Review of the Transparent Approach to Costing A report by KPMG for HEFCE

KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Agenda 1.Terms of reference 2.Sources of evidence 3.Review themes 4.Key findings

2 © 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom. Terms of reference evaluation of TRAC to support the TRAC Review Group in meeting the scope of its review by: “gathering and evaluating evidence to support the review, formulation of conclusions and recommendations, and assisting with the development of a consultation document to fulfil the group’s terms of reference. The work should include assimilation of the existing evidence available to support the review, as identified by the TRAC Review Group and users/ stakeholders, taking account of both current and future uses and users.”

3 © 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom. Sources of evidence Existing documentary sources on sustainability, efficiency and cost/utility of TRAC 12 English HEIs from across the seven TRAC peer groups Views of government, regulators and funding bodies Other stakeholders in the higher education sector National Union of Students

4 © 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom. Review themes 1. The needs of stakeholders now, and in the future. 2. The burdens and benefits of TRAC as a costing system for the HE sector. 3. Opportunities to improve and streamline TRAC and the associated reporting requirements, and to secure better use and ownership of TRAC information. In each of these three areas we considered possible consultation themes and questions and provide insight into the underlying evidence base.

5 © 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom. The needs of stakeholders now, and in the future Recognition of the need for accountability for public and charitable funds and need to demonstrate regularity in the use of those funds A sector wide ABC system important in providing information to aid understanding of fEC of research (and more recently teaching). No other national costing system identified through research A range of benefits for institutions:  TRAC data provided assurance to multiple funding bodies through a single set of data  Increased research funding  Used by funding bodies in assessments of institutional financial sustainability.

6 © 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom. The needs of stakeholders now, and in the future (2) Transparency – Publication of additional information on costs at an institutional level, or possibly at a subject level is possible Publication of cost data at a course/module level would be expensive (and could risk breaching competition law) Little evidence provided of significant demand for this information from prospective or existing students or within institutions.

7 © 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom. The burden and benefits of TRAC Perception that implementation of TRAC can be onerous Overall incremental cost to institutions:  Assuming an average of £50,000 per institution gives total annual cost for TRAC of £6.5 million (excluding Time Allocation) (for English HEIs)  Together with £7.1 million estimated total cost of academic staff input into Time Allocation, gives total annual cost for TRAC of £13.6 million  Overall cost represents some 0.06% of total income for English HEIs in  Some of these costs would be incurred whether or not TRAC was a requirement

8 © 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom. The burden and benefits of TRAC (2) Evidence of use of TRAC as a benchmarking tool and as a costing tool The use of information from TRAC to inform understanding of institutional sustainability or for individual activities remains mixed Sustainability measures to replace the RFI price adjustment welcomed as better reflecting longer term financial needs

9 © 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom. Opportunities to improve and streamline TRAC and the associated reporting requirements Enhancing communications Implementation of recommendations of Time Allocation Review Other opportunities to improve and streamline TRAC:  Dispensation arrangements – increasing the level of dispensation for HEIs with publicly funded research income (currently £500k)  Reporting requirements – in respect of Annual TRAC and TRAC (T)  Review and simplification of guidance  Review RFI adjustment, in line with work underway on institutional sustainability  Review of minimum requirements in range of other areas

© 2012 KPMG LLP, a UK Limited Liability Partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved. The KPMG name, logo and ‘cutting through complexity’ are registered trademarks or trademarks of KPMG International Cooperative (KPMG International). 10 Thank You