The McGettigan Report
Updated: Jun 4, 2020
Today UCU Sussex publishes a report on University of Sussex’s finances commissioned from Andrew McGettigan, independent expert on university finances and author of The Great University Gamble. The report is non-technical, clear and concise. We recommend everyone with an interest in the future of the University, and more broadly of UK Higher Education, to read it.
Read the McGettigan Report on University of Sussex
The report raises serious concerns about the University’s financial management and transparency. Specifically, it exposes a strategy on the part of the University Executive Group (UEG) of prioritising debt-driven expansionism over academic vision, the welfare of its employees and students, and the long-term sustainability of the institution. The report provides a damning backdrop to the UEG’s decision in March of this year to ‘accelerate’ a previously planned programme of cuts in response to the Covid-19 crisis.
Crisis Justice at Sussex takes the key findings of the report to be:
(1) Sussex is financially healthy. On the back of hard work from staff it has doubled its income in the last decade, and this is now just outside the top 30 of UK HEIs. It currently holds over £200 million in unrestricted cash and short term deposits.
(2) Loan conditions force Sussex to run a cash surplus. In 2017 the University took out £100m worth of 'private placement' loans. This money was intended for a new Life Sciences building but has never been used. The loan contracts are extremely restrictive. They commit Sussex to running a cash surplus (or 'net operating cashflow') of over £12m every year to 2044. In the last five years Sussex has consistently made a cash surplus of over £20m, but if the scenarios of falling student numbers envisaged by the Vice Chancellor materialise then it will be forced to make massive cuts in order to meet the figure of £12m next year. If student numbers bounce back after a year, as is likely with a demographic upturn and given tighter employment conditions, then these cuts will have unnecessarily destroyed teaching and research capacity in the name of meeting restrictive financial obligations.
(3) The loan conditions are opaque. We note that it is unclear whether Sussex can evade the penalties for failing to make the necessary cash surplus next year, or what legal advice it has received on this. It is unclear whether the financial risk associated with these loans is compatible with the University's charitable status. And it is unclear what the view of the Office for Students is on the loans.
(4) The University is committed to an endless cycle of expansion. Over the last few years the UEG's aim has been to use loans, annual cost cutting at the expense of staff and students, and fees from ever-expanding numbers of international students, in order to to finance a correspondingly ever expanding set of buildings and IT projects. There is no apparent academic vision informing this process.
(5) Its response to the pandemic has been driven by this expansionist cycle. The University's present rush to cut costs - especially at the expense of its most precarious staff - is not just a reaction to the prospect of a fall in student numbers in 2020/21. It also comes from a perceived need to sustain a cash surplus of at least £12m, come what may, and from an underlying determination by the UEG to keep funds back in order to continue on the expansionist path of the last few years. What appears as inevitable is in fact a result of the UEG's own choices.
These findings raise serious questions about the University's governance over the last few years:
How was £100m in loans taken out under such restrictive conditions?
What are the penalties for failing to meet these conditions?
What steps has the UEG taken to avoid those penalties?
More fundamentally, how did the University come to embark on the present programme of debt-driven expansionism?
UCU, Unison and Unite at Sussex are urgently investigating these issues. We have submitted detailed questions to UEG and requests for copies of a number of crucial Council documents. We have set up a 'Finance Learning Curve' working group to educate ourselves in the finances of the University.
We aim to find an alternative way ahead for the University in the pandemic crisis, based on the principles of transparency, collaboration, humanity and justice, and above all on a vision of the University as an equitable and sustainable academic and educational institution, that we have put forward in launching the Crisis Justice at Sussex campaign.
We are at a critical juncture. We invite all members of staff and students - whether union members or not - who want to join us in this project to contact us urgently at firstname.lastname@example.org.
Crisis Justice at Sussex
*Link to PDF updated to allow for an easier download. 3 June 2020 and 4 June 2020.