No 6274
Wednesday 18 July 2012
Vol cxlii No 39
pp. 803–826
The Council begs leave to report to the University as follows:
1. The West Cambridge Master Plan was approved by the Regent House by Grace 8 of 14 May 1997 and outline planning approval for the Master Plan was obtained in April 1999. The Master Plan incorporates extensive infrastructure support, and a land-use mix including: University teaching and research facilities; research organizations including incubator units for science-based businesses; shared amenities – sports facilities, cafes, shops, and campus centre facilities; residential use – accommodation for University staff and postgraduates including a nursery; and a park and cycle facility.
2. The Council proposes that a Data Centre is constructed on the West Cambridge site. This will include separate data halls for the following three institutions: University Computing Service (UCS), High Performance Computing Service (HPCS) and Cambridge Assessment (CA). A fourth data hall will be constructed, but left as fallow space for future growth. Occupation of the Data Centre will allow UCS and HPCS to relinquish their space in the Arup Building on the New Museums site, allowing its refurbishment and use for other institutions.
3. It is intended that new or replacement data facilities for other University institutions will move into the Data Centre, freeing space for research or other activities. Once the existing rack provision is fully occupied, the fallow data hall will be fitted out. For the present, UCS has agreed to accommodate within its growth space the data facilities of the new Chemical Engineering and Biotechnology Building now being designed for the West Cambridge site. The design options will include a permanent extension, or Phase 2 building, to be constructed to meet future demand from within the University or from other organizations.
4. The building will be constructed as a ‘lights out’ facility and permanent occupants of the building will be restricted to maintenance and security staff. Power and essential plant will have back-up provision. Security of the site and the building will be an important feature of the design. The initial estimate of cost is £23m, but it is hoped that this will be reduced as the design develops, and will be financed from the University Capital Fund and Cambridge Assessment.
5. The existing data facilities in the Arup Building and elsewhere have inefficient infrastructure leading to high energy wastage. The construction of a new ‘green’ Data Centre would result in a significant reduction in carbon emissions. Such a reduction would be amplified across the University if a consolidation / centralization strategy is adopted to accommodate other additional inefficient computing services.
6. During design development, to RIBA Stage D, the design team will offer alternative designs to allow the University to make a decision on the design target carbon reduction. Running costs and carbon emissions of the Data Centre are dependent on the alternative selected, but all options under consideration offer lower running costs and lower carbon emissions than current arrangements.
7. The new building will be designed to achieve a BREEAM sustainability rating of ‘Very Good’, which is the minimum required by the University. Attempting to attain a higher rating would not be cost effective and the design will be directed at reducing carbon emissions.
8. Drawings of the proposed scheme are displayed for the information of the University on p. 813, and in the Schools Arcade.
9. The Council recommends:
I. That approval in principle be given for the construction of a new building at West Cambridge for the establishment of a Data Centre.
II. That the Director of Estate Management be authorized to apply for detailed Planning Approval in due course.
Drawing of the Proposed Scheme
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16 July 2012 |
L. K. Borysiewicz, Vice-Chancellor |
Nicholas Gay |
Rosalyn Old |
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David Abulafia |
David Good |
Susan Oosthuizen |
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N. Bampos |
Andy Hopper |
Rachael Padman |
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Richard Barnes |
Christopher Hum |
John Shakeshaft |
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Charles Bell |
F. P. Kelly |
Sam Wakeford |
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D. J. A. Casserley |
Vanessa V. Lawrence |
A. D. Yates |
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R. J. Dowling |
Robert Lethbridge |
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I. M. Le M. Du Quesnay |
Mavis McDonald |
The General Board beg leave to report to the University as follows:
1. The continuing economic crisis has placed macroeconomics at centre stage for empirical and policy-related research. Current macroeconomic models, widely adopted by national and international institutions for policy assessment and design, have come under increasing scrutiny concerning whether and to what extent they are able to account for recent events. The ability of macroeconomic models to match or adjust to the empirical evidence is of critical importance for progress in macroeconomic research and consequent robust policy formulation, whether at the national or international level.
2. The Faculty of Economics has been prominent in the development of macroeconomic thought, in particular through the work of John Maynard Keynes and his collaborators. The position of macroeconomics in Cambridge has somewhat diminished since then but in recent years the Faculty Board of Economics has taken a number of initiatives to re-establish Cambridge as a centre for teaching and research in macroeconomics. Empirical macroeconomics and applied policy play a key role in Faculty teaching programmes, and are central to the M.Phil. in Economics, which is aimed at students whose careers are likely to be in government or the private sector. A new M.Phil. in Finance and Economics will be offered for the first time in 2012–13.
3. Empirical macroeconomics is an increasingly popular area for doctoral and post-doctoral research. The Faculty has recently attracted generous research funding through the Keynes Fund for Applied Economics (Reporter, 2011–12, pp. 17–18), together with a further substantial pledge from the Institute for New Economic Thinking (INET). In addition to research projects in applied economics and finance, these resources will fund a number of doctoral studentships and post-doctoral fellowships. To ensure that these initiatives are successful, it is essential that the Faculty has an adequate number of senior scholars in macroeconomics to provide research leadership and supervision, especially in the area of empirical macroeconomics.
4. In view of the strategic importance of macroeconomics and the retirement on 31 August 2012 of Professor M. H. Pesaran, who has provided distinguished academic leadership in the area of empirical macroeconomics, the Faculty Board of Economics considers that it would be appropriate to establish a Professorship of Empirical Macroeconomics. This has been endorsed by the Council of the School of the Humanities and Social Sciences.
