Secret Accounts and the University’s Public Narrative on Cuts

Having been expelled from all university committees as VP (Education), I have have no choice but to stop appealing to the University privately and instead appeal to all members of the University for the change we need. The following article is based on the University’s management accounts (which have somehow made their way into my hands) . These are privately circulated to the university executive separate to the publicly published accounts. The contents throw new light on the University’s strategic vision. This is the first in a series of article based on the worrying information revealed in these accounts.

The University has a ‘vision’. Its big agenda under Vice Chancellor David Eastwood and even under his predecessor Michael Sterling has been of ‘sustainable excellence‘ – structural and financial reforms to ensure the university remains financially stable. This of course sounds entirely reasonable and fits neatly into the prevalent narrative also employed by the government of austerity and “unavoidable”, “common sense” cuts.

Under the Sustainable Excellence Budget, we’ve seen the University pursuing repeated pay cuts, closures to Departments and significant pressure being applied to the Guild of Students to conform to these aggressive measures. We’ve seen the inflation of halls fees, tuition fees, writing-up fees, PGR & PGT fees, and overseas fees. The University has aggressively pursued “vacancy savings” leaving many important posts empty. Furthermore, it has ‘explored new areas for revenue’, seeking profit in areas traditionally run for the general good (I’ll be releasing more on some these ventures later).

Much like the Chancellor of the Exchequer, George Osborne, has exaggerated the debt crisis to justify cuts, the University seeks to hide its financial strength so as to justify the need for ‘efficiency savings’. The two remarkable graphs attached below show the incredible discrepancy between the private ‘management accounts’ and those publicly available.

What the University’s management are doing is of course lawful; the techniques that change the numbers between the two different sets of accounts are legitimate. For example it is perfectly legal & legitimate that the university does not include the profits from its subsidiary companies in the public accounts.

The public accounts are designed to give a “narrative” to the University’s financial plans. In fact, this practice is more or less encouraged. The Higher Education Funding Council for England (HEFCE), which our Vice Chancellor David Eastwood was the former Chief Executive of states that “HEIs have an opportunity to use their annual operating and financial review (OFR) and/or other narrative reports to demonstrate the many ways that their activities deliver public benefit.”. The University’s annual accounts provide running commentaries from the University executives based on the public figures. The “managerial accounts” on the other hand are designed to be used to actually run the organisation and make strategic decisions.

The bottom line is that the University’s public narrative on its cuts is not matched by its private information. Crucially, it is the private information which is actually being used to make the decisions on the necessity of cuts to departments, pay & pensions - information that those affected by these decisions, and their representatives, do not have access to.

What the management accounts show

The management accounts show a cash surplus each year, nearly double that of the public accounts for the past three years. The most startling year was 2009/10 where management accounts display a surplus of £49.926m (10.7% of income) but the public accounts show a surplus of £25.353m (5.4% of income).

The briefing for this year’s public accounts shows that for the financial year 2011/12, which will be published in November 2012, the University has been reporting a £2.1m-£6.8m deficit, despite their private accounts showing a large surplus of £24.2m-£24.4m.

the private report is remarkably candid about the future “As present the university will publish a deficit for 2012/13, but based on past performance”, Management accounting practices are far less historically orientated than financial accounting. The figures in the statutory accounts include significant depreciation on assets bought in previous financial years, and exclude certain revenue streams. This may all be in line with correct accounting practice, but it nonetheless means that this provides a less accurate year-on-year image of how the University’s financial situation is changing than can be gained from reading the Management Accounts. As such, a glance at the Public Accounts suggests that the University is now in deficit, but management will be making choices based on accounts which show that they have a cash surplus.

for 2013/14 & 14/15 the private estimates are both well over the prediction on the public record. In public 13/14 is predicted between a deficit of £992,000 or a small surplus of £4.92 million, while privately the university estimates £24.265 million – £33.720 million. In 14/15 the public estimate is a surplus of £15.243 million, while in private they estimate £38.847 million surplus.

The University of Birmingham's private management accounts on which strategic decisions relating to the university are based. This graph is part of a revealing 15 page document which will be fully released in time. For now the information it contains will be released in a part by part analysis.

The Universities public accounts including the public accounts that will be published this coming November. These public accounts provide a narrative for the universities actions.

The Universities public accounts including the public accounts that will be published this coming November. These public accounts provide a narrative for the universities actions.

In summary

It is clear from these graphs that the University’s public narrative of financial weakness has been grossly exaggerated. At the very least the the public accounts on which the university justify changes are dramatically different to the private accounts they use to make them. University employees and students have suffered pay cuts and increased fees as part of this ‘all in this together’ attitude, and have been grossly misled. In the future, staff and students shouldn’t accept the same line from University managers so quietly.

This is the first in series of articles on the university, which will continue for several weeks & then be turned into pamphlets to be delivered around the university.

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2 Responses to Secret Accounts and the University’s Public Narrative on Cuts

  1. Pingback: New university schemes for revenue: exploit their students & employee’s children. | Vice President Education & Access

  2. Pingback: Deregulation of universities has led to an attack on students and the workforce. | Bright Green

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