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Message from the Vice-Chancellor to staff and students - 21st April 2020

Dear Colleagues and Students,

I hope you all had restful breaks over the Easter period. I know that relaxing is difficult when we all have so much uncertainty to contend with, but I was pleased that we were able to offer some additional rest days to staff and I hope that these were valuable for everyone.

Maintaining good mental health is challenging at this moment for many, many reasons, and I am sure that, like me, you may have found adjusting to the new ways of working very challenging. You may have seen last week that a number of our academics contributed to a paper in the Lancet Psychiatry, highlighting the urgent need to tackle the harmful impacts of the COVID-19 pandemic on global mental health. The NHS has launched the ‘Every Mind Matters’ campaign to reflect this, and we have also created a wellbeing area of our Coronavirus website to share resources and advice from our own experts and external organisations. However you prefer to do so, I urge you to take time for your own wellbeing and to reach out for the support that the University and other agencies can offer.

Over the last few weeks there has been an enormous amount of work between universities and the Government to ensure that the higher education sector can weather the COVID-19 storm. The challenge to the future of individual institutions, and our higher education system as a whole, could not be greater. While I absolutely do not want to overstate the potential problems we face, I want to be completely transparent and open about how we see the future, and hopefully involve the entire university community in the process of making decisions about the changes we will need to make.

Last week the Office for Budget Responsibility (OBR) warned that the UK’s gross domestic product (GDP) could be reduced by 35% over the next quarter and that Higher Education may be the sector hit hardest. Universities UK (UUK) have warned that almost £7bn in tuition fee income could be lost if international students are unable, or choose not, to attend when the next academic year begins. The knock-on effects for regions where universities are the major employers and drivers of the local economies, could be very damaging. The biggest problem for us in interpreting the financial challenges is that we do not know if we are dealing with a one-year crisis or a more medium-term problem.

Along with others, I have been working with UUK, with the Russell Group (both through weekly meetings) and with the Government to analyse the likely impacts on the sector and to outline the steps that will be necessary to secure the future strength of our world-class higher education system. I was pleased that new instruments such as the Coronavirus Job Retention Scheme, the Coronavirus Business Interruption Loan Scheme, and the COVID Corporate Financing Facility have been extended to universities. However, much more is required to safeguard our position as global leaders in education and to ensure that the research base upon which the country’s economic prosperity, not to say our ability to face challenges such as COVID-19 will so heavily depend, is not badly undermined.

We have had a welcome announcement from UK Research and Innovation (UKRI) that they are extending the funding available to final-year PhD students by a further six-months. This brings some relief for many of our postgraduate researchers, but many more are still concerned about what lies ahead. We also now know that A-level results will be published in August, and we will be working hard to welcome a new cohort of students to Exeter as soon as we are able to in the autumn.

However, the extension of the countrywide lockdown for a further three weeks, and the outlining of the Government’s five tests which must be met before a full or partial return to normality, are a clear signal that the current crisis will be with us for many months to come, and this will inevitably have a significant impact on our plans for the next academic year.

In response, the Vice Chancellor’s Executive Group (VCEG) have begun the development of a detailed contingency plan, including a series of measures designed to help secure the long-term future of the University. Our initial estimates are that we could face a potential worst-case scenario of the loss of between 15 and 25% of our teaching and research income over the next year, which would lead to significant in-year financial challenges. On the more positive side we know that the demand from students for places at our university remains high, and we know that our research will be critical to the future of the country, but we do not know yet how long it will take for these areas of activity to return to their normal levels.

We have been prudent in our financial planning over recent years, and so have a good level of reserves. But if our current worst-case scenario comes to pass, then we will have to find ways to save considerable sums of money. We have done all that we can to preserve our resources, but now we must be ready to do more if and when necessary. We are examining all aspects of our expenditure in an effort to meet this challenge and as you would expect, we have paused as much discretionary spend as we can.

I think it is important that you know that I strongly believe that the senior team of the university should make their own contributions to reducing expenditure – including executive remuneration and budgets - before we work through the other options available to meet the potential shortfall. We will be working on this in the coming days. There are of course a range of additional savings measures that could be taken if necessary to control spend and recruitment, and these will be discussed in partnership with the wider Senior Management team, Senate, the campus trade unions, Students’ Guild and Students’ Union before any final decisions are made. All decisions will be made based on our values and with equity and fairness as core principles. And of course, the level of savings needed will depend on many factors, including the level of government financial support for universities.

Our absolute commitment to you, our University community, is that we will only take action when absolutely necessary to protect the quality of our education and research, and our future as a major employer in the region. We will share the details of our financial modelling and forecasting, and the possible triggers for further actions in the months ahead.

Our overriding objective is to ensure the financial sustainability of the University and in doing so to ensure that when this pandemic ends, as it will, we can rebuild and refocus on the delivery of our world-class teaching and research.

I passionately believe that universities are vital engines for social mobility, equality, internationalisation and the compassionate global vision that we will need in facing down this pandemic and future challenges, such as the environment and climate emergency.

We cannot control this world-wide crisis but we can control our response to it. We are a forever institution whose values of Community, Rigour and Collaboration must guide our response to the crisis in the months ahead, always underpinned by our shared ambition for our University’s future.

With best wishes,

Steve

Professor Sir Steve Smith
Vice-Chancellor and Chief Executive