UNIVERSITY OF EXETER
CNL/14/37
COUNCIL
A meeting of the Council was held on Thursday 10 April 2014 at 2.00pm in the Boardroom, Tremough
House, Penryn Campus.
PRESENT:
Pro-Chancellor, Miss S J Turvill (Chair)
Mr C J Allwood
Provost and Senior Deputy Vice-Chancellor, Professor N Armstrong
Mr G Brown
Dr S Buck
Mr N Bull
Ms A Conroy
Professor K E Evans
Ms J Hargadon
Mr P J M Hodges
Mr R M P Hughes
Deputy Vice-Chancellor, Professor J M Kay
Mr P Lacey
Sir Robin Nicholson
Dr A M Shaw
Vice-Chancellor and Chief Executive, Professor Sir Steve Smith
Professor S Tomlinson
Ms S Wilcox
IN ATTENDANCE:
Director of Communication and Corporate Affairs, Mrs J Chafer
Chief Financial Officer, Mr A Connolly
Chief Executive to the Students’ Guild, Ms T Costello
Deputy Vice-Chancellor, Professor M Goodwin
Exeter FXU President, Mr C Malyon
Director of Human Resources, Ms J A Marshall
Mr H F McCann, Director of Estate Development (in attendance for discussions
under minute 14.24(b))
Acting Chief Operating Officer, Mr R G Pringle
Deputy Vice-Chancellor, Professor N J Talbot
Executive Officer, Mrs J Williams
APOLOGIES:
Ms H Barton, Professor D A Myhill, Mr C C Pomfret, Ms B Rigg and Ms M I
Shoebridge
14.19
Chair’s Opening Remarks
The Chair welcomed Tom Stevenson, Executive PA to the Chief Operating Officer, as an observer
to the meeting.
14.20
Declarations of Interest
Members NOTED the register of members’ interests in relation to the business of the agenda
including standing declarations of interest.
14.21
Minutes
The minutes of the meeting held on 27 February 2014 were CONFIRMED (CNL/14/16).
14.22
Matters Arising
(a) INTO/EXETER UNIVERSITY PARTNERSHIP
(reference minute 14.4(c))
Council RECEIVED an oral update on the INTO/Exeter University Partnership from the
Provost, Professor Neil Armstrong.
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Professor Armstrong updated members on the current performance of the joint venture and
the discussions that had taken place at the recent meeting between the University and INTO.
The current INTO buildings were financed through a debt facility. INTO were now renewing
this facility and were proposing to simply roll forward the facility on the same terms, with the
same lenders, and for the same amount. There appeared to be no gain for INTO and no
additional requirements placed on the University. However the University would take legal
advice to confirm this was the case. If no issues were raised it was proposed that the
University consent to the re-financing. However, this would come back to Council if there
were any issues. Council AGREED to this proposal.
(b) OFFICE OF FAIR TRADING: INVESTIGATION INTO FEES
(reference minute 14.5(b)(v))
Council would consider this under the Vice-Chancellor’s verbal update (Minute 14.23).
14.23
Vice-Chancellor’s Report
(a) Council RECEIVED a report from the Vice-Chancellor (CNL/14/17), which covered the
following topics:
(i)
QS World Subject Rankings – it was reported that Geography and English Language and
Literature appeared in the Top 50 worldwide according to the QS World University
Rankings published on Wednesday 26 February 2014. In total, Exeter featured in the
world’s Top 200 institutions in 15 of the 30 subjects listed in the latest edition of the QS
World University Rankings by Subject. Geography had strengthened its Top 50 position
rising from 48 to 21. English Language and Literature had joined the top 50 for the first
time ranking at 43.
Other subjects that had performed well this year included Psychology, Earth and Marine
Sciences and Politics and International Studies which were ranked in the Top 100;
Modern Languages, Economics & Econometrics, History, Sustainable Agriculture, and
Education were ranked in the 100-150 range; and Sociology, Engineering, Biological
Sciences, Accounting & Finance and Environmental Sciences appeared in the 150 – 200
range.
