Reporter 17/3/99: Annual Reports of the Council and the General Board: Notice

Annual Reports of the Council and the General Board: Notice

15 March 1999

The Council have considered the remarks made at the Discussion of these Reports on 19 and 26 January 1999 (Reporter, p. 332). They have sought comments from the General Board and from the Finance Committee, and have taken those comments into account in presenting the following response.

1. Professor Whittington questioned inter alia the need for the savings exercise currently under way in relation to expenditure from the Chest. The Council set out the arguments for a savings exercise in their Report to the University, dated 25 May 1998, on allocations from the Chest for 1998-99 (Reporter, 1997-98, p. 678). That Report was approved without comment and the savings exercise is now close to completion. While the Abstract of Accounts for 1997-98 showed a surplus, the Council judged the exercise to be necessary because financial forecasts for future years showed expenditure from the Chest exceeding Chest income. Professor Whittington argued that the increase in Departmental reserves, which is a significant component of the surplus to which he drew attention, ought somehow to be made available centrally for expenditure on recurrent purposes. Under present arrangements funds held in reserves are in general held for specific purposes and are not available for central allocation. The General Board have a policy of encouraging the prudent use of uncommitted Departmental reserves, which are considerable in aggregate, but neither the Board nor the Council believe it appropriate now to remove discretionary control from Departments. The Finance Committee are reviewing policy and procedures in this area in the interests of the efficient use of University resources, and will be consulting the General Board.

2. Turning to Professor Whittington's other points, the Council comment first on the basis for calculating the savings. The General Board, through their Needs Committee, considered a number of ways of apportioning the target between the Schools and the institutions outside the School structure. Since the primary purpose of the savings exercise is to enable the University to pay higher stipends and salaries, the Board concluded that the centrally-funded recurrent expenditure on stipends and wages was the appropriate base from which to calculate the savings targets. They excluded non-pay expenditure from the calculations in recognition of the fact that allocations had already been considerably eroded as a result of the failure to compensate fully for inflation in recent years. In fact, the balance between pay and non-pay expenditure does not show wide variations between Schools. However, the method adopted produced a significantly smaller target for the University Library, where the non-pay budget accounts for almost 50 per cent of recurrent expenditure and on which institutions in the arts, humanities, and social sciences particularly depend for the support of teaching and research.

3. With regard to the use of the disaggregation analysis to weight the targets for the several Schools, the Council and the General Board wish to make it clear that they are well aware of the limitations of the analysis and its vulnerability to external factors, which make it unsuitable as a means for the mechanistic allocation of resources. Since the analysis was first produced in 1990, the Board have regularly stated their view that the analysis is more reliable at the level of a group of institutions, or a School, than at the level of an individual Faculty or Department. Their long-standing policy has therefore been 'to have closer regard' to the position of institutions in the analysis 'as a factor in the resource allocation process'. For example, the Board undertook a selective recurrent savings exercise of £500,000 within the School of the Biological Sciences in order to reduce the extent of over-funding of that School according to the analysis. Likewise, the Board have taken account of the analysis in determining the distribution of the funds to support new needs in response to the priority lists drawn up by the Councils of the Schools, etc. In this case, the effect of weighting the targets was to produce a range of savings from 2.2 per cent for the School of Technology to 3.2 per cent for the School of Arts and Humanities, notwithstanding the imbalance between income and expenditure, according to the analysis, ranging from -20 per cent for the former to +14.5 per cent for the latter. The Board believe that to have used the disaggregation analysis, to a very modest extent, in setting the savings targets for different groups of institutions is consistent with that policy. No 'new precedent' has been created.

4. The Council and the General Board share Professor Whittington's concern at the effect of externally determined changes by the HEFCE on the funding position of institutions, as shown by the analysis. It is for this reason that the Board have proceeded cautiously in using the analysis for the purposes of resource allocation. The Board aim to provide a level of resources to all Faculties and Departments that will enable them to contribute towards the achievement of the University's mission to sustain academic excellence across the full range of subjects represented in the University. It is for this very reason that the Board, in considering the overall distribution of resources, adhere to the principle of the block grant. However, the Board cannot ignore the attribution of both income and expenditure by different subjects, and the increasing need to account, both internally and externally, for the use of public funds. The Board have taken the opportunities offered by consultation with the HEFCE to draw attention to the undesirable effects, to which Professor Whittington also drew attention, caused by the convergence in the subject quanta for the 'R' grant. Equally, it is important that the institutions concerned should recognize the importance of gaining the maximum possible funding through the attainment of the highest possible ratings in the next Research Assessment Exercise.

5. In response to Professor Whittington's detailed comments, the Council and the Board take this opportunity to draw attention to the fact that the disaggregation analysis has been the subject of a detailed review in consultation with the Councils of the Schools, as a result of which the analysis and the underlying methodology is now fully documented. In particular, the methods of attribution of central costs, to which Professor Whittington drew attention, though complex, are described in considerable detail in the version circulated to Faculties and Departments.

6. The Planning and Resources Committee of the Council and the General Board have attached high priority to the development of a suitable methodology for resource allocation covering all institutions, including both academic and service institutions. A team of officers in the University Offices is working on proposals, and it is expected that a paper will be presented to the Committee in the Easter Term 1999.

7. Turning to other remarks made on their Annual Report, the Council are mindful of the strains under which the arrangements for University governance have been operating recently. The Council fully recognize that under the Statutes the Regent House is the governing body of the University. The Regent House, however, is not a deliberative body in the conventional sense. The Council have been discussing how they can combine the leadership which they should show, in fulfilment of their statutory duty as the University's principal executive and policy-making body, with proper consultation with the Regent House over issues of strategic or other major importance, at a time when the timetable imposed by many of the University's external partners for decision by the University is increasingly short. The Council accept that information technology has a part to play. They hope that resources will shortly be allocated for the further development of the web sites both for the University and for the University Offices. The Council expect to report further on governance during 1999.

8. The Council do not accept the comment that the only advantage to the University of links with industry is financial. It is no longer the case, if indeed it ever was, that all leading-edge research is undertaken in universities, and it is of great benefit to the University for its staff, particularly in science, technology, and medicine, to be in regular contact with researchers in industry and in Research Council laboratories and the laboratories of medical charities. The Council recognize that a framework is needed for such collaboration; they have addressed this issue more fully in their Notice on the Report on the proposed new building for the Computer Laboratory (see p. 462).

9. Several comments were made in the Discussion about the University's personal promotions procedures and other personnel matters. Since the Discussion the Regent House has decided, as the result of a ballot, how it wishes to proceed. The Council expect the General Board to bring forward a further Report shortly on the proposal to establish an office of Senior Lecturer. In the meantime the Council wish to inform the Regent House that the Pro-Vice-Chancellors carry out their onerous duties without the provision of either dedicated space or secretaries.

10. The Council are submitting a Grace to the Regent House (Grace 8, p. 482) for the approval of their Annual Report and that of the General Board.

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