Jo Johnson threatens English v-cs with OfS fines over pay

Minister to set out plans for new regulator to ‘use its powers’ on senior pay in UUK speech

September 7, 2017
Jo Johnson smiling
Source: Alamy

Jo Johnson will step up his calls for “restraint” in vice-chancellors’ pay by setting out instructions for England’s Office for Students to “use its powers” on the issue, including the potential use of fines.

The universities minister was due to set out his plans in a speech to vice-chancellors at the Universities UK conference at Brunel University London on 7 September.

Meanwhile, Janet Beer, the University of Liverpool vice-chancellor who is the new president of UUK, was set to call on the government to consider reintroducing maintenance grants for the poorest students and reducing loan interest rates for low and middle-earners in her speech.

Mr Johnson will instruct the Office for Students, the new regulator for the English sector becoming fully operational in April 2018, to “insist all universities justify any vice-chancellor pay over £150,000 as part of their condition of registration,” according to the Department for Education. If an institution fails to do this, “then the OfS could use its powers to address this, including imposing fines”, the DfE adds.

According to Times Higher Education’s comprehensive data on vice-chancellors’ pay, only seven English institutions paid their leaders a salary below that level in 2015-16.

The OfS will also issue new guidance on senior staff pay, including on the “role and independence” of remuneration committees, and “require” institutions to publish details of all senior staff earning more than £100,000 per year.

Mr Johnson’s speech is likely to bring suggestions from some in the sector that he is asking the OfS to overreach the powers granted to it in the Higher Education and Research Act, which established the new regulator. This could prove a major flashpoint over university autonomy before the organisation even begins operation.

Mr Johnson will also urge institutions to develop their own remuneration code, which could “include the publication of a pay ratio of top to median staff pay, and an explanation for any top pay increases that are greater than increases in average pay across the institution,” the DfE says.

The chief executive of the OfS, Nicola Dandridge – who frequently defended v-c pay in her former role at UUK – and chair, Sir Michael Barber, “have chosen voluntarily to cut their own annual salary by 18 per cent and 10 per cent, respectively, which equates to a combined reduction of more than £40,000”, according to the DfE.

Mr Johnson was due to say: “The debate over student finance has, rightly, increased public scrutiny of how universities spend the money they receive from fees.

“When students and taxpayers invest so heavily in our higher education system, excessive vice-chancellor salaries send a powerful signal to the outside world.

“Greater restraint is required and, by independently volunteering big pay cuts themselves, Sir Michael Barber and Nicola Dandridge have shown true leadership.

“Exceptional pay can only be justified by exceptional performance, which is why I will ask the new Office for Students to take action to ensure value for money and transparency for students and the taxpayer.”

The DfE will launch a public consultation in the autumn seeking views on the OfS regulatory framework, including the new measures outlined in Mr Johnson’s speech.

Professor Beer was due to say in her speech: “It is understandable that high pay is questioned and it is right to expect that the process for determining pay for senior staff is rigorous and that the decision-making process is transparent. It is also reasonable to expect that decisions are explained and justified.

“I understand that our colleagues at the Committee of University Chairs are considering what further guidance could be shared with our governing councils to support them in meeting these important expectations.”

She was also expected to outline three areas of reform to the funding system that UUK is seeking, an approach agreed at the institution’s board meeting this week.

UUK “would like to work with [the] government to consider the option of providing targeted maintenance grants for those most in need of this support”, she was expected to say.

Professor Beer was set to add that “the government should consider reducing the interest rate payable, not for all, but specifically for low and middle-income earners through changes in earning thresholds to which interest rates apply”.

And she was also expected to say that “we need to acknowledge that the way the current system is perceived by students, their families and by graduates is problematic. As university leaders, we need to do more to ensure that benefits of the system we have in England are better understood.”

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