Financial response briefing – your questions answered

Staff costs are our biggest outgoing but salaries haven't increased with inflation, so why is inflation having such a big impact?

Salaries are increasing by 5-8% in August in response to high inflation and colleagues have already received a portion of this pay rise in March salaries. Although the pay rise has not matched inflation, it will still add almost £12m to the University's expenditure in 2023/24 over and above already planned for, and this will almost certainly continue to rise in future years. Despite the need to make savings, this was the right thing to do to support our staff who are themselves affected by the increased cost of living.

Couldn't we have forecast or prepared for these challenges in advance?

While forecasts and forward planning are key to our decision-making, the external economic pressures of the last 12 months have been significant and the extent of their cost impact in 2022/23 and 2023/24 was not easy to predict. Whilst some inflation was likely due to the economy restarting after lockdown, the impact of the Ukraine conflict was largely unforeseen in the markets. Market forecasts for consumer price inflation moved very quickly to 10% in July 2022, for example. This has had an impact on costs for the University across the board.
The University is in a better position than many institutions to respond to these challenges. We have worked hard to ensure that good reserves are maintained and have secured fixed prices on contracts where possible. However, these options are limited and resources are finite. Government investment in higher education has also remained static, meaning finances are being squeezed year on year regardless of our own planning.

The Council minutes mention review of professional services staffing - please could you provide more information on what this may entail?

A professional services workstream has been running as part of the Strategic Alignment Pathway of the Strategic Foundation Programme since the Autumn Term 2022. It is charged with recommending what foundations we need to put in place to ensure that our services are as adaptable and as resilient as possible for the medium to longer term. It will report during the Summer Term 2023. There will be significant engagement with colleagues on the implementation of whatever recommendations are approved.
Another draft recommendation from the Strategic Foundation Programme is to introduce an approach to business process review that frees up time by modernising and streamlining processes. For example: making them more digital and more consistent where that can be done.

The Council minutes refer to 'school restructuring' and 'Henley integration'. What does this mean?

We are looking at the moment at whether we have the right structures in place to be efficient, both in academic Schools and professional Functions, and to what extent better integration could result in cost savings. Henley Business School will be part of this and it is timely, some 15 years after the merger, to understand what closer working together would mean, and what it could save. We know there are areas that prospective students are clearly interested in and others where, through no fault of our colleagues, there is less interest. We therefore need to look at how support growth in popular subjects to keep offering a quality student experience and ensure the right people are in place to allow this.

Can you clarify the recruitment situation, and who is making the decisions on what vacancies are 'essential'?

To clarify, there is not an outright freeze on filling vacancies, however, staff costs remain our biggest financial outgoing and present a large and swift opportunity to reduce our deficit. An SRF Review Group was introduced for scrutiny of vacancy requests around three years ago as part of post-Covid response measures, and this arrangement will continue. The Group is chaired by the Co-Chairs of the Planning Board, Richard Messer and Mark Fellowes. It will work closely with Heads of Schools and Functions to consider essential vacancies, as we recognise there are some positions that cannot be left unfilled.

Rather than limit recruitment across the board, would it be better to make redundancies in some areas to protect others?

We are a whole university community and so collectively responding to these challenges and avoiding redundancies if possible is important. This reflects our Covid-19 response, which was supported by colleagues. At the same time, we recognise that supporting the potential for growth in some areas of the University is important for our long-term financial sustainability and ability to deliver high quality programmes. This will be considered in the long-term plans being developed over the next few months.

Will you be reopening the Voluntary Redundancy scheme? If so, on what grounds?

The University will be taking all reasonable measures to reduce costs before considering options that might involve redundancies. There are therefore no current plans to open a voluntary redundancy scheme.

A new PVC International is being recruited as 'critical' so how will their performance be managed so we know the role is actually good value for money?

The Pro-Vice-Chancellor (International) job description states clear responsibilities around improving global reputation and international student recruitment, which is a vital source of income for all UK universities and will support our plans to grow student numbers. Like all PVC roles, the position will be line managed by the Vice-Chancellor who will be offering all the support the successful candidate needs to deliver good value for the University.

Can we prioritise internal recruitment to retain talent and protect jobs?

We will be looking at promoting opportunities internally as well as enhancing secondment opportunities on a short or longer term basis. It is always important to have the right person for the job so we do not want to implement a rigid policy where only internal candidates will be considered in all circumstances, but we will actively consider it where possible to do so.

Asking colleagues to do more is going to lead to burnout. How can we control workloads and understaffing?