5. In order to meet the costs of the Professorship, the Faculty Board has proposed that the University Lectureship released from abeyance on the retirement of Professor Pesaran be suppressed. The remaining costs will be met from funds available to the School of the Humanities and Social Sciences. The General Board have accepted the Faculty Board’s proposal for the establishment of the Professorship on this basis.
6. The Board are satisfied that an appointment at this level will be likely to attract a strong field of applicants. They are assured that suitable accommodation is available in the Faculty of Economics for the Professor. The Board have agreed to concur in the view of the Faculty Board of Economics that election to the Professorship should be made by an ad hoc Board of Electors and that candidature should be open to all persons whose work falls within the title of the Professorship.
7. The General Board recommend:
I. That a Professorship of Empirical Macroeconomics be established in the University for one tenure from 1 September 2013, placed in Schedule B of the Statutes, and assigned to the Faculty of Economics.
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11 July 2012 |
L. K. Borysiewicz, Vice-Chancellor |
Simon Franklin |
Rachael Padman |
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N. Bampos |
Andrew Gamble |
J. Rallison |
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William Brown |
C. A. Gilligan |
Patrick Sissons |
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H. A. Chase |
David Good |
Amanda Talhat |
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Sarah Coakley |
The General Board beg leave to report to the University as follows:
1. The intersection of law and environmental policy is a relationship of vital importance. In western democracies, all public policy needs a legal basis, and most policy initiatives ultimately need to take legal form. Policy design and legal design interact in ways that influence both. The legal system also constitutes the principal route through which public policy is implemented, whether through the actions of regulators and courts (who in turn might have their own policy perspectives) or through individuals applying legal rules to their own activities. Environmental policy, important in itself, provides particularly interesting examples of the relationship between law and public policy. These include the UK’s innovative attempt in the Climate Change Act 2008 to subject greenhouse gas emissions to legally binding targets and the interaction between common law environmental regulation and statutory intervention. These themes overlap with a wide range of teaching and research activity across the University, in Departments including Architecture, Engineering, Geography, and Land Economy.
2. The Estate Management Development Fund was established in 1956 for the furtherance in the University of research and study in what was then known as estate management. The income from the original gift from Mr Harold Samuel has helped secure the study of land economy through the establishment of offices and posts, including the Professorship of Land Economy. In 2012, the Department of Land Economy celebrates its fiftieth anniversary, and in recognition of that milestone the Managers of the Estate Management Development Fund, in consultation with the Samuel family and the Board of Land Economy, propose the establishment of the Harold Samuel Professorship of Law and Environmental Policy. This has been endorsed by the Council of the School of the Humanities and Social Sciences. The Professor will bring a new dimension to current and future research activity, with a focus on law and policy around the environment and sustainable development, and will work closely with the Cambridge Conservation Initiative to influence policy and practice. The Professor will contribute to teaching that brings together law and politics across a range of taught postgraduate programmes, including the new M.Phil. in Public Policy.
3. The School of the Humanities and Social Sciences has agreed to release funding equivalent to a University Lectureship towards the costs of the Professorship. The remaining costs will be met from the Estate Management Development Fund. The General Board have accepted the Board of Land Economy’s proposal for the establishment of the Professorship on this basis.
4. The Board are satisfied that an appointment at this level will be likely to attract a strong field of applicants. They are assured that suitable accommodation is available in the Department of Land Economy for the Professor. The Board have agreed to concur in the view of the Board of Land Economy that election to the Professorship should be made by an ad hoc Board of Electors and that candidature should be open to all persons whose work falls within the title of the Professorship.
5. The General Board recommend:
I. That a Harold Samuel Professorship of Law and Environmental Policy be established in the University for one tenure from 1 October 2012, placed in Schedule B of the Statutes, and assigned to the Department of Land Economy.
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11 July 2012 |
L. K. Borysiewicz, Vice-Chancellor |
Simon Franklin |
Rachael Padman |
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N. Bampos |
Andrew Gamble |
J. Rallison |
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William Brown |
C. A. Gilligan |
Patrick Sissons |
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H. A. Chase |
David Good |
Amanda Talhat |
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Sarah Coakley |
The General Board beg leave to report to the University as follows:
1. Stroke is one of the most common neurological disorders in the United Kingdom. It already makes a considerable impact on healthcare and the frequency will increase steadily in line with ageing and demographic changes in the population. The outcome from stroke varies from minor inconvenience to severe disability and total dependence on others for all aspects of daily living. Stroke results from several different disease mechanisms. Although much is now understood concerning their risk factors, with medical and public health measures adopted that reduce the incidence in particular age groups and reduce the risk of recurrence after an initial episode, stroke will continue to represent a major medical and healthcare problem for the foreseeable future.
2. Clinical neuroscience is identified as a strategic area for further development in the School of Clinical Medicine. As with all aspects of work in clinical neuroscience, the close alignment of clinical services and experimental work provides a special opportunity for research which impacts on common diseases and disorders affecting the brain and spinal cord.
3. A single tenure Professorship of Stroke Medicine was established in the University by Grace 6 of 27 October 1999. The Professorship lapsed following the retirement of Professor J. C. Baron on 30 September 2010, and the Faculty Board of Clinical Medicine have proposed that it should be re-established for a further tenure. Cambridge University Hospitals NHS Foundation Trust have agreed to meet the full cost of the Professorship for the first year. Thereafter the costs will be met equally by the Trust and by the School of Clinical Medicine from its existing resources. Cambridge University Hospitals would award an Honorary Consultant contract to the Professor and provide full access to appropriate clinical facilities; appropriate research facilities will be provided within the School through its Department of Clinical Neurosciences.
