Feb-March 2021 GUCU Note on College Finances
In the last finance briefing by GUCU exec in November 2020, we acknowledged again that the College is in financial difficulty, but argued that many of the assumptions in the financial reforecast at that time were overly pessimistic. From the most recent financial information that UCU has seen as part of our union recognition agreement with management, our projections and analysis were correct.
The College deficit has come down considerably (by approx. £6.5m) for three main reasons: (1) much better student retention than anticipated (2) more new student enrolments in October and (3) the removal of the staff 1% pay award. The reduction in staffing levels we have seen through the Voluntary Severance Scheme (VSS), ‘vacancy savings’ – the non replacement of staff who have left; the non-renewal of many fixed term contracts and cuts to hourly paid AL budgets have also contributed greatly to bringing the deficit down.
This means that staff have already contributed a great deal and paid hugely for the Covid crisis at the College: through our pay freeze (another real terms pay cut); promotions freeze; through the loss of our colleagues and the increase in workloads that has resulted; and through the extra work we have done to recruit, and to support our current students to continue with their studies during the crisis.
It is our understanding that no banking covenants will now be breached and that the anticipated dip in cash in April will be less than expected. That said, the College’s deficit is significant. The £20m deficit projected 6 months ago, is down to £14m and there will be the recent government cut to our teaching grant of £2m to factor in. Our understanding is that a Revolving Credit Facility (RCF) is close to being finalised, but it will be for a significantly lower sum than the headline of £25m repeated by Comms throughout the Autumn. Important to note also, is that an RCF is more like an overdraft than a loan, so the sum sought may not need to be fully drawn down.
It appears that full valuations of Goldsmiths properties and leases are now finally underway. UCU is not privy to the detail of those conversations, but based on papers, it looks like at least £5m can be brought in from a minimal amount of asset disposal and lease closures in the months ahead. The amount could be a lot higher. There is no sign of the Enterprise Hub in current papers. Crucially, we note that none of the current cash forecasts include the upsides from asset disposals. Had these asset sales taken place after August 2020 when first recommended by KPMG, we would not have a cash crisis in April, we would be in a much stronger financial position for this year and in a better position to pace any restructuring required. In any case, if the sales take place, they will bring the deficit figure down significantly within this financial year or early in FY21-22.
This leaves UCU members with a number of important questions:
- We understand that the Recovery Plan aims to achieve cumulative savings of approx £26m up till 2024-25 alongside a projected rise in income of £13m. How is this possible? How can Goldsmiths recover or grow with a hugely reduced, demoralised and overworked workforce?
- Goldsmiths has a one-off Covid related deficit and an ‘underlying deficit’. Why was the strategy not to use asset disposals to deal with the former in a more timely manner, avert any crisis, and then work together on the latter at a more reasonable pace?
- Why force through a fundamental restructure of our portfolio in the midst of a public health crisis, when people can ill-afford to lose jobs and when nobody actually knows what the post-Covid university will need to look like?
- Why are front line professional services and teaching staff being targeted for redundancy when management layers continue to expand (new Heads of School, new ‘Change Managers’ etc.) and much of this managerial work is being outsourced to consultants for exorbitant fees?
- Why have so many of our casualised black and PoC colleagues still not been given permanent contracts?
- How do the loss of staff already incurred and the redundancies to come do anything to improve teaching and support for our students?