Policy and Resources Committee Minutes 7 November 2019

Minutes of the meeting of the Cardiff University Policy and Resources Committee held on Thursday 7 November 2019 in committee room one, Glamorgan Building at 14:00

Present: Mr Alastair Gibbons (Chair), Professor Colin Riordan, Mr Tomos Evans, Professor Karen Holford, Ms Jan Juillerat, Dr Steven Luke, Professor Stuart Palmer, and Ms Jackie Yip.

Attendees:        Professor Rudolf Allemann, Mr Dev Biddlecombe (agenda item 21.ii and Students’ Union Lease item), Ms Deborah Collins (Secretary), Mr Martin Haynes (agenda item 21.i), Ms Alison Jarvis, Ms Susan Midha, Mr Daniel Palmer (agenda item 17), Ms Alex Payne (Minutes), Ms Siobhan Robinson (agenda item 21.ii), Ms Claire Sanders (agenda item 21.ii), Ms Helen Shaw (agenda item 21.i), Professor Damian Walford Davies and Mr Rob Williams.

Apologies:        Professor Gary Baxter, Dr Carol Bell, Professor Amanda Coffey, Ms Katy Dale, Mr Thomas Hay and Professor Nora de Leeuw.

586  Welcome

The Chair welcome all to the meeting and apologised for those papers issued late. It was noted an additional item on the Students’ Union Lease had been added to the agenda and the paper for this was contained within the Exhibit Book. It was noted that there would be a change to the order of  the items contained within the agenda and the Chair would detail these changes throughout the meeting.

587 Apologies for Absence

Apologies were provided by Professor Gary Baxter, Dr Carol Bell, Professor Amanda Coffey, Mr Thomas Hay and Professor Nora de Leeuw.

588 Minutes of Previous Meeting

The minutes of the meetings held on 4 June 2019 (Extraordinary meeting paper 18/718B), 4 June (paper 18/719), 4 July (Extraordinary meeting paper 18/720) and 27 September 2019 (Extraordinary meeting paper 19/119B) were confirmed as a true and accurate record and signed by the Chair.

589 Matters Arising

There were no matters arising.

590  Declaration of Interests

The Chair reminded the Committee members of their duty to disclose any potential conflicts of interest and asked if there were any declarations.

Noted

That the Students’ Union President and Vice-President Education declared an interest in relation to the Students’ Union Lease (additional item) and the International Foundation Programme (agenda item 21.ii).

591 Constitution and Membership 2019/20

Received and considered paper 19/120, ‘Constitution and Membership 2019/20’. The Chair introduced the paper.

Noted

591.1        that it is usual to review these at the first meeting of each academic year;

591.2        that changes to the Terms of Reference for the Estates and Infrastructure and Investment and Banking Sub-Committees would be covered under the reports from the Chairs of these committees.

592  Report from the Vice-Chancellor

Received and considered paper 19/121, ‘Vice-Chancellor’s Report to PRC’. The Vice-Chancellor introduced the paper.

Noted

592.1        that the University was ensuring additional resource for those areas where additional recruitment had taken place;

592.2        that the figures around research funding and activity were very positive;

592.3        that since production of the report, the UCU ballot results had been issued which confirmed industrial action would take place; the University was planning as much as possible to mitigate any impacts but that there was a  limit to what could be done, given there is no obligation to provide detail of what is planned and by whom;

592.4        the University had completed a lessons learnt exercise following the last round of industrial action and would be putting those into place for this round;

592.5        that the University was a member of the Environmental Association of Universities and they had asked for a letter to be signed by its members  declaring a climate emergency; in light of this, the University had been reviewing its operational activities, the research done across the university in this area and the impact of the University’s footprint within the wider South Wales region;

592.6        that the University was working with the Communications Team and the Welsh Government to determine actions in relation to the climate emergency and was looking at how to communicate these;

592.7        that the University was working to improve consistency of teaching quality across schools and had made progress in this area, especially as a single set of data was now being captured to monitor what is happening; it was expected industrial action would affect this area.

