British uni strike bewildering

Striking British university teachers deserve sympathy but not a publiclyfunded bailout for shrinking retirement income, writes Daniel Finkelstein

My first job was as a journalist on a computer magazine. We had to write them using golf ball typewriters and Tippex (a white fluid you used to paint over errors. Once it dried you could type over it again. Boris Johnson used it to make speeches on Europe).

When the articles were ready, two members of staff had to drive to Richmond, where they were typed in again. The staffers sat there for two days repeatedly correcting the proof copies with a red ballpoint until the typesetting company got it right.

One day, our publisher decided to buy us PCs and a desktop publishing system. But instead of welcoming this boon, the National Union of Journalists insisted we all be paid a large bonus to use the new equipment. And then called a strike.

I have had to wait almost 30 years to witness an industrial action as bewildering, but I think I’ve finally found it. University and college lecturers appear to have called a strike in order to protest against the solvency of their own pension fund.

Here’s what happened. The universities have a pension fund for those who work in colleges and universities. They pay into it 18 per cent of staff salaries in order to guarantee the fund will be able to pay out certain benefits when members of the scheme retire. This is a very generous amount to pay in but, as it turns out, still not enough to cover the pensions being planned.

Many schemes have encountered the same difficulty. The regulator is there to make sure all the parties to the schemes are being fair to each other. You don’t want a situation, for instance, in which the first to retire are able to claim full benefits, while younger members find all the money has gone.

So the Universities Superannuation Scheme and the Pensions Regulator have to reach an agreement by this summer in which the former persuades the latter the scheme is solvent. And to achieve that, the universities are proposing the scheme be changed. It will honour the benefits arising from money saved until now, but treat money collected in future differently, and as offering a smaller benefit. And this change has provoked a strike.

In one way, it’s understandable. After all, unlike the strike when we all got a new computer, this is a strike when people are being told that they will get a smaller pension than they were expecting. We are all loss-averse. It’s only human to be upset about this and make others aware how upset you are. And I can see why they wish to target their anger at the managers of the scheme. It’s infuriating to be made promises and then to see them broken.

I also have great respect for academics. I’m the son of one professor and the brother of another. It’s a rare day when I don’t consult the works of a university researcher. They deserve to be well-remunerated.

But with the best will in the world, what’s their strike for? What do they hope to achieve? The pension fund is a pot of money shared between current and past staff. All the trustees and the regulator are trying to do is to make sure it is fairly shared out.

The younger lecturers are, therefore, literally striking against themselves. They are insisting the trustees go on giving away the lecturers’ own money more quickly than is prudent and increase the chance of there being none left.

To this, there are three responses from supporters of the strike. One is that the universities should put in more money. But how realistic or reasonable is it to ask that an employer puts more than 18 per cent of salaries into the fund? That’s a vast amount already. And where would that money come from? It would come either by paying lecturers less or by having fewer of them. In other words, again, striking against themselves.

A second response is the one suggested by the fact John McDonnell, the shadow chancellor, is backing the strike. The rich should pay for these pensions, which are only being reduced because of Tory austerity. Universities would get more money and wouldn’t have to make such difficult choices.

Leaving aside the question of how much money from the rich might be forthcoming, making lecturers’ pensions a social priority is certainly an arresting idea. I agree it would be nice to make good the funds, but I thought Mr McDonnell had promised the rich would abolish tuition fees and also purchase more train guards in order to satisfy the RMT.

The third response is that the change in the benefit structure is unnecessarily strict. It is, they say, based on massively over-cautious assumptions. In addition to the strikers, there are some vicechancellors who support this argument.

Of course they do. The row going on in universities has been going on in thousands of businesses for many years. The regulator and the trustees of funds are having bust-ups every day with contributors and members. The latter always think the amount they are paying in is enough; the former always argue a more cautious approach to payments and promises needs to be made.

If the members and contributors are right, then in later years it will be possible for a more expansive approach to be reinstated. And Universities UK has said that. But the regulators and trustees have no personal interest in being strict. They are just trying to protect equity between policy holders. To strike against that is to strike for the right to take an unsustainable risk on the grounds that you know better. Even though, if the risk goes wrong, the costs will fall calamitously on randomly selected members who will be left without pensions.

Let’s be clear, this is not a victimless action. Students have paid for a service which is now being withheld. The case for them being given compensation is overwhelming. Academics can’t just have a row with each other about how they share out their own savings and expect students to pay for the argument. Academics always like to insist students are more than customers. Right now, they are treating them as less than customers.