Reporter Copyright © 2001 The Chancellor, Masters and Scholars of the University of Cambridge.//: Report of Discussion

Report of Discussion

Tuesday, 12 February 2002. A Discussion was held in the Senate-House of the following Reports:

Report of the Council, dated 28 January 2002, on the composition of the Audit Committee (p. 481).

Professor A. J. BADGER:

Mr Deputy Vice-Chancellor, I speak as the current chair of the Audit Committee to support strongly the recommendation of the Council to reconstitute the Audit Committee in line with Professor Shattock's recommendation so that the Committee has a lay majority and, ultimately, a lay chair.

As I indicated in the Discussion of 27 November (and as the Audit Committee has reiterated in its Annual Report to the Council), the Audit Committee and the internal auditors did raise repeated concerns about the implementation of CAPSA, but it is clear that they did not do so with the necessary urgency to prompt sufficient action by the Council. The Audit Committee has in the past year taken steps to scrutinize the University's controls more robustly and to convey its concerns with greater urgency to Council, but I am convinced that a lay majority is essential to make the Committee a more 'uncomfortable bedfellow' to the Council. First, while the University has been well served by the external members on the Audit Committee, there is no doubt at the moment that they can feel isolated and exposed. Second, lay members more easily have the experience, independence, and the authority to provide a detached and rigorous assessment of the University's business. Third, the chair of an Audit Committee with a lay majority will be in a stronger position to force the Council to take notice of the Committee's concerns.

I would like to make three brief additional points: I believe a lay chair is in the best position ultimately to bang the table and insist on the University halting a particular project until the Audit Committee's concerns are met. To do that, the chair must be on Council. So I very much hope that the changes will be made in due course to the Statutes, as the Report recommends, to provide for lay membership of the Council that will make it possible for there to be a lay chair of the Audit Committee.

Second, an Audit Committee, no matter how effective, will be of little use unless University Committees, the Council, and the Regent House improve the quality and timeliness of their decision-making. It is essential that those involved in the discussion of the Governance Consultation paper recognize this imperative.

Third, I wish to support the emphasis on training laid by Dr Evans, Professor Shattock in his report, and the Pro-Vice-Chancellor, Professor Grant, in the implementation action plan. The Audit Committee already provides training for its members in the responsibilities of Audit Committee membership. Training will also be needed for lay members of the Committee in the operation of the University, otherwise the lay members run the risk of being passive and bewildered, rather than active and challenging, members of the Committee. Finally, training is essential for members of the Council to ensure that they exercise greater responsibility for, and respond more decisively to, matters brought to them by the Audit Committee.

Dr S. J. COWLEY:

Mr Deputy Vice-Chancellor, if the proposals both in the Report of the Council on the composition of the Audit Committee and in the Notice on University Governance were carried through, we could theoretically end up with the whole Audit Committee being composed of external members; namely the external member of Council appointed as Chairman in class (a), the other two external members of the Council appointed in class (b) by right of the provision proposed in the Notice that external members of Council become members of the Regent House, and the four persons in class (c), not being members of the Regent House nor employees of the University.

Now it may be that the aim of Council is that the Audit Committee be composed wholly of external members; if not the proposed Regulation 1 should be more tightly worded.

Unfortunately this is not the only issue where the current drafting possibly leaves something to be desired. My reading of the proposed Regulation 1 is that the Chairman of a revised Council could apparently serve on the Audit Committee. However HEFCE document 98/28 suggests that the 'Chairman of the Governing Body should not normally be a member of the Audit Committee' (here I interpret HEFCE's use of Governing Body to mean Council, since the Governing Body of this University does not have a Chairman).

I would also like to note that I can find no requirement in HEFCE document 98/28 that a majority of the Audit Committee need be external members, just a statement that 'care should be taken in the appointment of governors with a significant interest in the institution (including staff governors) to ensure that the independence and objectivity of the Committee is preserved'.

Surely the aim in reconstituting the Audit Committee should be to establish a Committee that will perform its functions effectively, independently, objectively and, if need be, fearlessly. Moreover, as the collapse of Enron demonstrates, having external members on your Audit Committee is not sufficient to achieve this (the whistle-blower in the case of Enron was an internal member of staff). To be effective, the Audit Committee needs to know what is going on at the work-face by having its ears to the ground, or at least by being composed of members who have had sufficient conversations along King's Parade. (To that end it might be worth remembering that Council, and the Principal Officers, appear to have been almost the only members of the University who did not know in advance that 1 August 2000 was going to be an unmitigated disaster.) I would therefore argue that external members need to be supplemented by independent internal members.

There is of course no theoretical reason why elected members of Council cannot be independent internal members of Audit. However, I have heard it suggested that very senior members of the University have argued that the Council should be bound by a form of Cabinet collective responsibility. I see no support for this view in Statutes and Ordinances, but if pressure is being applied in this respect, might it not be hard, if not impossible, for those members of Council on Audit to be independent?

For the above reasons there may be a case for a class of internal members of Audit that are either elected, or appointed by an independent body. If the latter then the Board of Scrutiny might be such an appropriate body (here I declare an interest as a member of the Board of Scrutiny); indeed, there may be a strong case for the four external members being appointed by an independent body rather than Council.

A further reason why the proposed Regulation 1 needs refinement is that Council appears to be trying to kill two birds with one stone, i.e. determine the composition of Audit both pre and post any reform of Council. If the consultation concerning governance is to mean anything then Council should not be making any assumptions about the composition of Council post reform. Further, as Professor Edwards has recently observed, the passing of a new Ordinance is not onerous. Therefore, Council should at present concentrate on a fast-track reform of Audit for the current composition of Council, and bring further proposals forward if the composition of Council is subsequently reformed.

HEFCE requires Audit to have three members of Council, one of whom is Chairman; these should be appointed by Council. I suggest that these members should be supplemented by the appointment by an independent body of two internal persons (who are not members of Council, the Finance Committee, etc.) and four external persons. Such an Audit Committee would not have an external majority, but it would be consistent with HEFCE document 98/28 and have the independence, objectivity, and necessary inside knowledge to be effective.

Council might also like to inform the Regent House as to what the renumeration, if any, might be for external members of Audit, and how the University should ensure that the external members had no conflicts of interest; for instance at the present time would an employee of Vodafone be an appropriate external member?