(ii)
Employee Engagement Survey - the employee engagement survey would run for a three
week period between 29 September and 17 October. The decision had been taken by
VCEG to postpone the survey, which had been due to start in April, in order to maximise
the opportunities to benchmark Exeter’s performance with other Russell Group
Universities, to make more headway in delivering and communicating the actions since
the last survey over a more sustained period, including the ‘Positive Working
Environment’ work stream, and to co-ordinate action planning workshops during term
time, not over the summer vacation period.
(iii) UK Research Partnership Innovation Fund Expression of Interest (COMMERCIAL IN
CONFIDENCE)
(iv) Visit by the General Medical Council - The General Medical Council (GMC) visited the
Medical School in March, as part of the ongoing five year accreditation process. Although
formal feedback was still awaited, the GMC expressed no major concerns and first year
medical students said they were satisfied with their course and would recommend it to
others.
(v) Office of Fair Trading Investigation into Undergraduate Higher Education in England - the
OFT had published its Report following its call for information on higher education in
England, launched last October. The report recommended that the new Competition and
Markets Authority (CMA), which came into existence on 1 April, undertook a ‘compliance
review’ of the sector, but not the full ‘market study’ that had been predicted. However, it
could be that the CMA would launch a further study after it concluded its own
investigations. It had also recommended that the CMA ‘inform the design of the
regulatory regime’, saying the current regulatory framework was ‘overly complex,
outmoded and unfit to support current and future policy ambitions’.
(vi) Government Response to Sir Andrew Witty’s Review of Universities and Growth - On 14
March, the Government published its long-awaited Response to Sir Andrew Witty’s
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Review of Universities and Growth, entitled British Invention: Global Impact.
elements of the report were:
Key
• A long term commitment to support universities in their ‘third mission’ to deliver
economic growth by renewing the Higher Education Innovation Fund (HEIF) at current
levels, with the introduction of a process to reward improvements in performance from
year to year. There was also some encouragement for there to be more of a focus on
Small and Medium Enterprises (SMEs) in HEIF, but recognising ‘a long-term and fully
rounded approach to funding all forms of knowledge exchange, with all forms of
partner’.
• Business Schools may be asked to take a bigger role in SME engagement, and all
universities should have a single access point for SMEs.
• There was a clear emphasis on universities working with Local Enterprise
Partnerships (LEPs) to set innovation strategies.
• The Technology Strategy Board (TSB) should assist LEPs with smart specialisation
and EU funding plans and drive innovation and growth at a local level.
• Improved access to information about university strengths for business via national
‘Gateway to Research’ and heatmaps.
• There should be 3-4 pilot Enterprise Zones to be set up at universities, which aim to
encourage innovative businesses to engage with universities and universities to
engage more with business (a pilot which was already underway).
• ‘Arrow Projects’ were supported in principle, but there were no commitments at this
stage to provide additional funding – funding partners were encouraged to ‘liaise’.
• UKTI to work more closely with universities to develop international business
partnerships.
• Universities UK would run an annual event to showcase the economic impact of the
sector.
There would be a full discussion of the University’s regional strategy in light of these, and
other developments at the May meeting of Council.
(vii) HEFCE Funding Allocations 2012/13 – 2014/15 - the Higher Education Funding Council
for England (HEFCE) had informed the University in its annual funding letter of changes
to funding for 2012/13 and 2013/14, as well as indicative funding for next year, 2014/15.
The impact on this financial year, which also reflected adjustments to the previous year,
was that teaching grant had reduced by £1.2m compared to the initial grant notified to
the University last March. A total grant of £43.3m constituted a 2.2% reduction on the
initial allocation made by HEFCE. However, a reduction had been expected and
provision of £862k made – the overall impact was therefore a reduction of £367k which
had not been anticipated. This would have an adverse impact on the forecast surplus
reported to Council at its last meeting.
