BUFDG Digest 29 July

BUFDG

This week’s Shared/Sector-owned Services Spotlight is UMAL, a sector-owned insurance mutual providing specialist cover, claims handling, and risk support for higher and further education institutions. BUFDG was impressed by the level to which the service is shaped by the realities of the current risk landscape, and the integrated model, which combines underwriting, claims, and risk management with deep sector expertise, enabling institutions to benefit from shared insight and proactively manage an increasingly complex risk landscape. Owned by its members, and described by one as “extension of their team”, the service reinvests surpluses back into the sector while offering efficiencies such as no insurance premium tax and reduced intermediary costs. You can watch all recordings from the Shared Services Showcase here.

As is usual for this time of year, our events programme will be quieter over the next few weeks but there is plenty to look forward to after the summer break including the next SORP Implementation Forum (15 Sept); Employment Status (IR35) - Off Payroll Working annual training session (16 Sept); Time to Talk Income Collection Management (25 Sept) and the Research Finance Forum (14 Oct).

SECTOR

With a new PM comes a new cabinet, and the main appointments are now all confirmed. Lucy Powell is the new Education Secretary (including HE), Jacqui Smith (Baroness Smith of Malvern) continues as a Minister for Skills within DfE, and Jonathan Reynolds is taking on the new department for Business, Innovation, Science, and Trade (DBIST), where the research portfolio will reside. Prof. Sir Patrick Vallance has resigned as part of the shake-up. UUK has wasted no time in writing to the PM, putting stability at the top of the sector’s wishlist.

The latest UCAS applicant figures have been published following the 30 June deadline. There has been a 5% increase in the number of UK 18 year-old applicants, a 1% increase in mature UK applicants, and a 7.1% increase in international applicants. DK has the usual deeper analysis on Wonkhe.

There are a dozen or more specific mentions of universities in recent UK Government industrial strategy papers: Modern Industrial Strategy - Year One and the  Industrial Strategy Quarterly Update. These include £750m for the UK’s largest supercomputer at the University of Edinburgh, and a new centre for doctoral training in semiconductors, led by Swansea University, that will develop critical technologies for clean energy, transport, and defence. Andrea has the full list in this discussion post.

We talked about burgeoning university partnerships in the last Digest. There’s another announcement since then with the RCA starting to work with four new providers in the UK and Ireland. Also, in another good example of collaborative working the Greater Manchester universities and colleges have produced a report on how they plan to coordinate on Post-16 pathways.

Finally, David Kernohan has published a fascinating and sobering long-read for the Post-18 Project, looking at the impact of demographic trends on the future of the university sector. In short, there are some very big (and difficult) decisions that the country will need to take very soon if it is to avoid the worst-case scenario – the steady and inevitable decline in national wealth and wellbeing as a result of inaction. With a viewpoint this zoomed out it’s hard to read and not conclude that 95% of political conversation is inconsequential froth.

ENGLAND

OfS has published its financial viability and sustainability risk assessment framework, following consultation with the sector. It aims to outline how the regulator assesses financial risk, how they apply their regulatory judgement, and the levels of intervention. They stress they will be making clear in communications that final regulatory judgement about financial risk will always balance several different factors at any one time, and cannot therefore be easily reproduced. 

Both University Alliance and Universities UK have published their responses to the OfS consultation on their fee model. Both take issue with institutional size being used as a proxy for regulatory burden.

The DfE has published guidance on how providers can prepare to express their interest in delivering LLE-funded modules from September 2027. The actual submission process will open in October. A reminder you can discuss all things LLE with colleagues on the BUFDG discussion boards.

Any institutions wishing to stretch the cost-benefit analysis might want to know the bidding process for the £77m of capital funding made available through the OfS for improvements to learning and teaching facilities. The deadline for submissions is 4 September, you’ll find out the outcome by the end of October, receive the first half of the funding sometime in November, and should have the project “ready to deliver fully for students by the start of academic year 2027-28 at the latest”. Good luck.

HEPI’s latest debate paper, "New choices: Revisiting futures for higher education in England”, argues that the financial challenges facing English higher education have arrived faster than anticipated, leaving the sector in an “unstable hybrid” future that is unsustainable in its current form. With the OfS projecting 45% of providers will be in deficit in 2025/26, authors Sir Chris Husbands (former vice-chancellor of Sheffield Hallam University ) warns that incremental measures such as the recent tuition fee increase, which were offset by higher National Insurance costs, do not go far enough and suggests universities will need to make more fundamental decisions about operating models, while government must provide greater clarity on funding, regulation and mechanisms for institutional restructuring.

