Skip to main contentCambridge University Reporter

No 6508

Thursday 31 May 2018

Vol cxlviii No 32

pp. 623–660


Report of the Council on the financial position and budget of the University, recommending allocations from the Chest for 2018–19

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


1. Recent years have seen major upheaval in political and economic environments resulting in a prolonged period of uncertainty marked by extensive change.

2. The most significant of the uncertainties and changes affecting the higher education sector are addressed in the opening paragraphs of this Budget Report. Although there can only be limited confidence in what the future might hold, the University must continue to develop and commit to strategies for excellence in education and research, and make assumptions about the financial environment in which it is – and will be – operating. This is reflected in this year’s Budget Report, and the financial forecasts that underpin it.

Uncertainty and change


3. The UK’s withdrawal from the European Union (‘EU’) is under way, but protracted Brexit negotiations and continued political disagreement are delaying clarification of the nature of the UK’s future relationship with the EU and the medium- to long-term consequences.1 Details are only beginning to emerge about the transitional arrangements that will apply from March 2019. This indeterminate future makes planning very challenging, particularly with respect to EU student numbers and fees and EU-derived research funding; it also makes our success in recruiting and retaining the best staff difficult to predict.2

4. Representatives from Cambridge are actively engaging with the government on these and other issues, including providing expert testimony to the House of Commons Select Committee on Exiting the EU.3 The University is also developing strategies for education and research in an attempt to mitigate the risks.4 These strategies include implementation of defined plans for undergraduate and postgraduate recruitment, and the rolling out of the University’s People Strategy in recognition of the fundamental importance of both academic and non-academic staff to the continued success of the University.5

5. The University is strengthening its external relationships at this crucial time, and continues to seek and establish collaborations that span international, national, and regional initiatives. Recent international examples include the Nanjing Centre of Technology and Innovation,6 the Max Planck-Cambridge Centre for Ethics, Economy, and Social Change,7 a new social sciences research partnership with Sciences Po,8 a biomedical collaboration between the School of Clinical Medicine, Sunway Medical Centre in Malaysia, and Papworth NHS Foundation Trust,9 five new collaborative research projects under the Global Alliance initiative,10 and Cambridge co-leadership on the international Deep Underground Neutrino Experiment.11 The University is also exploring the scope for closer relationships with a small number of leading European higher education institutions.

6. Nationally Cambridge is a partner in the Dementia Research Institute, the Alan Turing Institute, and the Rosalind Franklin Institute and, over the last two years, has absorbed four Medical Research Council Units. The Centre for Digital Built Britain, which is supported by a £6.6m grant from Innovate UK, is a partnership between the Department for Business, Energy, and Industrial Strategy (BEIS) and Cambridge ‘to deliver a smart digital economy for infrastructure and construction for the future, and transform the UK construction industry’s approach to the way we plan, build, maintain, and use our social and economic infrastructure’.12 The new Cavendish Laboratory13 will also support new national collaborations by giving researchers across the UK access to a national facility comprising infrastructure and facilities that are of the quality, specification, capacity, and scale required for modern cutting-edge research. Researchers and students from universities throughout the UK will be able to share ideas, be exposed to new research techniques, build wide academic networks, and in so doing, enhance knowledge exchange, augmenting the prospects of economic benefits through employment and skills development throughout the UK.

7. On a regional level, the University, local councils, and businesses form the Greater Cambridge Partnership, which is the local delivery body for a City Deal with central government, bringing investment worth up to £1 billion over fifteen years to improve infrastructure, support and accelerate the creation of new jobs, build new homes, and create new apprenticeships. The University works closely with regional partners, including Cambridge University Hospitals NHS Foundation Trust, Cambridge and Peterborough NHS Foundation Trust, and Royal Papworth Hospital NHS Foundation Trust, individually and through Cambridge University Health Partners. The University looks forward to the continued expansion of the Biomedical Campus as a result of the relocation of the Royal Papworth Hospital later this year. These partnerships and co-location with major pharmaceutical companies such as AstraZeneca and GlaxoSmithKline will contribute to a thriving community of academics, businesses, and clinicians combining world-class research with efficient translation.14 The University is also leading a new regional skills partnership called Accelerate EAST,15 involving businesses, and further and higher education providers, which seeks to harness and develop the skills and talent across the eastern region workforce as part of a strategy to drive regional economic prosperity and growth. In addition, the University is actively engaging with the Combined Authority, both through the Cambridge and Peterborough Independent Economic Review and the shadow business board.

8. By nurturing international, national, and regional relationships Cambridge should be well-placed to continue to prosper in a post-Brexit era.

Student funding

9. The future of tuition fees is uncertain. Increasing concerns over levels of student debt,16 the level of remuneration of senior university leaders,17 and the quality and ‘value for money’ of courses18 have led to the announcement of a major ‘Review of Post‑18 Education and Funding’.19 The review will be wide-ranging covering choice, accessibility, skills, and value for money including a particular focus on the funding system. It is not possible, at this point, to determine the extent to which the outcome may lead to wide-reaching reforms of funding for higher education.

10. In the meantime, after one year of inflation-related increases in undergraduate Home tuition fees, they are now frozen once again, for at least one further year, at £9,250 per annum. The impact of this at Cambridge will be a widening of the deficit between the cost of an undergraduate education and the support for it from student fees and government grants. The Cambridge teaching model is distinctive and highly successful, but costly to deliver. The most recent calculation showed that the average annual cost of an undergraduate education borne by the University and Colleges per Home undergraduate student is £18,500.20 The collegiate University must maintain a focus on delivering the highest quality of educational provision while continuing to explore ways to manage the deficit by operating as efficiently as possible.

