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Financial Statements 2011-12 11


Future Outlook


2012 saw the first intake of home/EU undergraduates under the new higher education student loan regime. Those cohorts that returned for second, third and fourth years of study continued to be funded under the old regime which was subject to successive cuts from 2009-10 onwards. This extended period of transition from the old and dwindling regime to the new is frequently referred to as “the valley of death”. Success in climbing out of the valley will depend upon our ability to attract and retain students.


On 20 September 2012, the University’s Clearing and Admissions service reported that acceptances to HEFCE funded institutions by home/EU undergraduates were 52,000 (-15%) lower than at the same time in the cycle in 2011. There was a 15% reduction in acceptances from students who had secured grades at A-level, or equivalent, of AAB or higher. There was no cap on admission of students with these grades. This was matched by a 15% reduction in admissions of other students who did not secure these grades and therefore counted against the HEFCE student number control.


By comparison, the University recruited fairly well (around 9% below) but experienced some shortfall against targets due to the reduction in numbers of students achieving AAB or higher at A-level and a drop in admissions from the wider EU. Much of the reduction in home/EU intake is compensated for by recruitment of international students above target. Nonetheless, the University has revised its budget for 2012-13 to ensure that it remains on a sustainable footing. Importantly, it is making every effort to ensure that the syllabus, student experience and prospects offered more than justify every pound due to be paid by its new graduates when their earnings exceed £21,000 per annum.


It is encouraging that the University’s share of a highly constrained pool of funding for research has been maintained. This is an important indicator of research strength as the University looks to repeat its outstanding performance in the 2008 assessment exercise in the Research Excellence Framework 2014.


In accordance with its ambition for its excellence in research to be matched by excellence in the education it provides, the University is progressing with the construction of The Forum building at Southend and advancing projects for a new student centre, library extension and a building to meet the ambitious growth plans of the Essex Business School at Colchester. It is also looking significantly to improve facilities at the East 15 Acting School. A corollary of these ambitions is that borrowing will peak at just over £130m in 2013-14. However, the vast majority of this debt is repayable by equal instalments of principal which have been provided for in the University’s financial forecasts. Accordingly, the total exposure to debt will decrease by £4.6m a year with associated reductions in interest payable.


The relationship with Uliving will strengthen the University’s finances while ensuring the provision of high-quality residences for its students at reasonable cost. The Meadows will provide additional capacity for the University to continue to fulfil its founding ethos of living and learning.


In July 2012, the University Council received a sustainability plan for the estate. While the original 1960s estate on the Colchester Campus has served the University well for its first 50 years, it is recognised that it, in current form, will not meet the highest standards of carbon efficiency and space utilisation in the next 50. The sustainability plan provides the University with the opportunity to reinvent the vast majority of the built estate in a way that will demonstrate a bold and dynamic institution operating within a coherent and structured plan for its physical assets. It is proposed that twelve phases of work will be spread over the next 30 years with two phases being completed in each five-year Capital Investment Plan period at a cost per period of £24m in today’s prices. While the total expenditure is significant, when spread over this timeline it is not an unrealistic proposition. The decanting space necessary for the implementation of the Sustainability Plan will become available once the Essex Business School, the Student Centre and the Library extension projects are completed.


The University is strengthening its management structures in order to ensure success in implementing a rich programme of innovation and development. Looking beyond the changes to the funding of home/EU undergraduate education, global demand for education and research has never been higher and continues to grow. The University is positioning itself to participate to its full potential in the knowledge based economies and societies that are developing at an extraordinary pace.


Risk


The University’s Risk Management Group reviews the risk register three times a year and reports to the Audit and Risk Management Committee on strategic, financial and operational risks and force majeure. Plans are in place to implement a new risk management policy that will be fully embedded within the operational units of the University. This is designed to ensure that the University is prepared for the new and highly uncertain environment for UK universities. Focusing on the Top 12 Strategic Risks, the new policy will synchronise with a new strategic plan and key performance indicators.


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