Working for a smarter, stronger sector

New approaches to efficiency and value for money

Professor Sir Ian DiamondPrincipal and Vice-Chancellor, University of Aberdeen

Chair, Efficiency and Modernisation Oversight Panel

Universities are…

• Major economic actors in their own right

• Huge drivers of growth and innovation

• Research power-houses on the global stage

• Efficient and effective –UK as “top performer”

…however

“Higher education in the United Kingdom is

undergoing a period of significant change.

This is being driven by a number of factors:

political, cultural, economic, and technological.

The trends are global in their scope, and far

reaching in their impact. They affect every

aspect of university provision, the

environment in which universities operate, what

they will be required to deliver in future, and

how they will be structured and funded…”

Source: Universities UK (2012) Futures for higher education: Analysing trends

Funding higher education: key challenges

• Austerity and public finances

• Tuition fee income & inflation

• Growth in the international student market

• Revaluation of USS pension scheme

• …and the need to invest in the future

Universities continue to invest in our future success

2009-10 (actual)

2010-11(actual)

2011-12(actual)

2012-13 (forecast)

2013-14 (forecast)

2014-15 (forecast)

2015-16(forecast)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Funding breakdown of capital expenditure 2009-10 to 2015-16

Receipts from sale of tan-gible assets

Deferred capital grants received

Mortgages and loans acquired

Net capital to be financed from internal cash

£ m

illi

on

s

Meeting the challenge: Our efforts so far

Reporting period

Target (£m)

Delivered (£m)

2005/06 151 134

2006/07 150 150

2007/08 198 202

2008/09 126 159

2009/10 241 273

2010/11 363 462

Total 1,229 1,380

CSR savings in the HE sector Source: HEFCE

• £1.38bn savings over CSR04 & CSR07

• £481m efficiency & VfM savings, 2011/12

• On track for over £400m savings in research

Efficiency and effectiveness in higher education: Phase I

• UUK Task Group reported in 2011

• Progress report published in 2013

• Strong evidence of good progress in the sector

• However – also set the agenda for future work

State of play

• Progress recognised by government: “the message on efficiency has got through”

• Continued engagement and enthusiasm: recent achievements show momentum throughout the sector

• No end to austerity: spending decisions to be taken in 2015/16 will be made in a challenging fiscal environment

• Universities must continue to invest: human, physical, digital capital key to competitiveness

HEFCE grant letter

• Tim Melville-Ross: “...the funding settlement … incorporate significant reductions…”

• Clear drive to embed efficiency and to maximise value for money for students

• Greater collaboration and sharing, and better use of our resources, are critical to our future success

Efficiency, effectiveness and value for money: Phase II

• Minister for Universities and Science recommended a second phase of work

• Broad scope agreed, November 2013

• UUK identified sector partners and established working groups in core areas

• To report findings and recommendations: February 2015

The challenges

Key challenges to address are in six areas:

– space and infrastructure utilisation, and asset sharing

– the higher education workforce

– the sector’s ability to record, quantify and analyse efficiency gains, and demonstrate the use to which these are being put

– investment strategy and operational plans of institutions

– academic practices and processes

– open data and efficiency

Working together to deliver success

• UUK will coordinate work but sector partners have been invited to lead projects– Asset sharing and the efficiency in research

– Delivering value from the HE estate

– Evidencing success

– HR challenges and the HE workforce

– Open data and efficiency

Timetable for delivery

2014

May Project symposium

July Interim progress report from UUK

October Final reports from working groups

2015

February Final report published – with implementation plans

Concluding remarks

• The funding environment and fiscal pressures are not going to get any easier

• We must continue to set a challenging agenda for the HE sector

• The whole sector needs be far better at communicating our progress