Newcastle University Value for Money Report 2011-12

Newcastle University Value for Money Report 2011-12

September 2012

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1Introduction

This is the eighth annual report on the University’s value for money activities.In previous years there has been a tendency for the VFM Steering Group to focus on support activity. This year, at the instigation of Audit Committee, we have focused more on our academic activity.

The objectives of the University’s value for money strategy, approved by Council in 2004, are:

• to integrate VFM principles within existing management, planning and review processes;
• to adopt recognised good practice where this makes sense;
• to undertake VFM studies on areas of activity identified as worthy of review;
• to benchmark our activities against other similar organisations where this is considered useful;
• to respond to opportunities to enhance the economy, efficiency and effectiveness of activities;
• to promote a culture of continuous improvement;
• to ensure that all staff recognise their continuing obligation to seek VFM for the institution as part of their routine activities.

2Measurement of Value for Money

2.1National Student Survey

The National Student Survey (NSS) is an important indicator of UK undergraduate students’ perceptions of the value for money offered by the University. We maintained our strong institutional performance in the 2012 survey, with 89% of students who took part agreeing or strongly agreeing that they were satisfied with the overall quality of their course. This is a 2% improvement on 2010, and shows a sustained improvement from 81% in 2006.

Percentage of students who agree or strongly agree to satisfaction in: / Newcastle / Sector
2012 / 2011 / 2012
The teaching on my course / 89% / 89% / 86%
Assessment and feedback / 67% / 66% / 70%
Academic support / 83% / 82% / 79%
Organisation and management / 84% / 86% / 77%
Learning resources / 86% / 82% / 82%
Personal development / 83% / 80% / 81%
Overall satisfaction / 89% / 89% / 85%

Results at subject level continue to improve with 25 out of 47 of our published subject scores meeting or exceeding the 90% target for overall student satisfaction.

2.2Other Student Feedback

During 2011/12, we took part in the Postgraduate Taught Experience Survey. We participate in this survey and its research counterpart, the Postgraduate Research Experience Survey, in alternate years. 89% of students who participated in the survey said that their experience at Newcastle had met or exceeded their expectations. This compared favourably to the national and Russell Group averages of 87%. In 13 schools, over 90% of students claimed that the overall experience of their course had met or exceeded their expectations. Only one school received a satisfaction score of less than 80%.

The results of the 2011 International Student Barometer were very positive. 91% of respondents rated their general satisfaction with Newcastle as high.We achieved strong overall scores in all four of the key areas of the survey: learning, living, support and arrival.Newcastle was ranked first in the Russell Group in a total of 23 specific areas this year.Identified areas of strength include opportunities for virtual learning (94%), Careers Service (93%), IT support (95%), and the Library (93%). We are addressing areas identified for improvement, including opportunities for social integration of international students.

The way in which student fees were spent in 2010/11 is set out in Appendix One. The analysis for 2012/13 will change as expenditure on student bursaries will increase. This information is obviously sensitive and further consideration will be given to the presentation for different audiences.

2.3Research indirect costs

The need for Universities to reduce their indirect costs (both in comparison to their peers and over time) was seen as a key conclusion of the Wakeham report. The University’s FEC indirect charge-out rates continues to reduce reflecting improved efficiency in our research support activities. We compare extremely well both against our TRAC peer group and against the sector average.

2008/09 / 2009/10 / 2010/11 / Improvement over 2 years
Newcastle University / £34,518 / £32,885 / £31,465 / 9%
TRAC peer group average / £39,825 / £38,347 / £37,812 / 5%
Sector average / £39,570 / £39,176 / £38,130 / 4%

Newcastle is one of only four Russell Group universities to be allocated to Efficiency Group A by Research Councils UK, both in 2011/12 and in 2012/13[1].

