USS pension feud hinders spending review pleas – Hillman

In a warning to the sector, the think tank chief warns that Treasury policymakers see the sector as unable to resolve “a mess in its own back yard”

An influential think tank director has warned that the contention surrounding the Universities Superannuation Scheme (USS) makes it much harder for the sector to win a favourable settlement from the comprehensive spending review (CSR).

Nick Hillman, the director of the Higher Education Policy Institute (Hepi), advised it was hard to make predictions about the CSR but warned “higher education is regarded as a sector in those parts of Whitehall with responsibility for fiscal rectitude as having been unable or possibly unwilling to resolve a mess in its own back yard”.

[USS] makes the powers-that-be less likely to give higher education the sort of Spending Review settlement that we all hope for
– Nick Hillman, Hepi

Despite attempts by Universities UK (UUK) to resolve the most recent valuation, employers remain at loggerheads with the University and College Union (UCU) – and the spectre of strikes now hangs over the sector for the fourth time in three years. Hillman suggested “the continuing discussions” over the scheme – and the uncertainty over the long-term costs – made policymakers in Whitehall weary of ploughing more cash into the sector.

Said Hillman: “This is probably unfair, given how many reforms to the USS have taken place over the years and all the continuing discussions, but it matters nonetheless because it makes the powers-that-be less likely to give higher education the sort of Spending Review settlement that we all hope for”.

UUK has announced it seeks reform of the scheme to avoid the intractable valuation process. UUK will also press USS “to explore the feasibility of Conditional Indexation, the development of a more flexible and lower-cost option for members to help address the high opt-out rate and to begin scoping a governance review of USS that would start after the current valuation”.

The vice-chancellors of Oxford and Cambridge universities and the presidents of the Oxbridge UCU branches have published a joint statement calling for a radical overhaul of the beleaguered USS.

Fluidity defines the contents of a spending review, even until the closing stages of the process, Hillman observed. They are, he warned, rarely “the final word”. The think tank director added that “regrettably, like almost everyone else who has considered the issue in any detail, I think the Spending Review may impose some new obstacles on the route to 2.4%”. He counselled vice-chancellors that an underwhelming three-year settlement does not mean the case for research funding is closed.

Read more: Russell Group submits comprehensive spending review recommendations

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