In 1995 the National Audit Office prepared a report for the Public Accounts Committee on severance payments in the publicly funded education sector after a row about the size of such payments. The current debate about the salaries paid to vice chancellors has an echo of the earlier concern with the methods used at the time to fund severance payments to top staff in our universities. Of course, as with most companies, there are now better governance arrangements and independent remuneration committees, designed to prevent the very political row that is currently underway about how much vice chancellors should be paid?

The business case is probably along the lines of that in order to attract top quality leaders you need to pay top salaries competitive with other parts of the world. This argument has been used by UK plc companies for many years, so the business people on remuneration committees can hardly object if university leaders advance the same argument in an increasingly global marketplace for higher education. There is also another argument that by becoming a vice chancellor you may forgo the success in your academic field, whether a possible Nobel or similar prize; a top selling text book or even just the satisfaction of teaching and research in your chosen field.

The alternative view that nobody in public service should be paid more than the Prime Minister usually ignores the non-salary benefits of a house in London and in the country and a non-contributable final salary pension that make up the total remuneration package of the leader of the government and just concentrates on the basic salary.

Where vice chancellors have probably made a mistake over the past few years of pay restraint is not to adhere to the same level of salary growth as the rest of their staff. If you are going to widen the differentials you need a cast iron public relations exercise in advance; to do so after the event always looks defensive and self-serving. Any head of human relations that doesn’t make that point clear probably isn’t reading the runes correctly.  Just saying the job is harder or more demanding isn’t enough?

The same is true for Multi-Academy Trusts where salaries of chief officers have risen over recent years, as I pointed out in a previous post ‘What is a CEO worth’ some time ago. The contrast between the pay of the chief executives of two of the larger MATs is around a couple of hundred thousand pounds. Is one underpaid?

The really interesting point with the university vice chancellors’ pay story is, however, that this time around, unlike in the 1990s, Ministers haven’t sought to pass the issue to the NAO and then the PAC, but have waded in directly. I assume that they see this as a way of diverting attention from other more concerning issues and putting the government on the side of the lecturers. Realistically, they are trying to close a stable door sometime after the horse has bolted and are only likely to catch universities that hadn’t adjusted their VCs pay to market conditions. Perhaps there should be performance related pay for senior university staff, but as large institutions they probably have to pay the heads of their professional service department competitive salaries and would you want the chief finance officer paid more than the vice chancellor? An interesting question.