Alan Langlands 26 November 2010

Review of the year

Q.In your opinion, how important is it, if at all, for the government to invest in UK universities? Source: Ipsos MORI Important 90 Not important 8 Net importance +82 Net difference % Base: 2,003 British adults aged 15+, 30 July - 5 August, 2010 Nine in ten of the public think it is important for the Government to invest in universities ___________________________________________________________________________________________________________________ very important don’t know fairly important not very important not at all important

£59 billion economic impact the enterprise university

Widening participation ____________________________________________________________________________________________________________________

Supporting strategic subjects ____________________________________________________________________________________________________________________

Global leadership in research __________________________________________________________________________________________________________________

Wider contribution of higher education ________________________________________________________________________ Development of our professions… …cultural and social impact …contribution to sustainable development

 sector has strong cash balances and healthy levels of reserve  income up by average 7.4% pa over past decade to reach a total of £21bn in –of which student fee income from Home/EU students was less than 9%  average operating surplus of just 1.3% of total income over the last decade  total support to institutions at higher risk less then £4M per annum – less than 0.1% of HEFCE funding Financial health ___________________________________________________________________________________________________________________

Challenges for the future

 £2.9bn (40%) reduction from £7.1bn Higher Education resource budget by plus reductions in other HEFCE funding lines  other cuts in public spending that will impact on higher education  a tough deal for students, graduates and their families –higher fees up to £9k –graduates pay less each month but pay for much longer  institutional response – need for new and innovative business models  re-work of the 1992 Act Future challenges ___________________________________________________________________________________________________________________

Transition issues ________________________________________________________________________________________________________________  resource allocation in  teaching funding policy from  access to higher education  quality and public information  research and HEIF  institutional and sector sustainability

Changing for the future _______________________________________________________________________________________________________________________  system change -a new paradigm for higher education funding  legislative change - increasing the fee cap; new interest rate; a rework of the 1992 Act  organisational change - the development of ‘Student Finance’ and (possibly) The Higher Education Council

An exacting timetable _______________________________________________________________________________________________________________________  effective management of and  White Paper on future strategy of HE by March 2011  legislation introduced for reforms by May 2012  new funding settlement by August 2012  new constitutional arrangements by August 2013

Key risks _______________________________________________________________________________________________________________________  political/ Parliamentary delays  public reaction  universities fail to respond with new business models  higher education loses credibility in the capital markets  loss of reputation/ international competitiveness (learning and teaching and research)  loss of financial flexibility  administrative failure Testing times for Governors and senior managers

 not losing sight of our core purpose  addressing and mitigating risks  discharge our funding and regulatory responsibilities in a fair and proportionate way  support institutions through the change process  tackle the unintended consequences of the new ‘market’ model  synchronisation of HEFCE funding cuts and the implementation of the new funding settlement with least damage to students, education, science and research  provide people with clear and unambiguous information Orderly transition _______________________________________________________________________________________________________________________

Interests of students are paramount _______________________________________________________________________________________________________________________ “If you value the world simply for what you can get out of it, be assured that the world will in turn estimate your value by what it can get out of you……” (Arthur Hadley, President of Yale University from 1899 to 1921) “If we value our students simply for what we can get out of them or what they might earn in the future, be assured that they will in turn estimate our value by what they can get out of us…..”

Thank you for listening