from the principal ....

The blustery weather conditions which greeted 2008 seem to reflect the turbulence in the world's economic markets. Universities are not immune from this and the challenge is to continue striving for excellence in learning and teaching and research through a significant period of financial restraint.

The UK and many other economies in the developed world face their toughest economic outlook for at least a decade with predictions of slower growth, rising inflation and increasing energy prices.

It is against this background that the University has set itself the target of achieving a 3% surplus over five years, an essential step if we are to support new academic initiatives and maintain the University's physical and technological infrastructure.

Given the disappointing outcome from the Government's comprehensive spending review and the pressures on pay, pensions and utility budgets, the action taken following the University's own Sustainability Review and delivery of the targets set in our Strategic Framework will move us towards a break even position.

The combined effect of the poor spending settlement which after inflation (set by Government at 2.7%) means "growth" in University funding in the three years from 2008/9 of -0.2%, +1.4% and +1.7% and the national pay awards for 2008 (set at 3% for May and 2.5% or RPI, whichever is highest for October) are substantial. With RPI currently running at around 4%, the prospect is that the University will need to identify additional savings of £1.9m in 2008/9 and £1.2m in 2009/10 to keep on track.

This puts a premium on achieving savings through voluntary severance and generating additional income through improved research overhead recovery and the expansion of taught postgraduate provision - the three main levers available to us. Action in these three areas is already resulting in significant improvements to the University's financial position and this will have to continue into the future.

However, the success of the University must never be determined solely by the strength of its balance sheet - financial sustainability is a means to an end, albeit an important one. It is for this reason that some of the more uncomfortable financial decisions have to be set alongside many successes which pave the way for further growth and development.

The Discovery Days introduced thirty one new professors to the University, each one an inspiring research leader, many of the new taught masters programmes (e.g. in the Law School) are showing early signs of success and research income has improved with significant grant successes from the research councils and the major biomedical charities. The University also continues to receive important capital grants from a wide range of charitable trusts, both local and national and the work of our staff and students is recognised by many national and international prizes and awards.

Maintaining the excellence and the momentum of the University through a period of financial restraint will require every ounce of our determination, innovation and creativity but this is our aim. I am in no doubt that we will weather the storm and be invigorated by it.

Alan Langlands