I, like many, am keen that there is an improvement in relations between the centre and members of the Regent House. I do not believe that this Report has significantly helped matters. Indeed I fear that the publication of an implicit assumption in paragraph 6(a) that the Council will be amended to have external members, even before the publication of the consultation Notice on University Governance, betrays the true nature of the consultation process. However I shall attend the Gordon and Malcolm road-show in the coming weeks for clarification of such weasel words as 'elected by Grace', and to find out if the Chancellor was consulted before the publication of a proposal to deprive him of his membership of Council.

Dr G. R. EVANS:

Mr Deputy Vice-Chancellor, this Report omits the full context for this consideration of the constitution of the Audit Committee. The week after it was published the Reporter contained a Notice (a Notice!). For the first time a plan to alter the fundamentals of our constitution has not been put in a Report and offered to the Regent House for Discussion. That sends a signal about the real intention. Instead there is to be 'consultation', in a series of seminars called 'Cambridge changing' (http://www.admin.cam.ac.uk/univ/change/seminars.html). Why not do both? So much for the Action Plan (Reporter, p. 507) on improving relations between 'us' and 'them'. We are not to be allowed to discuss the Governance proposals until the late summer (unless some of us call a Discussion in concern), until after they have become a fait accompli. Then they will dismiss all objections in another Notice and railroad the Grace through in mid-August when signatures for a ballot are not easily obtained.

And who are 'they'? I want you to notice something about that 'consultation'. It is to be led by Malcolm Grant and Gordon Johnson, who were on the committee which framed the Governance proposals. I call on these individuals to announce publicly at once that they are not themselves willing to be appointed Vice-Chancellor or Pro-Vice-Chancellor under the proposed new régime. The conflict of interest would be staggering. To make a bid for personal power while simultaneously seeking to ensure that the office you aspire to becomes that of a Chief Executive in the business sense would be pretty bad. So I am sure we can be confident that they have opted out of the race and that they will tell us so. Straight away.

I could not inform Malcolm Grant in advance that I was going to throw down this challenge, since he now refuses to correspond with me. You may remember he said he would be glad to defend the conduct of the promotions process last year in court. Well, now he has to, he doesn't seem quite so happy. Naturally, I could not warn others without warning him.

As background to the issues set out in the present Report, let me briefly sum up what is proposed in that Notice.

1. If you want to get control of a democracy you silence dissent. Very Blairite. Very now. But Cambridge's recent leadership has been comfortably placed to learn tactics from the Government. Of course it is right to include short-term contract scientists and others as members of the Regent House. But they are not going to let their signatures appear, are they? No continuation of the contract if they make themselves unpopular. And the line-managed may not be allowed to sign. It is a very cunning part of the plan to enlarge the Regent House and then emasculate it.

To require 50 signatures to be collected in a few days will effectively end ballots and calls for Discussions. That will allow the new 'leadership' to get on with all the things we have been holding at bay for the last few years, such as ending Discussions. I will bet that is to be the subtext of the 'review of communication within the University' (Reporter, p. 506) which the Council is to consider on 25 February.

You do not have to let them do this. You can vote non placet. Remember that. (Though of course they will package the 50 signatures with a lot of other things so as to get a yes vote.)

2. The need for change. No one denies that. But the proposed changes will simply give even more personal power to the few individuals who let CAPSA happen and their like (no heads are to roll we see in another Notice of 6 February). They will not be required to equip themselves any better to do their jobs. And they will become almost wholly unaccountable, since they will be answerable only to their own gang.

3. The Vice-Chancellor is to become a Chief Executive, with personal powers to act and decide.

4. An enlarged number of Pro-Vice-Chancellors is to be chosen (from insiders only), by their friends the members of the General Board and Council and the Vice-Chancellor and the new internal/external Chairman of the Audit Committee, of whom more in a moment.

5. The Council is to remain 'significant'. But a lot less so than at present. It is to cease to be a democratically elected body. Ex officio, all those who already have personal power will sit on it. A mere six members of a Regent House of over 5,000 will be elected by us. (I am not clear why the arithmetic which requires 50 signatures to call a ballot because the numbers are to rise to 5,000 does not also require a larger number of elected members of the Regent House on the Council, for the sake of proportion. Malcolm Grant has flourished statistics about in this forum recently. Perhaps he will be able to explain that at those meetings for 'consultation'. When he has reassured us publicly that he does not want to be the next Vice-Chancellor himself.)

Surely we must have a public debate about whether the Vice-Chancellor and his spin-offs or the Council are to run the University?

6. Had you spotted that the members of the present General Board will become unimaginably powerful under the new scheme? The General Board, far from being abolished or cut down to size in a unicameral structure is to get bigger and bolder and to become 'autonomous'; and its members are also to sit ex officio on the Council. What a power-base! The Councils of the Schools, whose influence in creating a master-servant relationship with the now largely line-managed academic staff of the University is notorious, are to have their Chairs centrally positioned.

7. The externals on the Council will be nominated by the same gang (how we shall grow tired of seeing their names!). What does 'elected by grace' mean? (7.3) That is not a form of election but a method of rubber-stamping those Directors of (?Vodafone) we shall soon have among us.

8. So if you want to work under the tyranny of a few still untrained individuals exercising vast personal power, and without a realistic chance of democratic resistance, go for it. Send in your enthusiastic responses to that e-mail address they are offering instead of a Discussion. You won't mind that they disappear from view when you have done so, or are selectively edited for use.

No one who reads that Notice brushing CAPSA under the carpet can have faith that change in the hands of the individuals responsible for it will involve going to work on the slackness and unprofessionalism of our administration. That will continue unchecked. And that is where we need to attend to our practice.

To the detail of the present Report. An e-mail from HEFCE on 22 January 2002 reminds institutions that 'under the terms of the HEFCE Audit Code of Practice', 'copies of their external audit management letter and audit committee annual report for the year 2000-01 should be submitted to the HEFCE Chief Auditor by the end of February 2002'. The Annual Accounts are surely a little overdue? They still do not seem to have been published.

