Britain’s academics are in revolt. Lecturers at 60 universities, including world-renowned institutions such as Oxford and Cambridge, began eight days of strike action this week. Almost 1m students will have lectures and seminars cancelled during the walkout, prompted by a dispute over pay, working conditions and pensions. Academics have demonstrated before; nearly two years ago, thousands stayed away from work for a fortnight.
At the heart of the dispute is a multi-faceted row about Britain’s biggest private pension plan, the Universities Superannuation Scheme, with 420,000 members and £67bn in assets. The academics and their employers, the universities, disagree on the scheme’s financial position, and there are deep-seated concerns over its governance.
Trust between the two sides has broken down. The sacking of a whistleblower — a non-executive member of the pension trustee’s board — who challenged the size of the USS deficit has added to the bad blood. Chances of reconciliation under current circumstances are slim. A second report from an independent joint expert panel, set up to try to narrow the gulf between the sides over the scheme’s financial health and governance, is expected shortly. There is little hope it will break the deadlock.
A key disagreement — and subject of prolonged wrangling — is the size of the deficit. The plan’s managers said in August the funding hole had nearly doubled to £6.6bn, meaning a potential further rise in contributions for members. About 198,000 active members of the scheme have already seen these increase from 8 per cent of salary before April 2019 to 9.6 per cent from last month. Employers have also seen their contributions rise to 21.1 per cent of employee pay, from 18 per cent. The UCU, the academics’ union, wants employers to cover the cost of staff contributions above 8 per cent. The universities say most cannot afford this.
Elsewhere, the high costs of running defined benefit pension schemes have already prompted most FTSE 100 companies to ditch them. Even once they were closed to future accrual, companies have been eager to offload them to insurance companies — though doing so can cost hundreds of millions of pounds. While academics and universities might not want to hear it, if the USS is to continue operating, the money has to come from them.
Yet the current industrial action carries wider significance than the fate of a disputed retirement plan. It has exposed the precariousness of Britain’s higher education system as it has become more of a marketplace. Universities are ploughing huge sums into facilities and accommodation — in some cases funded by debt — to attract fee-paying students. Vice-chancellors’ salaries have soared while the UCU says average pay for university staff has fallen by about 17 per cent in real terms since 2009. Working conditions too have deteriorated, with many lecturers on short-term or zero-hours contracts and facing increasing workloads.
The excellence of the UK’s higher education offering has long been one of its greatest competitive advantages, and will be even more pertinent in a post-Brexit world. Given universities’ key role in the economy, and the potentially deeply damaging impact of the USS dispute, external mediation is needed to bring a resolution. An independent inquiry should scrutinise the handling of the USS valuation by all key players, including the Pensions Regulator, and its potential effects on university funding. A financial blueprint that will give certainty to the retirement plans of thousands of academics is needed — even if, for all sides, it may contain some unwelcome news.
Get alerts on Universities Superannuation Scheme Ltd when a new story is published