4. The General Board have accepted the Faculty Board’s proposal and have agreed that election to the Professorship should be made by an ad hoc Board of Electors and that candidature should be open without limitation or preference to all persons whose work falls within the field of stroke medicine.
5. The General Board recommend:
I. That the Professorship of Stroke Medicine be re-established from 1 October 2012 for one tenure, placed in Schedule B of the Statutes, and assigned to the Department of Clinical Neurosciences.
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11 July 2012 |
L. K. Borysiewicz, Vice-Chancellor |
Simon Franklin |
Rachael Padman |
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N. Bampos |
Andrew Gamble |
J. Rallison |
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William Brown |
C. A. Gilligan |
Patrick Sissons |
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H. A. Chase |
David Good |
Amanda Talhat |
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Sarah Coakley |
The Board of Scrutiny begs leave to report as follows:
1. The Board of Scrutiny could be described as the University’s ‘watchdog body’. It forms part of the official mechanism for ensuring that the University is run in a way that is transparent and is accountable to the governing body of the University, which is the Regent House. It comprises eight directly elected members who serve for a period of four years, and the Proctors and Pro-Proctors (who are nominated by the Colleges and formally elected by the Regent House). Of the members who are directly elected by the Regent House, four retire and four new members are elected every two years. Further information is available on http://www.scrutiny.cam.ac.uk/.
2. The Board has a statutory obligation ‘to scrutinize on behalf of the Regent House’:
(a) the Annual Report of the Council;
(b) the Abstract of the Accounts of the University; and
(c) any Report of the Council proposing allocations from the Chest.
It also has the right to report to the University on any matter falling within the scope of this scrutiny, to examine the policies of the University and the arrangements made for the implementation of those policies, and has the power to inspect any documents that are relevant to any enquiry that it is empowered to make. The Board, with the best interests of the University in mind, aims to carry out its functions in a constructive manner. Since its inception, the Board’s practice has been to publish a single Report exploring the themes that emerge from these official documents, rather than a series of separate Reports on Reports. This Seventeenth Report follows this tradition.
3. In discharge of these obligations during the academical year 2011–12 the Board has met fortnightly during each Full Term with two additional meetings in June to finalize this Report. It held formal meetings with the Vice-Chancellor (‘VC’), the Senior Pro-Vice-Chancellor (‘PVC’), the PVCs for Research, Education, and Institutional Affairs, the Director of Finance, the Registrary, the Academic Secretary, the Project Director and Finance Manager of the North West Cambridge Development, and also with the Chair of the Audit Committee. In addition, sub-groups of the Board met with the PVC (Institutional Affairs) and the Director of Human Resources, the Director of Finance, and the Head of the International Strategy Office (‘ISO’). The Board is most grateful to all of these individuals for the time and assistance they have given.
4. The Board was provided with part-time administrative assistance this year by Miss Emma Easterbrook. Her help has been invaluable.
5. The Board has provided a summary of the recommendations that it made in its Sixteenth Report together with the Council’s responses in Annex A.
6. North West Cambridge is the largest project undertaken by the University in its 803-year history. The Board accepts that the project is a strategic necessity if the University is to expand its accommodation facilities in order to support its research capability.
7. The Board commented in its Sixteenth Report on the planning process for the development of North West Cambridge. Much has happened in the intervening period and the current intention is to seek the approval of the Regent House for the first phase of the project in early 2013. The Board is grateful to the Senior PVC, the Registrary, and the Project Director and Finance Manager for providing information and to the Chair of the Audit Committee for his help in exploring the risks involved in the project. In examining the project several points have repeatedly impressed themselves upon the Board.
8. First, the size and complexity of the proposed development is daunting. The Board has received full and robust responses to its questions. It is left feeling that while members of the Regent House may not agree with the answers to all of the questions that they may have, they can have confidence that the project is being managed with enormous care and is drawing on advice and expertise of a very high calibre.
9. Secondly, in asking the Regent House for approval for the project, a crucial question will be what would happen were the University to decide not to proceed.
10. Thirdly, the Board has been made aware of the commercial sensitivity of some aspects of the information to which it has had access. It is clearly true that estimates of property value are integral to financial planning, and publication of such figures could harm the tendering process. However, to those who may be sceptical of the robustness of the planning of the project, a refusal to provide information can easily smack of a cover-up.
11. The Board recommends that the Council makes as much information as possible available to the Regent House before asking for its approval for the North West Cambridge project.
12. This need for information applies particularly to the level of debt that the University will acquire. It has already been widely noted that the project requires the University to borrow significant sums for the first time in its history. Members of the Regent House may be surprised to learn that while the project will provide the University with an enormously valuable asset, the debt may not be paid off for several decades, if at all. In the meantime it is projected that rental income due to the University will be fully absorbed in servicing the debt. Indeed the financial model that was initially presented to the Council indicated that by 2030 the annual interest payments on outstanding debt would exceed rental income and hence, in the initial phases at least, further borrowing will be required to meet interest payments. The Board has been assured that the financial model is currently under review and that the revised model shows a positive interest coverage. The Board looks forward to reviewing the new model and may produce an Extraordinary Report when it has done so.
13. The Board recommends that positive interest coverage throughout the duration of the project is a condition for approval of the North West Cambridge project.
