With government cuts beginning to take their toll on higher education budgets, many universities are having to reduce their costs to ensure that demanding efficiency targets are met. But how are these cutbacks being reconciled with corporate social responsibility and the growing support for fairer pay?
Last year’s comprehensive spending review brought the news that government funding for universities would be reduced from £7.1bn to £4.2bn by 2014. The government had hoped that the majority of this reduction could be offset with an increase in tuition fees, and last December a bill was passed to increase tuition fees from £3,290 a year to a maximum of £9,000. Despite this reform, it is estimated that universities will still see around 20 per cent of their income disappear.
In the aftermath of these announcements, right of centre think tank Policy Exchange argued that universities are not doing enough to cut their costs. In their research paper ‘Higher Education in the Age of Austerity’, they claimed that universities could collectively save as much as £3bn a year if they privatised many of their services.
So what are universities doing to address the budgetary constraints that lie ahead? And how are they reconciling the pressures on their finances with a commitment to higher wages, specifically the Living Wage Campaign, which many universities have signed up to?
Objectivity Anthony Tyrell, head of head of Estates and Facilities at the Institute of Education (IoE) in London, has looked at making savings across the board. After reviewing working practices, managers decided that there was very little extra capacity amongst the workers to increase their output.
“Benchmarking and efforts to increase productivity did not feature in our plans, due to staff productivity here already being well above the industry norm. What we focused on instead was a department-wide audit, which looked objectively at every expenditure. It transpired that there was substantial double accounting; we have a contract to clean two sets of buildings, the education premises and the residential areas, and when we asked for two sets of invoices we discovered that we were paying for two uniforms and other related equipment,” he said.
The IoE is also committed to greater levels of collaboration and shared management practices: “Our relationship with other universities working in proximity to us is being scrutinised, and we will look at ways that we can work with them, in procurement practices or sharing management staff, for example.”
Reviewing productivity Mike Kelley, director of Residential Services at the University of Liverpool, approaches the government’s cuts with a different set of circumstances. After a review of processes and working arrangements in 2007, they found that the department was running at a surplus and therefore able to withstand the significant reductions to their budget.
The 2007 internal reforms came in response to the fact that working arrangements had remained largely unchanged for a generation. After reviewing productivity levels and areas of responsibility amongst cleaning staff, they found that their labour numbers were too high and the amount of productivity too low. For staff that were resistant to change, the university offered voluntary strategic disengagement. This meant that workers who did not want to modify their working practices in line with the new requirements were offered a package that included the equivalent of one year’s salary and redundancy.
“It was offered across the university, at every level,”explains Kelly. “This process was very successful from our department’s point of view, as we reduced staff numbers and increased efficiency.”
The university also looked at modernising the level of service it provided to students, in recognition of the fact that facilities staff were “overcomitting”. This meant that services such as weekly fresh linen and bi-weekly servicing of communal areas were scrapped.
Kelly found that these changes were well-received by the students. “We have never received a single complaint about the services we provide,” he adds with a note of pride.
Working together The university is focusing on closer collaboration with other establishments, such as Lancaster University, through sharing facilities and offering joint courses on subjects like medicine.
Liverpool has also looked at innovative capital-raising strategies for new projects. They are currently in the process of building new student accommodation, which is being privately funded by banks. The £200m development will be self-financing, deriving its income from the student’s accommodation charges, while from a facilities management perspective the state of the art facilities will be easier to maintain and clean than the older existing buildings. This new development, Kelly believes, will allow his department to increase its contribution to the university’s central budget, by allowing them to offer more sophisticated conference facilities.
The upgrade to the levels of service provided by the new developments also anticipates changing expectations from the students. Kelly describes this as “enhancing the student experience, offering them better value for money and more relevant services”.
Fair pay While the upheaval in higher education has been taking place, the slow drumbeat of the fair pay movement has been pulsating underneath. In recent years, this movement has crystallised in the form of the Living Wage Campaign, a carefully calculated figure that amounts to the minimum wage that people need to keep a family in health and properly housed, fed, and able to contribute to society. Led by London Citizens, the living wage is not a case of just topping up the minimum wage, rather a way of calculating the amount needed to live in certain areas of the country.
Like every department at the IoE, both Tyrell and his colleagues are committed to adopting the Living Wage from 1 August 2012. Reacting to the criticisms that the wage should be implemented immediately, Tyrell explains: “The process takes time; when the cleaning contracts were last tendered there were three levels of pay, which led to a discrepancy of contracts. But we fully expect to keep our word and deliver this to staff by this date.”
Tyrell believes that the commitment to increasing staff wages has eroded the strength of the benefits associated with outsourcing, which has sometimes been viewed as a way of reducing responsibility of the employer: “The campaign increased the pressure on the organisation to find a way to ensure that staff are paid fairly. This has meant that outsourcing cannot be used as an excuse.”
Tyrell and other members of the management team at IoE are unequivocal in their support of the living wage, and see it as their duty to make it work for staff within the institute. “We have taken a more comprehensive approach to the London Living Wage and believe that four hour contracts are required to make living wage desirable for employees. Only by paying close attention to our workers schedules does the living wage achieve its moral objectives.”