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