Archive for the Finance Category

« Older Entries
Newer Entries »

End of Term Thoughts

Posted in Biographical, Finance with tags , , , on May 4, 2018 by telescoper

Today is the last day of teaching term at Maynooth University. My last lecture, a revision lecture, was yesterday morning and I spent most of the afternoon helping students put the finishing touches on their project work, which is due in on Tuesday next week. Next Monday is a bank holiday in Ireland (as it is in the UK), then there’s a short period of private study before the examinations start next Friday. As it happens, the theory paper for the module I’ve been teaching on Computational Physics is on the first day of the examination period.

It’s `Study Week’ in Cardiff next week too, and I have a revision lecture there. Owing to the Monday holiday we’ve juggled the schedule a bit to ensure all modules have a revision lecture so I’m doing my revision lecture on Thursday rather than the usual Tuesday. I have a meeting at the Institute of Physics in London on Tuesday and it’s the Annual General Meeting of the Royal Astronomical Society (also in London) on Friday so I’ll be spending all of next week in the UK, in between Cardiff and London. Since teaching is over I’m not planning any more midweek travel (unless it’s absolutely necessary) and intend to spend one week in the UK and one week in Ireland, and so on, apart from conferences and the like, until I fully relocate in July.

I thought I’d mention another thing, which represents a fortuitous bit of timing. Twenty-five years ago, while I was living in London, I took out a savings policy of the sort that involves making a regular monthly payment into a mixture of investment funds. The term of this policy was 25 years, and the maturity date was 23rd April 2018. On a couple of occasions I have been tempted to cash it in early but decided to let it run until maturity. The performance of my chosen funds has fluctuated over the last two and a half decades, but when the price of units drops and you invest a fixed cash amount you end up buying more units than when they’re expensive so if they do recover in value you do well. This is called Pound Cost Averaging.

However, when a policy like this reaches the end of its term the amount you get back depends on the value of the units on the day that it matures. Although my policy wasn’t doing at all well a decade ago, it seems my portfolio (more by luck than judgement) has done well over the last ten years, but with the stock market being rather volatile in the early part of this year it’s been a bit of a white knuckle ride recently. Thankfully the last few weeks seem to have been more stable, and although the units are not at an all-time high in terms of value they were not far off that when they were cashed in. aturity value turned out to be about three times the total amount I’ve invested. I received the money on 30th April, and the proceeds will make a significant contribution to the cost of purchasing a house here in Ireland.

The downside of pound cost averaging is that the final sum is paid in pounds to a UK bank account, and with the pound languishing against the euro there’s now a decision to be made about when to transfer it to Ireland..

1 Comment »

University Pension Differences

Posted in Education, Finance, Maynooth with tags , , , , , , , , on January 26, 2018 by telescoper

Following a ballot of members of the University and College Union (UCU), the UK university sector is gearing up for strike action over proposed changes to the USS pension scheme. Unless the dispute is resolved in the meantime (which I think is highly unlikely) the first strike lasting two days will place on 22nd and 23rd February. Thereafter strikes will escalate to cover three days, four days and five days in subsequent weeks.  I’ll actually be in Maynooth for the first 48 hour block so won’t have to worry about crossing a picket line initially, but will have to later if it drags on. It looks set to be a bitter dispute which will not be easily resolved.

When I joined USS (in 1988) it was a simple `Final Salary Scheme’. Both employer and employee contributed and the benefits accrued were an index-linked pension of 1/80 of the final salary for each year of contributions and a (tax-free) lump sum of 3/80 for each year of contributions. I joined at age 25 so I expected to accrue 40 years of pension if I retired at 65, namely a pension of half my final year’s salary and a lump sum of three-halves. It looked a good deal and was a significant factor mitigating the relatively low starting salary for academics in those days.

Over the years it became apparent that this scheme is actuarially unsound because (a) people are living longer, increasing the scheme’s liability and (b) investment growth achieved by the USS fund managers has decreased, with a negative impact on asset growth. Moreover, the USS fund is not underwritten by the government, so if it collapses completely members could be left with no benefits at all.

