Reports

Report of the Council seeking authority to submit a planning application for University land at North West Cambridge

The Council begs leave to report to the University as follows:

1. The University’s mission1 – to contribute to soc­iety through the pursuit of education, learning, and re­search at the highest levels of international excellence – is the strategic purpose that is the motivating force behind the current proposals to seek planning approval to develop its land at North West Cambridge.

2. The University faces competition for the most able staff and students from across the globe and its reputation is affected by its ability to continue to recruit and retain the very best people in this environment. The University intends to remain among the world’s leading universities and development of the North West Cambridge site is a key component of realizing that ambition. Together with the adjacent West Cambridge site it affords one of the few opportunities for expansion. It has been the long-standing view of the Council that development on this site, with its relative proximity to the city centre, is essential to the future of the institution.2

University objectives

3. The primary objectives of the project are to:

(i)provide additional housing for University and College staff – that would help to ease difficulties of new recruits, particularly post-doctoral research workers from outside of Cambridge, in finding accommodation;

(ii)assist with the provision of postgraduate student accommodation, the scarcity of which is inhibiting academic developments;

(iii)provide a medium- to long-term land bank of sites which can be used for the University’s academic development and to attract private research facilities which have University links.

4. These are compelling reasons for promoting the development of North West Cambridge. But the vision for the masterplan goes significantly beyond this. The Council wishes to create a vibrant, urban extension to the City that predominates as a University quarter but one that is also a mixed academic and residential community supported by high-quality schooling, shops, community, and leisure facilities, connected internally and with the wider city by green spaces and pedestrian and cycle routes. The highest principles of energy and transport sustainability will be incorporated into the development so that not only will North West Cambridge support the academic and social needs of the University, it will show what can be achieved through contemporary technology, architec­ture, and urban planning. The underlying form sought through partnership between the University and local authorities is one of mixed-use neighbourhoods and North West Cambridge will reinforce that model in the way that it is developed out. It will also integrate with the development of West Cambridge and the adjoining areas, providing a coherent whole. It will benefit the existing residents, staff, and other occupants of the West Cambridge site, providing much-needed facilities that will assist development of the remaining areas.

5. It is considered that planning for larger-scale facilities on the North West Cambridge site will complement rather than compete with those at West Cambridge, and indeed make the latter potentially more attractive to commercial occupiers than it presently is.

Housing

6. The housing issues for new staff, particularly those new to Cambridge, are significant, and the Council has been briefed on the basis of staff surveys undertaken by the Department of Land Economy, as well as assessments of present and future needs and the residential markets in the Cambridge area. As reported in the Green Paper (Reporter, 2009–10, p. 1010), the most significant needs, in relation to numbers of new staff, are for contract research staff and assistant staff.

7. The Council is aware that Departments would feel better able to recruit early career research staff to Cambridge if it were possible to give assurances that good quality housing at a reasonable price near the University was available. The Council is also aware that many support staff commute to work from outlying areas because of difficulties in finding affordable housing near the University. Detailed work continues with the Human Resources (HR) Committee to develop an allocation and rental policy for the University housing on the North West Cambridge site that will address these needs and meet the requirements of the Area Action Plan. In order to ensure that there continues to be availability of accommodation for new employees, tenure will be on an annual basis limited to three years in total with a fourth year in exceptional circumstances.

8. The Area Action Plan requires that the housing for University staff is provided at below market rents based on occupants paying no more than 30% of net household income. More recent central government guidance suggests a different approach and discussions are ongoing with the local authorities as to how this will be reflected in the rental policy, which will form part of the section 106 planning Agreement.

9. The project involves equivalent numbers of houses that will be for sale in the open market through residential developers, which will provide capital receipts through land sales.3 Many units will be sold as private dwellings, but some may become private rented accommodation, and so help to address the needs of those who reach the end of permitted tenure of University rent-assisted accommodation, but wish to remain within the community. Such private rented accommodation might also assist those whose income levels exclude them from the rent-assisted accommodation.

10. The Council reminds the University that although much of the description of the project is about property issues, the fundamental drivers are the facilitation of the work of academic Departments and Faculties and providing a context for longer-term development of the University’s academic needs once existing sites are fully committed.

Collegiate accommodation

11. The limited capacity of the Colleges to offer places for postgraduate students is becoming a significant inhibitor to academic developments. This is manifested in restrictions to growth in numbers of graduate students recruited, and this in itself has an impact on the size of the pool of talent available to support the development of the University’s research.

12. Constructive discussions with the Colleges have commenced about the appropriate shape of collegiate accommodation for this site and a joint University and Colleges working group under the chairmanship of Lord Wilson (Master of Emmanuel College) has been established by the University and the Colleges’ Committee. The group is particularly interested in how new College accommodation, including perhaps a new College foundation or Approved Society, might specifically be provided to meet the needs of early career research workers in the University housing, either in conjunction with or separately from collegiate accommodation for postgraduate students. The group will be reporting initially to the Colleges’ Committee early in July so that its views may be taken into account in the detailed planning for a phase 1 development on the site.

Academic and research facilities

13. The University’s academic profile continues to develop, and the available space on other sites will soon be used up. It is much harder to be specific at this stage about the potential academic and research occupiers of this site, as in many ways its development will naturally follow on from that of West Cambridge just across the road.

14. There are no specific plans at present for academic developments on the site, but provision has been made in the masterplan for future buildings. The strategy for development and sale/investment of these facilities will follow normal procedures for approval by the Regent House and development control through the Buildings Committee (a joint committee of the Council and the General Board).

Planning overview

15. The needs of the University were explored and agreed by independent Inspectors at the public examination into the draft Area Action Plan in 2009, since when needs and rental costs have increased.

16. Proposals for potential development of the North West Cambridge site were set out in some detail, including a draft masterplan, in a Green Paper published in the Reporter on 25 June 2010 (p. 1010, http://www.admin.cam.ac.uk/reporter/2009-10/weekly/6194/section1.shtml). The Council responded to the comments made on the Green Paper and in a Discussion in a subsequent notice published on 10 November 2010 (Reporter, 2010–11, p. 166, http://www.admin.cam.ac.uk/reporter/2010-11/weekly/6202/section1.shtml#heading2-6). A separate Report has been published (Reporter, 2010–11, p. 618, http://www.admin.cam.ac.uk/reporter/2010-11/weekly/6218/section6.shtml#heading2-16) about the govern­ance of the Project.

17. Some minor changes to the descriptive plans have been made since June 2010, primarily to increase their utility in a planning application. The masterplan attached to this Report has been refined. The additional draft revised plans listed in the Appendix to this Report, reflecting presentational amendments to ensure they allow for planning flexibility as the site is built out, and are legally robust, are available to members of the University on the Council’s website (http://www.admin.cam.ac.uk/committees/council/). The plans also include identifying minimum and maximum building heights, widths, and lengths.

18. The proposed development accords with the provision anticipated within the approved Area Action Plan,4 namely 1,500 residential units for University staff, 1,500 market housing units, 2,000 College places, 100,000 sq.m. of research space (60% for University research and 40% for private research with University links) plus supporting facilities including shops and community facilities in a local centre, primary and off-site secondary school provision, doctors’ surgery, and a hotel.

Financial implications

19. The Finance Committee has authorized expenditure to complete an outline planning application for the whole site, including an allowance for costs during the period up to the grant of outline planning consent when the local authorities are formally considering the application including the completion of a section 106 Agreement under the Planning Acts and agreeing planning conditions to secure an overall outline planning consent.5

20. The Council would not wish to proceed with this scheme until a suitably robust case has been made, and that point has not yet been reached. A further Grace will be sought at that stage.

21. It is envisaged that if/when the project proceeds it will do so in phases, with each phase assessed both independently and in terms of contribution to the whole. An objective from the outset will be to ensure that even when only the initial phases have been completed, the area will have a distinctive sense of place.

22. The financial implications of all relevant parts of the anticipated section 106 Agreement are being included in the project budget and will cover primary/nursery school provision on site; secondary school contributions (towards the school on the NIAB site on the opposite side of Huntingdon Road); children’s centre; community centre and sports hall/performance space; football, cricket, and tennis pitches including an all-weather pitch; sports pavilions; swimming pool contribution; Green Travel Plan; recycling centre contribution; health centre; Police touchdown facility; library contribution (to be located on the NIAB site); and access to the countryside.

North West Cambridge Plan (JPEG image file)

Why now?

23. The Council considers that the provision of additional housing for postgraduate students is urgent to support the University’s academic development. It also considers that developing residential accom­modation would significantly ease current problems of staff recruitment.

24. There is merit in obtaining outline planning permission,6 which would be valid if work started within ten years, so that when the University feels it is right to proceed, there need not be significant delays arising from planning issues. Were the University not to proceed to secure the planning consent, it is likely that in due course the local authorities would seek to re-designate the site as Green Belt.

25. Further work has been done to develop allocation and rental policies for University housing that are acceptable to the University’s Council and HR Committee and are also believed to be consistent with the conditions contained within the Area Action Plan; these policies will be contained within the section 106 Agreement.

26. Similarly detailed work has been undertaken in respect of traffic impact mitigation/travel plan measures that will avoid progress on the project being linked to a new A14 road improvement scheme. Once agreed with the County Council and Highways Agency those measures will also be contained within the section 106 Agreement and include measures directed at demand management and trip reduction across the strategic and local road networks. Measures include the creation of new on-site bus routes; the introduction of travel plan measures across the University’s facilities in the city (e.g. encouraging car-sharing and use of public transport); funding of a promotional campaign for the guided bus; capacity enhancements to the M11 southbound slip-road; a traffic mitigation scheme at the M11 J12 Barton Interchange northern roundabout; traffic signal optimization schemes on Madingley Road, Huntingdon Road, and other local roads, with pedestrian and cyclist facility improvements on Huntingdon Road.

27. In order to take forward this project to a point where the University can decide whether or not to proceed, and when, the Council now seeks the University’s endorsement for the submission of an outline planning application.

Conclusion

28. The most urgent drivers are the shortage and cost of decent quality residential rental accommodation in Cambridge and the need for new collegiate graduate accommodation. These would permit easing of current constraints on academic and research developments and help the University to maintain its international position.

29. The Council recommends:

That the Registrary be authorized to apply for outline planning consent for a development on the North West Cambridge site in general accordance with the illustrative masterplan set out above; and also to enter into the section 106 legal Agreement to secure the planning consent.

16 May 2011	L. K. Borysiewicz, Vice-Chancellor	M. J. Daunton	F. P. Kelly
	Anthony Andrews	R. J. Dowling	R. Lethbridge
	N. Bampos	I. M. Le M. Du Quesnay	Rahul Mansigani
	Richard Barnes	David Good	Mavis McDonald
	D. J. A. Casserley	Andy Hopper	Rachael Padman
	Stephen J. Cowley	Christopher Hum

APPENDIX

The following additional draft plans are available on the Council’s website (http://www.admin.cam.ac.uk/committee/council/):

1. Site Boundary

2. Demolition Plan

3. Access Parameter Plan

4. Open Land and Landscape Areas Parameter Plan

5. Building Heights Parameter Plan

6. Land Use (Built Development and Ancillary Space) Parameter Plan

7. Development Building Zones Parameter Plan

8. University Ownership Plan

9. Existing Topography

10. Illustrative masterplan

Report of the Council on the financial position and budget of the University, recommending allocations from the Chest for 2011–12

The Council begs leave to report to the University as follows:

1. This Budget Report reviews the financial position of the University and recommends allocations from the Chest for the financial year 2011–12.