One of the ways to control workloads is through the business process review, which is seeking to modernise and streamline processes. In addition, UEB is committed to reprioritising strategic projects so that some are delayed, or potentially stopped altogether. That task will, in part, be informed by work on reprioritisation being undertaken as part of strategic projects led by Estates and DTS.

How should we prioritise work to ease workloads?

We should all consider what we can stop doing to be more efficient. We will agree plans with those delivering work, and look to issue guidance, but as part of our model of distributed leadership we welcome colleagues taking initiative to identify work and processes that are not necessary in order to improve efficiencies. UEB will also be thinking about what projects we continue and what we stop to make best use of our money. Halting the medical school plans is one example of this. Other projects that will reduce complexity and workloads in the long-term are important to continue.

Staff morale is low. How is our wellbeing being supported?

We understand that discussions around financial and strategic decisions for the University’s future may be a cause of anxiety for colleagues, particularly because many of the outcomes are not yet known. Anyone with concerns, questions or ideas can talk to their line manager and feed back to Heads of Schools/Functions. We encourage line managers to use team meetings to discuss these issues openly, and give colleagues the opportunity to share how they are feeling.
We have good quality wellbeing services available to colleagues, along with our independent Employee Assistance Programme which is available 24 hours a day, and our network of Wellbeing Peer Support colleagues.
Colleague wellbeing will be a key consideration throughout this response process.

Can you tell us how you plan to engage the Staff Forum and the UCU as you develop the plans?

Engagement with colleagues will be crucial to this process. We intend to have meetings with Staff Forum and UCU representatives to discuss proposals. We would like to continue the positive dialogue we had during the pandemic and over the past three years to allow us to work together to find solutions. There will also be consultation with the Staff Forum and UCU over any necessary redundancy proposals, which is a legal requirement.

How can colleagues at all levels engage in this planning process and suggest ways to make savings?

We were grateful to see so many colleagues offering practical suggestions of ways to make savings during last week's briefing session. It is important to hear a range of voices and ideas, big and small, on this issue. Colleagues are encouraged to speak to their line managers or heads of School and Function who can report this into UEB members who are investigating savings options over the next few months to report to Council in July. All colleagues are also welcome to email vc@reading.ac.uk.

Can you provide a breakdown across departments and programmes for the planned £12m growth in student numbers?

Demand for subjects at Reading is similar to demand nationally, where we see continued strong growth in applications for programmes related to business, psychology, biological sciences, computer sciences and law, and more modest growth in a number of other subjects. At the same time we would expect to support wider programme development, particularly at PGT level where demand is strong both from UK and international applicants.

How will we ensure any cuts do not impact our ability to attract students or damage our offering in some subjects?

Colleagues across the University, including in GRA and MCE, are working to identify where we can best recruit students from to meet the University’s growth requirements and in doing so to focus in on markets and groups that are more likely to join us. This means, in spite of any cuts, we will be increasingly focussed on achieving a strong return on investment in attracting students to the University across our subject areas. To protect our offering, this will require us to have a keen eye on what programmes students want to study and to continue to develop our programme portfolio in a planned way to meet that demand.

Can we explore ways to recruit older, part-time and online students to aid growth?

Opportunities for Reading to offer online programmes are currently being developed. Online programmes particularly appeal to mature and part-time learners. This complements our existing work with local colleges to create pathways and attract students to the University who haven’t followed a typical educational path and are seeking study later in life than their counterparts.

How will we stop colleagues leaving the University or the sector due to these challenges?

We are fortunate that Reading is not as badly affected by these financial pressures as some other institutions, a number of which will be facing incredibly difficult decisions. Although facing up to these challenges will not be easy, Reading remains attractive in the job and student market.
Working together to get through this process and remain financially sustainable is important to secure our future, to grow, and to ensure that the University remains an attractive place to work and study. Retaining the talent, knowledge and skills of our excellent colleagues will be a priority in this process.

Is there a reason why the University haven't sought to re-recruit a Chief Financial Officer, especially in the light of the financial outlook?

A new financial management model was put in place this year on a temporary basis, with the Director of Finance becoming the University's most senior financial officer. This will be reviewed in summer 2023, at which point a decision will be made on our long-term financial management structure. In the meantime, the current management model is strong and benefits from being overseen by multiple colleagues with a range of expertise.

A medical school would have been a chance for growth so why have the plans been paused?