593 Report from the Estates and Infrastructure Sub-Committee

Received and considered paper 19/122B, ‘E&I Sub-Committee Chair’s report to P&RC’. Dr Steven Luke introduced the paper.

Noted

593.1        that the Committee had received a presentation on the ARCHI Business Case and felt this was a very strong proposal that should be endorsed by Policy & Resources Committee; the committee were impressed with the marked improvements since the original proposal;

593.2        the Sub-Committee were proposing an amendment to the Terms of Reference to include the Deputy Vice-Chancellor as an Officer within its membership.

Resolved

593.3        to approve the amended membership for the Estates and Infrastructure Sub-Committee.

594 Treharne Review Part Two Action Plan

Received and considered paper 19/137B, ‘Treharne Review Part 2 Action Plan’. Ms Deborah Collins introduced the paper.

Noted

594.1        that the paper contains the recommendations from the Treharne Review Part 2 and associated actions, a number of which have been completed;

594.2        that, although not listed on the cover sheet, Estates had been consulted and input to the action plan;

594.3        that the executive team were looking to put together a sponsorship framework to clarify the role of executive sponsors, delivery sponsors and project managers;

594.4        that progress against these recommendations would be provided to the Estates & Infrastructure Sub-Committee meeting in March 2020.

595 Report from Investment and Banking Sub-Committee

Received and considered paper 19/123B, ‘I&BSC Chair’s Report to P&RC’. The Chair introduced the paper.

Noted

595.1 that the Annual Treasury Management Report had been reviewed by this Committee and endorsed to submit to Policy & Resources;

595.2 that the returns generated from the fund managers were generally good.

Resolved

595.3 to approve the amendments to the Terms of Reference for the Investment and Banking Sub-Committee.

596 Annual Treasury Management Report

Received and considered paper 19/132B, ‘Annual Treasury Management Report’. The Chair introduced the paper.

Resolved

596.1        to recommend Council approve the Annual Treasury Management Report.

597 University’s Annual Report and Financial Statements for 2019/2020

Received and considered papers 19/131B, ‘Reconciliation to forecast Paper 31 July 2019’, 19/185B, ‘Financial Statements 31 July 2019’, and 19/184B, ‘Judgement Paper 2018/2019’. The Chief Financial Officer and Ms Alison Jarvis introduced the paper.

Noted

19/131B Reconciliation Paper

597.1        that there had been an increase in income, mainly through an increase in tuition fees;

597.2        that there had also been an increase in staffing costs due to the additional resource required for the additional student numbers; this was currently 58% of total income (58.7% had been budgeted for), down from 59.2% in the previous year;

597.3        that the increase in employer pension contributions was expected to add three quarters of a percent to these figures;

597.4        that there had been a large increase in depreciation costs due to the additional £3.4m capital expenditure; this was not due to the new capital investment projects but ongoing business;

597.5        that total expenditure had been slightly more then budgeted;

597.6        that the operating deficit forecast had been revised to £7.9m and the yearend position is an operating deficit of £6.9m;

597.7        there had been a gain in investments of £12.2m but these were unrealised in cash terms; for the first quarter of this financial year this had in fact had a downturn of £4m;

597.8        the VSS provision relates to exit costs for the remaining staff within the 19/20 academic year;

19/184B Judgements Paper

597.9        that the pensions liability note was the most significant change in the accounts;

597.10      that these accounts recognised the completion of the March 2017 actuarial valuation of the USS Scheme and the agreed deficit recovery plan of £5.7bn; the University had increased its provision to £140m to reflect the commitment to pay this back over 14 years (c.£10m per annum); this needs to be accounted for at the time the commitment is entered into which is why it has been included here;

597.11      these figures also included actuarial changes relating to the CUPF and Local Government Pension Schemes;

597.12      that at the time of preparing the accounts, the USS 2018 Valuation had been published but the deficit recovery plan for this had not yet been agreed by the USS Trustees; this reduced the deficit to £3.6bn and removes £58m of the £91m owed by the University;

