No 6521
Wednesday 10 October 2018
Vol cxlix No 3
pp. 38–54
1. The Board of Scrutiny provides independent analysis and oversight on behalf of the Regent House, examining the Annual Report of the Council (including that of the General Board to the Council); the Abstract of the Accounts; and any Report of the Council proposing allocations from the Chest. It has the right to comment on related matters that it believes should be drawn to the attention of the University, including issues of policy. Further information can be found on the Board’s website1 and in Statutes and Ordinances.2 The Board has the right of reporting to the University and this is its Twenty-third Report.
2. As mentioned in the preamble to its Twenty-second Report, the Board aims to encourage members of the Regent House to think about and engage in governance as part of a process intended to be complementary to, not in contention with, the Council and the General Board. Nevertheless, following the recommendations of the Wass Syndicate, the Board was established to provide an additional mechanism for holding the Council to account for the increased powers it had acquired, particularly in relation to the items that the Board is required to examine.
3. The Board hopes to assist the Council as well as helping members of the Regent House to engage with and make decisions about business; for example through commenting at Discussions, or by opposing, supporting, amending, or promoting Graces. The Board may be able to comment more freely than the Council, or give greater attention to certain areas of business, and although it has some capacity to act on its own account, it cannot supplant the responsibilities of the Regent House collectively, any more than it can perform the work of the Council. We hope to encourage discussion and collaborative thinking across the University.
4. Fourteen meetings of the whole Board took place, including three at which Senior officers attended as guests: the Vice-Chancellor, Professor Stephen Toope; the Senior Pro-Vice-Chancellor, Professor Duncan Maskell; and the Registrary, Ms Emma Rampton. Smaller ‘working groups’ met with the Deputy Chair of the Council and Chair of the Council’s Governance Review Working Group, Mr John Shakeshaft; the Chair of the Council’s Audit Committee, Mr Mark Lewisohn; the Chief Financial Officer, Mr Anthony Odgers; the Director of Finance (initially Mr Andrew Reid and then Mr David Hughes); the Director of Estate Strategy, Dr Jason Matthews; the North West Cambridge Project Director, Ms Heather Topel; the Pro-Vice-Chancellor for Research, Professor Chris Abell and the Head of the University Research Office, Dr Peter Hedges; the Pro-Vice-Chancellor for Education, Professor Graham Virgo; the Chair of the Colleges’ Committee, Professor Michael Proctor and the Head of the Office of Intercollegiate Services, Dr Matthew Russell; and the Director of the Human Resources Division, Ms Emma Stone. Further information and assistance was provided by the Head of the Registrary’s Office, first Dr Kirsty Allen and then Dr Regina Sachers; by the University Draftsman, Ms Ceri Benton; by Mr Jonathan Appleton, Assistant Director for Academic and Financial Planning and Analysis; and by Ms Andrea Hudson, Assistant Director of Human Resources (Operations). The Board is duly grateful to all of them for their time and thought and records its thanks.
5. Additionally, the Board commends its Support Officer, Ms Rachel Rowe, for her assistance with working notes, agendas, and minutes and also marks the contribution of Ms Saba Ala’i, a member of the Board during part of the year.
6. This Report is focused on three areas: governance, finance, and planning. Our discussions have persistently turned to these and much of what is written around other matters is linked by these strands. The challenges faced by the University remain significant, and as mentioned in our last Report, guarding our core purposes of scholarship and innovation, nurturing the staff who deliver them, and at the same time maintaining and evolving our facilities, will place great demands on all three.3 In addition to individual sections on governance and finance, planning is also examined through other sections of the Report in comment on estates, research, education, and human resources.
7. The Board notes with appreciation the Council’s report of the work of the Chancellor, The Lord Sainsbury of Turville, representing a valuable engagement extending beyond his ceremonial and formal duties in Cambridge.
8. In its Twenty-second Report the Board applauded Professor Sir Leszek Borysiewicz for his advocacy of the University’s international engagement and social agency, especially in the context of Brexit. In his final year as Vice‑Chancellor, Sir Leszek called for the University to offer leadership locally and regionally as well as internationally, and along with other universities, to deepen its engagement with society. These are important goals, but will place additional demands on the University.
9. As mentioned, the Board was pleased to welcome his successor, Professor Stephen Toope, to one of its meetings during the year and has been encouraged by the extensive programme of consultations and open meetings which he has undertaken. It hopes these will continue and that members of the University will engage with them.
10. The Council reports establishing an internal review committee, the findings of which it subsequently endorsed, and also receiving a presentation from a charity-law specialist on the responsibilities of Council members as charity trustees of the University. The Board commends this willingness to review and to make changes in working practices, but believes that aspects of the Council’s responsibilities and of its relationship with the Regent House have been brought into sharper focus. In its last Report, the Board drew attention to the need for members of the Regent House, as well as members of the Council, to be clear about their rights and responsibilities: ‘Understanding the respective duties and powers of the Council and of the Regent House is important.’.4
11. As our trustee body the Council must act for the University overall and not just for the Regent House. It may not be practicable or reasonable to disclose full information to the wider University about all matters, but recent debates have identified possible tensions between confidentiality and the duty of trustees to be adequately informed. As our governing body and the principal electoral constituency for the Council, the Regent House should be confident that Council members have enough information to exercise oversight as trustees and that this is kept under review. This is especially so when Statute A X 8(d) and the Special Ordinance derived from it allow delegation of functions to a committee or individual Officer, but do not relieve the delegating body of accountability.
