Given the level of interest in my previous post (over 2,400 views in the last 10 days), I thought I would provide an analysis of UCU’s counter-proposals on USS and of the ongoing contestation of the leadership’s strategy in the current industrial action. In brief, UCU is offering to sacrifice the final salary scheme and give employers much of what they want, in exchange for a modestly improved career-average scheme. Conservatives within the union are also moving to rescind the industrial action before it has even properly started.

UCU’s Counter-Proposals

UCU’s response to UUK’s proposals, and its counter-proposals, were initially buried in a circular to branches posted on UCU’s website, before being circulated to members on Friday, only after they had been put to employers’ representatives in writing and at the USS Joint Negotiating Committee on Thursday. UCU’s critique of UUK’s proposals is excessively technical, but it does provide this helpful chart of pre-1992 universities’ incomes and costs since 2008/9.

The remarkable highlights are that income is up 27.7%; on average, the surplus of income over expenditure is £14.2m per annum, of which £11.2m is retained in reserves, which have consequently increased by 62.5%, leading to a net rise in the universities’ assets of 39.8%. Meanwhile, because of the massive real-terms pay cuts inflicted by employers, staff costs as a proportion of income are 3.7 percentage points lower. Put bluntly: just like major corporations, universities are hoarding cash; they can afford to improve their workers’ pay and conditions, but choose not to do so. There is no crisis in the affordability of pay or pensions in pre-1992 universities.

As anticipated in my earlier post, UCU’s counter-proposals for USS essentially offer the employers a deal: UCU will sacrifice the final-salary scheme for an improved career-average scheme based on defined benefits (i.e. one knows the value of one’s pension, rather than only knowing what one has put into a pot to purchase an annuity, as in “defined contribution” schemes).

UCU proposes an accrual rate of 1/70th per year of service, and a lump sum of 3x salary (they do not say whether this is final or career average), with CPI revaluation. This is a modest improvement on the current career-average scheme, which has an accrual rate of 1/80th, the 3x lump sum, but full inflation indexing only up to 5%, half indexing from 5-10%, and nothing thereafter, meaning that pensions could be seriously eroded if inflation persistently exceeded 5%. However, compared to the Teachers Pension Scheme (TPS) used in post-1992 universities, this proposal is not particularly bold: the accrual rate for TPS is 1/60th, and while there is no automatic lump sum, one can convert part of one’s “pot” into a lump sum at a good rate: £12 lump sum for every £1 contributed. For a worker earning an average £30,000 over 30 years, UCU’s proposed approach would generate an annual pension of £12,857 and a £38,571 lump sum. Spread over 20 years of retirement, that yields £14,785. The same person in TPS would get £15,000 per year.

What is UCU willing to sacrifice (“negotiate around”) for this relatively bland alternative?

• “Final-salary link to be replaced by another index”. They do not say what, but presumably career-average.
• Capping the pensionable salary at 85%, and a “potential for an absolute cap on pensionable salary”. This is presumably to allay employers’ concerns about late and rapid escalations in pay used to boost pensions pots.
• An increase in employee contributions (from the current 7.5% of salary in the final-salary scheme, or 6.5% in the current career-average scheme), so long as employers’ contributions are double that of the employees’.
• In exchange, employers are asked to retain an entirely defined-benefits scheme, dropping their suggestion of a cap on defined-benefits (currently at £50k of income), followed then by a defined-contributions pot.

This amounts to sacrificing the final salary USS scheme, shunting all of its current members onto the modestly improved career-average scheme, ramping up costs for members, and containing costs for employers. As critics immediately highlighted, this will have a particularly negative impact on women, whose progression through the salary scale tends to be slower than for men. The logic of offering these dramatic concessions to employers is that this very modest, clearly affordable approach would stabilise USS’s long-term finances and avoid repeated clashes over pensions.

