Teaching staff are striking, students are organising in solidarity. They find themselves pitched against university management and NUSU President Ronnie Reid. 190,000 lecturers and staff across the country face an effective cut in pensions of several thousands of pounds a year, varying between members of staff, in a change to the Universities Superannuation Scheme (USS). The changes would also risk pension payments on stock market investment outcomes. This represents another move to privatisation in the education system, exposing and isolating teachers and students.
Ronnie Reid, President of the Newcastle University Student’s Union, has proposed a motion due to be debated and voted on the 8th February declaring that the Union “does not support an increase in Newcastle University’s employer contribution to the USS pension scheme” to close the supposed deficit in the USS.
This motion must be defeated. It would effectively mean that the Newcastle University Students Union would expect staff to accept the cuts or raise their own pension contributions, opposing any university or student resources being diverted to them, even excluding the curbing of controversial high executive pay at Newcastle University to help higher contributions to staff pensions. This would tear apart the good relationship students and teachers have at Newcastle University. The views of a small council of Students Union elites and an irresponsible President cannot be allowed to do this
There are deep factual issues with Ronnie’s motion. The supposed £7.5Bn deficit in the USS pension fund figure he quotes is utterly unreliable, and sourced from a heavily criticised methodology straight from the USS executives trying to push through marketization and cuts to pensions.
The scheme is actually booming and its assets have increased by an average of 12% yearly for the last 5 years. Academic research from First Actuarial also predicts that the USS scheme is solvent without need to rely on the scheme’s assets: payments to pensioners are predicted to match payments coming in from existing staff for the next 40 years.
Academics have rightly criticised the official USS prediction of a £7.5Bn deficit. This deficit projection is produced through a methodology called “Test 1” that assumes the premise ‘if every university in the scheme collapsed tomorrow, would the scheme have enough money to pay its pensioners?’. Test 1 assumes that all of the high value assets held by USS would be rapidly transferred to government bonds (due to scheme closure), which offer returns below the rate of inflation because of historically low interest rates. Interest rates are so low because of quantitative easing (a process of printing new electronic money) and low Bank of England base interest rates (the interest rates with which they lend money to private banks).
This is a patently ridiculous way to measure the success of a pension scheme. Pursuing this course of action, in this absurdly unlikely scenario, is unthinkable and stupid. This complete collapse is especially absurd as rates of net income in universities are skyrocketing. Although this test may be worthwhile for one institution, it seems highly unlikely that 150 top UK universities would collapse at the same time. Simultaneously, the ‘best estimate’ of Test 1 is an £8.3Bn surplus, according to the UCU.
In effect, this notion of a £7.5Bn deficit rests on an outcome which is practically unthinkable. Top universities from Cambridge to Newcastle even being allowed by the government to collapse simultaneously seems unlikely when our financial institutions received massive bail-outs in 2008, and when our universities are also one of the UK’s most internationally competitive institutions.
Despite this, the scheme’s managers seek to go ahead with plans to cut employer payments into staff pensions. Currently, Employers pay 18% of salary before tax, and employees 8% of salary. 26% of the value of their salary ends up going to their pension pot each year. Under the new scheme, this burden will shift. Employees will still pay 8%, but the employer will now only pay only 12% to their pension pot. The ‘lost’ 6% will instead go into a separate ‘deficit recovery’ pot to protect employers’ pension liability from the highly disputed £7.5Bn deficit in case of the complete collapse of USS and its 150 university backers. In effect, staff pensions are being spirited away to a fund they have no control over and will not see.
Not only is this a cut of nearly a quarter to employee pensions every year, but it is being justified by a worst-case scenario outcome that will not happen. What this change will do with certainty is reduce the amount that every member of staff using USS has to rely on in their old age, or given to their families in the event of their death.
This harsh cut to pensions, and externalising of stress and liability to individuals through a stock market-based pay-out system has very little to do with saving USS, and more to do with enabling the privatisation and marketization of education and universities.
In conversation with Bruce Baker, President of the Newcastle branch of the UCU, I was told he thought it was possible that part of the motive behind the change may be so that universities can take pensions off their balance sheets and no longer record them as a liability, making universities more attractive to private investors. Because pensions would be left to the stock market, universities would no longer need guarantee as much funding long term for their staff. A stock market which is intrinsically unreliable and that lecturers have no professional attachment to. All the risk would be externalised to teaching staff for the sake of improving the balance sheet of universities.
The rate of support for strike action at Newcastle University was very high: On a turnout of eligible voters of 62.1%, there was a rate of support of strike action of 90.0%. There is arguably a massive democratic justification for this strike action within the UCU.
Newcastle University currently has no public plans to reimburse students for lost teaching hours, but have plans to not assess students on topics they have missed. This is despite forcing staff into this position and being the root cause of the loss of teaching hours.
