Making the Best Better
Total Page:16
File Type:pdf, Size:1020Kb
MAKING THE BEST BETTER UK Research and Innovation More efficient and effective for the global economy Report for Department of Business, Innovation and Skills By Sarah Jackson On secondment from the N8 Research Partnership 30 March 2013 1 MAKING THE BEST BETTER UK Research and Innovation More efficient and effective for the global economy The purpose of this report is to document and analyse evidence of the efficiencies within the higher education research base. The evidence has been collected from existing reports and data, combined with new case studies. Providing recommendations for future efficiency savings is explicitly outside the scope of this work. Key highlights and conclusions The higher education sector is moving towards a ten year track record of delivering efficiencies, including headline savings of over £1.38bn over CSRs 2004 and 20071, and Research Councils delivering savings of £428m over the current CSR period. These efficiencies have been achieved using two key drivers: a. Increasing domestic and international competition b. Science ring fence, allowing reinvestment of savings to increase world class performance of universities. The evidence collected for this report shows a strong ten-year track record of institutions delivering both operational and productive efficiencies, which is improving research and teaching. This strong link between driving efficiencies and improving student experience and better research is increasing investment in skills, knowledge and human capital. Capital budgets are being utilised more effectively, primarily through creating clusters of excellence and sharing equipment. This is delivering state-of-the-art facilities, enabling new science and better equipment and expertise for business. The increased effectiveness of the system is delivering both greater outputs for science and research, and also greater impact in the global marketplace: generating new knowledge, leveraging private investment in R&D and increasing the quality of human capital. This pays a critical role in the industrial strategy, supporting innovation and growth in the economy. HE institutions have been delivering efficiencies for a number of years, but there is a significant weakness in the ability to tell the story: “Universities are good at telling people about their exciting research, but not about how much money has been saved”2. 1 Universities UK (2011) Efficiency and effectiveness in higher education: A report by the Universities UK Efficiency and Modernisation Task Group London: Universities UK. p.16. http://www.universitiesuk.ac.uk/highereducation/Pages/EfficiencyinHigherEducation.aspx 2 Professor Sir Ian Diamond, speaking at the 2nd Annual UUK Conference on Efficiency, 26 February 2013 2 Contents Introduction - Efficiency and world class performance .............................................................. 4 Executive Summary ........................................................................................................................ 5 Section 1: Building towards a ten year track record .................................................................. 9 1.1 Operational and Productive Efficiencies .................................................................................................. 9 1.2 The Wakeham Review: Efficiencies and Sustainability of Research ..................................................... 11 1.3 The Diamond Report ............................................................................................................................. 11 1.4 How the system works and where the efficiencies are realised ............................................................. 12 1.5 Building an evidence base of efficiencies within HEIs ........................................................................... 13 1.6 Efficiency taxonomy............................................................................................................................... 13 Section 2: Operational Efficiencies - Cash Savings reinvested for students and research.. 14 2.1 Procurement .......................................................................................................................................... 14 2.2 Human Resource Management ............................................................................................................. 15 2.3 Challenges in managing workforce change – why these need to planned not mandated ..................... 16 2.4 Estates .................................................................................................................................................. 18 2.5 Shared Services .................................................................................................................................... 19 Section 3: Productive Efficiencies............................................................................................... 20 3.1 Teaching and Student Service Delivery................................................................................................. 20 3.2 Science Assets and Equipment – higher cost, higher productivity, efficiency and sharing .................... 20 3.3 Innovation Funding – Technology Strategy Board ................................................................................. 30 Section 4: Financial Management ................................................................................................ 31 4.1 Awash with Cash - the case against: “Surplus, but not surplus to requirements” .................................. 31 4.2 Developing new teaching and research facilities: leveraging resources from financial markets ............ 32 4.3 Net cash or debt position ....................................................................................................................... 34 Section 5: Conclusions ................................................................................................................. 35 Appendix 1: List of Contributors ................................................................................................. 36 Appendix 2: Case Studies ............................................................................................................ 38 3 Introduction - Efficiency and world class performance The efficiency and effectiveness agenda is critically important for any organisation; it increases competitiveness and creates new sources of value. By itself, “Efficiency is not a measure of success in the marketplace”3 (Mouzas, 2005). In the context of the research base, efficiency needs to be considered alongside the quality of services provided for students, the quality of teaching and the quality of research The evidence collected for this report demonstrates that it is the imperatives of effectiveness and increasing world class performance that are driving greater efficiencies across the sector. Definitions: When collecting case study data, the following definitions have been used4: Operational Efficiency: Delivering the same output for reduced input Productive Efficiency: achieving greater output (quality or volume) for the same, or proportionately less, input. Structure: This report is split into 4 parts: Section 1: Building towards a ten year track record of efficiencies. Section 2: Operational efficiencies and how savings are being reinvested Section 3: Productive efficiencies: how the sector is delivering more, with proportionately less Section 4: “Surplus but not surplus to requirements”- financial management in HE Scope: In view of limited time, and given the balance of funding5, the report is focused mainly on efficiencies and effectiveness of the research base, and also includes a detailed case study on the Technology Strategy Board. Providing recommendations for future efficiency savings is explicitly outside the scope of this work. Contributors: The list of contributors is detailed in Appendix 1. The case study material builds on the work undertaken by UUK in this area. Author: I have completed this report whilst on a part time, 6 month secondment to BIS from the N8 Research Partnership - the collaboration of eight research intensive universities in the North of England. Acknowledgements: I am very grateful to colleagues in BIS for their support and welcome into the team, especially Maria Cody, Helen Cross and Bryony Butland, and to Graeme Reid for his leadership and sponsorship of the project. I would also like to thank all contributors to the report, who were hugely enthusiastic in telling their stories, and also Jamie Arrowsmith and Chris Hale at UUK. Finally, to thank Professor Chris Brink (Vice-Chancellor, Newcastle University) and Professor Trevor McMillan (Pro-Vice Chancellor, Research, Lancaster University) for their encouragement and support to undertake this secondment, and to Allison Armstrong and Nick Goldspink for their help in finalising and formatting the report. Sarah Jackson, Director of N8 Research Partnership On part time secondment to BIS, October 2012-March 2013 3 Mouzas, S (2005) Efficiency versus effectiveness in business networks Journal of Business Research, Volume 59, Issues 10–11, October 2006, Pages 1124–1132 (Lancaster University Management School) 4 Definitions based on templates received from BIS central finance team, and subsequent helpful discussions with Rosa Fernandez, Economic Advisor, BIS 5 For example, for FY 2012-13, the science and research budget was 5.3bn and the innovation budget £0.6bn (BIS, 2012- 13) 4 Executive Summary Efficiency in the HE