The USS Final Salary scheme was closed to new entrants some years ago and replaced by a less generous defined benefit scheme. A couple of years ago it was closed to existing members too, though the benefits accrued are retained; I will now only be able to get 28/80 of my final salary from that scheme when I actually retire. The scheme was replaced by a hybrid of an even less generous defined benefit scheme and a defined contribution scheme (where the pension benefit is dependent on the fund valuation at retirement, as most private pensions). Now the proposal is to remove the defined benefit component entirely. The loss of pension benefits will be substantial.

I don’t see any easy settlement of this dispute so I’m glad that it won’t affect me very much. I’ll be leaving the UK Higher Education system this summer and relocating to Ireland. Quite a few people have asked me how the pension scheme works here so I thought I’d point out the differences.

The first thing to say is as a professor in the National University of Ireland at Maynooth I am treated as a public servant so my future pension benefits here are covered by the Single Public Service Pension scheme. This resembles the final salary scheme that USS used to be, but with the important difference is that it is integrated with the State Pension to which everyone is entitled if they pay social insurance contributions. This – called the SPC – is similar to the old State Earnings-Related Pension Scheme (SERPS). Since public employees benefit from this as well as the public service pension scheme, the accrual rate in the latter is lower than the old USS scheme – just 0.58% per year – on salaries up to €45,000. For salaries above this figure the amount above the  limit generates an accrual rate 0f 1/80, just as the USS version. There is also a lump sum which accrues at 3.75% per annum, the same as the USS scheme.

In summary, then, the big difference is that in Ireland the public service pension is integrated with the state pension, whereas in the UK the latter is entirely separate. It’s also the case that in Ireland the pension is guaranteed by the government (which, of course, can change the rules…)

In my opinion the pension scheme for University staff in Ireland is significantly better value than the diminishing returns provided by the USS scheme, yet another reason why I made the decision to move here.

 

13 Comments »

Things Falling

Posted in Finance, Politics with tags , , , , , , on August 3, 2017 by telescoper

A very busy but also very interesting day at the office in the Niels Bohr Institute ended this evening with a thunderstorm, complete with spectacular lightning and torrential rain. I got wet on the walk back to my small home, but I managed to get inside before the worst of it started. I seem to remember a similar thing happened last time I was in Copenhagen. Maybe it’s the time of year.

Anyway, torrential rain isn’t the only thing that’s been falling today. The Pound dropped sharply against the Euro, so it is currently around €1.1069, not far from its lowest point in the last year. That’s not directly relevant to my visit to Denmark, which isn’t in the Eurozone, but the Pound has tumbled against the Danish Kroner too. In fact it’s been falling steadily over the past three months:

At 8.234 Kroner to the Pound, this the worst exchange rate I can remember in all the approximately 30 years I’ve been travelling to Copennhagen. The rate has usually been about 10:1 or even higher. Copenhagen has always seemed a rather expensive place, but converting prices into Pounds at the current exchange rate makes your eyes water. Fortunately I’m getting my local expenses paid by the NBI so the increased cost won’t really affect me, but it’s definitely noticeable. Such is the shambolic state of our government that I wouldn’t bet against the pound reaching parity with the Euro before too long.

Of course one is not allowed to suggest that the falling pound and sluggish economic growth might be something to do with BrExit because that would be `talking the country down’. The worrying thing, though, is that we haven’t left the European Union yet. Just wait until March 2019 when we leave the European Union, together with the Single Market and Customs Union without any trade agreement. Where will the pound be then, I wonder?

15 Comments »

The UK Financial Contribution to the EU

Posted in Finance, Politics with tags , , on April 22, 2016 by telescoper

There’s so much misunderstanding and distortion flying around about the United Kingdom’s contribution to the European Budget and what it might be spent on if we left the EU that I just thought I would post this for information. It shows official figures from HMRC for 2014. Similar pie charts are available for other years, but often they include the EU contribution under “other” which is why I’ve chosen this particular one. Also, I’m very lazy and it came up first on Google…

fat cut

Although it’s a lot of money in cash terms, it’s very small compared to current expenditure on, e.g. Health, Education and Welfare and even compared to the interest payments on our national debt. Saving this contribution would not make sufficient financial resources  available to make a significant difference to these other big ticket  items. Note also that if the UK loses its current credit rating, the expense of servicing our debt will increase by an amount that could easily on its own wipe out the saving on our EU subscription.