2. Information on trends in staff and student numbers, research, and expenditure patterns is provided in the usual way in Appendices 1–4 (pp. 774–7).

Overview

3. As predicted in the 2010 Budget Report,1 2011–12 will be a challenging year. Notwithstanding the possibility of further revisions, the financial consequences of the changes to government funding of Higher Education are now clear. Over the next five years, HEFCE funding for teaching Home/EU undergraduates will reduce by approximately 80% to be replaced by an increased index-linked fee of £9,000 for students admitted from 2012–13. Because of differences in phasing, during the transition period, the total income in real terms for Home/EU teaching will be around £10m per annum less than in 2009–10. Parity with the 2009–10 level will not be achieved until 2016–17 when all students will be under the new fee regime. Government funding for research to the Research Councils and HEFCE has been largely protected in cash terms, although the amounts available for capital expenditure through Research Councils appear to be severely squeezed. However, competition for available funds is increasing and there are signs that Cambridge is losing market share. Equally seriously, indirect cost recovery is falling due to a shift towards sponsors unwilling to pay the full economic cost of research (notably charities, the EU, and the British Government) and there is increasing pressure from the Research Councils to reduce indirect costs. Finally, support for capital expenditure via the HEFCE Capital Infrastructure Fund (CIF) has been reduced by approximately 60% from an average of more than £30m per annum to £11m.

4. Based on guidance issued by the Planning and Resources Committee (PRC) in July, the Planning Round builds up estimates of income and expenditure in both the Chest and non-Chest positions from detailed projections provided by Schools and Institutions, and from information on other income and expenditure. Given the uncertainty during the 2009 Planning Round, Schools and Institutions were asked to consider the planning implications of two tighter funding scenarios. Scenario A asked for a cash cut to allocations of 2% in 2011–12 and scenario B for a cash cut of 5%, both with 3% per annum cash increases thereafter. The immediate impact of the second was considered to be potentially damaging whilst the first would generate an unacceptable deficit. Hence, the PRC adopted a third scenario, C, for its 2010 Planning Round guidance. Scenario C requires a 2% cash cut in 2011–12 but only a 1% per annum cash increase thereafter. On inflation assumptions at that time, this represented a real terms cut in funding by 2014–15 of about 9% relative to 2009–10. All projections will be reviewed for the next planning round as they are rolled forward a further year and the medium-term projections are likely to change.

5. To assist Schools and Institutions in maintaining this tight budgetary framework, the PRC established working groups to report on the potential for efficiency savings in the areas of academic activities, pay and resources, and services and administration.2 Initial outcomes from this work include the introduction of a Voluntary Severance Scheme (VSS) to reduce the staff headcount from September 2011, and reviews of the Unified Administrative Service (UAS)3 and the delivery and organization of IT services.

6. In terms of income generation, by 2013–14 the introduction of premium M.Phil. fees and increases to overseas fees will generate £10m per annum more than predicted in the 2010 Budget Report. Also relative to the 2010 Report, investment income has strengthened by around £2m per annum. These and potential savings in pay costs from the VSS will help to offset the reductions in HEFCE grant and reduced forecasts of indirect income from research.

7. Taking all of the above into account, this Budget Report recommends allocations for 2011–12 which will result in an anticipated deficit of £9.2m. On current projections this deficit will increase to £12.7m in 2012–13 before returning to balance in 2015–16. Overall, this projected budget envelope is forecast to result in a cumulative deficit over the period of £36m. Whilst such a deficit is unwelcome, the Council believes that it strikes an appropriate balance between financial prudence and avoiding undue damage to the excellence of our teaching and research.

Fees and Funding

8. Appendix 5 describes HEFCE funding for 2011–12. Funding for teaching in 2010–11 as announced in March 2010 was £61.1m and the corresponding funding for 2011–12 as announced in March 2011 was £56.1m. In fact, however, the 2010–11 grant was cut twice in-year resulting in net funding of £58.8m. Set against this figure, the reduction in teaching funding for 2011–12 is the modest –4.7% figure announced by HEFCE, whereas in fact, the full year-on-year cut in teaching funding was –8.3%.

9. HEFCE funding for research in 2010–11 as announced in March 2010 was £117.8m, but as with funding for teaching, it was cut in-year to a net £115.8m. The total research funding for 2011–12 announced in March 2011 was £117.5m, announced as a +1.5% cash increase whereas year-on-year, it actually represented a small cut of –0.3%. This flat funding for research was achieved by reducing the weight assigned to work rated 2* in the Research Assessment Exercise from 1 to 0.3, thereby concentrating funding further on the best-performing research intensive universities. In future, it is likely that the weight for 2* will be zero, with implications for planning our strategy for submission to the Research Excellence Framework in 2013.

10. HEFCE funding for capital is reduced by over 60% to £11.3m in 2011–12. Indicative funding for the subsequent years 2012–13 to 2014–15 is broadly flat but is not guaranteed.

11. In the light of recent changes to undergraduate funding for Home/EU students, HEFCE future teaching funding is expected to reduce by 80% by 2014–15. The Government’s intention is to transfer its support from institutions to students, with higher levels of fees offsetting the substantial cuts to direct grant. The University has agreed that it will increase fees for Home/EU undergraduates in 2012–13 to £9,000, subject to agreement by OFFA of the University’s Access Agreement.4

Capital Planning

12. In recent years, major capital expenditure projects, mainly new buildings, have been funded from a combination of sources, principally government funding through HEFCE (most recently CIF) and external donations. In the last two years, in anticipation of reductions in the availability of CIF, some modest capital provisions have been set aside in the Chest budget made possible by higher than previously forecast transfers from Cambridge Assessment. So far these allocations have not been spent. Equipment has also been funded by a combination of sources, including CIF, research grant sponsors, and the Chest equipment fund.

13. The ability to continue investing in the University’s operational buildings is essential if we are to remain globally competitive. Over the eight years from 2001 to 2009, capital spend on buildings averaged £65m per annum of which approximately half came from donations. This level is broadly comparable with our UK peers (Oxford £82m, Imperial £70m, UCL £54m). Taking account of the continued and pressing demand for new buildings and equipment, and the need to remain competitive in an environment of reducing CIF and increasing competition for research funds, the Council has agreed to continue to commit at least £25m per annum towards buildings, augmented wherever possible by donation income, and a further £8m per annum for capital equipment.

14. To support this, the PRC has agreed a Capital Planning Framework and an associated capital fund which together allow buildings and large equipment purchases to be scheduled over a planning period of up to 20 years to match academic priorities and to take account of inter-dependencies between projects. To ensure that there is no loss of scrutiny, the progress of individual projects within the framework plan will continue to be subject to the existing Capital Projects Process. To exploit fully the flexibility of the framework, actual spend against the fund will fluctuate and, to accommodate this, the Council has agreed that the fund may be augmented by an external loan provided that the full cost of interest and repayments is carried by the fund itself.

15. The establishment of the capital fund in this way is intended to provide a robust planning basis for the University in an environment where government support for capital expenditure is decreasing and the future prospects are uncertain. Initially, the fund will be supported primarily by earmarked capital funding from government and the transfers from Cambridge Assessment and Cambridge University Press. Funding for the first four years of the Capital Fund is projected as shown in the table below.5

	2011–12	2012–13	2013–14	2014–15
	£m	£m	£m	£m
Brought forward6	19.6	15.9	7.7	2.2
Income
Cambridge Assessment	14.6	10.1	11.6	22.4
Contribution from Chest expenditure budget	0.0	3.0	3.0	3.0
Assumed contribution from HEFCE (CIF)	12.0	8.0	8.0	8.0
Total	29.3	24.8	27.5	39.9
Projected spend7	33.0	33.0	33.0	33.0
Carried forward	15.9	7.7	2.2	9.1

No separate allocations are therefore proposed for the New Buildings Enabling Fund and Potential Capital Enabling Fund.

The current year

16. The Council reported in the 2010 Budget Report that the estimated total income for the year 2010–11 would be £773.1m, of which £351.5m would be Chest income and £421.6m would be non-Chest income. The overall position on the Chest was expected to be a deficit of £1.8m which is now forecast on the same basis to be a deficit of £3.7m. This slightly worse position arises from a number of changes summarized in Table 1. The most significant negative effects were:

(a)lower than expected contributions to research grant overhead costs and

(b)higher than anticipated in-year reductions in the HEFCE grant.

Set against these were:

(a)higher than forecast endowment income and interest receivable and

(b)higher income from Composition Fees, arising from changes in the composition of the student population, particularly the increase in students on Master’s courses with premium fees.

17. For the purposes of this Report, allocations to Schools and Institutions are budgeted as fully spent. There is evidence that Schools and Institutions are managing funds carefully and spending slightly below budget; the anticipated underspends will assist them in meeting the challenges set by the proposed reduction in funding for 2011–12 compared with previous forecasts. Of assistance in keeping expenditure within budget were lower than expected pay increases in August 20108 together with prudence in deciding whether to fill vacancies.

18. The non-Chest component of the University (excluding Cambridge University Press, Cambridge Assessment, and the Cambridge Trusts) was forecast to generate a surplus of £4.4m in 2010–11. This component of the budget is difficult to predict with precision mid-year but there is currently no reason to expect a significantly different out-turn.

Planning Round

19. At the start of each Planning Round, Schools and Institutions are given a provisional Chest Allocation based on the agreed planning envelope. As noted in paragraph 4, it was clear that compared with the guidance issued in the previous year there were likely to be significant changes to the parameters including reductions in both income, particularly HEFCE grant, and expenditure, because pay settlements were likely (and proved) to be less than had been allowed for. On that basis the much tighter spending limits described in paragraph 4 were prescribed. As part of the Planning Round discussions, all spending sectors are able to discuss any difficulty in keeping within the indicated levels. In the event, all Planning Round submissions conformed to the guidelines, although, in some cases some spending down of reserves over the planning period is anticipated.

20. One common issue arising from this and previous Planning Rounds was the lack of appropriate incentives for maximizing income and minimizing costs and an income contingent arrangement for enabling new development. For the specific case of new income generated by Schools’ proposals to raise fees for particular courses, an ad hoc arrangement was in place for sharing income between the School and the Chest. However, a more general mechanism is required. In response, the Resource Management Committee (RMC) introduced a model9 based on Resource Allocation Model10 (RAM) calculations, whereby if a School’s actual RAM surplus exceeds X% of actual out-turn11 then Y% of the surplus is added to the School’s allocation. Similarly, if a School’s RAM deficit exceeds X% of actual out-turn, then Y% of the deficit is subtracted from the allocation. In the 2010 Planning Round, X has been set at 5% and Y at 10%. The key feature of this model is that the X% tolerance band supports the cross-School subsidy implicit in the current Planning Round process and prevents unavoidable perturbations in out-turn disrupting School planning. The Y% surplus/deficit adjustment prevents School allocations from drifting too far from the value that is supported in the RAM by attributable income. When viewed as an incentive, this approach encourages Schools to move above the tolerance band by increasing income or saving costs whereupon they receive an increasing proportion of their additional earnings.

Estimates for the forthcoming year

21. Chest income for 2011–12 is predicted to be significantly lower than projected at this point last year, while non-Chest income is predicted to be higher, principally as a result of continued modest growth in research activity.

22. A significant reduction in Chest income arises from the cuts in HEFCE funding as outlined above in paragraphs 8 to 10. The future effectiveness of our fund-raising campaigns will also affect Chest income.

23. The continuing difficulty in obtaining greater contributions to the indirect costs of research is of considerable concern, and the PRC and the Research Policy Committee (RPC) will be giving priority over the coming year towards mitigating this problem.