Students and staff at Newcastle University are rightly organising in solidarity, supporting the strikes, and putting pressure on the university management. I spoke to Lee Clifford, a second year Politics and Sociology (BA) student playing in active role in student organisation around the strikes:
“It is vital that we look beyond the fourteen days lost and see the bigger picture; a neoliberal ideology which has saddled many students with debt for life and now attempts to use this commodification to pit students against university staff while stripping them of job security. It is for these reasons that students must support the upcoming strike action, side with university staff and take a stand against this pervasive ideology at the root of these changes.”
Lee is completely right. This is all about transferring risk to disempowered individuals so that financial institutions and large businesses can thrive, cutting themselves off from having meaningful or respectful relations with the staff who make their profits and success a reality.
Amongst students acting in solidarity with the strikes, campaign literature, banners, and plans for protest are all in the works, and students are anxious to work in solidarity with striking staff. A motion is set to follow Ronnie’s which supports the UCU strike action. This must be passed so we can have a swift end to the strikes by uniting staff and students against these distant elites.
Mikolaj Serafin, a second year sociology student, said “I’m organising with the striking lecturers because I appreciate the hard work they’ve put into making our education a reality. The world is precarious enough as it is, so it simply isn’t right to have your chance of a secure future destroyed just like that. Besides, it’s their pensions today, but could be our pensions tomorrow.” Another student, Emily Sherwood, adds “We are being pitted against each other when we should be working with each other. After all, their teaching conditions are our learning conditions.” They’re spot on. Remember whose side you’re on. Who do you have more in common with? Enriched executives you’ve never met, or the people helping you learn every day?
I spoke to Professor Bruce Baker, President of the Newcastle University branch of the striking UCU, to hear his view:
“We don’t get bonus payments when the University does well, and we don’t really want them. If we did, we would all be bankers. We want security so we don’t have to worry and can focus our energy on doing the best research and the best teaching we are capable of. But why would the best and the brightest teachers and researchers go into a university career with such a terrible pension scheme? This threatens the entire profession and will have long-lasting effects on the quality of Newcastle University if it goes through.”
This injustice is just one in a long line of attacks on staff, students, and workers. We didn’t start this, but we have to finish it.
Hitherto, we haven’t discussed the views of Newcastle University’s executive. I also reached the office of Professor Chris Day, Vice Chancellor of Newcastle University for his comment. He made repeated references to the unfounded claim of a £7.5B deficit:
“There are a number of reasons why we find ourselves in this current situation. Firstly, we are all living longer. This is a good thing, but the increase in life expectancy is faster than the increase in the pension age.
Secondly, interest rates have been lower than the rate of inflation for more than eight years now and there is no sign this will change. These combined factors have left a £7.5bn deficit in the pension scheme. This has impacted the pension sector globally.”
Interest rates are not relevant to the day to day functioning of the scheme, because it produces money from assets, stocks, and shares. They only become relevant in the nigh-impossible “Test 1” scenario, being shamelessly plugged to argue for effectively reducing staff pay and the shifting of liability to individuals. Raising the pension age would also be unhealthy for keeping new teachers entering the profession. Chris Day’s supposed solutions create new problems.
It is not only students getting involved and sharing the view that Newcastle University can in fact do more to help hurting lecturers. Non-academic staff at Newcastle University are also getting involved in campaigning. One worker in Estate Support Services, who wished to be referred to only to as “M.”, had this to say:
“As an employee of the university I think it is important workers support each other in disputes such as this. Lecturers are being swindled out of their pensions while the university profits, spending money on new buildings, campuses outside of Newcastle, and filling the pockets of high-up executives.”
“M.” mentioned issues like spending on new campuses and high executive pay. By looking at the Newcastle University’s accounts for 2017 I investigated these claims to see if possible solutions could be suggested and investigated, in the unlikely scenario there were a significant USS deficit that needed to be covered. Solutions could include funding larger employer contributions to staff pensions, or taking a less formal measure of providing miscellaneous benefits or pay increases to staff in the eventuality the proposed changes to USS go through.
One way this may be funded is through the sale of assets, many of which are not student-facing. This could be divestment from financial investments – under student pressure, Newcastle University has already divested from fossil fuels. According to the annual review: “As of 31 July 2017, the University had £75.2m of endowments (2015: £63.4m). Endowments [investment vehicles, or a package of managed investments] are primarily invested in equities [stocks and shares]. The University uses Majedie, Baillie Gifford and Black Rock to manage its investments. The University’s ethical investment policy provides a mechanism whereby students or staff can challenge how the University invests its funds and also requires our investment managers to subscribe to the United Nations Principles for Responsible Investment (UNPRI).” In other words, Newcastle University has been pressured into divestment once before, and students and staff can facilitate this again.
Employer contributions to teaching staff pensions could be also funded by the sale of land on campuses across the world owned by Newcastle University in Singapore, London, and Malaysia. However, this may have an adverse impact on staff and students there. Newcastle University’s latest campus purchase was Newcastle University London, opened in September 2015. According to the accounts, Newcastle University as of 2017 has combined net assets in four learning schemes totalling a value of £12.7 million in Newcastle University INTO LLP, Newcastle University INTO LLP London, Newcastle Science Central, and Newcastle Science Central Management LLP. Critics of University pension policy could point to the purchase of new assets, and to the existence of these net assets, and expect instead that money be diverted to supporting staff and students directly.
