UNIVERSITY OF ESSEX
SENATE
Wednesday 17 March 2004
(1.15 pm – 4.30 pm)
MINUTES
(Unreserved)
Chair
Professor Crewe, Vice-Chancellor
Present
Dr Abdel-Kader, Professor Alder, Professor Atkinson, Mr Bailey, Professor Benton,
Ms Blannin, Ms Blacklock, Professor Busfield, Mr Butler, Dr Cannessa, Ms Cardew,
Mrs Cassell, Dr Clarke, Professor Coakley, Dr Cox, Dr Dorussen,
Professor Dowden, Professor Foweraker, Dr Fox, Professor Gershuny, Ms Heath,
Professor Henson, Professor Hulme, Ms King, Dr Krikler, Ms Lean,
Professor Lubbock, Mr Mack, Professor Manson, Professor Massara, Mr McAuley,
Professor Millard, Professor Morris, Professor Muthoo, Professor Neary,
Professor Nedwell, Dr Raines, Dr Regibeau, Professor Richmond, Dr Rockett,
Mr Rozati, Dr Rowlands, Professor Sacks, Dr Samson, Dr Scarbrough,
Ms Shanks, Professor Sherer, Ms Statham, Dr Steel, Ms Sutton, Dr Swift,
Professor Temple, Dr Upton, Dr Venn, Mr Watson, Mr Watt, Professor Wright
Apologies
Mr Baraldi, Ms Brennan, Dr Brewis, Professor Colbeck, Professor Downton,
Professor Hanley, Mr Luther, Dr Michalowski, Dr Norval, Ms Parmenter,
Mr Shamsaddini, Mr Vinal
Secretary
Senior Assistant Registrar
In attendance
Registrar and Secretary, Director of Finance, Academic Registrar, Planning Officer,
Director of Personnel Services
By invitation
Ms Corcoran (Item 6 only), Mr Nicholson (Item 7 only)
1
STARRING OF AGENDA ITEMS
Noted
2
In accordance with Standing Orders, para 7, the following items were
starred for discussion:
Agenda item 2
Minutes of Senate (10 December 2003) –
Review of Role of Heads of Department
Agenda item 11 (a)
Latest Budgetary Situation 2003/04 and
Financial Forecasts for 2004/05 onwards
1/04
The Minutes of the meeting held on 10 December 2003, subject to the
following amendment to M.219/03 (new wording underlined, deleted
wording struck through):
2/04
MINUTES
Approved
‘There was general agreement that the maximum term should be limited to
six years, although there were different views about the initial term and
periods of re-appointment. In discussion varying views about the initial
term of appointment and periods of re-appointment were expressed, but an
1
informal show of hands indicated strong support for an initial term of three
years.’
3(a)
BUSINESS TAKEN WITHOUT DISCUSSION
Approved
3(b)
Without discussion, those items not already starred on the agenda or
indicated at the start of the meeting.
3/04
FORMAL BUSINESS (S/04/01)
Noted
Items of Formal Business reported in Paper S/04/01, copy attached to the
file copy of the Minutes.
4/04
RECOMMENDED TO COUNCIL
That Ordinance 3 be amended as set out in Appendix A (not attached for
web publication).
4
5/04
MATTERS ARISING
None.
5
6/04
VICE-CHANCELLOR’S STATEMENT
Noted
The Vice-Chancellor’s statement to the Senate (Appendix B attached)
covering:
 the Higher Education Bill
 the AUT industrial action
 the University’s financial position
7/04
There was discussion about the extent to which the University could
generate income by increasing overseas student recruitment. The view was
expressed that home/EU numbers should be reduced in order to recruit
more overseas students. However, the University already recruited more
overseas students than all but one 1994 Group universities and would be
financially vulnerable if planned overseas student recruitment was
unsuccessful because of competition from other institutions. Concerns
were also expressed about:
(a) the impact in social, cultural, capacity and pedagogic terms of
shifting the current student recruitment ratio in favour of overseas
students;
(b) the ethical dimensions involved in recruiting more students from
less developed countries;
(c) the extent to which academic decisions were being made on the
basis of the University’s financial balance sheet.