SCOTLAND

The SFC’s University Transformation Framework has announced support for projects at seven universities, spanning “a range of priorities, including enhanced pathways between colleges and universities, shared services, digital transformation, medical education partnerships, infrastructure planning and research collaboration”. The framework funding is the result of re-juggling existing sector grants.

WALES

Medr has published its data return requirements for 26/27, used to inform funding allocation calculations, as well as many other areas of operation. 

Two Senedd committees have launched consultations on what their priorities should be over the next term, providing universities to feed in suggestions on both education and economy and energy.

TAX AND PAYROLL

There’s news and a discussion of the new policy on Single-use drinks containers on the BUFDG discussion boards here. This has potential to have a significant impact across the university, and will need highlighting to any retail outlets at your university, your procurement teams and those that process purchase invoices and reconcile income. If you also program retail tills in-house, it will also be worth raising this with the appropriate team, and your Estates team will also need to be in the loop in case it involves providing additional facilities on site. This scheme is coming in from October 2027, and there are separate approaches in England / NI, Scotland, and Wales. A new guide has also just been issued from a VAT perspective.

The BUFDG tax team are seeking your input into government proposals to mandate direct debit payments for PAYE and VAT liabilities. We are aware that the sector has on-going issues reconciling payments against HMRC ‘dashboard’ debts due to recognised ‘gremlins’ in the HMRC system, and believe that any mandating of direct debit will further exacerbate the issue. However, we need the sector to feedback on their issues here so we can add weight to our response.

Andrea, with input from the tax teams at Oxford and Cambridge, has produced a helpful new guidance document covering VAT, Research Funding and Third Party Consideration (July 2026). If funding received by a university is used to provide goods or services to a third party, such as an industrial partner, the funding may be treated as consideration for a supply, creating a VAT liability that requires the university to account for VAT and potentially issue a VAT invoice.

Of particular interest to research teams, our guidance on Paying Research Participants: Tax and NMW Challenges helps universities identify when participant payments may create tax or National Minimum Wage risks and outlines the key considerations for managing those risks effectively.

This policy paper sets out the application of the zero rate to supplies of electricity.  It includes this comment "Small businesses who qualify for the domestic energy VAT relief and are not registered for VAT, as well as charities and residential care homes eligible for the reduced rate will also benefit”.

So (fingers crossed), you should see a reduction in the VAT amount charged on electricity used in RRP and RCP buildings from 1 October - the policy paper says that the measure is "funded for this financial year" so it might run to 5 April 2027. Once we have the draft legislation, it should be clearer. The position for members in Northern Ireland is less certain.

MA / TRAC

A reminder that bookings are now open for the 2026 TRAC Practitioners Conference. Taking place online 22 to 23 September, the event will include a mix of plenary and breakout sessions, giving delegates an overview of the work of the TDG, its activities and, of course, the latest TRAC guidance. A separate TRAC for Beginners session will take place on 16 September for registered conference delegates who are new to TRAC and need a leg-up before the conference starts. Places cost £95 (plus VAT).

Did you know we have 6 eLearning modules on Business Partnering that are freely accessible to you as part of your university’s BUFDG Pro subscription? These are: Finance Business Partnering in HE - Foundations; Adding Value as a Business Partner; Building Influence and Making an Impact; Stakeholder Relationships, Business Analysis and Insights and Strategy into Action. They’re valuable resources if you’re starting out in business partnering or developing this skill set further and all are CPD certified. Any queries on this, just let Rachel know.

The OfS has confirmed that the annual TRAC data summary aggregated from provider submissions will be published on 18 August.

PROCUREMENT

The Higher Education Supply Chain Emissions Tool (HESCET) is being updated for the Autumn. The main change is to move from calculating emissions to a different framework based on standard industrial classification. A full update on this work is available on the website here.

UK Universities Procurement Consortia (UKUPC) has launched a new strategy for 2026 to 2029. The strategy outlines what UKUPC does, sets a strategic vision, and builds around three themes of value creation, sector understanding, and future focus. Alongside the strategy, UKUPC has published its Impact Statement 2024-25, showcasing the outcomes delivered through collaborative procurement in the previous reporting period.

We’re hosting a free round-table for members tomorrow on the process for adding new suppliers finance systems. This is a discussion to share current processes, best practice and plans. Please come prepared to discuss how this process works at your institution, and feel free to share any plans for improvements you plan to make in this space.

FINANCIAL REPORTING

You can now book on to SORP Forums on 15 September, 24 November, and 27 January. A reminder that notes from all previous forums can be found on our website, along with the SORP Knowledge Hub where you can find the 2026 SORP documentation including additional guidance and revised Model Financial Statements, plus a toolbox of webinars and guides to help you prepare.

