Dear Vice-Chancellor or Principal
1. This letter notifies higher education institutions (HEIs) of an option to delay part of the submission of their financial forecasts to us until April 2011 (rather than December 2010). No response is required.
2. Our requirements for annual accountability information are set out in 'Annual accountability returns 2010' (HEFCE 2010/25). In that publication, paragraphs 35 and 36 and Annex B cover our requirements for financial forecast information. Given the continuing uncertainty about HEFCE funding beyond 2010-11, following the Browne report and the Spending Review, we consider that institutions may not have firm enough indications of future income to enable them to complete their financial forecasts meaningfully at this time. This view is confirmed by recent comments from some in the higher education sector.
3. We welcome the efforts institutions are making in considering their strategies and in modelling different scenarios in this time of change. We also feel that institutions' forecasts are likely to benefit from a delay until spring 2011, when information about future funding will be more complete. Those forecasts can then give HEFCE a more robust base for its work, including its risk assessments.
4. We are therefore offering institutions the option to submit their forecasts in either December or April, as follows:
- You are welcome to submit your financial forecasts and commentaries in line with our original requirements in December. You may wish to do this if you have completed your approval processes and secured governing body agreement, and if you are confident that your assumptions take into account likely future funding scenarios. If you subsequently feel that your forecasts do need to be updated then you are free to re-submit by the deadline under option b.
- Institutions may submit their annual accountability returns as normal in December but with a financial forecast only to the end of 2010-11. We will then require forecasts for the following three years to be submitted by Friday 15 April, in addition to an updated forecast for the period ending July 2011. If you choose this option, it would also make sense to hold off submitting your financial commentary (paragraphs 37-38 of HEFCE 2010/25) except for question 3 in the table at paragraph 38 which asks, in relation to the period of the four-year forecasts:
'What scenario planning has been undertaken in relation to the financial position over the forecast period? What actions has the HEI taken / does it plan to take to address the impacts of any reductions in income streams?'.
5. We will undertake the scrutiny of your annual accountability returns as usual in December/January, and will contact any institutions where we think there are serious issues to address. We will not make our final risk assessments or write to you about those assessments until we have studied the forecasts for the whole sector in April/May.
6. This alteration of our 2010 accountability requirements is a result of it taking longer to arrive at a financial settlement than when we originally published those requirements. I trust that the change will not cause undue work. This letter will be followed by more detailed guidance sent directly to heads of finance.
Sir Alan Langlands