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July 28th, 2020:

SUCU Requests for information: Active Campus and University Finances

Over the past month SUCU has been asking for trade union representation on the high-level decision-making group ‘Active Campus’. The knowledge and expertise of TU H&S reps are invaluable and can help direct senior leaders in their discussions about how to open up our campuses safely. Our H&S officer, Adam Dunn, wrote to the Chief Operating Officer on 21st July to request, once again, for representation:

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SUCU received the following response from Richard Middleton on the 23rd July: 

“Dear Adam

Thank you for your letter of 21 July seeking representation of a UCU Health and Safety representative on the Active Campus Group, and in turn seeking representatives from the other trades unions.

This is a group of Executive Directors in Professional Services – my direct reports – meeting as a group of senior managers to make plans for the operation of the campus from September onwards, ensuring that we meet our obligations to students and fulfilling our managerial roles.   In doing so we are naturally utilising the experience of University staff working in Professional Services.  It is not a group to which I would invite trade union representation.

As you will know, I and the HR team and Health and Safety Director have been meeting regularly, mostly weekly, with representatives of all the campus trades unions for several months and I have committed to keeping those regular meetings informed of how plans for the Autumn term are developing.  I believe that regular discussion has been working well and is consistent with our mutual commitments to improving relationships.

Trades union representatives participated in the development of guidance and protocols for returning to work during May and June.  Those groups were very successful and I am grateful for the trades union contributions and the positive spirit with which that work was undertaken.  It was a good example of our cooperation.

The University consults with trades unions consistently on health and safety and of course most comprehensively at the Health and Safety Consultative Committee.  I am confident also that there are good daily working relationships between University staff, especially those working in health and safety, and the trades union health and safety representatives.

With best wishes,

Richard”

In a recent meeting, the COO agreed to share with SUCU officers a precis of the discussions which are taking place on Active Campus. While this development is welcome, we do not feel that this is equivalent to having TU reps actually present for these discussions.

SUCU has also been asking for more detailed financial information to be shared with the executive committee in order that we can be fully informed about the University’s financial situation. We are asking to see concrete evidence that there is a case for the ‘cost savings’ measures the Vice Chancellor has informed us might be required. On the 21st July we emailed the Chief Operating Officer again about this:

Dear Richard,

We are holding an EGM tomorrow to discuss UCU’s national Fund the Future campaign and we will be discussing the VC’s recent email. I am writing to follow-up on a request made at JJNC 25th June to provide full financial disclosure so that unions have a complete understanding of the parameters of the university’s financial decision-making. The actions state that this was fulfilled on the 8th July but in the finances meetings we have attended since then we have pressed for more detail. Specifically, SUCU would like data on the following:

  • The full overall budget for 2020/21 and predicted scenarios (not just the summary that has been submitted to Council for approval)
  • A breakdown of the projected loss to income, making it clear how much of this drop in income is offset by originals plans to run a surplus.
  • Full figures on the cash reserves the University has which may be able to absorb any projected losses.
  • Full figures on any liquid assets the University has which could be turned to into cash if needed.
  • What percentage of offsetting measures are being levied against staff costs, and have the University fully considered making cuts elsewhere?
  • What budget for capital expenditure is planned for 2020/21? Is this work essential?

We would also like answers to the following questions:  

  • Are management worried about breaching agreements made with lenders about how to run the institution? Do we have any covenants that stipulate that the institution should meet a certain level of business performance each year?
  • Has management considered how the proposed cuts will affect the ability of our institution to bounce back in future years? Have management modelled any changes to future income?
  • Has management researched the government business loans scheme to see whether the university if eligible for this support? 

More detailed information is essential if we are to contribute fully to discussions around cost-savings. We urge you to share this crucial financial information with us as soon as possible.

Many thanks,

Lucy Watson (SUCU President)”

On 23rd July, we received this reply:

“Dear Lucy

Thank you for your email.  I regret that I was not able to reply within the day of your request, but of course I want to respond before we meet this afternoon for our regular discussion.  I will address each of your questions in turn

1.       Full overall budget for 2020/21.  There isn’t yet a full budget for 2020/21 because of the uncertainty about our income for 2020/21. We expect to take a final budget to Council in November.  This will likely still retain a level of uncertainty because of the January international PGT intake.  We don’t have “predicted scenarios” – we model scenarios following the same sort of approach at IFS and London economics. The VC’s email of 1 July gave the headlines of this scenario work.

2.       Breakdown of projected loss to income.  The baseline budget is an internal planning document worked up according to our strategic plan which is to deliver a surplus each year to generate cash for investment.  In the VC’s email he referred to a drop of £70m in income, in a moderate to severe scenario.  We think it is prudent to prepare plans consistent with that figure; but, as I say in the first point, we also expect that to change as we gain more information about actual enrolments.

3.       Full figures of cash reserves – are available in 2018/19 financial statements, which are published and those have not changed materially.  The extent to which these “may be able to absorb any losses” depends on their intended use – capital investment remains a strategic priority.

4.       Liquid assets – this information is also available in the financial statements, represented by cash and investments.

5.       Offsetting measures levied against staff costs – We are looking at offsetting potential losses against non-staff and staff costs as well as cash.  Until we understand the actual impacts of student recruitment and the length of the challenge we have not yet got firm plans yet on any specific percentage in each of those areas.  We are as you know maintaining very strict controls on non-pay spend and are holding down recruitment and replacement of staff.  As we have shared with you, we hope to achieve further reductions in staff spend through voluntary measures if at all possible. 

6.       We also have not currently set a budget for capital for next year, again we are awaiting November.  Nevertheless planning for capital investments, especially in the estate, continues, consistent with the University’s strategy.

As the VC said in his email:

“This loss of income would need to be mitigated in three ways: through significant reductions in our planned operating expenditure by maintaining the same level of rigorous control and scrutiny as we have done since March, including scaling back our planned capital expenditure; through reducing our staff costs – our single largest investment; and through careful use of our cash reserves. Our intention will be to use a balance of all three in order to maintain our prospects for recovery, which is likely to take more than a single year.

“I know there is a considerable appetite for information and detail. I want to be open with you about what we are doing, and why. The levels of uncertainty are immense, and I know that is frustrating for all of us. However I am confident that our approach is sensible, and that we will ensure we regularly test our assumptions against what turns out to be reality and adapt our planning accordingly, and that we will neither take action before we need to, nor leave it too late to take action.”

In response to your final three bulleted questions:

We do have covenants on borrowing which we are monitoring and modelling.  We are looking at longer term impacts and the VC email makes clear the high-level principles we are using to govern our decision making. We are exploring actively all the options Government is making available and assessing their benefit to our long-term sustainability.  

Best wishes

Richard”

SUCU will continue to press for more information on the current and projected financial situation at the University so that we can better represent all staff in our discussions with senior management.