We have just received this response from the Warden in response to the open letter (also published below) written by our Vice President. We are happy to publish it now in the interests of full and frank debate.
21 February 2018
Thank you for your response to my open letter calling for a return to national negotiations on the USS pension scheme.
Our correspondence demonstrates the complexity of the matter at hand and the importance of my call for us to work towards a shared understanding of the challenges faced by the USS. My initial letter expressed frustration at the fact that all parties have expended considerable energy in their analyses of the scheme, while leaving many in the sector none the wiser as to the true extent (or otherwise) of the USS’s problems. This is why I called for a clear account to be given of the reasons for such divergent views on the state of the USS. Contrary to the suggestion in your letter, it should be self-evident that I am not clinging on to any particular valuation, but genuinely wish to see clarity and resolution. By extension, that includes challenge of the fundamental assumptions (particularly those covering long term interest rates) if necessary to aid understanding.
I suspect we are in agreement on a number of points. I noted the extract of Professor Latchman’s statement you sent me with interest (although I have not seen the full text) and I have no problem with its conclusion that the “preferred outcome [should be] the retention of a defined benefit scheme in an affordable form”. But the word “affordable” is highly significant in this statement. Goldsmiths would certainly be supportive of a plan that delivered some element of an affordable defined benefit, if such a scheme and associated valuation assumptions can be mutually agreed.
Where we clearly disagree is in the state of Goldsmiths’ finances and our ability to support further significant financial contributions to the USS. I will aim to address your points in turn.
First, you dispute my claim that we run on a broadly break-even basis (i.e. neither making a consistent surplus or deficit). Many readers of this correspondence will be keen and critical scholars of the changing nature of the higher education sector. The idea that an analysis of the College’s finances going back to 2007 could shed light on our current financial predicament does not bear close scrutiny as the external environment has been transformed, and not for the better. I draw my conclusion based on recent financial data and the College’s current forecast, which I summarise in Table 1 of the appendix to this letter. This shows a broadly break-even financial position.
Second, you refer to the small decline in staff costs as a proportion of total income over the last decade (61.8% in 2007 to 60.4% in 2017). Yet, over this time, a reading of our financial statements also shows that staff costs have increased from £39.8 million to £69.4 million (a 74% increase). If your percentages are being presented as evidence that we have under-invested in the staff base, then I would counter that the increase in actual staff costs tells a very different story. In understanding our considerable investment in staff, it is also worth noting that our 2017 figure of 60.4% is still significantly higher than the sector average.
The reason that staff costs have decreased in percentage terms from 61.8% to 60.4% is straightforward. Depreciation and amortisation costs have grown as a share of cost as we have invested in the Estate and IT infrastructure. The problems which gave rise to this investment may not be obvious to newer members of staff, but they were very real and live issues at the time and the investments made have done much to improve the experience of students and staff. The cost of estate improvements, new teaching room audio visual equipment, the Professor Stuart Hall Building and the like are recognised as depreciation and amortisation over the life of the assets acquired. This is summarised in Table 2 in the appendix, which also addresses your question on the percentage of income devoted to non-pay costs in 2007.
Third, you refer to our unrestricted reserves. However, our spend is limited by the amount of cash we have in our bank accounts, so the better figure to focus on is our actual cash position as at 31 July 2017, which was £29.9 million. This is a finite pot of money which, for the reasons explained in my initial letter, is declining year-on-year (for example, cash balances stood at £34.5 million at 31 July 2016 and are currently forecast to be £24 million at 31 July 2018). The notion that a finite (and declining) sum of money can fund a permanent and recurring increase in pension contributions doesn’t make financial sense, not least because it begs the question “what happens when the cash runs out”? There are also a great many potential claims on that cash, of which additional pension contributions would be just one.
The reference to the 5.5% to 7% increase in contributions reflects my understanding of the widely reported proposals tabled at the December round of negotiations between UUK and UCU (with the 5.5% presented as UCU’s proposal for the increase to employer contributions). My “insistence” is born of a simple calculation. Our pensionable payroll for USS is around £40 million, so the UCU’s 5.5% proposal would cost £2.2 million.