Academics from Lancaster and Loughborough University have been involved in helping the Financial Reporting Council understand how corporate reporting is adapting to the use of AI. The summary is that, while use is growing, much of it continues to be ‘human led’. There is significant caution in using AI due to the risk-averse nature of public reporting, where “even minor inaccuracies can have significant reputational implications.”

RESEARCH AND INNOVATION

UKRI has published data on investments and outputs between April 2015 to March 2026, which shows how demand for funding, allocation decisions, and research and innovation outputs have evolved over time. The figures show that funding commitments, award volumes, and award rates all decreased through this period, but include some good news stats on further funding, IP, and job creation.

UKRI also published a statement on accurate grant costings, setting out the importance that applications reflect the true costs of research proposals and stating that “perception that lower costs will be viewed more favourably during the assessment process is misleading and exacerbates unsustainable practices, ultimately placing greater financial burden on research organisations.” This corresponding LinkedIn blog advocating for “Building a More Financially Sustainable Research System” sets out what UKRI needs from applicants.

Research England has released its funding budgets for 2026–27, outlining a small increase in funding for research and knowledge exchange activities, alongside a reduction in capital funding compared with the current year. Institution-specific allocations will follow. The announcement is accompanied by a ministerial guidance letter which emphasises the role of funding in supporting the government's agenda around institutional specialisation, collaboration and the reforms proposed in the post-16 white paper.

Reporting on the aforementioned “New choices” HEPI paper, Research Professional suggests a “quiet research concentration” is underway across England, with financial pressures and changes to research funding driving investment towards a smaller number of research-intensive institutions. The article notes growing concerns that universities may increasingly need to make difficult decisions about which research activities remain sustainable, particularly where they rely on cross-subsidy from other income streams.

The list of signatories to the Women in Research Charter continues to grow, as universities commit to actions and shared expectations that improve outcomes for women across the UK research system alongside key research funders.

You can find the recording from the final scheduled Innovate UK monthly drop-in held on 7 July here, along with notes from all previous discussions. Innovate UK engagement will move from monthly drop-ins to a quarterly format from autumn 2026, with BUFDG ‘champions’ helping to identify key topics for discussion. Further details and future dates will be shared in September.

PENSIONS

There is the good news of a reduction in the TPS employer contribution rate to 17.68% from April 2027 - an 11% decrease. There’s plenty of coverage of the announcement, including commentary from UCEA. You can read Julia’s explanation and join the discussion via this post on the BUFDG discussion boards. The government has also rejected the Education Select Committees proposal to limit the use of SubCos to provide TPS alternatives.

The USS valuation was also positive, with the scheme emerging strongly in surplus, and there is now a consultation on strategic objectives, given “the provisional results show that the Scheme could support the continuation of existing benefit and contribution levels”. There was a USS webinar this week and we’ll share the recording as soon as we have it.

In related news, First Actuarial are running a free webinar on 11 August covering a range of pensions-and-education issues for Finance and HR teams.

You will find more on all of the above, plus LGPS developments, the latest updates from HMRC, pensions dashboards, and government pension reform initiatives in BUFDG’s latest pension newsletter.

MISCELLANEOUS

Lloyds Bank has published a report on infrastructure funding and the implications for innovation and growth. It finds, among other things, that there’s a structural investment gap in the HE sector of at least £10bn, and that unless this is closed the government will not be able to maximise the sector’s R&D and growth-delivering potential.

And a reminder of the recent news that the National Wealth Fund and Lloyds Banking Group have announced a new financing initiative to make up to £500m in lending available to support the retrofit and decarbonisation of UK university estates. It’s suggested that the loans will help modernise up to 300 university buildings. The National Wealth Fund is providing up to £350m of financial guarantees to enable the bank’s lending, which it says will allow Lloyds to offer longer-period loans and more flexible financing arrangements.

Dan Brady from Barnett Waddingham has an excellent blog post on LinkedIn looking at exclusions as part of responsible investment. In examining investment policies from across the sector, he finds that implementation can vary widely, even if policies are similar. For example when looking to exclude ‘significant exposure’ to fossil fuels, “One manager may exclude oil and gas producers. Another may only exclude companies where any revenues linked to fossil fuels exceed 10% of their total revenue. Yet another may exclude supermarkets because they operate petrol stations”. Another finding is that the majority of pooled funds can be rendered almost completely unusable by applying just a couple of the more common exclusions. Also, a related reminder than Barnett Waddingham will, from this Autumn, be known as Howdens.

Our Job of the fortnight is for a Finance and Operations Manager at LSE, within LSE’s commercially-focused Extended Education unit. The successful candidate “will lead both day-to-day finance operations and longer-term financial planning activities, translating complex financial information into clear, actionable insights and contributing directly to the development of new programmes and business models”.

Other vacancies can be found as usual on the BUFDG jobs page.