Regulatory environment

11. Fundamental changes to the regulation of the Higher Education sector have been realized in accordance with the Higher Education and Research Act 2017.

12. The Office for Students (OfS) has been operational since 1 April 2018. It takes a student-centred approach to regulation focusing on choice, quality, and the delivery of value for money for students and taxpayers.21 The OfS will implement its new regulatory functions in full from 1 August 2019. Until then, a transitional period is under way; all providers wishing to access student support and public funding from 1 August 2019 must register with the OfS in 2018–19.22

13. The OfS will be responsible for the Teaching Excellence and Student Outcomes Framework (TEF). The University of Cambridge secured a Gold rating in TEF2 in 2017 and was commended for its supervision system, opportunities for undergraduates to undertake research projects alongside world-leading academics, the provision of facilities that provide a world-leading learning environment, the rigour and stretch of courses, the inclusive and individualized support services for disadvantaged groups of students, and a Careers Service that allows students to tailor work experience to their needs.23 An independent review of the TEF is taking place during academical year 2018–19 and will inform the assessment framework for 2019–20.24 The framework is expected to include the first year of a subject-level TEF and a pilot is already underway. Fifty providers, including the University of Cambridge, were selected to participate.25 The University’s participation will ensure that it is in a strong position to influence and shape the future direction of subject-level TEF.26

14. UK Research and Innovation (UKRI) came into legal existence on 1 April 2018 and comprises the seven research councils, Innovate UK, and Research England, which will oversee UKRI’s England-only functions in relation to university research and knowledge exchange.2728 The UKRI Board29 controls a budget of over £6 billion and advises the Secretary of State on the allocation of funding between research disciplines and the balance of funding under the dual support system.30 Priorities for UKRI include achieving greater collaboration across the research base, delivering more support for multi- and inter-disciplinary research, and improving collaboration between businesses and researchers.31

15. Cambridge continues to build its cross-disciplinary activity and will be well-placed to respond to future priorities as determined by UKRI. Eight Interdisciplinary Research Centres (IRCs) have been established in the University along with a further seven Strategic Research Initiatives with the potential to develop into IRCs in due course.32 Joint degrees are also being developed to attract high quality applicants and, by supplementing existing single-subject Triposes, enrich the intellectual environment of participating Schools. This year saw the introduction of the Modern and Medieval Languages and History Tripos, and the History and Politics Tripos.33

16. The University is taking steps to ensure that it can take advantage of opportunities emerging from the implementation of the government’s industrial strategy34 and has benefited from additional HEIF funding for this purpose. The allocation for Knowledge Exchange includes a £475k recurrent uplift. Knowledge Transfer Facilitators are engaged in activities to increase collaborative research between the University and industry. Workshops organized around defined research challenges for industry and other external stakeholders are helping to stimulate collaborative research ideas and potentially create funding opportunities.35


17. Government ministerial teams have changed in recent months. Damian Hinds is Secretary of State for Education,36 and Sam Gyimah is a joint Minister for Higher Education at both the Department for Business, Energy, and Industrial Strategy, and the Department for Education.37

18. Changes have also taken place in the University’s senior leadership team. Professor Stephen Toope was inaugurated as the new Vice-Chancellor in October 2017. Anthony Odgers has completed his first year as Chief Financial Officer of the University with responsibility for the University’s financial and commercial assets including those of the wider University group. As a result of this appointment and of Professor Maskell leaving the University to take up a new appointment as Vice-Chancellor at the University of Melbourne, the role of Pro-Vice-Chancellor for Planning and Resources has been replaced by the new role of Pro-Vice-Chancellor for Strategy and Planning, which comes into effect from 1 August 2018 and will be filled by Professor David Cardwell. He will work closely with Heads of Schools, Pro-Vice-Chancellors, the Chief Financial Officer, and academic leaders in supporting and strengthening the academic mission of the University, including overseeing the distribution of resources. Other developments in leadership teams include the appointment of Emma Rampton as Registrary and the appointment of David Hughes as the University’s new Director of Finance following the retirement of Andrew Reid. Recruitment is underway for a new Director of the Fitzwilliam Museum following the appointment of Tim Knox as Director of the Royal Collection.


19. As highlighted in previous Budget Reports, the University’s capital programme is ambitious and, if all projects were to be taken forward, would require capital expenditure over the next 15–20 years of over £4 billion. University resources alone cannot deliver development on this scale.