12. Since 2017 there has been a marked increase in the frequency of Graces initiated by members of the Regent House and the manner in which these are handled may begin to have wider consequences for our governance arrangements.5
13. One Grace directed disengagement from direct or indirect investment in activity concerning fossil-fuels. The Council agreed to submit this to the Regent House, but resolved that it could not bind them ‘...in respect of the exercise of their fiduciary responsibility for the University’s investment practices…’.6 Under our Statutes the Council, not the Regent House, has general management of our affairs, including investments, with consequential obligations as trustees under charity law.7 Neither the Council nor the required twenty-five members of the Regent House called a ballot, so the Grace was approved without voting and the Council set up a Working Group to prepare a report on the advantages and disadvantages of the proposed divestment.
14. Subsequent protest about non-implementation has branded the outcome as undemocratic, but this response does not address the problem of legal constraints, or the absence of a vote by the Regent House for or against the Grace. Restrictions imposed both by our own Statutes and by law create the potential for tension between the desire of members of the Regent House to be active in governance (which the Board strongly supports) and the constraints on the University and its Council (the membership of the latter being predominantly elected or approved by the Regent House). If this is not understood, it might in time corrode confidence in our constitution.
15. Those initiating a Grace should be actively encouraged to consult an officer such as the University Draftsman for advice, to avoid proposing formulations which are likely to be contrary to law or our Statutes, or to prove ineffective because they are imprecise or ambiguous. There are costs, but as a matter of general principle Graces initiated under Special Ordinance A (i) 5 should be balloted. The Council, our principal executive and policy-making body, should issue a fly-sheet, as can the initiators and other interested parties and the Regent House as a whole becomes more actively involved.
16. The Council lacks the power to propose amendments to Graces, unless an amendment has already been proposed by individual members of the Regent House. Thought should be given to making provision for this to happen in relation to Graces that the Council has not initiated. In these circumstances, however, the Vice-Chancellor, as the ordinary Chair of the Council, might be perceived to have a conflict of interest if a competing amendment needs to be ruled inadmissible or a choice between similar amendments must be made.
17. Problems with lawfulness in relation to Graces initiated under Special Ordinance were raised by Dr George Reid at a Discussion in 2017.8 The Board sees merit in an independent review when the Council believes that there may be a problem in this respect or that a Grace may be ineffective and might report to the Regent House seeking agreement that it should not be submitted. The Council could, for example, delegate this under Statute A X 8(d) to a member of the Faculty of Law. Dr Reid mentions the possibility of a retrospective review by the Vice-Chancellor and ultimately by the Commissary under Statute A IX 1 if requested by an individual member of the University. If the Council acquires power to initiate amendments and a decision needs to be made about competing amendments or their admissibility when an amendment is proposed by the Council, the Vice-Chancellor could delegate it in a similar way under Statute C III 7(b). The default, however, should be the submission of such Graces in a timely fashion, except where they appear to conflict with the law or our Statutes or to be otherwise ineffective.
18. Amendments should not remove the power of negation from the Regent House. An un-amended Grace changing an unsatisfactory or unlawful situation can be rejected, even if that is unlikely and undesirable. Removing that choice in a ballot if an amendment or amendments arise diminishes the authority of the Regent House.
19. Concerns have been expressed to the Board about the time taken to consider Graces under Special Ordinance A (i) 5 and the Board wonders about the cumulative impact these may begin to have on our routine processes of governance and on the business of the Council, especially if these processes are not sufficiently resourced. In reviewing the Conduct of Business Regulations, consideration should be given to the administrative support necessary for our self-governing arrangements to function effectively and efficiently, and to building into them recent developments, such as electronic voting through Electoral Reform Services.
20. Progress with the review of membership of the Regent House and the Council and of the conduct of Discussions seems slow. Given the increased demand on resources created by Graces under Special Ordinance A (i) 5, however, this is explicable and may in itself indicate the need for greater overall support for our governance processes. Publication in the Reporter of a consultation on ideas to reform the conduct of Discussions is noted and the Board hopes that members of the Regent House (and others entitled to participate in Discussions) will contribute to it. In this context the Reporter remains essential to those interested in governance and University business in general and although linked from the For Staff page of the website, there is no link from the University’s main landing page at http://www.cam.ac.uk.
