In June 2020, the University of Reading commenced consultation via a section 188 notice in response to a claimed financial shortfall arising from Covid-19. In a move that was unprecedented in higher education, the University put ALL staff at risk, with the threat that it would fire and rehire employees on inferior contracts, if agreement was not reached through consultation. In August 2020, the University put forward a Final Proposal (FP) in respect of this consultation. This proposal will now be put to a Reading UCU member ballot. It is very important that people are fully informed about this final proposal before voting.
In the FP, the claim is made that it is ‘as fair, reasonable and proportionate as it is possible to be in the circumstances’ (FP, para 8). As staff at the University of Reading, we emphatically disagree. Contrary to what is claimed, the agreement reached in consultation with UCU negotiators does not buy us out of redundancies, which remain very much on the table. It exposes all employees that earn over £18,000 per year to a pay cut, and everyone to a three-year pay freeze, in a manner that is anything but progressive and fair. The implementation of the pay cuts can supposedly be stopped after two reviews of the University’s actual financial position, but no information is given in the FP or the University-UCU-Staff Forum Memorandum of Understanding on the targets against which that financial position is to be judged nor on the process for those reviews. And all that is offered in return is a promise for more discussion, at some point in the future, around governance reforms.
No redundancies … today
The Vice-Chancellor in his briefing of 14 August expressed his pleasure that an agreement had been reached that removed the need for compulsory redundancies. As the final proposal states, ‘[f]or the avoidance of doubt, this means that there are no projected compulsory redundancies arising from the predicted shortfall in student fees arising directly from the Covid-19 emergency’ (FP, para 11). And in her email of the same date, the Reading UCU branch president stated ‘[i]mportantly, it [the final proposal] eliminates the University’s previous threat to cover the costs of Covid-19 by making staff compulsorily redundant’.
Yet, the truth is that, because of the University’s decision to divide its cuts and restructurings into ‘Phase 1’ (dealing with the consequences of Covid-19) and ‘Phase 2’ (its longer-term plans to restructure the University), redundancies remain very much on the table in the context of Phase 2, which has been running simultaneously alongside the Phase 1 consultation group. Formal consultation on the Phase 2 restructuring plan, according to the timeline set out in the University’s May 2020 post-Covid-19 restructuring process, is expected to begin as soon as September, with any redundancy notices being served in January 2021. By separating out its plans in this way, the University has ensured that redundancies remain a tool at its disposal.
A ‘progressive’ pay cut?
The FP states that the agreed tiered pay cut ‘is designed to provide protection to lower-paid staff … and is progressive’ (FP, para 9). It is true that the pay cut does not apply to staff on Grades 1 and 2, and for those on higher grades the proportion of the pay cut increases (to 15% max). However, there remain serious flaws with the tiered pay cut. First, exempting only Grades 1 and 2 from the pay cut means that those of us earning as little as £18,000 will have our salary cut. When considering whether something is fair, reasonable and proportionate, one should consider the likely impact on the people affected. Many of us on £18,000 a year are simply not in a position to shoulder any cuts to our pay, in stark contrast to those at the top end of the salary scale, for whom a 15% pay cut still leaves a salary vastly greater than the average UK income.
As part of this, a serious equality impact assessment should have been conducted and shared with staff. Instead, the FP (at para 9b), and the VC in his 14 August briefing, state that the pay cuts will reduce the gender pay gap and that their impact on BAME staff is reduced by the exclusion of Grades 1 and 2. This is not an equality impact assessment. And this is not the way to address the gender and ethnicity pay gaps at the University.
Secondly, only three tiers of pay cut are proposed in the FP: 5% for Grades 3 to 5, 10% for Grades 6 to 8, and 15% for Grade 9 and above. This was the very proposal put forward by the Director of Human Resources at the beginning of July. It is not a genuinely progressive pay cut. As you move up the three tiers, each spans a greater range of salaries than the previous: the 5% cut applies to those on £18,000 to £30,000 (a £12,000 range); the 10% cut applies to those on £30,000 to £60,000 (a £30,000 range); and the 15% cut applies to those on £60,000 to £269,999 (the highest salary listed in the 2018/19 University accounts) (a £209,999 range). At the very least, one would have expected to see a far more graduated scale according to salary in a proposal claiming to be ‘progressive’.
And finally, these cuts ignore the reality that staff pay has already plummeted in real terms over the last decade, exacerbated in Reading where the costs of living have significantly increased, while high levels of precarity and equality barriers continue to bite. A significant number of university staff struggle to pay their mortgage/rent and bills. This stands in stark contrast to the 55 employees at the University of Reading that earned over £100,000 a year in 2019 (see 2018/19 University accounts). Our VC earns a wage of £195,000 per annum plus pension, as well as £17,503 per annum for 5 days a month chairing the Thames Regional Flood and Coastal Committee. This pay for 5 days of work a month is higher than many full-time staff earn as their entire annual income. No agreement should be made without a cap on such high salaries.
Reserves before salaries
The final proposal states that ‘any improvement in its projected financial position will be reflected first and foremost in amendments to the proposed temporary changes to terms and conditions, prioritised over any consideration of the £46m call upon identified reserves agreed by Council’ (FP, para 14). To clarify, we are reading this as saying that the proposed cuts to salaries will only be relied upon if losses exceed £46m. However, two questions remain open that should have been clarified in the final proposal. First, how is ‘projected financial position’ in paragraph 14 of the FP defined? Second, what proportion of the £46m in reserves remains?