20. In recognition of this, a prioritization and scoring mechanism has been developed over the last twelve months to support the Planning and Resources Committee (PRC) in its prioritization of projects and overall decision-making.38 This tool tests the feasibility of delivering individual projects in the next five years and at five-yearly intervals thereafter, and assesses the potential academic impact of individual projects across a range of categories.39

21. Phase 1 of the North West Cambridge (NWC) development, which is managed as a ring-fenced project and lies outside ‘little U’ financials,40 is externally financed and underpinned by the University’s balance sheet. The 2018–19 budget for NWC assumes minimal residual capital expenditure on Phase 1. Rentals from NWC flow through the University Group income and expenditure, and cash flow.41

22. A fixed-rate bond was issued in 2012, and interest payable also flows through the University Group income and expenditure, and cash flow. Subject to Grace of the Regent House, the Council is considering authorizing a second bond issue of up to £600m to fund revenue-generating projects.42 With the very low interest rates currently available, by investing the proceeds of borrowing in projects that produce revenue, the intention is to generate, over time, a net surplus. Any net surplus would then be available to support the core strategic mission of the University, to the benefit of future generations. The bond issue, if authorized, is expected to be long-term (50–60 years). Up to £300m of the issue could be an amortizing CPI-linked bond where the interest payable is low, but the bond principal increases with CPI. The amount of any index-linked issue would be determined by the attractiveness of terms that can be obtained. The remaining amount would be in the form of a fixed-rate bond with principal repayable on maturity. Pending investment in revenue-generating projects, the proceeds of the bond would be invested by the Investment Office in a low-risk asset portfolio. It is anticipated that a significant proportion of any proceeds raised would be invested in NWC Phase 2, if this should be approved (perhaps in early 2019). The potential bond issue has not been included in the projections of this Budget Report.

Planning Round 2017


23. Last year’s Budget Report forecast that the Chest would remain in deficit over the planning period, at levels of £21m in 2017–18 to £6m in 2020–21. The Report observed that operating with a Chest deficit, for the short term, enabled the University to maintain momentum and invest in areas of strategic academic importance, and provide administrative services that are fundamental to the core operation of the University. In the long term, the Report observed the need for strategies to support the generation of new and additional income to the Chest, and constrain and reduce expenditure.

24. This year’s Budget Report reaffirms that message. A Chest deficit of £25.2m is forecast in 2018–19 improving slightly to £15.0m by 2021–22. The position is a deterioration compared to last year’s Budget Report due largely to provision for new costs associated with the University’s People Strategy, higher forecast allocations for utilities, University Scholarships for UK and EU postgraduate students, Widening Participation, Examiner Fees, funds to implement the recommendations of the Research Administration Review, and increases in allocations to the Schools and Non-School Institutions (NSIs). These are described in more detail in paragraphs 45 and 46.

25. Improving the long-term financial sustainability of the University will be informed by a new 10- to 15-year high-level financial model, which is currently in development under the oversight of the Chief Financial Officer. A further piece of work is under way to explore the fixed, stepped, and variable costs of educational provision to determine the marginal cost of additional undergraduate or postgraduate students. The findings will enable a better understanding of the income generated, and costs incurred, of long-term growth in student numbers.

26. In the medium term, the Joint University and Colleges Working Group on Postgraduate Student Numbers has agreed a collective target of 13.1% growth in the total population of full-time postgraduate students over five years. This equates to a target of c. 7,400 full-time postgraduate students on 1 December 2021, an increase of approximately 860 students. The University and Colleges have agreed that this overall growth target is the priority, but have also expressed a wish to see an increase in the proportion of Doctoral to Masters students from the current 60:40 to 62:38.

27. Schools have responded to the growth target and submitted proposals in this planning round for expansion in existing postgraduate courses and for the introduction of new taught Masters courses commencing 2019–20. Progress towards the overall target is being overseen by the Postgraduate Admissions Committee. Actual figures will be closely monitored each year and will inform the development of incremental plans in successive planning rounds.

28. The operation of a new Income Incentivization Model, which has been endorsed by the Resource Management Committee (RMC), will ensure that Schools receive a share of additional income generated from growth in postgraduate numbers. The key principle of the Income Incentivization Model is to maintain recurrent baseline allocations from the Chest,43 but to supplement these on an annual basis by cost-neutral distributions based on year-on-year changes in certain streams of gross Chest income. The model is initially piloting three streams of income: postgraduate fees, the Chest share of overheads recovered on Research Grants and Contracts, and Research Degree Programme Supervision funding. In each case, the chosen funding streams complement University-level academic priorities: growth in postgraduate student numbers, an improvement in the rate of recovery of indirect costs of research, and an increase in the proportion of Doctoral students to Masters students.

29. The Income Incentivization Model will be introduced in Planning Round 2018 and will inform allocations in and from 2019–20. The next task for the RMC is to propose how the model will apply to the NSIs. Growth in the University, continual change in the regulatory environment, increasing external risks, and the introduction of new legislation place new resource requirements on the NSIs, particularly those service-related institutions such as the UAS and the UIS. While all efforts are made to absorb additional costs within existing baselines, the scope for efficiency gains is ultimately limited. Through the operation of the Income Incentivization Model a share of any income growth generated by Schools and institutions will be retained centrally, and it is proposed that a proportion of this could be made available to supplement baseline allocations for the NSIs where there is urgent need. Through this mechanism, increases in allocation would also be available for NSIs to the extent that there is income available to fund them.

30. Alongside a focus on generating new income, the RMC will continue to review the Resource Allocation Model focusing in particular on expenditure and the net position of Schools and NSIs.

Planning guidance

31. In June 2017, the PRC considered the Planning Guidance for Planning Round 2017 and agreed that Chest allocations for 2018–19 and provisional allocations thereafter should remain at the levels forecast in Budget Report 2017. This approach allowed for a 1% inflationary uplift to Chest allocations for 2018–19 over 2017–18 and for each year thereafter. It also allowed for increases to Chest allocations in or from 2018–19 based on requests for funding that had already been endorsed, in principle, by the PRC during the Planning Round 2016 process. The impact of these increases had already been built into the consolidated forecasts of the previous Budget Report. The PRC recognized that this approach would be capable of flexing to support critical priorities if this were to prove absolutely necessary. The forecasts for Chest allocations were considered at a joint meeting of the PRC and RMC in March 2018, and a number of increases were supported. These are described in more detail in paragraph 45 and are summarized in the Allocations Table found later in this Report.