8/04
Concern about high staff costs had to be balanced against the positive
impact the University’s staff and research profile had on student
recruitment.
9/04
It was suggested that savings could be made by extending the timeframe
for the capital building programme. However, some capital projects were
linked to Funding Council expenditure deadlines and the financial benefits
of delaying building were generally limited to the interest that could be
earned on temporary savings. High quality teaching and support facilities
would be required to be competitive when tuition fees were introduced for
10/04
2
home/EU students.
The costs and benefits of planned investment in Biological Sciences were
discussed. Although an expensive investment it was justified on several
counts:
(a) the importance of the discipline within a non-specialist institution;
(b) the role played by Biological Sciences in supporting other aspects
of planned expansion, especially in health-related disciplines and
the potential medical school;
(c) the need to boost research-related income after the 2008 RAE
(funding for grade 4 or equivalent was likely to reduce further after
2008).
The Department had responded well to plans to develop its research profile,
e.g. external research income was already double that generated per FTE
last year and above the typical threshold for departments graded 5 in the
2001 RAE.
6
11/04
CHANGES TO ORDINANCE 10: HEADS OF DEPARTMENT (S/04/02)
Noted
Report of the Working Party established by Senate in December 2003 to
review recommendations concerning the role of Heads of Department and
the wording of Ordinance 10. The report addressed all the concerns
expressed by Senators in December 2003 and had received the support of
the Vice-Chancellor’s Advisory Group.
12/04
Concern about the potential impact of increasing allowances for Heads of
Department since this signalled a move away from a collegial approach to
departmental headship towards a managerial style. Other members of the
Senate believed that the collegial approach to departmental management
was no longer sustainable and that the additional allowance for Heads was
appropriate. It was noted that Heads of Department need not accept the
additional allowance if they so preferred.
13/04
The motion that recommendation 5, concerning additional allowances for
Heads of Department, should not be endorsed received three votes in
favour, with the majority voting against.
14/04
RECOMMENDED TO COUNCIL
that the report of the Working Party established by Senate in December
2003 to review recommendations concerning the role of Heads of
Department and the proposed changes to Ordinance 10 be endorsed, subject
to further revision of Ordinance 10, paragraph 1, as follows (new wording
underlined, deleted wording struck through):
15/04
‘A Head of Department shall be appointed by the Council on the
recommendation of the Senate on receipt of a joint nomination
from the members of the permanent Academic Staff holding posts
allocated to the Department,, (including those appointed with a
view to permanency) and the Vice-Chancellor, determined in
accordance with the published procedures for nomination of Heads
of Department. The nominee shall be a Professor, Reader or Senior
Lecturer, normally holding a post allocated to the Department
concerned.’
3
7
INSEARCH PROPOSAL (S/04/03 and a tabled paper headed Insearch – Updated
Financial Projections)
Noted
General confidence in the standing of Insearch Limited as a potential
partner of the University and in the quality of Insearch academic provision,
which would be parallel to the first year of study in the Departments of
Accounting, Finance and Management (AFM) and Computer Science.
AFM and Computer Science would determine whether Insearch students
had met the standard required for entry to the second year of their degree
programmes. Applicants to the Insearch Foundation programme would be
made aware of the intensity of the programme and would receive study
skills support in addition to taking discipline-specific courses. Insearch
students would be fully registered students of the University and would
benefit from the standard support services. Their academic progress would
be monitored by the Dean of Learning Partnerships.
16/04
Concern was expressed about the impact of the proposed partnership on the
English Language Teaching Centre (ELTC) because of the similarities of
Insearch provision with the Bridging Year and pre-sessional English
courses, the extent to which Insearch might recruit students in areas from
which the ELTC received applications, and the extent to which Insearch
and ELTC might recruit from the same pool of English language teaching
staff. The Vice-Chancellor’s Advisory Group was aware of these issues
and was committed to sustaining and developing ELTC activities. Careful
and targeted marketing would be required to ensure that the ELTC and
Insearch were not competing for the same students.
