It is not often that universities make front page news but the recent strike by university lecturers seems to have got quite a lot of media coverage.
On the surface it looks like quite a straight-forward dispute about money. University vice-chancellors (represented by a body called Universities UK) are proposing to reduce the pensions that university staff will receive in the future. The reason they are doing this is that existing contributions to the pension fund for universities (the USS) are not expected to cover the cost of future pensions.
One political commentator, who I have a lot of respect for, Daniel Finkelstein, has said that lecturers are striking against themselves. He argues that increased contributions from universities to the USS would have a damaging effect on university lecturers. As a result of increasing contributions, universities would have to either pay lecturers a lower salary and/or employ fewer of them.
He also argues that it would be unfair for the government to increase funding to universities in order to pay generous pensions at a time when the NHS is strapped for cash, prisons seem to be nearing a state of anarchy and universities are already generously funded by students through expensive tuition fees. A large chunk of these tuition fees may end up being paid by the government if students are unable to pay back their loans.
While I find this line of reasoning quite persuasive, it seems to be predicated on the assumption that there will be an indefinite squeeze on the nation's finances. As country we have had around 7 years of government austerity. Recent news suggests that this austerity has been successful in eliminating the government deficit from around £100bn a year down to zero - https://www.ft.com/content/3f7db634-1cac-11e8-aaca-4574d7dabfb6.
So will the squeeze be indefinite or are we approaching the end of it? Nobody really knows. As of 12 months ago, the OBR, which produces official forecasts of the government deficit, was still forecasting a large deficit for 2018-19. But tax receipts have been a lot stronger than expected. Speaking from personal experience, these things are difficult to forecast!
My view is that economic growth and tax receipts will be stronger than they have been for much of the last 10 years. As a result, the USS will probably not run out of money and if it does, the government should inject some extra cash to keep it afloat. There are many competing spending priorities for the government, but I think that attracting and retaining bright people across the public sector is essential. While there are many who are drawn to the public sector purely with a desire to contribute to society, generous public sector pensions do play a big role in encouraging people to stay. I think these pensions should continue so that public services can flourish as they ought to.
On the surface it looks like quite a straight-forward dispute about money. University vice-chancellors (represented by a body called Universities UK) are proposing to reduce the pensions that university staff will receive in the future. The reason they are doing this is that existing contributions to the pension fund for universities (the USS) are not expected to cover the cost of future pensions.
One political commentator, who I have a lot of respect for, Daniel Finkelstein, has said that lecturers are striking against themselves. He argues that increased contributions from universities to the USS would have a damaging effect on university lecturers. As a result of increasing contributions, universities would have to either pay lecturers a lower salary and/or employ fewer of them.
He also argues that it would be unfair for the government to increase funding to universities in order to pay generous pensions at a time when the NHS is strapped for cash, prisons seem to be nearing a state of anarchy and universities are already generously funded by students through expensive tuition fees. A large chunk of these tuition fees may end up being paid by the government if students are unable to pay back their loans.
While I find this line of reasoning quite persuasive, it seems to be predicated on the assumption that there will be an indefinite squeeze on the nation's finances. As country we have had around 7 years of government austerity. Recent news suggests that this austerity has been successful in eliminating the government deficit from around £100bn a year down to zero - https://www.ft.com/content/3f7db634-1cac-11e8-aaca-4574d7dabfb6.
So will the squeeze be indefinite or are we approaching the end of it? Nobody really knows. As of 12 months ago, the OBR, which produces official forecasts of the government deficit, was still forecasting a large deficit for 2018-19. But tax receipts have been a lot stronger than expected. Speaking from personal experience, these things are difficult to forecast!
My view is that economic growth and tax receipts will be stronger than they have been for much of the last 10 years. As a result, the USS will probably not run out of money and if it does, the government should inject some extra cash to keep it afloat. There are many competing spending priorities for the government, but I think that attracting and retaining bright people across the public sector is essential. While there are many who are drawn to the public sector purely with a desire to contribute to society, generous public sector pensions do play a big role in encouraging people to stay. I think these pensions should continue so that public services can flourish as they ought to.
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