597.13      that due to accounting rules, the balance sheet for this year could not be adjusted to reflect the new deficit figures and only a note included; Finance had discussed this with the four major accounting firms, but the resulting position is as stated;

597.14      that the commitment of c.£10m per annum will be included within the staff cost figures as it is an employer provision, and adjustments have been made below this line to avoid affecting the reserves; the staff costs to income ratio figures will be calculated using the correct employer contribution figures to ensure these remain comparable with other institutions;

597.15      that this issue will affect all HEIs nationally and there will need to be clear communication to explain these figures;

597.16      that the expected level of growth and income generation from the CSC Ltd. joint venture with IQE had not been met, partly due to fluctuations in European grant funding due to Brexit and the China Trade Wars;

597.17      that the shareholder agreement for this joint venture was due for renewal in 2020 and the Chief Financial Officer and Vice-Chancellor had met with their counterparts in IQE to discuss next steps; in these discussions, it became clear IQE were reluctant to invest further in the joint venture, and this feeling was shared by the University; IQE were still committed to the current investment and delivering the business operations;

597.18      that the lack of investment, coupled with the downturn in growth, suggests slower growth in the future and a further reduction in expected returns over the next 5-10 years;

597.19      that the balance sheet currently states £24m for this item, but it is estimated the value is lower than this; it is proposed that an accounting provision of £19m is included in the accounts, to reflect the impairment of this investment;

597.20      that there were ongoing discussions with the external auditors on this item, who were happy with the proposed basis of the evaluation but required further detail;

597.21      that there would need to be good communication on this, to ensure any political ramifications in the local area are managed, especially as production of semiconductors is a key area of growth in the region and this area of development is expected to continue to grow;

597.22      it was felt by the Committee the accounting provision was a sensible course of action.

Resolved

597.23      to add this item to future agendas as a standing item to receive updates;

597.24      to review pages 11 and 13 to ensure the valuation figures stated are consistent.

19/185B Annual Report and Statements

597.25      that the total deficit figure of £114.9m was inclusive of the pension provision figures discussed earlier; excluding these figures provides a deficit figure of £12.9m;

597.26      that the operating deficit figure was £6.9m and that it was important to understand the implications of the pension provision and VSS costs in relation to this figure;

597.27      that the risk register wording will be updated following the results of the ballot for industrial action;

597.28      that the external audit report has not yet been received and this report will refer to the two major judgements discussed earlier;

597.29      that the cash generated sum was £63m and the University remains cash positive at a current operating level; the Chair requested references to cash targets be reviewed to ensure these are clear, appropriate and easy to understand;

597.30      that increases in staff costs due to pay increases was around 1% year on year and the bulk of the increase had come from pension contribution increases;

597.31      there had been a small increase in staff numbers due to an increase in research income and staffing required to support and deliver in this area; there has been a decrease in staff earning over £150k by around a third.

Resolved

597.32      to endorse this paper for submission to Audit Committee;

597.33      that members were asked to review related party transactions to ensure no inconsistencies.

598 ARCHI Business Case

Received and considered paper 19/135B, ‘ARCHI Business Case’. Mr Martin Haynes & Ms Helen Shaw introduced the paper.

Noted

598.1        that an outline business case had been brought to the Committee in Spring 2014 and approved, requesting funds to carry out design work;

598.2        that in the time since this outline case, the school had grown by 225 FTE and there were plans to continue to grow;

598.3        that a number of maintenance issues had been identified within the Bute Building which would need rectifying even if the business case is not approved as these are core infrastructure issues; these have been included within the costs, which also include contingency and optimism bias figures;

598.4        that Estates & Infrastructure Sub-Committee had reviewed this case and emphasised the need for a maintenance schedule for established buildings; the sub-committee noted the effort in reviewing costs and possible risks mean this business case provided more realistic construction costs;

598.5        that the School had scheduled a number of lectures and workshops to brief students on the works;

598.6        that discussions are ongoing on how the increased surplus generated from increased student numbers can be used towards support services.

