Willetts: less red tape + fewer tax burdens = more autonomy

 

By Jack Grove, THES

Measures to cut red tape and reduce tax burdens on universities will strengthen their autonomy, David Willetts has said.

Speaking at a meeting organized by the thinktank Politeia in central London yesterday, the universities and science minister said he was keen to maintain the independence of universities, citing research which indicated a strong link between autonomy and quality.
To this effect, he announced a string of initiatives which he believed would further institutional independence.
He confirmed that new rules scrapping VAT on shared services for universities would come into immediate effect.
The move, which was made to comply with European Union legislation, will open the door for greater collaboration between universities, which currently have to pay the 20 per cent tax if they outsource in-house administration services.
Announced by Chancellor George Osborne, Mr Willetts said the new rules would start immediately and that a new finance law was not needed.
A letter had been sent to Universities UK to confirm the decision.
The universities minister also announced an initiative to help cut unnecessary data collection by higher education institutions.
“I have discussed the issue of data collection with people from across the sector, and there is a widespread desire to go back to first principles,” he said.

“We need to establish precisely what information we already collect, what we actually need and why – and to reconcile the two, so that collection is useful and proportionate for all institutions concerned.”
He said that the Information Landscape project launched just last month was “seeking answers to these essential questions”.
“Participants will be identifying any 'quick wins' for easing the burden on universities, as well as publishing a road map for implementing a simpler model overall,” he said.
He added moves to lower the amount of state funding for universities would allow them to escape certain EU dictates.
With the state contributing only 40 per cent of the sector’s costs from this autumn, as opposed to the current 60 per cent, institutions would escape EU rules governing public bodies, which were defined as those funded by at least 50 per cent of public money.
“We are in a government that understands the value of autonomy,” Mr Willetts said.
He also announced a review of philanthropy in the higher education sector following the end of the government’s match funding scheme.
In the talk titled The Idea of a University, Mr Willetts said the university was “one of the most precious institutions that modern societies possess” and vital for “transmitting a body of knowledge, culture and skeptical understanding from one generation to another”.
jack.grove@tsleducation.com

Have shared services reached the tipping point?

Three significant factors may have pushed public sector shared services into real viability?

Over the next 12 months we will be able to judge whether 2011 was the 'tipping point' year for public sector shared services. If it is, then three significant factors will have contributed to it.

First, the publication of the shared services map by the Local Government Association. It shows that 219 councils areengaged in 143 partnerships and evidenced that more than 80 of them are up and running, and have made cashable savings of over £80m to date.

This case study of public sector success was added to by the Universities UK report, Efficiency and effectiveness in higher education, which gives examples of over £100m cashable savings in shared service projects over the past five years. For many this evidence of success and 'banked savings' has been the missing element which has heldsome bodies back from exploring partnership working as an option.

The second event was that shared service project management became a profession. During the year more than 400 leaders and senior managers in local government, fire, police, higher education and further education stepped onto the shared service architect's programme, the first module in the postgraduate certificate in shared services at Canterbury Christ Church University. Those who complete the programme can request to be recognised as shared service practitioners. A number of those have gone on to undertake the full, six-month, postgraduate certificate and will become recognised as shared service architects.

Sir Merrick Cockell, LGA chair and leader of Kensington and Chelsea council, presented the first postgraduate cohort with their graduation certificates in July. Talking to the group, Cockell stressed the importance of training and developing the shared service skills and knowledge of both members and senior managers so that they can deliver the benefits of shared service activity effectively and rapidly. In December, the second cohort received their certificates from Baroness Hanham, Parliamentary Under Secretary of State at the Department for Communities and Local Government. Baroness Hanham echoedCockell, emphasising that shared services can be complex to develop and deliver, and that building public sector shared service skills and knowledge is very important to the success, and rapid delivery, of partnership projects.

The third change has been the announcement by the chancellor in his autumn statement that the government will introduce a VAT exemption for shared services, between organisations in further and higher Education and charities. The inability of these sectors to reclaim VAT on partnership activity has been perceived as a major stumbling block. The chancellor's statement came on the back of more than £16m in partnership seed-corn grants being released into partnership projects during the year by the Higher Education Funding Council for England, the Association of Colleges, the 157 Group and the Learning and Skills Improvement Service. Full story see http://www.guardian.co.uk/public-leaders-network/blog/2012/jan/06/public-sector-shared-services-tipping-point?newsfeed=true 

Shared savings plan to halve admin costs

By Jack Grove of THES

London Metropolitan University is set to cut its administration costs by up to 50 per cent by sharing services with other institutions, bringing "some staff losses and some staff gains".

The university announced the transformation after governors agreed on 21 December to redesign support services.
It has identified more than 70 different areas, such as payroll, procurement and careers, that could be made more efficient over the next five years by collaborating with other London-based institutions.
The proposed changes follow chancellor George Osborne's Autumn Statement on 29 November, which announced the removal of the 20 per cent VAT surcharge on shared services between VAT-exempt bodies.
This tax made it prohibitive for universities to share back-office functions, vice-chancellors had argued.
Malcolm Gillies, vice-chancellor of London Met, said that the university "aims to reduce its support-service costs over the coming five years by up to 40 to 50 per cent".
Professor Gillies, who is chairman of London Higher, which represents more than 40 London-based higher education institutions, added: "If every university tendered together for insurance, payroll or careers, you can see that would drive lower unit costs."

He said that "a lot of universities" are asking how they can do the same.
"There may be some staff losses and some staff gains, but if you run it into shared services, you grow a business."
Administrative support services cost the UK higher education sector £10 billion a year, Professor Gillies said, and the bill for London institutions is close to £2 billion.
The administrative shake-up follows radical action by London Met in response to the government's changes to undergraduate tuition fees and funding.
It reduced its course offering by 70 per cent to focus on high-demand areas such as business, while setting some undergraduate tuition fees for 2012 as low as £4,500.
jack.grove@tsleducation.com.

Removal of VAT barrier to encourage shared services

29 November 2011

By Simon Baker

A major barrier to universities saving money by sharing services is set to be removed by the government.

In his autumn statement today, the chancellor George Osborne said that the government would introduce a VAT exemption for services shared between organisations that are already exempt from the tax, such as universities.
In the past, universities have been deterred from saving money by sharing services such as payroll and procurement because any new operation would have to charge VAT back to the partner institutions.
This would mean that a shared operation would need to save at least the cost of VAT – currently 20 per cent – to be worthwhile.
However, the new arrangements – which had already been consulted on following the 2011 Budget – suggest universities could set up a new joint organisation to run services without facing an extra tax bill.
Nicola Dandridge, chief executive of Universities UK, said the move was “good news” for the sector and met a key recommendation from the recent Diamond Review of efficiency in higher education.

“Universities have wanted to develop more cost-effective operating models, and more creative collaborations with external partners.
“But to date, the VAT rules have acted to block this. We hope today's announcement will address this issue,” she said.
Meanwhile, the chancellor announced the launch of an online portal called HE Global to provide information and advice to universities on expanding overseas and also a vehicle to help the sector, government and business work together in selling “education offers” abroad.
Paul Marshall, executive director of the 1994 Group of smaller research-intensive universities, said: “Having ready access to insight and advice through a resource like HE Global will help institutions implement their own international strategies.
“We’ve also called for a collaborative approach to promoting cross-sector opportunities overseas. The new vehicle proposed in today’s statement will no doubt play a big part in making this a reality. We look forward to helping to take this forward.”
simon.baker@tsleducation.com