Claire Sanders analyses the questions surrounding vice-chancellors’ salary hikes
Vice-chancellors’ salaries are becoming an increasingly hot political issue as the lecturers’ pay dispute escalates.
The potent mix of big rises, disparities in wages and the absence of transparent performance measures for university heads is raising questions about how university remuneration committees work and how institutions are governed.
In a week that lecturers took industrial action over poor salaries, figures show that vice-chancellors at the top of the pay table are earning more than those in comparable jobs in the sector — notably heads of higher education funding councils. Overall, in 2004-05 vice-chancellors’ pay increased by 25 per cent on 2001-02 and 8 per cent on 2003-04.
Sally Hunt, general secretary of the Association of University Teachers, said: "Vice-chancellors’ pay is not subjected to the same scrutiny as our members’, and it is unclear what barometers are used to measure their performance."
She added: "We will be writing to the Secretary of State for Education to ask that this matter is investigated so everyone can see just what vice-chancellors have done to warrant the huge salaries the taxpayer is giving them."
The Department for Education and Skills declined to comment, but in the past the Government has been alarmed at the size of pay-offs and pension enhancements for exiting vice-chancellors. In 2002, the Higher Education Funding Council for England issued guidance on this matter.
The Committee of University Chairmen last published guidance for remuneration committees in 2004. David Fletcher, its secretary, said: "Remuneration committees are expected to look at the performance of their vice-chancellor when set against the objectives the university has set itself." He added that the CUC also undertook its own surveys of vice-chancellors’ pay and provided universities with data for benchmarking purposes.
Small, but rewards are big
The continuing inconsistencies in the pay system are puzzling.
Michael Wright, of Aston University, for example, is the fourth-highest-paid vice-chancellor in the UK, with a salary of £243,000. Yet Aston, with a salary bill of about £34 million, is a relatively small university when compared with the larger Manchester and its £261 million wage bill. Furthermore, Aston has had an operating deficit — based on total income minus total expenditure — for the past three years.
Professor Wright’s performance-related bonus of £20,000 in 2003-04 was cut to £15,000 in 2004-05, although he received an overall pay rise of 2.1 per cent.
In 2003, Professor Wright told The Times Higher that his salary for 2001-02 was a "fake figure", including two components of performance-related pay. "Next year will see my salary going down with a bump," he said. But that "bump" did not happen.
David Packham, registrar at Aston, said the university did not comment on individual salaries but insisted: "The size of an institution is a complete irrelevance. If we appoint a head of department, we do not relate their salary to the size of the department."
Disparities in pay can arise in part from the background of the vice-chancellor. Those coming from industry are at the top end of the scale. These include Sir Richard Sykes, head of Imperial College London, who moved from GlaxoSmithKline, and Neil Gorman, Nottingham Trent University’s vice-chancellor, who came from Mars International.
Some of the latest pay changes will surprise staff. Gerry McKenna, the former vice-chancellor of Ulster University, stood down after an investigation ruled that he had a case to answer over allegations of bullying and being affected by alcohol at official university meetings. He was nevertheless awarded a salary of £205,183 in his final year — a 46 per cent rise on 2001-02 and a 6 per cent rise on 2003-04.
An Ulster spokesperson said: "All salary increases for senior staff are regulated by a remunerations committee, which is externally chaired by a senior lay member of the university’s council. There is also other external representation on the committee. The vice-chancellor’s awards, like those of other staff, strictly conform to Hefce guidelines."
The unions are furious that Brian Roper, vice-chancellor of London Metropolitan University, received a salary of £214,000 in 2004-05 — an increase of 13 per cent on last year.
Roger Kline, head of lecturers’ union Natfhe’s university department, said: "This is an outrage after the longest dispute in higher education history when both the Commission for Racial Equality and employment tribunals have criticised the university."
DID YOU KNOW?
- The average salary for the head of an institution is £154,060
- The salary bill for v-cs in 2004-05 was nearly £25 million
- The increase in the salary bill since 2000-01 is £5 million
- Fourteen heads of institutions earn less than £100,000.
Institution heads can earn more than a funding council chief
Vice-chancellors’ salaries are higher than those of other top jobs in the higher education sector.
In his final year as chief executive of the Higher Education Funding Council for England, Sir Howard Newby earned about £170,000. In the previous year he earned about £145,000. His salary will have increased since his move to become head of the University of the West of England. His predecessor at UWE, Sir Alf Morris, earned £189,029 in 2004-05.
Over at the Higher Education Funding Council for Wales, Philip Gummett earned £93,418 in 2004-05 — half the salary of the current Cardiff University vice-chancellor.
The heads of the research councils are similarly modestly paid compared with the heads of universities.
In 2004-05, for example, the head of the Engineering and Physical Sciences Research Council earned about £115,000.
However, a spokesman for the Universities and Colleges Employers’ Association said that the average increase for vice-chancellors last year of 8 per cent was well below the average percentage rise for chief executives in both the public and the private sector.
He added: "In the same year, most academic and support staff in higher education received an overall pay increase of between 6 and 7 per cent."
Nigel Savage, chair of the audit committee at the Higher Education Funding Council for England, said: "Hefce has no control over vice-chancellors’ salaries and no business interfering. However, in terms of corporate governance, it is an issue."
He said that Hefce would need to be satisfied that remuneration committees followed the guidance from the Committee of University Chairmen — they must seek comparative information on salaries and other benefits and conditions of service, and undertake a benchmarking exercise.
In Wales, an audit by the Higher Education Funding Council for Wales on remuneration and severance in Wales is raising questions. The audit will determine whether universities are complying with the principles set out by the Nolan Committee on Standards in Public Life — which include selflessness, integrity, objectivity, accountability and openness.
The audit is looking at the terms of reference and operation of remuneration committees, the link between performance management and target setting and remuneration policies, as well as the use of benchmarks and market comparators for determining salary levels.
Philip Gummett, the HEFCW chief executive, said: "Performance assessment for senior staff is not very highly developed. We are working with remuneration committees so that we can all take stock and reflect on how we work."
Link to table in the Statistics section: Vice-chancellors' pay 2004-05