It was fun while it lasted

Both vice-chancellors and academics enjoyed healthy pay rises in 2008-09, although they may seem a distant memory to those now feeling the pinch. Using an exclusive analysis by Grant Thornton, John Morgan and Hannah Fearn look at who got what in the last year of plenty

April 1, 2010

Pay and benefits packages for vice-chancellors rose by more than 10 per cent last year as the boom times in higher education ended with a bang.

While vice-chancellors' salaries rose in line with those for academics in 2008-09, about half of university heads also received additional benefits packages. Vice-chancellors who retired or stepped down at four institutions - City University London, the University of East London, the University of East Anglia and University College Falmouth - were awarded between £188,000 and £393,000 in one-off payments on top of their salaries.

In 2008-09, the leaders of 152 higher education institutions received a total of £33,311,726 in salaries and benefits, excluding pensions, according to an exclusive analysis of figures conducted by the accountants Grant Thornton on behalf of Times Higher Education. That represents a 10.6 per cent rise over the previous year, taking institutions' average spend on their vice-chancellors to £219,156.

The average salary for heads of institutions was £207,318, up 6.8 per cent.

Academics saw their average salaries rise by 7.1 per cent in 2008-09. The average stood at £46,607 at the end of the year, according to figures from the Higher Education Statistics Agency (Hesa).

Although the figures date from 2008-09, they emerge at a time when the consequences of the financial crisis are being keenly felt across higher education, with universities planning for job cuts and strikes looming on some campuses.

The number of institutions spending £300,000 or more on their vice-chancellors in total pay and benefits, excluding pensions, rose from five in 2007-08 to 12 in 2008-09.

Of those that made their accounts available, the institutions that spent the most on their vice-chancellors were City (£651,000), UEL (£537,000), UEA (£489,000), the London Business School (£4,000), Falmouth (£392,118) and University College London (£376,190).

City budgeted to pay Malcolm Gillies £393,000 as part of a "compromise agreement", in addition to his £258,000 salary, when he resigned after a dispute with the board over governance. He was later appointed vice-chancellor of London Metropolitan University.

UEL paid Martin Everett £250,000 after he resigned following a board investigation into his leadership in spring 2009.

UEA spent £265,000 on "additional pensionable service" for Bill Macmillan after he took early retirement following a period of sick leave.

At Falmouth, Alan Livingston benefited from a £188,000 "pension enhancement" in the year of his retirement.

At UCL, Malcolm Grant's £72,698 benefits package - on top of his £303,492 salary -included £12,000 for a service charge on his flat and a £20,000 payment to reflect his "contribution to UCL's outstanding performance".

Across the sector, there were a number of cases where the leader's post was occupied by more than one individual and occasions where one-off payments were made to individuals, including those retiring or stepping down.

The figures listed in the table should be understood as the cost of the office holder or holders, rather than as the basic salary of an individual. Grant Thornton compiled the figures from the accounts made available by 152 institutions.

According to the Hesa data, the highest average salaries for academics were at the London Business School (£146,459), the Royal College of Music (£58,846), City (£57,309) and the London School of Economics (£57,147).

The data also suggest that the pay gap between research-intensive universities and post-1992 institutions is narrowing.

In reading the figures on vice-chancellors' and academics' pay presented here, it's worth bearing in mind that they are from a year that saw a 5 per cent salary increase for those on the national pay spine. Employers also stress that the "majority of HE staff" enjoyed an additional 3 per cent increment as well.

Since then, as everyone knows, the financial climate has soured, a change reflected in the national pay award of 0.5 per cent for 2009-10. Negotiations between unions and employers on next year's settlement are likely to be tense and difficult.

However, vice-chancellors are not on the national pay spine, instead having their pay decided by the remuneration committees of institutions' governing bodies.

Sally Hunt, general secretary of the University and College Union, said: "Hiding behind remuneration committees is not good enough when they are not required to publicly explain their reasoning.

