Spending spree on RAE stars may spark cash crisis

Universities face financial squeeze. John Gill reports.

January 10, 2008

The rush to recruit research "superstars" ahead of the 2008 research assessment exercise will leave some universities facing future financial difficulties, a number of senior managers predicted this week.

Steve Smith, chairman of the 94 Group of smaller, research-led universities, said that the RAE transfer market had led to the inflation of top salaries and warned that some vice-chancellors might have overspent on recruitment with little guarantee of strong financial returns.

Professor Smith, vice-chancellor of the University of Exeter, said: "I'm certain that some vice-chancellors will have spent a lot of money hiring people in. We've had people from Exeter offered a lot of money to move (to other institutions), and we've had to match them."

In the last RAE in 2001, a small number of top-class recruits could increase a department's funding several times over, but observers predict that the impact of individuals will be less significant this time.

Professor Smith said: "This time you're funded on a graded profile... and the effect of a superstar is far less." Although he said he did not believe vice-chancellors had "bet the family silver... clearly, some institutions have been prepared to spend a lot of money in advance of the RAE."

Exeter recruited 182 staff last year, including 36 professors, but Professor Smith said that the university was not "banking" on any increased RAE income.

Universities' submissions for the RAE were made at the end of November last year, and the verdict on each department's research quality will be known in December. But how the results will be used to determine the annual Pounds 1.4 billion research spend by the Higher Education Funding Council for England has yet to be determined.

Sheila Gupta, vice-chair of the Universities Personnel Association and director of human resources at the University of Edinburgh, said there was "no doubt" that there would be some institutions that have gambled too much, adding: "It would be unusual for there not to be, given the size of the sector.

"We don't know what the funding methodology will be, and that's been an important factor because it's a huge gamble to take when one has no guarantee that (spending large sums on recruitment) is going to deliver the improvements in status being suggested." But she said that she believed that most institutions had carefully developed strategies.

Alan Ryan, warden of New College, Oxford, said: "There's a fixed pot of money, and this is about trying to get more of it. If there are going to be winners, there are also going to be losers. There will be a lot of people in the middle of the pack who will have bet a lot of their cash getting departments into the higher rankings."

However, Malcolm Grant, provost of University College London and chairman of the research elite Russell Group, said he did not believe research-intensive universities would have taken risks to win RAE "Brownie points".

He said: "We're planning for five to ten years, not for 12 months, to get in a team for the next RAE."

Nigel Thrift, vice-chancellor of the University of Warwick, said most vice-chancellors were aware that there was only a "finite pot of cash".

"Anyone engaging in spending sprees on academic stars... not only fails to grasp the limited chance of reward but also ignores the global forces shaping the search for academic research talent," he said.

Philip Harding, finance director of the University of Westminster and chairman of the British Universities Finance Directors Group, said: "All investment involves risk, and institutions are unlikely to jeopardise their financial sustainability."

john.gill@tsleducation.com.

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