Soaring revenues stoke pay debate

June 30, 2006

University revenues have soared in recent years, according to a leaked analysis that has raised questions about how much vice-chancellors can afford to spend on academics' pay.

The Times Higher has seen a draft analysis of the financial prospects of English universities, prepared by the highly influential Higher Education Policy Institute.

The paper, described as a "work in progress", argues that institutions'

revenues have "grown rapidly" in recent years. It describes the current decade as a "relatively prosperous" period for English universities.

The document could inflame feelings among lecturers, many of whom are furious at being balloted on a 13.1 per cent pay offer instead of the 23 per cent they were hoping for.

Vice-chancellors have countered academics' demands for further pay concessions by arguing that the 13.1 per cent rise over three years is "at the absolute limits of affordability" and, for some universities, beyond those limits.

A draft of the analysis was presented to the Hepi board in March and then discussed at an invitation-only seminar in June. Academic unions are questioning why it has not been published.

Sally Hunt, University and College Union joint general secretary, said: "We have always maintained that there will be considerable sums coming into the sector over the next few years.

"It would have been helpful if this report had been published when it was originally presented to the Hepi board back in March.

"The report appears to back what we have been saying. People must draw their own conclusions as to why these findings were not made available during the recent pay dispute," Ms Hunt said.

Liz Lawrence, a leader of the newly formed UCU Left grouping, which advocates a rejection of the current pay offer, said: "This report appears to confirm our feeling that there is the money there, but vice-chancellors do not want to spend it on staff pay."

The Hepi board includes Baroness Diana Warwick, chief executive of Universities UK, and a number of vice-chancellors, including the future head of the English funding council, David Eastwood, and its former head, Sir Howard Newby.

Sir Graeme Davies, chair of the Hepi board, a member of the UUK board and vice-chancellor of the University of London, said: "This document is a work in progress.

"It has been discussed both in the Hepi board and at a seminar, and has also been sent widely to people for comment. The final report is intended to be a projection of potential expenditure and income in English higher education institutions beyond 2010-11," Sir Graeme said.

Bahram Bekhradnia, the director of Hepi, said: "It is mad and probably defamatory to suggest that we have suppressed publication of a half-completed report. "Since the initial analysis, we have published two reports on metrics and are now working on a survey of teaching provision.

He added: "This one will be published after those in the autumn when it is completed after we have extended the analysis to cover the sector's expenditure and needs."

The analysis seen by The Times Higher , titled "The revenue growth of English universities" and written by Hepi researcher Tom Sastry, notes that between 1994-95 and 2003-04, the combined income of the English higher education sector grew by 35 per cent in real terms. It goes on to predict a real-terms increase in revenue between 2003-04 and 2010-11 of 39 per cent.

"It is clear, therefore, that the middle and later years of the current decade will be a relatively prosperous period for English universities and colleges, largely because of the impact of higher fees, the 2004 spending review settlement and the science and innovation investment strategy," the analysis says.

"Continued strong growth in income from non-public sources could improve things still further." The analysis goes on to argue: "The next few years are best seen as an opportunity to prepare for riskier and possibly tougher times ahead."

The leak could hardly come at a more sensitive time, with lecturers being balloted on whether they will accept the new pay offer. The results are due on July 17.

Jocelyn Prudence, chief executive of the Universities and Colleges Employers' Association, said: "It would be unfortunate if this incomplete draft report were presented as an authoritative statement on higher education finances before being published, particularly as it focuses on income only and provides no analysis of expenditure increases."

The leak also comes as unions and universities are preparing their interim submissions for the next Comprehensive Spending Review.

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