Deputy Vice-Chancellor Professor Andy Long and Chief Financial Officer Margaret Monckton write about the latest developments on plans to address the financial impacts of Covid-19.

As we approach the end of the University’s financial year, we wanted to take stock of our financial position, thank all colleagues for their support and look ahead to renewed investment in our research, teaching and operations under the Medium-Term Financial Plan.

Covid-19 budget plan 2020/21

We are pleased to report some positive news in terms of our management of the loss of income due to the Covid-19 pandemic. The costs of the pandemic and our projected losses, whilst still steep by any measure, have further reduced from initial estimates of £150 million to £116 million over 2020/21.

We have only been able to deal with this situation successfully through the difficult decisions made by managers across our community in pausing investments and reducing costs in a sustainable way, alongside securing higher than expected levels of student recruitment. Once again, we offer our sincere gratitude for the patience, hard work and diligence of so many colleagues in meeting our shared savings targets, against a very difficult financial backdrop.

Successfully managing our income losses in this way has meant that we have been able to end the financial year by paying staff increments, meeting increases to the Voluntary Living Wage in full, reintroducing promotion and regrading panels, and doubling the size of the Nottingham Reward Scheme to offer colleagues financial recognition for the additional efforts and contribution made during this extraordinary year.

Medium-Term Financial Plan

Meeting our Covid budget plan also means that we can now rebuild our University income faster than many universities, recommence investments and grow our spending in a sustainable manner that supports the long-term interests of our staff, students, research and teaching. As we have highlighted to colleagues in our latest round of staff briefing events, the Medium-Term Financial Plan will govern and guide exciting new investments to support delivery of our shared goals in the University Strategy.

This plan aims to restore the University to pre-pandemic levels of investment of around £100 million pa in just three years. To do this, we will not ask people to work even harder than they do currently. Instead we will rebuild and accelerate our commercial income from events, hotels and conferencing, and increase our proportion of international students (to the Russell Group average), limiting overall undergraduate growth to focus on improving tariff and widening participation.

Increasing our external research income will also prove key here, not as an end of itself, but in order to maintain the health of our disciplines through the training of research students and staff; to increase capacity for research through time for academic colleagues and funding for students and staff; and to provide the enhanced resources and equipment needed to support research over the longer term.

Our current cost recovery for research is about 67p for every pound spent, which we would like to build gradually to something closer to the Russell Group average of 75p. The continued work on the Research Strategy is vital to this and we look forward to seeing the output of the consultation process as this will undoubtedly be an area for the keenest focus over the coming years.

The Medium-Term Financial Plan will also aim to restore, then increase, our levels of surplus to pre-pandemic levels – last year this stood at £9 million but we aim to reach £25 million next year and up to £45 million by 2024/25 – all to reinvest in the University. It is essential to remember that surplus is not profit – every penny we generate in surplus is invested back into the University.

Within the plan, we have included rising pension costs, annual pay increases for staff, increases due to inflation over the next few years, and the continued costs of protecting us from Covid-19 through our asymptomatic testing service and additional student and staff support.

Our ability to rebuild the University finances more quickly than many others is only possible due to the careful management of our finances this year and in continuing to avoid taking on new, higher levels of debt. That would only lead to servicing large interest payments and burdening future generations of staff and students with debt, instead of spending on teaching and research, staff, students and facilities.

University Performance

In both strategic and financial terms, we can look towards the future with confidence and use our University Strategy to drive our performance as an institution with a focus on improving the quality of our research and teaching, rather than growing the size of our student population.

The University Strategy is our foundation, at the heart of all planning processes and performance measures. Colleagues will be able to trace a line from the Strategy, through its supporting strategic delivery plans, into Faculty and School/Department business plans and onwards to link to team objectives. A new task group will seek to better understand what we need to do as an institution to drive our performance over the short, medium and long-term, focusing on the areas that are important to us all and intrinsic to our identity – research, knowledge exchange, education and the student experience.

As we continue into the new academic year, we will be hosting a series of round table and engagement events with colleagues to focus on business planning and aligning our Faculty, School/Department and Professional Services efforts to delivering the immediate goals of the University Strategy.

We will also continue our series of staff briefing events on the University’s finances and financial strategy to ensure that colleagues understand the approach we are taking and how this will ensure we can build back stronger from the pandemic. Thank you for your continued support, we look forward to seeing you soon.