And what else should we be in a position to tell HEFCE? CAPSA Report B 2.19 (e) 'The University was under threat of losing a great deal of VAT refund money - Cambridge had been the only university unable to provide information to the Customs and Excise officers for the partial exemption calculations.' We still can't, can we?

CAPSA Report B 5.2. The [HEFCE] Financial Memorandum requires that the University's governing body must ensure that 'it has a sound system of internal financial management and control' and that the University must have an audit committee and internal and external audit in accordance with HEFCE's Audit Code of Practice. CAPSA Report B 2.19 (f) 'There was a need to satisfy HEFCE Auditors after the HEFCE Audit visit in June 2000'. We are now trying to satisfy them, according to this Report. But beginning from the wrong end, surely?

Would anyone unfamiliar with the labyrinthine inefficiencies of this University believe that a Report including reference to consultation 'within the University about, among other things, the appointment of external members of the University Council', could be published on the say-so of the Council when at the same meeting (of January 28), it was apparently deciding not to publish that same 'consultation' to the University in a Report for Discussion? Even hardened members of the Regent House used to it being forgotten that we are the University (and have to be asked) will be startled.

Appointing external members to the Council is a huge decision. It has all sorts of implications, including abandoning democratic election of members of the Council. But we are asked to approve a Grace which will pre-empt that decision, by providing for the appointment of 'the Chairman who … following approval of an amended membership of the Council, would be one of the external members of the Council'.

In any case, what independence is achieved by making an external person a member of the Council and then appointing him Chair of the Audit Committee? That does not separate Audit from the Executive. Surely once he is a member of the Council he is no longer independent? The citation of Shattock in the Report we are discussing ought to be accompanied by another. CAPSA Report B 8.4 'I believe that … the Audit Committee … should have a lay chairman recognized for his/her ability to take an external and critical view of the University's affairs'.

I shall come back to this crucial question of independence in a moment.

The next key issue is the mode of appointment. Have we learned nothing from CAPSA about the consequences of persisting with the present practice of cosy secret nominations? 'Appointed by the Council' and 'co-opted by the Committee', it says. I have seen the Council 'appointing'. It gazes vacantly at a piece of paper on which the administrative officers have helpfully typed some names which they have (in some instances) previously put before the Committee on Committees. It approves them in an instant and goes off to lunch. How can we have any confidence that appointments to the Audit Committee by the Council will involve any more rigour and objectivity?

The purpose of the HEFCE Audit requirement is to ensure that someone is sufficiently independent to be willing to call for a halt, and to go on calling until the juggernaut actually stops.

The Shattock Report on CAPSA spoke vigorously about the failure of our then Audit Committee collectively to exercise that essential function. CAPSA Report B 2.21: 'This paper … was discussed by the Audit Committee on 5 July 2000. The Committee were reassured … : no hard questions were asked about contingency planning; reassurances were accepted without question in respect to software problems; no questions appear to have been asked about timescales.' CAPSA Report B 5.17: 'The Audit Committee did not provide the rigorous, independent view of the University's affairs that the University needed. It was too much part of the 'system', too ready to accept reassurances, and not willing to make statements that would be uncomfortable to higher bodies.' CAPSA Report B 5.14: 'The Audit Committee's own Annual Reports to the Council tended to be bland documents which, where they repeated critical statements or warnings in the internal or external auditors' reports, did so without reflecting any urgency for action. … In 1997-8 while noting the comments in the Internal Audit Report and in the External Audit Management letter the Audit Committee reported that they had 'been assured that progress is being made to address them' 47. In 1998-9 the Committee reported that they had 'monitored the development of this (the CAPSA) project closely and are satisfied with the progress being made'. CAPSA Report B 8.4: 'There is perhaps a natural tendency in Cambridge to seek to rebuff criticism and to be reluctant to take on board doubts and warnings expressed from outside. … A strong and, where necessary, questioning Audit Committee is a benefit to a university although it may constitute an often uncomfortable bedfellow.'

The cosiness is infectious and makes apparent externals easily fooled. CAPSA Report B 2.17: 'KPMG consultants … did not apparently foresee the problems or warn of the … in the light of … the warnings that KPMG were issuing as the University's external auditor.' The Enron collapse is bringing to light some uncomfortable things about the result of doubling up on your auditors and consultants. And, Sir Alec, one politician has found that a well-remunerated Non-Executive Directorship can be a bit of a poisoned chalice. Time for a smart exit from Vodafone?

Are serious challenges to our practice to be expected from this reconfigured Audit Committee if nothing is done to prevent it turning out to be a clone of its 'limp' predecessor?

We are being invited to give up our citizenship and become subjects of the Vice-Chancellor and the barons of his court. Cambridge is going to be like all those universities in which the Registrary formerly served his time. It is going to resemble them very closely indeed. It is going (in every sense) to be 'managed' And those doing the managing show no signs of wanting to be open to challenge any more than they were when the old-style Audit Committee failed in its duty. It is a line-managed Cambridge whose 800th anniversary we shall be celebrating in 2008. Not a feast but a funeral.

Professor M. J. GRANT:

Mr Deputy Vice-Chancellor, I'm going to need to crave your indulgence this afternoon because I will not be talking directly about the Audit Committee but I wish first to make a personal statement and then to address some of the issues that Dr Evans has raised in her speech this afternoon and also in an article this morning in the Education Guardian.

First to the personal statement. Members of the Regent House will know that in July last year I was asked by the General Board's Promotions Committee to chair the Sub-committee dealing with applications from candidates in the Arts, Humanities, and Social Sciences in relation to a particular application, that from Dr Evans. When that Sub-committee came into the main Committee in September last year I was asked again to chair the main Committee when it considered that application. I wish to make it clear this afternoon that I regarded my function as being one that was quasi- judicial, one which would be utterly unbiased, and one which would assist the Committee in applying the utmost rigour in its deliberations on that application. I was, and continue to be, utterly indifferent as to whether Dr Evans is promoted or not. My passion is for the proper governance of this University and for the integrity of the conduct of its affairs.

