The Finance Strategy supports the delivery of the University’s Strategic, Operational and Departmental Business Plans. The Strategy is designed to ensure the long term financial sustainability of the university, delivering an integrated approach linking academic, financial and business planning issues, enabling investment and development and underpinning the delivery of an excellent student experience.
The Higher Education sector has experienced a period of uncertainty in relation to its core income stream for some time now. The cap on fees has recently been confirmed, and whilst this provides some certainty, the £9,250 fee cap maintains a real term reduction in resource which will continue until 2024/25, whilst pay and pension costs are increasing to unprecedented levels year on year. The combined effect creates significant pressure on University resourcing. Levels of competition across the sector are at an all-time high for growth in new entrants and overseas students. The demographic upturn in 18 year old school leavers offers opportunities for overall sector to grow alongside movements in market share. During the period of this Finance Strategy, UoG aims to achieve growth in turnover to sustain investment; service innovation and delivery of an excellent staff and student experience.
In developing this Strategy, the University has had regard in particular to the relevant OfS Regulatory Notices and the CUC Guide for members of Governing Bodies.
This Finance Strategy is one of the strategies underpinning the University Strategy, and has been developed in parallel with a number of mutually reinforcing strategies, including: Education; Marketing, Branding and Communications; People; Estates; Digital; and Sustainability, all of which support the achievement of the 5 University Strategic Goals set out in the Strategic Plan 2022-27, which are:
Education: to support our students, in the UK and overseas, to learn well by providing an outstanding education
Student Life: to enable and support our students to thrive and flourish
Student Outcomes: to support our students to achieve their full potential in their career and their lives
Research, Innovation and Enterprise: to undertake excellent research and encourage innovation and enterprise for students, staff and partners
Civic Role: to promote the wellbeing and advancement of our community
The new University Strategic Plan 2022-27 sets demanding targets for growth and success and this Finance Strategy seeks to support that growth ambition. It aims to facilitate growth and provide a framework for delivery through recurrent resourcing and investment in infrastructure and innovation. The University journey to Net Zero Carbon emissions is another significant feature of the 2020-30 decade and this finance strategy also seeks to supports delivery of this ambition.
Our Overarching Financial Aim
The main aim of this Finance Strategy is to ensure the long term financial sustainability of the university through growth in turnover, which ensures sufficient surpluses and cash resources are generated to enable the University to invest in its people and infrastructure and provide an excellent student experience.
Our Goals and Priority Actions
Primary Financial Goals:
To ensure the continued financial sustainability of the University
To identify and fully exploit profitable income lines with growth potential
To manage pay and non-pay costs within an inflationary environment
To maintain cash generation at a level to sustain investment and business development.
To ensure the continued financial sustainability of the University
The priority actions required to deliver against this goal are:
To adopt an operating model, where budgets and resourcing of activities are mapped against our strategic priorities through alignment of the annual business planning and budget processes. In order to ensure appropriate investment in priority activities, greater analysis and understanding of ‘Business as Usual Activities’ will be developed, to facilitate re-direction of resources to value creating activities.
We will maintain short and long term forecasts, including scenario planning and sensitivity analysis. Forecasts should be at a sufficiently robust level to guide decision making.
We will measure performance against Key Financial Indicators. Through monthly monitoring of KFIs against targets, reporting on variances, reforecasting at appropriate intervals and implementing interventions, as necessary.
To maintain a robust and compliant financial operating framework. Appropriate levels of financial control and delegations of authority to safeguard assets, manage exposure to liabilities and safeguard against fraud.
To maintain a culture of cost awareness and cost control. The current financial climate makes it essential for all staff to question the need to spend, and to seek ways of minimising non-pay expenditure. Furthermore, staff are encouraged to seek more efficient ways to deliver processes and services, removing non-essential or non-value adding activities. All Departments are expected to consider, develop and implement Business Process Improvements, with support from the Projects & Planning Team.
We will deliver transparency of financial information to students, to aid their understanding of Value for Money.
