Less than a week after the close of the UCU General Secretary elections, remuneration figures have been released showing a record 16.3% rise in UCU General Secretary Jo Grady’s basic pay in the year to August 2023.
The unprecedented £18k rise brings Grady’s basic pay up to £127,690. A further £26,868 in other remuneration benefits brings the total pay package up to a record £154,558.
The annoucement comes less than a week after the close of the General Secretary elections in which Jo Grady faced criticism for not disclosing how much of her claimed £10,000 donations to the fighting fund were actual cash donations. With emails suggesting that a large part of this ‘donation’ related to her not taking further pay increases and benefits.
It also comes amid controversy within the union as Unite UCU, who represent staff working for UCU, narrowly settled a contentious pay dispute in which UCU senior management pushed for a ‘flat rate’ rather than ‘progressive’ rise. This meant highly paid senior executives received the same % rise as the lowest paid casually employed members of the union.
Manifesto pledges broken
As covered by the UCU Rank and File network, Grady already appeared to have broken a key manifesto pledge from her successful 2019 election campaign in relation to her pay. These latest figures, however, blow these prior excesses out of the water.
In her 2019 manifesto, Grady promised “if elected, I will ensure that any increases in my salary is no higher than the most recent national pay offer in Further Education“. Comparing her actual pay rises to the national AOC offer in FE for each year, we can see that by 2023 Grady was taking more than £20,000 more than she said she would from the union in basic pay:
Salary (£)
AOC offer %
Actual % incr. in basic pay
Excess salary vs manifesto (£)
Benefits (£)
Total (£)
2019/20
102,288
21,443
123,731
2020/21
104,841
1.0%
2.5%
1,530
22,121
126,962
2021/22
109,762
1.0%
4.7%
5,418
23,124
132,886
2022/23
127,690
2.5%
16.3%
20,737
26,868
154,558
The record benefits package also raises eyebrows, especially if her widely publicised ‘donations’ came from not taking benefits she was entitled to.
Similarly, the record budgeted expenses of the General Secretary’s department raise further questions, especially in an election year. Noting that these figures are in addition to and separate from the figures above – rising from just £8,318 in the year before she was elected to a budgeted £97,020 in 2023:
Falling membership
Perhaps even more damaging to the union finances, however, are the membership numbers released this week. These show that the union lost 8,520 in the three years to January 2023. A number that exceeds the entire vote on which Jo Grady was relected, more than 5,000 of which relates to a mass exudus from the union in 2023 following the disasterous mishandling of the national disputes.
Worryingly, this record drop comes despite UCU opening up its category of full voting member to thousands of postgraduate members in 2023.
Consensus is a funny thing – the latest gains on the USS have been roundly hailed as a historic win. We have achieved a huge turnaround in benefits, with pre-April ‘22 benefits set to be re-instated and even our lost accruals set to be recovered.
This consensus is understandable when placed against the victory in 2018, which followed a single round of strike action, mass recruitment to the union, and a sense of unstoppable momentum – to the extent that reversing the proposed cuts was not enough. We demanded root and branch reform of the USS, changes to the USS valuation methodology and investment strategy, and governance reform (see here for an overview of various calls). Failure to see that victory through set the conditions for the 2020 valuation and the attack on our pensions that followed in 2022, and contributed heavily to the vote of no confidence in then General Secretary Sally Hunt at the (reconvened) 2018 UCU Congress.
In 2023 the context for our victory has been very different. We have been through over four years of grinding disputes littered with strategic missteps, demoralising climb downs, and wrong turns at almost every stage. And, unlike in 2018, we actually saw our pensions cut and our contributions hiked in black and white, on our pay slips and in our pension statements.
It is more than fair that we take this moment to call out this victory, therefore – and to rattle it in the direction of colleagues who crossed our cold February pickets and will now be tens or often hundreds of thousands of pounds better off in retirement thanks to our sacrifices. But the trickier reality is that this outcome looks much the same as that in 2018 – a reversal of cuts that sets the conditions for further attacks in the next few years (perhaps with the silver lining of the retirement of some key figures within USS).
