The meeting of Council in March had approved proposals for the release of £5.7M for the Student Village Redevelopment Phase 2, which will continue over the summer. The Bursar and Finance Officer reported that the work had been split into four separate contracts. The Contract for the proposed refurbishment of Whitworth Hall had not been approved as it was regarded as poor value for money and, pending further discussions with the lowest tenderer, it might be agreed that no action should be taken other than urgent work to meet fire precautions regulations. There were problems with Contracts 2 and 3 for Faraday/Royce C and E Blocks. In one case the contractor might be unable to complete the work in the specified time, and in the other, there were difficulties in keeping within the tender price. Work in Contract 4 on A, B2, B3 and Sub-wardens Blocks might proceed over the summer following further negotiations with Tilbury Douglas Construction Limited to reduce costs. Demolition of the Village was not regarded as an option: it was part of the University's heritage. If work under Contract 4 only was completed over the summer this would represent approximately one-third of the 450 or so bedroom refurbishments planned. It was, however, necessary to avoid a repetition of difficulties experienced in 1998 from the delayed completion of contracts. Fee levels for Halls were determined according to the provision of a set of facilities and would not be affected by refurbishment unless the facilities were increased. It was RESOLVED that the Bursar and Finance Officer should liaise with LSU Officers on progress with the refurbishments.
It was confirmed that relatively low charges would be made for use of the Performance Training Centre. Liaison on this had taken place with LSU representatives.
The Bursar and Finance Officer introduced a revised budget for 1998/99 and cash flow forecast. The forecast out-turn (surplus after transfers) was £719K.
In response to a query, it was reported that preliminary costs of £4K had been incurred in relation to a collaborative project, involving other institutions and the British Council, to consider the establishment of a University in Egypt to produce high quality engineering and business graduates. Should this come to fruition, the providers would be a consortium of UK universities. It was possible that this could eventually involve the establishment in Egypt of support facilities such as a joint students' union. Loughborough was well placed to take advantage of a perceived gap in HE provision in Cairo. A French university had recently been established there, although the mass market was for an English speaking institution.
The Committee considered information from HEFCE on a comparison between 1998 Financial Forecasts and Actuals for 1997/98, including indicators of the financial strength of the University in comparison to the sector as whole. Overall the indicators showed the University to be in a relatively sound position. It was noted that some discrepancy arose from the exclusion of LUSAD in the Forecasts and its inclusion in the Actuals. In relation to staff costs as a percentage of total expenditure, the indicator placed Loughborough in the upper quartile. This was thought to arise from the scale of residential services and it was RESOLVED that the Bursar and Finance Officer should check the ratio and report back to the Vice-Chancellor.
The Forecast Surplus (after depreciation of assets at valuation and tax) was £2,486K compared with the 1997/98 Actual of £2,655K, a positive difference of £169K. It was observed that for some years University financial forecasts showed a consistent trend to underestimate the outturn. It was acknowledged, however, that it was prudent to err on the side of caution and the forecasts were reasonably accurate given the operation of many variables.
The Committee considered an overview of favourable and unfavourable financial developments for 1999/2000, a budget strategy recommended by the Operations Sub-Committee Budgetary Review, plus an alternative approach. The Operations Sub-Committee Budgetary Review recommendations would require Council approval for a variation to Financial Strategy to support additional investment of approximately £800K in research designed to generate increased rewards in the next Research Assessment Exercise. This would lead, in the short term, to lower surpluses, reduced transfers to the Building Fund and a slowing of the building programme. The alternative approach did not require this variation of strategy but included a more optimistic view of income generation, cost savings and deferring planned expenditure.
The Bursar and Finance Officer advised the Committee that elements in the alternative approach were undesirable, it could be overoptimistic to assume increased income from overseas recruitment and other proposed measures could lead to serious difficulties for the provision of support services. Academic departments were experiencing serious difficulties and two Faculties were already struggling to achieve balanced budgets for 1999/2000. A further reduction of £150K TTA income on the budget presented was now anticipated. The Operations Sub-Committee Budgetary Review recommendations already included optimistic assumptions.
There was discussion on a number of elements in the proposals. Some concern was expressed that the required £200K from further cost savings, or increased revenue, in the Residential Organisation might reduce services to students, or generate unwelcome competition with other enterprises on campus, at a time when the Residential Organisation was already adhering to an approved business plan. It was confirmed that additional savings could be found by the Organisation which would, for example, benefit from the current lower interest rates. Even if only one of the contracts for the Student Village refurbishment was completed over the summer this would generate marginally improved income as it included the provision of ensuite facilities.