For 2014/15, the University’s total grant would be £35.1m. This was a reduction of £8.2m
or 19% over the current year, reflecting the continued transition from the ‘old regime’ to
‘new regime’ student funding system and, of course, this was offset by increased tuition
fee income with ‘new regime’ students paying £9k. Next year’s grant was £1.474m
higher than had originally been anticipated, reflecting the success of this year’s high level
of undergraduate recruitment. Of particular concern was that the letter signalled that
funding for STEM could be under further threat.
(viii) Budget 2014 - the Chancellor’s 2014 Budget Statement and the updated economic and
fiscal outlook from the Office for Budget Responsibility was announced on 19 March. Key
points for Higher Education were:
• The government had committed to investigating options to support postgraduate
participation, but there was no specific spending commitment at this stage. Ideas
would be put forward in the Autumn Statement 2014.
• On research and innovation, the Chancellor announced:
a) an extra £106 million over five years to support the creation of around 20
additional EPSRC Centres for Doctoral Training.
b) an extra £42 million over five years to establish the Alan Turing Institute, a national
research centre focusing on big data and algorithm science.
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•
•
•
•
c) an extra £74 million over five years to be invested in the TSB Catapult Centres
network to support the commercialisation of cell therapies and graphene
technologies.
Regarding international students, the government was going to triple the number of
Chevening Scholarships from 2015–16. The Chevening Scholarship programme
provided funding for full-time postgraduate level courses. This year the scholarships
were supporting more than 600 individuals in total, although not all were from
developing countries.
The government would also expand the “Education is GREAT” campaign to help
attract more international students to the UK, and build on its reputation as a worldleading place to study.
On apprenticeships, the government would provide £20 million over 2 years (2014–15
and 2015–16) to support apprenticeships up to postgraduate level. This investment
would be provided to part-fund the training of degree level or postgraduate
apprentices. The rest of the cost of the training would be met by the employer.
The following measures in support of business investment (including Research &
Development (R&D)) were announced:
a) A doubling of the Annual Investment Allowance (AIA) from £250,000 to £500,000
and an extension of the scheme until the end of 2015. AIA provided businesses
(particularly SMEs) with an up-front relief on their qualifying investment in plant
and machinery.
b) An increase in the rate of the R&D tax credit payable to loss-making SMEs from
11% to 14.5% from April 2014. Government expected that this measure would
support £1.3 billion of investment in innovation over the next five years.
c) A move to make the Seed Enterprise Investment Scheme (SEIS) and the capital
gains tax 50% reinvestment relief permanent.
(ix) Costs of the Student Support System and Labour Fees Policy - the proportion of unpaid
student loans was reported to have reached 45% of the £10bn in student loans made
each year, as announced by the Minister for Higher Education David Willetts in response
to a parliamentary question from the shadow education minister, Liam Byrne. It was also
confirmed that the resource accounting and budgeting (RAB) charge was rapidly
approaching the 48.6% mark, which was the threshold at which experts calculated that
the government would lose more money than it would have saved by keeping the old
£3,000 tuition fee system.
In addition, the Labour Party had announced that it was minded to make a manifesto
pledge to reduce tuition fees to £6k. It was unclear at present how the £1.67bn funding
gap would be made up.
(b) In addition to the written report, the Vice-Chancellor drew attention to the following:
(i)
Appointment of Deputy Vice-Chancellor (Education) - following recommendation by
Senate and approval by Council via email correspondence, Professor Nick Kaye had
been appointed Deputy Vice-Chancellor (Education) from 1 August 2014 for five years in
the first instance. Members looked forward to welcoming Professor Kaye to his new role
and to Council next academic year.
(ii)
Other Senior Staff Changes - Jilly Court (currently Deputy Director of Academic Services
and Head of Student Services) would be the new College Manager for the College of
Engineering, Mathematics and Physical Sciences (CEMPS). Ian Blenkharn would
become the new Head of Student Services. Ian was currently Head of Admissions and
Registry Services. Members wished them both every success in their new roles.