2.4Procurement[2]

During 2011/12 Procurement Services invited tenders for 107 contracts and framework agreements on behalf of the University with a total contract value of £36.5m. Reported financial savings negotiated during the process for purchases were £1.5m.These tenders were carried out using the University’s e-tender system resulting in efficiency savings of £85k. Ca £25m was ordered using collaborative procurement arrangements (£23m in 2010/11). This equates to an efficiency saving of £100k.Purchasing card usage increased from 11,917 transactions (value £1.5m) to 17,069 transactions (value £2.5m). This equates to an efficiency saving of £145k.E-marketplace transactions increased from 4,943transactions (value £1.0m) to 25,923 transactions (value £4.8m). This equates to an efficiency saving of £925k.

2.5Administrative Costs

The graph below shows our total administrative expenditure as a percentage of income set against an extended peer group for the most recent comparative years[3]. We see this as an important measure of the value for money of our support activities. In 2010/11 25 institutions occupied the range from 14%-18% and Newcastle, at 14.3%, was eighth lowest in the group of 35.The mean for the comparator group was 15.6% and the median 16.1%.

3Governance

Executive Board has management information presented to it on a quarterly basis which helps to identify value for money issues at a strategic level.The VFM Working Group has continued to take action on various initiatives.Membership during 2011/12 was as follows:

• John Hogan, Registrar (Chair)
• Neil Addison, Head of Procurement
• Peter Andras, Reader in Complex Systems, Computing Science
• Alan Boddy, Professor of Cancer Pharmacology, Northern Institute for Cancer Research
• Zoe Bright, School Manager, Education, Communication and Language Sciences
• Richard Dale, Executive Director of Finance
• Susan Lawson, School Administrator, Mechanical and Systems Engineering
• Gary Montague, Professor of Bioprocess Control, School of Chemical Engineering and Advanced Materials
• David Ramsey, Faculty Management Accountant, SAgE
• Clare Rogers, Director of Estate Support Service
• Juliet Simpson, Head of Internal Audit
• Chris Stafford, Head of Administration, HaSS
• Steve Williams, Director of Information Systems and Services

The recent review of the effectiveness of Audit Committee has recommended that there is a closer relationship between the committee and the VFM Working Group so there is a better understanding of the University’s priorities in this area.

4Academic staff expenditure and performance

4.1Introduction

In 2011/12 our staff costs of £209.4m represented 55% of the University’s income. Academic staff costs amounted to £125.8m (60% of the total, compared to 59% in 2010/11) and, perfectly reasonably, were the single largest item of expenditure. The achievement of good value for money in this area is probably the most important and sensitive of all our areas of work.

Expenditure on staff costs has been low compared to our peer group and this has been one of the key factors behind our good financial performance over the past few years. In 2009/10 only 6 universities out of 35 in our wider peer group spent a smaller percentage on staff. The comparative position for academic staff costs is set out in Appendix Two. These tables suggest a middling position for us but low or middle range costs are not the same as good VFM. The two critical tests of our academic performance are the National Student Survey and the Research Excellence Framework. The next REF results will not be available until 2014. In the predecessor exercise, the Research Assessment Exercise, whose results were announced in 2008, we were 27th in UK in research quality and 17th in research power.The results of the most recent student surveys are summarised in sections 2.1 and 2.2.

4.2Academic staff time

How do academic staff spend their time? This is a sensitive area. Traditionally research universities employ very bright people and then give them time to develop and explore their discipline. This is still an important policy but the increases in external scrutiny, the competitive nature of research funding, squeeze on resources, increasing student numbers and increasing student fees have demanded more accountability and transparency in how academic staff spend their time.

The ‘transparent approach to costing’ (TRAC) was introduced as part of a review of the sustainability of research funding. It has been used to show that universities make a loss on publicly funded research.This in turn led to higher overheads being paid by research councils.However, it is still the case that research is an expensive activity that requires some subsidy from teaching income.The University’s results are reported to Executive Board, Council and HEFCE.