And of course what we get for that relatively small contribution is access to beneficial trade agreements, inward investment from EU companies and other sources, and access to the science programmes. You may disagree, of course, but I think it’s money very well spent.

 

 

22 Comments »

Nervous

Posted in Finance, Science Politics, The Universe and Stuff with tags , , on November 22, 2015 by telescoper

The outcome of the 2015 Comprehensive Spending Review is to be announced shortly (on Wednesday 25th November), a fact which suggested this piece of music. It’s a solo piano piece by the late great Mal Waldron. Among many other things, Mal Waldron was Billie Holiday’s regular accompanist from 1957 until her death in 1959 and it was during that time he was booked to appear on a famous all-star TV Jazz broadcast called The Sound of Jazz from which this solo performance is taken. It’s an original composition by the pianist, and it’s called Nervous.

p.s. I did a blog post some time ago about Billie Holliday’s heartbreaking last performance with Lester Young, which also appeared on The Sound of Jazz. You can find it here.

1 Comment »

The Renewed Threat to STEM

Posted in Education, Finance, Science Politics with tags , , , , , , on July 26, 2015 by telescoper

A couple of years ago, soon after taking over as Head of the School of Mathematical and Physical Sciences (MPS) at the University of Sussex, I wrote a blog post called The Threat to STEM from HEFCE’s Funding Policies about how the funding policies of the Higher Education Funding Council for England (HEFCE) were extremely biased against STEM disciplines. The main complaint I raised then was that the income per student for science subjects does not adequately reflect the huge expense of teaching these subjects compared to disciplines in the arts and humanities. The point is that universities now charge the same tuition fee for all subjects (usually £9K per annum) while the cost varies hugely across disciplines: science disciplines can cost as much as £16K per annum per student whereas arts subjects can cost as little as £6K. HEFCE makes a small gesture towards addressing this imbalance by providing an additional grant for “high cost” subjects, but that is only just over £1K per annum per student, not enough to make such courses financially viable on their own. And even that paltry contribution has been steadily dwindling.  In effect, fees paid by arts students are heavily subsidising the sciences across the Higher Education sector.

The situation was bad enough before last week’s announcement of an immediate £150M cut in HEFCE’s budget. Once again the axe has fallen hardest on STEM disciplines. Worst of all, a large part of the savings will be made retrospectively, i.e. by clawing back money that had already been allocated and which institutions had assumed in order to plan their budgets. To be fair, HEFCE had warned institutions that cuts were coming in 2015/16:

This means that any subsequent changes to the funding available to us from Government for 2015-16, or that we have assumed for 2016-17, are likely to affect the funding we are able to distribute to institutions in the 2015-16 academic year. This may include revising allocations after they have already been announced. Accordingly, institutions should plan their budgets prudently.

However, this warning does not mention the possibility of cuts to the current year (i.e. 2014-15). No amount of prudent planning of budgets will help when funding is taken away retrospectively, as it is now to the case. I should perhaps explain that funding allocations are made by HEFCE in a lagged fashion, based on actual student numbers, so that income for the academic year 2014-15 is received by institutions during 15/16. In fact my institution, in common with most others, operates a financial year that runs from August 1st to July 31st and I’ve just been through a lengthy process of setting the budget from August 1st 2015 onward; budgets are what I do most of the time these days, if I’m honest. I thought I had finished that job for the time being, but look:

In October 2015, we will notify institutions of changes to the adjusted 2014-15 teaching grants we announced in March 20158. These revised grant tables will incorporate the pro rata reduction of 2.4 per cent. This reduction, and any other changes for individual institutions to 2014-15 grant, will be implemented through our grant payments from November 2015. We do not intend to reissue 2014-15 grant tables to institutions before October 2015, but institutions will need to reflect any changes relating to 2014-15 in their accounts for that year (i.e. the current academic year). Any cash repayments due will be confirmed as part of the October announcements.

On top of this, any extra students recruited as as  result of the government scrapping student number controls won’t attract any support at all from HEFCE, so we wll only get the tuition fee.And the government says it wants the number of STEM students to increase? Someone tell me how that makes sense.