"The salary bump-ups and massive pension benefits for vice-chancellors on the way out make it difficult for anyone to have any confidence in the system...I am sure that the thousands of staff likely to lose their jobs in the coming months will be delighted to learn that six-figure pay-offs are considered the norm by some vice-chancellors. Similar settlements for them and an assurance that there is not one rule for them and one for the rest will soften the crushing blow of redundancy."

Alex Haslam, professor of social and organisational psychology at the University of Exeter, has previously led research showing that institutions with a wide disparity between the pay of vice-chancellors and other staff are likely to drift down the league tables that rank universities.

He says the research showed that "the more unevenly rewards are apportioned, the worse the organisation in question performs in the future. Accordingly, the more that universities treat leaders as superheroes (and reward them accordingly), the more their future performance is compromised. By the same token, the more that leaders display the same restraint that they urge in their staff, the more likely they are to secure the confidence and followership of those staff.

"Given the choppy waters that the sector is now entering, this wisdom seems particularly worth heeding at the present time. Indeed, we would be particularly concerned for the prospects of those institutions that ignore it."

A spokeswoman for the Committee of University Chairs (CUC), which represents the heads of governing bodies, says: "The average increase awarded to vice-chancellors in 2008-09 broadly reflects the high award for all staff at the end of what was a generous three-year settlement."

She adds: "From the CUC's own researches, we can report that considerable restraint was exercised by universities' governing bodies between 2009 and 2010 in setting vice-chancellors' pay, with a substantially lower average increase reported, reflecting the changed economic climate. Our analysis of pay increases shows that the average increase in salary was 1.9 per cent between 2008-09 and 2009-10. This compares with a total pay increase of up to 3.5 per cent for staff generally for 2009-10, comprising a pay settlement of 0.5 per cent plus an incremental rise of 3 per cent."

A spokesman for the Universities and Colleges Employers Association (Ucea) says the rise for vice-chancellors is in line with that for the rest of staff in higher education.

"Ucea's own research looking at the actual salary increases received by heads of institutions in 2008-09 shows a median increase of 8.9 per cent, broadly in line with the more than 8 per cent received by the majority of higher education staff for that same period.

"Ucea's figure is based on a comparison of the reported remuneration increases of the 133 heads of institution who remained in post over the period," he says.

"Nearly two years have passed since these 2008-09 increases, and it is no surprise that the 2009-10 remuneration figures for both staff and heads of institutions reflect the need for sector sustainability."

The spokesman concludes: "Feedback from institutions where the outcome of 2009-10 pay reviews have been finalised show that 70 per cent of heads of institutions are either receiving no increase at all or 0.5 per cent."

The highest total for spending on a vice-chancellor in 2008-09 was recorded at City, which budgeted to pay Gillies £651,000. That was a rise of 186.8 per cent over City's spending on the vice-chancellor in the previous year.

A City spokesman says: "The salary paid to former vice-chancellor Malcolm Gillies is in line with that of vice-chancellors at similar-sized universities.

"On 23 July 2009, Gillies and the university took the mutual and amicable decision that Gillies should step down, with both parties putting the interests of the university first. For the purposes of the 2008-09 annual accounts, an estimate was made of the sum to be paid to Gillies as part of the compromise agreement, and this is included in the annual accounts figure of £651,000. The agreement included a duty on Gillies to mitigate this payment. The 2009-10 accounts will be adjusted, as a significant part of the provision will not be required as Gillies took up the position of vice-chancellor of London Metropolitan University from 23 January 2010."

The second-largest package for a vice-chancellor was at UEL, where Everett was paid £250,00 on top of his salary of £287,000 after stepping down following an investigation into his leadership in 2009. That was a rise of 210.4 per cent on its spending on the vice-chancellor post in 2007-08.

A spokeswoman for UEL said: "During 2008-09 the substantive vice-chancellor was replaced by an acting vice chancellor. Both post holders were paid on the basis of an annual salary of £182,000. For a period of time the two posts were overlapping.

"For the purpose of your league table the vice-chancellor annual salary for the 2008-09 financial year was £182,000.