Secondly, Mr Deputy Vice-Chancellor, in her comments this afternoon Dr Evans referred to my failure to respond to correspondence. I need to put that into particular context in order to explain my conduct to the Regent House. Dr Evans wrote to me in January asking if I would be so kind as to set out the principles on which the General Board's Promotions Committee had acted. On consultation with the Registrary I found that Dr Evans was engaged in no fewer than three sets of legal proceedings against the University in respect of the promotions procedure. I therefore responded to her in terms in which I expressed my surprise that she had failed to disclose this to me in her two messages to me. I found that to be unethical. In her response to me she challenged my finding of being unethical but also suggested as she has this afternoon that there was a likelihood that I might be involved as a witness in any such proceedings. I must say that that disclosure does nothing to undermine my feeling that her approach to me was unethical.

The third part of my personal statement, Mr Deputy Vice-Chancellor, arises from her direct question this afternoon as to whether I was a candidate for the Vice-Chancellorship. I can assure her, as I will assure the Regent House, that despite some tentative approaches from quite misguided colleagues I am clear in my own mind that I do not have the qualities required for the Vice-Chancellorship of this University. My vision of that person is that they should be world-class figures capable of seizing this University, of taking a grip on its governance, and of providing the leadership into the next stage of development of the University that we now seek. I am conscious that I fall far short of that person specification.

I turn now with your leave, Mr Deputy Vice-Chancellor, to some of the comments that have been made this afternoon, and this morning in the press, about the consultation process regarding the governance of the University. In this morning's Education Guardian Dr Evans made a number of claims. One 'the University wasted £10m on a new accounting system which is still not working'.

Incorrect.

I refer her to the statement of the Council, dated 4 February 2002, where the performance of the system is set out in the second paragraph. It is currently being used by an average of 355 persons a day, it is currently processing 9,420 purchase orders, 3,430 sales invoices, 27,226 supplier invoices, and 10,800 cheques per month on average. There are indeed problems with the system but to assert that £10m has been wasted on it and that it is not working I regard as incorrect.

Secondly, 'The academic community has always been able to challenge administrative decisions by calling a ballot or insisting on a debate. That was how the CAPSA disaster was brought to light. It is now planned to end that form of accountability. New proposals will make it necessary to get so many signatures in the required few days that challenge in the future will be practically impossible.'

Incorrect.

The proposal in the consultation paper says that the number of signatories required should rise from ten to fifty. Until 1963 the number of signatories required from a very much smaller Regent House was thirty. However, normally people were required to be physically present and to declaim non placet in order to challenge a decision, or a proposal, or a Report of the Council.* The increase from ten to fifty might not be thought to be so disproportionate to the relationship or indeed to the mode of expressing discontent in 1963 as Dr Evans has suggested. In the days of e-mail the notion that there would be difficulty in finding fifty signatories for a matter which genuinely concerned members of the Regent House might not be regarded as wholly realistic.

Thirdly, ''Radical' proposals have now been put to the University with a lot of talk of 'consultation' but not for debate', a point which Dr Evans has repeated this afternoon.

Incorrect.

Debate is precisely the quality which the Council and the General Board are seeking with the consultation paper.

Professor A. W. F. EDWARDS: Deputy Vice-Chancellor, point of order, could we return to the topic of the Report?

Mr DEPUTY VICE-CHANCELLOR: Thank you. Please sit down, Professor Edwards.

[Notice by the Editor: At this point Mr Deputy Vice-Chancellor asks Professor Grant to continue with his remarks in the context of what is being discussed.]

Professor M. J. GRANT: I'm sorry. I wish to be clear, Mr Deputy Vice-Chancellor. My remarks were responding to comments that were made in an earlier address this afternoon to the Regent House. Are you willing to allow me to respond to those or would you prefer that I did not?

Mr DEPUTY VICE-CHANCELLOR: I think if you respond briefly. We have them on the record in any event, I think it is important that you should have a chance to respond.

Professor M. J. GRANT:

Thank you.

Consultation, Mr Deputy Vice-Chancellor, has no fixed and inviolable mode in any institution. Nor should 'debate' be confused with 'discussion with a capital D'. It is incorrect to assert that there is to be no debate. Not only is the consultation paper to be the subject of numerous seminars across the University, but it will, should it be converted into a Report, be brought forward in the normal way in due course, and be the subject of a Discussion in due course.

Fourthly, 'the new idea is to create a Chief Executive style Vice-Chancellor with a circle of Pro-Vice-Chancellors he will nominate'.

Incorrect.

The proposal refers both to nomination and to applications and does not refer to nomination by the Vice-Chancellor.

Mr Deputy Vice-Chancellor, you have been generous to me. I would wish to continue but feel that I have already overstayed my welcome. I should wish simply to record my concern that the time has come for an open discussion on the future governance of this University engaging the widest group of those who hold a stake in its future and not confined to the narrow group whom we find here in the Senate-House on a Tuesday afternoon. That is a genuine ambition and one which Dr Johnson and I propose to carry forward in an open, honest, and transparent way.

Report of the Council, dated 28 January 2002, on the construction of a new building for the University Farm for its Centre for Agronomy (p. 482).

Dr G. R. EVANS:

Mr Deputy Vice-Chancellor, may I too respond briefly?

Mr DEPUTY VICE-CHANCELLOR:

Is this on the topic of the Centre for Agronomy?

Dr G. R. EVANS:

Mr Deputy Vice-Chancellor, I have two pages strictly on the subject of the Report. I would like, with your permission, to read two or three sentences of a brief response to what Malcolm Grant has just said.

Malcolm Grant has not, I see, given an unequivocal assurance that he would not accept the Vice-Chancellorship. He has merely offered us an example of the medieval modesty topos. As for my 'unethical' failure to mention the litigation, does he not read my speeches? And what was the Registrary doing approving the University's Defence without asking Malcolm Grant what he wanted said on his behalf?

As to getting signatures, has he tried that with our terrified staff? And he has not answered the question 'why not have a Discussion too?'

If I may, I will take both the planning Reports in this single speech. For the Centre for Agronomy, a planning application 'will be submitted' (4) (with or without the passing of this Grace?). But Cambridge makes planning applications on sometimes very unclear internal authority. Glad to see it got its comeuppance again on the Huntingdon Life Sciences Project.

For both the Centre for Agronomy and the 'residences, a nursery, and shared facilities at West Cambridge' we are invited to authorize the Treasurer to 'accept a tender'. This has been going on unsupervised for some time and the CAPSA Report was clear that it ought to be supervised, in the light of the disaster of the 'method' of procuring for CAPSA. It is there in the Action Plan (Reporter, p. 504). So why no change?