24. Composition Fee income is projected to be £3.3m higher than previously estimated, as a consequence of the progressive implementation of decisions to increase fee levels for Master’s courses and overseas students but tempered by new restraints on increasing student intakes due to the Colleges’ limited capacity for expansion. Projected income from Endowment income and interest is £2.2m higher than previously estimated.

25. As mentioned in paragraph 20, a number of variances from the Planning Round guidance are recommended by the Resource Management Committee. These arise mainly from the Schools’ share of additional M.Phil. fee income, and the newly introduced RAM Distribution Model. These are summarized below.

Additions in 2011–12	£000
SAH	111
SHSS	696
ST	471
SPS	509
SBS	343
SCM	102
Schools Total	2,232
Botanic Garden	1512
UAS	6513
Cambridge in America	16814
Others Total	248

26. The Council continues to consider that the current level of the buildings maintenance budget is broadly appropriate. The Council notes that despite the restrained expenditure on maintenance made over recent years, statistics regarding the overall condition of the Estate as reported in national statistics continues to be good. However, the cumulative effect of holding down expenditure in this area will be closely monitored.

27. The combination of predicted income and expenditure outlined above results in a projected Chest deficit for 2011–12 of approximately £9.2m (Table 2, p. 771). While recognizing that the normal planning target is to achieve a 2% to 3% surplus, the Council considers that the proposed allocations for Schools and other Institutions have been scrutinized in detail and that further reductions for 2011–12 would damage the position of the University.

28. The Operating Budget described in this Report is developed and managed on a fund accounting basis. The University’s annual Financial Statements are prepared on a financial accounting basis consistent with generally accepted accounting principles. A number of adjustments are needed to convert the Operating Budget to a format comparable to the Income and Expenditure account seen in the University’s Financial Statements. The main adjustments are to remove capital expenditure from the Operating Budget and bring in a depreciation charge, and to estimate the amount of spend against reserves and build-up of reserves. For the sake of those who wish to make comparisons with the Financial Statements, such a conversion of the Operating Budget for 2011–12 is shown in Table 4 (p. 773). The Council considers, however, that the format used in Table 2 is the appropriate one for planning.

Looking forward

Financial projections

29. Given the current policy environment, estimates have been made of how HEFCE funding may reduce, and of the impact of the changed funding of home undergraduate students. The situation will be monitored carefully, and the University will be as proactive as it can be to protect its position. Apart from changes in T funding, and potential changes in R funding, our CIF allocation, which has been running at the equivalent of over £30m a year, will reduce to around £11m in 2011–12 and it will be at best flat for the remainder of the planning period.

30. After the consistent year-on-year growth in research activity (as measured by direct expenditure) shown in Appendix 3, it is projected that growth during the next five years will be slow. Of particular concern is the difficulty in recovering from research sponsors as a whole an appropriate share of the indirect costs of research and justifying the differential cost of supporting high quality research in new and challenging areas.

31. Endowment and investment income from the Cambridge University Endowment Fund (CUEF) has been projected by applying the formula set out in the regulations for the distributions from the Amalgamated Fund (Statutes and Ordinances, p. 998) with the assumption of a continuing modest recovery of the investment markets over the planning period. The formula balances the competing objectives of a stable flow of income to support operations while protecting the value of the endowment in real terms over time. This ‘smoothing’ approach allows consistency for planning and expenditure whilst adjusting gradually to changes in market values. The Finance Committee, with the advice of the Investment Board, will continue to keep the distribution policy under review.

32. Tuition fee income beyond 2011–12 is based on expected changes to the composition of the student population, and the changing fee structures. Future projections regarding Home/EU fees assume that the full index-linked £9,000 fee will be charged to students admitted from 2012–13 onwards.

33. Projections of expenditure beyond 2011–12 have been built up from the detailed plans at School and Institution level submitted in December 2010.

34. Pay awards have been assumed to be 0.5% per annum until 2012–13, and 1% per annum thereafter. As indicated in paragraph 42, the Council will closely monitor developments in this area.

35. Continuing growth in post-experience education is predicted and, subject to adequate arrangements for costing and pricing, should provide useful net revenue to the Chest as well as to the Departments and Institutions concerned.

36. The current agreement for the transfer of funds to the Colleges in respect of Home/EU undergraduates sees the per capita transfer increase by 2.34% to £3,951. In view of the new funding regime for Home/EU undergraduates, the University and Colleges have put in place a review of the agreement in 2011–12.

37. The predicted income and expenditure outlined above are set out for the period to 2014–15 in Table 3 (p. 772).

38. Work continues to develop long-term proposals for the University’s land at North West Cambridge to provide housing for staff and students together with provision for future academic and research accommodation. Following the principles set out in the Fourth Report on the development of the University’s land in North West Cambridge (Reporter, 2007–08, p. 613), the intention is that any investment required by the University will be ring-fenced and will be recouped on financial conditions agreed for the scheme as a whole.

Uncertainties

39. Although the details of the government’s intended funding are now clearer, the uncertain economic outlook persists and further cut-backs are possible. In particular, in-year cut-backs in HEFCE grant have been a feature of recent years and provision is now routinely made for this.

40. The funding cuts to HEFCE are complemented by tight funding for the Research Councils affecting a significant proportion of the University’s activity. Research income from industry and charities has also been affected. A significant reduction in research funding would result in a decrease in activity (principally through a reduction in the almost 3,000 or so staff supported from research grants and contracts). A recent trend across all of the major funding agencies has been to favour making large research grants aligned with strategic themes in preference to small responsive-mode grants. Recent data shows that we are losing market share within our UK peer group. The Research Policy Committee (RPC) has put in place a number of initiatives to improve our competitiveness in this area and these need to be developed further.

41. Just as concerning is that in an attempt to preserve the research activity supported by their budgets, research funders are seeking to reduce the contribution they make to indirect costs. For the Research Councils, it is clear that the implementation by the RCUK15 of the Wakeham Report16 will result in a cut to indirect recovery on both new and existing grants. Furthermore, Principal Investigators are increasingly turning to charity and EU programmes to fund research. These sponsors pay very low overhead rates and this change in the mix in our research funding is putting further pressure on indirect recovery.

42. Making medium-term estimates of increases in pay and non-pay costs is particularly difficult in current circumstances. The Council recognizes that it must continually monitor trends and review the extent to which increases in costs are matched by increases in income.

43. Last year the Council drew attention to the risks inherent in our pension schemes. The University and Assistants Joint Board has recently agreed that a revision to the assistant staff pension scheme (CPS) can be put forward for consultation with staff members. Further developments in the revision to USS are awaited. In both cases, the primary goal is to make the scheme sustainable in the long term.

44. Cambridge Assessment has a robust business plan covering the next five years. However, national and global economic conditions remain adverse and political unrest in key customer regions will be challenging. Hence, a discount has been applied to the formula agreed with Cambridge Assessment for annual transfers of surplus income to the University. A similarly prudent approach has been taken to the smaller, but growing, contributions from Cambridge University Press.

45. The UK government is committed to challenging reductions in carbon emissions, to which the University will be legally required to make its contribution. While some reductions in carbon emission will be achieved through changes to our existing practices, the scale of reductions required over the next decade will require significant expenditure. This will affect both our recurrent expenditure and our capital programme.

Conclusions

46. The Council is clear that adjusting to the new financial climate and managing the transition to the new undergraduate funding regime without undue stress will not be easy. In view of these exceptional circumstances, it has agreed that projecting a deficit budget for the period up to 2014–15 is justified to maintain our operations and to allow continued investment in essential capital and new initiatives.

47. The allocations proposed in this Budget Report are projected to lead to a Chest deficit of £9.2m in 2011–12 and a cumulative deficit of some £36m over the planning period to 2014–15. The scale of this deficit has been managed to strike an appropriate balance between financial prudence and the need to ensure that the excellence of our teaching and research is not irreparably compromised.

48. This planning envelope has only been achieved by tightly constraining School and Institution spending, starting with a –2% cash reduction in 2011–12 and below inflation increases thereafter. Without these tight constraints, the deficit would have been much greater and there would have been little prospect of a return to balance by 2015–16. Schools and Institutions will not find it easy to deliver the savings required and the next three years will be especially difficult.

49. In particular, it will be necessary to raise our game with regard to the quality of our research grant applications, and our ability to exploit our strengths through large-scale strategic collaborations. We also need to reduce our research infrastructure costs and improve our indirect cost recovery to ensure that our research activity is sustainable. These are matters which are now receiving considerable attention by the Council and proposals for improving our position are being developed with some urgency.

50. Nevertheless, the plans are achievable and there are potential upsides. The Voluntary Severance Scheme will generate savings and allow some strategic restructuring. The UAS and IT reviews will assist the associated organizations in providing better and more efficient support to academics. The development of new activities in executive education and premium fee Master’s courses will generate new revenues. Work in progress to improve our procurement services and our space utilization will also contribute. Finally, the continued support of alumni and donors will continue to strengthen our endowment.

51. The next few years will be difficult, but manageable. The Council believes that the plans embodied in this Report are appropriate for these uniquely challenging times, that they will enable the University to continue to flourish, and that they will allow a controlled return to balanced budgets. On this basis, the Council is content to recommend allocations for 2011–12.

Recommendations

52. The Council recommends:

I. That allocations from the Chest for the year 2011–12 be as follows:

(a)to the Council for all purposes other than the University Education Fund: £168.2m

(b)to the General Board for the University Education Fund: £198.5m.

II. That any supplementary HEFCE grants which may be received for special purposes during 2011–12 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 I above be adjusted accordingly.

16 May 2011	L. K. Borysiewicz, Vice-Chancellor	M. J. Daunton	F. P. Kelly
	Anthony Andrews	R. J. Dowling	R. Lethbridge
	N. Bampos	I. M. Le M. Du Quesnay	Rahul Mansigani
	Richard Barnes	David Good	Mavis McDonald
	D. J. A. Casserley	Andy Hopper	Rachael Padman
	Stephen J. Cowley	Christopher Hum

TABLE 1: CHEST 2010–11 LATEST FORECAST

	Original		Latest		Changes to
	Budget		Forecast		Chest
	2010–11		2010–11		2010–11
Income	£m		£m		£m
Grants from the Funding Council	182.7		180.7		–2.0
Teacher Development Agency	2.8		2.7		–0.1
Academic Fees	90.1		93.4		3.3
Research Grants and Contracts	40.0		34.3		–5.7
Endowment Income and Interest Receivable	15.5		17.8		2.3
Other Operating Income	7.6		7.4		–0.2
Cambridge Assessment	11.3		12.2		0.9
Other Services Rendered	1.5		1.1		–0.4
TOTAL INCOME	351.5		349.6		–1.9
Expenditure
Academic Departments	162.5		162.5		0.0
Academic Institutions and Services	26.1		26.1		0.0
Staff and Student Services	2.0		2.0		0.0
Unified Administrative Service (UAS)	31.7		31.7		0.0
College Fee	42.0		42.0		0.0
Estates related expenditure	38.4		38.4		0.0
Other administered funds	50.6		50.6		0.0
TOTAL EXPENDITURE	353.3		353.3		0.0
Deficit	–1.8		–3.7		–1.9

Notes

Other operating income comprises a variety of individually small amounts including recovery of VAT, recovery of the costs of major research facilities and the internal recovery to the Chest of the indirect costs borne by the Chest resulting from certain non-chest funded activities.

Other services rendered comprises the internal recovery to the Chest of the indirect costs borne by the Chest resulting from Trading activities.