Fourth, you raise a point about some of the employers wishing to end the concept of mutuality. This is not, as you state, an attempt to move the burden of the scheme’s risk onto individuals and away from institutions, but rather a move which would see risk transferred from the institutions collectively to the institutions individually. Goldsmiths benefits greatly from the principle of mutuality and we have always sought to defend it as it is clearly in our interests to do so. I hope this offers a degree of reassurance. Your questions as to why other employers may differ in their view of mutuality are probably better addressed to them.
Finally, you note that: “lots of us at Goldsmiths who are fiercely proud of the ‘Goldsmiths way’ would love for you to take a clear public stand in support of your staff in a way that would also not jeopardise our economic viability.” I believe that is exactly what I did in my initial letter, but I also owe it to staff and students (and our wider stakeholders) to explain the constraints of our financial position. My calls for further negotiations to reach a shared understanding of the USS’s problems are precisely because I want to see the correct decisions taken on the scheme’s future, for the benefit of all staff in the scheme.
18 February 2018
Many thanks for your letter concerning the College’s reaction to the forthcoming UCU strikes in opposition to what we believe are unjustified and unnecessary proposals to change the fundamental nature of USS. In particular, thanks for your call for a return to national negotiations though I fear that your comments in the rest of the letter actually undermine such a call and dilute the impact of your claim that ‘all of our staff have a right to good pensions.’
Your main argument appears to be that the College simply cannot afford the increased employer contributions that are apparently necessary to sustain USS at the present levels. In my view, this misrepresents the situation in some important ways.
First, while you state that ‘unlike many other UK universities, we do not consistently achieve financial surpluses’, this contradicts the fact that, as I understand it, the College has achieved surpluses in every year bar one since 2007.
Second, when you argue that ‘what we receive in fees and grants gets paid out in salaries, overheads and interest costs’, this neglects to mention that staff costs, as a proportion of total income, have declined from 62% in 2007 to 60% in 2017. This decline has occurred at a time when income has enormously increased: from £64.4 million in 2007 to nearly £115 million last year. And I would be really interested to know how much we spent on ‘non-staff costs’ back in 2007 as compared to the 29% of income that is devoted to these costs today.
Third, you insist that the proposed increases in employer contributions to USS of between 5.5% and 7% would cost up to an additional £2.8 million a year. In this scenario, you state that the College’s cash balances ‘could soon be exhausted’ if we ran significant deficits each year. This makes no mention of the £25 million in unrestricted reserves identified in the most recent financial report but, more significantly, it simply accepts at face value the highly contested valuation figures adopted by the Universities UK and opposed by UCU.
You argue that this is a really complex area and that ‘we lack the skills to decode and interpret the problem’. I am far from a qualified actuary but even I know that the idea of a pensions deficit is a pretty fluid thing when, only last week, the Pension Protection Fund revealed that the combined deficits of Britain’s remaining final salary pensions schemes – the kind of scheme that UCU members were told was unaffordable back in 2015 and that we were forced to sacrifice – halved in one month alone, from £104 billion to £51 billion.
Yet so certain are Universities UK about the figures in the November ‘Technical Provisions’ that identified a £7.5 billion deficit (mysteriously up from £5.2 billion in September) that our employers are insisting that we all have to wave goodbye to the guarantees of a defined benefit scheme in favour of a much inferior, individual pension pot. Actually, you’re right: it is a very complicated area but why is it – given the uncertainty of the situation – that the employers are so determined to ‘de-risk’ even when they admit that, in the words of USS, ‘the scheme actually has a significant surplus’? Why are the employers so keen to shed the principle of mutuality that has long underpinned USS to move the burden of risk onto individuals and not institutions? Why do you cling to the current valuation instead of challenging the fundamental assumptions that underpin it?
You wouldn’t be alone in asking some tough questions. Recently, the vice-chancellor of Warwick, Stuart Croft, publicly questioned the ‘need for the change in the valuation assumptions last autumn which gave rise to the scale of this challenge’ and called for a ‘return to active negotiations with a real willingness by all sides to explore every option.’ And you certainly wouldn’t be alone in thinking that this move to ‘de-risk’ speaks more about the desire to foster a competitive market inside higher education than it does to protect conditions for staff and to improve the learning experience for students.