"Heads of institutions' pay reflects the skills required and demands involved in leading complex, successful, multimillion-pound organisations. They operate in a global market.

"A sum of £250,000 was paid as compensation for loss of office."

UEA had the third-highest package. Macmillan took early retirement from the vice-chancellorship at the end of the 2008-09 academic year after a period of sick leave. The university spent £489,000 on him, a rise of 129.6 per cent on its spending on the vice-chancellor in the previous year.

A UEA spokeswoman says: "The university purchased, by way of a lump-sum contribution of £265,000, additional pensionable service, recognising his retirement before normal retirement age. This is not a payment of salary to the vice-chancellor, and it would be misleading to use it in any comparison with his salary figure for 2008."

The London Business School had the fourth-highest executive reward package, spending £4,000 on the holders of its dean's office in 2008-09, an increase of 17.3 per cent on the previous year. Sir Andrew Likierman took over from Robin Buchanan, who became president, during that year.

A spokeswoman says the changeover in leadership "resulted in some additional costs", as "effectively there were two salaries from the dean's office".

The fifth-largest package was paid by University College Falmouth. It spent £392,118 on Alan Livingston in the year he retired as rector after 22 years' service. That represented a rise of 129.5 per cent on executive recompense over the previous year.

A Falmouth spokeswoman says: "The final salary and pension entitlement of £392,118 comprises Livingston's annual salary of £164,781; performance-related pay of £18,837 for 2007-08; performance-related pay of £20,500 for 2008-09 (which because of his retirement date are both accounted for in the 2008-09 financial year) and a pension enhancement of £188,000 that was negotiated with the board of governors in 2000 as part of his contract of employment. This £188,000 was budgeted for annually over eight years and the total became payable at his retirement."

University College London laid out the sixth-biggest executive package on its provost, Malcolm Grant. It spent £376,190, including £72,698 in benefits, a rise of .3 per cent on the previous year. On the benefits, a UCL spokesman says £40,000 consisted of pension contributions, £12,000 related to a service charge on Grant's flat and £20,000 was "a non-pensionable lump-sum payment (rather than an increase in base salary) to reflect the provost's contribution to UCL's outstanding performance during the year".

The spokesman adds: "The decisions taken around the provost's salary in the period reported reflected a strong period of growth for UCL and pre-dated the current financial crisis. The provost, along with the university's senior management team, has agreed to forgo a discretionary pay rise for the coming year.

"It is important to note also a significant difference in the way the provost's pay is reported in comparison with that of other vice-chancellors. In the period reflected in this table, the provost was outside the Universities Superannuation Scheme (USS), and therefore the pension contributions for the provost formed part of the salary listed for him, which was not the case for vice-chancellors who were in the USS."

The average pension contribution made by institutions for vice-chancellors was £,484.

The biggest contribution reported, aside from those retiring, was £63,000, which the University of Edinburgh paid for Sir Timothy O'Shea. An Edinburgh spokesman says: "This figure includes a one-off adjustment of £15,000. This brings into line the principal's pensionable salary with his length of service in the sector."

Nicola Dandridge, chief executive of Universities UK, says the pay packages "reflect what it takes to attract, retain and reward individuals of sufficient calibre, experience and talent to ensure that UK universities continue to contribute to our economic recovery, transform lives and remain world leaders".

She adds: "Salaries of university heads in the UK are comparable to those in competitor countries and are also in line with remuneration packages for directors and chief executives of public and private organisations of a similar size."

Comparing the average salaries and benefits packages for the different mission groups shows that vice-chancellors' pay varies widely between different types of institution.

The average total salary and benefits package, excluding pensions, was £0,579 for the Russell Group, £247,798 for the 1994 Group, £222,460 for the University Alliance, £214,965 for Million+, £205,411 for non-aligned institutions and £156,005 for GuildHE.