17/04
There were concerns about the proposed growth in overseas student
numbers in AFM resulting from the proposed partnership, and whether this
would create an unsatisfactory balance between the home/EU and overseas
student groups. There were further anxieties about the problem of
recruiting sufficient academic staff with an appropriate research profile to
teach increased numbers. It was noted that Finance and Strategy
Committee regarded the support of existing AFM staff and their research as
well as planned growth in staff numbers as pre-requisites for the acceptance
of the Insearch proposal.
18/04
It was suggested that insufficient modelling had taken place prior to
presentation of the proposed partnership. It was not clear, for example,
whether the benefits of increasing overseas student numbers in AFM,
independently of the proposed partnership, had been considered and costed.
Similarly, it was unclear whether the financial impact on the ELTC of the
proposed partnership had been considered in sufficient detail. Although the
Vice-Chancellor’s Advisory Group regarded the financial projections
associated with the proposed partnership as cautious, it was generally
agreed that further financial modelling should take place before seeking
formal approval.
19/04
It was noted that Insearch staff and students could be accommodated in
existing plant for the first two years but that new build would be required
thereafter. Insearch would fund the required new build; an increase in
income to the University from the proposed partnership would also support
the University’s existing capital building programme.
20/04
4
Concerns were expressed about the potential impact on the research culture
of increasing undergraduate/foundation level study at Colchester.
Recruitment of additional overseas PGT students remained a priority but
there was strong competition from other institutions. There would be
significant additional costs to the University if it were to increase its current
overseas recruitment function from existing resources. The partnership
with Insearch, which provided a physical presence in a number of South
East Asian countries, represented an opportunity to expand the University’s
recruitment in new markets at postgraduate as well as undergraduate level.
It was essential for the University to be flexible, innovative and responsive
to change in order to generate income to maintain its high research
standing.
21/04
It was noted that Insearch Limited was seeking a 20 year contract with the
opportunity to review the partnership every five years.
22/04
The motion that the proposed partnership with Insearch Limited should be
endorsed received 33 votes in favour and 10 against.
23/04
8
REPORTS OF COMMITTEES
(a)
Information Systems Strategy Committee (S/04/04)
Annual IS Strategy Plan and Budget 2004/05 and Forward Look 2005 – 2008
RECOMMENDED TO COUNCIL
That the annual IS Strategy Plan and Budget 2004/05 and Forward Look
2005 – 2008 be approved as set out in Paper S/04/04.
(b)
24/04
Academic Standards Committee (S/04/05)
Generic Validation of Insearch Limited
[Administrative Note: the following resolution relates to joint recommendations of
Academic Standards Committee and the Board of Learning Partnerships.]
Resolved
a) that Insearch Limited, a wholly-owned company of the University
of Technology, Sydney, is of suitable quality and standing to be a
strategic partner institution of the University of Essex.
b) that, subject to the approval by the Council of a partnership with
Insearch Limited, the partnership should be placed within the scope
of the Board for Learning Partnerships.
25/04
Handling of Suspected Cases of Cheating in Examinations
Resolved
that the following new procedure for handling cases of suspected cheating
in examinations be adopted with immediate effect:
26/04
a) The Examinations Officer liaises with the Department concerned to
determine whether the material is of relevance to the subject.
b) Taking the nature of the item and the view of the Department into
account, if it is deemed that the student had been careless and had
not attempted to cheat, a warning letter is issued by the
Examinations Officer and copied to the Department and the
5
relevant School Office.
c) The warning would be considered in the case of future incidents,
whether in the same or future exam sessions. If a student were
reported on suspicion of cheating, the Examinations Officer would
check whether a warning had already been issued. If it had, the case
would be passed immediately to the Dean to be progressed in
accordance with the Academic Offences Procedures.
d) If the view emerged that the student was attempting to cheat, the
case would be passed immediately to the Dean to be progressed in
accordance with the Academic Offences Procedures.
