The COUNCIL beg leave to report to the University as follows:
1. This Allocations Report reviews the financial position of the University and recommends allocations from the Chest1 for the financial year 2006-07.
2. The financial position of the University continues to respond to action taken over the last three years. Increased devolution of financial planning and management to Schools and other institutions continues to demonstrate improved control of expenditure. The value of the appointment of a Finance Manager in each School and two additional Finance Managers for the non-School institutions has been amply demonstrated during the Planning Rounds.
3. A significant factor this year has been that actual and potential increase in costs of certain items have proved difficult to predict, including utilities, the College fee transfer, and the cost of assimilation to the single spine. In the light of this, some difficult decisions have been taken to try to maintain the planned improvement. These include reductions in planned expenditure by Schools and some one-off reductions in central expenditure to help contain the deficit in 2006-07 while measures are put in place to better plan the overall budget. At the same time provisional sums have been identified for equipment expenditure - likely to be needed from 2008-09 onwards.
4. The net effect on the projected Chest outturn is as follows:
| Target Chest surplus/(deficit) | 2006-07 | 2007-08 | 2008-09 | 2009-10 |
| £m | £m | £m | £m | |
| Last year | (1.2) | 6.6 | 12.3 | |
| Now | (0.8) | 2.0 | 7.8 | 9.9 |
5. The Council reported in May 2005 (Reporter, 2004-05, p. 699) that they estimated that the total income for the year 2005-06 would be £546.0m, of which £258.4m would be Chest income and £287.6m would be non-Chest, or restricted income. The overall position was expected to be a deficit of £(9.8)m on the Chest. The latest forecast is for a Chest deficit of £(8.1)m. The main changes compared to the original Estimate are summarized in Appendix 2 (p. 680).
6. Last year's Allocation report projected a deficit of £(1.2)m. After management action by Schools and the Unified Administrative Service (UAS), the projected deficit is now £(0.8)m. The major change to predicted income to the Chest is an increase in its share of income in excess of direct costs as a consequence of the introduction of Full Economic Costing (fEC) for research grants and contracts. Notable unpredicted increases beyond already planned expenditure arise in respect of utilities (£1.9m), a revised basis of calculating the College fee transfer (£2.2m), and implementation of the single spine (£2.5m).
7. It should be noted that under the current arrangements for planning Chest pay, estimated amounts are held centrally pending the final decisions on pay levels or structures, because it is difficult to predict precisely where the expenditure will fall. Once those decisions are reached, the resources will be released to Schools and other institutions and become part of their baseline. Apart from the best available estimate of the assimilation to the single spine, allowance is made for 3% pay inflation.
8. Current projections show the University moving into an operating surplus from 2007-08. This is, however, subject to a range of uncertainties. Income is very sensitive to projections of research volume and rates of indirect cost recovery following the national introduction of the Full Economic Costing scheme (fEC). Future levels of HEFCE funding will be subject to the outcomes of national reviews covering both the research and teaching streams.
9. Pay settlements are subject to national negotiation and the outcome over the next few years is uncertain. In the absence of firm figures the projections, for planning purposes, assume pay increases of 3% a year in addition to an uplift of £7.5m (over 4%) as a result of single spine assimilation. The University has an ambition to improve staff pay, but each 1% rise in salary adds approaching £2m to Chest expenditure and significant increases are therefore dependent on our ability to generate operating surpluses.
10. There will be further as yet unquantified costs arising from harmonization of conditions of service, and potential increases in pension costs remain a concern. Current projections have not attempted to quantify these risks.
11. Building on several years' development of the Resource Allocation Model (RAM) and the first Planning Enquiry in 2004, the planning process is now evolving into a mature annual Planning Round providing regularly reviewed strategic and operational plans at School and institutional level, and rolling five-year forecasts of income and expenditure for aggregation at University level.
12. The Plans submitted in response to the 2004 Enquiry were circulated within the University to inform institutions of each others' plans and to assist with the production of revised plans in the 2005 Round.
