Strategy 2009-10 to 2013-14
Finance
Strategic Aim Five - To support the delivery of the
University’s strategic plan, ensuring that new and continuing activities are
financially sustainable.
In 2008 the University embarked upon a new investment-led financial
strategy aimed at achieving long-term financial sustainability. By investing
in four key themes - the student experience, research, teaching capacity and
in enhancing the fabric of the University - we aim to increase our
self-reliance and determine our own agenda for the future.
To
support increased investment we set ourselves the target of achieving a
level of recurrent surplus (5 per cent of turnover by 2010-11) sufficient to
fund investment and protect against the unexpected. Critical to achieving
this goal is a cost-reduction exercise implemented at the start of 2008,
aimed at reducing the cost base by £5 million (by 2010-11). This exercise
has been successfully completed and cost reductions have already begun to
flow through.
The 5 per cent surplus target is being deployed to fund 3 per cent
strategic investment, 1 per cent sustainability (long-term maintenance) and
1 per cent contingency. The progress we have made in implementing our
strategy has provided the confidence to begin the investment programme.
Capital investment has commenced and we are now budgeting for enhanced
maintenance and recurrent investment. As a consequence our surplus target
has been recalibrated to 3.5 per cent of turnover, reflecting enhanced
recurrent investment.
In spite of the significant pressure on public finances caused by the
credit crunch and the recession and the additional commitment to fund a 5
per cent pay award (agreed October 2008) and significantly increased pension
costs from October 2009, progress towards achieving our financial objectives
remains solidly on track. Stronger than expected student number growth,
impressive growth in research grant and contracts income, combined with
effective cost control across all operations have contributed to this
position.
In 2008-09 income grew by 12 per cent (target 5 per cent), while income
from philanthropic sources was £1.4 million in 2008-09 (target of the five
year planning period £6 million) following the receipt of one substantial
legacy. The ratio of staff cost to total income has declined from 62 per
cent in 2006-07 to 59 per cent in 2008-09 and is set to decline further as
the full benefits of cost reductions continue to flow through.
Our Key Performance Indicators (KPIs)
explain the targets.