32. For the purposes of this Report, allocations to Schools and NSIs are assumed to be fully spent even if a balance is carried forward to the next year. This is the mechanism by which Chest-derived reserves accumulate.


33. Assumptions about future pay awards are a key area of sensitivity in the financial projections of this Budget Report. Increases in pay inevitably lead to significant, additional recurrent costs. A central contingency is set aside to mitigate the risk for Chest-funded posts for a period of time, but the risk of extra costs remains. For modelling purposes, the pay award assumed in the planning guidance was 2% per year during the planning period.

34. Apart from National pay awards, all additional pay costs arising from promotions, increments, and regrading are normally absorbed within existing allocations to the Schools and other NSIs except where separate provision is made.44 However, recent pay and reward initiatives proposed under the University’s People Strategy are forecast to result in significant additional recurrent costs. Schools and institutions are unlikely to be able to absorb these without corresponding increases to Chest baselines. Current forecasts indicate the required increase to Chest allocations would be £5m in 2019–20 increasing to £11m per annum by 2021–22.45

35. A default inflation assumption of 2% has been used for non-pay inflation in all years unless there have been compelling reasons to adopt an alternative assumption for specific classes of non-pay expenditure.

36. There remains significant uncertainty about the nature and cost of the Universities Superannuation Scheme (USS) pension provision from April 2019. The Joint Negotiating Committee (JNC) of the USS has rescinded the proposals for benefit change that it had set out in January 2018. A joint expert panel, with equal number of members being appointed by the University and College Union and Universities UK, is being established with a remit to review the valuation and make proposals on benefit changes from April 2019, while also examining long-term sustainable solutions. In the meantime, the USS Trustee is taking forward the automatic cost-sharing provisions under USS rule 76.4, whereby existing defined benefits are maintained and the increased cost is shared 65% by employers and 35% by employees. While there are a number of detailed elements to the implementation of this rule, the current estimate is that employer contributions would increase from 18% to c. 24%.46 The expectation is that the changes that flow from rule 76.4 are likely to be replaced by a new determination of the JNC following the work of the joint expert panel, but this cannot be guaranteed. It is estimated that an increase of 1% of salary as a USS pension cost will have a c. £2m cost to the ‘little U’ group with the exact amount depending on the ability to pass on additional costs to research funders. The potential increase in employer contributions has not been budgeted for in this Report, but would be met by the Chest in 2018–19 pending a more sustainable budgetary solution for 2019–20, once the outcomes are known.

Financial forecasts

Fees and HEFCE funding

37. The OfS and UKRI receive a guidance letter from the government every spring. This sets out the teaching and research funding budget, and details policy areas that should be prioritized along with any conditions of funding that should apply. This year’s guidance letters to the OfS and Research England (which oversees UKRI’s England-only functions) were received on 20 February 2018 and 31 March 2018 respectively. The announcements of grants for each institution funded by the OfS and Research England were made available, under embargo, on 9 May 2018.47

38. Appendix 5 describes OfS and Research England funding in 2018–19. The University’s allocation of funding for teaching has increased marginally by 0.9% to £18.1m. However, this includes additional funding for the continuing expansion of the School of Clinical Medicine.48 If the additional funding for medical students is deducted, there is an underlying decrease of 3.8% in the OfS grant for teaching.

39. The University’s allocation of funding for research has increased by 2.2% from £121.7m in 2017–18 to £124.4m in 2018–19. This comparison incorporates an adjustment to the 2017–18 figure to exclude £3.3m of Global Challenges Research Funding from mainstream quality-related research funding. From 2018–19, this stream of funding is being reported separately, and the allocation for 2018–19 will not be announced until later this year.

40. The allocations in the grant letters are provisional since the academic and government financial years differ. If there were to be a government budget cut in 2019–20 this might result in a ‘claw-back’ from the 2018–19 allocations.

Actual 2016–17 and forecast for 2017–18

41. The actual Chest out-turn for 2016–17 is provided in Table 1 of this Report (p. 642 ). The overall position on the Chest was a deficit of £2.1m compared to one of £3.3m forecast in Budget Report 2017. Although there were decreases in both fee income and the Chest share of indirect costs recovered on research grants and contracts, the effect was more than compensated for by reductions in actual expenditure in central administered funds.

42. Table 2 summarizes the forecast out-turn for the Chest in 2017–18. In the 2017 Budget Report this was anticipated to be a deficit of £21.4m. The forecast is now for a deficit of £15.5m due primarily to an uplift in Global Challenges Research Funding, an increase in operating income, and a reduction in forecast expenditure on administered funds.49

43. Activities funded outside the Chest (excluding Cambridge University Press, Cambridge Assessment, and the Cambridge Trust) were previously forecast to result in a deficit of £16.0m in 2017–18 after making a contribution to the Chest for central costs. This component of the budget is difficult to predict with precision but there is currently no reason to expect a significantly different out-turn by the end of the year.