Reform to governance and changes to the investment approach are now firmly on the table, but, with fond memories of the Joint Expert Panel (the ‘JEP’), we note that they are just that – more talks. Similarly, while the somewhat shakily worded agreement with UUK on restoration held up in the face of hawkish advice from the USS, and certainly could have been much worse (see my previous blog here), employers nonetheless recommended the lower combined contributions of 20.6%, and for this reduction to be implemented ahead of time, from 1st January 2024. Furthermore, negotiators have reported that employers are now seeking to replace UUK as the representative negotiating body with the more aggressively led UCEA, while they also seem likely to press ahead with conditional indexation. This would see us trade inflation protected defined benefits for an element of ‘index linked’ benefit – effectively trading inflation protected DB for DC via the back door, in the hope that this concession would shift some of the flawed assumptions in the valuation in our favour.
Why is victory being called now?
Victory has been called too soon and too often throughout most of 2023, to the extent that some members might wonder whether or not we have indeed actually ‘won’ our pensions back. The important difference at this stage is that on the 29 September ’23 UUK sent their formal response to the employer consultation to USS (see here). In short, employers have officially given their approval for benefit restoration to be costed and have formally recommended that benefits be restored – replacing previous ambitions to explore restoration, pending consultation. Key moving parts have therefore now been fixed in place as employers endorsed the strong covenant and, in relation to the ‘if sustainable’, opted to go for lower contributions at the expense of sustainability, rather than cut benefits maintain sustainability at the lower combined contribution levels of 20.6%. These changes are still to go to JNC in December, but with employers formally backing restoration there now seems to be only one outcome.
For an excellent summary of what benefits we lost and what we’re now getting back, see here.
How did we get here?
There is considerable discussion in the union in relation to the general lack of strategic direction, and over specific errors made in the most recent 21/22 and 22/23 national HE disputes. These have led to various calls for censure and no confidence in the current General Secretary (see congress motions here and here), with my branch, the University of Sheffield UCU, this week becoming the fifteenth branch to pass a vote of no confidence in the General Secretary so far this year. This might at first glance seem odd in light of the progress on USS, but this is because most activists know that this progress has come very much in spite of, rather than because of, the current leadership of UCU.
In reflecting back on our historic USS victory, we should begin slightly further back, looking at 19/20 and 20/21. At congress in May 2019, we established what was effectively the start of the current USS dispute. It had become clear that the ‘JEP’ had been ineffective, with no real teeth or ability to mandate changes to the valuation methodology or governance arrangements. It was also becoming increasingly clear that the scheme was set to generate further big deficits and that there would likely be new cuts to benefits announced on the back of the 2020 valuation.
Through 19/20 we balloted on both disputes, USS and Four Fights. I co-ordinated the GTVO effort for Birmingham UCU that year, and noted, along with many other reps, the minimal support these ballots received from HQ or the General Secretary, who had been a long time critic of disaggregated balloting. Nonetheless, 19/20 was our first big breakthrough in a truly national ballot (as opposed to just the USS institutions), driven largely by branch level GTVO work, with around 50,000 of our 70,000 HE members winning a mandate for action. In March of 2020, as summarised here, UCU HQ refused to conduct the planned Spring reballot, and then, perhaps more damagingly, refused to open any national ballot in 2020/21 despite receiving a mandate from congress (see HE 15 here).
We were therefore in an exceptionally weak position in the Summer and Autumn of 2020. We had called then failed to really back a national dispute in 19/20, ending the dispute without any gains for our members, we then failed to implement congress policy to ballot in the Autumn/Winter of 2020, before watching on as tens of thousands of casualised members were made redundant or dismissed in the early days of the pandemic (see the launch of the Corona Contract campaign here). We then failed in the latter half of 2020 to take the lead from the NEU and adopt a nationally coordinated response to enforced return to work during the second wave of Covid-19. Employers, by contrast, imposed a 0% pay settlement for 20/21, which led to record surpluses that year, and set about dismantling our pensions (see for example this brief from Sam Marsh, sounding the alarm bells in March 2020).
