04/02 - June

Dear Colleagues

REPLACEMENT RECORD FOR FINANCE STATISTICS RETURN (FSR) 2004/05 (REF.: 04031)

This Circular sets out the changes to the FSR that have been approved by HESA Board for implementation in 2004/05 following record review and sector consultation.

Introduction

As institutions will be aware, HESA has collected an annual finance record since 1994/95. This record is designed to be consistent with institutions’ published accounts, but apart from amendments to reflect changes to the SORP, has received little attention since its launch. HESA therefore introduced a structured review of this record in 2003.

Review process

The review was undertaken by a working group consisting of representatives from HESA’s Statutory Customers and from HEIs, through both the British Universities Finance Directors Group (BUFDG) and the Standing Conference of Principals Finance Officers Group (SCOP-FOG). The Terms of Reference for the FSR Review Group are attached in Annex A. The Review Group met four times between October 2003 and April 2004.

In spring 2004 institutions were consulted on the Group’s proposals. Over 90 responses were received with some institutions providing considerably detailed comments, for which HESA is grateful. The proposals presented for consultation represented a reduction in the amount of data to be submitted when compared with the current finance record. However, the Review Group identified a number of areas where institutions’ own requirements for finance data might be broader than those of HESA’s Statutory Customers. Institutions were therefore asked, as part of the consultation, to indicate if they would support the proposal to collect data over and above that required by the Statutory Customers. About 80% of respondents answered positively to this question, some in very strong terms, and the final outcome of the review accordingly reflects this position.

Although in some areas the revised return consequently goes beyond the requirements specified by Statutory Customers, they have all agreed that sector support for those extensions is at a level that makes it appropriate for completion of the entire return to be required from all institutions. Data can then be reported on a comprehensive basis across the sector.

During its deliberations the Review Group considered the possibility of amalgamating data from other returns with the HESA finance data. These included the HEFCE-run Higher Education Business Interaction (HEBI) survey, but this was not considered to be sufficiently stable for amalgamation at this stage. Also considered was the HESA Non-Credit Bearing (NCB) return, but this is to be reviewed separately as it was agreed to be unrelated to finance. Ultimately therefore there were no proposals for other statistics data to be added to or collected with the FSR.

The remainder of this Circular presents detail of the agreed revised FSR.

The future collection of finance data

The most significant implication of the decision to include additional information above that required by HESA’s Statutory Customers is that Table 4 (Research Grants and Contracts by Cost Centre) will be retained. Consequently, it will be possible to continue to calculate the present range of research-related Performance Indicators from the HESA data. The data from this table is known to be used widely in institutions, as indicated in responses to the consultation, and is made available to institutions via the HESA website.

It has been agreed that Table 8 (Staff Expenditure by Pay Group) is no longer required; indeed, it is in the process of becoming meaningless in the new pay structure. Because of this it has been agreed exceptionally that this table should be dropped with immediate effect (that is, from the 2003/04 return).

More detailed changes are almost entirely concerned with coarsening the granularity of the breakdowns required, for example, by amalgamating sub-heads in the income and expenditure tables. Particular attention has been paid to cases where a distinction is not now seen to be meaningful or useful, or where there is evidence that institutions have had to make distinctions arbitrarily or inconsistently. Improved guidance will be provided to ensure that institutions can make appropriate and systematic use of the categories that have been retained.

In all cases it has been ensured that the proposals are consistent with the revised FE/HE SORP introduced for 2003/04. To reflect the SORP requirements some minor changes to some of the primary tables of the FSR will therefore have to be made in 2003/04 ahead of the implementation of the bulk of the review revisions. The FSR will continue to need to be updated to take account of further SORP revisions in the future.

A summary of the detailed changes to FSR for implementation in 2004/05 is contained in Annex B.

Cost centres

Following discussion of radical alternatives, the consultation proposal was to simplify the present cost centre system significantly by merging or removing existing cost centres. This general approach was supported by institutions, but in many areas there was robust comment on specific proposals. This feedback has been taken into account in the final outcome, which is expected to provide a pattern of cost centres that strikes a good balance between being simple and providing a rich presentation of information. A list of the agreed cost centre changes is included in Annex C.

Timing

There was a very positive response from institutions to the consultation proposal to move forward the due date for return of data, together with the date by which copies of institutions’ published accounts are required for checking purposes. Institutions clearly value the opportunity that will result from this timing change to have data made available earlier, for instance on the Finance Plus CD product. It has therefore been agreed that institutions will in future be required to submit the FSR and their published accounts to HESA before Christmas.

Conclusion

The conclusions from this review should lead to useful cost benefits for institutions through some quite straightforward simplifications of the return, and the cost of change in institutions is accordingly expected to be minimal. The various simplifications have been scrutinised carefully to ensure that valuable information will not be lost, and there is not expected to be any negative impact on fitness-for-purpose of the dataset. The retention of a cost centre breakdown on a more simplified basis will continue to support HESA data quality management procedures across the different data streams. The retention of cost centres and of Table 4 will continue to support the production of the Performance Indicators relating to research, and it is likely that any discontinuity in the time series arising from the changes to cost centres will not be material.

Next steps

HESA will issue operational documentation to support the revised FSR in August. A national training event will be organised for spring 2005. First collection of data in the new format will take place in December 2005, relating to the 2004/05 financial year.

Yours sincerely

C. Jane Wild
Director of Operations

Annex A

Terms of Reference

It was agreed that the Finance Statistics Record Review Group undertake the following:

1. To review the range and detail of finance data currently collected by HESA and its Statutory Customers and the uses made of such data, with the purpose of reducing burden on HEIs wherever possible.
2. To consider any new requirements of the finance data stream together with the schedule of data collection.
3. To consider other related data requirements, for example HEBI and NCB, for inclusion, or to be collected in parallel returns.
4. In consultation with the HE sector, to agree proposals for a new finance (plus) record.
5. To agree an update schedule to reflect the annual impact of SORP changes and to take account of the fundamental review of SORP undertaken every three years.

Annex B

Changes to the Finance Statistics Record

Annex C

Changes to Cost Centres