13. Once again, the starting point for the Planning Round was the RAM for the current year rolled forward to indicate the Chest resources available to Schools and other institutions, with a manual of guidance on the assumptions to be used in forecasting. The detail of the planning enquiry, its overall purpose, and the guidance provided to institutions, is available at http://www.admin.cam.ac.uk/offices/planning.
14. The annual pattern from now on is likely to be a request for financial estimates revised and rolled forward in the light of any new guidance, with an Operating Statement for the succeeding year and a note of any significant changes to Plan. Full text plans are likely to be required only every three years unless a School wishes to re-submit or there is a change in strategy requiring significant revision.
15. The submission of plans and estimates was again followed by individual meetings early in the New Year between the Chairman of the Council of each School and the Pro-Vice-Chancellor (Planning and Resources). Similar meetings were held between the Heads of institutions outside the Schools and the Pro-Vice-Chancellor (Special Responsibilities). These meetings are a key feature of the annual round and are the starting point of deciding Allocations for the next year. Information not available at the commencement of the Planning Round may be incorporated at this, or an earlier, stage. Analysis and consolidation of plans and forecasts is expected to identify a range of issues for review with institutions, both to understand how their plans are developing and to ensure consistency of approach where consistency is needed.
16. The exercise has again identified a number of School- and University-level issues for consideration by the central bodies. Although consolidated student number forecasts can be produced from School Plans and are used for strategic and financial planning, there is a separate need for admissions targets by Tripos for discussion with the Colleges. These numbers will now be regularly determined in each Round.
17. The Planning Round is beginning to achieve its aim of providing greater stability for Schools and institutions - and a means of introducing, approving, resourcing, and implementing planned change. The 2004 Planning Enquiry was audited by the University's internal auditors during the year and found generally satisfactory; although the conclusions were not available to inform the 2005 Planning Round, a number of the changes recommended had already been included in the 2005 Round. Any outstanding issues will be incorporated to the 2006 Round. The new responsibilities falling on Schools have contributed to a review of the governance of Schools by the General Board.
18. The RAM Development Group keep the RAM under review and, in particular, how it will best serve the planning process.
19. Now that Plans have been revisited and revised, they may be drawn upon for the development of a new University Strategic Plan.
20. As reported last year, the Secretary of State's letter to the HEFCE of 13 December 2004, outlining funding for the period 2005-06 to 2007-08, stated that funding for higher education would increase by £2 billion between 2004-05 and 2007-08. DfES funding for research would increase by 30% in real terms over the same period.
21. The Secretary of State's letter to the HEFCE of 31 January 2006 announced that for 2006-07 funding for teaching would rise by £228m (5.3%), enabling maintenance in real terms of 'the overall level of grant per student'. Recurrent funding for research would increase by £95m and capital funding by £55m, about 8% in both cases.
22. The HEFCE announced on 1 February 2006 their provisional decisions that of the £6,706m available for distribution they would allocate:
23. The HEFCE Grant Letter for 2006-07 shows that on HEFCE calculations Cambridge will receive a 5.6% increase in resource for 2006-07 over that for 2005-06 (and the same when adjusted for volume growth). This compares with an all-England, including Further Education Colleges, overall increase of 4.1% when adjusted for volume and 5.8% overall.
24. The HEFCE 'T' funding model is unchanged from 2005-06 - a full description of the funding method in 2005-06 is given in HEFCE Circular 2005/34 on the HEFCE website (http://www.hefce.ac.uk/). Comparing equivalent totals between 2006-07 and 2005-06, the University has received an increase in total teaching funds of 2.3%, a small real terms reduction.
25. There have been no further additions to the funding for Rewarding and Developing Staff. From 2005-06 Round 1 funding has not been subject to monitoring because the conditions have been met. For institutions completing self assessment by 31 May 2006, Round 2 RDS funding will no longer be subject to separate conditions of grant and monitoring arrangements.
