Financial landscapeThis is an incredibly complex landscape and it is important to understand the reality behind the hype. We have had both massive cuts and a proposed increase in the fee cap thrown at us in quick succession. But what does this mean?Series of significant cuts – over the past year we have seen a series of significant cuts to HE funding, dating back to the previous Government in December 2009. We have also had the Government’s response to the recommendations made in the Lord Browne review for University funding. Let us quickly revisit the national picture:In December 2009, the Labour Government announced over £1 billion of cuts to the public funding of universities. Then, shortly after the election, the Government announced further immediate cuts of around £200 million to the Higher Education. In June, the Government announced an increase in VAT from 17.5 per cent to 20 per cent. This alone added an additional £1 million to £2 million per annum to our costs.Then, on 20 October, came the Comprehensive Spending Review. Significantly, it was announced that the overall budget for Higher Education, excluding research funding, would reduce from £7.1 billion to £4.2 billion, representing a 40 per cent reduction by 2014-15 - the teaching budget to reduce from £3.8 billion to £700k – an 80% reduction.Our ability to earn additional income will be key – and, given the cap on UK and EU undergraduate numbers for the next four years, we must look to our International markets as well as to our PGT and PGR. However, this must be balanced against the imperative of ensuring no downturn in the student experience – we are not a ‘pile ‘em high’ organisation. Our trade mark is quality.
Browne recommendations – The headline facts are these: A fee cap rise to £6,000 and the possibility to charge up to £9,000. It is important to note that the Government’s language on this is that charging beyond the £6,000 level is an exception – and with that exception are likely to come some very heavy expectations around widening access. Other points of note is that no individual would begin to make repayments until they earn £21,000 or above – at a rate of 9% of their income above £21,000. The new earnings threshold is significantly higher than the current threshold of £15,000. And, importantly, there is no up-front fee. So, despite what we might be led to believe by the media, the question is less to do with what an individual’s current ability is to pay back the loan, but far more about what their likely ability will be having gone to university. But, of course, that doesn’t make a good story.There is a lot of speculation about which universities might charge the full £9,000 – and frankly, some universities may well need to think again. Will there be more of a market? Before we get too carried away, we should look at the facts. The reality is that, before anything else is taken into consideration, a fee of £7,250 is needed in order to replace the money lost by the swingeing cuts to the Teaching budget. However, a further £750 is needed to make up for cuts to the capital grant, plus the need to spend more money on WP activities – it is very clear from the mood music that any fee above the £6,000 comes with a clear directive that the Institution will need to increase significantly its WP activities and must be able to demonstrate this. The exact details of what will be expected are at this stage unknown. We expect a white paper from the Government on widening access towards the end of the year. Regardless of the details, it is clear that in round terms, a fee of £9,000 will be the break even point – a net zero gain. Put another way, we will have no overall increase in budget but what we will most certainly have is an even more highly demanding student body.
HE sector is undergoing rapid and unprecedented change – the sector has undergone the most significant and rapidly paced change seen in the last 20 years. There is no doubt that the sector as a whole is experiencing a paradigm shift. Everything I am going to talk to you about today is hinged around this one inescapable and irrefutable fact – we are witnessing change far greater than most of us have ever seen before; and there is no going back. Attempts were made to advise our Government, both through UUK and through the Russell Group to share our concerns about the nature of the changes and the possible effects. However, this is the situation in which we now must operate
ChallengesAdmissions conundrum – We have a vast increase in response rate this year for 2011 entry. The market is already shifting, and our conversion algorithms provide little useful insight for this year and even less for next. Our ability to monitor and control intake will be essentialPricing – what will a particular degree be worth? What factors will determine its perceived value? We cannot say at this stage what our pricing will be – indeed how and when this is announced is itself a tactically commercial decisionWP – the targets are unknown. Government white paper is expected at the end of the year. What we can predict is an increase in the requirement for bursaries higher up the income scale and a need to increase our investment in WP-related activities. We will also need to consider our local market – with the likelihood of more people wanting to study closer to home and a possible increase in the requirement for us to attract students from Bristol postcodes, we will need to up our game. However, in all of this we will not abandon the principles which drive our WP activities – and that is an equity of educational opportunity and the belief that a diverse student body is essential to the highest-quality student experience. All of this remains true. Let us not forget that we have been practicing widening participation long before the phrase was invented.
