Board of Scrutiny

Noon, Thursday 20May 2004

Robinson College

LinnettRoom

Present: Stephen Cowley (Acting Secretary), Christopher Forsyth(Chairman), Nicholas Holmes, Elisabeth Leedham-Green, Timothy Milner, SaskiaMurk-Jansen, David Phillipson, Jennifer Rigby, Roger Salmon, John Spencer.

1.Apologies. Helen Thompson (on leave).

2.Minutes of the meeting of 6 May2004. These were approved.

3.Matters Arising.

3.1.Administrative support: Appointmentof the Board of Scrutiny Support Officer. It was reported that the three candidates had been interviewed.The appointment has been offered and accepted. A letter of appointment is indraft. Jennifer Rigby and the Chairman were thanked for their efforts.

3.2.Assistant Staff Pension Scheme(ASPS). The lasttwo actuarial valuations of the ASPS (2000 and 2003) were reported. A surplusof £68m in 2000 had turned into a shortfall of £17.6m in 2003 (although thestock market has recovered somewhat since that date). The fund stood at £204min 2003. The University was to make an extra contribution of £9.5m in 2003/4,as was UCLES. The Board discussed whether the University should haveanticipated the shortfall. In its 9^th Report the Board agreed tonote the failure to spot the problems with the ASPS at the time of the FinanceWorking Party Report, and to comment on personnel’s handling of the associatedstaff relations issues.

3.3.Acting Secretary. The Registrary has been informedthat Dr Cowley is Acting Secretary.

3.4.Legal Advice. Copies of the legal advice receivedby the University concerning the distribution of trust capital as income hadbeen received. It was noted that the Amalgamated Fund can declare a dividendthat is not related to income received. Up to 2000 income had been underdistributed, but that position had been reversed in 2001. The income surplusaccumulated prior to 2000/011 will have been fully distributed by the end of2003/04.Once this has happened,University trust funds with permanent capital will need a change of UniversityStatute in order to continue to spend a dividend in excess of income (e.g. inorder to adopt a total return policy). There is the separate issue of whetherthe University would be wise, even if it is legal, to continue dividends at thecurrent level.

3.5.Draft risk Register. The Secretary apologised for nothaving acted on the request for the draft risk register.

3.6.RAM and the Financial Model. The Secretary apologised for nothaving acted on the request for a statement of the relationship between the RAMand the financial model. In a discussion of the RAM it was reported Schoolswill be expected to submit plans detailing expenditure reductions duringMichaelmas 2004. These will be scrutinised by the Planning and ResourcesCommittee to confirm that they are consistent with the best interests of theUniversity as a whole (e.g. as regards student numbers and HEFCE QR income). Itwas reported that the Allocations Report should be published on Wednesday 26May.

The University’s finances were discussed. The Universityclearly needs more income or to spend less. The Finance Working Partyidentified possible extra sources of income and reductions in expenditure.However, there had been somewhat of a hiatus in implementing the more difficultproposals while the RAM was developed. In addition the problems with the ASPShad made matters worse. At some point the University was going to have to graspthe nettle in order to reduce its deficit. It was noted that, inter alia,the equipment budget had been reduced as an incentive for institutions anddepartments to use reserves. As an example it was noted that the UCS reserveswould last one for year; the question then arose as to whether an increase inits equipment budget had been allowed for in forward planning.

3.7.Audit Committee: HEFCE Documents. Therequested documents were tabled. It was decided to discuss them at the nextmeeting. The Chairman noted that he had yet to receive any documents on theconsolidation of accounts.

3.8.Investment policy. Discussion of this item was deferred to item5.

3.9.HERA. The Director of Personnel hadinformed the Chairman that the Council and the General Board were considering adraft Report on the introduction of a single salary spine based on HERA. Nopapers had been forwarded. The Board noted that the introduction of HERA and asingle salary spine had been an ongoing project for 2-3 years. Such a longdevelopment time might be appropriate for such an important and far-reachingmeasure; however, there must also be adequate time for consultation with theRegent House. Depending on developments the Board agreed that it might beappropriate to make this point in the 9^th Report.

4.Visit to Management InformationServices Division (MISD). A delegation from the Board had had a productive meeting with theDirector of the MISD, John Milner, on 14 May 2004. Topics discussed included:CUFS, CamSIS, the Shattock proposals for a merger with the UCS, and thepurchase of computer equipment. The Board was told that, although it had beennecessary to modify initial plans, CamSIS was expected to come in both onbudget and on time; the Director was happy with the procedures followed in theprocurement process. Plans for the introduction of a new human resources systemhad been extended over an extra year because of budget limitations, howeverdespite an antiquated system matters were in hand.There was good liaison with the UCS, but there was no perceivedneed to merge the MISD and the UCS. The Director of MISD was confident thatgood value for money was being obtained in the purchase of computer equipment.