To identify and fully exploit profitable income lines with growth potential
The priority actions required to deliver against this goal are:
We will deliver income growth and diversification through the following actions:
► Through successful development of the University academic portfolio, carefully identifying new courses to deliver growth in tuition fee income and government grants, and to deliver growth in student cohorts on the existing portfolio. ► Implement course viability reviews and identify early warning metrics for courses becoming less viable and develop plans for corrective action or to acknowledge when course closure may be the best option ► Through successful growth in the Higher Apprenticeships, ensuring a cost effective delivery model, and targeted tendering activity. ► Through new product development or extensions, including CPD and non-credit bearing course delivery ► Through a commercial approach to pricing of non-regulated fees ► Through successful and profitable growth in collaborative partnerships which generate validation, franchise or direct fee income through off-campus delivery. Collaboration may be through structured or less formal arrangements, and can offer good opportunities for accessing new markets (at home or overseas). ► Through successful development of the University Commercial Venue Hire, adopting a commercial approach to pricing and careful control of costs ► Through optimal occupancy of student halls of residence, throughout term-time and vacation periods ► Through successful growth of contract research and consultancy activities, ensuring that a commercial approach to pricing delivers profit generation ► Through managed growth in the Research portfolio, maximizing REF funding to deliver a base financial platform which can assist in the financial subsidy of this non-profit generating activity ► Through targeted bidding for public grant funded revenue projects, ensuring that reputational enhancement or legacy income generation justifies any financial subsidy or matched funding requirement for this non-profit generating activity. ► Maximize capital grant receipts through targeted bidding for funds, either as a sole delivery unit, or as part of wider collaborative biding opportunities
2. Selective investment in new growth initiatives with a mix of short, medium and long term horizons. Business cases should be robust, informed by lessons learned from previous developments, and should be considered against strategic goals and investment constraints.
3. We will actively manage the portfolio of activities (as described in i) above), informed by transparent information on profitability margins. Maximising contributions from regulated fee income; non-regulated fee income; commercial business development income and research.
3. To manage pay and non-pay costs within an inflationary environment
The priority actions required to deliver against this goal are:
To work with budget holders to gain a greater awareness of new financial pressures created in an inflationary environment
To make better use of the UoG Contract Management Framework to manage supplier contracts to deliver quality services at an affordable cost to UoG, taking actions to reset service levels as required
To forecast the inflationary impact on UoG pay costs in the short and medium term and to develop and implement plans to manage such inflationary pressures
To manage workforce driven price and volume financial pressures, through the Workforce Project Group, considering a wide range of levers to manage pay costs and delivery efficiency through the workforce
To review annually the pay to income ratio at University and business unit levels, and to take tactical and strategic actions to ensure that pay is maintained at manageable levels.
4. To maintain cash generation at a level to sustain investment and business development
The priority actions required to deliver against this goal are:
The City Campus development and other capital growth projects place greater focus on cash generation and related interest cover bank loan covenant KFIs. Cash generation is essential to maintain day to day financial health and to invest in strategic developments
To optimize estate utilization and implement an affordable premises investment plan to meet future education, administration and social needs of the University. Periodic review of the estate to consider permanent or temporary disposals, acquisitions or re-purposing of space, alongside focused investment in high priority areas and to maintain agility in the valuable premises asset.
To deliver a balanced investment programme across IT, equipment and other facilities.
To bid for capital funding to support the Estates developments; and to enter into loan funding for major projects, when supported by an approved Business Case.
To manage the major capital investment programme whilst maintaining a minimum level of cash which comfortably exceeds the minimum expectations of the OfS.
Measuring success
We will measure our success against the following Key Financial Indicators:
Financial Performance Indicator
Target/ threshold
Target/ threshold
Cash generation from operating activities
10% of turnover
14.7% of turnover
Operating surplus (before FRS 102 pension charge)
4.5% of turnover
1.4% of turnover
Year end liquidity ratio
To exceed 100 days
147 days
Minimum cash balance during year (OfS reportable event measure)
To exceed 45 days
66 days
Interest cover ratio
1:1.1
3.21:1
External borrowings (all borrowings and service concessions)
Not to exceed 45% of turnover
33.3% of turnover
EBITDA as a percentage of total income
To exceed 10% of turnover
8.3% of turnover
Investment in capital and recurrent maintenance -Capital (estates, equipment, and IT) – Recurrent investment in maintenance
5% of turnover 1.8% of turnover
11.6% 1.8%
Financial management metrics
Pay as a % of income
To benchmark annually, aiming not to be out of line with peers
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