- Union has just three weeks of running costs in the bank
- 'Sitting back and doing nothing is not an option', says General Secretary
- Plans to make nine NUJ staff redundant
- Pension deficit could range from anywhere between £500,000 to £4m
- Subscriptions could increase by 5 per cent
The NUJ is facing a 'severe financial crisis'and could run out of money and become insolvent by October, general secretary Michelle Stanistreet has warned.
Press Gazette understands that the union's National Executive Committee met this afternoon and voted through a series of cutbacks which include nine redundancies.
In a document sent to National Executive Council members this week, which has been seen by Press Gazette, Stanistreet said the union had been hit by a 'perfect storm" of falling income and rising costs - warning that as things stand the union has around £300,000 in cash, which amounts to just three weeks of running costs.
With monthly deficits averaging more than £20,000, the overall deficit at the end of February was £267,000, meaning that unless immediate action is taken "this money will run out in October and the union would be insolvent".
'There has been no single overnight event that has brought us to this position,'said Stanistreet,
'The fact that there has been no positive uplift in the industry's fortunes, and therefore our members'; the continued pressure on our budgets and unresolved deficits in some areas; the drop in subs income in the first half of this budget, 3 per cent more than the 2 per cent decline budgeted; the depletion of our assets and reserves in the wake of successive deficits; and the crisis in our pension scheme – all of these things bring us to the position we are in today, and this combination of factors mean we have to take action.
'Sitting back and doing nothing is not an option."
New data on membership statistics, meanwhile, has revealed an 18 per cent drop in overall membership figures over the past five years.
Stanistreet warned: 'After the audit of this year's accounts takes place following year end in September, NEC members have to formally declare their belief that the union will remain a going concern.
'If comprehensive action is not taken, the stark reality is that members of the NEC would not be able to make that declaration to our auditors."
In a bid to cuts costs and ensure staff costs make up no more than 45 per cent of total subscription income, the union aims to make around nine redundancies out of its 47 staff.
Stanistreet said the aim was to cut £400,000 from staff costs and incorporate this into the 2012/13 budget.
She concluded: 'I ask all members of the NEC to take on board and carefully consider the scale of the crisis facing our union. This is clearly a difficult time for NUJ staff. Nobody – not anyone on Finance or the NEC, and certainly not me as GS, wants to be in the position of making redundancies.
'However the only priority there can be is ensuring the union's future for our members. Standing back and watching the inexorable slide into insolvency is not an option.
'Only by acting together now and addressing the urgent financial crisis by making cuts and putting in place changes that will allow us to rebuild our reserves in the future, will we ensure the NUJ can continue as an independent trade union and set us on a path to a genuinely sustainable future – a goal I have no doubt that our membership expects us to meet.'
The union will meet with its bank Unity Trust next week to discuss its financial situation and to show it has a 'clear plan of action for tackling this crisis and setting the union on the path to sustainability".
A major problem for the union has been the impact of the financial crisis on members and subscriptions income.
While it budgeted for a 2 per cent year on year decline, the figure is now closer to 5 per cent, with the 'likelihood that this decline will continue given the ongoing difficulties in our industry".
The union also has a major pension deficit, which Stanistreet said could range from anywhere between £500,000 to £4m.
She said: "The reality of the current financial situation means that the employer covenant in the pensions fund is weakened.
'This would consequentially mean the ultimate deficit would be in the higher threshold as that has to be factored in when agreeing the assumptions on any valuation.'
She added: 'The pension trustees have been updated on our declining financial situation and I have made clear that there is no new money available to plug any future deficits."
The scheme is 'not sustainable and is an additional major threat to our future financial stability", she said, adding that the union needed to begin a formal consultation process with staff about 'fundamental change".
The union is now planning for a 10 per cent decline in subs income, and aims to build up its cash reserves from the current three weeks to six months.
That gives it a target of £2.5m – meaning £250,000 needs to be budgeted and put into reserves every year for the next decade.
It will also look to increase subscriptions by 5 per cent, a price rise of between 15 and 26p a week (15p per week for grade 1, 19p per week for grade 2 and 26p per week for grade 3).
Putting forward this motiong to NEC delegates Stanistreet saidf 'we need to be able to demonstrate that our approach has been one of shared pain and that the union has made the necessary cuts and is committed to turning this crisis around with a recovery plan".
In order to focus on 'core industrial work'the union will also aim to scrap union-funded professional training activities.
Instead, training contracts could be put out to tender or administered and delivered by the General Federation of Trade Unions on behalf of the NUJ.
It also wants to establish a 'Recruitment Task Force'to grow its subscription income.
Union's protection is needed by journalists now more than ever before
The NUJ said in a statement: "Leaders of Britain's journalists have adopted a programme of measures to protect the National Union of Journalists against the impact of the recession on the media industry and continue the effectiveness of the NUJ in defending member's interests.
"The NUJ National Executive Council (NEC) today (Friday 25 May) agreed a strategy including cuts across all areas of union expenditure, including provision for staff redundancies, in order to meet problems being caused by a fall in union income, rising costs and the challenging industrial environment."
NUJ General Secretary Michelle Stanistreet added: 'This is not the first time the NUJ has had to take decisive action to deal with financial difficulties. Previous solutions to falling income, resulting from a fall in employment in our industries, have sustained us until now.
'But we are conscious that if we are to plan responsibly for the future of the union, and the members whom we serve, we need a comprehensive strategy which involves managing expenditure and practising good housekeeping while continuing to provide the service to NUJ members which they are entitled to expect.
'As an immediate priority we will be extending the union's activities and membership across all sectors of the industry where the union's protection is needed by journalists now more than ever before."