In the Frederic Mason Room at the Priory

CANTERBURY CHRIST CHURCH UNIVERSITY

MINUTES OF THE MEETING OF THE FINANCE AND GENERAL PURPOSES COMMITTEE HELD AT 4.00PM ON TUESDAY 3 NOVEMBER 2015

IN THE FREDERIC MASON ROOM AT THE PRIORY

CONFIDENTIAL

Present:Mr Frank Martin (Chair), Mr Christopher Calcutt, Dr Gill Perkins,

Mr Krum Tashev (SU President), Vice-Chancellor

In Attendance:Mr Paul Bogle (Clerk to the Governing Body)

Mr Stephen Clark (Pro-Chancellor)

Mr Andrew Ironside (Pro Vice-Chancellor [Resources])

Mr David Leah (Director of Finance)

Mrs Heather McCulloch (Committee Officer)

Mrs Karen Pilgrim (Assistant Director of Finance (Accounting & Regulatory Systems))

Mr Peter Rands (Director of Sustainability Development [for item 8])

Mr Lee Soden (Director of Estates and Facilities Management)

50.Apologies for Absence

An apology was received from Ms Deborah Upton.

51.Declarations of Interest

There were none.

52.Chair’s Communications

• The Chair welcomed Mr Krum Tashev to his first meeting of the Finance and General Purposes Committee since his election as SU President.

• The Chair highlighted the work around Master Planning, which was now approaching a more detailed phase of planning, and he anticipated that the financial implications would be clearer by the end of the year. The Committee’s role was to afford proper oversight of the process and to consider individual business cases recommended by SMT.

53.Minutes of the Meeting of the Finance and General Purposes Committee held on 9 June 2015

The minutes of the meeting of the Finance and General Purposes Committee held on 9 June 2015 were agreed and signed as an accurate record.

54.Matters Arising not appearing elsewhere on the Agenda

There were none.

55.Finance and General Purposes Committee Terms of Reference [Paper H39]

Members of the Committee received Paper H39, Finance and General Purposes Committee Terms of Reference, which were being presented for annual review. Members of the Committee were being asked to consider whether the Committee’s responsibilities around Master Planning should be explicitly referenced in the Terms. TheCommittee recognised that the Chairs Committee had strategic oversight responsibility for the Master Planning project but, given this Committee’s responsibility for considering the detailed planning and receiving regular updates, it was decided that it would be appropriate to explicitly reference Master Planning in this way. Asimilar decision was reached regarding the environmental sustainability agenda, which will also be explicitly referenced.

A vacancy on the Committee was noted, and the Vice-Chancellor advised that it would be addressed in due course once the current vacancy on the Governing Body for the Archbishop’s nominee had been filled.

RESOLVED:

that, subject to the above amendments, Paper H39 be approved.

56.Finance and General Purposes Committee Draft Work Plan 2015/16

[Paper H40]

Members of the Committee received Paper H40, Finance and General Purposes Committee Work Plan 2015/16. The Committee was invited to recommend any other agenda items for inclusion. It was decided to accept the Draft Work Plan and amend at a later date if required.

NOTED

57.Sustainability Annual Report 2014/15 [Paper H41]

Members of the Committee received Paper H41, Sustainability Annual Report 2014/15, which was presented by the Director of Sustainability Development. He acknowledged the contribution of many teams and individuals in the production of the Report.

The Director of Sustainability Development highlighted four key areas in particular with relation to the Report.

• The identification of Sustainability as a cross cutting theme in the University’s Strategic Plan, and the subsequent development of the Framework for Sustainability document which underpinned all the work in this area.
• Curriculum enhancement as demonstrated by the Futures Initiative, which aimed to promote education for sustainable development (ESD). Bioversity projects at St Martin’s and Priory Gardens, and elsewhere at the other campuses, were highlighted, as was the Whole Earth Exhibition which was being displayed across all campuses during the Michaelmas term. All of these projects enhanced the University’s Sustainability profile externally.
• In terms of its performance against Scope 1 and 2 carbon emissions, the University was hampered by the age of its building stock, and there would need to be wise investment moving forward which took account of the ageing building stock alongside the Master Planning new build.
• A number of awards had been received by the Sustainability team including a Gold award to the Grounds and Gardens team awarded by Kent Wildlife Trust, and a Canterbury In Bloom Gold award for the City, in which the North Holmes Campus was singled out for special merit. Two individuals within the Team, including the Director of Sustainability Development, had been shortlisted for Green Gown awards which will be announced on 26 November.

The Committee acknowledged the significant progress that had been made on this agenda in a relatively short time; the University had moved from being one of the lower placed universities in terms of the sustainability agenda to one of the leaders, and its Framework document was being used as a template by other universities.

In answer to a query from the Chair, the Director of Sustainability Development confirmed that he was content that sustainability issues were being fully integrated into the Master Planning process.

In terms of future work, the Director of Sustainability Development advised that now the Framework document was in place the team will be focusing on embedding its principles within faculties and schools.

It was agreed that a copy of the Sustainability Annual Report 2014/15 will be circulated to all members of the Governing Body to help them understand the University’s commitment and progress made in this area of work.

