Wednesday 28-07-2021 - 16:00

Updates on the students' union's current financial situation 

We have been updating you on our financial situation in the past 12 months. In a normal year, the students’ union (non –commercial) has a total expenditure budget of around £2m. The bulk of our income comes from the University; circa £1.5m in 2020-21. The Deeds of Covenant from our commercial operations (i.e. the amounts to be paid over to the Charity) were £403,822 for y/e 2020. The commercial operations include the Sugarhouse, Central Supermarket, SU Living and Commercial Marketing. However, these are figures up to the end of July 2020, which missed out on the past 12 months of the effects of the pandemic. Our latest figures for the financial year ending on the 31st of July 2021 will be down significantly. 

Throughout that time period, we have been able to update you on the financial challenges the Students’ Union has been facing. From cuts to our block grant by the University, to our commercial services struggling in a world with COVID-19, and either being unable to operate or operating in a more difficult environment. 

Obviously, with restrictions being eased by the government, and things returning to something a lot closer to normal, we know that our members’ expectations will do the same too. In line with this, we think it’s appropriate for us to give you another update on our financial situation now, and communicate what that means for our service delivery, and ability to support you in everything you do.

 

The letter that we have received from the University is indicating a return to pre-COVID funding levels in some areas (we may still face cuts in specific projects, such as sport, Green Lancaster, etc). This means that our core block grant has not seen an increase for four years, despite student numbers growing by 21.25% (16/17 - 13,686 to 20/21 - 16,595) and an average inflation rate of 2.7%/year (each pound in 16/17 should now be £1.11). We are in a position where we have discussed with the University the possibility of pegging our block grant with student numbers, which would mean with rising student numbers and the expectation to deliver more, we would also have the resources to do so. However, the University has at this point not agreed to this option despite seemingly endless student number growth still firmly being a part of their long-term strategy. 

In addition to this, we are hoping that our commercial services return to a more normal level of operation come the start of the new academic year, however, we have spent the last 12 months sustaining losses across all our commercial services to ensure that they are still services that are available to our members when restrictions do ease, rather than opting to cease operations permanently. Whilst this could mean that come October our commercial services start to do relatively well, for the Union to return to a sustainable mode of operation, we would have to first recoup the losses from the past 12 to 18 months. Only once we can do that, would we be able to return to an operating model that is closer to pre-COVID times. 

 

Budget 2021/22 and Forecasts 2022 to 2024 

We are now working towards a financial recovery plan. As most of the ways we fund ourselves have been impacted by the pandemic, this has meant our overall income has gone down significantly. The aim is to show financial sustainability even though there will be a budgeted deficit in 2021/22. Our current forecasts show that this sustainable position may be achieved by 2023. 

There will be an impact on the Charity relating to the Deeds of Covenant from our commercial services and this is being incorporated into the budget and forecasts.   

Moving forward will obviously be difficult as we have faced staffing cuts within the organisation, meaning we no longer have the same capacity as we did before either.  

Here’s a summary for our position in the coming year:

• Core block grant funding from the University of £871,750 has been agreed along with £215,548 for specific projects
• We are unable to fill a significant number of staff vacancies we are holding which means we can’t continue to deliver everything we used to
• All budgeted expenditure is significantly reduced compared to pre-COVID levels
• We are assuming our commercial services will generate a lower net profit overall from our normal income streams compared to previous years 
• We will need to focus on the students’ union core charitable objectives and we will not have the resources to start new projects or events unless we drop another area of work. There will be some things we delivered previously that we won’t be able to deliver until we have cleared the deficit and have a surplus

Despite this, your Union will continue to support you in any way it can and ensure that your voice is at the forefront of any tough decisions that need to be taken. Obviously, these are tough times when we must operate well within our means, and this could result in a lot more “no’s” than “yes’s” when it comes to requests that require additional funding or resources, but we will always endeavour to be able to support things that are possible or at least come up with alternatives when they aren’t. 

In short, we will do what we can.