Message to all staff
 
As I indicated in my staff talks in June, I want over these challenging times to keep you informed of how the University intends to respond to the financial crisis and the anticipated cuts in public funding.
  
The scale of the cuts and how they will be administered is still unclear and this is due to the lengthy chain of decisions that are still pending. They include the ongoing Westminster Comprehensive Review (CSR) which will not be known until October; the impact of the CSR on the block grant for Scotland; the allocation to SFC in the Scottish Budget and the allocation of its grant by the SFC to the Universities.  The uncertainty is further compounded by the elections to the Scottish Parliament in May 2011.  The elections may stall any firm decisions and/or may result in an incoming government making changes to the outgoing government's plans to tackle the budgetary shortfall.  
   
If however the detail is in doubt, the fact that major cuts are coming is not.  We all know this and Universities throughout the UK are having to face up to the harsh realities of a bleak funding settlement and an uncertain financial future unprecedented since the Second World War.  
    
It is the Senior Management Group's (SMG) view, taking all the indications from UK and Scottish Government into account, that we can expect a real terms cut of somewhere between 20-25% in the funding received from the SFC over the next 4 years. If this were to be passed on to all Universities proportionately, this would translate into an 8-10% cut in our total income. Whatever realistic forecast we use, it is clear that under these circumstances the University would run out of cash to support its operations sometime in the calendar year 2013 unless corrective action is taken.  
     
Given that we are committed to maintaining a surplus of 2% to ensure sustainability and our capacity to invest, the forecasts show that if we don't act there will be a budget shortfall of £ 35M per year by the end of 2014/15.

In the face of this challenge and financial constraint, the SMG believes that it is vital that we meet them in a planned and strategic way.  Consequently, over the next few months the SMG will be drawing up a range of options that might be deployed to meet the estimates of the likely cuts to our funding and in a way that ensures our sustainability and excellence. 

There are, put simply and basically, two ways to face up to these challenges: generate more income and/or cut costs.  We believe that even on best estimates neither option on its own will be enough; we need to do both.  The SMG has therefore been considering a range of income generating possibilities, which include the recruitment of more full fee paying students, improving our commercial income and increasing philanthropic giving. SMG believes that these activities in combination might generate £ 15M/year by 2014/15. 

This potentially leaves a gap of  £ 20M/year which must be filled by cost savings. SMG has considered a number of cost saving initiatives, which include controlling estates and energy costs, identifying potential efficiency savings and reducing employment costs with a view to agreeing the best and most effective way forward.

These forecasting scenarios were presented to Court at its Away Day on Friday 3 September for its consideration and decision. In essence, Court endorsed SMG's analysis and commissioned the SMG to formulate clear and detailed plans on how to achieve savings of £ 20M/year between now and 2012/13.  These plans will need to be responsive and robust so as to take into account the rapidly evolving picture on the public finances.

As we begin to draw these plans together, we intend to consult widely.  From today I have initiated an email address OurGlasgow@glasgow.ac.uk to which I invite you to send suggestions as to how cost reductions could be achieved in the processes and activities that impact on your area of work. If you do not have easy access to email then please feel free to send your comments by mail,  addressing the envelope  OurGlasgow, Principal's Office. All suggestions will be considered by a working group I intend to establish to lead the formulation of the plans.
	  
I would also stress that though difficult days and decisions lie ahead, I believe, as I have emphasised in my staff talks, that we have three important positives in our favour. 
	   
The first is that we are facing these days, relative to many of our peers, from a position of strength. Our financial position prior to the public spending cuts is sound, and unlike many other UK Universities, we still have the capacity to recruit more international and postgraduate students to bring our recruitment up to the average of our competitors. We have a limited time to do this, and 2010-11 will be a crucial year to develop and market new courses which will be attractive to full fee paying students. This will be a key priority for all our four Colleges.
	    
Secondly, we have a Strategy in place 'Glasgow 2020 - A Global Vision' - which sets out our priorities and our direction going into the future.   Our strategy was built up over time through extensive consultation and provides a clear framework for making the decisions we will have to make; it will help us focus our resources on those academic and student activities that are or have the potential to be world leading and which will continue to improve our standing nationally and internationally.  
	     
And thirdly, we have completed our restructuring process.  Given that we have a strategy with clear direction, I firmly believe we also now have a structure that is best placed and designed to help us achieve it.  We are in short, ready to move forward.  However our plans are finally formulated, they will have at their heart our aim to enhance our position as one of the world's great broad based research intensive Universities.
	      
I hope this helps explain the financial challenges ahead and how in broad terms we are planning to meet them. I also intend to expand upon all of this in a series of staff talks commencing in October. 
	       
Anton Muscatelli
Principal