(c)
Board of Learning Partnerships (S/04/06)
Continuing Professional Development Provision
Graduate Certificate Award
[Administrative Note: the following resolution relates to a joint recommendation of
Academic Standards Committee and the Board of Learning Partnerships.]
Resolved
that the Graduate Certificate Level HE3(H) 60-credit award be approved as
an award of the University with effect from April 2004.
27/04
Graduate Certificate in Digital Enterprise and Innovation
Resolved
(d)
that the Graduate Certificate in Digital Enterprise and Innovation be
validated for a period of three years commencing in April 2004.
28/04
Careers and Employability Committee (S/04/07)
Noted
Report of the Careers and Employability Committee held on 04 December
2003.
9
REPORTS OF SCHOOL BOARDS
(a)
Graduate School (S/04/08)
29/04
New Degree Schemes
Resolved
that the following new degree scheme be approved for introduction in April
2004:
30/04
Professional Doctorate in Management in Social Care Practice
leading to D Management (Social Care Practice)
that the following new degree schemes be approved for introduction in
October 2004:
31/04
Professional Doctorate in Clinical Psychology
PhD in Socio-Technical Studies to be offered by CHIMERA
PhD in Film Studies
)
to be offered in the Department of
PhD in Creative Writing)
Literature, Film and Theatre
Studies
MSc Computational Finance
6
MSc Computational Agent Networks and E-Markets
MA in Criminological Research
Postgraduate Diploma in Criminological Research
Discontinuation of Degree Schemes
Resolved
that the following Masters schemes and Diplomas be discontinued with
effect from October 2004:
MSc Financial and Business Economics (9 months)
MSc Accounting and Financial Economics (9 months)
Diploma in Computational Linguistics
Diploma in Descriptive and Applied Linguistics
Diploma in English Language and Linguistics
Diploma in English Language Teaching
Diploma in Language Acquisition
Diploma in Language Testing and Programme Evaluation
Diploma in Linguistics
Diploma in Phonology
Diploma in Psycholinguistics
Diploma in Sociolinguistics
Diploma in Syntax
32/04
Changes of Degree Scheme Title
Resolved
that the following changes of title be approved from October 2004:
from: Diplomas in:
Art History and Theory
Gallery Studies
Film Studies
Literature
Film and Literature
to:
Art History and Theory
Gallery Studies
Film Studies
Literature
Film and Literature
Postgraduate Certificates in:
33/04
that the following change of title be approved from October 2004:
34/04
from: Certificate in Art History and Theory
to:
(b)
School of Humanities and Comparative Studies
Noted
(c)
No items were reported for Senate
35/04
No items were reported for Senate
36/04
School of Law
Noted
(d)
Graduate Certificate in Art History and Theory
School of Social Sciences
Noted
No items were reported for Senate
37/04
7
(e)
School of Science and Engineering
Noted
No items were reported for Senate
10
REPORTS OF COMMITTEES WHICH REPORT ANNUALLY TO THE SENATE
(a)
Library Committee (S/04/09)
Noted
Report of the Library Committee held on 08 December 2003.
