Value for money: what’s that and how do you show it?

Universities must show tuition fees are value for money
The government wants to introduce more structured, mandatory, value for money reporting. More than a dozen HE providers met to talk about their concerns and how it could be implemented. Steve Butcher from the Higher Education Funding Council for England (HEFCE) summarises what was discussed.

On 24 January I attended an event in Manchester hosted by UNIAC, one of the sector’s internal audit consortia. The subject was value for money (VFM) reporting and was chaired by Andrew McConnell, finance director of the University Of Huddersfield. Universities present varied in size and character and included Bishop Grosseteste, LIPA, Sheffield, Manchester and Keele. There was also a great mix in the backgrounds of attendees – unsurprisingly there were a large number of finance people but there was also a good representation from audit committees, university secretaries, procurement and other disciplines.

Reporting value for money

We discussed the requirement passed to HEFCE from the Department for Education to report on efficiencies in the higher education sector. I introduced the circular letter on the subject which we published last year which asked that annual VFM reports change to reflect this requirement and that they are submitted to HEFCE to allow us to  the information and produce a single sector report. Although we have not concluded a full review of this year’s reports, a cursory review suggests that taking all of the reports from institutions and producing this single view of VFM across the sector may not be as easy as we had hoped. This is because of variations in the ways that institutions had responded to our circular letter.

Three Es of value for money

So, given that this is where we find ourselves, the question is what do we do about it?
I was asked what the purpose of our report will be and who the audience would be – both pertinent and valid questions. The purpose is to give readers assurance that public and student funds are being used effectively, efficiently and economically – the three Es of value for money.

As to the audience, this starts with government who asked for the report to be produced but it also clear that government sees it as a vehicle for giving students information about the use of tuition fees. And the audience can be seen to include every stakeholder between these two.

“The purpose is to give readers assurance that public and student funds are being used effectively, efficiently and economically”

A single report for government and students: ‘probably impossible’

The discussion was wide-ranging but one of the areas we all began to agree on was the proposition that a single report attempting to give information both to government and to students is probably an impossible task.

So the very least we should think about is breaking the link between students and government and addressing the two issues separately. This has the advantage for us that HEIs consider what the benefit of the tuition fee is at their own institutions – and this could easily be different in every case.

Separating student interest out from more global sector efficiency allows some freer thinking about this area too.

Discussions moved around, but one of the themes which began to surface was this. For each of the areas set out in our circular letter (estates, procurement, research etc), it might be easier for HEIs to report to HEFCE using an agreed set of metrics which institutions can measure themselves against. They could also take this approach in their internal VFM reports.

There is another meeting being convened by UNIAC taking place in Senate House, London on 3 March where we aim to move these discussions forwards.

Steve Butcher
Head of procurement, HEFCE