My timeline is absolutely full of people all across the higher education sector — whether striking academics like myself, or journalists and commentators — who are talking about “what universities can afford to pay” staff right now. This feels like a very important moment, in the middle of ACAS negotiations and a huge sector-wide industrial action campaign about pay and conditions, to look at university pay, financial positions, and the “state of the sector” in as rounded a way as possible. I’m not going to make any claims about using reserves to ride to the rescue here and I’m going to assume government is completely absent from this terrain, as they have managed to be since absolutely wrecking everything, policywise, in HE between 2011 and 2015.
This post is going to make my own contribution to the discussion over pay, I hope it’s helpful.
You might well ask, “why should I trust anything I read here any further than I do press releases from UCEA or the union or summary articles by education journalists?” The only answer that matters is the footnoting historian’s answer: you can reconstruct everything I am about to do yourselves, choosing different institutions, and without all that much effort. This is because I am working with two publicly available sources of data, and some folks very helpfully created simple visualisations of the most important figures we need to use.
First of all, the sources of information:
A/ The Higher Education Statistics Agency, or HESA, which annually publishes quite a detailed breakdown of university overall finances, incomes, and expenditures, every year.
Now, to the important questions:
1. What Can “The Sector” Afford?
Let’s start with the money question at the heart of competing claims over pay in the current round of negotiations. What I am going to do here is take a small sample of 7 institutions from across the broader profile of 150-odd universities in the UK, and I’m going to use David’s visualisation tool (thanks!) to assess whether or not they individually could afford a net 7%, 9%, and 11% pay rise. I’ve chosen two “post-92s”, two non-Russell Group “mid-card” institutions, two “Russells”, and one university in public and visible financial trouble. I’ve included my own employer (Canterbury Christ Church) as one of the two post-92s and I’ve tried to vary location and to pick institutions that have fairly standard profiles (no Imperials, Open Universities, LSEs, Oxbridge, etc, these are all outliers that tell us very little about the broader sector). I’m not going to follow Kernohan’s advice to “look at the last three years” because, well, those three years contain a global pandemic. I’m going to look at financial positions as of last year only, and while that is statistically weaker, it is more honest about where institutions currently are and what they can currently afford.
Here is the list: Canterbury Christ Church University (Post-92); Anglia Ruskin University (Post-92); Manchester University (Russell); Cardiff University (Russell); Leicester University (“midcard”); Keele University (“midcard”); University of East Anglia (in “hot water”).
Here is an answer to whether or not each of these institutions could “currently afford” (without changing anything else at all about their finances) to pay staff 7, 9, or 11 % more, on average. This is only according to David’s tool.
CCCU: Yes (7); Yes (9); Yes (11). Surplus after 9%: +2.1 million. The story here is basically about lucrative “partnership” deals, trust me I know.
Anglia Ruskin: No (7); No (9); No (11). No surpluses in sight, but um, this place seems to spend an absolutely ghastly 40% of its money on staff in total? Down from 50% in 2016. Compared to other post-92s, that’s an appalling percentage. My financial mismanagement alarms are blaring.
Manchester: Yes (7); yes (9); yes (11). I mean, is this even a question? Manchester would have a current operating surplus north of 21 million pounds after paying its staff 11% more. Insert bleak jokes here about “markets for students”.
Cardiff: Yes (7); Yes (9); Yes (11). Again, Russell Group brand membership pays dividends, as does being the big option in Wales, clearly. Another stupendous surplus here north of 20 million even after paying staff 11% more.
Leicester: Yes (7); No (9); No (11). But again, only based on currently operating surpluses year on year. Leicester ruthlessly sacked a ton of staff and sold off a bunch of stuff recently and then made a surplus of 22 million quid in 2019–20. I’m pretty sure this institution could very easily afford 9 or 11 percent rises, particularly if it stopped taking risky land gambles on various cow’s fields dotted in and around the city.
Keele: Yes (7); Yes (9); Yes (11). And running a 10 million surplus still after paying staff 11% more. And all that with a demographic bump coming into view. Staff at Keele, your senior bods can absolutely pony up.
East Anglia: No (7); No (9); No (11), but it is instructive that the cost of pay uplift here is modelled to around 13 million, and in 2019–20 this institution made a 17 million + surplus?! What the hell happened?!
I also took the liberty of checking semi-randomly whether or not a further 30 universities could afford my middle pay rise (9%). The result was split basically 50/50, with some surprising institutions able to “afford” this amount and some, like Newcastle, weirdly unable to keep out of deficit while paying 9% more.
So, Can Universities Afford A Bigger Pay Rise Than What is on Offer?
I think the only reasonable answer to this question is “yes”, for two reasons.
One, even the institutions that are running deficits right now are often doing so for reasons clearly not related to staff pay, which is often a slow moving cost for employers. Many deficits after a pay rise aren’t actually that big in comparative terms, and universities are looking at increases in income from a rising number of students overall in the next 5+ years. The reason employers work so hard to keep pay down, of course, is that in this sector it really is the major cost to them. But why is that bad somehow? Staff both make the university what it is, and cost the university most of what it spends. Unless you’re Anglia Ruskin in which case what the hell guys?
Two, while paying staff more money (or spending more money because you need to hire more people on better contracts) is easier to understand when we express it as a flat cost to universities, this framing does not say anything at all about the ways paying staff more money might create positive income loops for universities. Staff with a healthier work-life balance get signed off work far less. They apply for, and I suspect get awarded, more grants. They design better modules and degrees, which can be marketed to more students. Nowhere in the pay debate do we yet see any discussion of the hidden costs of paying staff so poorly for so long, nor of crushing them under frankly bonkers workloads which are boiling staff slowly, froglike, in a cloudy cauldron of endless overwork.
What’s the Magic Number Then?
What will unlock the dispute? Well, let’s revisit that “full and final” UCEA offer from January. It basically amounted to 5% for most academic staff (above spine point 25), and about 6% for most academic-related or professional services staff (points 15–25). Even with my cursory trawl through last year’s finances it seems clear to me the majority of universities can afford about 3 to 4 % more than that in both cases. I.e. they could pay professional services staff (15–25) 10% more, and pay early and mid-career academics 8% more, without touching the sides of some of the surpluses currently being run, and without really wrecking the finances of struggling institutions, where it’s quite obvious some other stuff is looming over their finances (seriously, Anglia Ruskin I just want to talk).
Employers are always going to be moved reluctantly to these positions, but they can move there, and they should. It is in everyone’s interests for the staff budget to reflect an up-to-date “cost” of having all these world-leading experts around doing literally everything they’re being asked to do, from research to teaching to marketing to admin to pastoral care to god what did my line manager ask me for in that email buried amongst 78 the other day?
Academic staff are a very highly productive workforce, despite it all. They all deserve a pay rise, and I am very confident universities can afford to give them one.