18 July 2024 
Matt Sisson, Projects and Membership Manager
BUFDG
We’re pleased to let you know that we’ve just launched a new updated version of our guide to Understanding University Finance. Last updated in 2021, the guide is a useful and accessible companion for the broad church of university stakeholders and brave Annual Report explorers. If it’s a while since you downloaded it, please do take a look, and make sure that those in your institution who might benefit from it (governors, departmental budget holders, trainee accountants?) are aware of its existence. We’re particularly grateful for Peter Fielding for his work on the latest revisions.
Later this year we’ll also be publishing revised editions of both the Introduction to Accounting for Pensions in HE, as well as the guide to UK Universities and Tax. These can all be downloaded from the Understanding Finance pages.
NEW GOVERNMENT
It’s hard to believe that this time two weeks ago we were still talking about the election in the future sense. You’re probably up to speed, but sometimes ministerial appointments and specific briefs take a while to be clarified and settle in.
As was expected, Bridget Phillipson is the new Secretary of State for Education but, as could be construed from the live Q&A on Tuesday afternoon, Higher Education may be a long way down her list of priorities. Jacqui Smith is the new Higher Education Minister, and Peter Kyle has become Secretary of State for Science, Innovation, and Technology with a seat in cabinet, as DSIT is retained as a whole department. He is supported in the brief by Sir Patrick Valance as Minister for Science.
We don’t know much yet about plans for HE, although we hope for more clarity in the King’s Speech, which happens just after this Digest is published. The focus will be – to paraphrase - on economic growth through ‘devolution, infrastructure, transport, and clean energy’. Let’s hope the government recognises the role that our sector can play in that. Here’s what the Wonkhe team think could be in the government in-tray, their thoughts on the future of the LLE, and what we might expect from the new Skills England body.
In related news, Lord Wharton has resigned as Chair of the OfS.
SECTOR / FINANCIAL SUSTAINABILITY
In case you missed it in the last Digest, the OfS has published the 2022-23 Annual TRAC Report on behalf of UKRI, the SFC, HEFCW, and the Department for the Economy (Northern Ireland). It shows a sector aggregate deficit of £2,767 million for higher education institutions in England and Northern Ireland, with 93.7% of TRAC full economic costs recovered, compared to a deficit of £1,926 million and a recovery of 95.2% in 2021-22. In 2022-23, total TRAC income increased to £40,887 million, an increase of 7.4% / £2,815 million. The full economic costs of all activities increased by £3,656 million to £43,654 million (a 9.1% increase).
NSS results have been published by the OfS for this year, and show a 72% response rate and movement in a positive direction on questions around teaching quality and mental health support, among others. As usual, David Kernohan at Wonkhe takes a deeper dive.
The DfE and Welsh Government have announced the latest interest rates for those on student loan plans 2, 5, and PG loans for July 2024. Due to the lag, the RPI for the period was up at 13.5%, but this has been capped at the prevailing market rate (PMR) of 7.9%. Related to this, there are a couple of useful pre-election explainers from the BBC covering costs of attending university and how student loan repayments work. Useful to bookmark for future reference.
Lloyds Bank and PwC are launching a joint project to understand and showcase how universities are driving regional development, and develop tools to support their efforts. Andrew Connors writes about it for HEPI.
FINANCIAL REPORTING
The final version of the USS Pension Deficit Modeller for 2023/2024 is now available here. Due to the deficit recovery contributions ending in December 2023, this modeller provides the calculation for the unwinding of the pension liability, split between interest payable and staff costs. The discount rate to be applied should be the rate used at 31 July 2023 and no current year discount rate is required. Similarly, assumptions regarding payroll and headcount growth are not required this year. More information is available with the modeller here. Also, following further consultation with USS, the deficit recovery rate included within the model has been revised to 6.2% (from 6.3%) as this was the rate applicable for the period to December 2023. If you have any queries on the modeller, please contact Peter Fielding.
Work on the new SORP is underway, with members of the Technical Working Group taking part in a KPMG workshop yesterday to dissect the impact of the changes on the sector. Following a second workshop later this month, drafting will get underway in earnest and continue ahead of initial approvals by the SORP Board and FRC in November/December 2024, and the public consultation period from January to March 2025. The incoming SORP will be effective from 1 January 2026.
