Finance White Paper

On 14th March 2022 Council approved the Finance White Paper for consultation. The Finance White Paper puts forward a series of proposals to improve financial planning processes within the University. These proposals suggest a settlement for historic reserves, create cash-backed reserves for surpluses going forward, simplify funding flows and introduce a 3 year settlement for central charges. It is important to realise that the changes set out in this Finance White Paper do not of themselves ‘create’ any more money. They are expected to increase transparency, improve decision making, better align governance with financial responsibility, provide better financial incentives to increase both income and value for money, and promote more informed investment in the University’s academic future.

The proposals described in this consultation have been endorsed by Planning and Resource Allocation Committee (PRAC) and the Finance Committee after substantial engagement with divisions, department and the services over the past two years. Academic divisions have reviewed the proposals in detail and consulted extensively with their departments, and their views to date have substantially informed these proposals.

This consultation aims to explain the rationale behind the Finance White Paper, describe the proposed changes and offer the opportunity for comment on the proposals.

The consultation closes on 13th May. Comments can be made by clicking on this link to open up a short form, or emailing FinanceWhitePaper@admin.ox.ac.uk

The key elements of the Finance White Paper are summarised below. The full Finance White Paper and also the Finance Green Paper can be accessed from the “Documents” sidebar, but this content will be behind University single sign-on, but please email FinanceWhitePaper@admin.ox.ac.uk if there are any access difficulties.

The Finance White Paper’s proposals have been guided by the following principles:

Sustainability

All parts of the University have a responsibility for the financial well-being and viability of the University as a whole, now and in the future.

1. Financial information should be used to inform decision-making by transparently linking income, expenditure and funding.

2. Decisions should be made with awareness of current and future financial implications at departmental, divisional and University level.

3. Incentives should ensure the alignment of short, medium and long-term interests and encourage efficiency and effectiveness across the University.

Subsidiarity:

Financial responsibility should be held at the lowest appropriate level.

1. Governance, decision-making and accountability should rest at the same level as financial responsibility.

2. Financial responsibility includes the compliant and sustainable management of income, expenditure & investment (the ‘as earned’ model).

3. The application of subsidiarity should take into account the importance of fairness and the need for appropriate standards of service and infrastructure across the University.

  • A lack of transparency and accountability make it difficult to identify the financial consequences of decisions and ensure that there is alignment of costs and benefits;
  • The surplus that the academic divisions1 generate is being double-counted, as part of the surplus is required to fund core University investments;
  • A number of the academic divisions are in recurrent financial deficit;
  • There is a lack of clarity over the status and use of historic departmental reserves;
  • Financial planning is focused on a single year; and
  • There is insufficient provision for future capital requirements and for meeting increasing challenges in providing essential services such as IT and repairs and maintenance.

1Note – in the context of the Finance White Paper, ‘division’ means the grouping of academic departments acting collectively as one of the four academic division 

  • A simplification of funding flows – the abolition of the current 123 infrastructure charge and capital charge and the introduction of new Space and Service Charges;
  • The elimination of the double-count by introducing a Contribution from the divisions, to be transparent about how the divisions are contributing to the funding of a number of specific University activities agreed by Council;
  • A three-year funding settlement for the new charges and Contribution to provide greater certainty to all parts of the University and support longer-term planning;
  • The creation of cash-backed reserves to enable the divisions and departments to manage the financial ‘ups and downs’ each year, plan for income and expenditure over more than one year and fund modest investment to sustain and grow income;
  • Drawing a line under the historic reserves, with deficit reserves being written-off, surplus reserves being maintained, with the access to surplus reserves being broadened;
  • Continuity of access to accumulated PI funds and SRF reserves and
  • The abolition of the 1.25% financing charge.

These reforms are underpinned by the creation of new governance arrangements for the revised funding flows, enabling the divisions departments and the services to consider collectively the best way to support academic activity across the University.

The results of the consultation will be reported back to PRAC and Finance committee in June to inform a final set of recommendations to be put to Council for approval in July.  If approved, the proposals would operate from the start of the financial year 2023/24 (with the transitional changes to governance and processes in 2022/23.)

Documents


 

Consultation Survey


To access the Finance White Paper Consultation survey, please click here:

TAKE PART

Contact us


Diana Boxall

Finance White Paper Implementation Lead

financewhitepaper@admin.ox.ac.uk