Lancaster University has predicted that it will incur a £66 million loss next year as a result of COVID-19 and has asked staff to opt-in to voluntary cost saving measures, amid calls by the campus trade unions for more transparency on financial matters.

Professor Andy Schofield, the new vice-chancellor, sent a missive to all staff on 10th June outlining the University’s financial position. He said that the loss of £66 million would follow from a 20% drop in student numbers, considered to be a ‘middle risk’ scenario. Last year, tuition fees made up 47% of Lancaster University’s total annual income (£319 million). A report released by the University and College Union (UCU) in April predicted that the higher education sector will face a £2.5 billion funding gap next year as a result of plummeting student numbers.

To offset this loss, which Professor Schofield has acknowledged could either end up being better or worse than the ‘middle risk’ scenario, cuts are being made equally in three areas: capital projects, non-pay costs, and the payroll bill. To reduce the payroll bill, staff have been asked to opt-in to ‘voluntary cost reductions’ which include donating a portion of their salary back to the University (10% per month from August to November), not accepting their annual incremental increase, and other measures like flexible working and buying additional annual leave.

The campus trade unions, UCU, UNISON, and Unite have written to the University with several concerns about the proposals. In a statement, Lancaster UCU called the payroll proposals premature and said the University should wait until September when there is a clearer picture of student numbers. They also called for a commitment to reduce redundancies, and a commitment that if staff reduce their hours it will not result in greater workloads for colleagues. They also asked the University to be more transparent about its calculations and its financial position. Lancaster UNISON echoed this with their statement and clarified to their members that there remains ‘no guarantee that we will not end up in a situation where there are either voluntary or compulsory redundancies.’

The relationship that the campus trade unions have with Lancaster University has been strained over the course of the last year. UCU went out on strike twice, in November/December and again in February/March. The bullying scandal earlier in the year made national headlines and embarrassed senior management. Little has been learnt, it seems, as the University’s HR Director Paul Boustead expressed his disdain, in a personal capacity, at UCU’s statement by retweeting a message telling the union to ‘shut up’ and disclaiming it as ‘bile and scaremongering’. Mr Boustead later clarified in a reply to local councillor Jack O’Dwyer-Henry, before blocking him, that there was ‘no offence meant’ by the tweet.

Professor Andy Schofield became vice-chancellor on 1st May, replacing his interim predecessor Professor Steve Bradley. Image via Lancaster University.

There has only been one unexpected loss to University finances so far, and Professor Schofield has made clear that the University will be finishing the ‘financial year [in July] close to where we anticipated we would be in January.’ The only unexpected loss has been the rent cancellations and reductions announced in May, which is predicted to have cost the University less than £10 million.

In the past year, the University has financially benefitted from the two periods of strike action undertaken by UCU members. Those on strike forfeited their entire salary for those periods, so the University likely saved around £800,000 in salaries it didn’t have to pay. Those on strike for both the periods lost a cumulative 6% of their annual salary, but the political impact of the latter strike was dampened as the COVID-19 pandemic took off in March.

The University’s financial strategy before the pandemic has not been without criticism, although as much of the detail is shrouded in the term ‘commercial in confidence’ this criticism hasn’t necessarily been as precise as it needed to be. Questions have been raised, particularly by the trade unions, over the excessive expenditure on capital projects such as the Health Innovation Campus, the Management School extension, and the Edward Roberts Court remodelling. Spineless has reported on some of the University’s overseas partnerships, such as Leipzig and Ghana, but what is not clear is the extent to which the University has incurred losses carrying them out. Lancaster’s private venture in Manchester, UA92, is likely to suffer far more from a drop in student numbers than Bailrigg is. Last year, the University paid £3.5 million in interest on loans that may well have been taken out to finance some of these projects.

The University has also been saving money and increasing workloads through the use of ‘vacancy management controls’, aka a continual recruitment freeze, as noted in subtext. It is clear where the money is normally going, too. Between 2014/15 and 2018/19, the number of staff other than the vice-chancellor paid over £100,000 increased by 103%, from 29 to 59. The vice-chancellor himself has a basic salary of about £275,000, making the University rather top-heavy (although he is donating 20% of it back to the University this year).

These sentiments were raised in the unofficial University Court held on 12th March, just before the University closed. At that meeting, a motion of no confidence in senior management was overwhelmingly carried. The motion called on University Council to ‘instigate remedial steps to investigate the governance and culture of the institution and to provide assurance to staff and the student community about the future of our university.’

There is a lot of consternation about how the University is going about addressing the potential shortfall that will result from COVID. On 19th June, Lancaster UCU passed an emergency motion calling on senior management to adopt an approach involving consultation, transparency, and equality. They say that if they fail to see management adopt this approach, they are prepared to enter into a formal dispute. What management need to abandon is their all-or-nothing war stance that they held during the UCU strikes earlier this year. If they want the staff (and student) community of the University to cooperate with them and make sacrifices despite their poor decision-making in recent years, senior management need to stop fashioning the institution into a graduate factory and instead realise that universities function best when they are a community of scholars.

For more on the financial position of the University, read issue 194 of subtext here.