Growth versus Productivity/Efficiency

Presented by Andrew Neal15th January 2009

INCOME AND EXPENDITURE2008/09 2013/14 Comment

Income £'000 £'000

Funding Council Grants 47,616 54,296 Low inflation. Proportion declining.

Academic Fees 43,774 63,674 Home static, overseas increasing

Research Grants and Contracts 26,168 34,844 Growth ca. 6.6% pa

Other Operating Income 44,144 53,534 Growth ca. 4.5% pa

Endowment Income and Interest Receivable 4,122 3,371

Total Income 165,824 209,719

Expenditure  

Staff Costs (Recurrent) 98,330 116,554 Staff costs within target range

Staff Costs (Restructuring) 150 150

Depreciation 9,732 15,964 Based on capital programme

Other Operating Expenses 48,485 64,608 Rebalancing from staff costs

Interest Payable 3,359 3,124

Total Expenditure 160,056 200,400

Revaluation reserve transfer 685 685

Historical Cost Surplus/(Deficit) 6,453 10,004 Move to 5% surplus

 

4% 5%

Compound Annual Growth Rates (2008/09 to 2013/14)

0

1

2

3

4

5

6

7

8

%

Funding Council Grants Academic Fees Research Grants andContracts

Other Operating Income

Compound Annual Growth Rates (2008/09 to 2013/14)

