January 26th, 2021
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.
In this latest blog, we would like to update colleagues on the progress made by our community in meeting the savings required to keep within the approved 2020/21 budget plan, and confirm that consideration of pay and reward will now take place in March once the financial impact of the latest national lockdown is clear.
Budget Plan 2020/21
We would like to open this blog by thanking colleagues across the University for their hard work in ensuring that we have so far stayed firmly on track with the budget plan for the current academic year.
Colleagues will recall that we had planned for a loss of £150 million in income this year due to the impact of Covid-19, which would be met by pausing investments, plans to reduce our costs in a sustainable way, and a voluntary redundancy scheme coupled with further measured borrowing on top of our average level of £100 million debt.
While a loss of income on this scale can never be described as “good” news, given the path of the pandemic, it is positive to be able to report that our projections were broadly accurate and our budget plans not only remain on track, but at the first quarter of this year appear to be performing around £3 million better than predicted.
This is in no small part due to colleagues making and keeping to their robust savings plans alongside a smaller than expected drop in student recruitment income, where the loss was closer to £30 million than a predicted £80 million. There is still some risk around this number due to the January starters and, as we explain later, this upside has been offset by higher than expected Covid-related costs and further losses in commercial income.
We must also thank all colleagues, in particular our recruitment and admissions teams, for their efforts in securing higher than expected levels of Home student recruitment which has helped to offset losses from lower levels of international recruitment.
While we stay on track with our budget plans, as we have written previously, we do not anticipate requiring further savings to be made this year and colleagues should continue spending within their agreed budgets.
Costs of Covid-19
As a university, we have rightly spent a considerable sum on the additional costs associated with conducting teaching and research during the pandemic and its associated restrictions and lockdowns.
To date, more than £23 million has been spent supporting staff and students by ensuring that more than 260 buildings are Covid-secure, establishing our own Covid testing service where more than 20,000 tests have been conducted for our students and staff and delivering blended learning online and in-person.
These costs also include increased provision for student mental health, wellbeing and financial hardship, providing additional spaces for students to study and socialise and crediting students’ University accommodation accounts where they are unable to use their hall rooms while studying from home.
Of course while a budget can be planned, a pandemic cannot, and as might be expected Covid-19 and the latest national lockdown is bringing a number of additional risks and costs that we are accounting for within our current planning.
University funding sources are interlinked, so that gains in some areas can offset losses in another – for example recruitment income from Home students generally breaks even, but surpluses from international and commercial income can support research activity.
As we have written above, losses from student recruitment are likely to be closer to £30 million than £80 million, whereas losses in our commercial income from events and conferencing while the nation remains under lockdown have increased from £14 million to £32 million.
More positively, income generated by our research activity is holding up, notwithstanding the difficulties of researching in lockdown conditions, and we are recovering those awards impacted by earlier lockdowns.
However, the progress of the pandemic and associated national restrictions mean that not all of our anticipated research margin will be delivered in this academic year, by the order of some £11 million. We are also modelling a risk-adjusted loss of £12 million to account for further impacts resulting from the pandemic, for example if our researchers are unable to deliver against funding criteria due to the restrictions or if Covid-19 means that industry and charities in particular do not have funding available for research.
Pay bill measures
As we have written previously, we have been discussing measures with our trades unions to manage our £365 million annual pay bill such as pausing spend on things like pay increments and the Nottingham Reward Scheme in order to protect jobs.
While we were hoping to make decisions this month on pay, given the further financial pressures resulting from the latest national lockdown, we have reluctantly determined to look at this again in March once the impact is clearer. We are sorry that this will mean a further wait, but we hope that colleagues will understand the overriding priority continues to be to protect jobs, teaching, research and the student experience during the pandemic.
However, as communicated previously, regrading and promotion panels will resume later this year, and communications will be sent to all staff from Human Resources in February with confirmation of all key dates for the revised timescales.
In conclusion, we would like to reiterate our sincere thanks to colleagues for your support in keeping the University’s finances on track and ensuring that we can weather the storms to maintain the things that are most important to us all – our teaching, our research, and our community of students and staff.
We will host a further round of staff meetings on the University’s finances later this term, and very much want to continue our conversations with colleagues across the institution. In the meantime, should you have any comments or questions, please do email us with your thoughts.
Andy & Margaret
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