I have a hunch that you’re not at all happy with how things have gone and how the negotiations have been dominated by some of the largest institutions. I’m sure you have seen the figures that show that while 75% of Oxbridge institutions want to take financial control of their liabilities and while 73% want to de-mutualise, only 24% and 14% respectively of other USS universities feel the same way.
I know that lots of us at Goldsmiths who are fiercely proud of the ‘Goldsmiths way’ would love for you to take a clear public stand in support of your staff in a way that would also not jeopardise our economic viability. But then I’m sure that the Master of Birkbeck is just as committed to the economic viability of his own institution except that he publicly called for a return to negotiations on the basis of clear support for the existing defined benefits scheme:
The future of the USS pension scheme is a matter of concern to all of us, and I have made clear in the past that my view is that any changes should be based on meaningful negotiation. Whilst Birkbeck is only one voice, I am now stating publicly that both sides should return to the negotiating table and conduct meaningful negotiations with the preferred outcome being the retention of defined benefit scheme in an affordable form.
This dispute will only be resolved if there are enough individual vice-chancellors prepared to stand up to the ideological intransigence of Universities UK and demand a return to negotiations on the basis that the current proposals exaggerate the scale of the USS’s problems and undermine higher education’s reputation as a desirable and rewarding place to work. I encourage you, once again, publicly to challenge the UUK position and to call for meaningful negotiations on the basis that we need seriously to re-examine the basis for such drastic and unfair proposals.
With best wishes
Des Freedman (Vice President, Goldsmiths UCU), written in a personal capacity
Here it is! The timetable you’ve been waiting for that lists our teach-outs and activities during the proposed 14 days of strike action to defend our pensions.
The timetable is HERE and includes appearances from Gary Younge, Paul Gilroy, Dawn Foster, Faiza Shaheen, Paul Mason, Jeremy Gilbert and even some well-known faces from Goldsmiths.
Events take place either outside the Library on Dixon Road or in the Students Union.
If you have suggestions about other activities, please email firstname.lastname@example.org
A packed Student Assembly meeting of over 250 students overwhelmingly passed the following motion. We are hugely grateful to the sabbatical officers and all the students who attended for giving us such amazing support. This fight is for all of us!
Goldsmiths Students Union motion
8 February 2018
SUPPORT UCU ACTION AGAINST USS CHANGES
- University leaders have proposed significant detrimental changes to the agreed terms of the USS (Universities Superannuation Scheme) pension scheme – both to the staff contribution, and the subsequent pension that is received.
- Universities UK reported that the changes to the scheme would mean dropping the current ‘defined benefit’ pension; staff will no longer have an assured pension after retirement.
- UCU, negotiating on behalf of their members, estimate that a typical lecturer would be more than £200,000 worse off over the course of their retirement under the proposals.
- Proposed changes to the pension scheme also mean that someone starting work today could lose £9,600 a year from their pension. This will push lower and working class lecturers out of academic institutions, effectively socially cleansing the sector.
- NUS (National Union of Students) and UCU (University and College Union) have united in calling for university leaders to engage in open, faithful and constructive negotiation for as long as it takes in order to resolve this dispute, as a matter of urgency.
- UCU balloted its members on the prospect of industrial action, with Goldsmiths UCU branch voting 95.4% yes; one of the highest votes for strike action in the country.
- UCU plan to take sustained and incremental strike action to fight against these changes, to take place on 22-23rd February, 26th-28th February, 5th-8th March, and 12th-16th March.
- Proposed changes to the USS pension scheme is risking the financial future and security of our lecturers.
- That the proposed changes to the USS pension scheme is classist, and acts entirely in the interest of the company itself, not its members.
- UCU Goldsmiths reached out to our warden, Pat Loughrey, to stand up and speak out against the proposed changes, but he has failed to do so.
- This strike has come at the fault of our management team; it is a decision that our lecturers have been forced to take in order to save their future, and the future of higher education.
- Goldsmiths belongs to the University of London; it is no excuse to say that Goldsmiths’ warden speaking out will lack value or impact.
- Our warden must stand up to the progressive institution that he markets us to be, and speak out against the detrimental UCU cuts.
- To support the UCU and NUS united fight against proposed changes to our lecturers pension schemes.
- To support any action that our lecturers will take in the fight against the changes to their pension scheme.
