Staff may get a zero salary offer to avoid redundancies

University coffers take a hit from unexpectedly high pay costs, report Phil Baty and Melanie Newman

September 18, 2008

University staff may be handed a "0 per cent" salary offer in 2009, after unexpectedly high pay costs this year.

The 2006-09 pay deal has seen staff receive increases totalling more than 10 per cent in the past two years. And, from October 2008, universities are due to pay further increases of about 5 per cent, as the final year of the deal guaranteed rises at the rate of inflation, as measured by the September 2008 retail prices index.

The current RPI figure, published this week, is 4.8 per cent and the September figure will be published in mid-October.

Pay was discussed behind closed doors at the annual conference of the vice-chancellors umbrella group, Universities UK, in Cambridge last week.

The three-year deal allows universities to defer the 2008 pay increase by up to 11 months if they are in "financial difficulties", and previous indications suggested that about 30 universities would not pay on time.

But at a Universities and Colleges Employers Association (Ucea) subscribers meeting at the Cambridge event, it is understood that about three quarters of vice-chancellors indicated that they expected to pay the increase on time as they were keen to be seen to take the "moral high ground" in continuing talks with the University and College Union (UCU) on pay negotiating structures.

Privately, some have suggested that staff should not expect a rise of more than "something between zero and a very small figure" in 2009-10 if they are given 5 per cent this year. One told Times Higher Education that offering "0 per cent" in 2009 was a serious suggestion if institutions were to avoid redundancies.

Phil Harding, chair of the British Universities Finance Directors Group, was collating the results of a survey of finance directors on their ability to pay the 2008 increase as Times Higher Education went to press. He said that he expected that "most" universities would not invoke the "financial difficulties" clause in the agreement to defer payment.

Mr Harding said: "The one message that is very clear from financial directors is that any case for a 'catch-up' settlement has gone and payment in full and on time means that we start with an expectation of nil uplift for next year."

A Ucea spokesman said that it was "far too early" to speculate on 2009 pay figures.

But he added: "The magnitude of the October pay increase will stretch the finances of all institutions and some may be forced to phase or defer payment.

"Institutions will need to make difficult adjustments to their planned budgets to meet these new costs and minimise job losses. It is inevitable that the cumulative effect of these salary increases will place serious constraints on pay settlements for August 2009 and beyond."

Sally Hunt, general secretary of the UCU, said: "The last pay deal was a good one and has gone some way to deal with the 'catch-up' element academic and related salaries so desperately needed.

"The problem has not gone away though and attempts to immediately claw back next year the deal that UCU members fought so hard to get in 2006 will be met with a robust response."

The UUK meeting also heard that institutions that belong to the Universities Superannuation Scheme are likely to have to make a 2 per cent increase in contributions.

Sir Martin Harris, chairman of the USS, is understood to have told attendees at a closed meeting that the increase was necessary because of increased life expectancy.

He stressed to Times Higher Education that the figure was not the "final outcome" of a process of evaluation that the fund is going through, and any increases would have to be agreed by the USS board, and would not be before 1 October 2009.

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