Forecasts in 2018–19 including allocations from the Chest

44. Forecast Chest income for 2018–19 is £471.1m compared to £466.2m assumed in Budget Report 2017. Although there is a reduction in forecast fee income from Home undergraduates, there is also an increase in forecast fee income from overseas students driven by higher forecast numbers overall and an increase in fee rates.50

45. A breakdown of the forecast for 2018–19 is shown in Table 4 (p. 644 ). Forecast expenditure includes a number of increases in Chest allocation for Schools and NSIs over and above those that were already built into the previous Budget Report (see paragraph 31). These new increases were considered and recommended at a joint meeting of the PRC and RMC in March 2018 and are summarized in the Allocations Table below. The Allocations Table shows only those new increases approved in this planning round.51 It summarizes the uplift in 2018–19 and tracks the cumulative impact of this increase – and any other new increases that are forecast to occur in later years – over the remainder of the planning period.


Additions to allocations resulting from PR2017

Additions £k

Cumulative impact rolled forward £k





University-wide initiatives

Internal relativities review





In-year pay/reward costs





CamBens and Voluntary Living Wage accreditation










Digital Teaching and Learning (in UIS)





TOTAL University-wide initiatives






School of Arts and Humanities





School of the Humanities and Social Sciences





School of the Physical Sciences





School of Technology





School of the Biological Sciences





School of Clinical Medicine





TOTAL Schools





Non-School Institutions (NSIs)

Unified Administrative Service (UAS)

  UAS new recurrent posts (including posts in the Disability Resource Centre and Counselling Service)





  UAS Soft-funded posts to baseline





  UAS Research Administration Review





  UAS subtotal





University Information Services (UIS)





Cambridge in America (CAm)





Institute of Continuing Education (ICE)





TOTAL Non-School Institutions










Non-recurrent grants

Public Engagement and the Festivals





Review of Sports





West Cambridge Catering





University-wide initiatives

(i)The most substantial increase in allocation is for University-wide initiatives under the People Strategy. The forecast cost in 2018–19 is £6.6m. This is considered to be the upper limit of what will be required in 2018–19, and work is still underway to determine the final figure. The forecast includes the Internal Relativities Review,52 and revised Pay and Reward schemes including Academic Career Pathways, the Professorial Pay Review, and Contribution reward systems for non-academic staff.53 The current forecasts only reflect the in-year costs of the Pay and Reward schemes (see paragraph 34).54 The overall sum of £6.6m will be held in the central contingency administered fund pending clarity on the final sums to be distributed to Schools and NSIs.

(ii)New allocations to University-wide initiatives also include the Lecture Capture service, which is part of a well-established project to support the delivery of teaching, modernizing the University’s facilities to bring them into line with other leading higher education institutions.55 This sum is added to the UIS baseline.


The overall increase in Chest allocation to the Schools in 2018–19 is £0.8m increasing to £1.5m by 2021–22. This includes:

(i)an allocation split between the Schools of Clinical Medicine, and the Biological Sciences of 75% of the forecast additional income resulting from HEFCE’s award of 21 additional places each year for Graduate Home students;

(ii)an increase in the forecast allocation to the School of Clinical Medicine to meet the funding shortfall resulting from the gradual withdrawal of the NHS Clinical Academic Reserve;56

(iii)allocations under the Resource Distribution Model. This mechanism is being replaced by the Income Incentivization Model, which will inform allocations to Schools from 2019–20 (see paragraphs 28–29).


The total increase in Chest allocation to the NSIs is £1.9m in 2018–19 increasing to £3.6m in 2021–22. This includes the following:

Unified Administrative Services

(i)A recurrent uplift of £0.3m is forecast from 2018–19 to support new posts. This includes a group Data Protection Officer to meet the requirement of the EU General Data Protection Regulations.57 It also includes a commitment to underwrite £0.1m towards new posts in the Disability Resource Centre and the Counselling Service.58 A corresponding contribution to these posts is being made by the Colleges.

(ii)A further increase to the UAS baseline from 2018–19 will provide recurrent funding for critical posts that are currently being funded from reserves. The cost is £0.4m in 2018–19 increasing to just under £1.0m by 2021–22. Baselining these essential posts will ensure that there is greater transparency of total expenditure on administrative services in the UAS. This, in turn, will enable a more rigorous assessment of recurrent expenditure on administrative services throughout the University, including the UAS, Schools, and institutions. This is an essential step in providing the clarity required to assist the assessment of what the future size and shape of the administrative service should be, taking into account all sources of data including the UniForum benchmarking data.

(iii)A recurrent uplift of £0.7m is forecast from 2018–19 to support the implementation of the recommendations of the Research Administration Review. The result will be a redesigned pre-award research administration function, which will be embedded in Schools and their Departments. The service will also deliver significant improvements in post-award and contracts support and result in a more seamless and integrated service for Principal Investigators. A key objective of the new service will be to deliver a sustained improvement in cost recovery from funders and it is anticipated that this will contribute to the cost of the new service.

(iv)Non-recurrent grants are supporting Public Engagement and the Festivals, and enabling the completion of important work to review and register University sports clubs.59

University Information Services

(i)A recurrent funding increase of £0.2m is forecast in 2018–19 to meet increasing costs of subscriptions to Oracle, JISC, and Microsoft. Current forecasts show this increasing to £1.4m by 2021–22 due to a change in the charging basis for the Microsoft license fee. The University will be participating in sector-wide negotiations about the changes being imposed.