5.Preparation of the Annual Report.

5.1.Executive summary. It wasagreed to include an executive summary at the start of the Report.

5.2.Introduction. It was agreed to shorten the introduction (and notto use the word “watchdog”), to include a reference to what the Wass Reportenvisaged the Board’s role would be, and to move the section on the remit ofthe Board to the end of the Report. It was also agreed to include footnotes insections referring to the relevant paragraphs in the Annual Reports of the Counciland General Board and/or the Abstract of Accounts.It was agreed to refer the interested reader to the WWW fordetails of when and whom we met.

5.3.Financial matters. It was agreed that the start of this sectionwould include an overview of the accounts. It was agreed to note that, in thelight of probable cuts, the University should concentrate on the excellent, andshould cut the non-excellent. The Board was aware that some in the centralbodies are aware that the current annual deficit cannot continue, and thatsomething has to be done. However, because of the hiatus resulting from theintroduction of the RAM, while the issues may have been identified (e.g. in theFWP Report), many of the issues do not seem to have been directly addressed.

5.4.Statutory Posts. There was a discussion of whichadministrative posts should appear in the Statutes. It was agreed that, if notin Statutes, senior posts should appear in Ordinances. The need for a role ofTreasurer was discussed. The question arose as to whether the Director ofFinance should report to the Registrary, or directly to the VC.

5.5.Investments. There was a discussion of the draft section oninvestments. It was agreed that detailed quotes should be placed in Annexes. Aneed to clarify the definition of trust and restricted funds was identified. Itwas agreed to determine what view the Finance Committee had come to as regardsa policy of maximising total return (the Chairman will ask for the relevantpapers). A question arose as to the approximately £100 m of University fundsthat is not in the Amalgamated Fund; this was thought to be principally cashbalances.

5.6.Maintenance. The draftwas welcomed. A question arose as to why the estates plan was not on the WWW.The Board has discovered that behind the scenes there is strategic thinking andplanning going on; however, this is not necessarily evident to the casualobserver (or member of the RH). It was agreed that the Board should highlightissues rather than suggest courses of action. However, it was suggested thatthe recommendations at the end of this section need to be more positive

5.7.Strategy. The pointwas again made that while there may well be strategic thinking going on in theUniversity, the average member of the RH was unlikely to be aware of this and,unlike at some Universities, the views of the University at large are not beingsolicited. It was thought that it was unrealistic to expect Chairmen of Schoolsto be responsible for soliciting the views of RH members in their School or forinforming them of strategic thinking.

5.8.RAM. It was again observed (a) that theRAM does not distribute income as earned, and (b) that the top slicing of theCollege fee in the RAM could lead to distorted incentives. There was adiscussion of whether the College fee should be subject to a reduction similarto that sought from the Schools and other Institutions in the University. Itwas noted that the top slicing of the College fee highlights the role ofColleges. The view was expressed that the cost drivers in the RAM must also bethe same cost drivers felt by Colleges, otherwise this might be a recipe fordisaster. There was a discussion of student numbers in this context. It wasalso noted that many Colleges are in deficit, and that undergraduates can oftencost Colleges twice what the undergraduates pay in fees, rents, etc. It wassuggested that after the new-form statutory accounts of the Colleges have beenpublished for the first time in Michaelmas 2004, it might be appropriate forthe Board to publish an interim Report.

5.9.Governance. It wasagreed to refer to the re-organisation of the Finance Committee and the PRC. Itwas agreed to prune the Board’s draft comments on the working of Council. Therewas a discussion of the need for a General Counsel, or similar. The recentadvertisement for a Director of Public Affairs was noted. It was agreed to notethe poor information flow between Council and the Regent House, and to welcomegreater consultation and open debate (see also 5.7 above). It was noted thatrenegotiation of the College fee, including the capping of student numbers, wasa sensible decision; however it was not clear that the negotiations werehandled optimally. It is clear that the University and Colleges should bethinking about their relationship. There was a discussion as to whether theexisting formal routes of communication via the Colleges’ Committee and the 3+3Committee were adequate.

6.Any other business. There wasno other business.

7.Date of next meeting. It wasagree to hold an extra meeting at noon on 27 May 2004 in Robinson College.