What a mess! It’s going to be back to the drawing board for me and my budget. And if a 2.4 per cent cut doesn’t sound much to you then you need to understand it in terms of how University budgets work. It is my job – as the budget holder for MPS – to ensure that the funding that comes in to my School is spent as efficiently and effectively on what the School is meant to do, i.e. teaching and research. To that end I have to match income and expenditure as closely as possible. It is emphatically not the job of the School to make a profit: the target I am given is to return a small surplus (actually 4 per cent of our turnover) to contribute to longer-term investments. I’ve set a budget that does this, but now I’ll have to wait until October to find out how much I have to find in terms of savings to absorb the grant cut. It’s exasperating when people keep moving the goalposts like this. One would almost think the government doesn’t care about the consequences of its decisions, as long as it satisfies its fixation with cuts.

And it’s not only teaching that is going to suffer. Another big slice of savings (£52M) is coming from scrapping the so-called “transitional relief” for STEM departments who lost out as a result of the last Research Excellence Framework. This again is a policy that singles out STEM disciplines for cuts. You can find the previous allocations of transitional relief in an excel spreadsheet here. The cash cuts are largest in large universities with big activities in STEM disciplines – e.g. Imperial College will lose £10.9M previous allocated, UCL about £4.3M, and Cambridge about £4M. These are quite wealthy institutions of course, and they will no doubt cope, but that doesn’t make it any more acceptable for HEFCE to break a promise.

This cut in fact won’t alter my School’s budget either. Although we were disappointed with the REF outcome in terms of league table position, we actually increased our QR income. As an institution the University of Sussex only attracted £237,174 in transitional relief so this cut is small potatoes for us, but that doesn’t make this clawback any more palatable from the point of view of the general state of health of STEM disciplines in the United Kingdom.

These cuts are also directly contrary to the claim that the UK research budget is “ring-fenced”. It clearly isn’t, and with a Comprehensive Spending Review coming up many of us are nervous that these cuts are just a foretaste of much worse things to come. Research Councils are being asked to come up with plans based on a 40% cut in cash.

Be afraid. Be very afraid.

5 Comments »

Awaiting The Barbarians

Posted in Finance, Poetry, Politics with tags , , , , , on July 13, 2015 by telescoper

— Why are we come together in the market place?
 
            Barbarians are expected here to-day.
 
— Why in the Senate-house this inactivity —
why sit the Senators and do not legislate?
 
            Because barbarians are to come to-day
            What laws should they make now — the Senators?
            Presently the barbarians will make laws.
 
— Why has our Emperor risen close upon the sun —
why is he waiting there, by the main city-gates,
seated upon the throne, — august, wearing the crown?
 
            Because barbarians are to come to-day
            And so the Emperor in person waits
            to greet their leader. He has even prepared
            a title-deed, on skin of Pergamus,
            in favour of this leader. It confers
            high rank on the barbarian, many names.
 
— Why do our consuls and the praetors go about
in scarlet togas fretted with embroidery;
why are they wearing bracelets rife with amethysts,
and rings magnificent with glowing emeralds;
why are they holding those invaluable staffs
inlaid so cunningly with silver and with gold?
 
            Because barbarians are to come to-day;
            and the barbarians marvel at such things.
 
— Why come not, as they use, our able orators
to hold forth in their rhetoric, to have their say?
 
            Because barbarians are to come to-day;
            and the barbarians have no taste for words.
 
— Why this confusion all at once, and nervousness:
(how serious of a sudden the faces have become):
why are the streets and meeting-places emptying,
and all the people lost in thought as they turn home?
 
            Because the daylight fails, and the night comes,
            but the barbarians come not. And there be
            who from the frontier have arrived and said
            there are no barbarians any longer.

And now what shall become of us without barbarians?
These people were in sooth some sort of settlement.

by C.P. Cavafy (1863-1933); posted on the occasion of the all-night negotiations between the EU and Greece over a bailout deal.