RESOLVED:

that Paper H41 be approved.

58.Master Planning

58.1Minutes of the Governor Master Planning Review Group Meeting held on 18 September 2015 [Paper H42]

Members of the Committee received Paper H42, Minutes of the Governor Master Planning Review Group Meeting held on 18 September 2015, for information.

NOTED

58.2Progress Update [Paper H43]

Members of the Committee received Paper H43, Progress Update, which was provided by the Pro Vice-Chancellor (Resources). Mr Rob Thrower, Assistant Director ofEstates and Facilities had been appointed to the full-time substantive role of Master Planning Project Manager, and his successor will be confirmed shortly.

Positive engagement with planners, including Canterbury City Council and Historic England, had been established. However, in view of the ambitious timescale, additional meetings with planners were being held in order to ensure their active engagement with the planning process. The Vice-Chancellor had led a briefing of members of the local authority which had been well received, and a follow-up briefing in the New Year had been requested.

Of a total of 32 external stakeholders, 24 had actively engaged, which represented a positive outcome. In terms of the tender process to appoint architects to develop detailed design proposals for the historic prison quarter, there had been four bids; two firms were shortlisted and BDP Architects was the firm appointed on the basis of quality, creativity and cost. As they had successfully secured the earlier bid for thescopingoftheMasterPlanningproject,itwasanticipatedthattheprocess

moving forward would be more seamless with just one set of architects.

Staff and students had been kept regularly informed of progress to date and positive feedback had been received from both groups.

A detailed risk register had been submitted to the Audit Committee in September, and the University was awaiting details of a new methodology for presenting project risks that had been recommended by the outgoing Internal Auditor.

The University will be engaging in further discussions with the Ministry of Justice around the University’s plans for the development of the Prison site.

NOTED

59.Financial Reports for the Year ended 31 July 2015

59.1Report on the University’s Financial Position [Paper H44]

Members of the Committee received Paper H44, Report on the University’s Financial Position. The Director of Finance highlighted the following key points from the Report, which reported year on year changes.

In terms of income:

• overall income had increased by 3.4%, though there were significant movements on particular income lines within the headline figure;
• there had been a 50% fall in income from HEFCE, and a significant decrease in NCTL funding; moving forward NCTL income will be nil except for special initiatives and income from these will be incorporated in specific grants income;
• there had been significant increases in tuition income for both UK and EU students, and for international students;
• a small decrease in NHS education contracts was in line with forecast expectation;
• income from research grants and contracts had remained stable, and there had been an increase in Other income.

As a consequence of the HEFCE Student Data Audit, the University had set aside a contingency sum for potential clawback by HEFCE of £650k, which was considered sufficient for the purpose.

In terms of expenditure:

• overall expenditure had increased by 3.4%, enabled by strong control over staff costs;
• a strong asset/liability ratio of 2:1;
• a decrease in external borrowing as a % of income to below 40%;
• a small decrease in the number of liquidity days, 90 .

In terms of overall capital investment for 2014/15, the figure was just over £8m (£15m in 2013/14), which represented a net increase of £269k in fixed assets.

The Director of Finance credited his team for an accurate actual outturn compared to in-year forecasts; the overall income achieved for 2014/15 was £126.4m compared to a six month forecast of £126m and a nine month forecast of £126.7m.

Looking forward to the 2015/16 budget, early indications of positive student recruitment, together with strong financial results, provided a good degree of confidence at this stage.

Finally, the Director of Finance detailed the capital plan for 2015/16 with a high priority investment in IT equipment and systems and telephony.

The Chair commended the University on its positive financial performance.

NOTED

59.2University’s Consolidated Financial Statements [Paper H45]

Members of the Committee received Paper H45, University’s Consolidated Financial Statements. The Assistant Director of Finance (Accounting & Regulatory Systems) advised the Committee that the Statements were consolidated this year due to the reactivation of Medco in February 2015.

With regard to pension scheme assumptions, the University had challenged those of the actuary and agreed a more balanced position for reporting pension liability on the balance sheet. A decrease of 47.9% in interest payable included a credit of £370k for notional interest charged on the pension scheme under FRS17.

The Director of Finance highlighted the introduction of FRS102 next year, whereby the University’s share of the USS pension scheme deficit will be incorporated into the balance sheet from 2016/17. The University was preparing for the introduction of FRS102, and will be undertaking a revaluation of all its building and land assets with a view to obtaining more realistic current market valuations.

NOTED

59.3Medco Financial Statements [Paper H46]

Members of the Committee received Paper H46, Medco Financial Statements. Since the reactivation of Medco in February 2015, the company (trading as Unitemps) hadmade a small surplus of £55k, which had been gift-aided back to the University. To date most of the income from Unitemps had come from employing University students; however, moving forward Unitemps will be focusing on greater opportunities for external placements working with local businesses in the community.

The Chair congratulated the team on the profit margin, which was an achievement in its first year of trading.

NOTED

60.Students’ Union 2014/15 Financial Statements and Budget 2015/16

[Paper H47]

Members of the Committee received Paper H47, Students’ Union 2014/15 Financial Statements and Budget 2015/16. The SU President reported a positive financial year for 2014/15 achieving an operating surplus of £21.6k, which represented a positive variance of £8.4k over budget. The Chair congratulated the Union on a positive set of financial results.