The Backlash

The backlash to these defensive proposals, and the wider problem of UCU’s poor leadership, began even before the aforementioned circular was released. There is now a serious struggle occurring within UCU’s ranks over the union’s approach to USS and the industrial action. An open letter to UCU’s National Executive, initiated at Goldsmiths and sent last week, made many of the points in my previous post, particularly on the lack of consultation and strategic leadership, calling for an HE Conference to determine a strategy and negotiating position. But it also criticised over-reliance on the marking boycott, arguing it would generate insufficient pressure on employers and calling for measures that would more directly damage institutions’ finances. Particularly in light of the weak proposals out of UCU and the docking of pay at many universities, a growing number of UCU branches are also passing motions condemning the lack of consultation and demanding an HE Conference on pensions. The required threshold to trigger a Conference could well be met soon.

However, another struggle is being waged on UCU’s Higher Education Committee (HEC), which could even see industrial action being called off barely more than a week after it began. The UCU and UUK Joint Negotiating Committee (JNC) for USS met on 13 November; nothing was agreed save a framework for negotiations. UUK offered to cancel all pay deductions if UCU called off the marking boycott. UCU’s HEC will decide how to proceed on Wednesday 19 November. To be clear, the employers have not yet conceded anything, except they did not push their proposals to a vote – which they would have been unlikely to win anyway, as the independent chair would be very unlikely to use a casting vote to break the UUK/UCU deadlock at such an early stage.

The conservative faction that dominates the HEC may well seek to push this through, despite opposition from the UCU Left grouping. This could only be described as disastrous, since it responds to threats of pay deductions by effectively backing down, allowing employers’ strike-busting strategies to succeed. It would also be undemocratic, since it violates established UCU policy to respond to 100% pay deductions with escalation to full industrial action. It is not obvious why the employers should then concede to any of UCU’s milquetoast demands when they have observed first-hand how flexible the union’s spine really is. While UCU may have erred in initiating the boycott as and when it did, to abandon it at the first sign of resistance seems profoundly self-defeating.

A couple of people responded to my earlier post by agreeing with my critique but suggesting that I had wrongly implied that a radical membership was being betrayed by a conservative leadership. That was not my intention; as I noted, the membership is largely passive, and broadly gets the leadership it deserves. However, I note that on campuses where employers have threatened to dock 100% of pay for participation in the marking boycott, branches have voted to escalate the boycott into full strike action: Liverpool, Bradford, Salford, Cardiff, UCL. Reflecting the unprecedented turnout in the ballot, these moves suggest real anger and determination at the grass roots, which proper leadership could harness. Real resistance to the pay docking could force employers to back down anyway (their offer suggests the boycott already has them collectively rattled), whilst maintaining pressure on vice-chancellors to make rapid concessions over USS.

Put simply, the UCU leadership is using the membership as a stage army while seeking to mediate between an increasingly angry membership and the employers. It initiated the marking boycott without first consulting its members on what an acceptable negotiating outcome would be, rushed out its proposals in secret and put them to the employers without first seeking members’ approval, and now seeks to lock down the parameters of the debate by ending the industrial action, closeting its negotiators with UUK’s in the JNC, and presenting a fait accompli in January in the same manner as the pay settlement, with demoralised and confused members left with little alternative but to endorse the outcome.

Opponents of this approach are mounting a rear-guard action, organising a lobby of the HEC (1pm at LSE Bankside on 19 November), demanding that UCU’s counter-proposals be withdrawn, and demanding an HE Conference to censure the leadership and UCU’s USS negotiators and organise an alternative approach to the dispute. Given that they are a minority on the HEC, however, it is unclear how this group can succeed.

It may well be the case that UCU’s counter-proposals are the best that can reasonably be hoped for, at a moment where final salary schemes are becoming rarer than rocking horse droppings. But at the very least, proponents of this analysis must make their case to union members and persuade them. Union members are not marionettes to be summoned or dismissed by full-time bureaucrats as part of their private machinations. They are thoughtful, passionate human beings participating in what ought to be a democratic movement for their collective betterment. Until the leadership recognises this, it will always be forced to make endless concessions on basic, pay-and-conditions issues, because it will never undertake the internal political negotiation and mobilisation required to construct a forceful, winning strategy capable of really defending our interests.