governance
Has Reading milked its dairy trust?
Back in December, I made an offer via Twitter to look over the accounts of any universities where academics and/or students had any concerns about what was happening.
A member of staff at Reading approached me. A quick look at the latest financial statement (for 2017/18) flagged up a few issues. The main one was contained in Note 19 “Creditors: Amounts falling due within one year”.
It looked as if the University was committed to paying £120m to the trusts for which it acts as sole trustee.
That seemed unlikely. It was not as if the University was in a position to produce such sums and anyway the figure included for 2017 indicated that a slightly smaller sum had been in the same category in the previous financial year.
The accounts offered no explanation. I would have expected to see something either in this Note or in that devoted to “Related Party Transactions”. This prompted me to look back through Reading’s previous financial statements. I had to go all the way back to 2014/15 to see the first clue:
“Included in other creditors is an amount of £40.9m owing to the University’s endowment trusts (2014: £13.2m). This total increased significantly in the year due to land disposals by the trusts.”
In subsequent years, the amount owed to the trusts increased rapidly, climbing to £87m and then the £107m of the 2016/17 accounts. What I now know is that this reflects the manner in which the proceeds arrived from the sale of land at Shinfield belonging to the National Institute for Dairying Research Trust: £20m in 2014, £50m in 2015 and a further £50m in instalments over the next 3 years.
The University spent these sums and noted that it owed NIRDT the £120m. In a statement issued on Saturday in response to our Guardian story the University argues that the sales were fully documented in its accounts.
“The University is confident that it has responded appropriately to the issues relating to the sale of land that formed part of the assets of the National Institute for Research in Dairying trust. The details have already been set out in the University’s published financial statements.” (9 February 2018)
I don’t disagree. But what is missing from all recent financial statements is any account of the loans, which the University says were made to itself by the Trust. The University has nowhere disclosed the terms of the loan and, although it told me interest was payable, it was not able to say what interest was due and indeed whether any had been paid. The terms of the loans should have been published in the accounts and declared in the notes devoted to “related party transactions”.
There are prima facie conflicts of interest when a trustee is also the beneficiary of a trust. In this case, Reading appears to have accepted that it should have acted differently …
“The appropriate governance arrangements are now in place relating to the university’s management of the trust …” (my emphasis)
but is still being less than clear regarding how the matter is going to be resolved. I was told that two independent panels with legal representation have been convened: one to represent the interests of the trust, the other, the university. And that the university has also informed the regulators of what Office for Students called “a reportable event”. OfS said it had received this notification “recently”, but would not give any more specific timeframe.
There is obviously a broader question about what this means for the university’s finances and whether such a loan should be thought of as a “real debt”. I take that to be part of what needs to be resolved. Since the trust is designed to fund research at Reading, it is never going to be in trust’s interests to precipitate a brutal reckoning, but it seems clear that the loan is on generous terms (rolled over and increased each year) and isn’t being used solely for agricultural research. This indicates two sets of questions: was the conflict of interest properly managed? should the loan have been approved and extended annually?
Setting those questions aside, and returning to the finances: it is clear that the university has used proceeds from the sales to cover over problems in the last few years (deficits from ordinary activities of c. £20m in each of the last accounting periods).* It is not all clear what additional pressure may be put on the university’s position when the matter is fully resolved. (If anyone knows more about trust law and potential precedents, feel free to comment below).
More broadly, there is a question regarding how appropriate it is to “consolidate” the accounts of related trusts into university statements. NIRDT accounts do not appear to be published. Since it is a trust connected to an “exempt charity” , its accounts do not appear on the Charity Commission website; since it is not a company, there is nothing at Companies House. Reading does produce an annual statement regarding the investments held by another of its trusts, the Research Endowment Trust, but does nothing similar for NIRDT. Does anything prevent OfS from requiring universities to also publish the accounts of such trusts? (Again, if anyone with more knowledge in this area wants to comment, please do so below).
Judging from my inbox, this story has wider pertinence. My offer is still there. Please email if you want me to have a look at something.
*update: while over £110m was spent on acquiring fixed assets.
No more photos of sleeping MPs? New rules restrict what media can cover in Tasmania Parliament
Tasmania House of Assembly. Photo by Edoddridge. Source: Wikimedia Commons
Journalists and media groups are opposing the new media guidelines issued by Tasmania's House of Assembly Speaker Sue Hickey. Tasmania is an island state of Australia located south of the country’s mainland.
The nine-page document dated August 2018 details what journalists are allowed and prohibited to do while reporting inside the House of Assembly and its precincts. Media groups said the new rules undermine their work and make it almost impossible to report the proceedings in the Parliament.
Here are some of the rules that are being criticized:
- Journalists may not linger in the vicinity of the House of Assembly Chamber, Committee Rooms, the Atrium, Ministerial offices, party rooms or individual rooms of Members and may not seek to engage members in conversation.
- As a general rule, members of the media wishing to speak with a Member should make an appointment by telephone.
- Photographs of divisions, disturbances within the Chamber, or unparliamentary behavior by Members are not permitted.
- Photographs of individual Members, not speaking in debate, are not permitted.
- Images cannot be digitally enhanced, touched up, or altered in any form.
- Photographs taken are to be used only for the purpose of fair and accurate reports of proceedings and shall not be used for elections campaigns, satire or ridicule, and commercial advertising.
- Photos are only permitted during the first 10 minutes of Question Time.
The Media, Entertainment & Arts Alliance, the professional association for Australia’s journalists, described the new rules as “the most egregious attack on the work of a parliamentary press gallery.”