Resolved

598.7        to endorse to Council this business case, with a budget of £20.21m, is approved.

599  International Foundation Programme

Received and considered paper 19/137, ‘International Foundation Programme’. Professor Rudolf Allemann introduced the paper.

599.1        the Chair clarified that he was an employee of a private equity firm that owned Cambridge Education group and so declared an interest in this item;

599.2        this paper proposes the creation of International Cardiff Study Centre (ISC) which will be provided by an external provider on the University’s estate;

599.3        this has initially been projected for 10 years, which is the suggested contract length with Study Group;

599.4        that this addresses a strategic need, as the University has benefited from good student recruitment targets but is underperforming in relation to International UG and International PGT students; this will also help address issues around the quality of intake from international UG students;

599.5        it is estimated that 40% international students start their study with a pathway programme;

599.6        the University’s in-house Internal Foundation Programme (IFP) has suffered from being unable to compete with the large providers (such as Study Group) and being unable to recruit; the in-house IFP team have been involved from the start and it has been made clear their services will still be required; this change will enable IFP staff to be doubled;

599.7        the reasons for choosing Study Group as the provider have been included within the paper; crucially they will not compete with the University’s own English Language pre-sessional programmes;

599.8        Study Group will operate within the University Estate and therefore pay rent; Study Group will take 15% of the first year’s tuition fees for any student who progresses to study at the University;

599.9        there will be a requirement to provide space for Study Group and it is proposed the fourth floor of the Students’ Union is provided for this need; Estates are confident this can be completed in time although it is a tight timescale;

599.10      the Students’ Union representatives confirmed they are supportive of the proposal but are concerned over the logistical capacity issues within the building and would welcome the opportunity to expand;

599.11      the case is strongly supported by UEB and College Boards;

599.12      there is a recruitment plan in place to address the negative percentage figures of size when compared to the Russell group average.

Resolved

599.13      for a discussion to be held between the Chair of Estates & Infrastructure and the Chief Operating Officer on the programme for this;

599.14      to agree all the resolutions provided in the paper;

599.15      to confirm figures had increased from those in the paper and were approved at £3.1m drawdown for refurbishment works and £1.7m remaining capital funds;

599.16      for an update to be provided at the next meeting by the Vice-Chancellor.

600 Students’ Union Lease

Received and considered paper 19/129B, ‘Cardiff University and Student Union Lease’. Ms Deborah Collins introduced the paper.

Noted

600.1        that the Students’ Union President and Vice-President Education left the room for this item;

600.2        that Professor Holford, Mr Rob Williams, Professor Walford-Davies, and Professor Palmer left the meeting; the meeting remained quorate;

600.3        that this paper requested approval for a variation to the lease between the University and Students’ Union; there is currently a 50-year lease from 1988 which includes the stairs; this needs to be removed to allow the stairs to be demolished as part of the Centre for Student Life works and there are a number of compensations requested by the Students’ Union as part of these works;

600.4        advice has been sought from Cooke & Artwright;

600.5        that there was a time pressure to agree this lease in order for the Students’ Union steps to be demolished and avoid delay to the programme; this may require Council approval and if so, may be completed ex-committee;

600.6        that this has been a complicated issue to unpick;

600.7        that the final cost of the reversions to the lease are yet to be confirmed, but will be in the millions;

600.8        that there were risks around this agreement and the Committee were concerned around the short timescales and financial implications;

600.9        a discussion was held on whether adding 50 years to the lease was the appropriate course of action;

600.10      that advice was being sought in regard to how to reflect this on the Balance Sheet;

600.11      that discussions had been held on this three years ago and there had been enormous work from both parties based on good faith.

Resolved

600.12      for the Chief Operating Officer and Director of Estates and Campus Facilities to progress discussions with the Students’ Union;

600.13      for Council Lay Members to be contacted via correspondence for comments and agreement, but that the Committee supported the approach for a decision to be reached ex-committee if necessary.