- To encourage Goldsmiths students to be in partnership with their lecturers in the fight against these changes – impact on the lecturers will consequently impact the students. We must be united in our fight against cuts to the higher education sector.
- To encourage students not to cross the picket line.
- To redirect students to other alternative study spaces that are not behind the picket line.
- To ensure that the library and art/design studio spaces are not behind the picket line.
- To be completely transparent with students during the entirety of the strike; keep them informed on the current situation, how they can take action, and how they can be supported.
- To seek ways in supporting both staff and student interests during any time of staff action against the pension cuts.
- To directly contact the warden on coming back to the negotiation table, and standing against the USS cuts.
- To collaborate with UCU on communicating with students on how they can ask for assessment extensions and fee reimbursement
Why are we taking action?
Staff at universities across the UK voted overwhelmingly for strikes and other forms of industrial action to resist savage – and wholly unnecessary –proposals to cut our pensions. Under the new scheme, our pensions will be gambled on the stock market and the average loss for a new starter is likely to be some £208,000.
Why are the employers so determined to push this through?
Universities are raking in huge amounts of money from £9000+ tuition fees but are reluctant to invest this in things that will improve the quality of education: better staff/student ratios, smaller classes, more motivated and secure staff and fewer temporary contracts. Instead vice-chancellors are being paid huge salaries (Goldsmiths’ contribution to the Warden’s pension in 2017 alone was £46,000). This attack on staff pensions is an attempt to shift pensions liabilities from institutions to individuals themselves, and is part of a wider shift in higher education to embrace market forces and competition. It is a situation in which students are seen as ‘customers’ and staff as a ‘cost’ to be minimised.
But aren’t staff at Goldsmiths paid too much already?
Since the introduction of tuition fees, staff costs as a percentage of total income have fallen from 61.8% in 2007 to 60% in 2017. Student fees have not gone into paying staff more!
But isn’t the pension fund in debt?
It depends whose figures you believe. The employers have chosen to use the most pessimistic (and unrealistic) scenario of widespread university closures that, not surprisingly, shows a deficit. In reality, the scheme receives each year much more than it pays out and runs a healthy surplus.
What are staff actually planning to do?
Members of UCU will be on strike on February 22-23, February 26-28, March 5-8 and March 12-16. We will also be ‘working to rule’ which means not taking on any additional or voluntary duties. We will be picketing the College on all these days and organising ‘teach-outs’, short talks by staff and visitors, about a range of relevant topics.
Won’t this hurt students unnecessarily?
The dispute comes about as a result of the refusal of the employers to negotiate seriously. We know that this will have an impact on students, but hope that they will direct their understandable frustration at the employers and not at staff who are seeking to maintain a high-quality university education system. Students can take up their grievances by emailing email@example.com.
What can I do to support the strike if I’m not a member of UCU?
If you’re a member of staff in a relevant grade or a postgraduate student, please join UCU! Whoever you are, please spread the word about the dispute. During the strikes, we would ask everyone NOT to cross our picket lines if at all possible and to take part in the activities we plan to organise. Please email the firstname.lastname@example.org to ask exactly what Goldsmiths is doing to bring the employers back to the negotiating table and how it plans to address the real concerns of staff and students at such a critical time. You can visit www.goldsmithsucu.org to find out more about the dispute.
Read the whole fact sheet here.
Goldsmiths UCU reached and exceeded the 50% threshold required in the USS Ballot. The results are:
Votes cast in the ballot as a % of individuals who were entitled to vote 59.1%
Result of Voting
Yes 95.4% No 4.6%
More importantly, of all institutions with a turnout of more than the required 50%, Goldsmiths had one of the highest vote for strike action in the whole country!
Thank you to all for your support!
More information is available here: https://www.ucu.org.uk/ussballotresult_jan18?utm_source=lyr-contacts&utm_medium=email&utm_campaign=reps&utm_term=broff-uss&utm_content=USS+branch+officers%27+update+-+ballot+results
- USS Pensions – Ballot Result
- London Weighting Campaign
- Fight Elitism Campaign
- Gold Paper
- Event for International /EU colleagues 5 February
- NHS Demonstration 3 February
- March Against Racism 17 March
- Motions for Conference