So how did we win?
Universities UK would have us believe that we didn’t win – that the movements in the valuation were simply an unfortunate accident of history, and that their response to the flawed 2020 valuation was in line with their regulatory duties. We know, however, that this would be a re-writing of history. The valuation position moved, but that was in no small part due to changes to the valuation methodology that were achieved through industrial action, to the extent that the scheme would have been in surplus even if benefits had never been cut in April ‘22. Furthermore, employers could have taken a similar approach in the Summer of 2023 that they took in the Summer of 2020, by pocketing the significant scheme surpluses in a combination aggressive reductions in contributions together with appeals to ‘sustainability’ of the scheme in relation to the unaffordability of benefit restoration. The fact that they did not do this, and that they will also be augmenting our lost accruals for Apil ’22 to April ‘24, is evidence to the fact that this is a win, and a testament to the sustained strike action through 21/22 and 22/23, to the prolonged legal challenge against the directors of the scheme, and to the progress made in national HE ballots.
On those changes to the valuation methodology, we should look to the many local joint statements achieved during the marking and assessment boycotts of 2022, such as this one between the University of Sheffield and Sheffield UCU:
“[the University will] Call for future valuations to be based on moderately prudent assumptions. Call for better pension benefits for members if future valuations show an improved funding position for the scheme. Continue to provide enhanced covenant support for any proposals formally presented and agreed through negotiations at the USS Joint Negotiating Committee (JNC). Support the work that is being undertaken by UUK, UCU, and USS to explore more affordable membership options, to enable more eligible staff to join USS. Support the joint work on governance reform in USS and on possible future benefit structures for the scheme”
We would no doubt have been in a stronger position to snatch outright victory from the jaws of victory had we balloted over the Summer of ‘23, in line with Congress policy, and approached September 2023 negotiations demanding higher combined contributions, governance reform, and further changes to the valuation methodology and investment strategy. But to achieve what we have achieved in the absence of such a strategy is significant, and demonstrates that the landscape has shifted considerably.
In relation to the role of the current General Secretary, we no doubt all need to take credit for the progress on the USS, and in particular the progress on balloting our members, which is now, thankfully, receiving coordinated national support. But it is worth remembering that Jo Grady was also the General Secretary who lost our USS pensions in the first place, and hardly helped us win them back when UCU HQ pushed the Spring ’22 re-ballot into the Easter holidays, reducing the number of branches with a mandate, or when they subsequently gave all remaining branches participating in the Summer ’22 MAB a local opt out, which quickly halved the number of USS institutions taking action to secure changes to the valuation methodology (see this article in the New Socialist for a full write up).
Similarly, as UCU Left (and others) note, many on the right of the union consistently argued against no detriment in the context of the 2020 valuation, while others argued to decouple the disputes with a view to settling early on USS separately from the Four Fights. If this had happened prior to the 2023 valuation we would have prematurely taken full restoration and recovery off the table and we would not be in the position we are now in.
In sum, the message for members is that this is indeed a huge and historic win, comparable to our 2018 victory. The message to reps and activists is that the fight continues, and, hopefully before too long, under new (member-led) management.
Following the Spring ‘vote to note’ and the subsequent standing down of UCU action on the USS dispute, the USS have issued their employer consultation documents in relation to the April 2024 changes to benefits and contributions. This article summarises what we (as UCU and/or USS members) know and what we need to push for, both locally and nationally, in order to secure benefit restoration on the USS.
