Read the report in full by downloading the PDF below
The report linked above was prepared for Sussex UCU by Andrew McGettigan, an expert in university finances, using the Sussex Financial Statements 2021/22 [1]
Sussex UCU Exec and Reps, January 2023
We encourage everyone to read the report by Andrew, linked above, in full. Below are excerpts, additional data and commentary by Sussex UCU Exec and Reps on themes from Andrew’s report linked above.
As background, the year 2021/22 saw ongoing UCU national disputes over pay and pensions and a local Sussex UCU dispute over the threat of compulsory redundancies due to the Size and Shape programme [2]. The national disputes over pay and pensions are now escalating into 2023.
A lot has changed since the last report for Sussex UCU by Andrew McGettigan, published May 2020 [3], following the deeply unpopular announcement of the Financial Review Guidelines implemented by previous VC, Adam Tickell, during the Covid crisis. One of the most visible changes since that report has been the arrival of a new Vice Chancellor.
Sussex has a lot of cash and is bringing in a lot of cash
As Andrew notes in the linked report above
Sussex no longer appears to be targeting surplus figures as a Key Performance Indicator. In 2020, Sussex was targeting 7% surplus to income and intending to increase it to 10%. Now it appears focused on net cash from operations. [McGettigan Report 2023, p5]
This change in measuring the financial success of the institution is clear from page 12 of the Financial statements, reporting £57m net cash inflow in 2021-22.
Over recent years the University has managed its finances to consistently generate net operating cash surpluses. A net operating cash inflow of £57.2m (£41.3m in 2020-21) was achieved, which funded the year’s capital investment. Taking the balance sheet items “Investments” and “Cash and cash equivalents” together (as current asset investments are mainly short fixed-term deposits) the University’s available funds have increased by £72.6m this year. [University of Sussex Financial Statements 2021/22, p12]
Sussex has scaled back the five year capital investment plans (that emerged from Sussex 2025 strategic framework [4]) from £300m to £200m following the widespread community opposition to Size and Shape, and the associated threat of compulsory redundancies. But Sussex has £250m in unrestricted cash and short-term deposits, which is already enough to cover the capital projects plan.
However, Sussex does have borrowing of £173m, some of which is interest only and some of which will need payments starting in 2039, although the value of these payments due in fifteen or more years' time is of course likely to be eroded by inflation.
In the short term we will need to keep a close eye on plans for the Capital Projects. In the longer term (as we approach the payment dates for these loans in 2039), we will need to look out for programmes that announce efficiencies to cover some of these repayments.
Sussex staff costs and insourcing
Sussex income increased by 9% to £346m, while staff costs increased by a much lower 2.4% to £168m. Sussex spent less than 50% of its income on staff. Sector data is only available up to 2020/21, but compared to these figures Sussex relative staff costs are low for the sector. Andrew has considered the spending on SEF and insourcing, reporting that
Adding… outsourced facilities and maintenance staff… to the overall staffing costs would add roughly 2 percentage points to the staff expenditure to income ratio…. The university's finances also appear strong enough to bring those staff "in-house". [McGettigan Report 2023, p7]
Campus accommodation
The report linked at the top of the page covers some details of the arrangements of the 50-year contracts with Balfour Beaty for on-campus student accommodation. Although the income from on-campus rent is not detailed, ‘Residences, catering and other operations’ accounts for £43m of income.
As Andrew makes clear, it is students who are getting the poor end of the deal. The graph below demonstrates the astonishing impact rising rents have on availability, in real terms, of affordable on-campus student accommodation.
Figure 1: the above histogram did not form part of the report by Andrew McGettigan but was compiled from data collected by Sussex students and staff. It supports the statement in the report by Andrew McGettigan that students are on the poor end of the deal regarding on-campus accommodation contracts [5,6]
If Sussex is to support students on low income and provide affordable housing on campus there needs to be serious action and an effective affordable rent policy.
In conclusion
We encourage everyone to read the full report by Andrew McGettigan, linked at the top of the page. This blog post however gives the initial views and conclusions of Sussex UCU Exec and Reps. Our views are likely to evolve as we gain more information and understanding. But the following initial conclusions emerge.
Sussex seems to have relatively low spending on staff, as a percentage of income. If outsourced staff are included this relative spending moves closer to historic sector norms. However, cash income and cash investments are high and already more than enough to cover the planned capital expenditure. Given Sussex is located in Brighton, with high cost of living, this seems a poor balance in terms of investment in staff working conditions.
It is also clear Sussex could have afforded to rule out compulsory redundancies over Size and Shape from the start. The failure to do this has cost considerable good will, increased workloads, and resulted in the loss of important community knowledge through three rounds of voluntary severance.
Sussex could readily afford a pay increase, and even a ‘Brighton weighting’. For example a 10% increase in staff costs would only take staff spend as a percentage of income to 53%, well within sector norms.
In addition, Council clearly had more than enough financial headroom to support the UCU proposals to prevent devastating USS pension cuts. This stands alongside the misleading claims on the cuts from the interim VC regarding equalities impacts [7]. Sussex now needs to commit to fully restoring USS pension benefits.
The financial arrangements of student on-campus accommodation also needs considering. Like the drive for outsourcing before, this is clearly something that needs to be rolled back, and a good range of affordable student accommodation with a practical affordable rent policy is now essential.
Sussex is at a critical juncture, with a new VC in post, a new deputy VC to join in September, a new Director of HR and the recruitment for a new Chair of Council in progress.
2023 will see escalating industrial action over pay and pensions and much pressure on local negotiation to improve Doctoral Tutors’ (DTs') pay and conditions. DT are among the most precarious staff group and at the front line of highly specialised teaching, learning, marking and assessment. Their contracts are low fraction, short-term, hourly paid Grade 6 and the dramatic erosion of this FTE pay relative to RPI needs to be addressed urgently.
There will continue to be widespread calls for insourcing and local demands for a ‘Brighton weighting’ as well as focus on structural plans to reduce inequalities and workload following the successful results of the 16 weeks of local negotiations [8].
If student learning conditions are really staff working conditions, and vice versa, then Sussex will need to see progressive commitments and action in all these areas in the very near future.
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To read Andrew McGettigan’s report, download the link at the top of the page.
[1] University of Sussex Financial Statements 2022
[2] Sussex UCU, ‘critique of the Size and Shape project’, April 2021
[3] Sussex UCU, ‘The McGettigan Report’, June 2020
[4] University of Sussex, ‘Strategic Framework 2025’, March 2022
[5] Spreadsheet of graphs and calculations with refs for student on campus rents
[6] Sussex UCU, ‘Sussex rent strike and on-campus rents since 2010’. January 2021
[7] Sussex UCU, ‘Analysis of council paper supporting cuts to USS pensions’, March 2022
[8] University of Sussex, ‘Union and university reach agreements on key issues’, October 2022
See also Sussex UCU, ‘a run through Sussex Financial Statements 2019/20’
Photo credit: Blatant World