VC staff sessions: summary of the key points
Monday, 26 February 2018
The University’s financial position was the focus of the Vice Chancellor’s staff talks this week.
Colleagues turned out in large numbers to hear the Chief Financial Officer, Sam Foley, talk about the University’s finances and the outlook for the next 3-5 years.
In his opening remarks, Sir David Bell referred to the ‘Post-18 Education and Funding’ review announced by the government this week. He said universities had a key role to play in developing the skilled graduates the country needed and stable and sustainable finances – which the current system provides – was essential to their future success.
He said our own university had worked hard over the years to manage its finances, but there is still a lot of work to do.
Sam Foley’s presentation covered six broad areas:
- University’s recent financial history
- Cashflows, investments and debts
- Plans for the next 3-5 years
- How we compare with other HE institutions
- External pressures and restrictions
- Choices we have
She said our operating income (i.e., income resulting from our primary activities) in 2016/17 was £289m, which included increased income from tuition fees and research as well as income from our investments. In comparison, our expenditure topped £300m, with £161m spent on staff costs.
“We need to make more than we spend to generate a surplus, so we can continue to invest in our facilities,” Sam said. “We have made a surplus in the last three years but all have included exception income from land disposals”.
She said sector agencies like HEFCE (Higher Education Funding Council for England) saw surplus as a sign of financial stability.
On cashflows and debt, she said, “In a normal year, we generate £30-40m of cash from our operations,” Sam said. “But to pay our bills and support the investment programme we sometimes need more than this so we borrow”.
She said the University had a strong credit rating, but can only borrow a set proportion of the value of our assets. So growing the surplus means increasing our income and managing our expenditure.
According to our 2016/17 Financial Statement, tuition fee was the biggest source of income for the University. Our ability to attract students continues to grow our student numbers but we need to recruit more overseas students to grow our fee income.
Sam Foley said the Efficiency & Effectiveness programme had helped us bring our expenditure down, but on productivity measures, we were behind some of the comparable universities.
“We are in an extremely competitive environment, and some of our competitors will most likely get stronger. We could do better in many ways.”
She said among the biggest challenges for the University were Brexit, inflation, an increase in the cost of borrowing, changes in government policy and the future level of tuition fees.