Let me read you one or two passages from the judgement Professor Grant kindly sent me after I asked recently what had become of the University's long-running 'public procurement' case which has been to the High Court, to Europe, and now back to the High Court. In the judgement of 15 November 2001 ([2001]EWHC Admin 978), Munby, J was not amused. The point on which the European Court of Justice agreed with the University was, he said 'not controversial' (So, Registrary and Council, there was no need to go expensively to Europe to establish it.) 'The relief now sought has nothing to do with the relief originally sought'. He accused the University of 'seeking to argue up the actual level of its undubitably private funding' in the hope of proving it was not a public body for the purposes of having to comply with public procurement directives. He was pretty fierce with the Registrary's arithmetic in his witness statement:

Mr DEPUTY VICE-CHANCELLOR:

You seem to be wandering off the point again.

Dr G. R. EVANS:

Mr Deputy Vice-Chancellor, with respect, the matters in issue in this case are to do with procurement and the tendering process. It is central to the issue in the Report.

Mr DEPUTY VICE-CHANCELLOR:

Please continue.

Dr G. R. EVANS:

His figure for [2000], as I understand it, is produced simply by adding together the figures for the University for the 12 months ending 31 July 2000; for UCLES for the 12 months ending 30 September 2000, and for CUP for the 12 months ending 31 December 2000, without any attempt to apportion or allocate the raw figures derived from these different accounting periods to any common accounting period. Awarding the (I am sure not inconsiderable) costs of our adversary the Treasury to the University to pay, he commented, 'The simple fact is that from beginning to end', except on one minor point, 'Her Majesty's Treasury has achieved complete success and the University complete failure'. He refused leave to appeal. I trust we are not going on with this by seeking leave to appeal in the Court of Appeal?

The moral I want to draw in connection with this present pair of Reports is simply this. What was the sense in wasting all that money and administrative time when the real need was much closer to home, a need to ensure that we have in place a better and more transparent system that just allowing the Treasurer to 'accept tenders' when we have to procure services or architects and so on?

And may I ask the Registrary, again, to give us in print, in the Reporter, the total sum spent by the University in legal fees on this public procurement matter from start to finish.

My second point also has a bearing on those Governance proposals. Agronomy is to be funded partly from sales of crisps and groceries. The rest the Council have agreed to 'provide' (easy to be lavish when you have no figures for what is in your bank balance anyway). There is to be a dip into our reserves (I thought they were so endangered that we had to keep down salaries?). A Capital loan is proposed for the nursery and the shops and some interesting questions are floated about securing it. It is not only the proper supervision of the expenditure which is worrying; it is also the sharing of facilities with commercial enterprises. Shops downstairs and students upstairs?

Now if we let a few power-brokers significantly increase their personal power in the University (without ensuring that they undergo psychometric tests and do training courses and all the rest of it), frankly, I do not trust those in charge of our finances not to make a mess of this too. Training courses seems rather thinly covered in the great 'Action Plan' (Reporter, p. 507).

So, may I ask that the Treasurer is not allowed to accept any further tenders without a proper system being put in place to supervise her as she does it?

Professor R. A. LEIGH:

Mr Deputy Vice-Chancellor, I speak as Head of the Department of Plant Sciences. Before taking up this post, I was a Deputy Director of the Institute of Arable Crops Research at Rothamsted Experimental Station in Hertfordshire, the oldest agricultural research institute in the world. There my duties included scientific and managerial responsibility for some of the field-based crop research. Thus I have some experience of agronomic research and its status in the UK.

I wish to raise a number of concerns I have about this Report, particularly that it concentrates only on how the new building will be paid for and ignores any mention of how the decision to proceed with this scheme fits in with longer-term academic considerations of the role of agronomic research in the University. I am also surprised at the apparent ease with which the University has been able to find funds to progress this project when other schemes are being restricted because no additional money is available.

The successful programme of potato agronomy research at the University Farm takes place outside the Departmental structure and is a consequence of the present Director of the University Farm holding an academic, rather than a managerial, post. The research is funded largely by industry and is 'near market' rather than fundamental. This is not a pejorative assessment, as providing practical solutions to problems of crop yield and quality is the aim of most agronomists. Given his academic status, it is not inappropriate for the Director of the University Farm to undertake research, and he has been encouraged to do so (Reporter, 1993-4, p. 769). His research programme is well-funded, and is highly-respected within the potato industry, as evidenced by the substantial financial support that has been forthcoming for the new building. However, the University should not make investment decisions based solely on the willingness of others to provide money, and this proposal raises a number of issues.

Firstly, there is an implication that agronomic research is seen as an important activity that is more deserving of investment than other areas in the University, and one must also assume that the Council sees the expenditure as worthwhile because it intends that agronomic research will continue beyond the retirement in 2010 of the present Director of the University Farm. Presumably this will require that the next Director of the University Farm will also be appointed to an academic post, rather than as a Farm Manager with a more restricted brief of managing the land until it is eventually developed for other purposes. If this is not the intention, why invest in new facilities without any long-term view on their future use? Is it proposed that my Department will assume responsibility for the Centre, as agronomy is essentially applied plant sciences? If so, we should have been included in the discussions of the proposals. Presently, new facilities for agronomy would not be a high priority for us as we have other more pressing needs that limit our research.

Secondly, when the future arrangements for the Farm were considered by a Joint Committee of the General Board and Financial Board (Reporter, 1993-94, pp. 768-71), it was concluded that 'a case had not been made for a University Farm to meet academic needs'. The proposal to provide a new building for the Centre for Agronomy appears to assume that research activities at the Farm are now sufficiently important to deserve additional investment, with the implication that they have become more relevant to the academic needs of the University. I am unclear how this has been established, if indeed it has.

Thirdly, the Director of the University Farm is an Officer of the Finance Division so we have the anomalous position that an institution administered from within the Unified Administrative Service is being given new laboratories and associated facilities to undertake scientific research. Is it really the intention of the Council that the UAS should be involved in research in this way?