TABLE 2: CONSOLIDATED OPERATING BUDGET FOR 2011–12

		Research
		Grants and	Trust	Other	Total
	Chest	Contracts	Funds	Non-chest	budget
Income	£m	£m	£m
Grants from the Funding Council	178.2			13.7	191.8
Teacher Development Agency	2.3				2.3
Academic Fees	101.6			17.3	118.9
Research Grants and Contracts	38.0	275.2			313.2
Endowment Income and Interest Receivable	17.8		29.8	2.3	50.0
Other Operating Income	8.3	1.6		63.1	73.0
Cambridge Assessment	10.0				10.0
Other Services Rendered	1.3			41.3	42.5
TOTAL INCOME	357.5	276.8	29.8	137.6	801.7
Expenditure
School of Arts and Humanities	19.7	4.5	4.2	3.4	31.8
School of the Humanities and Social Sciences	34.0	11.9	4.0	11.4	61.2
School of the Physical Sciences	36.7	60.6	7.4	11.9	116.6
School of Technology	25.9	34.6	3.5	40.8	104.7
School of the Biological Sciences	30.6	81.8	2.8	11.0	126.2
School of Clinical Medicine	15.1	80.7	2.0	29.5	127.4
Total Schools	161.9	274.3	23.9	107.8	567.9
Academic Institutions and Services	27.3	0.8	2.4	18.9	49.3
Staff and Student Services	1.9	0.0	0.0	2.4	4.4
UAS	32.1	0.5	0.4	12.4	45.4
Strategic Provisions	1.0				1.0
College Fee	41.6				41.6
Estates related expenditure	39.7				39.7
Other administered funds	61.2				61.2
TOTAL ALLOCATION/EXPENDITURE	366.7	275.5	26.7	141.5	810.5
Deficit/Surplus	–9.2	1.2	3.1	–3.9	–8.8

Notes

Chest – as in Table 1

Non-chest Other operating income includes general and specific donations, recharges to health authorities of certain costs within the Clinical School, executive education and other programmes within Judge Business School and a variety of other activities within Schools, Non-School Institutions, the UAS, and subsidiary undertakings of the University.

Non-chest Other services rendered comprises a variety of Trading activities within Schools, Non-School Institutions (including ICE), the UAS, and subsidiary undertakings of the University.

TABLE 3: OPERATING BUDGET SUMMARY

	BUDGET 2011–12				PROJECTION 2012–13				PROJECTION 2013–14				PROJECTION 2014–15
		Non-				Non-				Non-				Non-
Income	Chest	Chest	Total		Chest	Chest	Total		Chest	Chest	Total		Chest	Chest	Total
	£m	£m	£m		£m	£m	£m		£m	£m	£m		£m	£m	£m
Grants from the Funding Council	178.2	13.7	191.8		165.2	14.3	179.5		152.2	13.7	165.9		139.2	13.0	152.2
Teacher Development Agency	2.3	0.0	2.3		2.3	0.0	2.3		2.4	0.0	2.4		2.4	0.0	2.4
Academic fees	101.6	17.3	118.9		127.0	18.2	145.2		149.8	19.0	168.7		172.5	19.5	192.1
Research grants and contracts	38.0	275.2	313.2		39.0	278.1	317.1		39.8	281.2	321.0		41.7	286.7	328.4
Endowment income and interest receivable	17.8	32.1	50.0		18.3	31.9	50.2		17.1	32.4	49.5		18.0	34.9	52.9
Other operating income	8.3	64.7	73.0		8.6	63.9	72.6		9.3	63.2	72.5		9.9	65.0	74.9
Cambridge Assessment	10.0	0.0	10.0		0.0	0.0	0.0		0.0	0.0	0.0		0.0	0.0	0.0
Other services rendered	1.3	41.3	42.5		1.4	43.8	45.2		1.4	45.3	46.7		1.2	44.8	46.0
TOTAL INCOME	357.5	444.2	801.7		361.8	450.3	812.1		372.0	454.7	826.7		385.1	463.8	848.8
Expenditure
Schools	161.9	406.0	567.9		164.7	408.1	572.8		167.0	415.0	582.0		169.1	423.2	592.3
Academic institutions and services	27.3	22.1	49.3		27.5	23.2	50.8		27.8	22.3	50.1		28.1	22.4	50.5
Staff and student services	1.9	2.4	4.4		2.0	2.4	4.4		2.0	2.5	4.4		2.0	2.5	4.5
UAS	32.1	13.3	45.4		32.5	12.0	44.5		32.8	11.8	44.6		33.1	11.3	44.4
Strategic provisions	1.0	0.0	1.0		1.0	0.0	1.0		1.0	0.0	1.0		1.0	0.0	1.0
Other administered funds	142.5	0.0	142.5		146.8	0.0	146.8		152.1	0.0	152.1		155.4	0.0	155.4
TOTAL EXPENDITURE	366.7	443.8	810.5		374.5	445.8	820.3		382.7	451.5	834.2		388.7	459.4	848.2
Deficit/Surplus	–9.2	0.5	–8.8		–12.7	4.5	–8.2		–10.8	3.2	-7.5		-3.7	4.3	0.7

TABLE 4: PROJECTED INCOME AND EXPENDITURE ACCOUNT 2011–12

	Year ending 31 July 2012				Income and Expenditure account
			Income and		2010–11
	Budget		Expenditure		Latest	2009–10
	Table 2	Adjustments	account		forecast	actual
	£m	£m	£m		£m	£m
Income
Grants from the Funding Council	191.8	9.5	201.3		201.0	202.6
Teacher Development Agency	2.3		2.3		2.8	2.7
Academic Fees	118.9	5.0	123.9		114.0	102.0
Research Grants and Contracts	313.2	–16.1	297.1		282.3	267.7
Endowment Income and Interest Receivable	50.0	–0.1	49.9		46.8	44.6
Other Operating Income and services rendered	115.6	–7.6	108.0		111.3	112.8
Cambridge Assessment & CUP transfers	10.0	17.3	27.3		12.1	14.9
TOTAL INCOME	801.7	8.0	809.8		770.3	747.3
Expenditure
Staff costs
Research	138.7	–7.5	131.2		125.5	122.5
Other	302.1	1.6	303.7		294.5	282.7
Other operating expenses
Research	118.0	–10.0	108.0		101.8	92.2
College Fee Transfer	41.6		41.6		42.0	39.5
Other	188.6	–12.0	176.6		159.1	147.3
Depreciation
Research	8.8	1.8	10.6		9.7	7.3
Other	12.7	30.7	43.4		44.6	44.9
Total expenditure on continuing operations	810.5	4.6	815.1		777.2	736.4
Surplus/Deficit on operations before transfers	–8.8	3.5	–5.3		–6.9	10.9
Released from specific donations		11.0	11.0		12.0	17.3
Surplus/Deficit retained in reserves	–8.8	14.5	5.7		5.1	28.2

Notes

1. Expenditure The expenditure estimates in Table 2 have been analysed into income and expenditure account categories on the basis of relevant working papers.

2. Eliminations Income, as stated in Table 2, includes items totalling £20.7m which are excluded from the income and expenditure account, either because the funds are received by the University as agent or because the income is internal to the University (such as internal loan transactions). The same amount is adjusted in expenditure. In addition the estimated VAT repayment of £2.4m, included in income on Table 2, is set against expenditure in the income and expenditure account.

3. Capital adjustments Table 2 is prepared on the basis of funds to be received, allocations, and cash spent. Adjustments are required to exclude from expenditure amounts which will be spent on equipment and other items which will be capitalized as fixed assets in the financial statements (total £21.5m), and to include estimates of depreciation totalling £54.0m. Corresponding income adjustments are required in respect of the external funding for these items totalling £10.8m and releases of deferred capital grants to match depreciation (total £32.9m).

4. Reclassifications Income items totalling £7.0m are classified differently within the operating surplus/(deficit) as between Table 2 and the financial statements. In addition, £11m of forecast specific donations included within income in Table 2 is included as a transfer from endowments within the income and expenditure account in accordance with the University’s accounting policies.

5. Impact of consolidation Table 2 represents the University’s projected activities together with the activities of certain subsidiary companies attached to specific University Institutions. An adjustment is required to estimate the impact of consolidating the income and expenditure of all subsidiaries. An estimate of £6.7m has been added to income and expenditure based on the 2009–10 actual consolidation.

APPENDIX 1: Staff FTE by organization and staff grouping: 2002–2011

	Academic
	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011
Schools & Academic institutions	1,511	1,535	1,524	1,479	1,484	1,553	1,594	1,557	1,533	1,520
UAS & Vice-Chancellor’s Office
Academic Services	2	4	4	3	2	3	3	2	3	3
Museums & Galleries						2	2
Staff & Student Services	1	1	1	1	1	1	–
Development Office & Investment Office
Total	1,514	1,540	1,529	1,483	1,487	1,559	1,599	1,559	1,535	1,523
	Academic-related (administrative)
	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011
Schools & Academic institutions	147	143	166	175	172	206	208	249	265	288
UAS & Vice-Chancellor’s Office	202	230	250	274	296	297	293	323	323	310
Academic Services	40	40	38	25	16	10	9	13	18	16
Museums & Galleries	8	9	13	13	13	17	17	20	20	20
Staff & Student Services	22	21	20	19	20	23	27	18	23	26
Development Office & Investment Office	24	26	24	32	35	31	33	37	41	39
Total	444	468	511	538	553	584	587	660	690	700
	Academic-related (computing)
	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011
Schools & Academic institutions	148	189	210	213	219	222	224	222	226	231
UAS & Vice-Chancellor’s Office	19	26	36	44	47	48	49	55	59	61
Academic Services	79	92	87	93	98	98	97	95	93	89
Museums & Galleries	1	2	1	2	2	2	2	3	3	3
Staff & Student Services	3	3	3	3	3	4	4	3	4	4
Development Office & Investment Office
Total	250	311	336	354	369	376	378	380	386	391
	Academic-related (other groups)
	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011
Schools & Academic institutions	92	108	112	115	111	95	98	104	101	104
UAS & Vice-Chancellor’s Office	7	14	13	13	13	14	13	15	14	13
Academic Services	63	66	65	67	67	71	72	75	69	71
Museums & Galleries	14	16	15	17	18	19	19	18	16	16
Staff & Student Services	7	11	13	16	14	20	18	18	15	14
Development Office & Investment Office
Total	183	215	218	227	223	219	220	230	215	217
	Research
	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011
Schools & Academic institutions	2,048	2,221	2,223	2,170	2,257	2,484	2,532	2,576	2,679	2,712
UAS & Vice-Chancellor’s Office		2		1	1	1	1	7	6	7
Academic Services	19	20	24	23	31	30	32	34	34	32
Museums & Galleries	11	12	13	13	14	16	9	13	13	12
Staff & Student Services
Development Office & Investment Office
Total	2,078	2,255	2,259	2,206	2,302	2,531	2,574	2,630	2,733	2,763
	Assistant
	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011
Schools & Academic institutions	1,869	1,894	1,915	1,833	1,773	1,806	1,832	1,875	1,908	1,920
UAS & Vice-Chancellor’s Office	331	380	392	401	398	430	445	554	526	494
Academic Services	270	268	279	274	271	262	263	272	268	251
Museums & Galleries	70	69	62	76	78	83	82	85	89	87
Staff & Student Services	44	45	46	49	51	125	121	37	48	51
Development Office & Investment Office	12	12	15	18	15	18	19	20	31	34
Total	2,596	2,668	2,709	2,651	2,586	2,724	2,762	2,843	2,871	2,836
	All staff
	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011
Schools & Academic institutions	5,815	6,090	6,150	5,985	6,016	6,366	6,488	6,583	6,713	6,775
UAS & Vice-Chancellor’s Office	559	652	691	733	755	789	801	954	928	885
Academic Services	473	490	497	485	485	474	476	491	484	462
Museums & Galleries	104	108	104	121	125	139	131	139	141	138
Staff & Student Services	77	81	83	88	89	173	170	76	91	95
Development Office & Investment Office	36	38	39	50	50	50	54	59	74	76
Total	7,065	7,457	7,563	7,460	7,520	7,993	8,120	8,302	8,431	8,430

Notes:

All data as at 31 January. Because of rounding, totals may not always equal the sum of the parts.