The University could also seek to redistribute high levels of executive pay to lesser paid teaching staff. This strike action over pensions comes not long after a nationwide upset over high levels of University executive pay. According to the Chronicle, Newcastle University’s previous Vice Chancellor was paid £248,000, excluding other possible non-monetary benefits, in 2015-2016.
From the staff costs in the accounts, it would appear the Vice Chancellor pay and benefits package amounted to £356,100 in 2017 (this amount was the total paid to the two Vice chancellors as one retired and Professor Chris Day took over). The VC pay for 2016 was £316,900, so this constitutes about a 12.4% increase from 2016 to 2017. This comes at a time when total Newcastle University income in 2016–17 was £487.9m, an increase of a lesser 3% from £476.2m in 2015–16. In the accounts, one can find the numbers of other higher paid staff, which includes pro-vice chancellors:
This data circumscribes Bruce Baker’s claim: “since 2009, our pay has not kept pace with inflation. Our real wages are over 15% lower now than they were nine years ago.” Rising executive pay and lower real wages for the majority reflects general trends. According to research by the TUC, “between 2007 and 2015, real wages in the UK fell by 10.4% – a drop equalled only by Greece. At the same time, students continue to face rising living costs in basics like rent and food as previously available support such as maintenance grants is removed. Many workers on Newcastle University campus are also not even paid a so-called ‘living wage’ for basic needs, calculated at £8.75 an hour. Yes, not enough to survive on while executive pay rises dramatically.
However, economic disparity in universities is not isolated to Newcastle. Ex-Bath Spa University vice-chancellor Christina Slade’s ‘compensation for loss of office’ meant she received over £800k in one year total when taking into account her salary. University executives are also often provided with ‘perks of office’ like luxury cars, expenses, and free housing.
Newcastle and other universities can provide alternative ways of funding a larger employer contribution to the USS pension scheme, or can afford to make less formal efforts to support staff, without resorting to removing resources from students on campus. Even if the deficit in the USS were real, and even if existing cash flow could not cover current pension payouts, there would be alternative ways to fix the problem without seriously impacting on learning. There is absolutely no excuse for this cut to pensions. We must cut through the propaganda of supposed deficit and a supposed need to punish teaching staff.
Despite this, executives push ahead with ideological and conceited cuts to and marketization of pensions. Student activists on campus have already organised efforts to register their concern with planned cuts to staff pensions. A petition is running to declare student support for striking staff, and has 120 signatures at the time this article is being written. At least one information session is also planned to occur, this one right before Ronnie Reid’s factually flawed motion goes to NUSU student council.
Lecturers have been forced to this strike action, and in your position, reader, you’d do the same. Remember that staff are on the defensive. It is their livelihoods being plundered.
UCU and student activists want other students to get involved by leafleting, writing letters to the Vice Chancellor, protesting on campus, talking to your friends in person and on social media, and not ‘crossing the picket line’ and going to lessons during strike days. I got in touch with the student activists and they said they could be contacted at Newcastle.email@example.com.
This cut to pensions is just one of many injustices found throughout universities. Students increasingly struggle with poverty, stress, and poor mental health. Newcastle university is one of the worst universities in the country for student welfare. It’s no surprise that the University’s oh-so-caring approach has now led to the eruption of anxiety in the hearts of every lecturer seeking a safe retirement.
This reporter couldn’t find any staff, student, or worker events or organisation on campus opposing the view that lecturers should strike. All of the organisation hereto visible has been supportive of staff interests and puts greater expectation on the university management to come back to the bargaining table, or at least takes no position on staff interests.
This firmly puts proponents of cutting staff pensions in a tiny minority of elites. This is contrasted with a majority of people sympathetic to staff and/or injured themselves by the decisions to cut pensions pushed through by pension managers and employers. The decision to cut pensions is ultimately resulting in the loss of teaching for students, and the loss of pay for staff, as the hands of striking staff are forced. This decision appears to be a political choice as the supposed deficit figure is unreliable, potentially acting as a smokescreen to justify the shifting of liability for pension pots from Universities to individual staff, now finding themselves surrendered and sold out to the fluctuations of the stock market.
On the one side of this conflict, there appears to be university management and a sympathetic NUSU President, and on the other, a defensive group of striking staff, and students acting in solidarity. It’s hard to predict where this dispute will lead, but one thing seems clear: Student activists and striking staff are mounting a resistance to harsh and unnecessary cuts to teacher’s pensions, and they don’t look ready to back down.
Jamie Cameron is a second year Politics (BA) student at Newcastle University, and a Comment Editor at the Courier. You can find or contact him on Twitter @everegalitarian. You can find his full report of the facts on Medium. Or, you can read his short article with just the facts at the Courier.
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Last modified: 7th February 2018