601 Students’ Union Budget 2019/20 and Accounts 2018/19

Received and considered paper 19/130B, ‘Students’ Union Budget 2019/20 and Accounts 2018/19’. Mr Daniel Palmer introduced the paper.

Noted

601.1        that the Students’ Union President and Vice-President Education re-joined the meeting this item;

601.2        that the budget for the year aimed for £100k surplus; this was expected to be slightly less due to a reduction in the Block Grant and expected interruption in income from the CSL building work; despite this, there is an expectation for further commercial growth and an expansion of night time venues for income;

601.3        that there had been an increase if staff costs due to wage inflation and pension provisions which has also impacted the budget;

601.4        that the accounts for the previous year were positive with a cash surplus of £193k;

601.5        that there has been an adjustment to the way the grant has been distributed across CUSU and CUSL; this is not an accounting error but a more accurate reflection of distribution of funds;

601.6        that performance in comparison to year previous has dropped;

601.7        that it is expected the proposed changes to the lease will be reflected in the accounts and provide a stronger balance sheet position;

601.8        that the Students’ Union had been voted SU of the Year by NUS Wales and was in the Top 100 Index for National Centre for Diversity;

601.9        that the Committee were impressed with the work done by the Students’ Union and hoped the relationship between the University and Students’ Union continued to be positive.

Resolved

601.10      to approve the accounts for 2018/19 and note the budget for 2019/20.

602 Pensions Update

The Chief Financial Officer provided an oral update on this item.

Noted an update had been provided under the University’s Annual Report and Financial Statements 2018/19.

603 Finance Report (Financial Management Accounts)

Received and considered paper 19/128B, ‘Financial Report’. Ms Alison Jarvis introduced the paper.

Noted

603.1        this report is now a month out of date; period 3 has now closed and Finance are re-forecasting based on these figures;

603.2        that the figures, especially around student recruitment, are positive.

604 Capital Investment Programme and Business Case Plan

Received and noted paper 19/133B, ‘Capital Investment Plan update’.

605 UEB Decisions made under Delegated Authority

Received and noted paper 19/124B, ‘UEB Decisions made under Delegated authority’.

606 Risk Register

Received and considered paper 19/125, ‘Risk Register’. The Vice-Chancellor introduced the paper.

Noted

606.1 that there remain a large number of high-profile risks;

606.2 that industrial action has been confirmed commencing from the week of 25th November 2019; the numbers of strikers is as yet unclear.

607 KPIs: Progress against the Way Forward Targets

Received and considered paper 19/126B, ‘Progress against Way Forward KPIs’. The Vice-Chancellor introduced the paper.

Noted

607.1 that there has been a slight improvement in the Times Higher League Table position for the University; there is an ongoing discussion on whether this will be achieved by 2023.

608 Annual People Report

Received and considered paper 19/127B, ‘Annual People Report’. Ms Sue Midha introduced the paper.

Noted

608.1        this report provides an update on the shape and profile of staff for the end of July 2019;

608.2        that an update on Senior Staff awards has now been included in the paper;

608.3        that the figures presented in figure 1.3 were taken from HESA data and may be skewed by outsourcing of some staff;

608.4        that the figures for performance development reviews had dropped and this was likely to be related to VSS and industrial action.

609 Transforming Cardiff Business Update

Received and considered paper 19/134B, ‘Transforming Cardiff Progress Report’. Professor Karen Holford introduced the paper.

Noted

609.1        that this process has catalysed a large amount of change that may not have happened otherwise;

609.2        that there appears to be a greater sense of trust given that proposals presented to Council in February 2019 were identified as ideas and were then discussed with staff as promised; College PVCs presented an update to Senate which noted the involvement of staff in developing these ideas;

Resolved

609.3        for metrics or quantitative data to be provided for this item going forward, especially around headcount, and an update to be provided at the next meeting.

610 Any Other Business

There was no other business.

611 Agenda of Next Meeting

Received and noted paper 19/138, ‘Draft Agenda: Policy and Resources Committee’.

612 Date of Next Meeting

Noted that the date of the next meeting is 21 January 2020.