(iii) RILD - Dr. Dennis Gillings had agreed to officially open the Research, Innovation,
nd
Learning and Development (RILD) building. The ceremony was taking place on 2 June
2014. Dr. Gillings was an alumnus of the University and founder and Executive
Chairman of global pharmaceutical company Quintiles.
(iv) Chair of HEFCW - David Allen, former Registrar and Deputy Chief Executive at the
University, had been appointed Chair of the Higher Education Funding Council for Wales
(HEFCW). Members recorded their congratulations to David on this appointment.
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(v) New School Provision at Cranbrook, East Devon – Professor Janice Kay, Deputy ViceChancellor (Education) informed members that an opportunity had arisen for the
University to be involved in an Expression of Interest to the Department of Education for
a new school at Cranbrook – a new town in East Devon. The school was already being
built and was due to open in September 2015. The project had been initiated by Exeter
College, who had asked the University to be involved as a lead education partner.
Exeter College would bear all financial risks. The partnership would also include Midas,
EoN, Flybe and the Met Office. The vehicle for running the new school would be the Ted
Wragg Trust. This Trust currently managed two other schools in Exeter - Isca and St
James School. The partnership, through this Trust, was submitting an expression of
interest which, if it was successful, would lead to a full application in July.
This opportunity was exciting for the University. However, it was only part of the jigsaw
of what the University was doing with Exeter Schools and Colleges and a briefing paper
would be brought back to Council in May on the initiatives the University was involved
with.
(vi) Industrial Action – it was noted that the University had put in place extensive contingency
plans to handle the Unions’ potential assessment boycott and ensure that students would
be able to graduate. The boycott, planned as part of the ongoing 2012/13 pay dispute,
th
was scheduled to start on the 28 April. The University’s position was that it would
withhold 100% of staff pay for those who did take this action.
However, the Unions were due to meet the Universities and Colleges Employers
th
Association (UCEA) on 15 April to discuss the 2014/15 pay negotiations and an
agreement on this might result in the assessment boycott being cancelled or postponed.
(vii) Universities UK Report: Impact of Universities on the UK Economy – UUK had published
a major study on the impact of universities on the UK economy. This report looked at the
economic impact nationally and regionally. The higher education sector’s turnover was
now larger than the pharmaceutical and aerospace sectors. International students offcampus expenditure in 2011-12 was £4.9bn and 136,639 jobs generated by the HE
sector could be attributed to the enrolment of non-EU students.
Universities in the South West of England generated total regional GVA of £2.7bn in
2011-12 and supported 51,780 jobs.
The
full
report
was
available
on
the
UUK
website
at:
http://www.universitiesuk.ac.uk/highereducation/Pages/EconomicImpact4Full.aspx#.U1v
2k7FwbIU
(viii) Student Fees and the Loan System – the Vice-Chancellor drew members’ attention to a
recent report by the Institute for Fiscal Studies (IFS) and the Sutton Trust on the new
student fee regime that was introduced in 2012. This had found that 73% of those
students starting with the £9k fees would fail to pay all of the debt off. This was in
comparison to 50% of graduates paying off the debt by the age of 40 under the old
regime.
Associated with this, the Vice-Chancellor led a discussion with members on the
implications and possible scenarios relating to the RAB charge, the £9k fee level, the
political parties’ fee policies and the student loan book.
The University needed to understand the impact and risks the different scenarios would
have for Exeter, and the Vice-Chancellor requested that a sub-group of Council and the
Executive be set up to advise on the implications of the options. Council AGREED that
this sub-group should be established immediately and meet about every 6 weeks.
14.24
Capital Programme (COMMERCIAL IN CONFIDENCE)
(a) CAPITAL PROJECT GOVERNANCE
(b) LIVING SYSTEMS
Hugh McCann, Director of Estate Development Services, was in attendance for this item.