Starting with the timeline, the next steps are set to unfold as follows:
19 July 2023: Employer consultation opens and is set to run until 22 September 2023;
25 September 2023: Employer-led consultation of affected employees and their representatives (UCU) set to launch;
29 September 2023 (no later than): UUK’s response to employer consultation;
30 September 2023: UCU strike mandate expires;
Early October 2023: scheme actuaries to cost proposed benefit changes (this might include costing several options);
18 December 2023 (no later than): JNC approve fully costed benefit changes, to be implemented April ’24;
Early 2024: Employer consultation on the future investment strategy (this does not affect current valuation figures);
In April, UCU members agreed to ‘note’ the above timeline for consultation, which technically meant we kept a live industrial mandate. However, as we can see from the timing – because we won’t hear anything on the outcome of the employer consultation until 22 September and won’t see the employee consultation until 25 September we have effectively stood down the mandate we had from the Spring USS ballot. This was under a strong steer from the UCU leadership and majority negotiators at that time that full restoration and recovery of lost accruals at lower contribution rates was in the bag or all but in the bag (this was disputed at the time by minority UCU Left negotiators), and that the only thing that could go wrong was a drastic downturn in the wider economy.
In this article I discuss the outstanding risks to benefit restoration in light of the latest consultation documents from the USS – concluding that everything remains on the table, from no restoration at all to full restoration and recovery of lost accruals – before suggesting what we should push for during the consultation.
I thought we had the USS the bag?
Firstly, this depends on how we define full restoration – do we mean restoration of pre-April 2022 benefits? Or do we also mean reimbursement, or ‘recovery’, of the benefits that would have accrued in the April ‘22 to April ‘24 period? I will cover each of these in turn below, but in short, in either case the answer is very much ‘no we don’t’ at this stage – there is crucial work to be done at the local and national level between now and October to secure both pre-April 2022 benefits and the lost accruals for the ‘22 to ‘24 period.
Members were probably made aware of the opening of the latest consultation via the widely covered scheme surplus of £7.4bn, that is indeed detailed in the consultation documents. This also relates back to the important joint UUK-UCU statement in which UUK agreed to ‘prioritise’ restoration of benefits to pre-April ’22 levels and ‘explore’ the option of recovery of lost benefits for ’22 to ’24, where these options are ‘demonstrably sustainable’.
The underlying valuation figures have moved a little further in our favour since, with the cost of pre-April ‘22 restoration now coming in at a combined (employer & employee) contribution rate of 20.6%, while the cost of continuing with current benefits coming in at 16.2%. Far below the currently excessive 31.4% combined contributions.
So surely this all means benefit restoration is now ‘in the bag’, the train has departed and we are on our way to the destination – restoring benefits and cutting contributions for a win-win?
As I warned at the time (here and here), this is unfortunately not necessarily how employers will interpret the joint UUK-UCU agreement; in particular, the ‘if sustainable’ clause. At the time of the ‘vote to note’ campaign, UCU leadership and UCU majority negotiators interpreted the ‘if sustainable’ clause to mean that as long as the valuation figures don’t move such that full restoration puts the scheme into deficit in the March-April period and/or (it wasn’t entirely clear which) the April-Sept period then full restoration was ‘sustainable’.
This of course was never likely and hasn’t happened. However, as we look at the latest consultation documents and start to hear reports from local negotiations, employers seem to instead be defining ‘sustainability’ with reference to employer finances and future valuation cycles. This makes a crucial difference, as we now need to not only meet the prudential assumptions in the valuation itself, but are, in effect, including a further layer of prudence over the level of surplus or “buffer” that will be needed to avoid contribution rises in future valuation cycles.
Usefully, perhaps, the USS now seem to have priced, or given a steer on, what they consider ‘sustainable’ – namely combined contributions of 26%, which would give a significantly lower risk of the scheme falling into deficit in 6 years time:
[Note UUK, with reference to Aon, also cost an additional intermediary scenario of 25.2%]
What does this mean for benefit restoration?
