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Notes on the Review of the Post Covid Recovery Plan Agreement

You, like us, will have received an email from John Brady. Following this there are a few matters which it would be helpful for us, as UCU members of the Consultation Group, to clarify.

As you will know, the University, UCU and Staff Forum came to an agreement with respect to measures to mitigate the impact of the Covid pandemic on the University’s finances. In return for a guarantee preventing compulsory redundancies, we agreed an element of potential pay sacrifice from all staff. This was either a three-year pay freeze or, if this is not sufficient, a graduated and time-limited pay cut. The agreement, as set out in the Memorandum of Understanding, includes regular review of the agreement, and, critically, requirements for these pay-related measures to be enacted only if and only for so long as is necessary.

Following the first review of the agreement in February, the updated financial impact on the University was assessed. The University had recruited home students in much stronger numbers than had been feared but there were still weaknesses in overseas recruitment. It was generally agreed that the proposed pay cut was not believed necessary at that time however all parties understood the need for prudence in the matter. The pandemic was still ongoing and a second wave, largely unanticipated last summer, was unfolding.

We have met the University on two occasions since February – in April and again in May. The May meeting was requested by UCU so it could properly respond to the financial information it had been provided previously. At these meetings it was again reiterated that a pay cut was unlikely, but again, rather than explicitly ruling this out, the principle of prudence was followed. In the matter of the pay freeze, it was noted that two important factors had impacted this. Firstly the 2020/21 national settlement for pay had been 0%. The proposed settlement for 2021/22 had been made for 1.5%, and although this had not been formally accepted by the trade unions, the imposition of this was thought likely.

TABLE 1 (Click here to enlarge)

Both of these facts impact directly on the financial justification for a separate, local, pay freeze. This can be shown in the Table 1, provided to us by the Chief Financial Officer as part of the review. It is important to note that the figure of £21M John Brady quotes comes from an assumption of a 2% pay increase for each of the three years from 2020. The impact of the 0% pay increase for 2020 and then 1.5% for 2021 (as opposed to the 2% figure budgeted), both compounded out over the three-year period, shows most of the ‘heavy lifting’ has been done by these nationally imposed pay awards. They have, as far as Reading’s financial forecasts go, already reduced the impact on the University by £13.5M without any local element of the pay freeze being required at all. John’s suggestion that the pay freeze has resulted in savings of £21M need to be understood in this context.

TABLE 2 (Click here to enlarge)

So a key question is as follows: With approximately £13.5M of ‘saving’ already accrued as a consequence of the prevailing national situation, will the remaining £7.5M still be required (second half of Table 1)? This was a matter we pushed the University on extensively. At the meeting we were advised the current projection for the direct financial impact for Covid stands £80.979M. Table 2 was also given, which shows the agreed mitigations updated with the April figures. This is taken from the Review paper which is available to all staff on the University website. We have changed the ordering of the mitigations here to better reflect the preferred order of application (pay cuts last) and a column has been added showing the shortfall after each mitigation has been applied. Where the figures go negative (and highlighted in red here), the mitigation has left a surplus. As it happens, the surplus left when the pay freeze is applied currently nearly equals this £7.5M. This means if we were to not implement local the pay freeze then we would still have mitigated the estimated £80.979 in full.

So why have we not done this you ask? Well the answer should probably not surprise you – prudence. It must be accepted that this is a very marginal call. We collectively agreed that it would be much more damaging to staff to give them assurances the pay mitigations were not needed, only to find they were. Crucially all eyes are on the 2021 recruitment round and its implications once both home and overseas student numbers are known. This is less than three months away.

Why has the University written to you now to inform you your contract has been changed? As we understand the situation, the University is only changing the contract to preserve the possibility of imposing a pay freeze, rather than the University having conclusively decided to actually impose the freeze. That possibility does form part of the agreement after all, so we are not really able to object to it. We did ask them to consider using other mechanisms to at least delay this step, such as using the facility in the JCNHES agreement to delay paying a pay increase for up to 11 months. The University were not prepared to do this and it is not clear it would be the sensible thing to do anyway. Even if some pay freeze is needed, we will ensure it is delayed as long and is as small as necessary and we have scope in the agreement to foreshorten the period if we are able.

Sally Pellow and Ian Bland

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