Position of strengthHighly sought afterOurs is an aspirational brand, and we need to build on this. We come from a position of immense strength and now is the time that we must ‘turn up the volume’Staff and studentsOur highly talented staff and students mean we operate in a global league at the highest levels. Our graduates are highly sought after and, as I said previously, graduate employability will be an even greater factor in the perceived value an institution bringsFinancially stableWe are a £400m turnover organisation - we have a healthy financial footprint, we have a strong asset base and we have cash in the bank for investmentLocationBristol as a city is a strong attractant. This will be even more important when the fees increase as increasingly people will judge the city as well as the Institution. In addition, given that some people are likely to look more locally for their education, then the high concentration of population in and around Bristol is another positive factor when combined with the high demand we command for placesOverall messageIf there is one thing I want you to take away from this update, it is that in this time of change, we are in a strong position and that there are opportunities ahead which we must grasp. I am in no doubt that now is a defining moment for our University and I am in no doubt that we are in a strong position to grasp the opportunities ahead
At a time of unprecedented change and uncertainty theonly sure thing is that the sector will need to squeeze every ounce of benefit from what is available to itJISC has always stood for the development of efficient shared services – indeed it is itself a shared service for the sectorOver the coming years the sector will need to maintain those shared services that it currently enjoys – like Janet, the Access Management Federation, JISC Collections, the JISC advisory servicesBut the sector will look to JISC to develop new services on its behalf to help with institutional efficiency and effectiveness
The current portfolio of services provided by JISC for the sector is extensive and valuedIt will be for us in institutions to help JISC understand our changing needs and requirements so that they in turn can maintain a range of services that provides us with the best value support that we requireBut let us not forget the critical role that technology plays every day across all our institutions in the delivery of our core missions , a role that we cannot do withoutWe face uncertain times and significant challenges but technology will play a key role in helping us meet these challenges and see the UK’s further and higher education sectors maintain their levels of excellence
Jisc11 Eric Thomas Opening Keynote
Annual ConferenceJISC<br />Universities: The New World 2011 onwards<br />Professor Eric Thomas<br />Tuesday 15March 2011<br />
Historical perspective<br />Describe recent events<br />Consider short and long term implications<br />Q & A and discussion<br />
In 1961 4.2% of 18 year olds went to university<br />In 2011 44% of 18 to 30 year olds will experience higher education<br />In 1976 a House Officer returned 27% of basic pay as income tax<br />In 2010 an Fy1 doctor returns 14% of basic pay as income tax<br />In 1976 46% of GDP was returned as fiscal income, in 2011 that is 39% and in 1995 it was 36%<br />Last 50 Years<br />
Values & Ambitions Unchanged<br />Vital that universities see themselves as educational and academic institutions<br />Continue to value ‘public good’ aspects of University education<br />Retain our values in the face of the changes<br />
Financial Landscape<br />Series of significant cuts<br />December 2009 - £1 billion<br />Spring 2010 - £200 million<br />20% VAT from January 2011<br />Teaching funding reduced from £3.9 billion to £700 million – a cut of £3.2 billion or an 80% cut in real terms<br />
Financial Landscape<br />Government response to Browne recommendations<br />Fees cap at £6,000 or £9,000 (“exceptionally”)<br />Increased focus on WP – requirements to be clarified<br />No upfront cost<br />£21,000 earnings threshold - £0.09 per £1.00 earned above £21,000<br />
Paradigm Shift<br />HE sector is undergoing rapid and unprecedented change<br />Significant cuts to funding already in place<br />A move from funding from the state to funding of (and by) the individual by loans<br />Immediate implications remain to be clarified; the wider ramifications will be significant and may not yet be obvious<br />
The Income Gap<br />First gap – University financial years (August – July) do not coincide with the Government financial years (April – March)<br />Second gap – State funding will reduce at a faster rate than any increase in fee income<br />No additional income<br />