Other NSIs

(i)The RMC has supported a new funding mechanism for the Institute of Continuing Education such that it will receive all attributable income received through the OfS and Research England. An increase of £0.3m is forecast from 2018–19.

(ii)The modest increase to Cambridge in America is driven by the need to cover adverse exchange rate movements between the US dollar and the pound.60


Administered funds

46. The allocations to centrally-held administered funds are reviewed each year by the RMC. The total allocation to administered funds in 2018–19 is £198.1m compared to £194.7m in Budget Report 2017.61 Forecast allocations to the administered funds are broken down into different categories as follows:

Forecast annual allocations £m





Administered funds

Teaching and research





Contingency and strategic funds










Human resources










General expenditure





TOTAL Allocation





(i)Teaching and research

£116.6m of the allocation to the administered funds in 2018–19 is in direct support of teaching and research activity. This includes funds that are held centrally initially, but are subsequently distributed, such as payments to Colleges62 (£73.1m), payments to University Partner Institutions (£1.3m), departmental shares of Charity Support Funding (£9.9m), and Knowledge Exchange63 (£4.4m). It also includes Chest allocations to support the Cambridge Trusts (£8.8m), bursaries and studentships (£5.5m), the Journals Coordination Scheme (£5.9m), Widening Participation (£1.9m),64 Examiner and Supervisor fees (£1.8m), Researcher Development (£1.2m), and preparation for REF 2021 (£1.5m).

(ii)Contingency and strategic funds

The total forecast for 2018–19 is £10.4m. This includes allocations to strategic funds such as the Strategic Planning Reserve Fund, the VC Strategy Fund, and the non-recurrent grant fund. It includes a centrally held contingency to support potential increases in pay awards as described in paragraph 33.65 The contingency also holds the funding set aside in support of University-wide initiatives and the Research Administration Review described in paragraph 45.


Estates-related activity accounts for £58.2m of the forecast allocation to the administered funds in 2018–19. This is largely for costs associated with buildings maintenance (£16.6m), utilities (£21.0m), rates, rents, and other running costs (£7.8m), capital equipment (£5.0m), facilities management (£1.6m), and minor works (£2.5m).

(iv)Human resources, operational, and general

Remaining expenditure includes human resources expenditure totalling £2.2m such as in-year costs of existing pay and reward schemes,66 operational costs totalling £4.4m such as insurance costs, bank fees, and audit fees, and general expenditure totalling £6.3m including funding for Cambridge Enterprise, Cambridge University Health Partners, and projects overseen by the Information Services Committee.

Forecasts for 2019–20 to 2021–22

47. The forecasts for the Chest continue to show a deficit across the planning period.

48. Tuition fee income beyond 2018–19 is based on current expectations for the composition of the student population, and anticipated fee structures (but see paragraph 9).

49. Projections of expenditure beyond 2018–19 have been built up from the detailed plans at School and NSI level submitted in December 2017.

50. Pay awards have been assumed to be 2% per annum across the planning period. A contingency is set aside to allow for some level of variation in actual pay awards.


51. Prolonged uncertainty is damaging, and significant regulatory change is adding further complexity. The University must respond in turn and be ready to adapt where necessary. The future direction of the University will be informed by the findings of a University-wide consultation undertaken earlier this year.67 This consultation explored how Cambridge can best pursue its Mission, strengthen relationships and partnerships, and continue to attract world-leading talent including students and staff.

52. The strategies for education and research that emerge from these deliberations can only be delivered if the University can move to a more financially sustainable position. This will require raising new sources of income, controlling costs – while recognizing that crucial investment must be continued – and maintaining a strong balance sheet. These measures will ensure that Cambridge is in a strong position to respond effectively to the changing environment in the years ahead.


53. The Council recommends:

I. That allocations from the Chest for the year 2018–19 be as follows:

(a)to the Council for all purposes other than the University Education Fund: £129.1m.

(b)to the General Board for the University Education Fund: £367.2m.

II. That any supplementary grants from the OfS and UKRI (through Research England), which may be received for special purposes during 2018–19, be allocated by the Council, wholly or in part, either to the General Board for the University Education Fund or to any other purpose consistent with any specification made by the OfS or UKRI, and that the amounts contained in Recommendation I above be adjusted accordingly.

21 May 2018

Stephen Toope, Vice-Chancellor

David Greenaway

Jeremy Morris

Ross Anderson

Jennifer Hirst

Susan Oosthuizen

Richard Anthony

Nicholas Holmes

Michael Proctor

R. Charles

Alice Hutchings

John Shakeshaft

Stephen J. Cowley

Darshana Joshi

Susan Smith

Daisy Eyre

Fiona Karet

Sara Weller

Anthony Freeling

Umang Khandelwal

Mark Wormald

Nicholas Gay

Mark Lewisohn

Jocelyn Wyburd

Tables and Appendices

2018 Budget Report – Tables and Appendices


  • 1The UK aims to reach a final exit deal with the EU by October 2018, after which the agreement will be subject to a vote by Parliament. 

  • 2Some clarity has emerged over the status of EU nationals currently resident in the UK. See The University’s Compliance Team in HR and the International Student Team are available to advise staff and students on all matters concerning residency, immigration, and visas. 

