Dunn Healy suggest a possible government scheme may help.
With reference to UUKs website (Universities UK) Universities in the UK -
“Are throwing their weight behind government aims to cut carbon emissions by 78% by 2035, as part of efforts to combat the global climate emergency.”
“Across the country, universities have stepped up their climate commitments. Not only have many universities committed to the government’s goal of net zero by 2050, but many have shown ambition and leadership by setting much earlier goals of 2030 or 2040”.
Very laudable actions and intentions, but where does the finance come to pay for the transition given of how underfunded university activity currently is or ever-increasing demands elsewhere. Coupled with the ambiguity of the setting of targets years in advance which could be a problem for future boards and sector experts to resolve.
The recent (What the PM’s new approach to Net Zero means for you - GOV.UK (www.gov.uk)) statement by PM Rishi Sunak seems to be potentially at odds with driving change within the immediate future.
“I’m absolutely committed to reaching Net Zero by 2050.
But no one in politics has had the courage to look people in the eye and explain what that involves.
That’s wrong - and it changes now.
We’re changing our approach to meeting Net Zero to ease the burden on working people.”
Yet it would appear that overall targets remain the same. So how will this governments and future governments policy impact on funding requirements?
During a recent conversation between Dunn Healy Advisory Dunn Healy Advisory Education Specialist to Higher Education and one of the Cambridge colleges, we were made aware of their recent successfully application to part fund a survey on possible net zero conversion strategies. With additional rounds opening, to fund the actions from that survey.
Further applications will be submitted to help fund heat capital projects. The government scheme is funded by Salix Finance ( Salix Finance). The bulk of the application so far are in the local authority arena though successful application in the HE sector (over the various previous schemes) range from Durham, Teesside, Bradford, Leeds, Sheffield to Liverpool, Manchester, and Leicester.
Some brief information from their website below – (strictly the scheme should be closed for applications this year but due to some technical ‘gremlins,’ the portal will re-open next week, specifically on 7th November).
Phase 3 of the Public Sector Decarbonisation Scheme, worth £1.425bn, was launched by Salix on behalf of the Department for Energy Security and Net Zero in 2021.
The Public Sector Decarbonisation Scheme provides grants for public sector bodies to fund heat decarbonisation and energy efficiency measures.
An additional financial year of funding has been granted by the Department for Phase 3c. This funding increases the value of the overall funding to the scheme and will enable Phase 3c projects to deliver across two financial years.
Phase 3c of the Public Sector Decarbonisation Scheme has up to £230 million available in 2024/25. The budget available in 2025/26 will be confirmed this autumn though applicants should assume a broadly balanced profile across 2024/25 and 2025/26.
Salix will be reopening the Phase 3c Application Portal for all applications on Tuesday 7 November 2023 at 2pm and we will close it on Friday, 10 November 2023 at 2pm.
Guidance notes and application criteria are listed in the site. It is well worth a finance department/advisor making an application either next week or even next year, but you will need to be quick.
When I first joined DfE, one of the things that struck me having come from a commercial background was how little interaction there was between universities and the DfE. From my experiences in the non-HE world, the way to understand a business was to spend as much time as possible, gathering data and knowledge to assimilate the business needs along with interacting with those companies to define the pitfalls and risks. This will allow for a strategic plan to be formulated as to what could be done to mitigate those as much as possible. Therefore, I found it very strange when asking what information, resources, or library we had about the sector was met with a few questioning looks of why would you want to do that.
Knowing the best way of understanding an issue is to speak directly to the sector and with as many sources as possible, I spent my time gathering data, setting up meetings, and speaking to those who were coping and flourishing well in the sector, to those who are struggling, along with the professionals that worked with them, in the accountancy and legal world. This enabled me to have an all-round understanding of how I might help.
I joined in the middle of Covid to help set up the restructuring regime for the higher education sector, using my turnaround and restructuring expertise, which meant I needed to understand the issues the HE sector would be facing fast! Although I did question the timing as it is my opinion that the student's application and attendance is a three-year process. As such, I expected more students, not less, would join during Covid, especially given people could no longer travel. I raised this as a concern as I believed the need for the scheme would be in year two as cracks would start to show then rather than on day one where alternative funding was also being giving to support, which is what we are starting to see now the other funding avenues have closed.
Having worked in turnaround and restructuring for many years, most of my clients would say that it was also a helpful process, although when you are in the middle of what can be a quite intense period, it may not always seem that way. Most wished they had started sooner or earlier when signs of the initial stress to the organisation are shown rather than waiting for a crunch point. And I am still friends with many of directors, vice chancellors, trustees, and owners, to this present day.
But I digress and bringing it back to the immediate issue a hand of how do I increase my understanding of what was needed in the sector?
I spent the next several months setting up workshops with universities, mission groups from the OfS, BUFDG, accountants, lawyers, and visiting various universities to understand the individual issues faced by each of them. I also spoke to some fantastic universities to understand what good looks like and to see if any lessons could be learnt to help other institutions. Of the several issues that repetitively came up that needed to be addressed, the one thing that struck me repeatedly was we were trying to find a one size fits all to individualised university set ups, where it is did not work.
Back to my prior working life dealing with turnarounds, I had never seen a plan mirror that of another company in my 20 years of working with different businesses and I have never experienced seeing the same solution rolled out repeatedly. One of my mantras used to be that two solutions were never the same when going through a turnaround process, parts were sometimes similar, sure, but never the same issue and risk happened in the same way. There were always nuances and differences between every organisation and specifics within each of those. This meant each restructure has its own unique needs and bespoke strategy plan for the specific issues and objectives for that organisation.
Why, then when it comes to regulation, funding, financing, and other aspects of the higher education sector, did we try to look for a one size fits all?
How can you compare a smaller specialist institution with less than 1,000 students to one with 30,000? Solutions are needed but the outputs are completely different and not comparable. Likewise, the returns required by the OFS did not seem to differentiate between size of university and time needed to complete nor the staff resource you may or may not have available.
If regulations are set for established large universities, what happens to those new or niches university trying to disrupt the sector or small specialist universities seeking to address a unique education need? They are on a different basis but are needing to adhere to terms set for organisations without a direct comparable to themselves.
I do not agree that ‘regulation free’ is the way forward but do feel that is a lot more time needs to be invested in looking at ensuring the regulations are fit for purpose and suitable for the size of institution. It needs to be noticeably clear what the role of the regulator is and how they achieve their objectives, without being stretched or diverted into new and additional territory. If the role of the regulator is to ensure every student has a fulfilling experience of higher education that enriches their lives and career, it should be wholeheartedly dedicated to that, ensuring quality and consistency and providing support to students in obtaining a quality higher education without being pulled into other directions that overrule the stated aim. There is a thought that in order to ensure that this aim is adhered to, is there a direct knock-on impact that the OfS should be there to assist the universities themselves when in distress? As a good quality university, with strong financial sustainability should enable students to achieve their desired pedagogy without fear of it being removed and stopped part way through the course, but that may be taking a step too far in the current climate!
Since leaving the DfE, I have been working directly with universities, vice chancellors, boards, and financial teams in the UK. It has been a real privilege for us to share our expertise to help universities in the current climate improve on their business plans and ensure strategic goals and plans can be set to achieve and/or maintain financial sustainability.
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