The Sussex Financial Review Guidelines: A Report to Members of Sussex UCU, Unison and Unite
The University Executive Group (UEG) issued the Sussex Financial Review Guidelines (FRGs) to Heads of School and Divisional Directors on 25th March, with an accompanying note from the VC stating that budget holders 'must strictly adhere to' them (bold in original). There was no prior consultation on the guidelines with the campus Trade Unions.
After the FRGs were shared with all members of one School and became semi-public, they caused a furore across the university, and led to national press coverage under headlines such as 'Sussex plans job cuts in pandemic fallout' (Research Professional) and 'Hundreds of university staff to be made redundant due to coronavirus' (Guardian).
In a series of Combined Joint Negotiating Committee (CJNC) meetings between 25th March and 7th April the three campus unions argued strongly against the FRGs, especially the sections that threatened the 'termination' of the contracts of temporary staff, doctoral/associate tutors, and fixed term contract staff, and the ending of studentship programmes for PhD students. On 29th March we issued a Joint campus union statement on the FRGs. On 31st March and 3rd April we submitted two substantive papers to the CJNCs requesting changes to the FRGs and explaining our objections to them section by section.
On 7th April the UEG issued a revised version of the FRGs. This report assesses the revised FRGs in the light of the present financial position of Sussex University.
1. The University's financial position
In his email of 25th March accompanying the original FRGs, the VC stated that they represented an 'acceleration' of savings that had been planned for the previous six months:
'To provide some background, it’s important that you all know that over the last six months, the University’s Executive Group (UEG) along with Heads of Schools and Divisional Directors plus many supporting colleagues, had already been undertaking a comprehensive review to identify ways in which we could reduce our spend and make major savings.
This work was undertaken because we knew that we could not deliver on the much-needed investment in the student experience and in our research infrastructure, if we did not make big changes. However, this work was done before the Covid-19 pandemic had arisen, and we now know that we need to accelerate our timescales on savings and to implement a suite of new and immediate measures on expenditure.'
Similarly, in his email to all staff of 7th April accompanying the revised FRGs, the VC said that 'During the last year the University undertook a comprehensive review to identify ways in which we could make savings in order to invest in our research infrastructure, the student experience, our estate and our IT systems', before going on to refer to the University's financial losses as a result of the pandemic.
All this makes it quite unclear to what extent the UEG considers the FRGs necessitated by the UEG's long term plans for investment and to what extent by an immediate financial crisis. However in this report we give the UEG the benefit of the doubt and assume that the FRGs are justified entirely by financial losses the University faces as a result of the pandemic.
These losses are extremely difficult to estimate. In CJNC meetings the VC has stated that in the current year the University has lost £10m in income as a result of the Covid crisis but will still end up with a small surplus this year, but has expressed the fear that next year it may lose up to half its income from international (i.e. non-EU) students. In 2018-19 this income was £71m or 22% of the University's total income (see this table using HESA figures).
However, the fact is that no-one knows what the financial losses of the sector will be. The most extensive effort so far to quantify the likely financial losses to HEIs next year, the newly published report by London Economics prepared for UCU, has had to rely on a single March-April British Council survey of Chinese students' intentions to arrive at its prediction of a 47% decline in non-EU students next year. The VC rightly said on 7th April that 'At this stage, putting specific numbers on the strain on our income would be speculation’.
Meanwhile we do know that debates within the government are ongoing about the scale of financial support that will be offered to universities. Specifically, the Education Secretary is reported to be arguing for a 'stabilisation' package that would offset the losses from tuition fees and other sources.
We also know that, as the VC said in his email of 25th March, 'the University is in a solid financial position'. In 2018-19 it reported a £23.9m surplus (prior to the USS adjustment) and unrestricted reserves of £333m. Based on HESA figures, its net cash inflow from operating activities as a percentage of total income was 13% and its net liquidity days were 255, putting it in the top 20% and top 10% of the sector respectively on these measures.
Furthermore, Sussex is unlikely to suffer from liquidity problems in the next year. On 20th April the Head of Higher Education at Lloyds wrote that since 2008 the banks have built up their loan to deposit ratios,
'Given the significance of the higher education sector to the UK economy and its world-class track record, I would expect the sector to be able to access liquidity where needed.'
In this light, our view is that the University's present financial position does not justify a precipitate round of cost cutting
In the following table we analyse the key sections of the FRGs point by point, comparing the original with the revised versions and pointing to the damaging effects even of the revised version.
2. Section by section analysis
We conclude as follows.
The FRGs have been issued hurriedly before it is clear how serious the financial implications of the crisis for the University will be. One senior colleague has called them 'the executive equivalent of panic buying'.
Their rationale is unclear in so far as they have been presented as at once an emergency response to prospective financial losses resulting from the pandemic, and also as an 'acceleration' of long-standing cost-cutting plans that had a quite different rationale.
They unjustly aim to make savings at the expense of the job security of precariously employed members of the university community. In his email of 25th March the VC wrote 'I am confident that if we pull together we can get through this and come out stronger the other side', but it is apparent from the content of the FRGs that this 'we' excludes the University's precariat.
Many of them call for savings which are trivial in the context of the funding shortfall that the VC has suggested.
Their vagueness has led to widespread confusion, with different budget holders interpreting them differently. It also makes them therefore susceptible to abuse by the managers asked to implement them, whether as a result of individual likes and dislikes or conscious or unconscious bias.
We add that to our knowledge no estimate has been made of the savings they aim to produce, and no comprehensive Equality Impact Assessment has been done on them.
Their revised version softens some of the language, clarifies some of the vague formulations, and withdraws some of the most extreme proposals in the original. But the above points continue to apply to this revised version.
Therefore the FRGs need to be withdrawn altogether, and moratorium needs to be placed on all major staffing decisions until the financial consequences of the crisis for the sector are better understood.
Meanwhile the UEG should focus its energies on joining with the unions locally and nationally to lobby the government for a funding settlement that is sufficient to see the sector as a whole through the present crisis, as called for by both the CEO of UUK and the General Secretary of UCU.
If part of the price demanded by the government for that settlement is a reduction in universities' spending, then both at Sussex and elsewhere this reduction should follow the basic principle of 'crisis justice': that all financial sacrifices must come from the top downwards.
UCU Branch Exec
UNITE Branch Committee
UNISON Branch Committee
24 April 2020