22. A summary of the consolidated financial statements for the University over the last seven years, including Cambridge University Press (CUP) and Cambridge Assessment (CA), so constituting 'big U', is below:
|
£m |
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
2016* |
2017* |
7-yr growth |
|
Turnover |
1,193 |
1,251 |
1,322 |
1,438 |
1,504 |
1,643 |
1,799 |
1,870 |
+56.8% |
|
Surplus / (deficit) |
20 |
3 |
48 |
73 |
44 |
339 |
112 |
492 |
|
|
Net assets |
2,415 |
2,590 |
2,641 |
3,074 |
3,177 |
4,243 |
4,355 |
4,847 |
+100.7% |
* A new FRS 102 accounting standard was introduced in 2016, which affects comparability with earlier years at the surplus/deficit level. However, if surplus/deficit for 2016 and 2017 is restated to exclude gains on investments and other items also excluded in previous years, they would still show small surpluses.
23. In conjunction with the observation that the University continues to have very low levels of net debt, this analysis paints an overall picture of a financially strong institution enjoying a continued period of steady growth. Over 2010–17, turnover increased by over half and our asset-base doubled. This retrospective look at the underlying financial strength of ‘big U’ sets the scene for the Board’s observations about what it perceives as serious weaknesses in our planning and budgeting.
24. It is, however, important to note that for the University the external environment since the financial crisis in 2008 has turned out to be remarkably benign in many ways. Staff costs account for nearly half of total expenditure (£799m out of £1,870m or approximately 44% in 2017) but, as noted in our last Report, cost of living increases, which were the most significant aspect of underlying wage growth for the majority of University staff, have been at about half the rate of Consumer Price Index inflation, averaging approximately 1% annually 2010–17.
25. Over the same period, key income streams, including tuition fees, investment income, and research income, have all grown well ahead of inflation, even after adjusting for some loss of government grants. Cambridge Assessment has also enjoyed notably strong performance, due to favourable developments within its international business. As a result, the overall income of the University on a consolidated basis has grown at an average annual rate of 6.6%.
26. In summary, over the last seven years the University has enjoyed real income growth that has matched or even exceeded that of many successful private sector businesses, whilst limiting growth in key elements of its cost base (principally wages). This has led to an unusual situation where the University has been through a period of what appears to be favourable financial circumstances for the institution as a whole, while the majority of its employees have generally experienced a fiscal squeeze at individual and often Departmental levels.
27. This situation does not seem to have been acknowledged in Allocations Reports, which, being confined to Chest income and expenditure, have focussed on the risks ahead and imminent budget deficits etc. These risks and deficits do not yet seem to have crystallized in any meaningful way in actual financial out-turns and the Board believes that the University is in danger of being perceived as having underestimated the past potential for investment in academic and service developments through overestimation of risk, or at least of not taking a balanced view. It must continue to refine concepts of risk and risk management, and balance these with future investment opportunities.
28. The Board notes that one of the pieces of the jigsaw described relates to the strong growth in research income due to recent success in winning grants:
|
£m |
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
7-yr growth |
|
Research grants and contracts |
268 |
284 |
293 |
332 |
371 |
412 |
469 |
466 |
+73.9% |
These grants typically cover all direct costs associated with a particular project, but the level of indirect cost recovery varies depending on the funding source and often falls well short of what the University calculates it should be. While a shortfall in indirect cost recovery may be a minor matter for a single marginal research project, research income was well on the way to doubling during 2010–17. Enabling this level of increased activity has required significant growth in administrative infrastructure, much of the cost of which is likely to have materialized as indirect costs, such as an enlarged administrative function, or new or enlarged buildings. Given the shortfall in indirect cost recovery, it seems unlikely that grants and contracts have covered all of this and therefore probable that this enlargement has only been possible through the generally favourable external financial conditions described and cross-subsidy from the Chest in support of non-Chest funded activity.
29. The Board is not convinced that the University has a sufficiently sophisticated and quantified understanding of the short-term and longer-term costs involved to appreciate the longer-term impact of this growth in research activity.
30. The Board also believes that external conditions have changed; and that it is highly unlikely that the benign financial situation of recent years will continue for much longer. In the Planning Round 2017, the Planning and Resources Committee (PRC) increased the pay award assumed during 2018–22 to 2%, doubling the 1% assumption used a year earlier. While this increase has to be a welcome step for employees after such a prolonged period of below-inflation wage growth, it will come at a financial cost to the institution.
31. Also notable are the ongoing discussions between the University and College Union (UCU) and Universities UK (UUK) in relation to the future of the Universities Superannuation Scheme (USS). Whilst the outcome of these remains unclear, it seems likely that in the years ahead the University will have to absorb significant additional costs associated with the deficit in the scheme. Under one scenario where current employee benefits are maintained in full, it could face a 6.9% increase in employer contributions and a settlement at or even close to this level would increase the recurring wage bill by c. £14m.10
32. Key income streams are also under pressure, perhaps more so than at any point since the financial crisis. Income from undergraduate tuition fees is almost certain to show lower real growth and may even reduce as a consequence of future review by the government and assuming that undergraduate numbers remain the same. Investment income growth over the next seven years seems very unlikely to match that of the previous seven, where the Cambridge University Endowment Fund total return target of Retail Price Index inflation +5.25% was comfortably exceeded. The funding available for research grants and contracts is likely to reduce, increasing the intensity of competition and possibly also the co-funding required from the University or third parties as a condition of an award.