14. The Board would like to congratulate the Senior PVC and the Director of Finance for the transparent manner in which the Financial Statements and the Budget Report have once again been presented. In its Sixteenth Report, the Board recommended ‘that the Council routinely include a section on underlying assumptions, including inflation, pay awards and all other critical inputs in all future Budget Reports’1 and it is pleased to note that all of the necessary data has been provided in the 2012 Budget Report. It is reassuring that at a time at which many institutions are being accused of lack of transparency in financial reporting, the Council has chosen to enhance significantly the clarity of the Budget Report and the University’s financial reporting process.
15. The Senior PVC and the Council are also to be congratulated for taking measures to ensure that the consolidated University group’s operating result was very close to break-even in the year to July 2011. Had not the Senior PVC recommended strict budgetary disciplines and taken steps to secure new income streams, the reported deficit on continuing operations would have grown substantially. This would have been particularly challenging as research and teaching are already under enormous pressure from Government cuts.
16. The Board notes that the Cambridge University Endowment Fund (‘CUEF’) is managed on a total return basis, and the distributions made reflect the long-term total return policy. Had the income and expenditure statements taken account of the actual distributions made by CUEF, the consolidated University group would have reported a surplus of £38m on continuing operations for the year to July 2011. In the 2010–11 financial year, the University reported positive cash flow after financing of £10m, a £107m (i.e. 12 per cent) increase in the value of endowment assets and a £175m (i.e. 7 per cent) increase in the net assets of the consolidated University group. The consolidated financial results for the 2010–11 year confirm that the University remains in a strong and (in the broader context of higher education in the UK) enviable financial position.
17. In recent Reports, the Board has commented with some concern that the Council had agreed to budget for a deficit for the period up to 2014–15. Indeed, our Sixteenth Report stated ‘the big news this year is that the magnitude of the deficit through to 2014 is now projected to be bigger than first anticipated’.2 Despite the ongoing challenges that the University faces, the recently published Report of the Council on the financial position and budget of the University for 2012–13 forecasts a healthy improvement in the University’s financial position. The 2011 Budget Report forecast a Chest operating deficit of £3.7m for 2010–11, with the deficit budgeted to rise to £9.2m and £12.7m in the two subsequent years and a cumulative Chest operating deficit for the five years to 2014–15 forecast to be £40.1m. The 2012 Budget Report shows a substantial improvement. In fact, in 2010–11 there was a Chest operating surplus of £4.7m, instead of a £3.7m deficit, and the budgeted operating deficits for 2011–12 and 2012–13 are now anticipated to be only £7.9m and £6.8m respectively. Most importantly, the Chest is now expected to be back in surplus in 2014–15, one year earlier than had been expected, and the cumulative deficit over the five years to 2014–15 is now projected to be only £15.4m. While it is fair to say that a £1m or £2m revision in the budget in any one year might be attributed to ‘noise’ given that annual Chest income and expenditure is more than £360m, the improvement in the overall trend, and the fact that the cumulative deficit over the five years to 2014–15 is now forecast to be almost £25m less than was forecast this time last year, is very important indeed.
18. Some members of the Regent House may attribute the improved financial outlook to the fact that initial budgets may have been overly cautious. The Board does not believe this to be the case. In fact, in its Sixteenth Report the Board expressed concern, especially in relation to the inflation assumptions, that inputs used in the budgetary process were overly optimistic. While the general inflation assumptions adopted in the 2011 Budget Report did prove to be optimistic and RPI inflation was higher than had been assumed, the underlying increase in staff costs has been maintained at less than 2.5 per cent per annum, and in the 2012–13 year, Chest expenditure is expected to increase by less than 1.7 per cent. The Board would like to congratulate the Council for its role in ensuring that the operating deficit is eradicated within the timeframe that was set. Measures such as the Voluntary Severance Scheme (‘VSS’) have resulted in a permanent reduction in ongoing expenditure, and have contributed to a significant reduction in the projected deficit.
19. The improvement in the cumulative size of the budgeted deficit over the four years to 2014–15 from £36.4m to £20.1m is attributable both to the tight budgetary constraints recommended by the Council and also to actions taken to increase income streams. The 2012 Budget Report indicates that for the three years to 2014–15, grants from funding councils, academic fees, and endowment income will all be higher than was originally projected in the 2011 Budget Report. As a result, in the year 2014–15 total income is budgeted to be £3.6m higher than the projection made in the 2011 Budget Report.
20. The VSS will result in a permanent decrease in Chest-funded posts and a permanent reduction in allocations from the Chest. When the scheme was first proposed in 2010 it was held out as a means by which the University would achieve efficiency improvements and cost savings. The Board has discussed the scheme with the Senior PVC, the Director of Finance, and the Director of Human Resources and is confident that sizeable and permanent financial benefits will accrue from the scheme. Formal applications for severance were submitted by 361 staff. This resulted in 194 leavers. The actual severance cost of £5.4m was significantly less than the originally estimated sum of £10m. With an outlay from the Chest of £4.9m, the ratio of net savings to severance costs for Chest funded posts is expected to be a multiple 2.26 and the total Chest savings over the next three years is expected to be £11m. The VSS has clearly been an important part of the University’s strategy to eradicate the deficit by 2014–15.