The Director of Estates and Facilities Management updated the Committee with regard to the improved performance of the Lounge and other commercial services at the St George’s Centre. Last year a minority of students were having a negative impact on the Lounge revenues, but due to hard work on the part of Elior, the Union and the University the atmosphere in the Lounge was now more welcoming and trade had improved as a result.

The aim moving forward was to reduce the size of the subsidy that the Unionreceived from the University. A benchmarking exercise will provide useful information around the level of subsidies for students’ unions in due course.

The Clerk confirmed that the Union had invested in external legal fees reviewing its own Constitution as there were issues with the model they were using. The SU Constitution had since been updated, and will be submitted for formal approval to the November meeting of the Governing Body.

NOTED

61.Report on the University’s Financial Position for the two month period to 30 September 2015 [Paper H48]

Members of the Committee received Paper H48, Report on the University’s Financial Position for the two month period to 30 September 2015. The Director of Finance reported a positive year to date surplus, which was £848k over the budgeted position; a shortfall in income was more than compensated by favourable variances on both staff and non-staff costs. He was awaiting confirmation of student numbers and a fuller picture will be available by the first quarter stage of the year.

A member of the Committee enquired whether there were any concerns around the tight staff costs budget for the year. The executive was not anticipating any particular operational impact, though it was noted that there were a number of vacancies within the HR&OD department which were in the process of being filled.

NOTED

62.University’s Loans and Investments [Paper H49]

Members of the Committee received Paper H49, University’s Loans and Investments. The Assistant Director of Finance (Accounting & Regulatory Systems) advised that the University assessed the credit rating for Lloyds Bank annually, and it continued to be one of the highest rated banks in the UK. In terms of investments, the total income earned from deposits in 2014/15 was £219k, compared to £124k in the previous year, with an average interest rate of 0.8%.

With regard to loan arrangements, the Assistant Director of Finance (Accounting & Regulatory Systems) informed the Committee that Lloyds had transferred three of the University’s loans, previously held with Lloyds, to Scottish Widows; no adverse impact was expected to arise from the new arrangements. Overall, the University’s loan profile was decreasing.

In terms of cash flow priorities, the University aimed to maintain a minimum of £8m as a good working capital. Peaks and troughs were inevitable due to the uneven profile of receipts from the Student Loan Company, HEKSS (previously NHS) and NCTL. There had been an issue with a late receipt from HEKSS this year, and the University had been in discussion with them in order to avoid a similar situation arising next year.

The Pro-Chancellor requested that the University seek assurances in writing from Lloyds regarding their ability to reassign loans to parties outside of the Lloyds group.

NOTED

63.Estate Development Update [Paper H50]

Members of the Committee received Paper H50, Estate Development Update. The Director of Estates and Facilities Management provided an overview of the level of investment that will be required in the estate alongside the investment in Master Planning.

Over the summer approximately £5m had been invested in the estate, which included both capital and revenue projects. The University continued to operate a high quality estate with over 86% of its accommodation in RIBA Category A & B; the University’s KPI target stood at 80%. However, over the next 10 to 15 years a significant amount of investment will be required to maintain a minimum figure of 80%, and a paper was being prepared for review by the SMT with this message. The Director of Estates and Facilities Management highlighted the importance of balancing the needs of current students with those of future students, and it will be challenging but important to maintain business as usual whilst moving forward with the Master Plan.

In terms of the Salomons relocation, there were two options being considered; the first was the creation of an educational facility as part of a new neuro village development in Tunbridge Wells, and the second was the rental of Vale House in the city centre on a 10 – 15 year leasehold basis. The first option was attractive but would not be available for at least two years, and a temporary location would be needed in the meantime. Vale House offered a temporary solution, but an investment in the region of £2m would be required on refurbishment. The University had an opportunity to exercise its break clause in relation to its occupancy of Salomons in 2016, and if Vale House was the preferred option a speedy decision will need to be made. The University had written to the owner of Salomons and awaited a formal response before putting a proposal to SMT on the preferred way forward.

With regard to the new Arts Facility, the Director of Estates and Facilities Management advised the Committee of the proposal to relocate the Broadstairs Arts programmes to a new building to be developed on the blue car park at the North Holmes Road campus. This proposal would also address the future needs of Art following the expiry of the lease at the Augustine Arts Centre in 2017. A full business case was being prepared by the Dean of Arts and Humanities.

In answer to a query from a member of the Committee, the Vice-Chancellor confirmed the potential to increase the number of students in west Kent with provision of a number of new courses, and Vale House had capacity to expand accordingly.

The Pro Vice-Chancellor (Resources) provided further information to the Committee around an opportunity at Pembroke Court in Medway. The current lease was due to expire in 2028, with a break clause at 2018. The current owners were keen to remove the break clause and had offered the University eight months’ rent free accommodation, which amounted to around £400k. The Committee endorsed the suggested approach of removing the break clause in view of the University’s long term commitment to health and provision in Medway.