33. Given these increasing pressures, the Board commends the initiative by the Vice-Chancellor and the Chief Financial Officer to develop a 10–15-year high-level financial model. As already mentioned, Allocations Reports have not fully articulated the favourable financial winds propelling particularly ‘Big U’ over recent years. Without both a full appreciation of this and a more sophisticated and balanced approach to planning, it will be harder to create the opportunities for growth or investment in education and research that will retain world-class status. A longer-term financial model, alongside associated improvements in the planning process itself, will increase transparency in the underlying financial drivers of the University and allow for more targeted and effective mitigation of risk.
34. The PRC has maintained an annual planning assumption of 2% for non-pay inflation 2018–22 while the baseline Chest allocations for non-pay items remains at 1%. Thus the planning process currently has a baseline that implies a real terms contraction in funding over the next four years and continues a budgeting model which has been in place for many years now.
35. In order to offset this built-in financial squeeze, the Schools and Non-School Institutions seek additional recurrent allocations from the Chest on an annual basis. Over the last seven years, these have been as follows:
|
Allocations £’000 |
2012–13 |
2013–14 |
2014–15 |
2015–16 |
2016–17 |
2017–18 |
2018–19 |
Total |
|
|
Schools |
|||||||||
|
Arts and Humanities |
122 |
285 |
– |
150 |
12 |
370 |
– |
915 |
|
|
Humanities and Social Sciences |
1,203 |
242 |
– |
231 |
265 |
– |
– |
1,941 |
|
|
Physical Sciences |
161 |
130 |
139 |
128 |
300 |
– |
180 |
1,038 |
|
|
Technology |
1,054 |
507 |
794 |
642 |
532 |
225 |
175 |
3,929 |
|
|
Biological Sciences |
178 |
271 |
16 |
56 |
117 |
726 |
11 |
1,375 |
|
|
Clinical Medicine |
28 |
666 |
32 |
530 |
152 |
1,210 |
392 |
3,010 |
|
|
TOTAL Schools |
2,746 |
2,101 |
981 |
1,737 |
1,354 |
2,531 |
758 |
12,208 |
|
|
|
|||||||||
|
UAS |
303 |
57 |
288 |
2,076 |
229 |
2,188* |
1,353 |
6,494 |
|
|
UIS |
94 |
– |
570 |
– |
1,187 |
1,333 |
224 |
3,408 |
|
|
CUDAR/CAm |
– |
3,114 |
750 |
– |
2,541 |
679 |
57 |
7,141 |
|
|
ICE |
52 |
65 |
67 |
70 |
– |
78 |
287 |
619 |
|
|
Fitzwilliam Museum, Botanic Garden, University Library, Kettle's Yard |
713 |
201 |
199 |
– |
268 |
541 |
– |
1,922 |
|
|
TOTAL NSIs |
1,162 |
3,437 |
1,874 |
2,146 |
4,225 |
4,819 |
1,921 |
19,584 |
|
|
People Strategy |
– |
– |
– |
– |
– |
– |
6,641 |
6,641 |
|
|
Other |
– |
– |
– |
– |
– |
– |
660 |
660 |
|
|
TOTAL OVERALL |
3,908 |
5,538 |
2,855 |
3,883 |
5,579 |
7,350 |
9,980 |
39,093 |
|
* The allocation to the UAS in 2017–18 was actually £3,941k but we understand that £1,753k of this was non-recurrent, so the table has been adjusted to reflect this and ensure comparability with other allocations.
36. Non-School Institutions (NSIs) have secured the highest share of additional allocations over the last seven planning rounds, with a total allocation of £19.6m (approximately 50% of the total available). The two biggest individual recipients have been Development and Alumni Relations/Cambridge in America (CUDAR/CAm) at £7.1m and the Unified Administrative Service (UAS) at £6.5m. There has also been a significant allocation of £3.4m to Information Services (UIS).
37. The Schools, on the other hand, have only secured a total of £12.2m between them (31% of the total), with one fifth going to Arts and Humanities, and Humanities and Social Sciences, and the rest going to Physical Sciences, Technology, Biological Sciences, and Clinical Medicine. It is not entirely clear, however, that over this period and given the baseline budget contraction of 1% per annum, these have resulted in much or indeed any real growth in the total Chest funding direct to Academic Departments (£199m in 2018–19).
38. A notable extra allocation of £6.6m was made for 2018–19 in relation to the ‘People Strategy’. The Twenty-second Report of the Board welcomed the publication of the People Strategy 2016–21 and recommended that the University ‘review the balance of resources being invested in high-paid staff particularly in relation to the retention of staff at all levels and the equitable use of supplementary payments.’11 The Board hopes that this will be used wisely to redress genuine inequities in pay across the University.
39. The Board has discussed this summary with several Senior officers and the main conclusion seems to be that the allocations vary greatly, both between areas and from year to year, and that it is hard to see evidence of a clear pattern or get a sense of long-term (or even medium-term) planning from it. The Allocations Report considers only Chest activity, while non-Chest income is an increasingly important component in the finances of many Academic Departments, and it focuses almost entirely on marginal changes in budgets from one year to the next, rather than taking a step back to look at total Departmental budgets and their correspondence to given needs.
