House of Commons - Education and Skills

Select Committee on Education and Skills Written Evidence

Further memorandum submitted by NATFHE

INTRODUCTION

NATFHE—The University & College Lecturers' Union represents 68,000 lecturers, tutors, managers and researchers in higher, further, adult and prison education. With the news that the discussion leading to the next Comprehensive Spending Review is to be delayed a year following the retiming of the Economic Cycle, NATFHE welcomes this opportunity to identify some current concerns about higher education funding.

Key Issues:

— The decline of academic salary levels relative to comparable professions' and the impact on the ability of institutions to recruit and retain academic staff.

— The lack of leverage to ensure that new funding intended to deliver higher academic pay and greater equality is delivered as intended by Ministers as evidenced from the misuse of nearly £1 billion of new funding through the HEFCE Rewarding and Developing Staff initiative since 2001.

— The need to hypothecate an adequate proportion of new Tuition Fee income to increase pay levels in accordance with statements made by the Prime Minister and Minister of State for Education during the debate on the introduction of Top Up Fees.

The decline of academic salaries

Public perceptions of the earnings of university academics are not matched by the reality within UK universities which have overseen a decline in academic pay. The extent of that disparity in earnings was estimated to be 30% by the Bett Committee[6], which recommended that academic salaries should be increased by that amount in order to close the gap between academic pay and the pay of comparable professional groups. Since the publication of the Bett report universities have done little to address the issue of pay, recruitment and retention. Lecturers start their careers (on average at age 28 after a PhD), on £24,352 rising to £30,304. After 14 years (having become senior lecturers) most earn £37,513[7].

Equivalent professionals are provided with higher salary levels as follows[8]:

Pay increases for comparable groups between 1994-2003 clearly demonstrate that the pay differentials between academic staff and comparable professional groups are widening. From 1994-2003 salaries of the following professions have changed in real terms as follows[9]:

The widening gap in pay between academic staff and comparable professional groups is a source of discontent amongst existing staff and acts as a barrier to recruitment. Academic staff can now command significantly higher salaries in other fields. The recently published DfES research commissioned from the NIESR into recruitment and retention for academic staff[10] found that "Academic pay is low relative to that in other highly qualified jobs in the UK, which is likely to reduce entry to the sector". The report recommends that pay levels be increased to improve retention of experienced staff and to assist the recruitment of high calibre graduates.

The inability to deliver on academic pay and equality

In 2001 then Secretary of State for Education David Blunkett announced an ambitious new funding initiative designed to increase pay in higher education. By August 2006 institutions in England will have received nearly £850 million of public funding which should have been used to improve pay levels for HE staff and improve equality. On 16 November 2000 Education and Employment Secretary David Blunkett announced plans to increase publicly planned funding to improve pay levels and improve equality. Mr Blunkett said:

"I recognise that staff recruitment and retention, equal opportunities and human resource development are central to providing a world class higher education. There will be £50 million in 2001-02, rising to £110 million in 2002-03 and £170 million in 2003-04, to support increases in academic and non-academic pay.

This will be a something for something reform, to help institutions to recruit and retain the key staff they need to improve further the quality of teaching and learning, and help modernise management and reward systems, on top of any pay increase which universities negotiate. These plans will be scrutinised in detail by the Funding Council. "

The two important features of this announcement are firstly that the money was clearly intended to be directed towards pay, and secondly that Government tasked HEFCE to oversee the distribution and use of the new funding.

However straightaway the DfES and HEFCE began to retreat from the position set out by the Secretary of State as reflected in the subsequent HEFCE consultation on how the money should be spent. HEFCE decided with the agreement of the DfES that the new funding intended to increase pay levels should be used for the following purposes:

— addressing recruitment and retention difficulties through the use of market supplements;

— meeting specific staff development and training objectives;

— developing equal opportunities targets, ensuring equal pay for work of equal value, using institution-wide systems of job evaluation;

— conducting regular reviews of staffing needs;

— conducting annual performance reviews of all staff; and

— taking action to tackle poor performance.

It rapidly became clear that institutions had used the first round of funding in 2001 for mainly non-pay purposes. The AUT estimated that only 30% or £16 million of the £50 million funding for 2001 was spent on pay. Evidence suggests that this money was not used to increase basic pay or to improve promotion prospects, instead it was used to pay market supplements and to fund progression for chosen individuals. Much of the funding was used to pay for private sector consultants, new managerial posts and on development for Human Resources departments, which are now substantially larger than before. In November 2002, an alarming report was published by Deloitte and Touche on the outcomes of rounds 1 and 2 of RDS. It stated that "some of the finding has financed voluntary redundancy initiatives which has facilitated much needed change" and contained a warning that "if all the funding for the initiative is made core, then it might be diverted into other projects".

