In Defence of the Public University: The USS Strike in Context

In Defence of the Public University: The USS Strike in Context

Gurminder K Bhambra

Our strike is about pensions, but it is not only about pensions. It is also about the structural changes that have seen increasing numbers of colleagues employed on temporary / precarious contracts. These changes in the nature of employment, while deleterious for individual colleagues, also have collective consequences, namely in terms of how pensions will be funded into the future.

This dispute is also about how the university reforms that began with the Browne Report and have culminated in the 2017 Higher Education and Research Act have undermined higher education as a system. Marketisation presents higher education as a space in which individual providers compete with each other and the proposed changes to the pension scheme are likely to intensify these processes. But first, what is the current dispute about?

The valuation of the current ‘health’, or otherwise, of the pension scheme is contentious in its own terms.

  • The September valuation suggests a deficit of about £5bn, but others have argued that there is no current deficit in the USS scheme. David Huyssen points to this independent analysis for confirmation of this claim.
  • Huyssen goes on to argue that ‘The ‘deficit’ being validated in press coverage presumes *as its forecasting premise* the instantaneous failure and closure of all the USS-contributing universities.’ That is, the deficit is based on an assumption that all institutions contributing to USS would go bust at the same time.
  • While individual companies do go bust, it is highly unlikely that 68 UK universities (including Oxford and Cambridge) would fail and go bust at the same time (Huyssen)
  • It has also been suggested that the current projected deficit is equal to the contributions holiday that employers took in 1997. From 1983 to 1997 employers used to pay in 18.55% to the USS pension, from 1997 they reduced their contributions to 14%. The value of this reduction equals the claimed deficit (Otsuka).

So, there is no existing deficit, the extent of any projected deficit is contested, and if there is a deficit it can be traced back to the contributions holiday taken by the employers – if, as Mike Otsuka says, the employers broke the system, they should now own the consequences of this.

So, what is the position of the employers?

In November 2017, USS released this statement subsequent to their consultation with employers about the health of the scheme: “UUK’s formal response to our proposals has been informed by feedback from 116 institutions, representing 92% of the total active USS membership. … A small majority of employers (53%) accepted the level of risk proposed … and a significant minority (42%) of survey respondents wanted less risk to be taken – including some of the very largest employers.”

It has since been revealed, again by Mike Otsuka, that one third of the respondents that made up the 42% were Oxford and Cambridge colleges who do not count as individual members. Their contributions inflated the figure of respondents who wanted less risk and this proportion should better be seen as 33% (not 42%) – this is not a significant minority. The large majority of employers – around 66% – accepted the level of risk proposed.

One additional point to note here, the benefits of retired members (already in receipt of their pension) or deferred members (those who have paid in the maximum to the scheme, for example, high earners such as Vice Chancellors and those in senior management) are secure. As USS states: “it is important for you [deferred and retired members] to know that your benefits are secure. The law means they cannot be reduced as a result of any discussions around the valuation.” So, we’re not all in it together. Some of ‘us’ have secured our benefits and are seeking to reduce them for all others. Indeed, when Vice Chancellors say that there will be final vote of USS members on the proposals, when all members will have a voice and not just those represented by UCU, they specifically include the voice of those unaffected by these proposals!

Since the strike began, 17 Vice-Chancellors have come out and publicly called for a return to negotiations – Aberdeen, Strathclyde, Kent, Birkbeck, Goldsmiths, Bangor, Warwick, Loughborough, Newcastle, Glasgow, LSHTM, Sheffield, Essex, Lancaster, Durham, Keele & Surrey (UCU). These include universities – including Russell Group universities – that are also some of the ‘very largest employers’ that UUK otherwise suggests are in favour of the USS proposal.

The USS pensions scheme is one of the last collective aspects of the public university system in that it is a ‘last man standing’ scheme in which all institutions are collectively responsible for the pensions liabilities of all other institutions. So, if any one institution failed – a scenario that has increased in likelihood as a consequence of the market reforms introduced in 2010, most significantly the removal of a cap on student numbers in individual institutions – then the assets of other institutions could be drawn upon to meet the pension responsibilities.

In this context, one can see why Oxford and Cambridge may wish the system to be dismantled in order to protect their immense assets, but why have a third of other employers joined them?

At present, the defined benefit aspect of the pension scheme means that it is too expensive for any individual institution to buy itself out of its collective obligations. By transferring all the risk to us as individual employees, by shifting to defined contributions, it makes it easier and cheaper for institutions to buy themselves out of their collective obligations and clears the path to privatisation. For example, in the recently announced review of fees, it has been stated that public higher education in England is the most costly to students of anywhere in the world, including the US. However, this excludes fees at US private universities, such as Harvard, Columbia and Cornell. These latter universities do not distinguish between home and overseas students (in-state and out of state) and the level of overseas students’ fees at some UK universities indicates to some Vice-Chancellors what they could charge if they were private institutions (with their own loan system unencumbered by the terms of government underwriting). Privatisation, however, means not only exiting the public loans system and its (for them) unfortunate cap on fees, but also an exit from USS which will be much less costly under a defined contribution scheme.

As such, defending the collective nature of our pensions scheme is also to defend the collective nature of universities and to push back against the processes of marketisation that would see a select few rake in the cash through increased student fees and the real prospect of other institutions collapsing as a consequence. Defending our pensions, then, is also to defend the collective system of (just about still) public universities and a position from which to argue again for the value of the public university system. This is not to suggest that everything was rosy in the past – there were issues, serious issues, that require address. Not least, the BME student attainment gap that sees Black and minority ethnic students leave with significantly worse results despite entering on the same grades. The fact that the university produces racial inequality is unacceptable – there is no similar effect in terms of class or gender, so why race? The democratisation that the public university was a part of, however, is a better place from which to address these issues than neoliberal politics.

The public university is a repository of the collective learning of communities (Dewey) – we must maintain its function for the public, for a critically informed public sphere, for the deepening of democracy. In defending our pensions, we are defending all of the above and defending the social democratic gains of the last half century which are being systematically dismantled, and struggling for more. The dispute can be resolved, we can win this … we must!

 

Gurminder K Bhambra is Professor of Postcolonial and Decolonial Studies in the School of Global Studies, University of Sussex

 

8 Comment responses

  1. Avatar
    February 23, 2018

    The USS invests in weapons manufacturers like Raytheon, producer of depleted uranium bombs, mining companies like Rio Tinto, guilty of polluting the environment in many developing countries, tobacco manufacturers like British Tobacco, companies employing precarious labour like Amazon. Why are left wing academics so keen to defend it, and why are they so surprised when it behaves like the neo-liberal institution it is? Why are they not investing their precious pension money more ethically? Where do they think their money goes? Have they ever even wondered? In my experience, not at all. Not only it is impossible to start a conversation on this, most people do not want to be told how the money is invested, let alone do something about it. Of course I support the strike, from afar as I now work in Germany, because the UUK and USS are behaving appallingly, but the structural issue is left completely non-examined. The USS is part of the neo-liberal university as currently structured, not the remnant of some socialist past.

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  2. Avatar
    February 27, 2018

    Excellent article!

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