40. The Allocations Report is by definition confined to Chest income and in summary it provides only a limited and possibly sometimes misleading view of the financial development of the University with little sense of a balanced, higher-level perspective on its spending priorities overall.
41. In their conversations with the Board, Senior officers have indicated that the existing Resource Allocation Model (RAM) requires change to ensure that it is fit for purpose. In the 2017 Allocations Report it was noted that it needed to be developed to ensure ‘a more direct link between Schools’ financial performance and subsequent allocations from the Chest’.12 In the 2018 Report it is noted that a new ‘Income Incentivization Model’ will be introduced in the 2018 Planning Round13 to ensure that ‘Schools receive a share of additional income generated from growth in postgraduate numbers’ and also a stream of the Chest share of overheads recovered on research grants and contracts and Research Degree Programme (RDP) supervision funding.
42. The Board welcomes this more explicit linkage of additional income to allocations, but remains concerned that by focussing solely on the Chest, resource allocation has operated for many years without a holistic and fully transparent financial assessment of the income and expenditure position for individual Schools. It is not clear, for instance, that the growth in tuition-fee income over recent years (partly due to fee increases and partly due to an increase in taught postgraduate courses) has found its way back to those Schools associated with its generation.
43. As mentioned, the baseline budget has been set at a level implying a gradual real-terms reduction of Chest income to Schools and NSIs in the absence of any additional Chest Allocations. This seems unsustainable in the longer-term, especially for Schools which have been consistently unsuccessful, or relatively less successful, in competing for additional annual allocations. The Board questions whether below inflation baseline budgeting was appropriate during a period when most income streams relevant to Schools grew at rates above inflation?
44. It is also of concern that with Chest allocations at a below inflation baseline over a four-year planning period, there is no obvious mechanism for funding projects which might generate additional income or cost savings in the medium- to long-term. A project expected to result in significant cost savings after five years would appear to be viewed within the current model as a drain on finite resources rather than a strategic investment with an estimated payback period and something that might make sense more or less regardless of what else is happening. The University may struggle to find the long-term efficiency savings and productivity gains it says it seeks without an adequate framework to make, monitor, and report on strategic investment in such activities.
45. In general, the Board suggests that a four-year financial planning period with a particular emphasis on the next year is simply too short for an institution over eight hundred years old that has a strong underlying financial base. Indeed, it is short compared to many academic planning cycles, which require at least a five-year view, given that the ‘business cycle’ includes both programmes of study which can take years to establish and then some further years to run a single cohort, and also research grants, which are typically for three years but can run to ten.
(a)That the existing reporting format contained within the Allocations Report is refined to present a more holistic and balanced view of our annual budgeting decisions which ties into the new medium-term framework;
(b)That the University pays particular attention to the ongoing growth in research activity in order to obtain a better understanding of the longer-term financial implications of expansion in an activity only partly-funded by external sources.
49. The University’s Capital Development Pipeline forecasts capital expenditure of more than £4 billion over the next 15–20 years and as noted in our previous Report, this pipeline remains largely unfunded. The Planning and Resources Committee has challenged Schools and Institutions to prioritize their proposals for capital expenditure more clearly than in the recent past and a capital prioritization tool is being developed to support this. This Report has already noted the pressing need for medium- and long-term financial planning and while acquiring such a tool is welcome progress, it demands both financial and academic strategies to be of use to Estate Management in making strategic decisions allocating resources amongst competing projects. It seems to the Board that there is general interest in the University with trying to commercialize non-operational property assets where possible, but it also appears that this is not a top priority for income generation and the University’s strategy on this remains unclear.
51. A review of research administration was instigated by the General Board in 2015–16.14 The review reported in Michaelmas 2016, with extensive recommendations for enhanced support for, and restructuring of, the Research Office. The Board has examined subsequent progress reports to the Research Policy Committee, describing the approach to implementing change in line with the recommendations, but to date the response might be seen as somewhat piecemeal and the impact is yet to be generally felt in many parts of the research community. We therefore welcome the additional recurrent allocation of £700k to the Research Office, to fund implementation of those recommendations.15
52. The principal changes are to focus more pre-award support in School-based teams, to improve support for Principal Investigators, achieve better cost recovery, and identify new funding opportunities. This will be of critical importance if the United Kingdom is ineligible for European Union (EU) funding post-Brexit. The additional allocation represents a substantial uplift in a constrained budget round and must be spent wisely to achieve the desired shifts in the Research Office’s responsiveness and culture (and improvement in the University’s financial position) in a timely fashion, given the period elapsed since the review was commissioned.
54. Forecast income, excluding capital, of almost £439m for 2018–19 appears to be flat-lining following the trend of recent years (£423m received 2016–17 and forecast £432m for 2017–18).16 This is potentially concerning, given Brexit, the uncertain environment following the reorganization of the national research funding bodies, and our investment in new buildings, much of which will increase research capacity.
