Universities could face 'significant' fines over vice-chancellor pay packages, regulator warns

Universities could be fined for giving vice-chancellors unjustifiably high salaries under new rules from the regulator.

Institutions will be forced to publish the full details of their bosses’ pay packets to the sector’s regulator, the Office for Students, and they’ll have to justify six-figure salaries and benefits.

If a university fails to comply, or fails to make a convincing case for the salaries, then “significant” financial penalties could be imposed on them, the Office for Students has warned.

Universities will have to provide the ratio between vice-chancellor pay and the pay of other staff, as well as the number of employees with a salary of more than £100,000 a year.

It comes after vice-chancellors’ salaries and expenses have been in the spotlight in recent months.

Sir Michael Barber, chair of the Office for Students, told The Independent that the regulator will look for packets that “stick out like a sore thumb” when deciding whether to intervene in the coming months.

His comments came just days after it was revealed a Bentley-driving vice-chancellor, who has defended high salaries of university leaders, was awarded a £66,000 pay rise in the last academic year.

George Holmes, head of the University of Bolton, was paid £290,215 in 2016-17, up from £224,300 the year before – a rise of nearly 30 per cent.

Speaking to The Independent, Sir Michael called on universities to be conscious of pressures on public sector pay, as well as challenges communities face, and to “act with restraint”.

When justifying salaries under the new requirements, universities will need to explain what their boss has achieved – and how their performance was judged by the remuneration committee.

Sir Michael said: “We believe that transparency and the requirement to justify the vice-chancellor’s pay and the ratios will put pressure on universities to act responsibly. But secondly, it may be that when we get that information some vice-chancellor’s pay will stick out like a sore thumb.

“Like a modest size university, and you are regional and you are not playing globally, and your pay is the same as a top university competing in the global market for research. So some things will stand out like a sore thumb. And if they do, we have powers to intervene university by university.”

His comments come after a voluntary code of practice – set up by the Committee of University Chairs – was condemned as “woefully inadequate” earlier this month.

A vice-chancellor must not be a member of its university remuneration body, the guidelines said. They were introduced after the University and College Union revealed that many vice-chancellors either sit on, or attend, the committee that sets their salaries.

Sir Michael told The Independent: “Vice-chancellor pay is a very visible part [of a university] and you can do a lot of reputational damage. So they should be very conscious of the context we are in – of the downward pressure that has been on public sector pay for several years now and of all the challenges that some communities are facing – and people should act with restraint.”

Nicola Dandridge, chief executive of the Office for Students, added: “Students and taxpayers need to be confident that our university leaders are paid appropriately and deliver value for money. High levels of pay that are out of kilter with pay levels elsewhere and which cannot be justified are unacceptable.”

The Independent has contacted Universities UK – a representative organisation for higher education institutions – for comment.