Made in Westminster – Sean Wallis | The Convention for Higher Education
This all changed with the removal in 2014 of caps on student numbers. Universities could now compete with each other for students, and market share. The first set of victims have been the post-92 universities, the ex-polytechnics, whose staff are not in the USS pension scheme. Students considering an expensive degree at London Metropolitan University, for example, now found places at King’s College. In London, LMU’s pain has been swiftly followed by that of Westminster University, currently engaged in serial cutbacks of staff.

In this first wave, the USS employers have boomed. Indeed, the Higher Education Statistics Agency reports that sector surpluses rose by a factor of 10 from £158m in 2005/6 to £1.5bn in 2016/17. However, to accommodate the new student numbers, universities needed estate capacity. They started a major programme of investment in new buildings, campuses and student accommodation. To do this they needed to borrow. Whereas some initial loans may have been on favourable terms, as construction costs have increased, institutions have had to borrow on the open market.

Of course, when you borrow in this way you have to declare your assets and your liabilities, including the liability toward the pension fund. It is this new obligation that I believe explains why, in the USS negotiations, UUK employers (led by the most expansionist Russell Group employers) focused on Defined Contribution, rather than, say, a worse Defined Benefit scheme.
education  higherEducation  universities  pensions  USS  valuation  deficit  risk  regulation  quantitativeEasing  banking  bailout  interestRates  gilts  expansion  investment  construction  UUK  RussellGroup 
6 days ago
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