  • 3The session focused on the implications of Brexit for research and science including future access to EU Research and innovation programme funding. A transcript of the session is available at

  • 4The Council has introduced broad strategies to guide work across the University’s activities. Detailed studies are being conducted and reported under the General Board’s Education and Research Policy Committees. See

  • 5 Measures are being introduced to attract and retain the best staff, support personal and professional development, implement sustainable reward and benefit strategies, and promote equality, health, and well-being.

  • 6

  • 7This collaboration was launched in March and involves the Department of Social Anthropology. The University, the Isaac Newton Trust, and the Max Planck Society have contributed funding to support six postdoctoral fellows for four years each working on issues of ethnical and economic change around the world. 

  • 8The agreement between the two institutions covers an initial three-year period with matching funds being provided for academic workshops, travel grants, short research visits, and visiting professorships at both Institutions.

  • 9The collaboration, supported by the Jeffrey Cheah Foundation, will establish a joint programme between the University’s School of Clinical Medicine and Sunway University supporting regular academic visits and exchanges, and offering scientific and clinical training opportunities at Cambridge for outstanding postgraduates from Sunway. Sunway Medical Centre will establish a Clinical Research Centre that will become a regional site partner for the University of Cambridge. State of the art research space on the Cambridge Biomedical Campus will be provided in the Jeffrey Cheah Biomedical Centre. 

  • 10The Global Alliance was formed in 2016 as a tripartite agreement between University of California, Berkeley, the University of Cambridge, and National University of Singapore. The Alliance is funding five collaborative research projects starting this year under three core themes of Precision Medicine, Cities, and Smart Systems.

  • 11Professor Mark Thomson from the Cavendish Laboratory is currently co-leader of the international Deep Underground Neutrino Experiment (DUNE), in which the UK government is investing £65m as part of a long-standing science partnership with the US. 

  • 12;

  • 13The building will be named the Ray Dolby Centre in recognition of an £85m gift from the estate of Ray Dolby. The government, through EPSRC, is investing £75m in the project to deliver a new Laboratory, which will serve as a national facility for the benefit of UK physics.

  • 14

  • 15

  • 16A study by the Institute for Fiscal Studies indicates that students graduate with average debts of £50,000,

  • 17The Committee of University Chairs has consulted on proposed guidelines on remuneration to determine how universities should approach senior pay. See

  • 18Issues around value for money have emerged in the wake of the findings of a survey of student attitudes by HEPI that indicates that only 32% of students in England think their courses represent good value for money. See p. 12, The equivalent figure for the Russell Group is 39%.

  • 19

  • 20The most recent calculation is from 2015–16. See

  • 21The OfS has a general duty to promote value for money and, under the Higher Education and Research Act 2017, has the ability to conduct efficiency and effectiveness studies on registered providers.

  • 22, p. 3.

  • 23See the Annual Report of the General Board to the Council for the Academical Year 2016–17,, section 2.

  • 24Under the new regulatory arrangements for the sector, participation in TEF will be an ongoing registration condition for all Approved and Approved (fee cap) providers with more than 500 undergraduate higher education students. 

  • 25Two models are being tested. Model A, in which the University is participating, is a ‘by exception’ model giving a provider-level rating and giving subjects the same rating as the provider where metrics performance is similar, with fuller assessment (and potentially different ratings) only where metrics performance differs. Model B is a ‘bottom-up’ approach to give subject-level ratings that feed into the provider-level assessment and rating. Participating universities are listed in Also see

  • 26GBEC Minutes from 8 November 2017. See

  • 27Each organization has an Executive Chair and details can be found on Mark Thompson, Professor of Experimental Particle Physics at Cambridge, is Executive Chair of the Science and Technology Facilities Council. 

  • 28The responsibilities of Research England include providing grant funding to English universities for research and knowledge exchange activities, developing and implementing the Research Excellence Framework in partnership with the UK Higher Education funding bodies, overseeing the sustainability of the Higher Education research base in England, and overseeing both the £900 million UK Research Partnership Investment Fund and the Higher Education Innovation Fund (HEIF). See

  • 29UKRI is an independent organization, supported by an independent Board whose members are appointed by the Secretary of State for Business, Energy, and Industrial Strategy. The UKRI Chair is Sir John Kingman. Sir Mark Walport is the Chief Executive.

  • 30Some academic communities have expressed concerns about the extent of ministerial influence on UKRI and whether individual research councils might lose autonomy to UKRI in determining how resource is spent.

  • 31, and pages 1–4. An immediate priority for the UKRI is to develop a research and innovation infrastructure roadmap. The intention here is to identify the UK’s existing infrastructure and understand its future needs in order to inform investment priorities in the long term. A final report is anticipated in Spring 2019. The infrastructure roadmap will feature large scientific facilities and major equipment, collections, archives and scientific data, e-infrastructures such as data and computing systems, and communications networks. See and

  • 32See and

  • 33

  • 34The strategy focuses on a series of grand challenges that promote research and innovation across artificial intelligence and big data, clean growth, the future of mobility, and the needs of an ageing society. See page 23, The Industrial Strategy Challenges Fund is providing £725m of strategic investment over the next four years and will promote greater collaboration between researchers and businesses to drive innovation and enhance economic prosperity across the UK.

  • 35See Research Policy Committee papers RPC 954, page 1 and RPC 955 Appendix B, page 4 (from the meeting on 25 January 2018).

  • 36

  • 37

  • 38The tool does not make decisions, but provides information designed to support decision-making. 