21. The 2012 Budget Report projects that endowment income will be significantly higher than previously forecast. The 2011 Budget Report forecast that the Chest’s endowment income and interest receivable would increase to £18.3m in the year 2011–12 but the most recent Budget Report, that of 2012, now suggests that this figure will increase by a further £3m to £21.3m. In its review of the budget for the current year, the 2012 Budget Report states: ‘The most significant change is the increase in endowment income and interest receivable. Cash surpluses from operations in recent years have been invested in CUEF units in anticipation of a superior long-term return to money held on deposit’.3 The Investment Office has managed the CUEF superbly over the last four years and the return of 16.1 per cent which was achieved in 2010–11 was significantly better than the total return objective of 10.2 per cent (i.e. RPI plus 5.25 per cent) for the year in question.
22. Notwithstanding this excellent result, the Board is concerned that cash, previously held on short-term deposit, has now been invested in the CUEF. It is certainly possible to make a case that excess liquid assets should be made available for investment in the CUEF to achieve superior long-term returns, but the University must ensure that cash being invested will not be required for other purposes in the immediate future. Clearly the liquidity and risk profile of cash deposits is very different from that of the CUEF and while it is pleasing that endowment income is higher than anticipated, we must ask whether unnecessary risks are being incurred to achieve this outcome. At a time when interest rates are extraordinarily low, all non-profit institutions are desperately searching for income. We must always guard against the taking of excessive risks.
23. The Board notes that income distributions from the CUEF are based on the underlying investment objectives (i.e. a total return of RPI plus 5.25 per cent). While the Investment Office has exceeded this target for the last two years, it is the Board’s opinion that this is a very challenging target. Meetings have been held with the Director of Finance and staff of the Investment Office and we have been impressed by the strength and depth of the investment professionals working therein. Nevertheless we recommend that the Finance Committee undertake a review of the total return investment objectives that have been established for the management of the CUEF.
24. The long-term performance of the CUEF is measured over rolling ten-year periods, in the most recent of which (i.e. to the end of June 2011), the CUEF outperformed the total return target in five of the ten years and underperformed in the remaining five. Over the last ten years the CUEF achieved an average annual return of 5.87 per cent. This is significantly lower than the average annual total return objective of 8.29 per cent over the period in question. Arguably, evaluation of the long-term return target requires that a period of more than ten years be considered, particularly as the last ten years was an extraordinary period in financial history. However, analysis of investment returns over the period since 1900 confirms that the current investment objectives for the CUEF are demanding.
25. Over the period 1900–2011 the average annual total real return on UK equities and gilts, after adjustment for inflation, was only 5.3 per cent and 1.4 per cent respectively. With interest rates and gilt yields at record low levels, many investment professionals suggest that the equity risk premium will be lower over the next ten years than it has been over the last. In such an environment, setting an unrealistically high total return objective may encourage the Investment Office to adopt an inappropriately high risk profile in the management of the CUEF.
26. The Board recommends that Council, through the Finance Committee, undertakes a comprehensive review of the total return objectives for the Cambridge University Endowment Fund in order to ensure that the targets are realistic and achievable over future rolling ten-year periods.
27. The Board recommends the establishment of a process by which total return objectives for the Cambridge University Endowment Fund will be reviewed at regular intervals in order to ensure that they remain appropriate.
28. In the Sixteenth Report, the Board recommended that the performance results for the CUEF be made more widely available. The Board notes that the University is constrained by Financial Services Authority regulations that restrict the material that an authorized investment manager may publicly distribute to unregulated individuals and organizations. The Board is, however, confident that if the appropriate legal disclaimers are made, the University would be able to publish the year-end CUEF summary report in the Reporter.
29. The Board recommends that the annual summary performance report that is distributed to investors in the Cambridge University Endowment Fund be published in the Reporter.
30. The Board was glad to discuss research strategy, policy, and the implementation of both with the PVC (Research). It notes that increasing grant income is critically important. For comparison, in the year to July 2011, Cambridge (£283.7m) was well behind Oxford (£376.7m) and Imperial College (£299.2m) in income from research grants. It welcomes the creation of the University Research Office (‘URO’) and the supplementing of the Research Operations Office (formerly the Research Services Division) with a Research Strategy Office (‘RSO’), which can better co-ordinate large cross-institutional grant proposals as well as the Research Excellence Framework submission. It hopes that steps can be taken by the new URO, which is now in the Academic Division, to improve communication (both within the central bodies and between them and Faculties and Departments) and other issues that have in the past reduced the effectiveness of this area.
31. The Board recommends that the University Research Office take steps to create a strong and visible presence in academic Departments, including establishing regular opportunities for direct interaction between URO staff and academics.
32. In its Sixteenth Report, the Board recommended that a review of international activities be undertaken, an international strategy articulated, and resources allocated to facilitate implementation of that strategy. The Board is pleased to note a number of developments in this area in the past year. The International Office has been reorganized as the ISO, Dr Toby Wilkinson has been appointed as its Head, the ISO has been co-located with the RSO, proposals for significant overseas funding, based on collaborative models being developed by Principal Investigators in conjunction with the ISO and RSO, have been completed, and an International Engagement Protocol, to standardize approaches to developing international collaborations, has been produced.4 In Lent Term 2012 the General Board received the India Strategy;5 and a dedicated India Officer, to support the implementation of that strategy, is expected to be in post by autumn 2012. The Research Policy Committee has approved an EU engagement strategy. This is being implemented by a Europe Working Group, which brings together EU-related expertise from the ISO, RSO, Research Operations, and the Schools. A draft paper on International Engagement is currently being developed, the newly constituted International Strategy Committee met for the first time in June 2012, a consultation among the Schools, Colleges and the appropriate committees/bodies which have responsibility for specific aspects of international engagement (such as undergraduate recruitment) will be launched shortly, and a revised paper, incorporating the results of this consultation, will return to the General Board in due course.