Establishing a medical school would require an investment of £40-50m up front (to cover staffing, the cost of a curriculum and infrastructure) and initially we would only be able to establish a private medical school. Even at the highest end of private tuition fees, we would only just be able to cover costs and there would be resource implications for supporting research-active clinical staff. If we were to flip to a publicly-funded medical school, we would have to cross-subsidise significantly as the current tuition fee does not cover the cost of training medical students. Therefore, although we would be able to grow student numbers, we would not be growing income and would instead be incurring additional costs.

You previously said plans were in place for the Malaysia campus to break even. Is it anywhere near meeting that and should breaking even be the ambition over making a profit?

Following the restructure of UoRM in 2019, the Malaysia campus is on much more stable financial footing. It currently makes a relatively small annual loss of around £1.5m, in part a consequence of under-recruitment of students during the pandemic. Closing a campus is a very expensive operation, so we need to keep looking at the campus in the long-term not the short-term. We want to avoid redundancies for our colleagues in Malaysia as much as in the UK. The UoRM lease is up for renewal soon and so, as you would expect, we are looking at the business plan and recruitment trends in the region and potential savings will be considered as with other areas.

How will all of this impact on the planned delivery of the Estates Strategy?

While we need to urgently reduce our deficit, the University and our people and students cannot operate with zero investment and without the tools they need to perform to their potential. Investing in our estate is also essential in our desire to move to become a carbon net zero university. Essential investment such as building upgrades must still go ahead, and will in many cases reduce costs in the long-term.

How big a saving is the Portfolio Review Pathway delivering?

The objectives of the Portfolio Review Pathway are to enhance the student experience and to improve academic and professional colleagues' workloads. Reducing the volume and complexity of our portfolio and its delivery will create capacity for innovation and future growth. Improving student satisfaction will also help maintain Reading’s appeal among prospective students. More information is available on the PRP pages on the Staff Portal.

Can we be more flexible with our choice of suppliers to allow budget-holders to save by using others if they are cheaper?

All colleagues should be conscious of the need to make savings wherever possible and procurement is no exception. The Procurement team is reviewing options with stakeholders to see if there are opportunities for savings. However, purchase decisions at the University are not made solely on price. Quality, safety, and aftercare are also taken into account, as well as public sector procurement regulations.
Travel needs to be safe and we need to be able to keep staff and students safe in emergencies (for example: terrorist incidents, or a natural disaster). This is more important than savings. Hotels that are booked through contracted travel companies are safe and sustainable.
We also consider whether suppliers are suitable based on their social compliance including modern slavery, safety and quality guarantees on goods. Suggestions from colleagues on ways to save money in purchasing can be raised with line managers, but it is important that any changes are in line with the University’s procurement and purchasing rules.

If many other universities are also in this financial mess, surely there is value in UoR working with other universities to collectively lobby government.

All universities are feeling the financial strain and we are part of conversations by Universities UK and the S10 group of universities on sustainable funding for higher education. We are collectively asking politicians what funding will be provided to help universities deliver government ambitions such as increasing social mobility and making the UK a science and technology powerhouse. We are also discussing ways we can pool resources or work together to find solutions in areas such as making better use of artificial intelligence.

Are you going to sell Greenlands?

There are no plans to sell Greenlands. We do need to be smarter about how we use our estate in general and look for opportunities to make savings, though, and this is a key consideration of strategic development being overseen by our Estates team.

Can we work more flexibly or implement a four-day working week to allow savings on heating/lighting etc in buildings on some days?

Hot desking and flexible working allow us the opportunity to consider these kind of suggestions from colleagues. However, measures such as a four-day week would only offer limited savings and would complicate our operation as a campus-based university, which is important to support teaching and learning and student life. We are already leasing some campus buildings to partners such as the NHS, which provides an income rather than just an energy cost saving.

Classrooms and taps feel too hot at times and some lights can't be turned off - are we using energy unnecessarily?

We always encourage colleagues to report any issues they encounter to the Estates Helpdesk so that they can be addressed. As well as being important for colleague comfort this feedback is a valuable way of identifying opportunities to reduce energy costs and we thank colleagues for their assistance on this. There are, of course, other factors to consider, such as statutory regulations on minimum tap water temperatures to prevent bacteria.

When will we hear updates and decisions?

Cost saving proposals will be presented to Council by UEB in July, after which time we will be able to share more about the direction we intend to go in. We want to avoid redundancies if at all possible and that is why decisions and timings are not yet final. We appreciate this uncertainty is a cause of anxiety for colleagues so we will of course keep colleagues informed of any updates in the meantime. It is important to note that plans will be developed in discussion with Heads of Schools and Functions, as it is important that colleagues are part of the development of plans.