Organization Group

Schools & Academic institutions All Schools; ICE; CPSL; CRASSH; UAS staff in Schools; Centre for Entrepreneurial Learning (from 2007)

Academic Services Libraries; UCS; CARET; Language Centre; Centre for Entrepreneurial Learning (until 2007); Cambridge-MIT (until 2009); Telecommunications Office from 2009

UAS Excludes staff in Faculties, Departments, and School offices. Includes Vice-Chancellor’s Office. Includes DRC from 2007; University Centre and University Farm from 2009

Museums & Galleries Fitzwilliam; Kettles Yard; Hamilton Kerr

Development Office & Investment Office Development Office & Investment Office

Staff & Student Services Careers; Accommodation; PE; Telecommunications (until 2009); ADC; Graduate Union; Dental Service; DRC (until 2007); University Centre (until 2009); Counselling Service

Academic-related (other groups) includes: Librarians; Keepers; Technical Officers; Ceremonial posts; Language Teaching Officers; Counsellors; Therapists

APPENDIX 2: University student statistics (full-time fee-paying students)

Undergraduates			2001–02	2002–03	2003–04	2004–05	2005–06	2006–07	2007–08	2008–09	2009–10	2010–11
	Home and EC
		Full-fee	10,727	10,827	10,752	10,729	10,471	10,420	10,315	10,415	10,538	10,518
		Half-fee students	177	126	137	165	165	159	137	136	110	83
			10,904	10,953	10,889	10,894	10,743	10,579	10,452	10,551	10,648	10,601
	Island Students
		Full-fee	32	37	39	38	45	49	51	44	35	30
		Half-fee students								1	0	1
			32	37	39	38	45	49	51	45	35	31
	Overseas
		Full-fee	892	971	983	988	1028	1112	1179	1258	1247	1,214
		Half-fee students	2	1	1	2	–	2	1	1	8	3
			894	972	984	990	1,028	1,114	1,180	1,259	1,255	1,217
	Total Undergraduates		11,830	11,962	11,830	11,922	11,816	11,742	11,683	11,855	11,938	11,849
Full-time Postgraduates
	Home and EC
		P.G.C.E.	579	624	708	672	621	503	477	438	431	429
		M.B.A./M.Fin.	23	33	33	35	25	26	42	54	47	48
		other postgraduates	2,611	2,659	2,638	2,790	3,223	3,302	3,038	2,883	2,971	3,223
			3,213	3,316	3,379	3,497	3,869	3,831	3,557	3,375	3,449	3,700
	Islands
		P.G.C.E.	–	–	2	2	3	4	3	2	1	4
		M.B.A./M.Fin.
		other postgraduates	–	1	–	–	–	–	–	–	–	5
		Total	–	1	2	2	3	4	3	2	1	9
	Overseas
		P.G.C.E.	–	–	–	4	4	4	7	4	4	1
		M.B.A./M.Fin.	64	91	76	69	80	78	102	119	142	153
		other postgraduates	1,788	1,877	1,938	1,927	2,267	2,292	2,166	2,042	2,204	2,335
			1,852	1,968	2,014	2,000	2,351	2,374	2,275	2,165	2,350	2,489
	Total Postgraduates		5,065	5,285	5,395	5,499	6,223	6,209	5,835	5,542	5,800	6,198
	Total Student Numbers		16,895	17,247	17,307	17,421	18,039	17,951	17,518	17,397	17,738	18,047
	Total Home Student Numbers		14,117	14,269	14,268	14,391	14,612	14,410	14,009	13,926	14,097	14,301
	Total Islands Student Numbers		32	38	41	40	48	53	54	47	36	40
	Total Overseas Student Numbers		2,746	2,940	2,998	2,990	3,379	3,488	3,455	3,424	3,605	3,706
			16,895	17,247	17,307	17,421	18,039	17,951	17,518	17,397	17,738	18,047

Notes

Data as at 1 December

1. This simple overview tabulation cannot be directly compared with any of the detailed tables in the annual Student Statistics special edition of the Reporter, as there are differences of treatment for certain categories of student, particularly ERASMUS and other exchange students at undergraduate level. At postgraduate level the numbers coincide in all years except 2006–07, where the number quoted here takes account of the latest available analysis.

2. Students with a part-time mode of study are excluded from this appendix. These include part-time postgraduates (e.g. M.Ed. and M.St. students) and non-matriculated students (e.g. Faculty of Education INSET, ICE, and CPSL students).

3. Postgraduate students who have completed the minimum requirements of their course, i.e. who are writing up or under examination, are also excluded from this appendix. In 2005–06 and 2006–07 postgraduate students were recorded as full-time for the first 10 terms and as writing up from the 11th term onwards. In 2004–05 and 2007–08 students are classified as full-time for 9 terms and as writing up from the 10th term onwards. The effect of these changes in definitions is that the number of full-time postgraduate students is higher for 2005–06 and 2006–07 in comparison with 2004–05 and 2007–08.

4. Incoming and outgoing reciprocal (ERASMUS) students and incoming MIT students are excluded as they do not pay fees.

APPENDIX 3: Research grants and contracts

Table 1 below shows how expenditure on research pay and non-pay has grown since 2003–04. It also shows how, with the introduction of fEC, contributions to indirect costs increased markedly, but are beginning to drop again.

Table 1 (£m)	2003–04	2004–05	2005–06	2006–07	2007–08	2008–09	2009–10	2010–11 (estimate)
Total research income	174.4	183.1	194.4	211.5	232.6	260.2	267.7	282.3
Staff costs	80.9	84.0	88.3	95.5	103.4	116.0	122.5	125.5
Other direct expenditure	72.3	78.4	84.3	87.9	92.4	99.4	99.5	111.5
Direct research expenditure [year-on-year % increase]	153.2	162.4 6.0%	172.6 6.3%	183.4 6.3%	195.8 6.8%	215.4 10.0%	222.0 3.1%	237.0 6.8%
Non-Chest indirects	9.5	9.0	9.7	10.4	11.2	13.0	12.4	11.0
Chest indirects	11.7	11.7	12.1	17.7	25.6	31.8	33.3	34.3
Contribution to indirect costs	21.2	20.7	21.8	28.1	36.8	44.8	45.7	45.3
Contribution as % of staff costs	26.2%	24.6%	24.7%	29.4%	35.6%	38.6%	37.3%	35.8%
Contribution as % of direct expenditure	13.8%	12.7%	12.6%	15.3%	18.8%	20.8%	20.6%	18.8%

Over this period, there was a phased removal of Dual Funding Support targets, which removed a burden (approximately 5% of research grant staff costs in 2005–06) from Departmental budgets.

Table 2 below shows the changing mix of sponsors over the same period, calculated on direct expenditure (as a Proxy for activity/volume).

Table 2	2003–04	2004–05	2005–06	2006–07	2007–08	2008–09	2009–10	2010–11 (estimate)
Research Councils	35.5%	38.2%	39.9%	41.2%	39.8%	38.2%	36.2%	33.2%
UK Charities	33.9%	35.0%	34.7%	33.1%	34.8%	33.3%	35.0%	34.9%
EC	5.5%	5.6%	5.8%	6.0%	6.1%	7.2%	7.9%	10.9%
UK Government	8.1%	4.7%	4.0%	4.4%	5.7%	7.3%	6.9%	7.1%
UK Industry	10.2%	9.7%	8.8%	7.1%	6.6%	6.1%	4.8%	6.1%
Other incl. overseas	6.8%	6.7%	6.9%	8.2%	7.1%	8.0%	9.2%	7.9%
	100%	100%	100%	100%	100%	100%	100%	100%

APPENDIX 4: Expenditure

In parallel with the new presentation of staff numbers, the Council agreed to show the changing patterns of total expenditure from both Chest and non-Chest sources in the form of the table below. This shows a fairly stable pattern of expenditure in academic institutions as a proportion of total expenditure.

Given the inclusion in the other institutions and activities line of ad hoc and project expenditure, a certain amount of variation from year to year would be expected. For that reason the breakdown between other institutions and other activities is given this year.

Expenditure (£m)	2004–05	2005–06	2006–07	2007–08	2008–09	2009–10
Schools & Other Academic Institutions	364.6	383.4	407.0	442.6	485.2	498.3
	70%	69%	68%	67%	67%	68%
Other Institutions	122.1	131.8	146.5	161.6	187.1	181.2
	23%	24%	24%	25%	26%	25%
Other Activities	36.2	41.4	45.4	53.0	55.7	56.9
	7%	7%	8%	8%	8%	8%
Total Expenditure	522.9	556.6	598.9	657.2	728.0	736.4

Notes

Because the split of expenditure from certain funds is not certain until the end of the financial year, no projection

is given for the current year.

‘Schools and other academic institutions’ figures include Centre for Business Research, Cambridge Programme for Industry (now Cambridge Programme for Sustainability Leadership), Institute of Continuing Education, and related activity handled by Cambridge Enterprise, plus UAS staff in Schools.

‘Other activities’ represents College fees, plus University Farm, Cambridge–MIT Institute, subsidiary companies, and balance sheet adjustments.

‘Other institutions’ includes energy costs, which explain the significant change in 2008–09.

APPENDIX 5: HEFCE FUNDING FOR 2011–12 (including final fourth quarter adjustments to 2010–11)

Summary

1. This paper is an analysis of HEFCE provisional funding for 2011–12 and the final fourth quarter adjustments to 2010–11. (Teacher Development Agency (TDA) grants are announced separately.)

HEFCE funding for the sector

2. The Secretary of State announces annually the priorities for HEFCE and the available funding. His 20 December 2010 letter states that the Government will set out in a White Paper its ‘overall thinking and plans for HE’ and asks HEFCE to focus on supporting a smooth transition to the new arrangements. HEFCE are asked to give importance to:

•Social mobility, fair access, and widening participation;

•Renewed emphasis on teaching quality;

•Student choice;

•Responsiveness to the changing demands of students and employers;

•Controls on student numbers;

•Capital funding to support key strategic objectives;

•Selective funding of research; reduced indirect costs;

•Universities and business working more closely together;

•Efficiencies, shared services and collaborations; sustainable development;

•Pay restraint;

3. The overall grant settlement by financial year is summarized in HEFCE circular 05/20111 as follows:2

HEFCE grant3 for the 2010–11 and 2011–12 financial years	Final funding for 2010–11 (£m)	Funding for 2011–12 (£m)
Recurrent teaching	4,949	4,645
Recurrent research	1,618	1,549
Total recurrent	6,567	6,194
Teaching capital	207	95
Research capital	167	75
Total capital	374	170
Science Budget: capital	158	53
Science Budget: Higher Education Innovation Fund	113	113
Science Budget: total other elements	271	166
Total	7,212	6,530

4. The announcement of grant has two reservations:

(1) Allocations are provisional. Institutions are asked to note that grant from BIS is not confirmed for the 2012–13 financial year which has a four-month overlap with the 2011–12 University year and HEFCE reserves the right to review all allocations if the allocations are not as indicated in the BIS grant letter.