The Devil is in … or rather not in … the detail
The FP emphasises that the implementation and continuation of the cost saving measures will be contingent on the outcome of two reviews – an ‘interim review’ in October 2020 and a ‘formal review’ in February 2021. It is stated that the latter will take ‘into account the savings accrued from any of the voluntary measures … and key metrics in relation to student recruitment (i.e. total fees income from Home and Overseas students) and any revised University income projections (to be presented in an open and defensible manner, with an ongoing commitment to respond positively to reasonable requests for relevant management information)’ (FP, para 18). No objectively identifiable criteria for assessing the University’s actual financial position are set out. This is a fundamental omission, particularly in light of the errors in the University’s financial forecasting that prompted this consultation (see our explanatory letter to staff) and the University’s addition of new and exaggerated projected income losses in its July updated Covid-19 financial impact model. If such criteria have been agreed, they must be made public, as must any agreed process for these two reviews.
More specifically, there are a number of problems in this part of the FP. First, the reference to ‘revised University income projections’ is extremely opaque, inviting yet more hypothesising by the University over future income. Second, what degree, if any, of a shortfall against target in student recruitment can be tolerated before the University is projected to incur a loss that would need recuperating through investments and (subsequently) cuts to its costs base? The July updated Covid-19 financial impact model refers to ‘lost income’ arising from Covid-19 that must be recuperated, implying that we are being asked not to underwrite a deficit in the University’s accounts but to make up lost/projected income, without regard to the University’s overall financial position.
Third, what would constitute a ‘successful’ recruitment round is undefined. Setting out the benchmarks for assessing recruitment levels is essential. This is all the more important given the significant increase in our targets for recruiting home/EU and international students for 2020/1 compared with 2019/20. Indeed, those targets are even higher than the very successful above-target actual enrolment numbers for last year. What is more, in the May 2020 report of the University’s Chief Financial Officer, as well as in the July updated Covid-19 financial impact model, the ‘planned’ level of home/EU and overseas undergraduate recruitment for 2020/1, on which the projected losses and need for cuts are based, was stated to be even higher still. Without clear, reasonable and non-arbitrary criteria for judging our actual 2020 recruitment performance, these two reviews will fail to serve the purpose for which they are claimed.
An afterthought – lip-service to governance reforms
The errors in the University’s financial modelling on which this consultation process has been based were noted above (see our explanatory letter to staff). The over-inflated recruitment targets in that financial modelling (and in the updated July 2020 model) were also noted in the previous section. Notwithstanding these significant errors, the University Council approved the commencing of the consultation process in June 2020. This is the most recent example from a long history of poor oversight of the University Executive Board. The reported five-year bill of £50m to £70m since 2016/17 arising from the decision to develop a Malaysia campus recently led to a restructuring and redundancies for our colleagues there. The poor planning and decision-making leading to the development of the Malaysia campus has been acknowledged by the University itself. In a similar example of poor oversight, the University suffered major negative press last year after it had to refer itself to regulators over its management of the National Institute for Research in Dairying trust. And the provision agreed with UPP by which the University would underwrite 99% of UPP student accommodation rooms creates a potential cost of £31.2m for 2020/1.
This long history of poor oversight makes the reform of University governance urgent. In the Reading UCU branch president’s email of 14 August 2020, it is stated that concessions were won from the University during the consultation relating to changes to governance structures and greater scrutiny of decision-making processes. In truth, however, the final proposal contains very little by way of substantive governance reform. Indeed, these supposed reforms are treated as an afterthought in both the FP and the VC’s email of 14 August, where they are alluded to extremely briefly at the end (‘[t]he University has also committed to a joint review of workloads and to provide opportunities for colleagues to have early scrutiny of major proposals and to conduct a review of workload issues.’) Moreover, only the ‘preliminary details’ of these have been agreed (FP, para 19) – we are thus being asked to shoulder the cost of the University’s financial mismanagement on the basis of future discussions around governance.
More specifically, the final proposal states that ‘[t]he University of Reading will seek to engage with staff and stakeholders about ways to improve University governance. This will be facilitated in a number of ways including’: ensuring Senate and Council papers are available for colleagues to read; requiring consultation within Schools and Functions regarding annual plans; providing UCU and the Staff Forum with an opportunity to comment on key University proposals; providing a regularly updated list of significant matters to the Senate Agenda Setting group; discussion of all new proposals in excess of £10m by Senate, the Joint University and UCU Committee and Staff Forum.
Given the degree of sacrifice that staff are being asked to make, these governance ‘reforms’ are woefully inadequate. They reflect formal, procedural ‘reforms’ at best, with no necessary substantive changes. In truth, these should already be a part of our governance. They reflect necessary (but not sufficient) conditions for good governance in the first place, not extra goodwill gestures from the University. This University is desperately in need of genuine governance reforms and stronger oversight of the University Executive Board.
Reading Between the Lines
20 August 2020
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 We have avoided referring to actual figures in this section due to confidentiality. However, Reading staff can compare these figures for themselves: to find previous years’ target and enrolment data, please see the admissions page on the PSO website; to see the higher targets for this year’s recruitment round, please see the most recent application statistics for the current recruitment round here; to compare the even higher ‘planned’ 2020/1 home/EU and total international (including TNE) student intake relied upon in the University’s financial modelling, see page 8 of the July 2020 updated Covid-19 financial impact model and page 29 of the May 2020 post-Covid-19 restructuring process, both available here.