Thoughts on the UUK Offer of 23 March 2018

UUK and UCU released a statement on Friday setting out a way forwards on the USS dispute. This (very lengthy) post examines the statement point by point, emphasising the concessions made by both sides.

The summary/ conclusion of my analysis is as follows:

  1. Employers have made major concessions only as a result of industrial action. Rational persuasion did not and does not work, and cannot be relied upon to resolve this dispute. Coercion is the only thing that brought the employers to this point and it should continue to be applied until we get what we want.
  2. The main concession employers (UUK) have made is that they will agree to a re-valuation of USS and, if that finds that current contributions and benefits are unsustainable, UUK will agree with UCU a plan to stabilise USS whilst maintaining “broadly comparable” benefits on a “guaranteed” basis, i.e. defined benefits. This is a huge retreat from their initial position, i.e. that contributions/ benefits were unaffordable; therefore, benefits had to be slashed.
  3. However, the agreement constricts this new valuation by demanding attention to “affordability” and the present regulatory climate, both of which are stacked against workers. To balance this out, I would strongly oppose ending the industrial action while talks are ongoing.

Overall, then, there remains a risk that employers will still manage to impose cuts to our pensions. I therefore agree with Sean Wallis at UCL that we ought to go back to UUK and demand a “no detriment” clause to ensure that this is not the outcome of the talks. This is implied by point (5), but is not firm enough. I would also recommend, however, that branches accept this revised agreement only on the proviso that UCU’s industrial action is not terminated. If no “no detriment” clause can be agreed, it is absolutely essential that industrial action continue.

Outside of this specific agreement on pensions we also need to concentrate on three others issues.

  1. Job cuts. One way that employers can make pensions “affordable”, or coerce us to accept poorer pensions, is to sack lots of us. The UUK president, Janet Beer, has initiated redundancy proceedings for 220+ of her staff at Liverpool. The Open University is proposing staggering cuts. More will follow. UCU needs to resist this completely.
  2. The real heroes of this industrial action have been casualised and precarious staff. I have been profoundly inspired and moved by their contribution; at my university, they have been the lifeblood of the strikes, despite the fact that they may never receive a pension or, in the case of PhD students, never actually get an academic job. The strike has raised a number of issues around the marketization of HE, and this is a crucial one. We must not return to the status quo ante where we didn’t discuss these issues, and we didn’t adequately support our colleagues on precarious contracts.
  3. Students’ grievances. Student support for our struggle has been overwhelming and, to me, surprising and deeply moving. They are told by practically everyone to behave like consumers, and they have resisted that. In over a dozen universities, they even have taken significant risks to occupy buildings in support of us. We owe them our solidarity in their struggles, too. So where, as for example at my institution, students are campaigning not only in support of us but also for themselves (in our case, opposing cuts to student bursaries) we need to maintain our support of them, until they win

In other words, this agreement must not become a way for established staff to pull the ladder up after themselves. The bonds of solidarity forged over the last few weeks must be nurtured and attempts to divide us resisted.

Point by point analysis

1. A formally agreed joint expert panel, comprised of actuarial and academic experts nominated in equal numbers from both sides will be commissioned, to deliver a report. Its task will be to agree key principles to underpin the future joint approach of UUK and UCU to the valuation of the USS fund.

Comment: Whilst appearing reasonable, this crucial step tries to redefine a political, workplace struggle into an apolitical, technical matter. This is symptomatic of the overly technocratic nature of the UCU campaign to date. UCU has tried to defeat pension cuts by questioning the method by which USS has been valued, the method of the UUK consultations, etc. These lines of attack have merit, in that they expose the “There Is No Alternative” (TINA) line of UUK for the nonsense it is. They have emphasised that actuarial methods vary and valuations are based on assumptions, and have exposed UUK as either utterly incompetent (unable to conduct a basic survey of its own members in a reliable manner) or in thrall to a handful of greedy institutions seeking to destroy USS (especially the bursars of some Cambridge colleges, and institutions more interested in buildings than staff).

