University of Nottingham UCU’s Alternative Financial Strategy – because there is a better way.

Earlier this year the University of Nottingham UCU branch launched its Alternative Financial Strategy. This was produced by engaging an external expert in higher education finances and drawing on the relevant disciplinary expertise of UoN’s branch members. The Strategy was overwhelmingly endorsed by members. It represents a response to the impact of the pandemic but also makes a longer-term case for managing the University’s finances differently and for making financial management in the University more open and democratic.

The pandemic exposed the very particular way that UoN manages its finances when compared to other Russell Group universities. In essence, the University finances both day-to-day commitments (current expenditure) and long-term investments (capital expenditure) from income generated from standard activities (student fees, grant income, commercial work). This form of ‘lean financial management’ rejects the notion that high cost long term investment projects should also be funded by sources of finance (including borrowing) that spread repayment costs over more time. Instead, it seeks to fund these projects only by generating immediate surpluses. While we understand that this can reduce interest payment commitments (relatively low given current long-term interest rates), this approach comes with significant costs. These include: 

  1. The cost of risk – the approach adopted by university management foregoes building up cash reserves that are essential for responding to unanticipated crises. This is why the University of Nottingham was forced into a panic reaction to the pandemic with an immediate embargo on all so-called ‘non-essential expenditure’, a major voluntary redundancy programme and the imposition of across the board 15% spending reductions (‘Covid cuts’ – now revised to 11% as the actual impact of the pandemic has become clearer). One very obvious, but less visible, consequence of this situation was the cull of colleagues working on precarious contracts.
  2. The cost to staff –the University’s approach to financial management ultimately transfers the costs of saved interest payments onto current staff. Indeed, it is current staff who must generate the additional income (increases in student fee revenue, increased grant capture) to fund long-term investment projects. The University’s own stated plans seek to increase income by 35% on pre-Covid levels, while simultaneously reducing expenditure by 11% (by making the ‘Covid cuts’ permanent). The consequences of this ‘more with less’ approach are easy to predict, as the drive for increased ‘productivity’ is intensified.

University management has not shown any willingness to engage meaningfully with UCU’s proposals. It rejected a request to present the proposals to University Council outright, and it circulated an uncompromising 36-slide rebuttal of our alternative to all staff. For all intents and purposes, from University management’s perspective, ‘there is no alternative’.

The UCU branch is extremely disappointed by this response. The AFS is serious and credible. We presented it as a constructive contribution to an open debate. Of all organisations, universities should be able to debate issues about which we may disagree. The branch will continue to press its case, including its expectation that Council find time to discuss the issues we have presented at its next meeting in June.

The branch has issued a response to management’s rebuttal of the AFS, clearly setting out the multiple ways in which management misrepresents UCU’s position and proposals. However, we are also convinced that our concerns with the University’s financial management model cannot – and should not – be reduced to technical discussions about how to calculate liquidity ratios. The pandemic has exposed all the frailties and contradictions of the neoliberal university, which focuses exclusively on securing competitive advantage in the global higher education ‘market’. UCU’s Alternative Financial Strategy is intended to chart a very different path for the future of the University – it is a real alternative.

It is an alternative that recognises that we all are ‘The University’. It is an alternative that prioritises the people who work and study in the institution. Our demands are practical and realistic. They focus on defending the jobs and working conditions of everyone who works in the university now. That is why UCU is calling for:

  • An end to the lean financial management model that drives ‘more with less’ working conditions for staff and that imperils jobs (especially those on precarious contracts).
  • An open review of all the University’s investment plans, recognising the need to postpone or even abandon plans where necessary. UCU has made clear that this is achieved most effectively through the involvement of a more democratic Senate, where all members are elected.
  • A commitment to fund investment plans using appropriate sources of long-term funding. High cost capital expenditure, generating benefits over many years, needs to be financed in ways that spread costs over time in order not to put untenable pressure on staff in the here and now. Failure to do so further fuels the ‘more with less’ culture and significantly adds to already unacceptable levels of stress and burnout.

If you agree that Council should put the Alternative Financial Strategy on the agenda for its June meeting, please sign this open letter supporting this request. You do not have to be a UCU member to sign (but we are asking that only UoN staff or students sign). Nor do you have to agree with everything the AFS says. You simply have to believe that Council should be willing to discuss and debate the issues raised by the AFS.