Higher Education

Why getting value for money is key for the education sector as prices continue to rise

23 August 2022   |   13 Minute Read
Teachers - value for money

 

With UK inflation at a 40 year high, it’s essential that schools, colleges, and universities get a grip on their non-staffing costs so they can maximise their budgets, make savings, and spend as efficiently as possible.

Rising UK prices

In June 2022, UK prices were up 9.4% over a 12-month period. Increases in the cost of fuel, energy, and food were all key contributing factors, with fuel up 42% from January to June 2022. And experts are predicting continued price rises into 2023, as well as the potential for a recession in the near future.

How schools, colleges, and universities are currently spending

With this economic instability in mind, we surveyed 250 people in the education sector to understand more about how they are currently spending. We discovered that departments across schools, colleges, and universities are all managing employee expenses, as well as spending for their organisations. And many people are doing this regularly; 63% of those surveyed made and processed purchases at least a few times a month.

42% spent on travel and entertaining, 30% on facilities, and 28% on catering – all areas where pricing increases have been particularly high. With 71% having monthly departmental budgets over £500, this means that expenses and non-staff costs will have a big impact on overall education sector expenditure.

What price rises mean for the education sector

Price rises are already being felt across the education sector. Universities must bridge the gap between inflation and fixed tuition fee rates to maintain a high-level of teaching and support for students. With prices firmly in the spotlight, they are seeing more scrutiny over spending from trustees, parents, and fee-paying students who are keen to see value for money. Vice-chancellors are warning that they could soon be forced to cut the number of UK students they take, increase class sizes and axe staff as the real value of tuition fees falls.

 

With food prices up 20%, pupil meals are a particular area of concern for schools, as these rising costs put the quality, quantity, and availability of school meals at risk. Factor in increasing fuel costs, which impact every step of the supply chain, and it’s no surprise that many small catering firms are beginning to find that providing school meals is too uneconomical. This could leave many schools without a catering offer for their students. And this is only one area of spending. School leadership teams are also having to contend with rising heating bills, transportation costs for students, and increasingly expensive books and stationery. With the government asking schools to “find another £1 billion of savings in schools and trusts…to “prepare for and manage” rising energy and other costs” when budgets are already tight, getting a grip on spending and reducing expenditure is essential in the coming months.

Getting value for money

Of the education-sector professionals we spoke to, only 28% used a spend or expense management platform. This rose to a third when looking at head teachers or those in the higher education sector, but they still remain in the minority. 56% were paying expenses out of pocket and then claiming money back, and 40% were using petty cash.

Relying on manual processes like these adds unnecessary admin and wastes time. Organisations are paying for finance teams to perform data entry or reconcile month-end expenses when these processes could be done in seconds. But it also means that those finance teams don’t have full visibility over what’s being spent. Petty cash, for example, leaves many purchases un-categorised. And relying on reimbursements can lead to last-minute unexpected purchases and budget shortfalls. With unchecked and siloed spending happening across departments, it becomes very difficult to identify potential savings. They can’t make the most of bulk purchasing, reduce unnecessary waste, prevent duplicate purchases or subscriptions, or reduce multiple delivery fees. In short, they can’t get value for money for anything they are spending.

With automated expense and spend management platforms, it’s easier to see every purchase that’s been made and identify every pound that could be saved. For example, with one easy dashboard (rather than custom spreadsheets) it’s much simpler to manage contracts and review them regularly to avoid expensive automatic renewals or long contract periods. Automating spending is the quickest and easiest way to keep payments compliant to regulations, so finance teams can avoid costly fines. It also makes it easier to identify where investing in new technology could save money and where services could be more cost-effectively outsourced or brought in house.

Many organisations also rely on subscriptions. These include anything from web portals for online learning or parent communication, to systems that manage tuition payments or attendance records. Managing these manually can result in organisations paying for unnecessary or duplicate subscriptions. With a spend management system, recurring payments like subscriptions or online advertising campaigns can be managed centrally for a complete view of every payment. That way, it’s easier to see everything in one place and reduce outgoings. And as administrators are no longer relying on individuals with credit cards, the risk of costly disruptions to essential services or campaigns is removed.

A future of price rises?

As the UK continues to face further price rises and the possibility of a recession, savings are front of mind for education leaders. In fact, more than two in five leaders say they will need to consider job cuts without further government cash. To avoid cutting staff or reducing what they offer students, it’s key that schools, colleges, and higher-education institutions get value for money for all non-staffing costs. Automating manual processes is an important tool they can utilise to help them cut costs, reduce unnecessary spending, and make essential purchases as efficient as possible.

 

 

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