Avoiding redundancies and transforming spending patterns at a Russell Group university through a strategic non-pay review

Non-pay spending (covering areas such as contracts, equipment, maintenance, and other operational costs) represents a substantial portion of university budgets. Across the sector, the financial turbulence of recent years has left few institutions untouched. Universities are being asked to do more with less, all while maintaining quality, supporting students, and safeguarding jobs. Hiring freezes and voluntary severance schemes have become familiar, if uncomfortable, tools in the sector’s financial toolkit. But before resorting to measures that affect staff livelihoods and academic quality, responsible institutions are looking for other levers to pull.

One of the most powerful and often overlooked of these is the non-pay (or discretionary spend) review.

The brief: 

With a student population exceeding 30,000 and a diverse research portfolio, our client (a Russell Group university) faced mounting financial pressures due to external factors such as reduced government funding, rising operational costs, and the need to invest in strategic priorities like digital infrastructure and sustainability initiatives.

Previous efforts had targeted pay budgets so non-pay expenditure remained an area with significant potential for cost savings and efficiency gains. There were also challenges around the existing processes and financial controls which needed to be considered.

Strive Higher were commissioned to undertake a review of non-pay spend activity, identifying opportunities and making recommendations to identify savings, improve procurement processes, and streamline operational expenditure while maintaining compliance and academic excellence.

Our approach:  

We gathered detailed expenditure data from the Finance team and other departments. This was complemented by benchmarking against similar UK HEIs and sector averages. High-level data from the HESA financial returns was used as a reference point to understand the wider sector context. This made it possible to identify outliers and areas with potential for savings, using scaled comparisons of activity and opportunity.

We then categorised spend into key areas which were assessed based on spend volume, potential for savings, operational impact, and ease of implementation.

Analysis of patterns of spend across broad activity areas indicated significant opportunities for improvement, including recurring fees, contracts, equipment, maintenance, consumables and travel/ expenses.

A detailed review of each of these broad activity areas highlighted three key themes to help reduce spend:

• Consolidation,

• Improving financial controls, and

• Changing behaviour.

Working with the university, we identified steps to achieve savings. These steps included:

• Reducing the number of purchasers,

• Moving approval routes out of teams/ units,

• Carrying out audits and updating the chart of accounts/ associated guidance to ensure tighter levels of scrutiny and greater levels of challenge on spend.

These changes could be made without negatively impacting the student experience or the overall academic offer, due to the extensive data analysis undertaken to understand the impacts.

As a result of our support, the university was able to identify addressable non-pay savings of £30m-£50m, along with a series of recommendations for adoption and broader change to support a sustainable future.

Outcomes:

• Significant cost savings and budget optimisation so non-pay spend can be reduced or redirected towards sharpened strategic priorities,

• Enhanced procurement efficiency and value for money by re-negotiating contracts and consolidating suppliers,

• Enhanced sustainability and operational resilience by optimising processes and minimising waste, creating a strong foundation to address future financial and resource, 

• Opportunities to foster a cultural and behavioural shift toward cost consciousness through transparency and collaboration during the adoption of changes.

If your university would like support to conduct a discretionary spend review, get in touch.