26. The calculations employed by the HEFCE to allocate the formula-based sums for widening participation depend substantially on data submitted annually by the University to the Higher Education Statistics Agency. The profile of students reported in the December HESES (Higher Education Students Early Statistics Survey) has led to reduction in two streams of funding: for widening access for full-time students from disadvantaged backgrounds and for improving retention of part-time students, but the level of activity at Cambridge will not be reduced.
27. 'QR' is calculated using measures of volume of research activity in Units of Assessment weighted by a factor which depends on the rating in the most recent Research Assessment Exercise, with supplementary funding for 'best 5*' departments.
28. HEFCE have announced that the average unit of funding for 5 and 5* departments has been increased by 6.1%. Taking all the changes into account, Cambridge has been allocated an 8.2% increase in total research funding and receives the largest share in the sector.
29. Charity income has been removed from the minor volume measures for 2006-07 used for the calculation of mainstream QR. Weightings have been adjusted for the remaining minor volume factors to ensure that the proportion of QR awarded on each factor remains the same as compared with 2005-06.
30. A new 'QR Charity support fund' provides funding in lieu of the mainstream QR formerly calculated on charity income. The new funding is not quality weighted but is received at a rate corresponding to 25% of reported qualifying income from home and overseas charities, equating to a contribution to indirect costs of 25%. A further tranche of funding is expected for 2007-08 and the assumed recovery rate will increase further.
31. The University continues to receive HEFCE special funding in respect of the Copyright Library, for transmission to the Institute of Zoology, and transitional funding to support the College fee arrangements is in its penultimate year. In order to reduce administration, from September 2005 institutions have been invited to make the final selection of Overseas Research Student Award Scheme (ORSAS) award holders themselves, within the limits of a ring-fenced grant provided for the purpose. ORSAS funding is newly included in the HEFCE grant for 2006-07.
32. Mainstream funds for initial teacher training (ITT) have reduced with a planned reduction in P.G.C.E. numbers. The funding for Postgraduate Professional Development (PPD) has not yet been announced, but is expected to be stable.
33. The estimate for 2006-07 is for a budget close to balance (a deficit of £0.8m), a significant improvement on the latest forecast for 2005-06 and similar to the position projected in last year's Allocations Report. This has largely been achieved through continuing control of costs and slightly improved contribution to indirect costs in the initial stage of transition to the new fEC regime for pricing Research Council grants and the introduction of higher fees for Home/EU undergraduates.
34. The estimated expenditure figures are based on detailed projections provided by Schools and other institutions as part of the Planning Enquiry. Information on other expenditure has been collected in a parallel exercise.
35. While the current year has seen a small drop in overall student numbers (see Appendix 1(A), p. 678), the student number plans mentioned above together show resumption of very modest growth in undergraduate numbers, and a slightly greater rate of increase in postgraduate numbers. Over the planning period, postgraduate student numbers are expected to increase at a rate of a little over 2.0% a year, with the majority of the increase in overseas student numbers.
36. Income is estimated to rise by 10.4% to £285.4m.
Changes to the HEFCE grant are outlined above. Details of the remaining changes are as follows:
37. Fees: Home and EU students: The estimated income to the Chest from this source for 2006-07 is £29.1m. The University Composition Fee for a continuing Home/EU undergraduate has been set by the Government at £1,200, with an estimated 7,159 students continuing to pay at this rate; an estimated 3,526 undergraduate and 503 P.G.C.E. students starting their course after 1 September 2006 will pay at the higher rate of £3,000 agreed on the approval of the University's OFFA Access Agreement.
38. The DfES have not issued a recommended Home/EU postgraduate fee level for 2006-07, but for the second year running have recommended an uplift for inflation of 2.5% over the previous year's rate (in line with the forecast rise in the RPI for 2006-07) providing a fee of £3,168.
39. Fees: Overseas students: The estimated income to the Chest from this source for 2006-07 is £30.0m, which assumes 1,032 undergraduate students and 2,058 postgraduate students. Composition Fees for overseas students were increased annually by 2.0% above the rate of inflation for 2004-05 to 2006-07 but there is concern that further above-inflation rises may begin to affect the ability to recruit the very best students. The proposal is to increase overseas fees by inflation only from 2007-08.
