Message from the Vice-ChancellorFriday, 22 May 2020
A message from the Vice-Chancellor on the post-COVID-19 response programme:
Following the recent briefing sessions for all colleagues through Teams, I wanted to share some further information with you about the process we have been putting in place to address the financial challenges created by the coronavirus pandemic.
The ongoing COVID-19 crisis has created upheavals for the whole higher education sector, when we are already dealing with income shortfalls due to inflationary pressures, a demographic dip, and static Home Undergraduate fees. As we discussed in the briefing sessions, it has also created significant uncertainty about our international and home student market. The lockdown restrictions have meant that alternate sources of income, like revenue from student accommodation and conference and hospitality facilities on our campuses, have been lost. Very few, if any, institutions expect to emerge from this situation without making quite fundamental changes.
There is, nevertheless, scope for us to make necessary changes in a strategic way. As we discussed at the briefing sessions, some of the more flexible ways of working we are discovering will have ongoing benefits for our wellbeing, environment and finances. I am in no way underplaying the severity of the challenges we face, but we do have a real opportunity to make our University more responsive to emerging opportunities, more attractive to employees and students, and better recognised and valued locally, nationally and internationally for the contribution we make. The University strategic plan provides a foundation for how we approach this opportunity. By working together as a community that has sustainability (environmental and financial) at its heart and that is engaged with those it partners with and serves, we can become a University known for excellence.
Financial analysis shows that we will need to make significant savings over the next three years. Some of these will be required quickly, but the aim is to ensure that they are as strategic as possible in the longer term.
In the interest of openness and transparency, I am sharing our emerging approach with you today but I need to stress that this is subject to discussion with Strategy and Finance Committee and Senate, and approval by Council, and the approach we will take is likely to be subject to changes. At this point in time, we envisage the response programme will have three phases:
- Phase 1 (May-July): Led by Samantha Foley, Chief Financial Officer, this project is focused on managing our costs over the next 18 months. While it is difficult to put an exact figure on the impact of COVID-19, our estimate is that the gap we face between what we earn and what we spend is likely to be around £15m in the current academic year, £60m in 2020/21 and another £40m in the subsequent two years. Recommendations from this phase are due to be presented to UEB imminently, and will require approval from our governing Council.
Already, the University has paused or delayed spending on some of our capital programmes, and we are making appropriate use of government’s “furlough” scheme for colleagues unable to work at this time. As Sam emphasised in the briefing sessions, the steps already being taken at School and Function level to curtail costs are making a meaningful difference, and so please do continue these efforts. They may not be sufficient on their own, but they really do help.
- Phase 2 (May-September 2020): This phase led by Professor Mark Fellowes, Pro-Vice-Chancellor for Academic Planning and Resources, works in parallel with and builds on the recommendations of Sam’s work. The project will work in partnership with members of the Leadership Group and colleagues with specialist knowledge and will also engage with RUSU to take account of student interests. The taskforce is exploring four broad areas:
How can we make our Schools financially robust?
What is the optimal way to deliver our professional services?
How should we be teaching?
How do we support excellence and sustainability of our research?
Leadership Group has had input into shaping this work and the four workstream groups considering these questions are getting underway. They will generate and explore a wide range of scenarios, including financial modelling and analysis of impacts, to present to UEB in September 2020. While long-term financial sustainability is critical, these scenarios must also deliver on our strategic principles to build a stronger University that is fit to meet the future.
- Phase 3 (October 2020 onwards): This will see the initiation of a programme of University-wide change to implement recommendations from both Phase 1 and Phase 2. Although we will need to move quickly, wherever possible our community (and our wider stakeholders) will have the opportunity to feed into this work.
As I have said before, given the scale of the challenge and the fact that more than half our expenditure is salaries and salary costs, job losses cannot be ruled out, but we will do all we can to prioritise other measures for short-term savings. Our staff representative bodies, the UCU and Staff Forum, are crucial to delivering any change and I will lead on engagement and formal consultation with them throughout the process. Decisions on any unavoidable reductions in staffing levels or significant changes to employment contracts will be managed in line with the University Restructuring Procedure.
Throughout all these phases, we must learn from the lessons of past change processes. In particular, this must be an open, honest and transparent process, built on communication and engagement with colleagues and students. Our objective, metrics and measurement must be clear from the start and we must ensure that there are strong governance mechanisms in place. Critically, we must not lose sight of our investment in colleague and student wellbeing and we must listen to and understand the detail of how things will work on the ground.
I remain committed to keeping you informed throughout on this and all other elements of our COVID-19 response. You will have had the message about plans for the new academic year and more information will follow next week about our phased return to campus. I am also in the process of setting up further online briefing sessions for all colleagues for early June. By then, we will have had feedback from our Council on our financial recovery plans.
Thank you again for your ongoing commitment, good will and support for our University and each other. I appreciate that we have a very challenging time ahead. A constructive, open and informed dialogue across our whole University community will be critical to both the integrity of the process and the ability to deliver durable solutions.
Professor Robert Van de Noort
Vice-Chancellor, University of Reading