0

2

4

6

8

10

12

%

Academic Fees Home Academic Fees Overseas

5 year total income growth

0

10

20

30

40

50

60

70

80

%

York

Exet

er

St A

ndre

ws

Que

en M

ary

Lanc

aste

r

East

Ang

lia

Bat

h

Dur

ham

Loug

hbor

ough

Suss

ex

Esse

x

Rea

ding

Leic

este

r

Surr

ey

5 year growth – HEFCE Income

0

2

4

6

8

10

12

%

Que

en M

ary

Eas

t Ang

lia

Yor

k

Exe

ter

Leic

este

r

Bat

h

St A

ndre

ws

Rea

ding

Ess

ex

Sus

sex

Loug

hbor

ough

Sur

rey

Lanc

aste

r

Dur

ham

HEFCE Income as % of turnover

0

5

10

15

20

25

30

35

40

%

Suss

ex

Quu

en M

ary

Exet

er

Bat

h

Rea

ding

Dur

ham

East

Ang

lia

Leic

este

r

Loug

hbor

ough

St A

ndre

ws

Esse

x

Lanc

aste

r

York

Surr

ey

5 year growth – Research Income

0

2

4

6

8

10

12

14

16

%

Exe

ter

Que

en M

ary

St A

ndre

ws

Yor

k

Dur

ham

Lanc

aste

r

Bat

h

Sur

rey

Sus

sex

Loug

hbor

ough

Eas

t Ang

lia

Ess

ex

Rea

ding

Leic

este

r

Research Income as % of turnover

0

5

10

15

20

25

%

Que

en M

ary

St A

ndre

ws

York

Leic

este

r

Dur

ham

Suss

ex

Bat

h

Loug

hbor

ough

East

Ang

lia

Lanc

aste

r

Rea

ding

Esse

x

Exet

er

5 year growth – Home/EU Income

0

2

4

6

8

10

12

14

16

%

Que

en M

ary

Loug

hbor

ough

Exet

er

York

Rea

ding

East

Ang

lia

Lanc

aste

r

Bat

h

Dur

ham

Suss

ex

Esse

x

Leic

este

r

St A

ndre

ws

Surr

ey

Home/EU Fees Income as % of turnover

0

2

4

6

8

10

12

14

%

Exet

er

Loug

hbor

ough

Suss

ex

Dur

ham

Rea

ding

Lanc

aste

r

Esse

x

East

Ang

lia

Bat

h

Que

en M

ary

Leic

este

r

York

Surr

ey

St A

ndre

ws

5 year growth – Overseas Income

0

5

10

15

20

25

%

Loug

hbor

ough

Dur

ham

St A

ndre

ws

York

Bat

h

Que

en M

ary

Rea

ding

Lanc

aste

r

Exet

er

East

Ang

lia

Esse

x

Suss

ex

Surr

ey

Leic

este

r

Overseas Income as % of turnover

0

2

4

6

8

10

12

14

16

%

Esse

x

St A

ndre

ws

Bat

h

Leic

este

r

Que

en M

ary

Loug

hbor

ough

Surr

ey

Lanc

aste

r

Suss

ex

Rea

ding

York

Dur

ham

East

Ang

lia

Exet

er

5 year growth – Other Operating Income

0

2

4

6

8

10

12

14

%

East

Ang

lia

Lanc

aste

r

St A

ndre

ws

War

wic

k

Surr

ey

York

Dur

ham

Loug

hbor

ough

Exet

er

Esse

x

Bat

h

Leic

este

r

Rea

ding

Suss

ex

Que

en M

ary

Other Operating Income as % of turnover

Lanc

aste

r

War

wic

k

Surr

ey

York

Leic

este

r

Rea

ding

Exet

er

Loug

hbor

ough

Dur

ham

East

Ang

lia

Esse

x

Suss

ex

Bat

h

St A

ndre

ws

Que

en M

ary

0

5

10

15

20

25

30

35

%

Percentages

CompaniesTradingResidencesGrant releaseContracts

Composition of Other Operating Income

Average fee (price) increases compared with turnover (volume) growth 2005/06 to 2008/09

2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 14,000

16,000

18,000

20,000

22,000

24,000

Overseas UG Higher - US$ equivalent

USD Equivalent FebUSD Equivalent Oct

Years

US$

2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 12,000

14,000

16,000

18,000

20,000

Overseas UG Lower - US$ equivalent

USD Equivalent FebUSD Equivalent Oct

Years

US$

2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2,500

3,000

3,500

4,000

4,500

Lancaster University - Analysis of Home PGT fees PT charged and comparison with HEFCE assumed fee

HEFCELancaster equiv (per FTE)

Years

£

2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2,500

3,000

3,500

4,000

4,500

Lancaster University - Analysis of Home PGT fees FT charged and comparison with HEFCE assumed fee

HEFCELancaster

Years

£

Compound Annual Growth Rates (2008/09 to 2013/14)

-2

0

2

4

6

8

10

12

%

Staff Costs(Recurrent)

Depreciation Other OperatingExpenses

Interest Payable

2003/4 2004/5 2005/6 2006/7 2007/80

2

4

6

8

10

12

14

AdditionsUnderlying

Increases in payroll costs

Staff Balance

Academic Staff - total 31%

- (exc T & R only) 20%

Clerical (& related) 21%

(Faculties 11 -24%)

Annual Payroll Pressure Prior to Pay Awards(2008/09 to 2013/14)

0

0.5

1

1.5

2

2.5

3

3.5

%

Incremental Drift Promotions Pay andPensions

Total

Annual Payroll Pressure with 2.5% Pay Award

-3

-2

-1

0

1

2

3

4

%

Incrementaldrift

Promotions Pensions Total CAGR inforecasts

Pay awards Impliedefficiency

Annual Payroll Pressure with 8% Pay Award

-10

-8

-6

-4

-2

0

2

4

6

8

%

Incrementaldrift

Promotions Pensions Total CAGR inforecasts

Pay awards Impliedefficiency

4.45

4.95

5.45

5.95

6.45

6.95

7.45

7.95

8.45

8.95

9.45

9.95

10.45

10.95

11.45

11.95

12.45

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Saving to achieve 4% surplus

Savings pressure £'000 (orig)Savings pressure £'000 (revised)

Percentage increase (depending on Aug 09 pay award)

£'00

0

Process issues

Our processes have developed in an ad-hoc way

Many tasks are done by people who are not adequately supported or trained.

Growth means we can’t manage this by informal networks anymore

A lot of time is wasted looking for information

Many departments are too small to do all the things they are expected to do

Why is this important?

Growth in research and teaching needs to be supported by appropriate processes and infrastructure

Too much resource is being wasted Not a problem for the finance department If we don’t change things academic

development will be constrained

People management - an underpinning theme Performance Partnership Modern policies and procedures Effective processes and systems Management information Succession planning

Final thoughts Life is getting tougher We can’t change everything We are implementing the admin review Faculties have reviewed their own admin

structures Are we heading in the right direction?