40. The underlying contribution to the Cambridge Commonwealth, Overseas, and European Trusts is maintained at the current level, but with a single uplift of £200,000 for 2006-07 reflecting the above-inflation increase in overseas fees in that year. Issues of the resource associated with postgraduate students, including future fee levels, banding, and finance packages, are under review by the General Board's Working Group on Graduate Education. Pending the conclusions of that review, the estimated contribution to the Trusts to the end of the planning period is fixed at the 2006-07 level.
| Estimate 2006-07 | Estimate 2005-06 | Increase/(Decrease) | Revised Estimate 2005-06 | Increase/(Decrease) | ||||
| £m | £m | £m | % | £m | £m | % | ||
| HEFCE/TTA grant | 173.9 | 161.2 | 12.7 | 7.9 | 160.5 | 13.4 | 8.3 | |
| Academic fees and support grants | 59.8 | 48.9 | 10.9 | 22.3 | 51.1 | 8.7 | 17.0 | |
| Other operating income | 11.2 | 12.5 | (1.3) | (10.4) | 12.6 | (1.4) | (11.1) | |
| Endowment and investment income | 11.3 | 10.1 | 1.2 | 11.9 | 10.9 | 0.4 | 3.7 | |
| Research grants and contracts | 27.8 | 24.5 | 3.3 | 13.5 | 20.3 | 7.5 | 36.9 | |
| Other services rendered | 1.4 | 1.2 | 0.2 | 16.7 | 1.1 | 0.3 | 27.3 | |
| 285.4 | 258.4 | 27.0 | 10.4 | 256.5 | 28.9 | 11.3 | ||
| Estimate 2006-07 | Estimate 2005-06 | Revised Estimate 2005-06 | |
| £m | £m | £m | |
| Transfer from UCLES | 3.3 | 4.0 | 4.0 |
| Refund of VAT (recurrent) | 3.0 | 2.5 | 3.1 |
| Arts and Humanities Research Council support for museums, (provided to assist with the cost of maintaining the University's collections) | 1.7 | 1.5 | 1.5 |
| General income from donations in advance of 800th Campaign | 0.6 | 1.5 | 1.5 |
| Other (including overheads from other University activity) | 2.6 | 3.0 | 2.5 |
| 11.2 | 12.5 | 12.6 |
41. It is estimated that income will total £11.2m, made up as shown above.
42. It is estimated that the unrestricted income from this source will be £11.3m made up as follows:
| Revised estimate 2005-06 | ||
| £m | £m | |
| Income from Amalgamated Fund | 4.4 | 4.3 |
| Income on short-term and other investments | 4.5 | 4.6 |
| Income from managed non-operational property | 1.6 | 1.4 |
| Other | 0.8 | 0.6 |
| 11.3 | 10.9 |
43. Chest Estimates for 2006-07 assume a distribution from the Amalgamated Fund of 116.4p per unit.
44. Direct expenditure related to research grants and contracts has risen by 8% a year over the last decade, but growth is expected to decrease in future years. Government policy is that increased funds for research should be used to meet a greater proportion of the costs rather than to expand activity. Projections of research growth are based on School Plans, reflecting capacity in different Schools. Estimates of indirect cost recovery, following the introduction of fEC, are based on calculations made centrally. Future income to the University is very sensitive to the validity of these plans and estimates.
45. Expenditure is estimated to rise by £21.0m (7.8%) over the Forecast for 2005-06.
46. The Terms of Agreement between the University and Colleges regarding College fees were renegotiated during the year. The new Agreement returns to the former principle of a per capita fee for each fundable student. A new notional baseline fee was agreed for 2005-06, being the value of the 1998-99 fee uprated in real terms. The Agreement provides that the increase in this fee will be calculated with reference to the latest available Higher Education Pay and Prices Index (all) and the GDP deflator for a corresponding period. The rate of increase will be the greater of the GDP Deflator and the Higher Education Pay and Prices Index (all) capped by the GDP Deflator + 1%. For the first time the Agreement embraces Homerton College.