11
REPORTS FROM FINANCE AND STRATEGY COMMITTEE
(a)
Latest Budgetary Situation 2003/04 and Financial Forecasts for 2004/05 onwards
(S/04/10)
Noted
(b)
38/04
39/04
Discussion of this item had taken place under agenda item 5: ViceChancellor’s statement)
40/04
HEFCE Grant Announcement 2004/05 (S/04/11)
Noted
12
41/04
TERM DATES 2004/05 AND 2007/08 (S/04/12)
Resolved
that the following revised term dates be approved:
42/04
2004/05
Autumn term
Thursday 7 October 2004 – Friday 17 December 2004
Spring term
Monday 17 January 2005 – Friday 25 March 2005
(Good Friday) (last day of teaching Thursday 24
March 2005)
Summer term
Monday 25 April 2005 – Friday 1 July 2005
2007/08
Autumn term
Thursday 4 October 2007 – Friday 14 December 2007
Spring term
Monday 14 January 2008 – Friday 21 March 2008
Summer term
Monday 21 April 2008 – Friday 27 June 2008
Joanne Tallentire
Senior Assistant Registrar
12 May 2004
(U:\Joannes docs\Senate\Senate\Senate March 2004\m-170304u.doc)
8
VC’s Report to Senate, 17 March 2004
I wish to report on three matters:
1. The HE Bill
2. The AUT industrial action
3. The serious financial situation facing the University
The HE Bill
Since my last report to Senate, the Government has introduced its Higher Education Bill to Parliament
and it is progressing through the various legislative stages. The Government made some significant
changes to the original proposals before 2nd Reading, in particular it now proposes:




a maintenance grant of £2750 p.a. for the poorest 30% of students, tapering to smaller
amounts for the next 20% income brackets;
a minimum £300 bursary payable to the poorest 30% of students by a university charging the
maximum £3000 fee;
a raising of the ceiling of the loans available for maintenance
debt forgiveness for graduates after 25 years
The Bill was passed at 2nd Reading by a hairsbreadth majority and has now come out of Committee
stage virtually unscathed. There will be a concerted attempt by Labour rebels to use an amendment at
Report Stage on 31 March to replace the proposed variable fee by a standard fee (although still a
higher fee, probably £2500) but it is unclear whether Conservative MPs will back them. At 3rd
Reading, on the same day, the Conservatives will mobilise to defeat the Bill as a whole, but it is
unclear whether Labour rebels, even if they fail on the issue of variability, will back them: as next
year’s probable general election comes into sight, the appetite for rebellion among Labour
backbenchers may be waning. Passage of the Bill is by no means a foregone conclusion, but the odds
are on it getting through.
If it does, the June Senate and July or possibly October Council will consider recommendations for
new tuition fee levels and for bursaries starting in the academic year 2006/7. We need to plan this far
ahead so that information can be included in the 2006/7 UG prospectus which is published in the
Spring of 2005.
The AUT Action
The AUT is in dispute with university employers. It declared its dispute because of its concerns about
future pay progression for academic and related staff and because of concerns about future grading
arrangements for academic-related staff. The associated pay offer was not a cause of the dispute
although dissatisfaction with pay levels may well have been a factor in the ballot that resulted in
support for a strike and action short of a strike.
There was a two-day strike on Feb 24-25 and since then some members of staff have taken ‘action
short of a strike’, including a refusal to assess students’ academic work.
It might be helpful if I sketch the wider political backdrop to this dispute. I know that there is a
perception among some staff that Vice Chancellors and their national organisations are either unaware
of or indifferent to the frustration and resentment felt by academic staff about pay levels.
I can assure you that this is untrue. If I may speak personally, I have a son, with a Ph. D from this
university, and his first book published, who is an academic and earning £23k basic at age 30, so I am
well aware of how poor academic salaries are, most especially on the lower rungs. UniversitiesUK
9
never loses an opportunity to remind Government how poor academic pay is and what the
consequences are for the future of the UK university system. It says so all the time.
The question is what arguments and action are most likely to persuade the Government to invest more
money in academic salaries. Pointing out that academic salaries have fallen behind the salaries of
comparable professions in the public sector, let alone the private sector, cuts no ice with the
Government. ‘Fairness’ and ‘natural justice’ do not feature in the Treasury’s lexicon of good
arguments.
The only arguments with a serious prospect of persuading the Government to invest in higher salaries
are, firstly, that current salary levels are leading to problems of staff recruitment and retention; and,
secondly, that the university sector has modernised its pay structures so that they can guarantee equal
pay for work of equal value, deal with recruitment problems and provide better rewards for the
contribution that staff make. The modernisation of pay structures was recommended in both the
Dearing Report of 1997 and the Bett Report of 1999.
These are precisely the grounds on which UUK is lobbying for resources for higher salaries. In its
submission to the Government’s 2004 Spending Review, Universities UK calls for an additional
£602m to be spent in the years 2006/7 and 2007/8 on pay modernisation, which of course includes
higher pay.
