John Cunningham FCCA, finance director of the Manchester Metropolitan University (MME), remembers clearly why he chose to be a finance professional in higher education. “I wanted to work in an environment which promoted the positive, social, economic and transformational impacts that education provides,” he says. That motivation remains true today, though the changes to the structure and funding of higher education since John joined the sector are nothing short of revolutionary.
The adoption of tuition fees has not only relieved the government of most of its funding obligation to universities, but it has also fundamentally changed the relationship between students and higher education institutions. “For the first time universities come under a little bit of a marketisation,” explains Cunningham. “Tuition fees moved the university from being ‘just entitled to a grant’ to earning income, satisfying students. So we need to attract and maintain income from students and ensure we are meeting their needs.”
Universities must treat students as customers, personalising services to their needs, ensuring a positive student experience. This means more than providing high quality teaching and supporting academic achievement. MME’s university estate has had to be upgraded, backed by longer-term, more strategic, investment planning. Students demand excellent lecture rooms and high bandwidth broadband, both within the university’s own estate and also in student accommodation.
While some universities have externalised the provision of student housing, MME believes that accommodation is an essential part of students’ experience and an important factor in their choice of university. Consequently, MME owns 2200 bed spaces for students and manages another 1500 through leases.
“Student accommodation is important as part of the learning environment and living experience and good quality housing helps with student success and retention,” argues John. “A lot of students are looking for a safe, family like, experience. They are looking, if possible, to be within a close walking distance of campus. We can offer much more than the private sector [accommodation providers] can. We may not match the private sector at the top of the market, but we can beat them on the student living and learning environment.”
MME decided it was essential to consolidate its city centre presence, moving from seven campuses to just two, making it easier and more pleasant to move around the university. The initial phase of the consolidation cost £350m, funded mostly through internal cash balances, with some capital grant from HEFCE – the Higher Education Funding Council for England – before that dried-up in 2010/11. About 10% of the capital cost was raised from bank loan finance, fixed at 5% in 2008.
In terms of revenue costs, 80% of funding is now from tuition fees. But MME is keen to diversify its income base. It wants to increase international student numbers: 5% of students are international, compared to a sector average of 12%. MME is carefully developing relationships with international partner institutions, aware that other UK universities have suffered reputational damage from unwise partnerships with foreign institutions that failed to meet the quality threshold.
MME has built-up several commercial relationships in recent years. “We need to attract other funders,” explains John. “We have quite a healthy CPD programme. Goldman Sachs, Tesco, HMRC, the Law Society and a number of commercial bodies that we would not have engaged with in the past.” One of these is Manchester City Football Club, which MME provides with a staff scholarship scheme and with which it is developing research and teaching opportunities.
Manchester clearly has strengths as a location: it is a globally famous city off the back of its two football clubs and music scene. It has more students than any other city in Europe, with the University of Manchester sitting literally next door to MME. But even though MME is a ‘new university’ – it converted from Manchester Polytechnic in 1992 – and the University of Manchester is a member of the prestigious Russell Group, there is no inferiority complex on display at MME.
“We can compete on the same stage,” says John. “In some areas they are our competitors, in others they are not. The nature of the universities is different. The demographics of our students is different: we recruit more from the city. The University of Manchester is more national and international in its reach. There is an element of differentiation in the market. We are a full service modern university, we are large, providing humanities, science and engineering, education. University of Manchester does likewise, but they have a medical school as well.
“Our business school is very important to us. It gives us recognition, it provides a badge. In terms of student numbers, it is an institution in itself. It is almost the size of a small university. It is a key component. And for international students, it is business and management programmes that are particularly attractive.”
MME is not worried by private sector competition. “It is making us more business-like and commercially minded, but we must remember we are not a private business,” argues John. “We are a university business. We are not here to generate a profit, to go to shareholders. Any surplus we create is reinvested on our intellectual capabilities and in our mission – in our staff and our students. The private sector will target higher volume, higher margin pieces of business. So they will top slice some elements of demand. But the core reason why people will want a university experience will remain intact.”
Despite this, the need to adapt and innovate is recognised. “We need to embrace more around the digital technologies,” says John. “My worry is that we could be missing an opportunity with online learning. Are we offering what we need to offer?” MMU is particularly keen to develop its CPD offering. “It is a market place that can be better developed in terms of what the university can offer, which is not campus based. We want to develop that to attract a more diverse income.”
The post-graduate market generally is exciting. John explains: “We are on the cusp of change there, with the introduction of loans for post-graduates. Student loans are embedded now for undergraduates and demand hasn’t slackened. In fact, it is buoyant. Part-time post-graduate is a market opportunity.”
John describes his career development as being enabled by “having an in-depth understanding of the business, strong people skills [and being] forward looking, challenging but supportive and solutions driven”. It is an approach that has served him well and would, he suggests, be equally useful to others who want to reach the top of the university finance profession.
1982 Graduated, BA Hons Accounting, University of Kent
1982 Joined Peat Marwick Mitchell
1984 Appointed Administrative Assistant in Finance Department, University of Manchester
1987 Graduated as an ACCA member
1992 Admitted as an FCCA
2001 Appointed Director of Finance at UMIST
2004 Appointed Director of Finance at De Montfort University
2012 Appointed Director of Finance at Manchester Metropolitan University
37,000 + students across two campuses
£270.6m revenue in year ending July 2015
£23.4m surplus for year ending July 2015
£58.6m net funds as at July 2015
£350m capital investment programme completed
£200m new capital investment programme planned