The guidelines represent an outrageous assault on press freedom, undermine the role of the media in carrying out legitimate scrutiny of the work of the state’s elected representatives, and hinder the dissemination of news and information to the people of Tasmania.
The Mercury, a newspaper in Tasmania, also rejected the new guidelines:
…these rules are nothing more than a sneaky way for our elected officials to avoid scrutiny as they go about the job taxpayers pay them to do in the building at the centre of our democratic system.
It plans to continue ‘lingering’ in the Parliament corridors despite the new rule banning it:
We therefore plan to continue to do so in the interests of open democracy and accountability. If the Speaker plans to enforce this ban, then that is a decision that would be on her head.
On Twitter, Australian quiz personality Brydon Coverdale questioned the rule which bans the taking of photos of ‘unparliamentary behaviour’ by parliamentarians.
Tasmania's parliament is banning the media from taking “photos of ‘unparliamentary behaviour’ by parliamentarians.”
Who do these politicians think they are? They are elected by the public, and the public is absolutely entitled to see how they behave. https://t.co/G4jDSqMZW8
— Brydon Coverdale (@brydoncoverdale) October 18, 2018
Speaker Hickey insisted that the guidelines her office issued are not really new and that they reflect the standard in other state parliaments. Some parliamentarians are also reportedly not happy that reporters can easily interview them in the chamber. But Hickey acknowledged the criticism against the new guidelines and vowed to consult the media about it.
Meanwhile, some journalists took photos of themselves ‘lingering’ in the Parliament corridor which is not allowed in the guidelines.
Lingering journalists at Tas parliament. The sort of behaviour new regulations will ban. #politas pic.twitter.com/IgsxDVLArg
— Leon Compton (@LeonCompton) October 18, 2018
Speaker Sue reached out and assured them that her office values the work of media.
I hope to meet with you all next week to get some workable consensus, we value our media mates!
— Sue Hickey (@SueHickeyTas) October 18, 2018
An Act of Congress for the Steady-State Timeline
By Brian Czech
Some years down the road—probably decades—we’ll pass the Full and Sustainable Employment Act, calling for a steady state economy in the USA. This is our vision at CASSE. When that day comes, scholars and commentators will construct a timeline demarcating the major steps along the way. On that timeline, August 28, 2018 will be duly noted. This was the day when the Measuring Real Income Growth Act, “MRIGA,” was introduced in the U.S. Senate by Chuck Schumer (D-NY) and Martin Heinrich (D-NM).
Even if MRIGA is never enacted, the Senate bill will belong on the timeline. It recognizes one crucial point on the way to a steady state economy: namely, that something is wrong with using GDP as an indicator of success. It represents an American paradigm shift, away from the bankrupt notion that “a rising tide lifts all boats” to the reality that some boats are falling to pieces while others are accruing new decks.
Now it’s true that MRIGA is far from a Full and Sustainable Employment Act. It’s all about a more equitable distribution of wealth, and says nothing about limits to growth. And that is precisely why it will be an early mark on the steady-state timeline, as opposed to the culmination of steady state economics.
Steady state economics centers around the themes of sustainability, distribution of wealth, and allocation of resources. When asked for advice, the steady state economist will prescribe stabilized GDP (for sustainability), an equitable distribution of wealth, and efficient allocation of resources using a variety of approaches. In contrast, conventional economics deals almost entirely with the allocation of resources by prescribing especially the “free market.”
Similarly, American political history has favored the free market. The American Constitution was conducive to the fast track of a capitalist economy. The founding fathers – and certainly subsequent politicians – emphasized economic freedom over issues of fairness and sustainability.
As we start bumping up against limits to growth in the 21st century, some cold hard facts reveal themselves. One is the accelerating pace of environmental deterioration. Another is that a rising tide no longer lifts all boats. When it takes drastic measures to grow the economy – including the revocation of longstanding environmental protections – the benefits accrue to fewer individuals, such as oil and chemical company executives.
Chuck Schumer explaining the bill on C-SPAN.
Environmental deterioration is noticed by ecologists and overlooked by most others, while the general inability to get ahead financially is experienced by the vast majority of individuals. Therefore we can expect political action on the distribution of wealth before any action on protecting the environment, much less any steady statesmanship to intentionally limit the size of the economy. And this is precisely what we are seeing in MRIGA: political action on the distribution of wealth, with no heed paid to sustainability (in the current bill at least).
So we suffer no illusions that Schumer and Heinrich are attacking GDP out of a concern for environmental protection or even long-term economic welfare. Even their apparent concern for the current distribution of wealth doesn’t hide the obvious fact that MRIGA is a political response to President Trump’s braggadocio over GDP growth rates. Nevertheless, the mere fact that Schumer and Heinrich focused in on GDP, rather than for example a progressive tax reform, will help us immensely as we raise awareness of the trade-off between GDP growth and environmental protection, economic sustainability, national security, and international stability.
The post An Act of Congress for the Steady-State Timeline appeared first on Center for the Advancement of the Steady State Economy.
The OfS should make university governance a top priority
Many of the criticism's recently levelled at universities could be fixed with improved governance, but will the new regulator be sufficiently ambitious to ensure reform? Jim Dickinson suggests some ways forward.
The post The OfS should make university governance a top priority appeared first on Wonkhe.
Any other business – Are governors asking the important questions?
Ant Bagshaw spoke to Andrew Bush, an experienced Advisor and Internal Auditor with KPMG, to get his take on how universities could deal with the most pressing issues for their governors.
The post Any other business – Are governors asking the important questions? appeared first on Wonkhe.