47. The revised Agreement has been used for estimating the total value of the transfer to the Colleges, and for estimation purposes only, the maximum annual increase has been assumed.
48. The financial constraints are considerable, but the Council recommend that the budget makes available priority additional funding.
49. £7.5m will be made available to cover estimated costs of implementation of the forthcoming proposals for salary restructuring. In addition, £0.6m has been budgeted for short-term transitional costs of promotions and regradings for all categories of staff.
50. Additional recurrent funding will be made available to cover utilities costs which will increase by £1.9m more than originally predicted following continued upward pressure on prices.
51. The future financial position of the University will be determined in large part by the opportunities for significant cost savings or additional income generation and positioning for the next Research Assessment Exercise (RAE). For this reason a provision of £3.0m has been made to facilitate restructuring. School budgets include approximately £1.9m to facilitate filling vacancies promptly in preparation for the RAE.
52. £0.5m is being made available for new expenditure outside the Schools, the largest element being periodicals costs in the University Library.
53. The Council consider the maintenance of the estate to be a high priority and note that the quality of the estate is ranked second in the UK higher education sector. The allocation for long-term maintenance has been set at £15m, a one-off reduction of £1m by comparison with the projection in last year's Report, with further elements of maintenance and refurbishment funded by HEFCE Project Capital and Science Research Investment Fund (SRIF) funding. The level of backlog maintenance is being monitored closely and is reducing. An allocation of £2.0m is made for minor works, including provision for improving disabled access. This combination of funding sources should help to maintain the estate in good condition.
54. A Chest allocation for equipment is budgeted at £1.6m and is supplemented by a special HEFCE grant in respect of capital support for research amounting to approximately £6.6m for 2006 to 2008, which is being earmarked for equipment. Further funds for equipment are available from SRIF and other non-Chest sources. Projected Chest allocations for equipment have been increased in the period 2008 to 2010 in the expectation that funds from other sources may reduce.
55. Other non-recurrent sums totalling £1.4m have been set aside for known commitments.
56. As the budget has been built up from detailed submissions, it is possible to provide the broad overview given in the first column (labelled 'Chest') in Table 1.
57. It is customary to divide the allocations between the General Board and the Council in respect of the institutions under their supervision, representing the University Education Fund and the remainder. On the basis of the detailed submissions, the University Education Fund should be £165.3m, and the remainder £123.9m.
58. New buildings for the Centre for Advanced Photonics and Electronics (CAPE) (£14.4m) at West Cambridge and the Leverhulme Centre for Human and Evolutionary Studies (£5.4m) have been recently completed. The next two years will see further development of the West Cambridge site with new buildings for Physics of Medicine (£12.5m) and the Institute for Manufacturing (£12m). Subject to final approval, the East Forum is expected to be built, with the University's portion costing £11.0m.
59. In addition to the expenditure from the University's own general funds, refurbishment of premises and replacement, renewal, and upgrading of equipment will continue to be funded by special HEFCE grants intended to contribute to the long-term financial sustainability of an institution's physical and research infrastructure (including equipment). As announced last year, the capital allocation to the University for the period 2006 to 2008 is £77.6m.
60. Refurbishment of existing facilities on the central city sites continues with the help of SRIF and Project Capital funds over the next two years and includes projects for Zoology (£1.75m), Engineering (£4.2m), Architecture (£2.6m), and History (£1.25m).
61. The major building programme at Addenbrooke's funded by Government and medical charities and philanthropic sources includes the Hutchison/CR-UK Research Facility (£46m), the University's biggest project, which is in the final stages of fitting-out and commissioning, and the Cambridge Institute for Diabetes, Endocrinology, and Metabolism (CIDEM) (£15m) which is being built as part of an NHS Trust project. The Pfizer building is also to be refurbished at a cost of £10m in part to provide new imaging facilities on the site.
