

32. The coming year will see the implementation of further provisions of the Data Protection Act, the introduction of the Race Relations (Amendment) Act and of the EU Directive on Fixed Term Work. The Council believe that the Personnel Committee and the revised arrangements for personnel administration will prove to be essential in developing and supporting the implementation of University-wide good practice in these and other areas. The new legal requirements will however inevitably carry with them additional compliance costs.

Medium term capital programme

Estate Plan

33. The dramatic increase in the capital programme has continued, from the usual level of around £80m of buildings in design or construction, through the figure of £280m reported last year to the current level close to £400m. Most of the capital funding comes from Central Government via JIF/SRIF, from Research Councils, the Wellcome Trust, industry, and from private or trust benefactions. This considerable programme of building is exacerbating the strain on recurrent budgeting as the estate expands faster than income available to maintain it.

34. During the year the Council and the General Board approved Estate Plan policies whereby

· no future building projects should be approved without a business plan being prepared from which it will be clear how the running costs are to be funded;
· space utilization is to be better managed; and,
· when possible, built space should be disposed of to offset the increase in the estate resulting from the building of new space.

35. A review of the various University sites has begun with a view to a longer-term plan for better use of the land and built space. A programme of option appraisals has also begun, which involves the strategic and financial assessment of all the options available to the University in order to evidence a sound and reasoned investment decision.

Major capital works

36. Projects totalling £82m started on site in 2000-01 and a further £147m's worth of projects are due to start in 2001-02, subject in a number of cases, however, to full funding being secured. Projects due for completion in 2000-01 and 2001-02 amount to £183.1m, and include the Betty and Gordon Moore Library, the Centre for Mathematical Sciences, the Island Site Phase II, the Faculty of Divinity Building, the William Gates Building for Computer Sciences, the Microsoft Building, the University Library Northwest Extension, the Department of Chemistry refurbishment, and major infrastructure works at West Cambridge and the Sidgwick Avenue Site.

Minor works

37. The minor works programme is now largely based on prioritized annual review of requirements for improvement of the quality or amount of space to meet changed needs, such as changes in the nature of research or teaching, or the arrival of new staff. Schemes in progress during 2000-01 totalled more than £12m, with an ongoing programme valued at more than £20m funded, in many cases, externally.

Transfers to reserves

38. Most of the capital works referred to above have been achieved with very limited use of Chest funds. Because of the overall pressure on the budget for next year the Resource Management Committee recommended, and the Council and the General Board have agreed, a reduction in the allocations to the Buildings Maintenance Fund, the New Buildings Enabling Fund, the Strategic Planning Reserve Fund, and the Minor Works Fund. If additional income is achieved, however, the Council aim to restore allocations to the 2000-01 levels.

Maintenance of buildings

39. In November 2000 the Finance Committee, on the advice of its Buildings Sub-committee, recommended to the Council that the buildings maintenance budget should be set at 1.64 per cent of the depreciated replacement cost of the estate. This was slightly in excess of the HEFCE-recommended minimum level of 1.50 per cent. The allocations for 2001-02 (including the annual transfer to the Buildings Maintenance Fund as well as expenditure under Head 8 of Estimates) reflect a proposed level of spend of 1.33 per cent, a shortfall of approximately £1.5m below the recommended minimum.

40. A major programme of buildings maintenance continued in 2000-01, with the result that the backlog of maintenance has been held to a level of £3.8m. Some of the larger projects included stonework restoration at the New Museums Site and the Senate-House, fire precaution and electrical works across the estate, and the cooling tower replacement at the Department of Physics. The Council are concerned that the proposed reduction in the level of spend in 2001-02 increases the risk that backlog maintenance liability will increase and means that there will inevitably be some delay in improving working conditions in some parts of the estate. The bulk of the work is reactive maintenance but there is a significant amount of preventative work in the programme. The Council intend to restore the minimum level of allocation in 2002-03 and subsequent years, and assume for this purpose that new buildings recently brought into commission will by then be enabling an increased flow of income to the Chest.

Environment

41. Good progress has been made in addressing environmental and sustainability issues as these have been increasingly seen as important by staff and students.

42. The University's third Environmental Plan includes specific actions relating to pollution control, waste, energy, wildlife, and organization. All actions have been costed and evaluated for benefit, performance indication, and present status of the issue it relates to. The plan has an initial cost of £182,000, with a recurrent cost of £124,000.

43. The Travel Plan received general approval from the Council in November 2000 subject to the addition of some further actions. It aims to help staff utilize the best option in travelling to and from work. Amongst the plan's objectives are the promotion of public transport, management of the reducing number of car parks, and encouragement of the cycling culture. Already the Estate Management and Building Service has had discussions with local bus companies over extending bus services, with particular reference initially to the provision of a dedicated route to service Sidgwick Avenue and West Cambridge. Additionally the Park and Cycle facility at West Cambridge is now operational, initially for displaced badge holders from central car park sites.

44. On matters of sustainability, the University has accepted the offer to join the Forum for the Future, a partnership of business, government, higher education, media, and voluntary sector organizations that aims broadly to influence commitment to sustainable development.

