Report of Discussion

Tuesday, 12 June 2012

A Discussion was held in the Council Room. Pro-Vice-Chancellor Dr Jennifer Barnes was presiding, with the Registrary’s Deputy, the Senior Proctor, a Deputy Proctor, and five other persons present.

The following Reports were discussed:

Report of the Council, dated 28 May 2012, on the financial position and budget of the University, recommending allocations from the Chest for 2012–13 (Reporter, 2011–12, p. 652).

Professor S. J. Young (Senior Pro-Vice-Chancellor, Planning and Resources):

Deputy Vice-Chancellor, this will be my third Budget Report as PVC for Planning and Resources, and the third year in succession recommending a planned deficit on the Chest. This is consistent with the strategy set out in 2010 designed to steer a course through the economic down-turn which strikes an appropriate balance between continuing to fund properly our academic mission, and the need for financial prudence.

So far, our financial predictions have been reasonably accurate, and we remain on track. Indeed, the prospects appear to be improving slightly. As the new undergraduate fee rolls in, net funding for teaching will return to levels comparable with those enjoyed in 2008–09. Our investment income is holding up despite constant market turmoil, and Cambridge Assessment continues to do well. The cumulative Chest deficit predicted for the period 2009–10 to 2015–16 in the 2011 Budget Report is now reduced from £36m to £23m, with a return to surplus expected one year ahead of schedule in 2014–15.

The baseline increase in allocations for 2012–13 was 1%, and I expect this modest level of annual increase to be maintained until we return to surplus. Lest this appear too austere, it is worth noting that unspent chest allocations remain in Schools to be spent in future years. These Chest Reserves have been increasing steadily over the last few years, and now total £36m across the six Schools. This is a sizeable war chest which, when added to the £6m of additional money provided to support the REF, should provide Schools with the scope needed to make any necessary near-term strategic investments.

A comparison of the forecast Capital Fund income and expenditure with that shown last year reveals a significant increase in spend, and the fund itself moving into deficit. Again this is part of our strategic planning. Council has agreed that the Capital Fund may move into a deficit of up to £100m, provided that the full cost of servicing that internal loan is met by the fund itself. Given the substantial cuts in government support for capital projects, this will be essential if our plans to renew key infrastructure are to proceed. In particular, the redevelopment of the New Museums site is now well underway. With the moves to West Cambridge of the Departments of Materials Science and Metallurgy, and Chemical Engineering and Biotechnology now agreed, it is time to consider in detail the future of this site. To this end, a New Museums Site project board has been established, and a new master plan will be developed over the coming year.

Elsewhere, developments on the Biomedical Campus continue apace: a new Data Centre will be built on West Cambridge, Astrophysics will extend the Kavli Institute, and Engineering will build an extension at its main Scroope Terrace site. Looking further to the future, the Cavendish Laboratory and the Downing Site are both in need of significant attention. The pressure on renewing our estate will not diminish, and neither therefore will the demand for funding to support it.

A review of Cambridge University Development Office and Cambridge in America has been completed to advise on the organizations, structures, and resources required for the next campaign. Income from donations is an increasingly essential component of our recurrent and capital funding. If we are to develop these income streams, we will need to develop a clear strategy for the next campaign, and be prepared to invest in the resources needed to deliver it.

Last year I commented on the need to focus our attention on research in order to regain our leading market share and ensure we obtain the best possible REF outcome. Under the guidance of the PVC for Research, considerable progress has been made. The Research Office has been restructured, REF infrastructure is in place, and a number of strategic themes and initiatives have been established. However, the shift to charity and EU funding, and the increasing level of claw-back via the RCUK Efficiency Factor have ensured that recovery of the indirect costs of our research remains below target. If our expanding research base is to remain sustainable, we must seek to increase indirect cost recovery in all ways possible, for example, by maximizing charging for PI time, ensuring that Chest-funded support staff are charged to grants, and increasing sponsorship by those prepared to pay the full cost of research, especially industry.

There is no doubt that we continue to live in uncertain times, and that there is no shortage of downside risks. Exposure to volatile investment markets, further cuts in government spending, under-performance of Cambridge Assessment, increasing pension liabilities, and a poor REF performance are obvious examples. Nevertheless, Cambridge has a strong balance sheet, and provided that Schools and Institutions continue to maintain careful control over expenditure, I remain confident that our financial strategy is sound. I therefore commend this Budget Report to the Regent House.

Finally, I would like to express my thanks once again to the many staff of the UAS who have worked hard to produce the data and projections that inform this Report.

Report of the General Board, dated 23 May 2012, on Senior Academic Promotions (Reporter, 2011–12, p. 673).

No remarks were made on this Report.