  • 39The University’s Capital Plan is to be re-developed to model more effectively the gross cost of projects and the anticipated cashflow, and to include informed assessments of the potential for external funding including philanthropy. Any remaining funding requirement must be considered alongside the prioritization tool and an assessment of overall affordability for the University. This will inform which projects are taken forward over the short- to medium-term. 

  • 40Excludes Cambridge Assessment and Cambridge University Press.

  • 41Bond interest is included in Table 5 of this Report.

  • 42

  • 43Core allocations would not change from year-to-year other than for any agreed inflationary uplift. There may, however, be periodic reassessments of the baseline allocation, as part of a three- or four-year cycle of strategic reviews. 

  • 44The in-year cost of the contribution reward and progression schemes for Chest-funded academic, and academic-related and assistant staff is met non-recurrently via the relevant central administered fund. Normally, the recurrent costs are managed within existing Chest baselines thereafter (but see footnote 45). 

  • 45When it met in April, the PRC agreed not to make provision in this Budget Report for recurrent allocation to meet forecast recurrent costs from 2019–20 resulting from pay and reward initiatives under the University’s People Strategy. A more robust assessment of the financial impact is being produced by the Human Resources Division of the UAS. It should be feasible to pass on some of the costs to research grants and contracts, although a substantial proportion will remain as a recurrent commitment on the Chest. The PRC agreed that an optimal solution will be to re-baseline Chest allocations for Schools and NSIs in order to eradicate forecast Chest deficits. The PRC observed that this would be timely, and would coincide with other discussions about the future direction and size of the University (see paragraph 51). Even so, the resources necessary to revise Chest baselines will rely on a combination of new and additional income, a reduction in activities, and an increase in efficiency in administrative services. The PRC agreed that these considerations will feed into a revised approach for planning, which is under consideration by the Chief Financial Officer and Director of Finance, and will be informed by the incoming Pro‑Vice-Chancellor for Strategy and Planning. 

  • 46, see paragraph 5.

  • 47The embargo for the OfS grant letter was lifted on 11 May 2018, and for Research England, on 15 May 2018.

  • 48This includes extra funding for 80 additional clinical students on the standard course and 21 additional students to be admitted to the Graduate Course. 

  • 49The reduction in expenditure includes an updated forecast for the total contribution to Colleges in respect of the University’s Graduate Fee.

  • 50The fee income forecasts also include a £2m reduction in the central provision to de-risk ambitious projections of student numbers.

  • 51The Allocations Table does not show increases already endorsed last year and built into the forecasts of Budget Report 2017.

  • 52The objectives of the Internal Relativities Review are to identify and address any situations where equal pay requirements are not being met, and to ensure that equal pay is properly considered in all future activity. 

  • 53The People Strategy also includes the continuation and extension of the current employee benefits scheme ‘CamBens’ and the continuation of Personal and Professional Development, both of which provide benefits to staff across all grades. More information is available at Also included are costs that will be incurred as a result of the University seeking full accreditation as a Voluntary Living Wage employer. 

  • 54Central administered funds currently meet the in-year costs of increases resulting from these pay and reward schemes. 

  • 55The project is under the oversight of the Pro-Vice-Chancellor for Education, and the Digital Teaching and Learning Subcommittee of the Information Services Committee. A successful pilot scheme has already taken place. The measures proposed in this planning round will extend the pilot across the University. 

  • 56The NHS Clinical Academic Reserve has funded key clinical teaching posts, but is being withdrawn as post-holders currently funded from this source either resign or retire. The School is taking a strategic approach to refilling these posts and some are being suppressed. Additional Chest allocation has been provided since Planning Round 2015 in order to meet the resulting shortfall. A review is to take place in summer 2018 with the aim of identifying a long-term solution, taking into account the overall teaching resources required to teach clinical medicine and all sources of funding available to the School to meet the funding required.

  • 57It also includes a post to investigate student complaints of sexual misconduct and additional support for the office of the Vice-Chancellor.

  • 58The extent of the University’s contribution may be reduced temporarily by contributions from reserves in some trust funds. The extra posts will ensure that the Disability Resource Centre and the Counselling Service can respond to increased demand as a result of growth in the postgraduate student population. 

  • 59The Public Engagement Advisory Group recommended additional outreach work following a recent review of public engagement. The formal review and registration of sports clubs will reduce the University’s exposure to risks identified as part of the Sports Review. 

  • 60The Chest benefits when exchange rate movements are favourable. 

  • 61Taking adjustments for cost-neutral transfers into account in 2017–18, the main year-on-year changes were due to increases in forecast allocations to utilities, rates, rents and other running costs, and charity support funding. These were offset in part by a reduction in forecast contributions to Colleges in relation to the University’s Graduate Fee. 

  • 62This is the College Fee transfer and contributions to the Colleges in relation to the University’s Graduate Fee.

  • 63Formerly HEIF.

  • 64The allocation to this fund is formula driven and based on increases in forecast fees and requirements set to-date by OFFA. 

  • 65The contingency holds an accumulated reserve of £13.0m in addition to the allocation forecast for 2018–19. 

  • 66This does not take into account additional forecast costs in relation to the new proposals under the People Strategy, which are presented in this Budget Report under University-wide initiatives. The allocation will be held in a central administered fund pending firm figures for the distribution of funds to Schools and institutions. 

  • 67