1. TRAC in 2010: Strategic context and key messages June 2010

2. 1.The funding environment 2.What do the TRAC results indicate? about efficiency and sustainability of research (note impacts of Wakeham review of fEC) about teaching (potential impact of Browne review of student finance) about institutional sustainability? 3.Key messages about TRAC 4.Current developments Time allocation Sustainability metrics MIPs 5.Challenges for institutions

3. The big picture: context 10 years of relatively generous funding and many positive advances in HE, e.g. –Growth in numbers, quality of student experience and diversity of student population –Quality and outputs of research –Investment in infrastructure BUT: Most public funding is below fEC More competitive sector (and costs of this) UK may be losing its pre-eminence internationally (as others invest more) –Threats to sustainability –New demands on accountability –More institutions at risk –Prospect of serious cuts over several years Is TRAC part of the solution, or a further problem?

4. Financial viability of HE activity 2008-09 TRAC results for UK Activity and income PFT £10.9bn NPFT £2.6bn Research £7.0bn Other £4.5bn TOTAL £25bn Surplus/ deficit as % of income (2.4%)21%(31%) (24% of costs) 8%(6%)

5. Questions raised by the TRAC data 1.Is the huge deficit on research sustainable? (and will it threaten future funding) 2.What are the surpluses made on overseas student fees being spent on? (apparently not on teaching and the student experience) 3.Many institutions’ surpluses appear too low for sustainability – are they sacrificing the long-term? 4.Is this fEC measure of surplus/deficit (including the RFI adjustment) a good indicator of sustainability (a) for the sector and (b) for individual HEIs? Dangerous to draw simplistic conclusions but these are big strategic questions at both sector and institutional level, and institutional senior managements (and governors) need to discuss them

6. Wakeham review (fEC task group) Arose out of BIS/RCUK concerns about the research deficits: 1.Have HEIs used fEC funding to grow volumes rather than to improve sustainability? 2.Has fEC funding encouraged “inefficient” use of research funds? 3.Can we trust the TRAC data reported by universities (are these deficits real)? 4.Are HEIs managing responsibly when they show huge TRAC deficits on R and sign off their TRAC returns as “fit for purpose”? 5.What can funders do to incentivise better (more efficient and sustainable) behaviour by HEIs?

7. Issues reviewed by Wakeham Has research volume grown too fast? TRAC evidence (research FTEs and costs) is limited (only 3 years of fEC data). No sign of seriously irresponsible growth at sector level – however numbers of PGRs and RAs have both grown, and need to be monitored (and some HEIs may have issues) Is research sustainable? Complex to answer this. The large TRAC deficits suggest that it is not but this depends on individual HEIs research strategies and the links between T and R) Is research efficient? Anecdotal evidence of poor utilisation of space and facilities, and the variability and growth of TRAC indirect cost rates is a concern to RCUK -what does your research strategy say about these points? -what are you doing about this?

8. Issues about sustainable teaching Note FSSG report (see references), and possible impact of Browne review Is TRAC under-costing T by recording costs of necessary scholarship as research? How can the sector protect the unit of resource and the quality of the student experience? there is ample evidence of strains and cost pressures but also of “over-teaching”, inefficiency, and poor utilisation and the relationship to research is critical for some HEIs - what does your teaching strategy say about these points? - have you done the sustainability analysis suggested in the FSSG report?

