Letters – 13 September 2018

September 13, 2018

Guesstimates won’t do for loans, either

It was great to read a clear assessment of the Universities Superannuation Scheme (“How can the pension crisis be resolved?”, Features, 6 September). But I wonder if everyone who read the article recognised its relevance to another equally urgent issue: whether student loans should appear as public spending in the national accounts when they are handed out.

Among the many reviews currently facing higher education, the one by the Office for National Statistics on how student loans are accounted for could end up as the most significant. Other than keeping the status quo, there are two main options.

First, we could start to count every pound loaned out as current public spending. Some people are desperate for this to happen because it would embarrass our politicians, who established the current loan system. But we should be careful what we wish for. The Dearing report found the old system of treating student loans as regular public spending meant that less money was assigned to higher education, impoverishing institutions.

Second, we could put only the portion of student loans that is expected to remain uncollected – the so-called resource accounting and budgeting charge – on the books now. On one level, this might seem sensible. But the RAB charge has foundations of sand. It is a guesstimate based on what might happen to lots of different features of the UK economy over 30 years or more. In this context, it is worth remembering that the Office for Budget Responsibility has displayed an amazing inability even to forecast student numbers over the short term.

If we were to add a RAB charge figure to the public accounts now, policymakers would either feel the need to tighten up the student loan repayment terms, hitting young graduates just as they are trying to start leading independent lives, or to reduce student numbers, which would block social mobility. What if, years later, the finger-in-the-air RAB charge estimate on which policy was based turns out to have been an exaggeration? We would have cut off our nose to spite our face.

In relation to the USS, Mervyn King and John Kay state, “If the answer to a question is very sensitive to a number that is almost impossible to predict, it is time to ask a different question.” They conclude, “we do not plan sensibly for the future by making up numbers to fill the gaps in our knowledge”. The ONS and the USS trustees should heed these wise words.

Nick Hillman
Director
Higher Education Policy Institute

 

The thoughtful piece on the fact that the USS is actually in rude financial health would not come as a surprise to those who have followed this debate and have been pointing out such insane assumptions by trustees as an average longevity in the nineties (it is presently 10 years lower).

The real issue is the question of whether the legislation is “well-intentioned but inept” or whether it was always perfectly obvious that its beneficiaries would not be USS members but the financial services sector. That the USS chief executive was given a salary increase of £69,000 this year makes it rather clear. Universities are full of clever people; after we stop Brexit, let us change the legislation and run the thing ourselves.

Douglas B. Kell
Research chair in bioanalytical science
University of Manchester

Job cuts foolhardy

The impending strike at the University of Leicester (“Leicester staff to strike over job cuts plan”, News, 7 September), in the face of a batch (or is it a “sack”?) of threatened compulsory redundancies, comes on top of the “fairly high-profile cost-cutting exercise to trim 150 posts” just two years ago. As the university pursues the apparent objectives of maximising revenue and minimising costs, its character and reputation are being trashed. The core business of a university is to provide an atmosphere conducive to excellence in research and teaching.

In my own department, colleagues with large grants have been threatened with compulsory redundancy on the basis of an external departmental research review, but the business cases have had to be “suspended” because the university refuses to disclose the contents of the external review. Massive pressure has been exerted on some research-active colleagues to transfer to teaching-only posts, while competitor universities move in the opposite direction, striving to maintain and build their research-active staff bases and their reputations for excellence. If the university is not persuaded to rethink its strategy, the damage will be irreparable.

Andrew M. Colman
Professor of psychology
University of Leicester


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