TRAC is the standard costing approach used by higher education institutions in the UK to cost teaching, research and commercial activities.Time Allocation plays a central role in TRAC and, although the accuracy of the data is open to some challenge, it does give a good indication of how staff believe they are spending their time. The data shows that academic staff work an average of 49.3 hours a week (based on full time academic members of staff only). Although much of the comparative data are presented in terms of cost allocation, it is important to recognise that it is not just a question of teaching subsiding research but also academic staff subsidising both activities.

Academic salaries allocated through diary exercise against TRAC peer group[4] / Newcastle / 2010/11 Peer Group A
2010/11 / 2009/10 / 1st Quartile / Average / 3rd Quartile
Teaching / 20% / 19% / 21% / 23% / 27%
Research / 39% / 37% / 35% / 40% / 45%
Other / 4% / 4% / 2% / 2% / 5%
Support / 36% / 40% / 30% / 32% / 35%

The allocation of academic salary costs is shown in detail in Appendix Three[5]. Support activity is apportioned across key activities to produce the following summary allocations:

Allocation of academic salary costs in TRAC
2010/11 / 2009/10
Teaching / 37.1% / 35.8%
Research / 56.8% / 58.6%
Other / 6.1% / 5.6%

From a VFM perspective two points seem to stand out.

First, the high percentage of time spent on postgraduate teaching is high compared with undergraduates given the numbers involved. The University has five times as many undergraduates as taught postgraduates but, in terms of academic time, undergraduates only account for twice the total time spent by academics. However, taught postgraduate teaching is delivered over three semesters as opposed to 24 weeks for undergraduates.These programmes are by their nature more advanced, specialised and intensive; PGT programmes have a credit value of 180 per academic year, rather than 120 credits for UG programmes and are delivered to smaller cohorts. Our taught postgraduate programmes also have amuch higher proportion of international students than our undergraduate ones. International students have been paying a higher fee and this will continue post 2012. They also require a higher level of support for some aspects of their studies.Undergraduates in comparison are often taught in larger groups. The majority of taught postgraduate programmes are one year in length as opposed to three or four years for undergraduate programmes.These factors heavily influence the amount of academic time taught postgraduates receive in comparison to undergraduates.

Second, the very high percentage of time spent on ‘own-funded research’ in HASS (27%) is much higher thanFMS and SAgE (5% and 10% respectively).Most of own-funded research is funded out of the QR allocations driven by the RAE (77% in the case of HASS) and in the future the REF. Academic staff in HASS spend roughly the same amount of time on research as academic staff in the other two faculties despite having twice as many students and 10% of the research grants and contracts plus QR funding of the University. It is worth noting that HASS has an improving NSS score and has reflected on the balance of time spent on teaching and research during term time and has led to contact time adjustment for 2012.This issue has been at the heart of some of our discussions about the higher undergraduate fee in 2012 and the amount of contact time in HASS. Perhaps the obvious conclusion is the desirability of HASS reducing the amount of own funded research by increasing its research grant income.

4.3Workload models

All three Faculties have workload models. These have become important management tools enabling heads of Schools/Institutes to distribute workloads in a more transparent and balanced manner.Although the tariffs used vary between the three Faculties reflecting different teaching or support arrangements, there are similar principles used in all three faculties.We thus have systems in place to help balance workloads and improve the overall efficiency of our efforts.

Responsibility for workload management lies with the Head of School. Schools are free to vary workload tariff schedules locally, but must respect the general principles agreed at Faculty level.UCU have agreed the principles of workload planning but not the tariffs.Full-time academic staff on grade G and above are allocated 1,744 hours (grade F 1,613 hours). Those holding a fractional appointment are allocated hours on a pro rata basis. It will be noted that in practice academic staff work longer hours.There are three categories of academic activity: teaching, research and engagement in line with the University’s mission.

The issue of the balance of time in HASS is being addressed directly by the Faculty PVC in the workload model as the following extract from the Principles of Workload Management explains.