It would be naïve to expect the Government to provide all the £602m, but there are reasonable
prospects of attracting some of this money if the university sector can demonstrate to the
Government’s satisfaction that it has a reformed pay structure. Last year’s pay deal for the NHS is a
promising precedent. What I am quite sure of, is that if a new national framework for pay across the
university sector cannot be agreed then there will be no extra Government resource at all. That is why
it is so essential for an agreement to be reached.
At national level there are currently behind-the-scenes attempts, brokered by the TUC, to suspend the
dispute and resume negotiations. I understand that they have been conducted in a constructive spirit,
but that is not the same as a done deal. These efforts are complicated by the fact that all the other
unions operating in the university sector, including the unions representing academic staff in the post1992 sector, have accepted or are recommending acceptance of the national framework, which has
taken two years to negotiate, and if employers were to agree to some of the concessions wanted by the
AUT the agreement with the other unions would unravel.
There is an informal deadline for the current private negotiations of 24-27 March, when the AUT
holds its next Council meeting. If it decides to continue the dispute and the non-assessment of student
work remains one of its tactics, I believe that national bargaining will break down and many
universities will try to negotiate local agreements. This University will then have to review its
position: as I wrote to students, we believe that we can give the local AUT firm assurances on all the
matters that have concerned the national AUT.
The non-assessment of student work, although patchy so far, has naturally caused considerable
concern to students generally, irrespective of whether they have yet been directly affected. I have
received a large number of letters from individual students expressing their natural alarm at the
potential implications for their end-of-year results if work is not assessed.
In response I have twice written to all students to reassure them that the University will take all the
practical steps it can to protect students’ interests, and to provide an update on developments and on
the background to the dispute. I am aware that so far the University has not been in a position to give
specific details about the action it will take to deal with the problem of un-assessed work. We shall do
this when we have a clearer idea of the likely scale and character of the problem. Our overriding
obligation is to our students who are the innocent bystanders to this dispute.
10
The financial situation
I now want to turn to the University’s financial position, which is set out in the papers for agenda
items 11(a) and (b).
There are only two things to say about the HEFCE grant for next year. Firstly, the University did
better than most, even after stripping out Writtle and SEEC, and from that perspective we should be
relatively pleased. Secondly, nonetheless, HEFCE’s core grant for teaching – the amount we receive
per student – increases by no more than price inflation (i.e. about 2.5%), even though salary costs
typically rise by 5.5% once promotion and increments are taken into account.
I want to draw Senate’s attention to the financial forecasts for next year and the two subsequent years.
The University needs to achieve an annual surplus of about £2.5m to pay for capital investment – for
new offices and classrooms, for refurbished laboratories, for teaching and research equipment – and
also for the human investment needed for new initiatives and for the academic strengthening of some
departments. We are, for example, investing £2m over 3 years in the restructuring of Biological
Sciences in advance of the next RAE.
The forecasts show that under current assumptions we are a very long way short of achieving these
surpluses: they show deficits of about £1m in each of the next 3 years.
These forecasts are much more pessimistic than before, because we have reduced our estimate of the
number of overseas students we shall recruit next year; in the case of 3-year undergraduates and PGR
students this has knock on consequences for subsequent years of course. We have lowered our
estimates in the light of this year’s relatively disappointing figures and the significant depreciation of
the dollar and the far-eastern currencies pegged to the dollar, since the autumn. For currency reasons
alone it is about 20% more expensive for a student from the Far East to come to a UK university this
year than last year: the US is now more competitive.
The new estimates of overseas student numbers are realistic and confirmed by Mike Nicholson and
John Oliver: we are being cautious but not deliberately pessimistic.
What these forecasts expose is our marked – perhaps excessive - dependence on overseas fee income –
it amounts to one sixth of our total income and if one adds rents a quarter of our total income – and
thus to our vulnerability to small fluctuations in overseas numbers. Simplifying only a little, it is
overseas fee and rental income that pays not only for capital investment and innovation, but also for a
volume and profile of staffing that enables the university to be a serious research institution.
