challenges and opportunities in the new environment

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Facing the future: Challenges and opportunities in the new environment Professor Nick Petford Vice-chancellor, University of Northampton & Chair, Procurement UK

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Challenges and opportunities in the new environment Professor Nick Petford, Vice-Chancellor, University of Northampton

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Page 1: Challenges and opportunities in the new environment

Facing the future: Challenges and opportunities in the new environment

Professor Nick Petford

Vice-chancellor, University of Northampton &

Chair, Procurement UK

Page 2: Challenges and opportunities in the new environment

Overview

• What do we do in higher education?

• Efficiency & value for money – drivers & responses

• Challenges & opportunities – the benefits of new approaches?

Page 3: Challenges and opportunities in the new environment

The UK higher education sector...

...is successful on the global stageWith relatively lower investment and 1% of global

population, the sector:

• Hosts 369,000 overseas students

• Undertakes 5% of global research

• Produces 12% of all citations

• Produces 14% of highly-cited papers

...is seen as an effective performerUK ‘top performer’ out of 28 countries in both

teaching & research – UK a case study of ‘good practice’ in EU study

...is hugely important to the UK economyWorth at least £59bn, creates >660,000 jobs, £5.3bn in exports

Page 4: Challenges and opportunities in the new environment

Success in delivering savings

Reporting period

Target (£m)

Delivered (£m)

2005/06 151 134

2006/07 150 150

2007/08 198 202

2008/09 126 159

2009/10 241 273

2010/11 363 462

Total 1,229 1,380

Efficiency savings in the HE sector (Source: HEFCE)

• Delivering world class HE: UK higher education as a global success story

• Demonstrating leadership: Taking ownership of difficult decisions on research costs, pay & pensions

• Succeeding on efficiency: Towards a 10-year track record of efficiency and value-for-money

Page 5: Challenges and opportunities in the new environment

…however

“Higher education in the United Kingdom is

undergoing a period of significant change.

This is being driven by a number of factors:

political, cultural, economic, and technological.

The trends are global in their scope, and far

reaching in their impact. They affect every

aspect of university provision, the

environment in which universities operate, what

they will be required to deliver in future, and

how they will be structured and funded…”

Source: Universities UK (2012) Futures for higher education: Analysing trends

Page 6: Challenges and opportunities in the new environment

The Efficiency and Modernisation Task Group

• UUK established EMTG in 2010 to look at operational efficiency Focus on ‘back office’– ICT, finance, estates, procurement, HR, admin Combined sector engagement and public/private sector expertise Remit: identify good practice, strategies for change, areas for improvement

• Review identified strategies HEIs can use to work more efficientlyprocess improvement and simplificationshared services and outsourcingmore effective use of benchmarkingbetter use of collaborative procurement

• 17 recommendations for institutions, sector bodies and govt Sector-level commitment to developing supporting infrastructure Commitment to monitor, evaluate and report on progress Responsibility of institutional leaders to address efficiency ‘at home’

Page 7: Challenges and opportunities in the new environment

Efficiency & modernisation project phase II: Overview of the implementation plan

Programme SummaryLead Delivery PartnersProjectWork stream

1Le

ader

ship

, im

plem

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tion

and

mon

itori

ng

2D

ata,

be

nchm

arki

ng

and

cost

s

3Re

gula

tion

4 Pr

ocur

emen

t

1a

1b

1c

4bTowards better collaborative procurement

3

Dissemination and evaluation

Supporting implementation:

Pilot projects, case studies and

guidance

Managing change in universities

A framework of resources to support change management

Creating an Innovation and Efficiency Hub

Identifying efficiency priorities in operational areas

Establishing a high-level evaluation panel

Supporting best practice: Case studies and guidance

Efficiency, academic practice and the student experience

2aData and

benchmarking to support efficiency

Developing data and benchmarking to support

efficiency and delivering better public data

Coordinating work to provide a better understanding of costs

2b A framework for commodity costs

Establishing a coordinated commodity cost framework

Clarification on graduate contributions and public funding

Producing an estimate of the costs of regulation in HE

Understanding the implications of the VAT Cost Sharing Exemption

Providing guidance on competition law for universities

Regulation and the efficiency agenda

4a Strategic leadership in procurement

Procurement UK: a new strategic procurement group

Delivering more effective collaborative procurement

Monitoring the 30% collaborative procurement target

Establishing the Academy for HE Procurement

Extending procurement capability and capacity assessments

4c

Improving capability and

capacity in procurement

AHUA , HEFCE, LFHE, UCEA, UHR, UUK

JISC, UUK

AHUA , AUDE, BUFDG, UCISA

UUK

AHUA , AUDE, BUFDG HEFCE, JISC, UCISA

HEA, LFHE, RCUK, UUK

FSSG, HEFCE, HESA, NPG, SCoNUL, UUK

TDG, TRAC Review Team

BUFDG

BUFDG, UUK

HE BRG

BUFDG, HEFCE, UUK

UUK

UUK

Procurement UK

Procurement UK

BUFDG, CIPS

BUFDG, CIPS

LDPs will produce of framework of resources that HE leaders can use to manage change. The group will identify gaps in provision and make recommendations for further action.