A member expressed serious concerns at the potential implications for the delivery of teaching and research if funding for Computing Services was held back. It was suggested that this could have a detrimental effect on meeting University strategy and there was a danger of pre-empting the review of Computing Services currently underway. In response it was emphasised that service improvements might be deferred rather than abandoned. This could also apply in the case of Estates work to comply with the Disability Discrimination Act.
A member reminded the Committee that HEFCE recommended a 3% budget surplus. Whilst it was accepted that in the current year this would not be achieved, the Operations Sub-Committee Budgetary Review proposals would mean that this would also not be achieved in 1999/2000. There was a need to restore the financial strength to underpin the provision of appropriate facilities in the future. Another member expressed sympathy for the problems currently facing the University but strongly echoed the view that Council strategy of £2M transfers to the Building Fund should not be varied.
Whilst it was acknowledged that long term strategy had not changed significantly, another member observed that the balance of short and long term needs had shifted and there was some inconsistency in deferring current capital needs to make future capital provision. Implementation of Council strategy to provide additional research support was at variance with strategy to restore transfers to the Building Fund and the University was faced with funding an additional £800K from within its 1999/2000 operating budget.
It was AGREED that clearer projections of overseas recruitment income should be provided to the next meeting of Executive Management Group.
The Committee RESOLVED that authority to produce revised budget strategy for 1999/2000 for recommendation to Council should be delegated to the Executive Management Group (EMG). This should include adjustments to restore the transfer of £2M to the Building Fund.
The Committee considered a paper from the Bursar and Finance Officer outlining the general principles underpinning the resource allocation process for 1999/2000, together with recommended allocations to Faculties, and Operations Sub-Committee Budgetary Review recommendations for 1999/2000 budget allocations for Support Services, Equipment and Special Factors.
It was proposed that the sum of £760K be set aside to enhance research and be proportionately allocated (80/20) to Faculties according to QR allocations and research grants and contracts income. It was proposed also to set aside an additional £360K to stimulate strategic priorities including the Research Office.
A member welcomed the examination of COMA charges and hoped that teaching and space costs would be reviewed in the coming year. A plea was voiced for further reexamination in 1999/2000 of the internal Price Band Weightings used within the COMA calculation. The weightings had been changed from 1:1.3:1.8 to 1:1.35:1.85 and, whilst content to accept this as Faculty Business Planning had already commenced, a member wished to see further movement towards the HEFCE price band ratios. Members were reminded that the University's resource allocation must operate within an integrated overall system and plan and that any review contribute to the allocation process overall.
The Committee RESOLVED to APPROVE the 1999/2000 budget recommendations proposed, subject to any revisions arising from revised Budget Strategy proposals approved by Council.
The Committee received an update on capital developments from the Bursar and Finance Officer.
It was reported that the proposal to create a Retail College on the campus could involve a £7M capital investment by Ford. It was believed that Ford had now approved funding for the project.
With regard to a plan for further development of Burleigh Court to build an additional 150 en suite bedrooms, it was noted that Estates Management Committee had expressed concern that there was insufficient space for this in the proposed location. Reassurance was given that discussions were at a very early stage and the site for the proposed development would be subject to further scrutiny.
It was observed that the Capital Plan presented assumed transfers to the Building Fund of £1.2M in 1999/2000 and £1M in 2000/2001 and 2001/2002. Unless Council strategy was to be varied, this should be restored to £2M for each of those years. Where any deliberate slowing of the building plan was proposed, this should be clearly reflected.
In response to a query concerning the Performance Training Centre, it was confirmed that, as the associated cost was under £1M, Council approval was not required. It was noted that projects involving lottery funding were included as they would also be part funded by the University. It was confirmed that sale and lease back mechanisms would be included in overall consideration of the options for off-campus Halls of Residence in need of refurbishment, although refurbishment might be as expensive as rebuilding.
The Committee RECOMMENDED to Council that approval be given to following tuition fees for 1999/2000:
(* This programme is moving from Mathematical Sciences to Education next year. The proposed fees bring the programme in line with other programmes in Education, which have been given special approval to levy a lower than standard fee.)
The Committee RATIFIED the action of the Chair in approving the remaining matters listed.
The Committee RESOLVED to APPROVE the following recommendations:
The Committee noted a report.
The Committee noted a report.
On the recommendation of the Executive Management Group, the Committee RESOLVED to delegate authority to Operations Sub-Committee to make recommendations to Council on levels of overseas tuition fees for the session 2000/2001.
The Committee RESOLVED to recommend to Council a policy on tuition fee refunds for early leavers.
The Committee noted the Twenty-first Report of the Sub-Committee.
The Committee noted a report on progress with Support Services Budgetary Review recommendations.