In effect, what USS are proposing – which is currently being widely hailed as confirming both full restoration (whatever exactly that means) and reduced member contributions of as low as 6.1% according to the UCU General Secretary – is that there is a potential trade-off between contribution cuts and benefit restoration, and that employers now need to carefully consider their own finances in relation to what if any benefits they can afford to restore. The very open ended nature of this consultation is captured in the following quote from the Chief Financial Officer of KCL:
The consultation will seek views on whether the preference is either a reduction in contribution rates and an improvement to the benefits to the pre-April 2022 level or a larger reduction in contribution rates and benefits remain as they currently are.
It is conceivable that we see restoration of pre-April ‘22 benefits at 26% (or alternatively 25.2% as suggested by Aon), maintaining the ‘sustainability’ we have now committed ourselves to via the UUK-UCU joint statement. It seems a stretch to suggest that we will see restoration of pre-April ’22 benefits at 20.6% as this would go against the suggested ‘sustainable’ clause in the joint statement, so something in the joint statement would have to give in this scenario. And it seems highly risky for UCU to run headlines on the latest consultation that suggest these documents confirm full restoration at member contributions of as low as 6.1% as this is certainly not the case.
Indeed, by campaigning on contributions in this way the current UCU leadership may be making it materially more likely that we *do not* get full restoration – with employers instead opting for lower contributions citing financial concerns, scheme sustainability, and UCU’s own social media coverage.
This section of the USS consultation (pg.25) concludes with the following:
“We welcome comments on the balance and trade-offs between investment strategy, the degree of prudence and stability (of benefits, contributions and funding levels), both at this valuation and looking ahead”.
What should UCU branches focus on in local discussions?
Firstly, as above, the status of the recovery of accrued benefits for the period April ‘22 to ‘24 is unclear in the latest release. The USS reference the intent to ‘explore’ this option but do not appear to price it into their main scenarios under consultation. UUK similarly commit to exploring the option within the valuation cycle, but argue this is separate to the main consultation, comes with separate legal issues, and would come at the expense of scheme sustainability (pg.8). Not exactly ‘in the bag’.
This seems to strongly suggests that any decision on this part of the restoration (worth somewhere in the region of £1.5bn) could potentially fall into the long grass of future valuation cycles, post-April ‘24. UCU branches (and national leadership) should therefore press urgently on this question with employers – urging them to factor this element of benefit restoration into their final response to the employer consultation on the 29 September, notwithstanding the scenarios modelled by USS in the consultation documents. We should also argue failure to consider this aspect of restoration would consititute a breach of our agreement, although we probably have to concede that the wording we signed up to in the joint UUK-UCU statement was exceedingly weak on this point.
Secondly, given we have now tied our own hands in respect of scheme ‘sustainability’, we ought to argue for the higher end of contributions, i.e. 25.2% to 26% in return for “full” restoration and recovery – i.e. both pre-April ‘22 benefits and April ‘22 to ‘24 lost accruals. We must not trade contributions for benefits, and we should not make contribution cuts the primary focus of our campaigning work.
Failing the above, the alternative scenarios, all of which would be consistent with the latest joint UUK-UCU joint statement, fall into three or four main categories:
Employers agree to 25.2% or 26% combined contributions and full restoration of pre-April ‘22 benefits, but delay augmentation of lost accruals to post-April ’24.
Employers dispute the 25.2% as too high, citing the deteriorating financial position of some Universities due to high interest rates and inflation (see latest OfS report on the deteriorating state of University finances and my recent report on sector finances for CRAFiC) and their need to maintain the covenant support. As a result we get a lower contribution rate, in the 20.6%-25.2% range, at the expense of some pre-April’22 benefit restoration in order to maintain ‘sustainability’.
Employers insist on 20.6% (or even lower) and cite the ‘if sustainable’ clause as meaning we cannot afford full restoration. This would lead to no or partial restoration being costed into the outcome of the consultation – which becomes considerably more likely if UCU continue to campaign on reducing contributions at the national level.
