Universities: Vice-Chancellors’ Pay - Question

– in the House of Lords at 2:59 pm on 12th September 2017.

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Photo of Lord Storey Lord Storey Liberal Democrat Lords Spokesperson (Education) 2:59 pm, 12th September 2017

To ask Her Majesty’s Government whether they plan to bring forward proposals to cap university vice-chancellors’ pay.

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip)

Universities are autonomous institutions and the Government have no wish to set a cap on vice-chancellors’ pay. However, given the investment in our world-class higher education system by students and taxpayers, value for money must be of the utmost priority. Exceptional pay should be justified by exceptional performance, and that is why the Minister for Universities has announced that the Office for Students will act to ensure transparency and justification of senior staff pay.

Photo of Lord Storey Lord Storey Liberal Democrat Lords Spokesperson (Education)

I am grateful for the Minister’s reply. The 2017 survey of vice-chancellors’ pay showed the top eight vice-chancellors earing over £400,000. Similarly, the salaries of chief executives of multi-academy trusts can be counted in hundreds of thousands of pounds. Only today, an education report from the OECD says that teachers are worse off today than they were in 2005. Paraphrasing what the Prime Minister said—that industry fat cats were the unacceptable face of capitalism—does the Minister not consider that some vice-chancellors are the unacceptable face of education?

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip)

There is a mood in the country, and there has been a lot of interest in the press, about vice-chancellors’ pay. That is an obvious point to make. However, as a result of the work that we did on the Higher Education and Research Bill, particularly in this House, we are empowering the new Office for Students to act to ensure value for money in focusing on senior staff pay. This is happening in a number of ways. We are introducing a new condition of registration, requiring the governing bodies of approved fee cap providers to publish key figures so that in future the number of staff paid more than £100,000 per year will be published, broken down into pay bands of £5,000. Also, the names of staff paid more than £150,000 per year, along with the justification for those salaries, will be produced by the OfS, and I think that that is a good step.

Photo of Lord Hunt of Kings Heath Lord Hunt of Kings Heath Shadow Spokesperson (Cabinet Office), Shadow Spokesperson (Health), Shadow Spokesperson (Education)

My Lords, is the noble Viscount confident that that will be effective? My understanding is that just a handful of current vice-chancellors earn less than the £150,000 threshold that he has referred to. Can he confirm that the Government have had a similar scheme in operation for civil servants, whereby Her Majesty’s Treasury has to give approval to any salary above a £150,000 threshold? The figures published by the Government in December 2016 show hundreds of civil servants earning above the threshold. Can the Minister really be certain that the measures announced will be effective?

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip)

We believe that it is absolutely the right course to take. I say again that universities need to be good stewards of their resources: they need to manage in a responsible manner, there needs to be strong leadership, and it is important that vice-chancellors’ pay is restrained. I understand that the average salary for 2015-16 was £234,000. Of course, the salary depends on the size of the institution and the responsibilities. At the end of the day, what counts is whether the pay is right for the responsibilities of the role and the size of the institution. That is one thing that has to be focused on by providers and universities.

Photo of Lord Cormack Lord Cormack Conservative

My Lords, if universities are indeed autonomous—we have in this country some of the finest in the world and we should be proud—surely we should be publishing not naming-and-shaming lists but, rather, lists of those to whom the whole community owes something for the excellence they demonstrate. I put it to my noble friend that it is not the job of government to meddle in these things.

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip)

We do not believe that we are meddling; we are setting down a framework of how we are encouraging universities to operate. As this House will know, the Office for Students is being given extra remits to be able to set the framework to be sure that universities look at how they operate and how they manage a prudent operation.

Photo of Lord Morgan Lord Morgan Labour

My Lords, I speak as a former vice-chancellor. Is it not lamentable that many vice-chancellors use as their defence a kind of cult of personality, with themselves as global superstars? This is at a time when the pay of the average university lecturer has been very poor, to the point that many of them have difficulties with professional mobility and housing, and when the unit of resource per student is going down and many lecturers have been made redundant. Should we not collectively, irrespective of party in this House, condemn this kind of approach and remind our vice-chancellors that universities are a team effort and that they depend on morale and the inculcation of values in which everyone can believe?

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip)

The noble Lord makes a number of good points. It is not just the level of the vice-chancellor’s remuneration that is important—it is that of senior staff as well. It is important that the vice-chancellor’s salary does not vastly exceed that of other staff. The noble Lord alluded to that. I go back to the responsibilities involved. For example, the University of Manchester’s annual income for 2015-16 was £987 million. It runs more than 1,000 degree programmes. There are nearly 40,000 students and 12,000 staff. There are considerable responsibilities involved. I do not want to defend vice-chancellors, but our aim is to put enough pressure on these institutions to ensure that their house is in order—just as with a private company.

Photo of Baroness Garden of Frognal Baroness Garden of Frognal Deputy Chairman of Committees

My Lords, I do not wish to disparage our great universities; they are a source of great pride to the nation. What is the Government’s view on the pension packages of some vice-chancellors? Some of them have very large lump sums and very generous pension payments, as well as additional salary supplements—all presumably paid for out of public funds. Are the Government concerned about this in any way?

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip)

There was a Question in the House the other day about pension schemes, particularly looking at concerns about the deficit. I hope that I addressed those concerns. We have to look at the package as a whole. We are focussing on vice-chancellors’ pay, but the package includes a pension scheme. I am not going to comment as to whether it is generous or not, but it is a final salary scheme. It is important for universities to take account of the whole package for vice-chancellors, including not just the pension but perhaps also the housing that they are in. This has been in the press as well.