9. Key messages about TRAC 1.The sector needs to support TRAC 2.TRAC raises some big questions for the sector 3.Institutions need to understand what TRAC is telling them 4.Getting TRAC right is a management problem for some institutions, but if they have problems, TDG is the right forum to raise these (Stuart Palmer letter to institutions April 2010)

10. 1. The sector needs to support TRAC The sector chose TRAC TRAC is important to the funders of HE – and if it is undermined their funding may also be There is no attractive alternative – the only one on the table (RCUK request) is full timesheets for all academic staff – there is to be a review in 2011

11. 2. TRAC raises serious questions about sustainability (See earlier slide) Institutional SMTs and governing bodies need to understand what TRAC is saying (and so need confidence on their data). They need to know and to be able to justify to their funders: –Whether their activities are sustainable –How they measure this –What level of funding and investment they need for sustainability –Their progress towards this This is part of a financial strategy – and funders may require evidence The TDG study may help here

12. 3. Institutions should test and use their TRAC data Funders have stated that their confidence in TRAC as an accountability tool depends on institutions using the data themselves QAV has shown that some HEIs do not do basic reasonableness checks – despite signing off the data as fit for purpose, and that implementation of TRAC is often not well linked to strategic institutional management TDG is working to improve “utility” of TRAC. Institutions need to use and benchmark their data – and get them right if they do not currently trust them

13. 4. TRAC works, but if you have issues now is the time to sort them Many institutions use TRAC effectively, and gain benefits Senior management need to be engaged Finance Directors have a key responsibility Issues about academic staff time are often institutional HR issues, not TRAC issues TDG has acted to address all those that have been brought to its attention (next slide) If your institution still has problems with TRAC you need to address these now: your Head of Institution is accountable for signing off that your data are fit for purpose

14. Recent developments from TDG 1.Greater flexibility on TRAC academic staff time allocation 2.Reporting of research surplus/deficit by sponsor type 3.Reporting of “operating costs” and “long-run full economic costs” as two separate numbers (i.e. with and without RFI adjustment) 4.Review of sustainability metrics/RFI 5.Management Information projects (utility of TRAC for HEIs) (Stuart Palmer letter to institutions of 8 March)

15. Why these changes? The aim of all these changes is to make it easier for institutions to use TRAC (TDG have directly addressed all the points where we were told TRAC was unhelpful for internal management) The challenge is now to those institutions to do so There are significant risks if they still do not Do you have any outstanding issues? Can you resolve them internally, or should you raise them with TDG or your funding body?

16. Risks for the sector RCUK Quality Assurance and Validation Process (QAV) showed many HEIs not implementing TRAC intelligently and a lack of engagement by senior managers Funders want evidence on research efficiency and sustainability – they cannot accept the wide ranges and fluctuations in indirect cost rates, poor practice on indexation, low utilisation of R estate and equipment etc Public funding will decline Some HEIs are still saying publicly “we don’t use our own TRAC data” – and this reduces funders’ confidence We don’t really know how to demonstrate and monitor sustainability

17. Discussion points 1.Are you using TRAC intelligently and able to show confidence in your data? 2.Are your senior management team and governors engaged? 3.Do your institution’s research and teaching strategies address efficiency and sustainability? 4.How will you cope with the likely fEC funding squeeze and further accountability requirements post-Wakeham? 5.How will you cope if fees go up and funding goes down? 6.Do you know what level of surplus and investment you need to make for sustainability? 7.Is your institution treating these challenges seriously?

18. Useful references Policy overview of TRAC http://www.hefce.ac.uk/finance/fundinghe/trac/tdg/FSSGJuly 2009.pdf http://www.hefce.ac.uk/finance/fundinghe/trac/tdg/FSSGJuly 2009.pdf FSSG report on sustainable T http://www.hefce.ac.uk/finance/fundinghe/trac/fssg/FSSGrep ort.pdf http://www.hefce.ac.uk/finance/fundinghe/trac/fssg/FSSGrep ort.pdf Stuart Palmer letters http://www.hefce.ac.uk/finance/fundinghe/trac/tdg/#key http://www.hefce.ac.uk/finance/fundinghe/trac/tdg/#key Key messages on TRAC http://www.hefce.ac.uk/finance/fundinghe/trac/tdg/TRACkey messages.pdf http://www.hefce.ac.uk/finance/fundinghe/trac/tdg/TRACkey messages.pdf Report of FEC Task Group (to be published June 2010)