(2) The second year of the HEFCE Student Number Control limits the 2011 intake of full time undergraduate HEFCE fundable students, and funding may be withdrawn if institutions exceed their control number.4

Outcome for Cambridge

5. HEFCE’s summary shows that Cambridge receives a decrease of 0.58% in recurrent funding for 2011–12, compared with a sector average decrease of 4.08%.

6. HEFCE’s comparison is with funding for 2010–11 after all adjustments. The tables below give a more detailed view which shows the June 2010 and February 2011 reductions applied to the teaching funding grant announced in March 2010, and the single reduction announced in February 2011 to R funding. The central column corresponds to the HEFCE totals referred to in the previous paragraph.

7. Because of the prospect of reductions in 2010–11 funding, £2m of announced funding was held back in the 2010 Budget Report and not allocated. That is slightly less than the total reductions in T funding of £2.35m. The £2m reduction in R funding was not expected and no provision was made for it, but it is partly offset by an additional £0.5m R funding to be received in arrears in 2010–11 (as a result of a HEFCE comparison of returns of research student numbers showing under-funding in 2009–10 of that amount).

8. The difference between announced funding for 2011–12 and the forecast funding used in the Planning Guidance was not sufficient to trigger revisions to proposed Allocations.

Funding in detail

HEFCE Funding for Teaching

9. After all the adjustments in the teaching stream described below, the total change is a reduction of 4.67% when compared with the adjusted teaching grant for 2010–11, but a reduction of over 8% when compared with the March 2010 announcement for the current year, and 14% over the March 2009 provisional allocation for 2009–10, before the reduction in Targeted Allocations and the current round of efficiency gains.

Mainstream Teaching Funding

10. The basic principle of the funding method for teaching (a comparison of Standard Resource with the sum of Assumed Resource and Assumed Fees) is unchanged for some years and is described in the HEFCE publication Guide to Funding; how HEFCE allocates its funds (circular 2010/24 at hefce.ac.uk5). There have, however, been significant changes in the last few years around the basic model: the removal of premiums, the creation and removal of targeted allocations, and the effect of the ‘ELQ’ policy.

11. The calculation of Standard Resource groups academic activity into four price groups so that similar activities are notionally funded at similar rates. The base price per weighted full-time equivalent student is £3,670 – a significant reduction from 2009–10 (£3,951) and reflecting the effect of successive efficiency gains.

12. A factor of minus 4.28% is applied to mainstream teaching grant before the addition of other grant elements.

Contract range and student numbers

13. The University’s contract position is +5.7% (+4.7% in 2010–11), still within the University’s bespoke contract range of –5.0% to +7.7% but above the sector norm that applies to most other institutions of –5.0% to +5.0%. (The higher ceiling was introduced to enable extra funding for Cambridge under the College Fee settlement.) The comparison that matters more is that produced after the HESA6 return when the HESES is recreated to show the true contract position based on actual (not projected) fundable student numbers. The position in the recreation derived from the 2010 HESA return was 5.3% (2009: 3.1%). Reducing Home/EU fundable student load is one reason for the rise in the position and the trend can be held or reversed – and the risk partially managed – if Clinical School numbers are allowed to rise in successive annual steps as the Clinical School plans.

14. The HEFCE student number control introduced for the 2010 entry limits the intake of new fundable students to no more than the 2008 entry. The University is currently admitting below the cap and has declined the offer of additional unfunded numbers for 2012 which it would not recruit. The clinical entry is outside that control (as the students have already been admitted).

15. A second reason for the increase in the position as reported in the grant letter (and which will probably apply to the HESES recreation from the 2011 HESA) is that HEFCE have reduced the base price in the Standard Resource calculation. Unequal reductions in Standard Resource and the Assumed Resource (with which it is compared) have contributed to the change in position. The risk of moving above the contract range as a result of formula changes has increased but it appears from the grant letter that where institutions have moved above the contract range, their upper limit has moved with them.

16. It is not clear what role this form of monitoring will play in funding arrangements post 2012, if it is playing any role now, but it is prudent to assume that until HEFCE abolish the arrangement the University will continue to risk holdback of funding if it rises above the Contract Range.

Targeted Allocations

17. The last weightings were eliminated from the Standard Resource calculation in 2008–09 and converted to Targeted Allocations (except the premium for London Weighting which does not apply to Cambridge). The Historic Buildings and Institution Specific allocations were originally premiums introduced (with other measures) to convey to the University part of the funding to support the College Fee, formerly paid direct to the Colleges. The Historic Buildings targeted allocation was discontinued in 2010–11. Some of the Targeted Allocations have a fixed value reflecting fixed costs and some are volume dependent.

18. Funding for very high cost and vulnerable science subjects (‘SIVS’) continues for 2011–12, although originally only set aside by HEFCE for the three years 2007–08 to 2009–10, and is intended to support chemistry; physics; chemical engineering; and mineral, metallurgy, and materials engineering to help maintain capacity in these subjects while demand from students grows. An additional allowance is provided to support SIVS following the introduction of the ELQ policy.

19. Former special funding for minority subjects was included in mainstream teaching grant from 2005–06, and is subject to the condition that one year’s notice must be given if there is an intention to close any subject for which this funding was provided. If so, funding may be reclaimed by HEFCE. The scope of the requirement to give notice has been extended to SIVS generally.

20. Rates of funding have reduced to reflect the June 2010 and February 2011 pro-rata reductions.

Widening Participation

21. There do not appear to have been any significant changes to the various Targeted Allocations for widening participation and student success. Improving retention funding is now included within funding for Teaching Enhancement and Student Success.

Other issues related to funding for teaching

22. The University successfully bid in partnership with the Cambridge Theological Federation for co-funded Additional Student Numbers (ASNs) to support a continued intake of 45 ELQ students to the B.Th. and to the B.A. in Theology in and after 2009–10 (so a total of 90 over the two years of the course taken by Affiliated Students). These ASNs are in addition to the Student Number Control; the normal holdback arrangements for under-recruitment do not apply, but there is individual monitoring of these ASNs and under-recruitment in 2009 has led to special holdback of grant of £41,935 in the current year, not shown in the grant tables. A second chance is given to make up the number, but if that is not successful the funded number will permanently reduce. The Federation is aware. Transitional funding for ELQs is otherwise reducing in line with expectations.

HEFCE	2010–11	2010–11	2011–12
TEACHING FUNDING	(March 2011)7	(restated)8	(March 2011)9	Change
	£		£	£/%
Teaching Funding – Core Funds
Baseline ‘T’ Grant (mainstream teaching grant in previous year)	53,560,268		53,558,547
2009–10 efficiency saving	(728,863)
June 2010 pro-rata saving			(583,081)
February 2011 consolidated reduction10			(1,483,369)
ERASMUS/SOCRATES fee compensation11	(138,164)		(204,390)
Adjusted Mainstream Teaching Grant	52,693,241		51,287,707
ERASMUS/SOCRATES fee compensation	206,640		245,280
Uplift to (reduction in) mainstream grant	658,666		(2,195,114)
MAINSTREAM TEACHING GRANT12	53,558,547	53,558,547	49,337,873	(4,220,674) –7.88%
June 2010 pro-rata saving		(583,081)
February 2011 consolidated reduction		(1,483,369)
ERASMUS/SOCRATES fee compensation		(204,390)
ERASMUS/SOCRATES fee compensation		245,280
Adjusted total	53,558,547	51,532,987	49,337,873	(2,195,114) –4.26%
Targeted allocations
Widening participation
Widening participation from disadvantaged backgrounds – full time UG	322,281		261,392
Widening participation from disadvantaged backgrounds – part time UG	37,685		5,355
Widening access for students with disabilities	59,424		58,214
Total widening participation	419,390	414,824	324,961	(89,863) 21.66%
Teaching enhancement and student success
Improving retention: full time UG	57,975		60,071
Improving retention: part time	41,300		8,316
Research informed teaching	0		0
Institutional learning and teaching strategies	370,523		330,854
Total teaching enhancement and student success	469,798	454,382	399,241	(55,141) –12.14%
Other targeted allocations
Targeted Allocation for part-time undergraduates	60,018		12,056
Targeted Allocation for foundation degrees	0		0
Targeted Allocation for accelerated/intensive provision	35,763		52,670
Institution-specific Targeted Allocation13	2,996,884		2,757,630
Maintaining capacity in SIVS following ELQ policy	675,969		622,003
Additional funding for very high cost and vulnerable science subjects	1,113,545		1,024,646
Sub-total	4,882,179	4,693,286	4,469,005	(224,281) –4.78%
Total targeted allocations	5,771,367	5,562,492	5,193,207	(369,285) –6.64%
Other recurrent teaching grants
Clinical consultants’ pay	607,144		558,673
Senior academic GPs’ pay	16,504		15,186
NHS pension schemes compensation	81,751		75,224
Transitional Funding for ELQs	947,987		764,689
Other recurrent teaching grants	1,653,386	1,589,416	1,413,772	(175,644) 11.05%
Non-mainstream student numbers14	119,241	114,628	109,721
Sub-total adjustments	7,543,994	7,266,536	6,716,700	(549,836) –7.57%
TOTAL TEACHING FUNDING	61,102,541	58,799,523	56,054,573	(2,744,950) –4.67%

23. Alternatively the changes can be summarized as follows:

	2010–11	2011–12
	(March 2011)15	(March 2011)16	Change
March 2010 grant announcement	61,102,541	56,054,573	(5,047,968) –8.26%
June 2010 pro rata saving to mainstream teaching grants	(583,081)
June 2010 pro rata saving to non-mainstream teaching grants17	(82,130)
July 2010 grant announcement	60,437,330	56,054,573	(4,382,757) –7.25%
March 2011 reduction to mainstream teaching grant	(1,489,114)
March 2011 reduction to non-mainstream teaching grant	(195,329)
TOTAL TEACHING FUNDING (AT MARCH 2011)18	58,752,887	56,054,573	(2,744,950) –4.67%

HEFCE Funding for Research

Mainstream Funding

24. QR continues to be calculated using a measure of volume of research activity in each Unit of Assessment (UOA) weighted by quality, but from 2009–10 has incorporated the outcome of the 2008 RAE in which quality was reported as a profile instead of by a single rating.

25. HEFCE’s funding method for mainstream QR allocates pots to each UOA in proportion to volume above 2* (1* and unclassified volume is unfunded). Those pots are then divided by weighted volume. The weights are unchanged for 2011–12. Volume is the FTE category A staff submitted in the RAE (including College employed staff) attributed by the percentages in the quality profile. In 2009–10 the volume attributed to 2*, 3*, and 4* was weighted 1, 3, 7, respectively, but in 2010–11 was weighted 1, 3, 9. For 2011–12 the weightings have changed again to 0.294, 3, 9. The effect is to increase selectivity but the reduced pot of mainstream QR leads to a sector average reduction (see Annex A) of 3.98%; Cambridge’s is less at minus 0.51%. HEFCE have noted the clear implication that, by 2012–13, activity rated at 2* should no longer be counted in allocating mainstream QR grant. They will be consulting institutions later this year on the development of the research funding method, with particular reference to support for the next generation of researchers.

Charity Support Funding

26. Charity Support Funding is calculated in proportion to the average of eligible home and overseas charity income reported in 2008–09 and 2009–10. The derived rate at which 2011–12 funding is allocated is 25.9% of the reported average (reduced from 27.6% in 2010–11 and 28.2% in 2009–10). The allocation of funding is cash level from 2010–11 and so the change in rate is the result of higher sector volume. 6% of the University’s allocation is passed direct to departments.

