In an email to LSE Staff, Director Dame Minouche Shafik has laid out the initial impact of the Covid-19 pandemic on the School’s financial situation. Facing financial strain, the university will furlough some staff who cannot work in the current conditions, delay big spending on capital projects and non-essential maintenance, and is said to be considering different staff pay strategies, including pay cuts to high earning staff.
The email details that although LSE was in a good financial position, it faces many challenges ahead: “LSE is already facing decreased revenue from halls of residence for Summer Term, as well as from the Summer School in 2020, with the decision to cancel the first two sessions now confirmed. There is also uncertainty about exactly when we will be able to reopen our campus, and any reduction in the number of overseas students joining our School is a significant risk that would have a big impact on our financial position, as well as our cultural and intellectual diversity.”
LSE’s Summer School and other non-credit bearing courses are a significant proportion of its income, as The Beaver has previously reported. The Students’ Union, which is a separate entity, has also had to furlough many of its staff. The Beaver has also learned that the School is considering operating online in 2020-21, at least in Michaelmas Term. In a recent email to Postgraduate offer holders, the school said that it was not allowing any deferrals into 2021/2, signalling the potential losses in student numbers that lie ahead.
Shafik says to staff the School will take the following actions:
- “Delay spending on capital projects and non-essential maintenance for the next 12 months
- Introduce a conditional freeze on all hiring proposals, which means they require explicit approval to go ahead
- Take the decision to furlough some staff who cannot fulfil their roles as normal because of the circumstances.
- No decisions have yet been made on staff pay. We are looking at the possibility of a pay reduction for higher earning staff, if this proves necessary.
- Continue with contribution pay. I do know first-hand how tirelessly many staff have been working and I can confirm that this year we will go forward with contribution pay awards for 2019/20, albeit strongly focused on one-off awards and with a more limited budget.
- Cut the total non-pay budget by 10%. Different parts of the organisation may face bigger cuts than others, as we continue to focus efforts on enhancing strategic priorities across education, research and operations to help us prepare for an uncertain future and the start of the next academic year.”
The email details that members of the Senior Management Committee (SMC) will take a pay cut for an initial six months. Shafik, who according to LSE’s Financial Statements received a basic salary of £357,000 in 2018-19, will take a 20% pay cut. The rest of the SMC members will take a 10% pay cut.