TAX AND EMPLOYMENT TAXES / PAYROLL
Earlier this year, HMRC consulted on changes to the Real Time Information (RTI) Draft legislation: Improving the data HMRC collects from its customers. The proposed changes will require employers to record all hours worked within RTI payroll returns from 6 April 2025. This all sounds relatively simple, and for many employees it will be, but for certain groups of employees, considerable work is required by finance and HR teams prior to commencement, to ensure the data returned is as accurate as possible and minimises the risk of non-compliance. Julia has written an article that explains the specific challenges it presents for the sector, what universities should do to prepare, and what sector bodies (incl. BUFDG, UHR, and UCEA) will be doing to work together in support.
We are pleased to announce a new Global Mobility toolkit on the BUFDG website, where you can access the various global mobility resources we have available. Take a look here and let us know if there are any resources you would like us to add.
Vialto has also published a paper on the new labour government and how it will effect global mobility. This paper has been designed to explain what the likely Labour policies will focus on for global mobility tax and immigration. Definitely one to share with your colleagues.
Following the introduction of a country grid guide to UK pensions for employees working in the 10 most common countries last year, we have asked Vialto to review this guide on an annual basis to incorporate any changes in legislation, treatment, understanding, experiences, etc.
The new version is available here and don't forget, we've added Ireland to our most common countries, so in future there will be an 11 country grid guide!
Members of UCEA can access their latest pensions newsletter on key issues and developments within the HE sector.
KPMG ran a morning technical update session for the higher education sector, which is now available to watch here. The session included an introduction on the current landscape (pre-election), audit and financial reporting, tax updates, finance system implementations and pensions.
Finally, save the date for the 2025 BUFDG Tax Conference, which will place in-person, from 11 to 12 June 2025 at Edgbaston Conference Centre at the University of Birmingham. It’s a great venue and we hope to see you there.
SCOTLAND
New figures from National Records of Scotland show that net migration into Scotland doubled between 2021 and 2022, due to high levels of migration into cities such as Glasgow and Edinburgh. The BBC has the full story.
In the new government, Ian Murray has been appointed the Secretary of State for Scotland.
WALES
Jo Stevens MP has been appointed as the Secretary of State for Wales. More recently than that, Vaughan Gething has resigned as Welsh First Minister, triggering a new Welsh Labour leadership contest.
HEFCW has published its funding allocations for Welsh providers for the 24/25 academic year, showing a 6% drop in total funding, in what will be a challenging year. There will be £10million in capital funding.
Meanwhile, a new independent report on Higher Education delivery, commissioned by HEFCW, calls in to question the ubiquity of the three-year degree model.
Finally, a reminder that Medr (the new name for CTER – the Commission for Tertiary Education and Research) takes over from HEFCW as the funding and regulatory body for post-16 education in Wales from 1st August.
PROCUREMENT
For most members, procurement of goods and services often makes up around 80% of their carbon footprint and wider impacts on the environment and society. The Responsible Procurement Group task & finish group has produced a guide which sets out practical ways to reduce our organisations’ supply chain risks and climate impacts, pitfalls to avoid and further sources of advice to draw on. Members can download the guide here.
UKUPC Responsible Procurement Network and the HEPA & EAUC national Responsible Procurement Group are collaborating on a review of the UKUPC Risk Analysis Matrix with a view to better align it with the Supply Chain Code of Conduct. We are seeking input from both users of the current matrix and anyone who has not used it but might be interested in doing so in the future. Please provide feedback via this very short survey by the 31st July.
OTHER BITS
From the last Digest - whilst many universities have set a net zero target, only a small proportion currently include their investments in that target. To help universities align their investment strategy with their climate ambitions, we have worked in partnership with Cazenove Capital to publish ‘Net zero investments: a guide for universities’, a report drawing on findings from university survey responses, focus groups, and case studies, to share useful data and insights, practical and applicable guidance, and five key steps to consider when setting a net zero investment strategy. The report will be useful to any university looking to decarbonise their investment portfolios and use their funds for good.
Colleagues whose role encompasses a degree of risk management may be interested in this article from Nous principal Julie Mercer and Charmaine Leech (RCG Consultants) on the importance of universities improving their organisational risk management maturity.
First Actuarial are running a webinar tomorrow (Thursday 18 July) on key issues for pension cost accounting in the education sector. Colleagues can find out more and book their place here.
Finally, our Job of the Fortnight is for a Head of Tax at the University of Leicester. The successful candidate will “provide strategic input into setting the overall tax strategy and supporting policies for the University and… provide tax support services to key strategic projects of the University in the UK and overseas and be the University lead for VAT, corporation, and employment tax matters.” The deadline for applications is 31 July.
As usual, there are lots of other vacancies listed on the BUFDG jobs page.