Despite the requests from NATFHE, AUT and other stakeholders that RDS funding should be ring-fenced, HEFCE announced in 2004 that in future the funding stream would be incorporated into the block teaching grant> In effect the RDS money was poured into the general funding delivered to each institution making it more difficult to ascertain where the money has gone and how an employer has spent their allocation. The amounts of funding delivered to institutions as a result of this initiative will by the end of 2006 have exceeded £1 billion. The allocations to the English sector are set out below:

HEFCE allocations by year


Year	HEFCE Allocations	Cumulative total

2001	£50 million	£50 million
2002	£110 million	£160 million
2003	£170 million	£330 million
2004	£225 million	£555 million
2005	£297 million	£852 million
2006	£224 million	£1,076 million

Whilst many institutions plan to use their RDS funding to meet the costs of introducing the new pay structure[11], the amounts of funding provided to the sector far exceeds UUK's estimate in 2003 that the total cost of pay modernisation would be £500 million. Institutions have enjoyed the benefit of RDS funding for the last four years, during which time pay increases have averaged 3.3% for higher education staff. NATFHE is concerned that the majority of this additional funding has not been spent on measures to directly improve the pay or opportunities of higher education staff[12].

We are concerned that having created this new funding stream the Government allowed institutions to spend funds on initiatives which did not impact on staff in the way the Secretary of State intended with only minimal scrutiny by HEFCE. We are also concerned that:

1. None of the RDS funding (which by the end of 2006 will amount to £1 billion of public money) was ring fenced or hypothecated to ensure adequate resources were used to improve staff pay.

2. It appears that the Government's public statements in 2001 on the purpose of the new RDS funding stream did not match the reality. Having raised the expectations of staff that significant new funding would be available for pay and improving equality, the DfES then agreed a set of criteria with HEFCE that in effect ensured that the funding was used to increase management capacity rather than fund pay increases.

3. Following the announcement by the Secretary of State in 2001, academic staff expected that institutions would use the funding to address pay levels. The raised expectations of academic staff have not been met, which in turn adds to the potential for low morale to increase amongst key staff within the sector.

The case for hypothecation of Tuition Fee income from 2006 onwards

In England and Northern Ireland in 2006, and in Wales in 2007 (excluding Welsh domiciled students), higher education institutions are introducing variable top-up fees payable by undergraduates—a change which, as the Prime Minister has acknowledged, is intended to bring additional funding into the sector for improvements to pay, as well as other items. In Scotland extra compensatory grant has been allocated to make up for the extra income available elsewhere from Top Up fees.

We note the statement of the former higher education Minister Alan Johnson in the House of Commons on 29 April 2004: "the Prime Minister, in a speech late last year, said: `The shortfall of teaching funding has badly hit the salaries of academic staff, which have shown practically no increase in real terms over two decades.' That is one of the reasons why we are pursuing the controversial measures in the Higher Education Bill. [1] Not only are we putting in an extra £3 billion from the taxpayer, but an extra £2 billion will come through existing fees and through the increase. University vice-chancellors tell us that, in general, at least a third of that money will be put back into the salaries and conditions of their staff. That will make an enormous contribution in tackling a very serious and deep-seated problem."

Despite those comments, university employers have now indicated that staff should not expect Top Up Fee income to be used to increase pay levels. The Universities and Colleges Employers Association (UCEA) which conducts annual pay negotiations on behalf of UK institutions has informed the trade unions that they do not anticipate that any of the new tuition fee income will be used to improve pay.

An analysis of many of the declarations made by individual institutions to the new Office of Fair Access (OFFA) shows that in some cases only 25% of new top up fee income will be spent on the provision of bursaries and grants for students. Whilst there is an undeniable need for many institutions to improve their buildings and facilities, the new funding amounting to some £1 billion per year[13] is sufficient to upgrade facilities, provide generous student bursaries and also fund much needed increases in pay for academic staff.

We do not believe that once again Government can be allowed to raise staff expectations that new funding will be used to increase pay whilst allowing the higher education sector to ignore the imperative need to address the issue of low levels of academic pay.

To that end we believe that the DfES should as a matter of urgency ensure that the commitments given by the Prime Minister and Minister of State are delivered to the sector by stipulating that at least 40% of the new top up fee and other income is hypothecated for staff pay from September 2006 onwards. This we believe to be the only way to ensure that unlike the previous spending pledges relating to Rewarding and Developing Staff, government commitments on the use of a proportion of top up fee funding for staff pay are delivered as intended.

September 2005

6 Independent Review of Higher Education Pay and Conditions Chaired by Sir Michael Bett published 1999. Back

7 Annual Salary £pa from 1 August 2005. Back

8 Professions indicated are all comparators used in the Bett Report on academic pay. Figures are current salary ranges 2004-05.

University Lecturers/Senior Lecturers £24,352-£37,513

General Practitioners: £46,455-£70,710

Teachers (advanced scales): £37,902-£47,469

Tax Inspectors: £44,520-£63,990

Back

9 Source: New Earnings Survey (series)

Higher education teaching professionals: +6.6%

Public sector average earnings: +12%

Personnel, training and industrial relations managers: +23%

Managers/senior officials in government (HEO to senior principal/grade 6): +31%

ICT professionals: +22%

Medical Practitioners: +27%

Secondary Education teaching professionals: +12%

Chartered and certified accountants: +12%