Uncut Diamond

Gerry Webber, University Secretary at Edinburgh Napier University and Chair of APUC discusses efficiency, effectiveness and value for money in Higher Education.

If the IFS are right, funding for BIS could be reduced by more than a quarter over the next five years. Only last week, the Chancellor announced additional cuts of £450m to the department’s existing budget. For most universities, even those in the devolved nations, this is deeply worrying.

Cuts in excess of 25% could hardly be described as “efficiency savings”. Nevertheless, the sector has to embrace the efficiency agenda more vigorously now than it ever has before.

The latest UUK report on “Efficiency, effectiveness and value for money” (February 2015), referred to by insiders as “Diamond 2” after its principal author, Sir Ian Diamond, should consequently be required reading for anyone concerned with the future health of the sector.

There are at least two reasons for keeping this high on the agenda.

First, there are real opportunities to do more with less – and much more with the same. We should pursue them.

Secondly, there is an urgent need to convince politicians, civil servants and journalists that universities are not just successful organisations, but economically savvy and financially responsible too.

Received wisdom in the corridors of power is that universities are stuck in the seventies and “awash with cash”. We aren’t, of course. But we need to shift perceptions, and in part we need to do that by changing the way we work. We have to face up to the things we should do better.

So Diamond 2 is important and necessary – but insufficient.

Let’s start with the positives. Universities are big players in the economy. We contribute more than £70 billion to GDP each year, attract around £10 billion per annum in export earnings, and have achieved more than £1 billion in efficiencies and savings over the past three years. These are impressive figures.

We have shown restraint on pay and reduced our staff costs as a proportion of income to around 55 per cent. Even our much-reviled (but not by us, of course) Vice-Chancellors have played their part. The overall ratio between their pay and that of the lowest paid staff has actually remained fairly stable over time, despite the annual blood-letting in the press. More surprisingly still, only 36% of our staff are now eligible for automatic increments.

Responsible? Yes. Efficient too.

We have invested heavily in our estates, reduced the space we occupy per person, and increased our earnings per metre squared by more than one-third over the past ten years. Our research output is bigger and better than ever, despite significant real-terms cuts in the science budget. We are sharing expensive assets, open with our data, and increasingly effective in delivering savings through smart and collaborative purchasing practices. Procurement efficiencies totalled more than £150m in 2013/14 alone.

And the problems? Well, three at least.

First, we are in danger of losing the argument even as we score all the points. We need to keep the pressure up on policy makers and remind our colleagues as well as our political masters of just how good we sometimes are. We can’t leave it all to Ian Diamond and his fellow efficiency-mongers.

Secondly, we need to broaden the base of our argument. Sure, we have a good story to tell on procurement, but we need to drive efficiencies in other ways and in other areas too. In short, we need more innovation and new developments, not forgetting “shared services”. This is a job for registrars, secretaries and COOs along with our VCs and FDs. In the end, actions speak louder than words.

Finally, we need to be honest. Better procurement cannot fuel the efficiency agenda forever. Ultimately, this has to be about the business models we choose to adopt. For better or worse, these have been remarkably resistant to change. Reading “Diamond 2” on staff one might be forgiven for thinking that the most important question now is whether, when and how to increase salaries. In fact, the fundamental questions probably relate to productivity, values and culture.

So it’s two cheers for Sir Ian and “Diamond 2”. The third is down to us.