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University 2011/12 Finance Report

The University recently issued a report including statistics for the 2011/12 financial year, available in PDF format.  The report is quite long and dense, so we have collected a few relevant points for our members below.

On the big picture:

The report opens by stating that the University has achieved a budget surplus of £14.2 million in 2011/12 (3.2% of income).  This academic year has started with £9,000 as the standard fee across all undergraduate programmes.  The changes in funding in the University sector means that Southampton will lose approximately 62% of state teaching support by 2015/16.

The report goes on to state that “the new fee regime should, assuming no change in student numbers, be broadly financially neutral for the University in the medium term provided we are able to maintain student recruitment broadly in line with current levels“.  However, this is concerning given the statements immediately following, which refer to the marked drop in student recruitment for 2012/13.

Overall, University income increased by 1.7% to £438 million.

On research funding:

The report notes that HEFCE grant funding was reduced by £1 million this year, as they “increased the concentration of research funding in the very highest quality 3* and 4* areas”.  RCUK efficiency savings imposed by the Wakeham Review mean that we lost a further £1 million in contributions to indirect costs.  The report indicates that this “is counter to the ethos of full economic cost funding and the University is disappointed to incur such penalties while delivering an efficient research base on every performance measure currently used”.

The University also criticises RCUK for pursuing “a value for money agenda” which is having a profound impact on funding for “top quality research”.

This is certainly an area where UCU is in agreement — cuts in research funding will be disastrous for UK higher education, particularly at a time when other nations are substantially increasing research budgets.

On staff cost:

The report notes that expenditures on salaries and wages increased by only 0.5% to £235 million this year despite hiring additional academic staff (making for an increase in staff numbers of 2.5%).  The University touts its “tight control of staff costs since 2007 after previous years of number growth and pay inflation”.  Pay inflation is a questionable characterisation, given the implication that we are somehow being paid over the odds — despite the fact that UK academics are ranked 27th in the league tables for pay, and are working long hours and experiencing very high stress levels.

Also, such “tight control of staff costs” clearly does not apply to the Vice-Chancellor, who enjoyed a raise from £267,000/year to £277,000, representing a pay increase of 3.75%.

The University also states that the pay award in 2011 of £150 reduced “the risk that salary costs would increase faster than the rate of income growth”.  They point out that government ministers have told them that higher education is effectively — if not officially — part of the two-year public pay freeze, and that “it is expected that there will be very little growth in pay levels in the next few years”.

Given that the drop in salaries combined with high inflation means that the average UK worker has lost 8% of their salary over the last 5 years, the prospect of this continuing for several more years could make academic careers on the low end of the pay scale untenable for many, particularly those with families or care obligations.

The University also discusses what it calls “the programme … to increase productivity”, better known as “centralising admin and sacking a lot of people”:

“We estimate the annual savings that should result from the reduction in staff to be £6 million. The administrative savings have allowed a permanent switch of resources from administrative to academic activity and in 2011/12 there was an increase of 102 academic staff.”

Interesting to note here that the University characterises this switch as “permanent” — apparently we are expected to cope with much-reduced admin resources in perpetuity, despite significant increases in academic staff numbers and thus an increased need for admin support.

Finally, the University reiterates its alleged focus on “improving the student experience” while simultaneously “optimising our submission to the 2014 Research Excellence Framework“.  The University increased ERE staff by 102 full-time equivalents in 2011/12 (4.4% increase) as part of their strategy for these two points.

Page 27 has a table summarising the numbers of highly-paid staff (over £100,000).

On pensions:

The University’s comments on pensions and the changes in USS are fairly dry, simply providing a list of the changes and noting that there is a continued risk of “large estimated deficits” despite these changes.  Brief mention is also made of the impact of the changes on the University’s financial position, as they note that “overall the risks posed by salary and pension costs to the University’s strategic aims have not increased over the past year”.

Once again these changes mean very little for the Vice-Chancellor, who received £37,600 in pension contributions to USS last year.

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Eric Silverman

Southampton UCU President

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