For-profit university director pocketed £1.6 million

Office for Students asked to tackle huge pay awards given to leaders of private providers

January 18, 2018
Puffin with fish in beak
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Enormous bills: ‘Taxpayers who are footing the bill should know who is drawing huge salaries for running small institutions and why’

England’s new higher education regulator has been asked to explain how it will curb high pay at for-profit universities after it emerged that the director of a private institution was paid almost £1.6 million in a single year.

While vice-chancellors at leading UK universities have faced fierce criticism over their pay in recent months, the enormous remuneration deals found at several for-profit higher education institutions, which receive millions of pounds via taxpayer-backed tuition fee loans taken out by students, have gone unnoticed.

The UK’s leading two for-profit universities – the University of Law and BPP University – have yet to release financial details for the last academic year, but previous accounts available at Companies House show that pay for some university leaders was far higher than the executive salaries found in public institutions.

One director at the University of Law – which received £12.4 million from postgraduate study loans in 2016-17, more than any other institution apart from UCL – was paid £784,000 in 2015-16, as well as £18,000 in employer pension contributions, taking his overall remuneration to £802,000.

However, the highest-paid director at the University of Law in the previous year, 2014-15, pocketed £1.57 million in the form of an “exit bonus”. Four directors also shared a bonus worth £3 million after the university’s sale by Montagu Private Equity to Lake International, a subsidiary of Global University Systems, a Dutch-incorporated firm, in June 2015, accounts show.

At BPP University – whose former vice-chancellor Carl Lygo is now an Office for Students board member – the highest-paid director received £645,000 in 2015-16, almost double the £331,641 paid on average to Russell Group vice-chancellors in the last academic year.

However, the £645,000 salary did not include any payments made to BPP directors by parent company BPP Holdings Ltd, which amounted to an additional £1.97 million that year, its accounts state. The highest-paid BPP Holdings director received £988,000, up from £830,000 in 2014-15, separate accounts show.

A spokeswoman for BPP, which received about £5.3 million via the Student Loans Company in 2016-17, said that its vice-chancellor, Tim Stewart, “has a current salary of £240,000”, but declined to comment further on how much previous directors or its former vice-chancellor were paid.

A University of Law spokesman also declined to say how much individual directors were paid in the past, but said that “previous pay arrangements relate to a period covering the sale of the university and the departure of a number of executive staff”.

“The university is committed to transparency in salary information and will move in the future to publishing this on the same basis as publicly funded universities,” he added.

Sally Hunt, general secretary of the University and College Union, said that the figures show that on the issue of senior pay and perks it was “even worse at private colleges” than in public institutions.

“Taxpayers who are footing the bill should know who is drawing huge salaries for running small institutions and why,” said Ms Hunt, who added that they “should be forced to print details of leaders’ pay and the rationale behind the types of pay deals that make the recent excesses in our established universities seem small”.

Gordon Marsden, Labour’s shadow higher education spokesman, said that the OfS’ promise to crack down on pay and perks given to university leaders should apply equally to for-profit institutions. “I cannot see any reason why private sector institutions receiving student loan funding should not be subject to the same rules as public universities,” said Mr Marsden.

Asked how the OfS would tackle the issue of high pay at for-profit universities, Nicola Dandridge, its chief executive, said that it was time for “institutions, remuneration committees and vice-chancellors to show leadership on this issue” and, if they did not, “the Office for Students will have to carefully consider how best to intervene”.

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