4 Comments »

Big Science is not the Problem – it’s Top-Down Management of Research

Posted in Finance, Science Politics, The Universe and Stuff with tags , , , , on June 2, 2015 by telescoper

I’m very late to this because I was away at the weekend, but I couldn’t resist making a comment on a piece that appeared in the Grauniad last week entitled How can we stop big science hovering up all the research funding? That piece argues for a new system of allocating research funding to avoid all the available cash being swallowed by a few big projects. This is an argument that’s been rehearsed many times before in the context of physics and astronomy, the costs of the UK contribution to facilities such as CERN (home of the Large Hadron Collider) and the European Southern Observatory being major parts of the budget of the Science and Technology Facilities Council that often threaten to squeeze the funds available for “exploiting” these facilities – in other words for doing science. What’s different about the Guardian article however is that it focusses on genomics, which has only recently threatened to become a Big Science.

Anyway, Jon Butterworth has responded with a nice piece of his own (also in the Guardian) with which I agree quite strongly. I would however like to make a couple of comments.

First of all, I think there are two different usages of the phrase “Big Science” and we should be careful not to conflate them. The first, which particularly applies in astronomy and particle physics, is that the only way to do research in these subjects is with enormous and generally very expensive pieces of kit. For this reason, and in order to share the cost in a reasonable manner, these fields tend to be dominated by large international collaborations. While it is indeed true that the Large Hadron Collider has cost a lot of money, that money has been spent by a large number of countries over a very long time. Moreover, particle physicists argued for that way of working and collectively made it a reality. The same thing happens in astronomy: the next generation of large telescopes are all transnational affairs.

The other side of the “Big Science” coin is quite a different thing. It relates to attempts to impose a top-down organization on science when that has nothing to do with the needs of the scientific research. In other words, making scientists in big research centres when it doesn’t need to be done like that. Here I am much more sceptical of the value. All the evidence from, e.g., the Research Excellence Framework is that there is a huge amount of top-class research going on in small groups here and there, much of it extremely innovative and imaginative. It’s very hard to justify concentrating everything in huge centres that are only Big because they’ve taken killed everything that’s Small, by concentrating resources to satisfy some management fixation rather than based on the quality of the research being done. I have seen far too many attempts by funding councils, especially the Engineering and Physical Sciences Research Council, to direct funding from the top down which, in most cases, is simply not the best way to deliver compelling science. Directed programmes rarely deliver exciting science, partly because the people directing them are not the people who actually know most about the field.

I am a fan of the first kind of Big Science, and not only for scientific reasons. I like the way it encourages us to think beyond the petty limitations of national politics, which is something that humanity desparately needs to get used to. But while Big Science can be good, forcing other science to work in Big institutes won’t necessarily make it better. In fact it could have the opposite effect, stifling the innovative approaches so often found in small groups. Small can be beautiful too.

Finally, I’d have to say that I found the Guardian article that started this piece of to be a bit mean-spirited. Scientists should be standing together not just to defend but to advance scientific research across all the disciplines rather than trying to set different kinds of researchers against each other. I feel the same way about funding the arts, actually. I’m all for more science funding, but don’t want to see the arts to be killed off to pay for it.

4 Comments »

Loans for PhD Fees?

Posted in Education, Finance with tags , , , on May 5, 2015 by telescoper

Just a short post to remind (or perhaps just tell) interested parties that the Department of Business, Innovation and Skills (BIS) is running a consultation on issues connected with postgraduate education. According to the BIS website:

We’re seeking views on proposals to introduce loans for postgraduate taught master’s degrees and to improve support for research students.

The consultation closes on May 29th 2015. The Institute of Physics and the Royal Astronomical Society are putting together collective responses for Physics and Astronomy respectively, but anyone can submit an opinion.

The scope of the consultation seems carefully worded as not to suggest explicitly  that loans might be extended to postgraduate research (i.e. PhD) students, but the implication is there. If the system of providing research council scholarships to PhD students were to be scrapped in favour of loans I think that would have a devastating effect on the future of UK science, as another sizeable loan on top of the debts accumulated as an undergraduate would put most potential research students completely off the idea of doing a PhD.

