Academic unions have embarked on a joint campaign to bring universities and the funding council to account for what they describe as a "massive waste of public money".
The unions claim that about £600 million intended for pay initiatives since 2001 has disappeared into burgeoning human resources departments and pay increases for a very small number of staff.
The Association of University Teachers and lecturers' union Natfhe are using the Freedom of Information Act to force universities to disclose how much of the money set aside for the rewarding and developing staff (RDS) initiative has been spent on staff pay since 2001.
Andy Pike, national official for higher education at Natfhe, said: "It smacks of being a massive waste of public funds. If we find that small amounts have been spent on pay we will refer the matter to the National Audit Office and ask it to investigate the improper use of public funds."
He said that the unions would also discuss the issue with Members of Parliament to ensure that it was raised within the public accounts committee.
Stephen Court, senior researcher for the AUT, said: "We are concerned that so much public money has been given to universities to improve pay but, to date, staff - except in a small minority of institutions - have little or nothing to show for it.
"Our fear is that the money has been frittered away on human resources consultants."
The unions are particularly disappointed that the money has not been used to improve equal opportunities. Mr Court said that the gender pay gap had widened slightly since 2001.
The money in question was announced by David Blunkett, then Education Secretary, in November 2000.
At the time, Mr Blunkett said: "I recognise that staff recruitment and retention, equal opportunities and human resource development are central to providing a world class higher education."
He announced that there would be £50 million in 2001-02, rising to Pounds 170 million in 2003-04 to "support increases in academic and non-academic pay". By 2006 more than £1 billion will have been allocated.
The unions claim that following a consultation by the Higher Education Funding Council for England this money was diverted from increasing academic pay overall into market supplements for specific staff, special initiatives and building up human resources departments.
In a statement Hefce said that the money announced by Mr Blunkett was intended for a number of purposes, including pay.
"It was to recruit and retain high-quality staff, to modernise human resource management in higher education institutions and to deliver improvements in equal opportunities," it said.
Hefce has commissioned an evaluation of the RDS money from KPMG. The evaluation is being analysed by Hefce and no date has yet been set for its publication.
But the Hefce statement said that KPMG had found that the money had led to improvements in human resource management "producing overall better performance of the sector".
Hefce said that KPMG found that there had been a "cultural shift in responding to equal opportunities issues".
The money has also been used to implement the new national pay framework, hammered out by employers and unions last year. KPMG found that 84 per cent of institutions had used it to support the job evaluations necessary for bringing in the framework.
Jocelyn Prudence, chief executive of the Universities and Colleges Employers Association, said: "The sector's human resources capacity and expertise - so critical in delivering pay modernisation - have improved substantially as a result of RDS."
Letters, page 15