UCU and Labour call for urgent action on 'back-door cuts' to colleges and universities

13 November 2018 | last updated: 15 November 2018

The government needs to act swiftly to allay fears of 'back-door cuts' at colleges and universities after it was revealed that a potential pensions funding shortfall could see further and higher education hit with a £300m bill.

MPs will debate the issue of education funding in an opposition day debate later today after schools minister Nick Gibb estimated that the additional cost to cover pension benefits from 2020 would be £142m for colleges and another £142m for universities. The news came in a written response to a parliamentary question from shadow education secretary Angela Rayner.

The problem stems from a need for employers to raise their contributions to the Teachers' Pension Scheme (TPS) from 16.48% to 23.6% after the government announced in September that it would be reducing the discount rate for public sector pension schemes at a faster rate than expected. This is linked to lower projections for long-term economic growth by the Office for Budget Responsibility (OBR).

The Department for Education has suggested that the government will provide funding for schools and colleges to manage the increased contributions in 2019, but it is unclear whether all further education colleges are covered and there is no such commitment for universities.

The government has also said that decisions about future funding to cover the pension changes will be made in next year's spending review, which the University and College Union (UCU) says leaves institutions unable to plan effectively for the future. The union said that colleges and universities needed clear direction and support from government and that a combined bill of almost £300m would have a serious impact on staff and students. 

UCU head of policy and campaigns Matt Waddup said: 'We can't wait until the spending review next year to address what is, in effect, a back-door funding cut on institutions who do vital work in their communities. The government needs to confirm that all colleges and universities will be given extra funding to offset these additional costs.

'Too often the message from this government is that they are relaxed about the negative effect of their policies upon the education sector, but students and staff will feel the very real impact of these cuts unless there is action now to stop them.'

Shadow Secretary of State for Education Angela Rayner said: 'In the Budget, the Chancellor insulted schools with his offer of 'little extras' but he didn't even offer that to further education colleges struggling to stay afloat. 

'If they are left to pick up the bill for this Treasury shortfall, further cuts taking hundreds of millions of pounds out of college and university budgets will have a hugely damaging impact on students. That is why Labour is demanding that the Chancellor ends all cuts to education funding and guarantees that college and university budgets will be protected from these projected cuts.

'The government should match Labour's commitment to cover public sector pay centrally so there is stability for services like education instead of leaving colleges, schools and universities in limbo with a crisis looming. The next Labour government will end Tory cuts in education and invest billions in further education to provide free lifelong learning.'

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