62. The projection of approved expenditure on capital building projects is attached as Table 2 of this Report. This table excludes expenditure associated with a proposed major Plant Science research building, for which proposals will come forward to the University shortly.
63. The forecast balance on the QEF at 31 July 2006 is a deficit of £(26.2)m, which after the estimated deficit in 2006-07 will increase to £(27.0)m at 31 July 2007.
64. Through the Planning Enquiry, short- and medium-term plans with financial forecasts have been developed by Schools and other institutions covering all sources of income (both Chest and non-Chest) and the expenditure applied against all sources. This shows more transparently than previously the flow of funds.
65. As noted last year, significant balances exist in trust fund spendable balances, donation and special accounts, and in departmental reserves which are available to be utilized, and which have been increasing steadily in recent years. The forecasts show that reserves accumulated from non-Chest activity will be widely used to maintain levels of activity in the short term without drawing on the Chest.
66. Because such fluctuations in non-Chest income are roughly balanced by changes in direct expenditure, the financial risk associated with such changes is not as great as for fluctuations in Chest income.
67. Other sources of non-Chest income are all estimated to increase much in line with inflation, except where specific exceptions were included in plans submitted.
68. There is a new realization at government level that for universities to operate 'sustainably' (that is, cover the full costs of the whole range of their activities and taking one year with another) additional funding is needed for both teaching and for research.
69. The government has provided the Research Councils with additional funding to support their work, without expecting an increase in volume. Although UK charities do not customarily contribute to indirect costs, some additional funding in proportion to charity income will be provided by the HEFCE through a new stream of 'partnership funding' replacing 'charity QR'. In return, there is now an obligation on the whole sector to calculate the full economic cost (fEC) of all research submissions and to seek to recover this cost wherever possible from the sponsor or from other sources (including the QR element of the HEFCE grant).
70. The introduction of fEC is seeing major changes to the way that research grants are costed, priced, and subsequently administered, and these are now beginning to be embedded in the University's administrative processes. The changes have not been without difficulties, and the Council are grateful for the understanding shown and contributions made by Principal Investigators and others involved in implementing the new arrangements. Further improvements in the systems supporting fEC will be implemented shortly.
71. The Time Allocation Survey (TAS) underpins the University's annual TRAC2 return, which in turn informs the calculations of indirect cost rates for fEC. Robust calculations are essential to maintain and improve income levels. The 71% return achieved in the recent survey was only just above the acceptable threshold of 70%. There are proposals that the TAS should in future survey a third of staff each year instead of all staff every three years. Embedding the survey in this way will improve its administration and will enable more time to be spent on ensuring the rate of return, while not adding to the number or frequency of returns for each staff member.
72. The fEC arrangements currently apply only to research, but the full costing of other activity is possible using similar methods. The HEFCE is moving ahead with a project for the costing of teaching.
73. The following significant changes to the pattern of the University's income are anticipated over the period:
74. The main assumptions made in these projections are:
75. Over the past few years the funding for teaching has declined as proportion of total HEFCE funding when compared with the funding for research. The most recent TRAC analysis shows more starkly that the total resource for publicly funded teaching in 2004-05 was about 14% of the University's total income. Education, including undergraduate education, remains fundamental to the University's mission but the analysis appears to show the research mission as dominant and growing. That dominance, the high cost of teaching at the boundary of research, and the continuing under-funding may so act as to give a false impression of the value of the educational mission and lead to an unconscious and unplanned drift away from education and teaching. It may be appropriate, therefore, to restate at this time the University's unequivocal commitment to teaching at the very highest standard of excellence and to maintenance of the student cohort at least at its present level while suitably qualified applicants continue to present themselves.