“One of the main purposes of workload modelling is to strike a balance between the available supply and demand for hours. As supply is finite, this requires prioritisation and the fine tuning of tariffs. The most important general requirement is to ensure that teaching and teaching related administrative activities are supported first when allocating responsibilities to individual members of academic staff.”

4.4Clinical academic job planning and value for money

Several years ago a new NHS consultant contract was agreed between the Department of Health and the British Medical Association.This generated a time-based contract where individual blocks of time were identified as so-called “programmed activities” (PAs).Each of these is generally 4 hours in duration and the standard contract for NHS consultants is one of 10 PAs (for a standard 40 hour week).Activity above this can be awarded additional PAs which carry additional remuneration.There was a national agreement that Clinical Academics would have their contracts along similar lines with the standard academic contract comprising 5 clinical PAs and 5 academic PAs.In the first year of this scheme a number of guiding principles were agreed at Faculty level and individual clinical academics were awarded contracts of between 10 and 14.5 PAs.This resulted in a significant addition to our salary bill, some of which was offset by additional funding from HEFCE.

With hindsight there was some lack of consistency across the University in how definitions were applied to the ca 110 clinical academic contracts.In subsequent years there was a general drift upwards in the mean PAs per member of staff.We undertook a much more rigorous scrutiny of job plans in 2011/12, examining in detail all proposed job plans for the forthcoming year.This was a time consuming exercise but it highlighted that there were indeed inconsistencies across the faculty. A set of more detailed guidelines was created, whichwas used to modify proposed job plans to ensure greater consistency.This iterative process led to some reduction in PAs in individual job plans.The overall saving to the University in this round was limited but the agreement of the more detailed guidelines will be applied to all future job planning rounds which will enable us to prevent any further upward drift in the salary bill.Indeed it may allow us to continue to trim PAs in certain areas.All Clinical Academic Job Plans have now been capped at 12 PAs, contrasting quite markedly with several local NHS Trusts.

4.5HASS Masters review

The Faculty has carried out a Master’s review with a focus on viability. As a consequence some very small programmes have been removed and others have been reformed to secure greater efficiency. Mechanisms are in place to ensure ongoing review of this area, where there has been a tendency to run too many small programmes. In the Linguistics area work is under way to consolidate the existing cross-school programmes into one suite with less duplication. In a number of areas efficiency gains have been secured without any detrimental impact on students by adopting a hub and spoke model for a suite of related programmes, which share some common modules but which are also clearly differentiated for marketing purposes (e.g. master’s programmes in ICCHS; MAs in Archaeology; the proposed new MA Creative Arts Practice; MAs in History).

4.6HASS undergraduate framework

The Faculty has developed an undergraduate taught framework in order to bring some consistency and ensure a suitable level of service to students. It establishes a minimum contact regime of 36 hours for a 20 credit module, which would deliver the minimum of 9 hours of contact for stage 1 students envisaged in the 2012 Offer. This is a substantial increase in contact in some areas, and represents better value for money for students.The framework is based on 20 credit modules as the normal building block, whereas previously schools made different decisions. This facilitates module sharing and makes it much easier to construct new joint honours programmes in response to market demand in a climate of increasing uncertainty about demand for undergraduate places. 20 credit modules also involve marginally less administration and assessment than two 10 credit modules. The framework has also encouraged schools to review and reduce the amount of optional choice available, which was sometimes excessive and inefficient in the past. The framework requires programmes (with some exceptions related to professional accreditation) to include capacity for students to be able to study modules outside their schools, which opens up options such as the career development modules run by the Careers Service or language modules, and widens student choice.

5Other VFM activity

5.1Asset sharing:Newcastle University partnership with the N8

In May 2011UK Research Councils introduced new requirements for requesting equipment on research grant proposals, which limited the amount of money and introduced a requirement to explore sharing equipment between HEIs. This was in response to the Wakeham Review (Financial Sustainability and Efficiency in Full Economic Costing of Research in UK Higher Education Institutions) and the 50% reduction in capital budgets at the last Comprehensive Spending Review,.