I wonder though if there might be actually be a limited role for loans in funding PhD students that might actually have a positive effect. I’ve stated before on this blog that I’m not opposed to the principle that students who can afford to make a contribution to the cost of their education should be required to do so, as this releases funding to support students who can’t afford to make such a contribution. I’ve never agreed with transferring the entire burden onto the student – which the current system effectively does – but I think it is reasonable for students to chip in a few grand when they can. It is true that having a better educated population benefits the country as a whole, which is why the taxpayer should support university students, but there is no question that the students themselves do benefit financially so they should share some of the cost too. Offering susbsidised loans to enable them to do this makes it quite a reasonable proposition.

One advantage of students having to contribute to their fees emanates from the fact that people tend to value things more if they have to pay for them. It seems quite clear to me that students, generally speaking, show far greater levels of engagement with their courses now that they are investing their own money in them.

Universities charge fees for posgraduate courses too, including the PhD, though these are much lower than for undergraduates. At my institution, the University of Sussex, for example, fees for a PhD in a science subject are about £4K per annum. Students funded by a research council bursary get this fee paid on their behalf on top of a stipend of around £14k per annum, and most are probably not even aware that the fee even exists. Students not in receipt of external funding usually have either have to pay their fee by working for it (possibly by teaching) or have to convince the institution to waive it, in which case the Department concerned does not cover its costs. If a student has a bursary that covers a fee plus a stipend for up to 4 years there isn’t much of an incentive for a PhD student to take a shorter time to complete.

So my suggestion is that it might be worth thinking about moving to a system wherein PhD students would be able to access loans to cover their fees rather than having them funded by a research council bursary or by having to work to earn the money. Such a scheme would save the cash-strapped research councils part of what they currently contribute and it would actually help students finance their own PhD if they had no access to such contributions. Having to borrow the money to pay the fee might deter some potential PhD applicants, but it might also improve completion rates by giving an incentive to finish promptly rather than hanging about. Note that a student with a PhD can expect to earn, on average, about 23 per cent more over a lifetime than someone only holding a Bachelors degree so it seems to me to be reasonable to ask a student to stump up part of the cost of doing a research degree through a loan which need only be paid back when the salary reaches a certain level.

I think this suggestion does have a positive side, but it is by no means a complete solution to the problem that, at least in the UK, we produce many more people with PhDs than are needed to sustain academic research and we need to think much more carefully about whether this route provides the correct career development for scientists in the wider world.

8 Comments »

How Arts Students Subsidise Science

Posted in Education, Finance with tags , , , , on March 26, 2015 by telescoper

Some time ago I wrote a blog post about the madness of the current fee regime in UK higher education. Here is a quote from that piece:

To give an example, I was talking recently to a student from a Humanities department at a leading University (not my employer). Each week she gets 3 lectures and one two-hour seminar, the latter  usually run by a research student. That’s it for her contact with the department. That meagre level of contact is by no means unusual, and some universities offer even less tuition than that. A recent report states that the real cost of teaching for Law and Sociology is less than £6000 per student, consistent with the level of funding under the “old” fee regime; teaching in STEM disciplines on the other hand actually costs over £11k. What this means, in effect, is that Arts and Humanities students are cross-subsidising STEM students. That’s neither fair nor transparent.

Now here’s a nice graphic from the Times Higher that demonstrates the extent to which Science students are getting a much better deal than those in the Arts and Humanities.

Subsidy

The problem with charging fees relating to the real cost of studying the subject concerned is that it will deter students from doing STEM disciplines and cause even greater numbers to flock into cheaper subjects (which where much of the growth in the HE sector over the last decade has actually taken place in any case). However, the diagram shows how absurd the current system (of equal fee regardless of subject really is), and it’s actually quite amazing that more Arts students haven’t twigged what is going on. The point is that they are (unwittingly) subsidising their colleagues in STEM subjects. I think it would be much fairer if that subsidy were provided directly from the taxpayer via HEFCE otherwise there’s a clear incentive for universities to rake in cash from students on courses that are cheap to teach, rather than to provide a proper range of courses across the entire curriculum. Where’s the incentive to bother teaching, e.g., Physics at all in the current system?

I re-iterate my argument from a few weeks ago that the Labour Party’s pledge to reduce fees to £6K across all disciplines would result in a much fairer and justifiable system, as long as there was a direct subsidy from the government to make good the shortfall (of around £6K per annum per student in Physics, for example).

3 Comments »

« Older Entries
Newer Entries »