Communication from the VC in January 2010

Dear colleagues,

You will no doubt have seen the various articles in the media, following the announcement made by Lord Mandelson before Xmas regarding funding cuts in the University sector. As we get closer to the general election in the spring, there will be increasing numbers of stories in the press about University funding cuts. Although the recent headlines are alarming, I don´t believe that they should cause us to panic. So I thought it would be worthwhile sharing with you my thoughts about how we are responding to the financial challenges ahead of us.

The proposed funding cuts will undoubtedly affect all of us in the University sector. However, there remains uncertainty about how the cuts will be implemented. We are expecting a letter from HEFCE in mid March which will outline more detail about the precise nature of the cuts. This will help clarify some of the impacts of the funding squeeze on the sector overall, and more specifically on the University of Sheffield. But we need to be realistic – there will continue to be uncertainty surrounding future funding of the sector for many months, if not years. We must learn to live with this as a reality and not get distracted by it; whilst at the same time arguing strongly our case and defending our success at national level.

This uncertainty is no reason for us to be complacent. Under the guidance of the University Council, the executive team is actively planning for potential scenarios which may unfold. The first scenario is looking at actions that would be required if we experienced a reduction in our core grant funding of 5% per annum from 2010/11 for three years. The second scenario is more pessimistic, and looks at a 10% cut in core grant funding in 2010/11 and then 7.5% for the subsequent two years. All faculties and departments are involved in dialogue and planning around those scenarios.

It´s important that we focus on what we value and what we do well. All of us believe in the benefit that higher education can bring to individuals and to the wider economy – and we can rightly be proud of our high quality research and teaching at Sheffield. Remaining focused on delivering this quality, and ensuring an excellent student experience, will be key as we progress over the coming months. At the same time, we should look for ways to help mitigate the impact of likely government funding cuts. Finding ways to work more efficiently, and developing other income streams to help balance the books, will be critical as we move forward.

We have made good progress in each of these areas. The voluntary severance scheme (VSS) in the summer has reduced our salary bill by around £13m; the "Better Spaces" project will help rationalise the costs associated with running University´s estate and improve the quality and carbon efficiency of our buildings. In the areas of learning and teaching, Faculties are reviewing their range of programmes to ensure that they reflect demand and with the benefit of reducing the number of low take-up programmes that cost a disproportionate amount to deliver.

However, despite the recent VSS scheme, we have yet to achieve our overall target of £25M of income increases/cost savings and need to identify a further £9.5m in relation to the shortfall we had identified. So we will need to continue to find ways to reduce expenditure – on space and estates, running costs, and staff.

Regarding increasing income, activity is underway across the institution to identify new income streams to help the financial situation. We have focused on developing new international opportunities and growing existing relationships – and many of these are beginning to show signs of delivering increased income. For example, our partnership with the University of Sharjah is about to be expanded following a successful first year of operation; Project Japan is exploring a range of income generating opportunities; and we have recently concluded negotiations with Omar Al Mukhtar University in Libya to receive a large number of PhD students next year, and are beginning to discuss a longer term agreement with them for student recruitment.

I´m particularly pleased that everyone is responding well to our financial challenges and many colleagues are already generating ideas to diversify and deepen non-core income streams, and to reduce operating costs still further. UEB are actively considering what the University can do to support your ideas and bring them speedily to fruition.

So, to conclude, the funding situation is serious. However, it is important that we all stay positive and remember to focus on what we do well – teaching and research – whilst all continuing to look for ways to increase efficiency and develop new income streams. I will be spending a lot of my time over the coming months working with other Vice-Chancellors to ensure the importance of the UK´s world class University sector is appreciated by all political parties. The most powerful way I have found to convince people of this is by using examples of our achievements here at Sheffield – achievements about which we should all be proud.

With best wishes,

Professor Keith Burnett, Vice-Chancellor