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Watchdog warns universities against ‘excessive’ pay for bosses

The Office for Students ‘will not hesitate to intervene’ over unjustified pay levels, its chief executive said.

A proposed new code on university bosses’ pay is “necessary” but “insufficient”, according to the head of a new watchdog.

More leadership is needed from universities in setting fair salaries for senior staff, according to Nicola Dandridge, chief executive of the Office for Students.

She welcomed a new draft remuneration code published by the Committee of University Chairs (CUC), saying it is an acknowledgement of “the need for appropriate and justifiable pay in the higher education sector”.

She also warned the new regulator “will not hesitate” to intervene if it believes there are “unjustified” levels of pay.

Vice-chancellors’ pay has been firmly in the spotlight in recent months, with growing concern over spiralling salary hikes and several high-profile figures, including ministers, calling for restraint.

A new draft remuneration code published by the CUC on Tuesday says the process for setting pay must be transparent.

“Society has a right to know that taxpayers’ funds are being properly used and that the institution is being managed in the interest of students, the economy and society,” it said.

“Senior post holders must be fairly, but not excessively, rewarded for their work.”

  • Universities will have to publish the pay of anyone earning more than £100,000 under new government proposals.
  • In 2015/16 the typical salary of a UK vice-chancellor was 6.4 times that of the average university worker.

The 17-page draft code, which is voluntary for universities, goes on to say that institutions should take into account factors such as the value an individual provides to their institution, and the context in which the university operates.

Responding to the draft code, which is open for consultation until March 12, Ms Dandridge said: “There is a need for change in the process around setting remuneration, and the proposed code makes significant proposals in this area.

“In particular, the references in the draft code to the need to justify pay in a public and transparent way are important, as is the role of benchmarking.

“One needs only to look to other leadership positions in public life to see that senior pay in higher education is out of kilter with comparable roles.

“Appropriate benchmarking will help remuneration committees to set pay levels that reward performance in a fair and justifiable way.

“The code is necessary, but in itself insufficient. We also need to see leadership from institutions in setting fair remuneration, people are rightly concerned by the level of pay, not just the process.

“Exceptional performance, clearly tied to exceptional outcomes, absolutely deserves exceptional pay. But, by definition, not every vice-chancellor can perform exceptionally. Where the level of pay cannot be justified, it should be reviewed.”

She added: “We very much hope that the sector will act in the spirit of this proposed CUC code and manage the issue of excessive pay itself.

“However, in the face of unjustified levels of pay, the Office for Students will not hesitate to intervene.”

Pay for university chiefs has risen significantly in recent years, and in 2015/16 the typical salary of a UK vice-chancellor was 6.4 times that of the average university worker, according to a government consultation published in October.

Average pay last year including pensions and benefits was more than £280,000.

Under new proposals, universities will have to publish the pay of anyone earning more than £100,000 and give an explanation if someone is earning in excess of £150,000, equivalent to the Prime Minister’s salary.

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