The counter argument to the above is that the ‘sustainability’ clause only relates to the next valuation, and doesn’t affect restoration – i.e. a reading of the joint UUK-UCU statement such that the commitment to ‘prioritise’ restoration takes absolute precedence over the ‘if sustainable’ clause, such that if employers dispute the higher 25.2% – 26% contributions then it will not affect benefits, only the risk of volatility at the next valuation date. That interpretation would give one further possible scenario:
Employers agree to pre-April ’22 benefits but dispute 25.2% – 26% as too high, agreeing lower contributions and in so doing accepting the higher risk of deficit at the next valuation date (i.e. in effect, employers agree to set aside the ‘if sustainable’ clause).
This interpretation seems to be the only scenario in which we might be able to have our benefits and eat them too, to coin a phrase, and seems to have some support within UUK (pg.6), but would fall outside of the letter of the joint UUK-UCU joint statement and run contrary to the proposals in the latest USS consultation pack.
In either case, it is important that UCU branches and national leadership prioritise full restoration – and if employers cite the ‘sustainability’ costs highlighted in the USS consultation then we insist that benefit restoration ought to take precedence over ‘sustainability’, and that we will consider anything short of this a breach of the spirit (if not the letter) of our agreement.
Other worrying options floated in the USS consultation documents
Assuming employers do not simply set aside the ‘if sustainable’ clause, it is worth looking a little more closely at what sustainability looks like in the latest documentation. Three pages of the main consultation pack are devoted to this (pg.24-26), and cover a range of broad issues, some of which relate to future investment strategies relevant to the next valuation cycle. But in relation to benefits, they suggest a range of already implemented and possible future reforms could improve stability of the scheme:
In the key conclusions section, USS then explicitly warn against trading the surplus for benefit restoration, which surely looks like a nod to the current consultation options, in particular, full restoration at less than 26%:
One further point to consider (that probably needs a separate blog!) is that of the employer covenant. This has been assessed as ‘strong’ by the USS, following advice of my former employer PwC, citing strong performance during the pandemic. This is good news; however, the figures underlying this assessment are now considerably out of date, and note should be taken of Bill Galvin’s comments in his covering letter to employers, which also forms one of the seven consultation questions:
“We would also welcome additional comments and feedback on our overall assessment of the employer covenant, including the assumptions we have made about the level of financial support employers are collectively able to give the Scheme and their Affordable Risk Capacity (see Section 6)”
We know employer finances have deteriorated in 22/23 due to rising inflation and interest rates. The work of PwC in assessing the covenant strength relied entirely on 20/21 financial data (see pg.7 of the supporting information). Data that is now more than two years out of date. My work for the Center for Research into Accounting and Finance in Context (CRAFiC) has already highlighted a number of USS employers with heavy reliance on variable rate loans and revolving credit facilities in financial difficulty. The recent budgetary forecasts report by the OfS, which is based on employer data, also evidences the more recent downturn in University finances.
Relaxing the covenant support would add a further 3.2% to the combined contributions. On the one hand, the majority of stronger employers will be against this as it makes the scheme more expensive to maintain, however, for individual employers at risk of a breach the consequences are severe, considerably limiting their finances, subjecting the to debt monitoring, and potentially putting them at risk of a costly exit. Maintaining the USS covenant, together with other debt covenants, could therefore put considerable weight towards lower employer contributions in this consultation in order to maintain the strong covenant. A very rough estimate based on the 21/22 HESA data would suggest that every 1% of employer contributions costs employers around £90m pa (for reference, a 1% across the board pay rise would cost USS employers in the region of £120m pa).
All of this ought to focus our minds and bring us back to the basic truism on the USS that we need to maintain our industrial leverage and escalation strategy until benefit restoration is signed and sealed – and when signing agreements with employers we need to be precise on our demands, without caveat or recourse to undefined subjective principles such as ‘sustainability’. The Spring of 2022/23 was likely a high water mark in both employer finances and the wider health of scheme, and coincided with two successful national UCU ballots – allowing this to slip into 2023/24 or beyond will make full restoration increasingly hard to win.
The Socialist Accountant 