Wendy Piatt, director-general of the Russell Group, says: "Russell Group universities are world-class, multimillion-pound organisations that need to attract vice-chancellors of the highest calibre and experience if they are to weather these troubled economic times. The leadership of a university is crucial for its success."

The 7.1 per cent rise in average salaries enjoyed by academics across all grades may be the last fruit of the good times for a while. The atmosphere of the 2010-11 pay negotiations is likely to be fraught. Unions will aim to ensure that this year's settlement reflects rising inflation, while employers will say government funding cuts tie their hands.

Academics now earn, on average, as much as senior civil servants in local government, who according to the Office for National Statistics, could expect to take home about £47,000 in 2009. A professor earns as much as a GP, pocketing an average of £74,341 in the past academic year.

Research-intensive universities no longer provide the career academic with a substantial salary premium. The impact of the pay framework means the differential in academic remuneration between the oldest and newest universities is ever shrinking. In 2008-09, academics working in Russell Group institutions received an average salary of £47,780, while their Million+ counterparts earned £44,677.

Three universities - Liverpool Hope, University College Birmingham and London Metropolitan University - refused to allow Hesa to share their staff data publicly (Liverpool Hope and London Met were the only omissions from the table last year). And for the first time, Hesa has collected information about average salaries only at professorial level and all other grades. It is no longer possible to make comparisons on the disparity in pay between senior professors and postdoctoral researchers in their first academic post.

Nevertheless, the bald averages conceal a diverse picture. London Business School pays its staff an enviable average salary of £146,459, and its professors - at the very pinnacle of their business career - are rewarded for their success with a healthy £190,409.

A spokeswoman for LBS says: "It is common practice for professors at many of the world's top-ranked business schools to receive generous remuneration packages; and to compete in this global market, we have to apply worldwide conditions of service and remuneration if we are to attract and retain the best thinkers."

City University, which includes Cass Business School, also paid a high average salary, with its academics pocketing £57,309. A spokeswoman for the university says it "aims to provide the highest standards of education, research and knowledge transfer, by attracting and retaining the best academic staff".

At the London School of Economics, academics are also comparatively well off, taking home an average salary of £57,147 across all grades. A spokesman says the institution is "prepared to pay well to help attract the best staff in a competitive market". The figure also reflects the added cost of living and working in central London, he explains.

But at the bottom end of the scale, academic bank balances are less well nourished. At Heythrop College, the specialist philosophy and theology college of the University of London, staff are paid an average of £,165 year - almost half the national average. But the Jesuit-founded college is unique. Many of the 35 staff are deeply religious people, working out of a sense of duty and commitment to education. A stipend, in some cases just £9,000 per annum, is given directly to charity. As Peter Brook, development and communications manager at Heythrop, explains, it is part of the special culture of the college. "If they are Jesuit or a nun, they are 'covenanted'," he says. "It goes to charity. We never see it."

The University of Derby pays an average of £40,354 to its academic staff. Martyn Holden, director of human resources, says the Hesa figures reflect the amount of further education offered by the university at its Buxton campus.

"The requirements of staff teaching in further education, which has a reliance on hourly paid staff, are different from those employed within higher education - and these are reflected in the different pay scales that apply," he says. The university estimates that academics working in higher education at the university earn an average of £41,338. "We recognise that is below the median for the sector, but it does reflect the different demographics of this institution."

At first glance, the Hesa statistics appear to produce some unexpected results - the University of Worcester, for example, pays its professors a staggering average salary of £89,008, more than the University of Oxford and Imperial College London. But a spokeswoman says it had been advised by Hesa to include the salaries of its vice-chancellor and its deputy vice-chancellor, both professors, in the calculation. "If these two posts are removed, the university's average salary for its professors is £64,613.92," she says.

The University of Chester says it "does not recognise" Hesa figures that reveal an average salary of £49,583 for its professorial staff. Tim Wheeler, the vice-chancellor, says: "According to the basic scale adopted in the summer of 2006, updated periodically, reflecting the pay scales in 2008-09, the basic professorial salary range is between £49,096 and £52,086, with the average at this level of £51,840." Wheeler adds that Chester has no clinical staff and many professors are working on "fractional appointments" with industry and the public sector, factors that drive down the average salary.