33. The Board recommends that continuing priority be given to international engagement to ensure that the University remains internationally competitive. In particular, it recommends that the development of international strategy continue, that sufficient resources be allocated to the implementation of that strategy, and that their effectiveness be monitored.
34. The University is currently committed to an increase in the numbers of graduate students at a rate of 2 per cent per annum until 2020, with a review in 2015. Admission to taught M.Phil. programmes are capped at a level consistent with this figure. This is consistent with the University’s goal of maintaining research excellence in an extremely competitive international environment but it has significant resource implications for Colleges, as well as for Faculties and Departments. While Colleges have a secondary role in the admission of graduate students, their involvement in graduate education is central to the ongoing stability of the collegiate University. A number of comments about graduate education can be made.
35. First, an annual increase of 2 per cent may be perceived as too small for some Faculties and Departments as it may reduce the supply of Ph.D. students and thus reduce the University’s longer term research capacity. The M.A.St. in Mathematics (previously the Part III in Mathematics), for example, is a programme of worldwide stature and the University is arguably harmed by limiting recruitment to that programme. On the other hand, the Colleges may have difficulty absorbing annual increases in graduate students, especially in the latter stages of the period covered by the agreement.
36. Secondly, a number of issues remain unresolved. For example, graduate students require not only accommodation but also the support and social structures provided by the Colleges. The North West Cambridge development (if approved) will increase the supply of graduate accommodation but will provide only about half of the total increase that is required.
37. Thirdly, in global terms, graduate education is becoming increasingly important. Relative to our competitors, an increase of 2 per cent per annum seems very modest. Indeed, the current arrangement is the result of negotiation between the University and the Colleges and it may best be described as an unstable compromise. The Board has gained the impression that the University has been unwilling or unable to determine the optimum rate of growth in graduate student numbers and so is relying on a process of trial and error, rather than good planning.
38. Fourthly, it has been assumed that undergraduate numbers are to remain constant. The Board observes that even a small percentage reduction in the number of undergraduate students would facilitate a further increase in graduate student numbers.
39. It is therefore vital that the University maintains, in close consultation with the Colleges, a credible and sensible long-term strategy on graduate student numbers, encompassing such matters as the balance between research and taught programs, the availability of graduate funding at Cambridge and competitor institutions, and the role of the Colleges in graduate education.
40. The Board recommends that the University take steps to review the optimum rate of increase in graduate student numbers and to increase co-ordination with the Colleges in this area.
41. The Board notes that with the successful conclusion of the 800th Anniversary Campaign to raise £1 billion and the departure of Peter Agar as the Director of the Cambridge University Development Office (‘CUDO’), the University is taking stock of its development activities and seeking advice on the future direction of development strategy. The Board will keep this under review. Meanwhile, the Board notes that the 2012–13 Chest allocation for Cambridge in America (‘CAm’) is £2.3m. This is a large sum, the size of which supports the case for much greater oversight of CAm by the Council.
42. The Board recommends that there be greater oversight of Cambridge in America by the Council.
43. A theme of the Board’s deliberations this year has been risk. It is clear that the world is becoming a riskier place and higher education is not immune. Since 2002 the University has maintained a Key Risk Register.6 The interface between the Colleges and the University is recognized as the locus of a number of overlapping risks. These, however, do not include the reputational and operational risks associated with the financial affairs of the Colleges.
44. The Board recommends that the University Risk Register include recognition of the risks to the University, both reputational and direct, consequent upon the actions or financial circumstances of individual Colleges.
45. The Board notes that some progress has been made in improving services provided by the Human Resources Division, particularly on the timely issuing of contracts of employment. It will keep this and other aspects of the services provided by the Division under review. The Board does not generally inquire into individual cases but the number and nature of these that continue to be drawn to our attention is a matter of concern.
46. The Board notes the efforts made by the University, the unions, and others to modify pension provision. In respect of the Universities Superannuation Scheme (‘USS’), the Board notes that industrial action in the continuing industrial dispute between the University and College Union (‘UCU’) and the University was suspended in February 2012 to allow negotiations to take place on the future shape of the scheme. In June 2012, UCU’s Congress voted to resume industrial action.
47. The University’s other principal pension scheme is the Cambridge University Assistants’ Contributory Pension Scheme (‘CPS’). The Board notes that the assistant staff trade unions and the University administration have negotiated a final set of proposals for CPS that are mutually acceptable. The extent to which the new arrangements will affect the CPS deficit is, however, unclear and the Board awaits the publication of the latest actuarial valuation.
48. Time will tell whether recent efforts will ensure the sustainability of the pension schemes. Given the importance of this issue to the University and its officers and staff, the Board recommends continued vigilance and will continue to monitor developments in this area.
49. This year the Board received several retrospective comments on ballots of the Regent House but it is not within our remit to investigate particular cases. We welcome the procedural change made this year whereby the envelopes will remain unopened until after the deadline has passed, and we consider that the Regent House as a whole will be willing to accept a concomitant delay in reporting the results, especially where the ballot involves a transferable vote. We understand that discussions are taking place to move to a system of electronic voting and we look forward to a detailed proposal in due course.
1.The Board recommends that the Council makes as much information as possible available to the Regent House before asking for its approval for the North West Cambridge project.
2.The Board recommends that positive interest coverage throughout the duration of the project is a condition for approval of the North West Cambridge project.