However, this approach also has weaknesses. It is vulnerable to technocratic counter-attacks which argue that UCU has got its sums wrong, “misleading” members. But more importantly, it neglects to make the fundamental argument that workers simply will not accept a further pay cut. Recall that, since 2009, we have suffered a real-terms pay cut of 15–20% and two reductions in our pensions, i.e. a cut in our deferred pay. The proposed pension cut has been modelled as a pay cut of 19%, on average. So, in the course of a decade, our employers have overseen a reduction in our living standards of at least half. This is unprecedented in the history of any profession in the UK.

From a worker’s perspective, the unwavering line should be that this is fundamentally unacceptable. Quibbling about the USS valuation does not assert this. It only says that the cuts are unnecessary because UUK/USS have done their sums incorrectly. This in turn implies that endless cuts to our living standards may be acceptable, if universities can persuade us that TINA, using a technical exercise.

This is a wrongheaded strategy, reflecting weak class consciousness among academics. Too few academics think of themselves as workers in opposition to their bosses; they prefer to consider them as “colleagues” engaged in the same collective enterprise (though the profound contempt with which our bosses have treated us lately has changed the minds of a fair few of us). We mostly prefer rational debate to industrial strife. We have assumed that it is our duty to persuade our “colleagues” that our pensions are affordable after all. Surely they will listen to reason? But since when is it the workers’ responsibility to show their bosses that cuts to their living standards are unnecessary? Cleaners at the Daily Mail recently won a 25% pay rise. How? Did they sit down with Viscount Rothermere and go through the accounts, showing him that their demands were “affordable”? Of course not. They simply made their demands and insisted that the bosses met them. It is the bosses’ responsibility to figure out how to meet their demands. Likewise, when ordinary people struggled for the welfare state, universal healthcare, and so on, they did not try to design these systems, showing that they were affordable within the then-existing tax-and-spending envelope. They simply made demands and insisted they were met. As for rational persuasion — does anyone seriously think that UUK would have made even the limited concessions of this agreement without the biggest strike action in UK HE history, plus over a dozen student occupations? They were not persuaded. They were coerced.

“Too militant!” some might cry. So let’s consider the details of this panel, which will occupy a crucial position since it will define the “key principles to underpin the future joint approach of UUK and UCU to the valuation of the USS fund”. Both sides will nominate an equal number of “experts”. As Mike Otsuka has pointed out, both sides will inevitably appoint experts whose outlook mirrors their own — so how the panel will avoid simply reproducing the political deadlock is unclear. Over 30 meetings quibbling about the valuation before the strike ballot produced no breakthrough. Again, excessive faith is being put in the power of rational dialogue and good will (Habermasian nonsense). A further risk is that actuaries have become increasingly conservative in recent years, under the influence of financial economics. Most of them seem to think defined benefits are for the cuckoos. A retired senior manager in financial industry (the father of a colleague, who goes by “Strike Dad”!) reinforces this concern.

Suppose this panel eventually recommends something like the September valuation, which a lot of people (like Otsuka) have been pushing as some kind of desirable outcome. That still projects a deficit of £5.1bn, implying a deferred pay cut of 15% rather than 19%. Would you accept that? How could you not, if you’d agreed to the panel, it was appointed by both sides, everyone worked in good will, etc, etc, etc? UUK could easily present any opposition to this as nefarious, irrational, even duplicitous.

In other words, the panel can easily be a way of restoring the line that TINA, but this time with full sanction from UCU.

The only saving grace here is the concession made in point (5) — see further below. In brief, this commits both sides to recommending to USS trustees measures to retain “broadly comparable” and “guaranteed” benefits, regardless of what the re-valuation shows. This arguably puts pressure on employers to agree a valuation that supports existing benefits with limited tweaks. However, this is balanced by certain caveats to the panel’s work in point (4) — again, see further below.

2. It will require maintenance of the status quo in respect of both contributions into USS and current pension benefits, until at least April 2019.