Fourthly, agronomic research has generally disappeared from most research-led Universities in the UK in the last twenty years. This University suppressed its Department of Applied Biology in 1989 on the assessment that separate research and teaching in that area were not needed (Reporter, 1986-87, pp. 621-3), suggesting that agriculture and related subjects were not seen as commensurate with the University's long-term academic aims. The investment in the new Centre seems to assume that there is a role for agronomy in the future. My own view is that research of the type undertaken in the Centre for Agronomy does not have a long-term place in this University once the present Director of the University Farm retires. It is best done by ADAS or similar organizations that are much more 'near market'. If we are to do work with crops in the field it will need to be much more fundamental and 'proof of concept', just as we would expect that opportunities for new technological developments in other areas will arise if we concentrate on the basic and strategic research that is our strength. Certainly, there are some programmes in my Department that could eventually lead to new agronomic approaches but they are some way from requiring extensive field testing.

I think these are serious academic issues that need to be considered by the General Board. The long-term academic status and role of the Centre for Agronomy needs to be established before the proposals in this Report can be accepted.

I am also concerned that the University appears to be able to find a contribution of over £600,000 to the project when my attempts to secure funds for plant growth facilities have been rebuffed on the grounds that the budget is tight and no additional monies are available. While we struggle to do internationally competitive research in substandard plant growth facilities, a major investment is planned in research that has not been submitted for peer-group scrutiny through the RAE, and which occurs outside the main Departmental structure of the University.

I note that it is proposed to recoup the University's investment from overheads on future research grants raised by the Centre for Agronomy. No doubt all Departments would like to finance new facilities through such a mechanism but the financial arrangements most operate under mean they retain only a small proportion of their overhead income and cannot consider using them for funding projects on this scale. This is especially true for those Departments like mine that have historically received most of their research income from the Research Councils and are expected to repay large sums to the University through their D08 accounts which start each financial year with large negative balances that must be paid off by the end of the year. It seems the special status of the University Farm and its accounting arrangements allows the Centre for Agronomy privileges and opportunities that are denied to other institutions.

In summary, I feel this project needs to be considered more fully in terms of the academic aims of the University and the future place of agronomic research within them. The expenditure also needs to be balanced against the benefits of investing over £600,000 elsewhere.

REGISTRARY:

Mr Deputy Vice-Chancellor, I do not intend to respond to any of the remarks that have been made about the Registrary this afternoon, I did not know they were going to be made and I have no remarks ready. I suspect Sir, you would rule me out of order in any event. However, there are two matters that have been raised by previous speakers relating to the substance of this Report on which I would like to comment.

One speaker referred to the failure of the University's planning application for, I believe I quote exactly 'the Huntingdon Life Sciences project', there is no such project, the University put forward proposals to build on Huntingdon Road, that project had no connection with Huntingdon Life Sciences or the activities engaged in by that organization.

Secondly, Professor Leigh referred to the University Farm as being organizationally part of the Unified Administrative Service. It is not. It is not organizationally or managerially part of the Unified Administrative Service; it is constituted under a separate Ordinance and its activities overseen by its own Management Committee.

Professor R. A. LEIGH:

My point was not that the University Farm itself is within the Finance Division but if you look in the staff complement, the booklet that gives the position of all individuals within the University, the Director of the University Farm is listed under the Finance Division, and what I said was that we have an institution administered from within the UAS, not necessarily that the Farm itself was part of the UAS.

REGISTRARY:

I'm sorry Deputy Vice-Chancellor, the University Farm is managed by the person who reports to the University Treasurer and that person is no longer within the Unified Administrative Service, nor is the University Treasurer.

Report of the Council, dated 28 January 2002, on the construction of residences, a nursery, and shared facilities at West Cambridge (p. 485).

No further comments were made on this Report.

Report of the General Board, dated 16 January 2002, on the establishment of a Professorship of Community Psychiatry (p. 451).

No comments were made on this Report.

Report of the General Board, dated 16 January 2002, on the establishment of a Professorship of Photonics of Molecular Materials (p. 452).

Dr G. R. EVANS:

Mr Deputy Vice-Chancellor, it seems we need 'a long-term research strategy in Photonics of Molecular Materials'. Dow Corning Limited 'have generously agreed to provide £25,000 a year for ten years to facilitate the establishment of a Professorship in this field'. (That will in total make the sum of £250,000 which Professor Windle and the MIT Director of CMI Ltd can give on their personal discretion. Check the University press releases of 5 February for the £2m research grant to a local materials scientist and ask Professor Windle, who I believe is himself some sort of materials scientist, whether it is not time for that long delayed list of his interests to be declared.)

So a Professorship is to be established for a period of ten years, with vague promises from Engineering that they will meet any shortfall in the costs of funding it. It is not quite clear whether this is in essence a short-term or a long-term, a normal or a Research Professorship.

It is expected that it will attract a strong field of applicants. It may be that there are lots of big leading players in photonics. I do not know. Let us hope that it will be advertised so that it will be possible for those applicants to know about it so as to apply. This is not a remote hypothesis, as last week's Reporter shows. In the Notice on the Royal Society Professorships in the January 30 issue of the Reporter, we read the double-think promise that 'All fixed-term Professorships and Readerships established under the procedure described in the Notice would be advertised (unless the Board decide there are particular circumstances that justify the establishment of a Professorship or a Readership for a named person as in the case of a Royal Society Professorship)'. I want to focus on this question of 'particular circumstances' in which, to quote the remit of the Civil Service Commissioners, the University is entitled to depart from 'the fundamental principle of selection on merit on the basis of fair and open competition'.

I have notified the subject of what I am about to say, and I apologise for having to make a public example of him, but this is important. The most significant administrative post in the University from the point of view of academic staff and students that of Academic Secretary has simply been given to Graham Allen without competition.

DEPUTY VICE-CHANCELLOR:

I think we are wandering right off the issue of the Professorship of Photonics. I do have to insist that we keep to the topic under discussion and not start talking about Academic Secretaries.

Dr G. R. EVANS:

Then I won't press the point at the moment, Mr Deputy Vice-Chancellor. I am perfectly happy to await my opportunity to read the comments I had wished to make today. I am sure such an opportunity will quite soon present itself. May I simply ask that we have a definition of 'particular circumstances' which I believe may be relevant to the filling of this and other posts? May I have one final sentence?