Business Research Funding

27. The Business Research element of funding is calculated on the average of funding reported for 2007–08 and 2008–09 in the HESA Finance Return. The derived rate of funding in 2010–11 was 29%, 0.5% lower than for 2008–09. It has not yet been calculated for 2011–12. The allocation of funding is cash level from 2010–11.

Other Research Funding

28. Research Degree Programme (RDP) supervision funding is calculated on cost weighted Home/EU RDP/PGR student load in years 1–3 full time (1–6 part time). The unit of funding per cost-weighted FTE has reduced again for 2011–12 and is £3,447 (2010–11: £3,711; 2009–10: £3,878; 2008–09: £4,294).

29. Funding for National Research Libraries is the latest manifestation of regularly reviewed funding. There was a major review in 2009 after which cash level funding was provided for 2009–10 and 2010–11. £6m has again been provided but allocated in 2011–12 pro-rata to the full economic costs incurred in providing a service to external users identified through a TRAC analysis.

Supplementary Funding

30. The £1.9m allocated in 2010–11 was the third and last year of HEIF 4 (Higher Education Innovation Funding). A provisional allocation of £2.85m HEIF 5 has been calculated on metrics returned in the annual Higher Education – Business and Community Interaction (HE–BCI) survey. The funding is the capped maximum but depends on the outcome of a consultation on threshold funding and some other questions.

HEFCE	2010–11	2010–11	2011–12
RESEARCH FUNDING	(March 2011)	(restated)	(March 2011)	Change
	£		£	£/%
Mainstream QR	78,697,712	78,697,712	78,298,683
Mainstream QR	78,697,712	78,697,712	78,298,683	(399,029) 0.51%
Charity support funding19	19,172,303	19,172,303	19,435,274
Business research funding	4,922,103	4,922,103	4,722,400
Sub-total	24,094,406	24,094,406	24,157,674	63,268 0.26%
Research Degree Programme (RDP) Supervision Funds	13,085,028	13,085,028	12,958,752
Mainstream funding	115,877,146	115,877,146	115,415,109	(462,037) –0.40%
QR funding for National Research Libraries20	1,965,785	1,965,785	2,129,914
March 2010 grant announcement	117,842,931	117,842,931	117,545,023	(297,908) –0.25%
Reduction in research funding		(2,028,984)
REVISED TOTAL RESEARCH FUNDS (March 2011)	117,842,931	115,813,947	117,545,023	1,731,076 1.49%
Total Funding for Teaching and Research March 2010 – March 2011	178,945,472		173,599,596	(5,345,87) –2.99%
Total Funding for Teaching and Research (after efficiency gains)	176,595,818	174,613,470	173,599,596	(1,013,874) –0.58%
HEFCE comparison		174,613,470	173,599,596	(1,013,874) –0.58%
SPECIAL FUNDING
Institute of Zoology21	2,218,963	2,218,963	2,218,963
Overseas Research Students Award Scheme (ORSAS)	686,858	686,858	0
Museums and galleries	1,956,000	1,956,000	1,956,000
TOTAL SPECIAL FUNDING	4,861,821	4,861,821	4,174,963	(686,858) 14.13%
TOTAL HEFCE FUNDING TO THE UNIVERSITY	181,457,639	179,475,291	177,774,559	(1,700,732) –0.95%
HEIF22	1,900,000	1,900,000	2,850,000	950,000 +50%

Special Funding

31. The Institute of Zoology is funded through the University as a special arrangement with HEFCE.

32. Funding for museums and galleries, confirmed after a recent review, has been held at the same cash level as in 2010–11.

Capital Funding

33. In circular letter 11/2011 (dated 17 March) HEFCE have announced the reinstatement of £58m Teaching Capital Investment Fund for 2010–11, of which the University’s allocation is £872,206.

34. HEFCE Circular 2011/08 sets out capital allocations for learning and teaching for 2012–13 and the total for research for 2011–12 to 2014–15; funding in and after 2012–13 is indicative and the amounts for 2011–12 have yet to be confirmed. An indication of the possible position is given in this table.

	2011–12	2012–13	2013–14	2014–15
	£	£	£	£
RCIF	11,370,250	11,370,250	11,370,250	11,370,250
TCIF	?	621,002	?	?

Outlook

35. The annex to the University’s grant letter outlines HEFCE’s view of future changes, as follows:

Funding and student numbers for 2012–13 and beyond

71. In future, we expect that tuition fee income will become the major source of funding and therefore the route for supporting particular institutional developments. As a result, the funding environment for higher education from 2012–13 will be very different and all our approaches to funding will be subject to review. Institutions should not assume that past practices and commitments in relation to recurrent teaching funding, teaching capital and special funding will continue.

72. We anticipate that the Government’s forthcoming White Paper will set out its future priorities for HEFCE grant and any changes to the regulatory framework governing higher education that may be necessary to support its policies, ensure public finances are appropriately managed and protect the interests of students. Our grant letter stated that for 2011–12 and 2012–13 the Government expects the Council will continue to perform its current role on its existing statutory basis. A significant priority for us within the funding we have available in this spending review period will be to ensure a smooth transition for institutions to the new higher education financing arrangements. We will be working with partners, including BIS and the Student Loans Company, to achieve this, because less funding will be routed to institutions as grants via HEFCE.

73. On teaching funding, we anticipate a phase-out of the existing method and its allocations and a phase-in of a new method and allocations. The details of both will be subject to consultation later this year (after the White Paper has been published). Much of this phasing is likely to reflect the changing proportions of students recruited before and after September 2012: those subject to the existing and new fee regimes respectively. However, changes to some allocations may be phased differently. This phasing-out of the existing funding method also has implications for our approach in 2011–12.

74. In previous years where institutions have holdback due to failing to meet targets for growth or contract range we have consolidated the reduction to grant into the following year’s grant and provided an opportunity for this funding to be recovered. The recovery of funding is generally dependent on additional recruitment in the following year. For institutions that face holdback in 2011–12 opportunities to recover funding in 2012–13 may need to be through tuition fee income rather than HEFCE grant. The availability of funding for that new cohort of students should depend on the new funding regime, not continuation of the old one. We will aim to clarify our approach in the funding agreements to be issued in July.

75. The small number of ASNs originally agreed for 2012–13 through earlier bidding exercises may similarly need to be supported through tuition fee income, rather than HEFCE grant – many may relate to subject areas that we will no longer fund for new students.

76. Our grant letter from BIS does not state what measures might be required from 2012–13 to reduce the risk that student support costs exceed the Government’s planned budgets. (We anticipate that more information on this will be provided in the forthcoming higher education White Paper.) In the meantime, institutions should assume that there will be no advantage to be gained in 2012–13 onwards from over-recruiting in 2011–12. The BIS grant letter also states that, as a provisional planning assumption, universities and colleges should work on the basis that 10,000 entrant places for 2011–12 are temporary and will not be repeated in 2012–13.

77. On recurrent research funding, the BIS grant letter of 20 December 2010 provided guidance on research funding priorities; in particular, it stated ‘You should take forward funding both for research and for support for the next generation of researchers, by selectively funding on the basis of only internationally excellent research’. We have noted this advice and the clear implication that, by 2012–13, activity rated at 2* should no longer be counted in allocating mainstream QR grant. We will be consulting institutions later this year on the development of our research funding method, with particular reference to our support for the next generation of researchers.

List of abbreviations

ADC Amateur Dramatic Club

ASNs Additional Student Numbers

BIS Department for Business, Innovation and Skills

CARET Centre for Applied Research in Educational Technologies

CIF Capital Infrastructure Funds

CPS Cambridge University Assistants Contributory Pension Scheme

CPSL Cambridge Programme for Sustainability Leadership

CRASSH Centre for Research in the Arts, Social Sciences, and Humanities

CUEF Cambridge University Endowment Fund

DRC Disability Resource Centre

ELQ Equivalent or Lower Qualification

EU European Union

FTE Full-time equivalent

HE Higher Education

HE-BCI Higher Education Business and Community Interaction

HEFCE Higher Education Funding Council for England

HEIF Higher Education Innovation Fund

HESA Higher Education Statistics Agency

HESES Higher Education Students Early Statistics

ICE Institute of Continuing Education

INSET In-service Education and Training

MISD Management Information Services Division

MIT Massachusetts Institute of Technology

OFFA Office for Fair Access

ORSAS Overseas Research Students Awards Scheme

PE Physical Education

PRC Planning and Resources Committee

PGR Postgraduate research students

QR Quality-related research

RAE Research Assessment Exercise

RAM Resource Allocation Model

RCUK Research Councils UK

RDM RAM Distribution Model

RDP Degree Programme

RMC Research Resource Management Committee

RPC Research Policy Committee

SAH School of Arts and Humanities

SHSS School of the Humanities and Social Sciences

SBS School of the Biological Sciences

SCM School of Clinical Medicine

SPS School of the Physical Sciences

ST School of Technology

SIVS Strategically Important and Vulnerable Subjects

TDA Training and Development Agency

TRAC (T) Transparent Approach to Costing Teaching

UAS Unified Administrative Service

UCS University Computing Service

UOA Unit of Assessment

USS Universities Superannuation Scheme

VSS Voluntary Severance Scheme

Second Report of the Council on undergraduate UK/EU fees, funding, and student finance

The Council begs leave to report to the University as follows:

Introduction

1. In its Report on this topic published on 28 April 2011 (Reporter, 2010–11, p. 698), the Council gave its preliminary views on the Graces received by the Registrary for submission to the Regent House published in the Reporter of 9 March and of 16 March (Reporter, 2010–11, pp. 589–91 and 614–15). As it indicated in that first Report, the Council has now sought the advice of the members of the Finance Committee and of the General Board on those Graces that would involve additional expenditure from University funds additional to that already authorized, as required by Statute A, VIII, 9(b), and has also asked the Undergraduate Admissions Committee for its advice on the Grace that would set a higher internal target for the percentage of state school students admitted to the University than has been included in the University’s submission to the Office for Fair Access (OFFA) as approved by the Council. The Council has also benefited from consultation with representatives of those who promoted or signed the Graces. It is grateful for the contributions made to its consideration of these matters by those representatives, as it is for the remarks made in the Discussion on 17 May on its Report of 28 April. As far as possible, the Council has tried to find a consensual way forward on the Graces. Where it differs from those who have promoted them, it nonetheless recognizes the strength of feeling that generated the Graces during the recent debate in the University about the setting of fees, the aspirations that the Council shares for ensuring that Cambridge admits the best students regardless of their background, and the need for appropriate financial support for students in the future. It hopes that the process that it has undertaken to consult widely over these important matters can be a template for determining future matters of controversy within the University.

Authorization of the Submission of the Graces Received

2. The Council has resolved to authorize the submission of the Graces received by the Registrary to the Regent House (in accordance with Statute A, VIII, 9(a)) and to call for a ballot on a timetable that could be completed on 27 June 2011, the Monday after the last day of Term. It has grouped the Graces into three categories at the end of this Report to assist in referring to them and has labelled them A–G. It is also promoting a Grace of its own (Grace H) as an alternative to Grace G. This Report provides the advice received by the Council on the Graces from the bodies it has consulted; provides a preliminary response to the remarks made in the Discussion of 17 May; indicates whether it supports the Graces it has authorized for submission; explains why it is promoting Grace H as an alternative to Grace G; and sets out the timetable for the ballot.