Comment: as others have pointed out this is not a concession. The cuts would only have taken effect from April 2019 anyway. What is more important is that the Pensions Regulator waive the 30 June deadline for the valuation of USS. If it does not, a default position will prevail. Given that TPR has been involved in the ACAS talks, however, it is likely that it will agree to this (and it has ignored breached deadlines before) — so getting hung up on this, as some technocratically-inclined UCU members are doing — is a distraction. The real issue is that this creates a “guillotine” for negotiations of April 2019, albeit with some flexibility implied by “at least”. If agreement is not reached by then, April is a dreadful time to resume industrial action. This is a good reason to maintain industrial action (see point (8) below).

3. There will be a jointly agreed chair whose first step will be to oversee the agreement of the terms of reference, the order of work and timescales with the parties. Any recommendations by the group must be based on a majority view of the panel without the use of a casting vote. A secretariat, jointly agreed by the parties, will be appointed.

Comment: a useful concession from UUK, because cuts have been rammed through the USS Joint Negotiating Committee (JNC) thanks to changes to its governance during previous disputes, with an “independent” chair repeatedly using his casting vote to side with UUK and help impose further cuts. However: a) the absence of a casting vote only increases the risk of deadlock; and b) JNC remains governed in this fundamentally dodgy manner and it is the JNC which will make recommendations for the USS Trustee Board to act upon, not this joint panel. So this is not much of a “win” at all. The governance of USS is still stacked firmly against employees, and there is nothing to stop it trampling on us again in future.

4. The panel will focus in particular on reviewing the basis of the scheme valuation, assumptions and associated tests. It will take into account the unique nature of the higher education (HE) sector, inter-generational fairness and equality considerations, the need to strike a fair balance between ensuring stability and risk. Recognising that staff highly value defined benefit provision, the work of the group will reflect the clear wish of staff to have a guaranteed pension comparable with current provision whilst meeting the affordability challenges for all parties, within the current regulatory framework.

Comment: Much of this sounds nice, but the devil will be in the detail. What does “fair balance” mean? What does “comparable” mean? Arguably the atrocious deals previously offered by UUK were “comparable” with existing provision. (And, to be pedantic for a moment, I can already compare the cuts proposed by UUK to my existing pension — it’s a 62% cut.)

The last sentence is more alarming, revealing that the two sides are still miles apart and again underscoring the risk that TINA is restored through the panel’s work. It imposes two limits to the negotiations: a) “affordability” and b) the existing “regulatory framework”.

a) Affordability: as critiqued above, this makes it the workers’ job to persuade their bosses that they can afford not to cut our pay (again), and our responsibility to accept any constraints arising from “affordability” concerns. This concedes a huge amount. It essentially accepts the way that universities are currently being run and financed, and their resultant balance sheets. But we know that this is a large part of the reason the present USS crisis has arisen. Because of the sector’s marketization and the withdrawal of much public funding, vice-chancellors are encouraged to behave like businessmen, maximising income (ferociously (over) recruiting students) while suppressing costs (especially “staff costs”, i.e. our living standards), in order to generate surpluses, which are frequently used for building programmes. This logic was invoked explicitly by Exeter in asserting that pensions are “unaffordable”, but it applies virtually everywhere. The “logic” of this approach is circular: the justification for new buildings is that we need to recruit/ accommodate more students. It’s not clear who actually benefits from this strategy except the bloated “management teams” overseeing it, who can award themselves grotesque salaries by invoking “market rates” (a logic never applied to our own salaries, of course). It is clearly dangerous to accept “affordability” as a constraint when it is so powerful shaped by this market “logic”. Again — the proper demand is: “we will not accept lower pay; YOU make it affordable”. Presented in that way, vice-chancellors cannot simply continue business as usual; they are forced to rethink their “business models” and maybe — shock, horror! — stop capitulating to government-led marketization and demand the restoration of public support to universities. Is this fantastical? I don’t think so. Cambridge is the university most to blame for the USS fiasco, yet its VC has been forced by staff and student pressure to issue broadsides against marketization. Similarly the Essex VC has noted that “principles cost money” (so do Principals; and sadly there are many Principals without principles). These are cracks emerging in a consensus that has dominated VC-land since 2009, which has involved rank capitulation to every destructive attack on the sector going.

