The sector is still looking for good news on teachers’ pensions

The Department for Education decided last autumn to provide additional funding to schools and further education colleges in England – but not universities – to cover the cost of increasing Teachers’ Pension Scheme (TPS) contributions.

This was one of those policy choices that, while largely expected, contains within it a microcosm of much larger issues within the sector. Post-1992 universities are required to sign their academic staff up to the scheme, and a rise in contributions of five percentage points came at almost the worst possible time, just as the international recruitment boom began to tail off – an issue which was particularly pronounced for many modern universities that had expanded rapidly into new recruitment markets. UUK and UCEA wrote to then HE minister Robert Halfon in March, calling for flexibility to take staff out of the scheme in the event that the government wouldn’t fund its growing weight – something that mission group University Alliance had been calling for previously, and also very much a red line for unions.

The Scottish government has now confirmed expected funding of £121.2m in Barnett consequentials stemming from the Westminster government’s additional money for England. The wrinkle here is that the funding has not been signed off by a parliamentary vote due to the election being called, and so the process has been delayed – there’s absolutely no reason to think the sum would change, however, once the Commons is back in session in July.

Following submissions from higher education sector groups among others, the Scottish education committee had been looking for answers on whether and in what quantity this funding was being passed on – the equivalent scheme in Scotland, the Scottish Teachers’ Pension Scheme (STPS), is also seeing an increase in required contributions, though by “just” three percentage points.

The question was raised as to whether some of this derived funding could come universities’ way – a point of particular interest, given that in April the Scottish Funding Council removed its financial support for modern universities affected by pension contribution increases, which had been £4.8m in 2023–24. Doing this at the same time as reducing the number of funded places for several modern institutions gave rise to a feeling that the impact of the Scottish government’s cuts in funding were not landing equally, though SFC chief executive Karen Watt told the committee the intention had been to “balance where those cuts fell”, pointing to the “phasing out” of strategically expensive subject funding which “fell more squarely on the older institutions.”

Watt also said that it was unlikely that SFC pensions funding for modern universities would “come back into play” into future years – but the Scottish government letter to the committee hasn’t yet ruled out these new Barnett consequentials being used in this way:

Employer costs for the STPS are split over a number of portfolios, with the majority incurred by Local Government but also additional costs within Higher and Further Education and the special schools directly funded by Scottish Government. After funding is confirmed at Main Estimate, Scottish Government will work with pay colleagues in calculating the precise transfers to ensure that the additional costs faced are transferred.

Scotland’s higher education sector will be making the case that some of this should come to those universities affected – Universities Scotland has already done a very good job of making clear the depth of the impact that falling international recruitment is having on many universities, and MSPs are concerned.

If the SNP government did announce that it was passing on some of the funding to SFC to be distributed to both colleges and universities, this would inevitably sharpen the issue back in Westminster as well. While the SFC did previously make a contribution to pension costs in a way that has never been the case in England, the difference here would be that funding for England that excluded universities would be directly giving rise to Scottish funds that were or could be going to universities. You would expect a redoubling of lobbying efforts in Westminster, with the hope that a new Labour government might be more receptive.

And if it didn’t fancy stumping up the needed cash, then there is that cheaper option of legislating to allow universities to opt out of government pension schemes. The drawback here would be throwing more fuel onto industrial relations problems in the sector, and reinforcing a divide between older and newer institutions in staff contractual terms.