For academics in the springtime of their career, the University of the Arts London is the place to start job hunting. It pays an average of £53,922 across all non-professorial grades. "University of the Arts London has worked hard over the past few years to put in place a pay structure that suitably rewards our high-quality staff and ensures that our students have access to leading practitioners and teachers," a spokeswoman says. "Many of those staff have specialisms that are much in demand in the creative industries, and therefore we need to offer competitive pay rates to attract and retain them."

Non-professorial academics working at Aberystwyth University, however, draw £37,831. A spokesman for the university questions the figure. "We will be looking closely at the data and at the basis on which the returns were made, so as to ensure that there are no inconsistencies," he says.

Negotiations on the national pay award for 2010-11 are already under way, with the five higher education unions submitting a jointly agreed claim for a minimum 4 per cent increase. This is needed not just to keep wages in line with inflation next year, but to cover the gap between cost of living rises and this year's 0.5 per cent settlement, the unions say.

In their formal claim, the unions argue that this year the employers "were calling for pay restraint in the full knowledge that over recent years the mean average of vice-chancellor and principal pay had increased by much greater rates than the vast majority of those employed by the sector". The unions say they will be "studying the forthcoming THE survey closely as it appears that senior management have not been practising what they preached".

Ucea will repeat its argument that heads of institutions who stayed in post in 2008-09 had a rise "broadly in line" with the rest of staff.

An interesting element of the unions' claim is for vice-chancellors and professors to be brought on to the national pay spine, so they receive the same pay increases as the rest of staff. The desire to know just how much is in each other's pay packets continues to be a powerful force in higher education.

The difference between men and women? 14 per cent

The pay data reveal that a gender gap still exists in higher education.

According to figures from the Higher Education Statistics Agency, male academics still earn more on average than their female counterparts. In 2008-09, men took home an average salary of £48,962 across all academic grades, while women had to settle for just £42,721 - a gap of 14 per cent.

But there is some good news. The pay gap is narrowing slightly year on year. In 2007-08, women collected £39,547 while men pocketed £45,809, which meant a pay gap of 16 per cent. More notable is the fact that the difference at the top of the salary range is less marked. In 2008-09, female professors earned an average of £70,670, male professors an average of £75,174, a pay gap of 6 per cent.

Some peculiarities remain. At the London Business School, there is a £36,683 gulf between the average salary for men and that for women. A spokeswoman attributes this to the small number of woman in senior posts.

"While the London Business School continues to be successful in increasing the number of female faculty, many are recruited at junior levels, which accounts for the disparity between male and female salaries. We actively work to narrow the gap. We routinely scrutinise faculty salaries to ensure the school does not discriminate on the basis of gender."

At the Royal College of Art, men earn almost £20,000 more than their female colleagues. A spokeswoman for the RCA explains that the college has a total of 38 full-time staff and that it works primarily with practising artists and designers.

"As all academic staff are included in Hesa's figures, both the rector and pro-rector are also included. This completely skews gender comparison statistics because they are both male," she says.

Ceri Goddard is chief executive of the Fawcett Society, which fights for equality in the workplace. She says the figures for higher education reflect a wider pattern in society.

"It's shocking that 40 years after the Equal Pay Act this is still the case. Young women may be leaving college with higher qualifications than men, but after only four years the men's salaries take over. A large part of this is nothing to do with time out for childcare but straightforward discrimination.

"The current equality bill going through Parliament is a step in the right direction, but we need a whole package of measures including tougher requirements on employers, more flexible working and better paid and more part-time working options."

Clarification: 1 April 2010

We are happy to clarify that Steve Chapman did not become principal of Heriot-Watt University until September 2009, after the financial years covered.

For Northumbria University, 2008/09 was a handover year and the figures include a one-off payment of £93,000 to Kel Fidler in the year of his retirement from office.

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