b) “The existing regulatory framework” is part of the problem. Various analyses have shown that it unnecessarily imposes “reckless prudence” on pension schemes, driving down benefits. (Sadly, USS is saddled with Bill Galvin as its chair, the man who first crafted these rules at TPR.) Many VCs (including my own) have invoked TPR’s rules as a reason why DB is now “unaffordable”. It is a mistake for UCU to accept a regulatory framework that essentially stacks the deck against its own members. Part of the struggle should be to force a change in TPR’s idiotic rules. Again, Strike Dad reinforces this point.

5. The panel will make an assessment of the valuation. If in the light of that contributions or benefits need to be adjusted in either direction, both parties are committed to agree to recommend to the JNC and the trustee, measures aimed at stabilising the fund to provide a guaranteed pension broadly comparable with current arrangements.

Comment: This is possibly the most crucial point in the whole proposal, and the one where UCU has probably won the most important concession. The panel is established to define the basis for a re-valuation of USS. Both UUK and UCU will accept this new valuation, and make recommendations designed to preserve “a guaranteed pension [i.e. DB] broadly comparable with current arrangements”. This is where UUK has been forced to retreat the most. Previously, they found a deficit that makes “contributions or benefits” unsustainable, and resolved to slash our pensions. Now, they agree that if this happens, they will jointly agree measures with UCU to “broadly” maintain our pensions in a DB form. That is a massive change from their initial position.

However: a) what “broadly comparable” means is, as already noted, open to interpretation. b) This loads all the “heavy lifting” in this conflict onto the valuation and the principles guiding this work, i.e. onto points (1) and (4). (4) is particularly crucial, since it commits both sides to taking into account “affordability” and the current regulatory framework when re-doing the valuation.

6. Alongside the work of the panel both sides agree to continue discussion on the following areas: comparability between TPS and USS; alternative scheme design options; the role of government in relation to USS; and the reform of negotiating processes to allow for more constructive dialogue as early as possible in the valuation process.

Comment: all to the good, though it remains unclear how these discussions will interface with the work of the panel. Some of the most important issues are being kicked into these parallel discussions, especially “alternative scheme design” and “the role of government”. These terms reference the possibility of the government stepping in as guarantor of USS or the possibility of a “collective defined contribution” scheme à la the Royal Mail pension scheme.

7. Support for this process will need to be sought from the USS trustees and the pensions regulator, recognising their statutory responsibilities. Both UCU and UUK will make the necessary approaches to seek this support.

Comment: see above. Presumably a formality. But UCU should agree to nothing unless these assurances are received.

8. Should this process prove acceptable to all parties this could provide the basis for the UCU to consult its branches and members on ending the industrial action currently underway within the sector.

Comment: “could”! Unless this is a wording error (which seems unlikely), this agreement has not been made conditional upon the cessation of industrial action. This, again, is a remarkable move away from the “capitulation” deal rejected earlier this month, which not only involved the cessation of industrial action but, incredibly, UCU “encouraging” staff to re-do work lost to strike action, for which they had had pay deducted. This clearly shows the extent to which strike action has worked. VCs are sufficiently rattled that they are willing to offer all of the above without any commitment from UCU to call off industrial action. It therefore stands to reason that UCU should not end its industrial action. It would be more than employers are demanding for their relatively minor concessions, and it would remove all pressure upon them to agree a compromise solution. The sensible thing for UCU to do is to maintain its current industrial action mandate, including Action Short of a Strike, until a reasonable agreement is reached.

In a sense, this will allow UCU members to exact revenge for the pay deducted during strike action, for a crisis provoked entirely by the employers (which may not even be legal). It will also remind employers how much they rely on this “good will” to keep universities functioning, concentrating minds and giving them reason to compromise in the joint panel. If this coercion is withdrawn they will have no reason to do this.