The new framework for academic' pay will help universities to address their shortage of economists, engineers and lawyers, MPs were told this week.
Drummond Bone, president of Universities UK, told members of the education and skills select committee that the new pay framework agreement would allow institutions to be more adaptable to changes in recruitment patterns.
Professor Bone, vice-chancellor of Liverpool University, said:
"Economists, engineers and lawyers are extremely difficult to come by.
There's a shortage of them in our universities and increasing competition for them from the US.
"It is also difficult to recruit them from other countries because the UK is so expensive. The new framework agreement introduces a greater degree of freedom so that universities can respond to changes in the market."
The framework agreement is the biggest shake-up of academic pay and career structures for 40 years and must be implemented at every institution by next August. It will create a single pay spine for all staff, from porters to professors, in old and new universities.
Diana Warwick, UUK's chief executive also gave evidence at the Select Committee. She said the agreement had come at an opportune time.
She said: "The degree of flexibility the agreement gives will be useful.
Universities are in competition with organisations that pay a great deal more for academics."
There was also discussion about ministers' proposals to introduce a new clearing system in 2008, and to end the use of predicted A-level grades in admissions from 2010.
The 2008 changes, which would also see candidates apply to fewer institutions, would be the first step towards a system of post-qualification applications (PQA).
David Chaytor, Labour MP for Bury North, asked Baroness Warwick and Professor Bone whether predicted A-level grades should be replaced with PQA.
They told the committee that the time needed to interview potential students for medical school, for example, meant that the start of the academic year might have to be delayed by at least two months with PQA.
This would deter overseas students and students from deprived areas, they said.