University on verge of tax-free pay deal

October 18, 1996

A CONTROVERSIAL "tax-free pay" scheme looks set to be introduced at the University of the West of England to fend off the effects of an enrolment shortfall.

Rob Cuthbert, assistant vice chancellor, said this week more than 76 per cent of staff had voted for the scheme and he expected the figure to rise above the 80 per cent mark needed to introduce it.

The scheme would use a tax loophole that allows employers to link a tax-free part of their employees' pay to profit, saving the institution money.

In a letter urging wavering staff to back the scheme, Alfred Morris, the vice chancellor, offered a further carrot by recommending that the one-year "no compulsory redundancy" clause already offered be extended to cover the life of the initial TFP scheme and any successor schemes.

He acknowledged that next month's Government Budget could prevent universities from introducing TFP schemes, but said that any change would not be retrospective. So UWE could benefit for two to three years from TFP if the scheme was operating before the Budget. Mr Morris said that shortfalls in enrolments meant that UWE had already lost a significant amount in student tuition fees and now faced clawback of funding council grants.

"This has worsened the university's financial position to the point where without the TFP scheme redundancies are now almost inevitable," he stated.

Mr Morris added that speaking of the prospect of redundancies was not a threat, but "a cold sober statement of financial reality". He said fears that staff who did not vote for the TFP scheme would be the first to be made redundant (THES, September ) were "categorically untrue".

UWE unions Natfhe and Unison are both opposed to profit-related pay schemes in higher education, but Natfhe head office has said the scheme is one of the safest in the sector.

A number of universities are considering similar profit-related pay (PRP) schemes, but many are thought to be awaiting possible changes in the Budget before holding staff ballots.

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