76. The HEFCE have consulted during the year on proposed changes to the funding of teaching. The response approved by the Planning and Resources Committee made clear that a number of the proposals would be unwelcome to the University, but the outcome of the consultation is unknown. The HEFCE will manage the transition so that there is a neutral effect in 2007-08, but there is no assurance about levels of funding for 2008-09. There is particular concern about the funding that underpins the cost of undergraduate teaching in Collegiate Cambridge and which is embedded in the grant following the changes to the College fee arrangements in 1999-2000.
77. Changes following the consultation are believed to be only the first stage of a second round of reforms on which the HEFCE will consult later. The second round may be in anticipation of further changes to the Home/EU undergraduate fee, over which there is considerable uncertainty. The HEFCE will also need to consider the shape of the formula for funding research after the next RAE and the introduction of the quality profile to succeed the current single rating. Any changes are not expected until 2009-10.
78. Although the projections for the next five years show a considerable improvement in the financial position, these figures must be treated with caution because the income streams are uncertain. Projected additional income for research is dependent on the University's ability to gain funding for research grants and contracts on the basis of full economic cost while simultaneously maintaining or increasing research volume as proposed in School Plans.
79. It would be prudent to suppose that, with the advent of fEC, other funding streams in support of research, notably SRIF, will in due course be reduced and that it may therefore be necessary to increase Chest expenditure on core infrastructure. Principally, for that reason, sums have been set aside in 2008-09 and 2009-10, but there are recent indications that SRIF funding will continue throughout that period at roughly the current level.
80. HEFCE funding for teaching continues to decline as a proportion of total income but is nevertheless significant. The HEFCE will change the T-funding model in the next few years and the effect on the block grant is unknown. The HEFCE will be reviewing the basis of its funding for research.
81. There remains a need to make good the depletion of the Quinquennial Equalization Fund.
82. Pay settlements are subject to national negotiation and the outcome over the next few years is uncertain. In the absence of firm figures the projections, for planning purposes, assume pay increases of 3% a year in addition to an uplift of £7.5m (over 4%) as a result of single spine assimilation. The University has an ambition to improve staff pay, but each 1% rise in salary adds approaching £2m to Chest expenditure and significant increases are therefore dependent on our ability to generate operating surpluses.
83. The likely future levels of employers' contributions to pension funds remain a concern.
84. The Finance Committee have considered the variety and potential magnitude of uncertainties and consider that they may result in variances of up to £5m a year in the forecast surpluses/deficits.
85. The Council recognize the complexity of the current financial position and believe that at present the levels of risk are acceptable. They will continue to monitor developments carefully through the Finance Committee and the Planning and Resources Committee.
86. The Council recommend:
I. That the revised allocations for 2005-06 referred to in this Report be approved.
II. That allocations from the Chest for the year 2006-07 be as follows:
| (a) | to the Council for all purposes other than the University Education Fund: £123.9m. |
| (b) | to the General Board for the University Education Fund: £165.3m. |
III. That any supplementary HEFCE grants which may be received for special purposes during 2006-07 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.
| 29 May 2006 | ALISON RICHARD, Vice-Chancellor | D. LOWTHER | VERONICA SUTHERLAND |
| A. J. BADGER | D. W. B. MACDONALD | LIBA TAUB | |
| Z. BARANSKI | JAMES MATHESON | LAURA WALSH | |
| RICHARD BARNES | MARTIN REES | BEN WHEELER | |
| NIGEL BROWN | G. A. REID | JOAN M. WHITEHEAD | |
| RUTH KEELING | DAVID SIMON | RICHARD WILSON |
The appendices to this Report are available as a PDF file:
1 Chest income consists of funding council grants, Home and Overseas fees, endowment income, a share of research grant overheads, transfers from CUP and UCLES, and certain other operating income. Non-Chest income consists of income from trust funds, special funds, the direct cost element of research grants and contracts, and departmental share of overheads, self-supporting accounts, services rendered, and residences and catering.
2 The Transparent Approach to Costing, introduced in 1999-2000, requires division of costs at institutional level among: Teaching (publicly funded and non-publicly funded), Research (publicly funded and non-publicly funded), and Other Activities.