(c) FUTURE FINANCE PROGRAMME
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14.25
Senate
A report from the meeting held on 20 March 2014 was CONSIDERED and Council APPROVED
the proposed changes to the University’s Senior Management including the proposed
amendments to Section 6 of the Statutes, the Deputy Vice-Chancellors, and Section 17 of the
Ordinances.
14.26
Audit Committee
Council RECEIVED the draft minutes of the meeting held on 28 February 2014 (CNL/14/23).
14.27
Academic Promotions (STRICTLY CONFIDENTIAL)
Council RECEIVED a report of promotions agreed between 28 October 2013 and 17 March 2014
(CNL/14/24).
14.28
Joint Committee for Consultation & Negotiation
Council RECEIVED the draft minutes from the meeting held on 18 February 2014 (CNL/14/25).
14.29
Council Nominations Committee (STRICTLY CONFIDENTIAL)
Council RECEIVED a report from the meeting of Council Nominations Committee held on 26
February 2014 (CNL/14/26) and APPROVED the following recommendations:
(i)
The appointment of Mr Chris Pomfret to Audit Committee from 1 August 2014 for an initial
term of three years.
(ii) The appointment of Mrs Maureen Jenkins as a Trustee to the Exeter Retirement Benefits
Scheme (ERBS) with effect from 1 May 2014 for an initial term of three years.
(iii) The continuation of Mr Nick Caiger’s appointment as Chair of the ERBS Trust for a further
three years from 1 August 2014.
14.30
New Building Tremough 2014 (SERFS) – Investment Appraisal
CONFIDENCE)
14.31
Management of Permanent Endowments (STRICTLY CONFIDENTIAL)
(COMMERCIAL IN
Council CONSIDERED a paper on the management of permanent endowments (CNL/14/28). The
Chief Financial Officer, Andrew Connolly, introduced the paper and noted the following key points:
•
The purpose of this paper was to recommend to Council a change in the approach to the
management of permanent endowment funds which would increase the amount the University
could spend from its endowment investments.
•
Under current charity law for managing permanent endowments, the University was permitted
to only spend investment income i.e. dividends and interest – currently yielding only 1.5% in
this age of low interest rates. This meant the capital appreciation element of the return could
not be spent and instead this accumulated on the balance sheet.
•
The University had targeted its investment managers, JP Morgan, with achieving an absolute
total return based on RPI+4% over a rolling period. That currently equated to an annual return
of 7%. The University’s current approach to managing the distribution of its endowment
returns meant it could only spend a small part of the total return generated.
•
In December the Charity Commission issued new guidelines, making it easier for charities to
adopt a total return approach to the disbursement of endowment for charitable purpose.
Adoption of a total return approach to the distribution of funds would align with the investment
objectives set for the University’s investment managers and increase the purchasing power of
the funds. The University would unlock some of the return that would otherwise be sat on the
balance sheet.
•
The University currently had 118 separate permanent endowment funds with a total value of
£20m. However, one endowment, the Institute for Arab and Islamic Studies (IAIS) accounted
Page 6 of 8
for £16m or 84% of these funds. The IAIS fund currently yielded c£240k per year in income
which could be spent. Under a total return approach up to £670k could be spent per year.
•
In setting a spending rule – based on what is thought to be a sustainable annual level of
withdrawal – the University would need to protect the endowment now and for the future.
•
The Charity Commission required a formal resolution from the trustees of the charity to adopt
total return – a decision that should be taken in knowledge of all the risks. The principal risk
being that the level of withdrawal exceeded the unapplied return, with the danger that the
original capital was at risk. This risk was mitigated by adopting a prudent level of withdrawal
and Finance & Investment Dual Assurance was proposing 3.75%. This, coupled with the
value of the unapplied return (which for IAIS amounted to £9.4m), provided a very comfortable
buffer against market perturbations.