55. As roughly 15% of our annual research income is from the EU, maintaining this ahead at the current level may prove challenging. Withdrawal of the UK from the EU poses a clear risk to the quality of EU research output; one which could be mitigated if the UK retains associate status as regards eligibility for European Research Council (ERC) funding. The emergence of the European Innovation Council as a competitor for EU funding presents a further challenge. While it is to be hoped that that income will not decline precipitately post-Brexit, there is an urgent need to diversify sources of research income and support researchers dependent on EU funding in making applications to other sources. The restructuring of the Research Office should help in this regard.
56. Currently 15% of our 18,616 full-time students and 25% of 6,572 students at postgraduate level are from the EU. The risks to the University and the Colleges are acknowledged by the Council in the Allocations Report,17 which contains a description of recent lobbying activity and of new academic or research partnerships and collaborations, a number of which are prospective and aspirational. Notwithstanding this evidence of much activity and the promise of ‘strategies for education and research to mitigate the risk’, the University’s strategy post-Brexit is unclear, especially when the attention of government is elsewhere and announcements, e.g. about the fee status of such students, are limited to a year at a time. Although we understand that there is a Brexit Committee with a budget, this is not mentioned on a Brexit website18 mainly composed of opinion pieces by Cambridge academics, but with relatively little reassurance or encouragement for prospective students, researchers, and academics from other EU countries. The University should do more in these respects and not be solely driven by events.
58. Developing such activities outside the EU is part of our response to Brexit and the Board notes recent announcements of initiatives such as the strategic partnership with the Nanjing Municipal Government. China in particular is committed to substantial investment in research, which should be a priority for Cambridge given our existing strengths and international profile. As overseas activities are scaled up, however, so is exposure to financial and other risks; therefore it will be important to manage these and for the cost, including due diligence and compliance, to be fully covered in business plans if they are to show that such initiatives do bring net financial benefit. The Council should satisfy itself that the UAS has the resources and mechanisms to manage these complex arrangements.
59. The key focus this year has been on the new recruitment strategy, agreed with the Colleges, to increase postgraduate student numbers by 13.1% over 2017–22.19 There was a previous agreement several years ago to increase these by 2% per annum over ten years, but at the time this was viewed rather more as a cap after the University had admitted more postgraduate students than ever before. The new strategy is viewed far more positively as a target. In passing the Board notes the significance of increasing numbers of international students and postgraduates in the University’s financial strategy.
60. This raises a range of concomitant issues on which this Report comments briefly, but the Board intends devoting further attention to the management of this area during the coming year.
61. Both the recent and the projected expansions in postgraduate student numbers have implications for the capacity of Departments to deliver. In the Council’s response to the Board’s Twenty-second Report,20 it was noted that Academic Departments had seen a 13% increase in total allocations less College fees in the period 2010–16. The question arises of how well the respective growths in demand and provision are currently matched?
62. A rise in numbers needs to be reflected by an accompanying increase in the staffing of Departments (and Colleges), and also an increase in the capacity of the central support services for students, notably the Counselling Service, the Disability Resource Centre, and the Careers Service. The greater administrative load required to process an increase in applications will also need to be addressed (in this context the Board notes that the Graduate Admissions Office has recently been combined organizationally with the undergraduate Cambridge Admissions Office) and with respect to international students there will also be an impact on the International Student Office dealing with Tier 4 visa requirements.
63. All of these considerations can have a potentially adverse impact overall on the student experience, something which the University has already noted as a concern with respect to postgraduate students on one-year courses and which led to the introduction of the Master’s Evaluation.21 The Board draws attention to that concern, and to the potential reputational risk.
64. Colleges may also need to provide greater support for one-year students who must ‘hit the ground running’; for example in the form of a postgraduate Director of Studies system, which the Board understands some Colleges have already introduced for their LL.M. candidates.
65. Insufficient academic support, at Departmental or College level, can diminish a student’s overall educational experience, but for anyone not properly aware of our scholastic conventions, perhaps due to linguistic difficulties or variations in academic referencing conventions, one possible outcome can be problems with alleged plagiarism. Instances that do not require disciplinary action but result in a loss of marks can still diminish outcomes for students and considerable time and resource can be spent investigating and resolving such matters.
66. The Board notes that there is potential to improve the distribution of postgraduates across the Colleges. The overall split between students on one-year programmes, either taught or research, and those pursuing doctorates is currently 38/62, and the division has an impact on the fabric of collegiate Cambridge. The University’s target is to increase the proportion of one-year students so that it is 40/60. The position amongst the Colleges varies greatly, however, with some having a split of 60/40, and for these there is a far greater turnover of students and it is relatively difficult to plan ahead. One-year Master’s programmes have proven very popular with Departments but this has produced an uneven distribution of such students across the Colleges.
67. The raised priority accorded in the People Strategy of the objective ‘to reward fairly, transparently and competitively whilst allowing for changing external pressures’ through its inclusion in the Human Resources (HR) Division Work Plan 2017–18: Strategic Priorities22 is to be welcomed. The Board notes the estimated date of delivery of 1 October 2018 for the initiation of a consultation on, and development of, a reward strategy.