3.The Board recommends that Council, through the Finance Committee, undertakes a comprehensive review of the total return objectives for the Cambridge University Endowment Fund in order to ensure that the targets are realistic and achievable over future rolling ten-year periods.
4.The Board recommends the establishment of a process by which total return objectives for the Cambridge University Endowment Fund will be reviewed at regular intervals in order to ensure that they remain appropriate.
5.The Board recommends that the annual summary performance report that is distributed to investors in the Cambridge University Endowment Fund be published in the Reporter.
6.The Board recommends that the University Research Office take steps to create a strong and visible presence in academic departments, including establishing regular opportunities for direct interaction between URO staff and academics.
7.The Board recommends that continuing priority be given to international engagement to ensure that the University remains internationally competitive. In particular, it recommends that the development of international strategy continues, that sufficient resources be allocated to the implementation of that strategy, and that their effectiveness be monitored.
8.The Board recommends that the University take steps to review the optimum rate of increase in graduate student numbers and to increase co-ordination with the Colleges in this area.
9.The Board recommends that there be greater oversight of Cambridge in America by the Council.
10.The Board recommends that the University Risk Register include recognition of the risks to the University, both reputational and direct, consequent upon the actions or financial circumstances of individual Colleges.
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27 June 2012 |
Jeremy Caddick (Chairman) |
David Goode |
Christina Skott |
|
Bruce Beckles |
Catherine MacKenzie |
Brian Sloan |
|
|
Kevin Coutinho |
Owen Saxton |
Paul Warren |
|
|
Martin Dixon |
Oren Scherman |
Alan Winter |
The Board recommends that the performance results for the Cambridge University Endowment Fund (CUEF) should be made more widely available throughout the University. In particular, the annual summary performance report that is distributed to investors in the Endowment Fund should be published in the Reporter.
Response: The University is constrained in the extent it can promote the CUEF under its regulation by the Financial Services Authority. Annual and quarterly performance summaries are provided to entities related to the University which are investors and to the managers of internal funds investing in the CUEF. An annual investors meeting is held and performance and asset allocation information is published in the University’s Financial Statements (with commentary in the Financial Review) and in the Financial Management Information Reporter.
The Board recommends that the Council routinely includes a section on underlying assumptions, including inflation, pay awards and all other critical inputs in all future Budget Reports.
Response: The guidance that precedes each annual planning round is available at http://www.admin.cam.ac.uk/cam-only/offices/planning/planround/round/ and gives indicators for pay and non-pay cost inflation. These will, in future, be included in the Budget Report.
The Board recommends that all inflation planning assumptions, together with all other relevant planning inputs be set at realistic levels, consistent with long-term UK averages for the HE sector.
Response: The Council believes that planning assumptions are realistic, but that contemporary circumstances and not long-term averages are the best guide if forecasts are not to be mere trends.
A range of indicators are reviewed before the guidance is issued. Estimates of pay costs take account of volume change and other factors such as incremental drift as well as possible future pay awards. Realism and caution are essential. The Council is concerned to ensure that unrealistic assumptions do not lead to unrealistic expectations. The Board is reminded that the forecasts are reviewed annually to maintain a rolling five-year view.
The Board recommends that the Council outlines the University’s strategy for ensuring that research income meets projected targets.
The Board recommends that the Council reconsider the manner in which strategic thinking in financial planning is provided.
Response: The Finance Committee has three external members who provide a valuable external perspective and specialist skills, including banking experience. A further external member, again with extensive banking experience, has been co-opted by the Committee from October 2011.
The Finance Committee set up a Financial Strategy Task Force, under the chairmanship of Ms Sherry Coutu, an external member of Council, which met over 2009–10. The group reviewed the financial approaches of the University’s international competitors and engaged specialist consultancy advice. Its detailed work was subsequently taken on by the Financial Strategy Steering Committee of the Finance Committee.
The Board recommends that steps be taken to reopen the Combination Room or at the very least report to the Regent House on future plans for this important asset.
Response: The Council notes that the Combination Room has been open to current and retired members of the Regent House and visiting academics since 3 October (Reporter, 2011–12, p. 7). It was also open to all members of the Senate and their families and guests during the Chancellorship election.
The Board recommends that the process of streamlining the contents of the Reporter and moving control of the material away from the centre to the Faculties is very carefully monitored.
Response: The Council notes this comment. The Registrary will review the success of this initiative at the end of the academical year.
The Board recommends that the Council outlines the University’s response to the trend towards funding larger grants linked to strategic themes rather than individual research.
Response: Overall, the University’s research income grew by 7.5% in 2010–11 compared with 2009–10. Notwithstanding this, the University remains acutely conscious of the potential problems arising from sponsors having very different arrangements for paying indirect overheads. For example, the Research Councils pay 80% of Full Economic Costing; with the charities the University receives partnership QR in the HEFCE block grant but no overheads; the EU pays a flat 20% of the overall cost while contributions from industry depend on individual negotiation. Meanwhile, in the present difficult economic climate, it is not surprising to learn that sponsors are trying to obtain the same amount of research, or more, for less outlay. The University needs to manage a balanced portfolio of research funding since any significant move away from the present level of Research Councils’ support would seriously compromise our ability to recover the full contribution towards centrally-incurred costs.