•
The University’s in house lawyers had confirmed that the University had the power to adopt a
total return and advice from JP Morgan was that they considered a total return approach
appropriate for the University, and that they were comfortable that a withdrawal rate of 3.75%
was sustainable.
Nicholas Bull, lay member of the University’s Investment and Endowment Group, noted to Council
that he was very supportive of this proposal. There was a lot of data validating 3.75% as an
appropriate withdrawal rate. Adopting a total return approach would allow the Chief Financial
Officer to account for the returns and plan effectively. This proposal was recommended to
members as a good step forward.
Council RESOLVED that a total return approach to the management of permanent endowments
be adopted with immediate effect, as it considered this to be in the best interest of the University.
Council APPROVED Appendix 1 as the deemed original value of donations, and the unapplied
total return, using the original value of the IAIS donation and capital balances as at 31 July 2001
for all other funds.
Council RESOLVED that the original value of donations is not indexed, but that the distribution
policy will provide sufficient safeguards to protect the future needs of the endowment funds.
The initial distribution policy be set at the investment manager target less 3%, resulting in a
distribution policy of 5% for 2014/15 based on capital values as at 31 July 2013. This policy to be
periodically reviewed, and changed if necessary, by Dual Assurance (Finance) in order to protect
the long-term capital value of endowment funds.
In forming this resolution, Council is satisfied that it has acted within its powers, acted in good faith
and only in the interest of the University, adequately informed themselves, taken into account all
relevant factors, disregarded any irrelevant factors, managed conflicts of interest and made
decisions that are within the range of decision that a reasonable trustee body would make.
14.32
Infrastructure
Council RECEIVED the minutes of the Infrastructure Strategy Group meeting held on 18 March
2014 (CNL/14/29).
It was noted that under the proposed arrangements for Capital Project Governance (reference
minute (14.24(a)) this was the final meeting of the Infrastructure Strategy Group and that the new
Capital Strategy Group would be meeting on 22 April.
14.33
University Terms and Academic Calendar 2014/15
(reference minute 14.14)
Council APPROVED the University Terms and Academic Calendar for 2014/15 (CNL/14/30).
14.34
Summer Graduation Dates/Ceremonies 2014
Council NOTED the Summer Graduation Dates/Ceremonies for 2014 (CNL/13/31).
14.35
Proposed Establishment of the University of Exeter 501(c)(3), US Non-profit Organisation
Council RECEIVED a paper on the proposed establishment of the University of Exeter 501(c)(3),
US Non-profit Organisation (CNL/14/32).
Page 7 of 8
Council was asked to endorse the establishment of a US 501(c)(3) Organisation for the University
of Exeter, and the use of international fundraising consultants ‘Chapel & York Limited’ to establish
and maintain this body. The Development and Alumni Relations Office (DARO) would apply for
this status in May 2014. Sarah Jarman, the new Director of DARO, had been consulted on this
paper and supported the approach outlined.
Council APPROVED the establishment of non-profit organisation with 501(c)(3) status in the US to
support the University’s fundraising plans.
14.36
Dual Assurance/Engagement Updates 2013/14 and 2014/15
Council RECEIVED an updated schedule for Dual Assurance/Engagement updates for 2013/14
and 2014/15 (CNL/14/33).
14.37
Transparent Approach to Costing (TRAC) Return (COMMERCIAL IN CONFIDENCE)
14.38
HEFCE’s Assessment of Institutional Risk
Council RECEIVED HEFCE’s annual assessment of institutional risk (CNL/14/35).
It was NOTED that the University was at this time ‘not at higher risk’ and that this was the best
possible outcome.
14.39
Affixing of the Seal of the University
Council AUTHORISED the fixing of the University seal to the documents listed in CNL/14/36.
14.40
Chair’s Closing Remarks (COMMERCIAL IN CONFIDENCE)
JW/JAL
10 April 2014
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