68. Also noted is the Gender Pay Gap Report 201723 which is part of the move towards gender equality, as well as meeting our statutory reporting requirements. This acknowledges that although progress is made year on year, it needs to accelerate and initiatives should be developed to expedite change.
69. Whilst warmly supporting the objectives in the Thriving and Inclusive Community element of the HR Work Plan’s Strategic Priorities,24 the Board is concerned about resourcing. Heads of Institutions finding the time to lead on cultural change may be compromised by competing priorities. The promotion of dignity at work, including initiatives such as Breaking the Silence, is both desirable and necessary but it requires a sufficiently resourced and flexible HR team to implement existing policy as well as initiatives.
70. Since 2010, the Resource Management Committee (RMC) has retained oversight of the University’s establishment and stipend budgets. Established offices, both academic and academic-related, are regulated by Statutes and Ordinances,25 confer membership of the Regent House and its associated entitlements (only some unestablished posts offer this), and provide certain employment protection, particularly against redundancy. Approval to create or fill an established office must be sought from the RMC on behalf of the Council or General Board, or in the case of creating a new Professorship, by means of a Report to the University, but by contrast, since 2014–15 Heads of Schools have had delegated authority to create and fill unestablished, Chest-funded academic and academic-related posts.
71. Statistics for appointments 2013–18 show an increase in unestablished posts. The criteria on which a decision to change from established to unestablished (or vice versa) is made are not readily available, nor is there any identification of this trend in the People Strategy – Action Plan (2016–21). There is, however, reference to the objective to ‘develop [an] improved contract of employment’ and to ‘review terms and conditions and develop [a] model contract of employment.’ While the use of unestablished posts may be appropriate in certain contexts, such as the acquisition of specialist skills for a fixed-term project, or to provide temporary cover, the Board is concerned that if this trend continues, it will have constitutional implications for the Regent House. It could also lay the University open to discrimination claims if staff with similar duties have different terms and conditions.
72. The Council expresses through the Allocations Report and in the context of Brexit a concern that uncertainties at international level may make 'success in recruiting and retaining the best staff difficult to predict'.26 While much of this lies beyond our control, the effect of reducing the Establishment with regard to governance and conditions of employment does sit with the University and this trend should be actively reviewed and the reasons for it be made transparent.
74. Summary of Recommendations:
1.Active engagement by members of the Regent House in governance is essential, so in addition to the ongoing review of membership, consideration should be given to whether the processes governing Graces initiated within the Regent House are sufficient, clear, and not unduly complex, and if these processes – including the limitations of Graces – could be better advertised, e.g. on the governance web pages?
2.That the University develop a medium-term (3–7 year) financial budgeting and planning framework which is both holistic and transparent in consideration of income and expenditure for the whole institution, i.e. ‘big U’. This could be done in a way that should protect the autonomy of the Schools, Cambridge Assessment, and Cambridge University Press, but allows the central administration of the University to take a longer-term view and would enable Schools and Non-School Institutions to present proper business plans for their initiatives.
3.(a) That the existing reporting format contained within the Allocations Report is refined to present a more holistic and balanced view of our annual budgeting decisions which ties into the new medium-term framework;
(b) That the University pays particular attention to the ongoing growth in research activity in order to obtain a better understanding of the longer-term financial implications of expansion in an activity only partly-funded by external sources.
4.A methodology should be developed to facilitate investment by Schools and NSIs in projects anticipated to have known payback periods, including those delivering improved administrative efficiency, and in kick-start projects expected to be self-funding in time, such as a new taught postgraduate courses. This could be some form of income-incentivization, or loans which might have agreed repayment schedules. Authorization for such investment should be separate from desirable allocations core to the University’s purpose that might be without a definite payback period.
5.That adequate resources should be allocated to a strategy to develop academic and commercial research space, preventing haphazard expansion and maximizing potential revenue streams, notably across West and North West Cambridge.
6.The General Board should closely monitor implementation of the recommendations of the review of the Research Office, publish a timetable for its completion, and commission a follow-up evaluation in three years’ time.
7.That the Council better inform the University of the development of a Brexit strategy, initially by publishing the minutes and papers of the Brexit Committee on the governance website.
8.As part of the further development of the People Strategy the Council should clarify the policy – and criteria – for the creation and filling of unestablished posts.
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30 September 2018 |
Timothy Milner (Chair) |
Martin Jones |
Edna Murphy |
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Graham Allen |
Carmel McEniery |
Karen Ottewell |
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Gemma Burgess |
Elspeth Morfoot |
Ian Wright |
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D. J. Goode |
Richard Mortier |
John Xuereb |
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CA |
Cambridge Assessment |
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CAm |
Cambridge in America |
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CUDAR |
Cambridge University Development and Alumni Relations |
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CUEF |
Cambridge University Endowment Fund |
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CUP |
Cambridge University Press |
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CPI |
Consumer Price Index |
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ERC |
European Research Council |
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EU |
European Union |
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HR |
Human Resources |
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NSI |
Non-School Institution |
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RPI |
Retail Price Index |
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UAS |
Unified Administrative Service |
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UK |
United Kingdom |
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USS |
Universities Superannuation Scheme |
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UUK |
Universities UK |
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UCU |
University and College Union |
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UIS |
University Information Services |
2Statute A VII (Statutes and Ordinances, p. 9) and Ordinances, Chapter I (Statutes and Ordinances, p. 114).
