It’s difficult at present to have a rational debate about VCs’ salaries and senior pay. In part that’s because there are two competing narratives.
For those of us that know the sector the story is a world class sector, governed by a cadre of highly experienced lay governors with a wealth of knowledge and experience of the outside world giving their time freely, all with the view of contributing to society. Its dedicated academics and professional service staff are transforming the lives of students and improving the economy by pursuing ground breaking research and innovation.
The other perspective, from a context of years of austerity, welfare cuts, and a decline of public services – is a privileged sector, defending its own agenda, whilst at the same time putting significant debt burdens on students and sitting in their isolated ivory towers.
It’s also a confusing message coming from government – on the one hand market competition, deregulation and freedom to innovate versus public accountability, ministerial challenges and comparison with the public sector.
In that atmosphere trying to justify VC pay and benefits is challenging to say the least. To be fair it’s probably impossible to objectively justify anyone’s salary. Do I think Gary Lineker is worth more than 5 times a VCs salary for presenting Match of the Day? Well, much as I respect Gary for all he has done for Spurs and injecting a real sense of humanity into policy debates on refugees – no. Then again, do I think VCs are fairly paid when I consider what nurses, care workers and others vital to the functioning of society get? Probably not. So, it depends on the comparisons.
We all know that we operate in a global market and our senior pay is significantly less than many of our international competitors. Comparisons with private industry are also interesting– not with FTSE100 – they are completely different with levels of pay that are unbelievable – but there are companies that get significant income from public sector funds.
For example, the RM plc group delivers a range of solutions and services to meet the specific needs of educational users – mainly UK schools. It has a turnover of £167M employing 1800 people. The CEO there gets £655k total emoluments. Does that give us any real feel for an effective comparison with a VC? Well it does not suggest they are totally out of order – but the comparison still does not quite work.[1]
Jo Johnson clearly was correct in stressing “it is important to remember that universities are generally still charities with a not-for-profit public service mission and that, when it comes to VC remuneration, finding the right benchmarks is essential”.
What I am clear on is that using arbitrary benchmarks such as the prime minister’s salary to assess and control the pay of VCs or any other roles is, as the Hutton Review of Fair Pay in the Public Sector found in 2011, generally simplistic, flawed and damaging.
Personally, I think we need to look more to the use of pay multiples as recommended by the Hutton Review. Here VC pay is about 6.4 times average earnings in the sector, according to the University and Colleges Employers’ Association (UCEA) figures. This compares reasonably with local government, and the civil service which is 11.1.
So, I’m not sure there is a real problem with levels of pay but there is a problem of perception – and here we do not help ourselves. I think there is more work to be done to set out how we have arrived at the decisions we have made and we need to make that information accessible. As an example, CUC has recently carried out an examination of information on senior pay on institutional websites – the quality is variable and in most cases difficult to locate. If you want to test this ask a student what they can find out from your website.
One thing I am clear on is that the clear majority of Remcos work diligently and carefully and have nothing to worry about if they set out why they have done what they have done – a proper transparency statement, easily accessible also gives an opportunity to demonstrate both the complexity of and the value delivered by our highly complex and important institutions. I also do not believe there is any evidence that VCs sit in on discussions that affect their own pay.
However, the challenge from the minister is, how can institutions and the sector ‘ensure that vice-chancellor pay levels are fair and justified, and that governance arrangements around remuneration are up to date’.
CUC will play its role in that – there is already a good set of guidance out there, but no doubt we can improve it – so we’ve initially agreed on a major debate at our Plenary in October – where we will discuss the key issues and explore some of the tough questions around benchmarks, transparency, bonuses and the governance of remuneration.
If CUC members agree on the need to develop more guidance then we’ll work collaboratively with colleagues in the sector to develop that guidance in a way that is practical and helpful. I am under no illusion that this will make all the headlines go away, but maybe we can have at least a better informed public debate.
[1] For more details see the blog post written by Mike Ratcliffe: ‘Chief Executive’s Pay: a provocation’