The General Board and the Research Policy Committee (RPC) have already taken steps to enhance the University’s grant-winning capabilities. Researchers are being encouraged to win more and bigger grants through the RPC’s formal programme of Strategic Research Initiatives and Networks. These will provide a framework on which the University can build major funding bids, which demonstrate clear academic leadership and goals, broad support from the academic community, and a substantial potential to attract new partnerships and research funding. The RPC are providing modest sums for a period of three years as pump priming for these areas of activity, the first four of which were awarded University Strategic Initiative status in 2010 (Neuroscience, Infectious Diseases, Stem Cells, and Conservation) with a further three in 2011 (Language Sciences, Cancer, and Energy). The University’s commitment to this scheme now stands at around £1.5m over a three-year period.
Concurrently, the University is improving its internal structures to achieve a better return on overheads. A more cohesive approach to costing and pricing has been introduced across the University Research Office and with particular attention being paid to strengthening procedures for scrutinizing large grant applications and to reclaiming more in eligible costs on EU grants. Meanwhile the Pro-Vice-Chancellor (Planning and Resources) is leading a project to improve the incentive structure for Departments and individual Principal Investigators while the RPC, recognizing the need for enhanced and comparative management information, has set up a Working Party to be led by the Director of the Management Information Services Division (MISD).
As the Board points out, there is a growing demand for larger, internationally excellent research teams within research calls. The claimed advantage of these substantially higher value grants is that they bring greater efficiencies while incurring lower indirect costs. But the University remains fully committed to the valuable and diverse research arising from single investigator research. The RPC has demonstrated this commitment by providing funding to support two research facilitators in the Schools of Arts and Humanities and the Humanities and Social Sciences. In addition, dedicated funding has been allocated to these same two Schools to compensate for the loss of the British Academy and ESRC small grants schemes and also to protect Ph.D. studentship funding.
The Board recommends that the Council provides an account of how the University will seek to maintain flexibility and competitiveness in recruiting from overseas in the light of UKBA restrictions.
Response: In its Annual Report for 2010–11 the Council commented on its increasing concerns about the Home Office’s new and restrictive rules on immigration and the implications for the University’s capacity to recruit the brightest and best international academics and students. The University is making strenuous efforts to influence the development of the policy, through representations to Ministers, other politicians, and senior Civil Servants as well as through consultation exercises when changes are proposed. The Council is also grateful for the work of Lord Wilson of Dinton (the Master of Emmanuel College) and Dr G. A. Reid, Head of the Intercollegiate Services Office, on addressing critical issues for the Colleges in this regard with determination and success. Some concessions have been made, for example the introduction of Tier 1 (exceptional talent) but, as should be apparent from recent events, immigration has a high profile politically which is not conducive to achieving further concessions in the short term. The Human Resources Committee is monitoring the situation closely and will consider whether central support for this area will need strengthening.
An internal review is currently being conducted to assess the level of support given to individuals submitting visa applications. It is likely that this level of support will be increased to reduce the risk of error and the consequential negative impact on the individual and the University. This could include support for an application for a visa alongside other welfare arrangements associated with moving to Cambridge, although it is important to note that the responsibility for the application remains with the individual.
The Board recommends that a comprehensive review of the University’s international activities be undertaken, that an international strategy be clearly articulated, and that the necessary resources be allocated, and their effectiveness monitored on a regular basis, to facilitate implementation of this strategy.
Response: The Council agrees that a clearly articulated international strategy for the University is essential and, together with the General Board, has taken steps to improve the support provided by the central administration. During the current year the International Office has been reorganized as the International Strategy Office (with a revised remit). Dr Toby Wilkinson was appointed as Head of the Office from 1 July 2011. In October this year the General Board approved a protocol for international agreements, to ensure best practice, better co-ordination, and support of international partnership agreements across Schools, Faculties, and Departments (http://www.admin.cam.ac.uk/offices/international/protocol.pdf) – the Head of the International Strategy Office will be making presentations of the protocol to the Councils of the Schools during the Michaelmas Term 2011 and Lent Term 2012. An International Strategy Committee, chaired by the Pro-Vice-Chancellor for International Strategy, has been established with effect from January 2012.
In September this year a consultancy project was launched to advise on concrete steps to strengthen the University’s strategic engagement with the EU; this is due to report by mid-December 2011. There has been major progress towards the delivery of draft country/regional strategies for India, China, and the EU by January 2012, and major progress towards the delivery of a draft overarching international strategy to the General Board in May 2012.
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CAm |
Cambridge in America |
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CPS |
Contributory Pension Scheme |
|
CUDO |
Cambridge University Development Office |
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CUEF |
Cambridge University Endowment Fund |
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FSA |
Financial Services Authority |
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HEFCE |
Higher Education Funding Council for England |
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ISO |
International Strategy Office |
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PVC |
Pro-Vice-Chancellor |
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RSO |
Research Strategy Office |
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URO |
University Research Office |
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UCU |
University and College Union |
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UKBA |
United Kingdom Border Agency |
|
USS |
Universities Superannuation Scheme |
|
VC |
Vice-Chancellor |
1Reporter, 20 July 2011, http://www.admin.cam.ac.uk/reporter/2010-11/weekly/6232/section6.shtml#heading2-34
2Reporter, 20 July 2011, http://www.admin.cam.ac.uk/reporter/2010-11/weekly/6232/section6.shtml#heading2-34
3Reporter, 30 May 2012, http://www.admin.cam.ac.uk/reporter/2011-12/weekly/6268/section6.shtml#heading2-19
4http://www.admin.cam.ac.uk/offices/international/protocol.pdf
6http://www.admin.cam.ac.uk/offices/secretariat/risk/register/