A web-based resource to support and promote efficiency and innovation will be created. The portal will provide access to advice, guidance, case studies and other resources.

Professional bodies engaged with the EMTG will produce short action plans identifying priorities and outlining how the Diamond recommendations can be applied in their areas

A high level panel will report on progress against the IP. Key sector bodies and the public and private sectors will be represented. An annual report will be made public.

LDPs will draw on their existing expertise and resources to identify case studies and best practice relating to process improvement, shared services and outsourcing.

LDPs should work to identify opportunities for extending recommendations into areas of academic practice and delivery. RCUK and UUK will address efficiency in research.

This substantial project will have three objectives: (1) to create better and more appropriate data for universities to use; (2) to create a benchmarking framework that will support efficiency in operational areas; and (3) to improve the quality of high-level data on costs in higher education that is publicly available.

The engage with the ongoing review of TRAC to help coordinate activity to give universities a better understanding of costs and support more efficient working.

BUFDG will develop a coordinated approach to commodity costs across the HE sector. This framework will support more effective benchmarking and procurement.

The LDPs will work with BIS to clarify the status of graduate contributions as public funding. Guidance and recommendations may follow subject to the outcome.

HE BRG will produce an estimate of the costs of regulation to the HE sector. This work can then be used to make recommendations for action.

The LDPs will coordinate work to interpret HMRC guidance on the VAT Cost Sharing Exemption, to identify opportunities for use and to support implementation.

UUK will commission legal advice on competition law, with particular guidance on shared services and sharing data. This will be disseminated throughout the sector.

A high level group will be convened to lead strategic change in HE procurement. The group will include APUC, ENP, HEPCW, BUFDG and procurement experts, and will lead 4b

Procurement UK will develop a strategy for delivering more effective and joined up procurement and moving the sector towards the 30% collaborative procurement target.

Procurement UK will develop a mechanism for evaluating progress against the 30% collaborative procurement target, and commit to reporting against this.

A coordinated programme of education, training and guidance will be developed and tailored to the needs of universities. This will enhance in-house capacity in procurement.

Capability and capacity assessments available to the sector will be extended to increase the effectiveness of university procurement functions.

2, 6

6

3, 4, 6

16

All

17

1, 2, 5

1, 2, 5

2

13

14, 15

7, 9

2

12

12

12

12

12

Recs

Page 8: Challenges and opportunities in the new environment

Projects led by UUK

• Procurement UKObjective: To provide strategic leadership on the development of collaborative and more effective procurement to meet the objectives set out in the Diamond report.

• Delivering efficiency through effective benchmarkingObjective: To ensure the HE sector has access to a robust, effective and accessible tool to evaluate operational costs in core operational areas

• The Efficiency Exchange – a joint project with JiscObjective: To develop a dynamic multi-media platform that supports HE professionals to embed efficiency, by improving access to sources of advice, guidance and expertise.

Go to the new site and tell us what you want the Efficiency Exchange to do: http://www.efficiencyexchange.ac.uk/

Page 9: Challenges and opportunities in the new environment

State of play

• Progress recognised by government: “the message on efficiency has got through” (Vince Cable, Sept. 2013)

• Continued engagement and enthusiasm: £481m in efficiency savings in 2011/12 – clear momentum to build on progress so far throughout HE sector

• No end to austerity: spending decisions to be taken in 2015/16 will be made in a challenging fiscal environment

• Universities must continue to invest: human & physical capital key to competitiveness – but context of VfM vital

Page 10: Challenges and opportunities in the new environment

Source: Universities UK (2013) Trends in income and expenditure for higher education institutions

Example: The challenge of capital investment

#2: HEI capital expenditure

#1: HEI surplus

Page 11: Challenges and opportunities in the new environment

Local example of ‘insourcing’

Page 12: Challenges and opportunities in the new environment
Page 13: Challenges and opportunities in the new environment

Challenges & opportunities: How do we…

…build on the excellent work around asset-sharing and disseminate the benefits across the sector?

…improve space utilisation, and what is the narrative we should be presenting to government and the wider public?

…develop the HE workforce to ensure that we are fit for purpose in the new environment?

…build on the work set in train by the Wakeham review to ensure research is efficient and remains sustainable?

…effectively monitor, quantify and communicate efficiency savings to government and the public?

…ensure that our efforts to deliver both value for money and social value in all that we do?