Forecast was bright

September 18, 2008

I feel that some further clarification is needed in response to Sally Hunt (Letters, 11 September). The sector did indeed spend an average of 58 per cent on staff costs in 2006-07, although this figure is merely that - an average.

The detail of the Higher Education Statistics Agency report, where the figures originate, shows that 106 higher education institutions spent in excess of 58 per cent of their budgets on salaries, with 70 higher education institutions spending between 60 per cent and 70 per cent of their income on staffing costs that financial year.

Since then, higher education institutions have increased staff pay by 3 per cent in May 2008 and are facing a high retail prices index-linked settlement in October. Higher education is not unique in being hit by exceptionally high inflation on costs and, like many employers, the sector will have tough decisions to make to manage these costs and minimise job losses.

The present economic situation was not foreseen by anyone, including the best economists in the UK. In April this year, when universities were setting budgets for 2008-09, the Treasury was forecasting inflation at 2.8 per cent.

It is therefore both inaccurate and demeaning to suggest that higher education institutions have failed to plan for an RPI figure that will not be known for another month. If Hunt is able to let me know the outcome of this week's lottery numbers, then I would be happy to share the winnings.

Phil Harding, Chair British Universities Finance Directors Group.

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