The Council have received the remarks made at the Discussion of this Report on 7 June 2005 (Reporter, p. 819) and are glad to note the comments about the greater clarity of this year's Report. They have noted Professor R. J. Anderson's comments on the duties of the Finance Committee and its relationship with the Planning and Resources Committee (PRC). The relationship was set out in the Council's Consultative Report of 8 March 2004 on matters relating to central administration and management (Reporter, 2003-04, p. 537). The Council believe that the relationship between the two Committees is appropriate: the work of the Finance Committee should focus principally on financial matters and stewardship; and the work of the PRC should focus principally on strategic planning and on higher-level aspects of resource allocation. The Resource Management Committee deals with detailed work on resource allocation.
Professor Anderson stated that the University is consuming capital. The Council confirm to the Regent House that the permanent capital of the University's trust funds is maintained intact and is not consumed. However, the University also has general reserves, and the deficits of recent years have led to a reduction in these. The balance on the Quinquennial Equalization Reserve (QEF) is, in effect, the cumulative deficit on the Chest, and in paragraph 66 of the Report the Council remind the Regent House of the need to make good the depletion of the QEF as the Chest moves back into surplus; to a large extent bringing the QEF back into surplus will depend on the success of the 800th Campaign.
Professor G. R. Evans questioned the change in the financial position between 2005-06, in which a deficit of £10m is forecast, and 2008-09 when an operating surplus is expected. Paragraph 60 of the Allocations Report refers to significant changes to the pattern of the University's income from 2006 onwards. Such changes include the introduction of higher composition fees and the introduction of full economic costing for research. The table set out in paragraph 62 of the Report shows the projected figures for the years in question.
Professor Evans also commented on the figure of £4.9m quoted in paragraph 42 of the Report. This sum is specifically to cover the pay restructuring expected when staff are assimilated to the single spine. The additional sum of £1.1m has been set aside for the standard annual promotion/regrading round, while the further sum of £2m quoted in paragraph 46 is for restructuring (early retirements and redundancies) arising from responses to the planning enquiry and in preparation for the next Research Assessment Exercise.
Professor Evans queried the rise in utilities costs. The University is a member of a nation-wide consortium of universities which purchases electricity and other utilities at a preferential rate. On the expiry of the current contract the rate had to be renegotiated. An estimate was made of the increase in cost of the new contract but recent increases in energy supply costs have meant that the increase was more than originally predicted.
Dr D. R. de Lacey expressed concern about the funding of the University's museums. The AHRB (now the AHRC - the Arts and Humanities Research Council) has supported the University's museums for several years as can be seen from previous Allocations Reports. The University has already applied to the AHRC for the next round of Museums Core Funding to cover the period 2006-09. The full costs of the museums is approximately £7m of which £3m is contributed by the AHRC and from other dedicated funds. The Chest supports the museums to the extent of about £4m a year. During the development of the RAM it was agreed that embedded museums (i.e. museums in Departments) should receive a stream of funds separately identified from those of the Departments in recognition of the role of these museums beyond the teaching/research functions of the host Department. This met with the approval of the Joint Museums Committee.
The main purpose of the Report is the approval of the allocations from the Chest for the coming financial year and the Council are accordingly submitting a Grace to the Regent House (Grace 2, p. 906) for the approval of the recommendations in the Report.