Advice Received by the Council

3. The General Board commented as follows on the Graces:

“The Board noted that the Graces fell into 3 groups, concerning: (i) expenditure on maintenance bursaries, fee waivers, and widening participation; (ii) the authority for determining the level of University Composition Fee for Home and EU undergraduates and for determining the balance of expenditure between maintenance bursaries, fee waivers, and widening participation; and (iii) the internal target for the percentage of UK undergraduates admitted from the state sector. In connection with the first group of Graces, the Board noted that these would entail additional expenditure which would imply the University incurring growing annual deficits requiring compensating reduction in expenditure elsewhere, which would adversely affect the student experience. They also noted that spending priorities were a matter for the planning round and, ultimately, the Allocations Report. In response to the second group of Graces, the Board noted that as well as being cumbersome in terms of governance, the proposed procedure would not provide a stable, reliable basis either for managing the University’s internal financial planning, or for advising prospective students about the financial support available to them. In relation to the third category, the Board agreed that it would be unwise, as well as confusing and reputationally risky, to depart from the advice of the expert bodies consulted in arriving at the Council’s current proposal. Finally, the Board noted that the University needed to preserve the flexibility to be able to respond to the consequences of the new funding regime.

In agreeing that their comments should be reported to the Council, the Board expressed the hope that the Council would be able to reach a consensual way forward in discussion with those who had initiated certain of the Graces.”

4. The Finance Committee restricted itself to expressing a view on those Graces that would require additional expenditure. It has come to similar conclusions as the General Board in this regard, particularly in the context of the University budget for Chest allocations for the period 2011 to 2016 that it recommended to the Council but which results in a £36m cumulative deficit on the Chest by 2016. The Committee remains concerned about the uncertain financial climate in which the University is currently operating.

5. The Council has also recommended the budget to the Regent House (p. 764), which includes the assumptions on expenditure on bursaries and outreach as submitted to OFFA. It takes a similar view to the Finance Committee’s and the General Board’s of the consequences for reducing expenditure elsewhere if more were to be allocated now for bursaries. Furthermore, it supports the General Board’s view that there is a detailed process, conducted under the aegis of the Planning and Resources Committee, for determining spending priorities which results in a comprehensive University budget.

6. With respect to Grace E, the Undergraduate Admissions Committee has advised the Council that:

“it was unanimously opposed to this Grace for the following reasons:

(i)It undermines the rationale based on evidence of examination performance for the 61–63% admissions target that forms part of the University’s Access agreement;

(ii)Any such ‘internal’ target would inevitably become open to external scrutiny and would make the OFFA target appear duplicitous;

(iii)The 61–63% target was set after extensive consultation with Colleges who are responsible for Cambridge undergraduate admissions. The unanimous view of the Admissions Forum was that a higher target could be achieved only by operation of an admissions quota system which was regarded as both undesirable and unlawful.”

The Council notes that this advice is similar in content and based on the same evidence that led the Council to its original conclusion about the target for the percentage of state school admissions to the University. The Council sees no reason for altering its view on this matter.

Response to Remarks made in Discussion

7. In response to remarks made at the Discussion of the Council’s First Report on 17 May the Council has noted Dr Burchell’s comments on the 61–63% admissions target of state students in the Access Agreement and the need for a strategy to achieve this. It is aware that the Colleges, through the Senior Tutors’ Committee and the Colleges’ Committee, are currently working on a clear strategy to deliver this target. The Council will consider the remarks further in the light of the Discussion of this Report which will be held on 24 May.

The Council’s Advice on Graces A – H

8. The Council does not support Graces A and B for the financial reasons it has already expressed earlier in this Report and which are supported by the General Board and the Finance Committee. It also does not support Graces C and D, while noting that in most respects the intentions of Grace D with regard to uplifting payments made to students by inflation and applying analogous eligibility criteria as the current Cambridge Bursary Scheme have now been met in the design of the new scheme. It notes that Graces A and B were submitted before the Council had taken its decisions on 14 March (and which were the subject of a Notice published on 16 March (Reporter, 2010–11, p. 611)) about the contents of the University’s Access Agreement to be submitted to OFFA and have been overtaken by subsequent events. The OFFA agreement required the University to specify minimum expenditure on various components (the subject of Grace C); and after consultation with the Admissions Forum and others it was agreed that there should be ‘student choice’ over whether the payment made to qualifying students would be a maintenance bursary or a fee waiver. This choice is inconsistent with Grace C (and Grace D). Furthermore the shape of bursary arrangements from 2013 onward may need to change in the light of the National Scholarship Programme and as other student support arrangements evolve so that Grace D is unhelpfully prescriptive. For all these reasons the Council recommends a non placet vote on Graces A, B, C, and D.

9. The Council does not support Grace E for the reasons set out in paragraph 6.

10. The Council has benefited from a very helpful discussion that took place with representatives of the promoters of Graces F and G. Grace F’s intention is to leave the current relevant University legislation in place (Regulation 12 of the Regulations on University Composition Fees, Statutes and Ordinances, p. 160) but to authorize that it be disregarded for the setting of the fees to be charged to UK and EU undergraduates for the academical year 2012/13. The Grace requires that the setting of the fees would be determined “following a Report from the Council explaining in detail the financial case for the level of fees it believes appropriate.” As the Council stated in its first Report of 28 April 2011, it believes that it provided substantial financial information to support the case for setting fees of £9,000 with effect from 1 September 2012. Grace 1 of 23 February 2011 (“That approval be given to the Council’s intention to propose an access agreement to the Director of Fair Access to Higher Education, for his approval, pursuant to Regulation 12 for University Composition Fees”) was approved in a ballot by 1,387 votes to 416. This provided the authority to set fees of £9,000 and the Council sees no reason for re-opening this question. It therefore does not support Grace F.

11. Grace G proposes an amendment to Regulation 12. The Council also believes that there would be an advantage in amending Regulation 12 to place the setting of the fees for UK and EU undergraduates on equal terms with the setting of all other fees in the University annually by Grace and therefore wishes to promote its own Grace, Grace H. It believes that an amended regulation should require the General Board and the Council, after consultation with the Colleges, to issue a financial analysis of the costs of an undergraduate education in Cambridge with the annual recom­mendation for the fees to be charged. Grace H also preserves, in its provisions (iii) and (iv), the current substance of provisions (i) and (ii) of Regulation 12. It also restricts the amount of fees to be charged in provision (i) to whatever limit may be set by law. This provision is no longer explicitly linked to the relevant provisions of the Higher Education Act 2004 in order to provide a more enduring context for this regulation. The Council believes that Grace H in this form captures the spirit and intention of Grace G but would remove the requirement that this be done with effect from “1 August 2012” (since the fees for 2012/13 have already been set by Grace). The Council promotes Grace H as its preferred alternative to Grace G and therefore recommends voting non placet to Grace G and placet to Grace H.

The Timetable for the Ballot

12. The proposed timetable for conducting the Ballot on Graces A–H is as follows:

Tuesday 24 May	Discussion
Thursday 26 May	Notice of Ballot on all Graces      or
Thursday 2 June	Response to Discussion (if necessary) and Notice of Ballot on all Graces
Friday 3 June or Friday 10 June	Deadline for flysheets (8 days after Notice appears)
Friday 17 June or Friday 24 June	Ballot papers distributed
Monday 27 June or Monday 4 July	Last date for return of Ballot papers

The Council notes that this timetable does not provide an allowance for extension if amendments to the Graces are received. In that case, the Ballot will be held over to the Michaelmas Term.

Graces to be submitted

(i) Graces A–D (Preserving Bursaries and Widening Participation)

Grace A

That, subject to an access agreement being agreed between the University and the Director of Fair Access to Higher Education, the total expenditure per annum on maintenance bursaries, fee waivers and Widening Participation activity be set at a minimum of £14m, instead of the “approximately £10m” figure proposed in the Notice of 23 February 2011.

Grace B

That, in the event that Grace [A] is not approved, subject to an access agreement being agreed between the University and the Director of Fair Access to Higher Education, the total expenditure per annum on maintenance bursaries, fee waivers, and Widening Participation activity be set at a minimum of £12m, instead of the “approximately £10m” figure proposed in the Notice of 23 February 2011.

Grace C

That, within the total resource limit set for expenditure per annum under the new (2012 intake onwards) fee regime on maintenance bursaries, fee waivers, and Widening Participation activity, the final balance struck between the funding of these three elements be subject to approval by Grace.

Grace D

That, notwithstanding any access agreement proposed to, or approved by, the Director of Fair Access to Higher Education, from the 2012/13 academic year onward, the University will ensure that maintenance bursaries of at least the present levels, suitably adjusted for inflation, and with analogous eligibility criteria as those used at present, continue to be provided.

(ii) Grace E (Proportion of UK undergraduates to be admitted from state schools or colleges)

Grace E

That, irrespective of any benchmark set as part of an access agreement with the Director of Fair Access to Higher Education within the “achievable” 61–63% range proposed in the Council’s Notice of 23 February 2011, the University sets internally a higher figure for the proportion of UK undergraduates it aspires to be able to admit from state schools or colleges, subject to an annual Report to the Regent House upon progress towards this.

(iii) Graces F, G, and H (Graces to improve fee arrangements for 2012/13)

Grace F

That, notwithstanding Regulation 12 for University Composition Fees (Statutes and Ordinances, 2010, p. 160) or any access agreement proposed to, or approved by, the Director of Fair Access to Higher Education, the actual rate of University Composition Fees charged to Home and EU undergraduates beginning courses in the 2012/13 academic year will be determined by Grace following a Report of the Council explaining in detail the financial case for the level of fees it believes appropriate, making clear its assumptions and providing all relevant data (including the data on which any graphs are based).

Grace G

That the main body of Regulation 12 for University Composition Fees (Statutes and Ordinances, 2010, p. 160) be amended to read:

“With effect from 1 August 2012, the rate of University Composition Fees charged to home and EU undergraduate students beginning courses on or after that date, shall be the amount determined by Grace following a Report from Council recommending an amount consistent with Part 3 of the Higher Education Act 2004 and giving detailed calculations demonstrating the necessity of charging at least that amount; failing which, or if the amount determined does not meet with the approval of the Director of Fair Access to Higher Education, the basic amount determined under the Act; provided that ”

with Regulations 12(i) and 12(ii) remaining unchanged.

Grace H

That, if Grace G is not approved, the wording of Regulation 12 of the Regulations on University Composition Fees (Statutes and Ordinances, 2010, p. 160) be deleted and replaced by the following wording:

“The University Composition Fees charged to Home and EU undergraduate students shall be subject to approval by Grace of the Regent House. These fees shall be subject to the following conditions:

(i)the recommendation for the fees to be charged shall be accompanied by an analysis of the costs of an undergraduate education agreed by the General Board and the Council following consultation with the Colleges;

(ii)the fees to be charged shall not exceed any limit prescribed by law;

(iii)for such students who are undertaking a required period abroad the rate shall be half the full amount charged under this regulation or such other amount as may be determined by the Secretary of State for this category; and

(iv)for such students beginning courses on or after 1 August 2009 which lead to a qualification (other than courses in Medical and Veterinary Sciences leading to the B.A. Degree or courses in Architecture or for the Postgraduate Certificate in Education) which is equivalent to, or at a lower level than, a qualification they possessed when they began their course (ELQ students) the rate shall be the fee determined by the University for ELQ students.”

17 May 2011	L. K. Borysiewicz, Vice-Chancellor	Stephen J. Cowley	Andy Hopper
	David Abulafia	M. J. Daunton	Christopher Hum
	Anthony Andrews	R. J. Dowling	F. P. Kelly
	N. Bampos	I. M. Le M. Du Quesnay	R. Lethbridge
	Richard Barnes	Nick Gay	Mavis McDonald
	D. J. A. Casserley	David Good	Rachael Padman