Where did the £5 million go?

Executive summary

The required savings stated in the “Final Proposal” – to be paid for by wage cuts and changes in terms and conditions – are £5 million more than the figure the RUCU President’s blog suggests was agreed upon by the consultation group. Why are RUCU members being asked to vote on a deal which contains unnecessary cuts to staff? For reference, £5 million represents almost 1/3 of the proposed savings from the tiered pay cut.

The details

In the original restructuring document [1] the CFO claimed there was a total of £106 million to be saved. In Phase 1, she proposed to make £46 million of savings from reserves and other resources, and £60 million from cuts to staff.

Deepa Driver demonstrated serious discrepancies in the CFO’s figures. The CFO performed a “light touch review” [2] where indeed the original figures were reduced but she also included new costs, including £11,667,000 apparently relating to USS pension costs, bringing the proposed total savings to be made in Phase 1 back up to £104 million. However, according to the RUCU President’s FAQs posted on 25th September 2020 [3] the RUCU negotiating team “stripped [the USS] figure from the University’s calculations in reaching the current proposal, as USS has nothing to do with COVID.”

After subtracting the £11,667,000 from £104 million, one would expect that the consultation proceeded on the basis of total savings to be made in Phase 1 of £92,333,000, with £46 million to be covered by reserves, leaving savings of £46,333,000 to be made from cuts to staff. The Consultation group’s “Final Proposal” [4] still includes the figure of £46 million to be covered by reserves (see point 14 of [4]).

However, the “Final Proposal” shows a total of £51,397,190 of proposed savings from cuts to staff. This is £5,064,190 more than the £46,333,000 calculated above.

What’s £5 million among friends?

Why have the RUCU negotiating team put forward a proposal to members that includes cuts to staff of more than £51 million while claiming that they have persuaded the University that the amount to be saved in Phase 1 is £5 million less? If the amount to be saved could have been reduced by more than £5 million, pay cuts for the lowest paid members of staff could have been reduced. It may seem that £5 million is not much in this context but it equates to roughly 10% of the proposed cuts to staff. For comparison, the savings made by the tiered pay reduction for 1 year are £15,529,790 when applied to all staff, see the table on page 2 of [4]. Therefore, one would expect that £5 million could have a significant impact on the cuts to the lowest paid staff.

Furthermore, the preamble to the RUCU ballot states “If members accept the proposal, and the university’s losses which can be attributed to the pandemic turn out to be significantly less than the £104M modelled by the university, then the pay cuts and/or pay freeze will be reduced in scale, and other cuts to budgets will also be relaxed.” This £104M includes the USS figure with the RUCU President’s blog claims has been taken out of the Phase 1 figures by agreement since it has nothing to do with the pandemic. The question is what does “can be attributed to the pandemic” mean? Attributed by whom and on what basis? And how much is significantly less? Is the USS figure, which is 11% of £104M, considered significant? If so, why were the pay cuts and/or pay freeze not reduced in scale accordingly before they were put to members? If not, what is the boundary where a reduction becomes “significant”? One would expect that a figure of £11,667,000 is highly significant when the total savings from the tiered pay cut are £15,529,790.

Vote NO

We cannot accept a deal where so much rests on the interpretation of the word “significant” and where the CFO has shown in the “light touch review” that if costs are decreased in one area, she is willing to simply include new costs in the model to end up close to the previously claimed deficit.

References

[1] Post-Covid-19 response – proposed restructuring process

[2] Modelling the impact of COVID-19 -light touch review

[3] Branch President FAQs

[4] Consultation Group – final proposal https://reading.web.ucu.org.uk/files/2020/08/200813-University-of-Reading-CG-final-proposal-13Aug20.pdf