3Twenty-second Report of the Board of Scrutiny (Reporter, 6478, 2017–18, p. 24), Summary.
4Twenty-second Report of the Board of Scrutiny, Engaging Regents in Governance.
5Six have been submitted in the academical year 2017–18 and eight since the start of 2017, as opposed to none during the years 2012–16.
7Statute A IV 1 (Statutes and Ordinances, p. 6).
10Allocations Report 2018 (Report of the Council, dated 21 May 2018, on the financial position and budget of the University, recommending allocations from the Chest for 2018–19, Reporter, 6508, 2017–18, p. 632), at para. 36.
11Twenty-second Report of the Board of Scrutiny, Human Resources.
12Allocations Report 2017 (Report of the Council, dated 13 June 2017, on the financial position and budget of the University, reccommending allocations from the Chest for 2017–18, Reporter, 6469, 2016–17, p. 604), Changes to the Planning and Resource Allocation processes.
13Allocations Report 2018, Planning Round 2017, Outlook.
15Allocations Report 2018.
16Allocations Report 2018, Footnote to Table 5.
17Allocations Report 2018, Footnote to paras. 3–7.
19Annual Report of the General Board to the Council for the academical year 2016–17 (Reporter, 6489, 2017–18, p. 212), Education and the learning environment.
20Council’s Response to the Twenty-second Report of the Board of Scrutiny (Reporter, 6490, 2017–18, p. 270).
21https://www.educationalpolicy.admin.cam.ac.uk/student-engagement/masters-self-evaluation-process
23http://www.inclusivecambridge.admin.cam.ac.uk/gender-equality-reporting
24https://www.hr.admin.cam.ac.uk/files/final_-_nov_work_plan_17_18_priority_summary_strategic.pdf
25Statute C (Statutes and Ordinances, p. 16).
26Allocations Report 2018.
The General Board begs leave to report to the University as follows:
1. The General Board recommends the establishment of a Professorship of Digital Humanities and a Professorship of Economics. The funding arrangements for these Professorships, as set out in paragraphs 2 and 3 below, were approved by circulation by the Resource Management Committee on 11 July 2018.
2. The Board has accepted an academic case from the Council of the School of the Arts and Humanities for the establishment in perpetuity of a Professorship of Digital Humanities, from 1 October 2018, in the Centre for Research in the Arts, Social Sciences, and Humanities (CRASSH). The full salary costs of the Professorship will be met from the School’s recurrent Chest allocation. The appointment of a Professor of Digital Humanities is consistent with the School’s strategic aims and was articulated in the School’s last Strategic Plan. The post-holder will take an academic leadership role in the Digital Humanities Institute, working to address those weaknesses identified in the 2016 Strategic Review of Digital Humanities, to develop programmes for the digital humanities community, and to build new external links and enhance the global profile of Digital Humanities in Cambridge. The new Professor will lead with Development and Alumni Relations to develop philanthropic fundraising for Digital Humanities in Cambridge. The Board has agreed that election to the Professorship should be made by an ad hoc Board of Electors and that the candidature should be open to all persons whose work falls within the general field of the title of the office.
3. The Board has accepted an academic case from the Council of the School of the Humanities and Social Sciences for the establishment, for a single tenure, of a Professorship of Economics, from 1 October 2018, in the Faculty of Economics. The full salary costs of the Professorship will be met from existing resources available to the School. The Professor of Economics will be expected to serve as the Chair of the Faculty Board of Economics for a period of at least five years, and will occupy a critical leadership role in setting and implementing the strategic vision in advance of REF 2021. The new Professor will be expected to enhance the international profile of the Faculty. The Board has agreed that election to the Professorship should be made by an ad hoc Board of Electors and that the candidature should be open to all persons whose work falls within the general field of the title of the office.
4.The General Board recommends:
I.That a Professorship of Digital Humanities be established in the University from 1 October 2018, placed in the Schedule to Special Ordinance C (vii) 1, and assigned to the Centre for Research in the Arts, Social Sciences, and Humanities (CRASSH).
II.That a Professorship of Economics be established in the University for a single tenure from 1 October 2018, placed in the Schedule to Special Ordinance C (vii) 1, and assigned to the Faculty of Economics.
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3 October 2018 |
Stephen Toope, Vice-Chancellor |
Matthew Kite |
Sofia Ropek-Hewson |
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Philip Allmendinger |
Patrick Maxwell |
Helen Thompson |
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Abigail Fowden |
Martin Millett |
Graham Virgo |
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A. L. Greer |
Richard Prager |
Mark Wormald |
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Nicholas Holmes |
Richard Rex |