And it is overseas tuition fee income that meets the gap between the increase in annual grant income
from the Funding Council, which barely keeps up with price inflation, and the staff cost inflation,
which is at least 2-3% higher.
The single best measure of the structural weakness of our finances can be seen in Appendix 1, Table 1
(Agenda page 58) about half way down: The contribution of ‘core teaching and research’ shifts from a
surplus of £1.6m last year to a deficit of £3.5m by 2006/7.
Obviously, we need to take measures as a matter of urgency both to increase income and reduce costs.
We shall be discussing a new initiative on overseas student recruitment – Insearch – in a little while
which will spread risk and provide some diversification.
We cannot increase income from our standard home and EU undergraduate numbers because the
Government will not increase funded places for such students and the teaching grant it gives is
insufficient and barely keeps pace with price inflation. In 2006/7, if the Government’s HE Bill passes,
11
we shall see the first year of additional tuition fee income – which would amount to £2m p.a. if we
charge £3000 for most degrees and earmark about 25% for bursaries and this figure is not included in
the forecasts.
We are therefore seeking to diversify income streams through NHS-funded students, Foundation
Degrees and CPD both here and in Southend. We have made a good start – breaking through to win
our first NHS contracts for pre-registration degrees under the Common Learning Programme – is
particularly gratifying. We are laying the foundations, literally as well as metaphorically, of a new
campus in Southend, almost entirely funded so far by external grants. Similarly the Research and
Business Development Office is increasing our capacity to attract new streams of research income.
However, these initiatives only generate a significant return in the medium term and we have acute
short-term problems. So it will not be enough to attend to the income side of the equation alone. We
shall have to tackle our cost base, especially staff costs.
Table 2 shows that staff costs as a % of turnover (actually expenditure) increase from 59% in 2002-3
to 64% in 2006-7 under current assumptions. This is unsustainable. We know that staff costs are
relatively high at Essex compared with the sector as a whole (58%) and the 1994 Group universities
(56%). This is partly because we are a smaller university than average and therefore do no benefit as
much from economies of scale as larger institutions and partly because we have a relative high
proportion of academic staff at professorial level with commensurately high salaries.
If we reverted to a 60% staff cost ratio we would save £1.8m in 2004/5, £2.8m in 2005/6 and £3.9m in
2006/7, enough to produce surpluses of £2m in the latter two years and about £1m next year.
Obviously, the more income we can generate through the various initiatives I have outlined, the less
the pressure to reduce staff costs. Budget Sub-Committee will be working hard to produce a surplus
budget for next year and better forecasts for the subsequent years. Almost certainly there will be a
freeze on new posts next year, except where they directly and immediately generate income. A
reduction in staff costs will be an important element in restoring adequate surpluses. I very much hope
that this can be done by a freeze and natural wastage and we can avoid having to divert capital
intended for investment in infrastructure into a redundancy fund but at this point I cannot rule out the
possibility that this will be necessary.
Finally, may I make a point about the relationship between the University’s research mission and its
finances. Excellence in research and scholarship is central to the University’s purpose: it always has
been, it is now and it will be for the future. But excellence in research is expensive: it requires
competitive salaries to recruit and retain the best academic staff; the protection of academic staff time
through manageable staff-student ratios, sabbaticals and innovation in teaching methods; up-to-date
research facilities and equipment.
Excellent research is expensive, but it nowhere near pays for itself. It cannot be funded simply through
a good RAE result and the inadequate overheads on external research grants. It needs to be crosssubsidised by other income-generating activities of the kind I have outlined – overseas student
recruitment, non-standard degrees, and so forth. These new income generating activities do not divert
the University from its research mission; on the contrary, they are essential for it to be maintained. Our
capacity, resourcefulness and willingness to produce more income through new activities is the key to
a good RAE result in 2008 and all the reputational benefits this brings.
12