Non-Chest income and expenditure

45. In the absence of any detailed forecasts it is estimated that the surplus on non-Chest income and expenditure will remain at £1.5m.

Overall position of the Quinquennial Equalization Fund (QEF)

46. The balance on the QEF at 1 August 2000 was £7.3m. The estimated deficit in the current year will reduce this to £2.8m, which is insufficient to accommodate the estimated deficit in 2001-02 of £5.1m. Therefore, it will be necessary to fund the excess deficit from other reserves.

Outlook for 2002-03 and beyond

47. Projections beyond 2002 have been prepared which show estimated deficits of £6m, £6m, and £10m for the following years.

The principal assumptions that have been made in developing these projections are:

· limited growth in HEFCE income;
· 0.5 per cent growth in undergraduate numbers, and 2.5 per cent in postgraduates with a 2.5 per cent inflation-related 'price' increase and a possible increase in excess of that for overseas students;
· pay and other cost increases broadly in line with inflation;
· cost increases to match the growth in the estate, but taking account of possible disposals of built space and of the increasing emphasis on energy conservation.

48. In order to restrict the levels of deficit a number of additional targets for income growth and expenditure reduction have been incorporated within these estimates:

· £4m over the three years of additional endowment income, VAT savings, contributions from Cambridge in America, and miscellaneous income;
· an increase in the volume of research carried out, particularly by Departments which have benefited from new buildings and/or major refurbishment;
· increases in overhead recovery rates for research grants, particularly from commercially funded research;
· reductions in the provisions for recurrent needs with new developments funded to an increasing extent through compensating contractions in existing activities;
· targeted savings in purchasing costs resulting from gradually improved utilization of CUFS;
· reductions in allocations to reserves, other than the Buildings Maintenance Fund.

The Council have asked their Planning and Resources Committee to develop an action plan to eliminate the predicted recurring deficits taking into account the targets set out above. This plan will need to be approved during the next academical year. The aim will be to return to a modest surplus by 2003-04.

Changes to the planning process

49. It is the duty of the Council to report on the University's financial position and to recommend allocations from the Chest. It is also its duty to prepare annual accounts of the University. There are substantial differences between the formats of these two Reports:

· non-Chest income and expenditure is noted in this Report but no detailed budget process is undertaken. Non Chest income has risen dramatically in recent years and now represents 50 per cent of the University's total income;
· the Allocations Report does not include any depreciation costs;
· the Allocations Report includes a number of allocations for capital expenditure and allocations to provisions and reserves. These are not included within the statutory accounts income and expenditure statement.

50. These differences cause confusion particularly as they can be sufficient to turn planned deficits in the Allocations Report into actual surpluses in the statutory accounts. Therefore, the Council intend to move away from the current Allocations Report basis to the statutory accounts format for all reporting. In order to achieve this and improve the quality of financial planning within the University it is the intention to:

· develop longer term (3-5 years) strategic plans which originate at the School level and take into account all their anticipated income and expenditure irrespective of the source of funding;
· integrate within these plans full consideration of capital projects (which must already be supported by whole life costings) and the required level of infrastructure and administrative support;
· endeavour to introduce a similar procedure for all major new academic initiatives;
· introduce a new resource allocation model which allocates all income to Schools and institutions, and takes account of appropriate risk analysis in relation to different sources of income;
· abolish for these purposes the distinction between Chest and University Education Fund;
· devolve the resultant budgets and any necessary staff and other resource to Schools and institutions.

51. Underlying these statements is a belief that the Cambridge University Financial System will eventually provide financial information which is adequate to enable the University's academic leaders to plan for the future.

52. The Council appreciates that this is not a straightforward accounting exercise but rather a fundamental change in the way resources are allocated and managed within the University. It will also require a change of Statute. It is hoped to introduce elements of this new process in the next financial year with a view to full implementation in planning for 2002-03.

Recommendations

53. The Council recommend:

I. That the supplementary allocations for 2000-01 referred to in this Report be approved.

II. That allocations from the Chest for the year 2001-02 be as follows:

(a) to the Council for all purposes other than the University Education Fund: £89.816m;
(b) to the General Board for the University Education Fund: £118.248m.

III. That the allocations for 2001-02 be adjusted to take account of any differences between actual and estimated expenditure on pensionable stipends, wages, pensions, national insurance contributions, and other personal emoluments.

IV That any surplus achieved in 2000-01 and any supplementary HEFCE grants which may be received for special purposes during 2001-02 be allocated by the Council, wholly or in part, either to the General Board for the University Education Fund or to any other purpose consistent with any specification made by the HEFCE, and that the amounts contained in Recommendation II above be adjusted accordingly.

11 June 2001 ALEC N. BROERS, Vice-Chancellor GORDON JOHNSON JAMES MATHESON
  A. J. BADGER DONALD LAMING G. A. REID
  C. R. J. BAILEY A. M. LONSDALE JEREMY SANDERS
  MAT COAKLEY C. LUDLOW M. SCHOFIELD
  PETER GODDARD D. W. MACDONALD L. TAUB
  D. A. GOOD M. D. MACLEOD

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Cambridge University Reporter, 20 Month 2001
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