I see that the General Board have given up 'believing' and are now 'clear' in their Notice on the establishment of Royal Society Professorships and related matters. The General Board kindly offer an 'explanation' to Professor Edwards. It seems to miss the point. I am sure he will make that point again himself by whatever channel he prefers, and I will not take the time to do what he is much better able to do than I.

Professor A. W. F. EDWARDS:

Mr Deputy Vice-Chancellor, the problem of our bolt-on Professorships, to which Dr Evans has so frequently and eloquently drawn the Council's attention without, so far as I can discern, any effect, has arisen largely because of the Council's acquiescence in the General Board's efforts to establish a kind of virtual University of Cambridge exempt from statutory control, to which I myself have so frequently, but alas less eloquently, drawn attention.

In the belief that all varieties of bolt-on Professorships involve the University in somewhat similar opportunities, benefits, difficulties, and dangers, and indeed mindful of the remarkable ruling (perhaps now to be challenged from the Chair) at the Discussion on 4 December last that the Vice-Chancellor, or his Deputy, has no authority to curb speakers who wander from the subject of the Report under discussion, I should like to take this opportunity to return to the example of the Royal Society Professorships. The Council have paid me the compliment of taking more than a page of the Reporter (p. 474-5) to reply to my earlier remarks on this subject, but their Notice is transparently tendentious in several respects.

First, I regret the breach of normal conventions occasioned by the Council's publication of the fact that the relevant minutes of the General Board and the Work and Stipends Committee were made available to me. I much appreciated this private gesture, and so informed the Director of Personnel, but what I find rather objectionable is the attempt then to convey the impression, by referring to those minutes, that I and everyone else should now be satisfied that the decision of the University to accept the Royal Society's new scheme was competently taken. Minute 94.223 of the General Board, to which the Notice refers, does not in fact support the paraphrase which is given; is in any case not the conclusive minute (see Work and Stipends for 3 May 1995); and does not answer my specific question - Were the Royal Society informed that their new arrangements were acceptable to the University?

Now that the Council have brought the matter into the open I have to say that I take an entirely different view of the papers. I think they reveal a disgraceful sequence of events, a culpable failure to enter into proper negotiations, and an inability to protect the interests of the University or even to ascertain the reasons why the Royal Society wished to change their scheme, culminating in a wimpish slide into an attempted solution which my successful challenge of some other bolt-on Professorships under Statute K,5 then exposed as illegal (which it was the General Board's responsibility to know in the first place anyway).

In expressing this view I am of course myself guilty of tendentiously inviting members of the Regent House to accept my interpretation of the papers rather than the Council's. The difference, I suspect, is that I have read the papers and the Council have not. If, after consulting the papers, the Council think the General Board's view should prevail, let them apply this simple remedy: publish all the relevant minutes in the Reporter so that people may judge for themselves.

This proposal is my today's contribution towards addressing 'the lack of clarity, transparency, and accountability in the central organization of the University' noted by Dr G. Johnson and his informal committee on governance (unsigned Notice, Reporter p. 508, paragraph 3.3(i)).

The second element of the Council's Notice which I regret is the mention of the particular persons named in the original Report. I took great care in my remarks to say that I was commenting only on the general situation revealed in paragraph 1 of that Report. I never opposed the particular Grace, which may well have been the only way out of the University's predicament pending amendment of the Statutes. Nor is it fair, incidentally, in that same paragraph to say that as a result of my discussions with Professor Lipton it appears that my main concern was the mortgaging principle inherent in the Royal Society's scheme. In our agreeable meeting I did not withdraw any of the views I had expressed in the Discussion, and now that the matter has been raised I should like to remark that, aside from questions of legality, my main concern is the acceptance of the principle that an external body, be it ever so famous, can effectively appoint full Professors of the University of Cambridge. There has to be a better solution than this to whatever the Royal Society's problem is.

The General Board have thought it relevant to repeat part of their Notice from last year's Reporter (2000-01, p. 552) describing their new procedure which followed the abandonment of unestablished Professorships. They refer to the 'prestigious national competitive schemes such as the Royal Society, Leverhulme, and Medical Research Council Research Professorship Schemes'. That is very interesting, because the Leverhulme scheme has been discontinued and I myself have never seen any advertisement for an MRC Research Professorship, and would be glad if the Board could provide me with their evidence for a national competitive MRC scheme.

Finally, the Notice contains a paragraph which starts 'Turning to the issue of the applicability of the Statutes and Ordinances in the case of a Royal Society Professor (and here of course, we are concerned with all the bolt-on Professors), it is unequivocally the case that the holder of a University office is subject to the provisions and procedures of Statute U', as if I had queried this fact. Of course I had done nothing of the sort. I had merely asked whether the Royal Society had been informed that this was one of the consequences of making their Professors statutory Cambridge Professors, and the failure to answer my question seems to indicate that they were not.

This paragraph concludes 'The Royal Society cannot by its own decision and action discipline or dismiss an employee of the University: Royal Society Professors may only be disciplined and dismissed in accordance with the requirements laid down in Statute U'. Isn't it odd, then, that the Agreement which the University has entered into with the Royal Society states, in clause 8, 'The Society reserves the right to terminate an award EITHER on the grounds of an individual's failure to comply with the Conditions of Tenure OR by reason of the desirability of the award being held elsewhere, OR for any other reason Council may see fit, but only after prior consultation with the employer and with a minimum of three month's notice, in writing, to the host institution'? Clause 9 generously adds 'In the event of an award being terminated, the host institution may terminate its contract of employment'.

Report of the Council, dated 4 February 2002, on the introduction of an equity share scheme (p. 518).

Dr G. R. EVANS:

Mr Deputy Vice-Chancellor, the ending of this Report stops the breath. 'Such arrangements' are expected 'to be of general interest within the University' and 'therefore' we have a Report for Discussion. Changing our governance to make the Vice-Chancellor into an Emperor was not expected to be of such 'general interest' then?

'A small number of individuals'; 'a very limited number of individuals'. But all those to benefit from this special treatment, this use of the University's money to help new staff buy houses, are to be Professors or senior administrators, to judge from the membership of the three-man committee who will choose this 'small number of individuals'. Graham Allen (his power visibly swelling), or Tim Mead (whose power has already aggrandized itself through the UAS 'reforms'), will sit with Alec Broers and the Chair-man of the Professorial Supplementary Payments Committee dishing out these nice little 'recruitment incentives'.

If I were a member of our assistant staff, forced by Cambridge house prices to live out in the villages and to toil in on the bus each day, I would be pretty bitter about this. All the evidence of the last few years is that this régime in Cambridge really cares only about the 'big leading players'. Rather gives a lie to the tender talk of bringing in the youngsters in today's Guardian.

And Alec, that debate 'we' are having in the Guardian today. I am always the author of my own remarks. Who ghost-wrote yours? I would ask you face to face if you had ever turned up in the Senate-House to chair a Discussion again after that time when all the press were invited to watch you.

Dr S. SZRETER (read by Mrs S. BOWRING):

Mr Deputy Vice-Chancellor, I appreciate moves by the Council to provide inducements to new recruits, and, on the surface, a Shared Equity Scheme seems an attractive proposition.

However, I speak for a majority of the Fellows who are currently participants in an equity-sharing scheme operated for a number of years by one of the largest Colleges of the University and which is in most essentials similar to that being proposed here. It is relevant to the immediate purposes of the Council to note that almost no eligible new members of the College have joined the Scheme during the last three years because of its perceived inadequacies. Indeed, where possible many have left the scheme.

The key problem is that in a housing market whose values are consistently over the long term rising faster than academic salaries, the rent required to be paid by participants on the University's equity share will rapidly increase, even if the rental interest rate is operating at a relatively low level, say 2%. I note that there is a mechanism specified to set the University's contribution so that the aggregate financial demands on an applicant from both mortgage and servicing the rent on the University's equity share does not exceed 33% of gross family income. However, it is not made clear whether this rule will only be applied at the initial point of house purchase or whether it will continue to be applied throughout the participant's career in the University.

Our experience in this College's Scheme would indicate the vital necessity of making it clear that the latter condition applies. It has been the non-application of such a mechanism to control and hold constant - over the long term - the ratio between academic salary levels and rental payments on the College's equity share, which has rendered this College Scheme problematic for its participants and unattractive to potential entrants.

Without attention to this, the very phenomenon which the Scheme is instituted to address (the disproportionate rise in house prices relative to academic salaries) will jeopardize the scheme's longer-term working and can be its undoing.

As a separate and additional crucial point, I would question whether 33% of gross income is the right marker level? Will it be an attractive proposition to potential participants to be faced with a permanent demand throughout their careers of 33% of their gross family income for their housing costs? As it is gross, this may equate to half or more of disposable income in many cases. Most people can accept such a high percentage demand for their housing needs for a limited period in their lives, often when families are young and a mortgage recently taken out. But as children become older and more expensive, especially with university fees nowadays, it can be very helpful that the percentage of income devoted to housing costs falls after a number of years. There would seem to be the distinct possibility, if the Cambridge housing market continues its long-term disproportionate rise, that under the rules of the Scheme as envisaged here, the amount of rent charged on the University's equity share would also rise disproportionately over time, as the real value of mortgage repayments falls, maintaining for the participant the rather high level of 33% of gross income being devoted to housing costs in perpetuity. I would ask the Scheme's designers to reflect on whether they themselves would be happy with such high outgoings on this item of their budget into their 50s and 60s until retirement?

Mr R. J. COLLET-FENSON (read by Mrs S. BOWRING):

Mr Deputy Vice-Chancellor, I would like to comment briefly on the above scheme. In paragraph 3 it says 'In addition the University's contribution would also be limited so that the aggregate of the annual interest owed to the University and the total annual cost of any borrowings to finance the purchase does not exceed 33% of the applicant's gross family income.'

Since the University has no way of knowing if the employee's spouse will remain in employment the above regulation would expose the University to unnecessary financial risk. I suggest that the regulation should be amended to read 'does not exceed 33% of the applicant's income.'

Professor D. L. MCMULLEN (read by Mrs S. BOWRING):

Mr Deputy Vice-Chancellor, there is an important point in the Council's Report on the introduction of an equity share scheme for house purchase that needs clarification before the Report can be welcomed with any degree of enthusiasm. This is that is not clear whether interest paid to the University under the proposed scheme would rise as the value of a participant's property rises.

The scheme looks reasonable at first sight. The requirement made in paragraph 3 is that the aggregate of the annual interest owed to the University by the participant and that arising from any other borrowings he or she makes should not exceed 33% of his or her family's gross income. This is, of course, the standard rule applied by most Building Societies when they finalize loans, and it has stood the test of time. It seems responsible.

Here, however, the resemblance ends. Interest paid to Building Societies may vary with the standard interest rate; but such variation is relatively small, and it constitutes a diminishing proportion of gross income as salaries rise. But, if the interest paid to the University under the proposed scheme rises as the value of the property rises, the implications are very different.

The value of some properties in the larger Cambridge area has risen fourfold in the ten years since 1991. There can be no reason to assume that similar rates of rise may not take place over the next ten years. This means that, if the interest is indeed keyed to the rising equity value, it would also rise fourfold over a ten-year period. Such a rise would far outstrip any increase in salary. This would, of course, have very serious implications for participants' domestic budgets, bringing them to crisis point in some cases, especially for those with children of school or college age. It might even force them to move, thus soundly defeating the original purpose of the scheme. It would certainly make it extremely unlikely that a participant could consider getting together enough capital to buy out of the scheme.

Any offer by the University to ease pressure on a participant's domestic budget by commuting interest payments into the equity share might seem at first sight attractive. But such an offer in effect would put a padlock on the possibility of ever buying out the University's share. In turn, it would mean that there would be no escape from ever-rising interest payments. These would, of course, again in contrast to most Building Society loans, continue after the point of retirement.

The fact is, therefore, that the spectacular rates of increase in property values within the Cambridge area over the last ten years should provide a warning, both to any prospective participants in the proposed scheme and to the University if it wants to attract them.

[* I am grateful to Professor A. W. F. Edwards for explaining that, because of the inability to challenge matters in a Congregation prior to 1963, the provisions for 30 signatories to initiate a secret ballot were never actually used.]

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