On senior pay, the ball is in the sector’s court

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Since taking up my role as Chair of the new Office for Students (OfS) in April this year, I have been inspired by the institutions I’ve visited and the students I’ve met: from the metallurgy lab at Brunel University innovating in the recycling of aluminium and the PhD student from Lahore pushing the boundaries of pure mathematics in Salford to the students at the Royal College of Music focused on entrepreneurship and the passionate student advocate of a subject-level TEF (who had recently masterminded a successful university-wide boycott of the National Student Survey!). Our country is not without its challenges but time spent with this wonderfully-diverse generation of students always instils confidence in the future.

The 2017 Higher Education and Research Act established the OfS to oversee the regulation of the higher education sector in England and prepare it – or, more precisely, enable its institutions to prepare themselves – for the next quarter century. At the moment, the OfS is a shadow body still in design phase. Our outstanding chief executive Nicola Dandridge started work last week. Our formal existence begins on 1 January 2018.

As I said last Friday, addressing the Association of Heads of University Administrators, we must always have our eye on the long term. Golden ages don’t have to be in the past.

Our higher education institutions are already powerful engines of economic growth and social mobility. They help transform cities and regions. They prepare students not just for the jobs of today but for those that don’t yet exist. They conduct the fundamental research which underpins innovation and they expand the boundaries of human knowledge, sometimes purely for its own sake. Their leaders tell me universities and colleges can be even better – and I believe them.

Those who lead higher education need constantly to make sure the public understand this immense contribution – it is vital our universities are understood not just in Whitehall and Westminster, but by students, taxpayers and the wider public. We cannot assume everyone supports or even understands what universities do. Too often, the sector can look detached and complacent. That is a risk.

The current funding regime has largely sheltered universities from austerity; we are on the brink of establishing a sustainable funding system which would underpin continuing growth and success. But if universities make decisions on how money is spent without sensitivity or restraint, they can all too easily look profligate and thus risk undermining confidence in the system.

Currently there is evident scepticism about the pay of some vice chancellors. In his speech at UUK in early September, the higher education Minister Jo Johnson raised this important issue (not for the first time incidentally) and put it firmly on the agenda of the Office for Students for early consideration.

The OfS has a clear duty in law to promote value for money – critical in this era of sceptical taxpayers and students rightly determined to get value for their investment. Senior staff remuneration may be just one significant component of value for money but, as we’ve seen in other sectors, it has major public salience. The OfS will explore how we use data, transparency and benchmarking to enhance value for money across major aspects of university spending, including senior staff remuneration. We will act decisively and unapologetically as necessary to ensure the student (and taxpayer) interest, short, medium and long term.

On this issue of senior staff remuneration, the fact that the OfS won’t formally exist until January next year provides the sector with an opportunity. If its leaders accept that the climate of scepticism is unlikely to change any time soon, it would make sense for them to take action before the OfS is even established. After all, the best kind of regulation is self-regulation.

There are numerous options they might consider.

The Committee of University Chairs plan to update and strengthen their guidance on how vice chancellors’ and senior staff pay is set.  In this context, it makes sense to look at the constitutions of remuneration committees. Vice-chancellors and other sector leaders could work with the CUC, both to toughen the guidance and, as some are already doing, to remove themselves from membership of these committees.

The salaries of senior staff could be made public where this is not already the case. It would also be possible to set out the pay ratios between the highest salaries, the median and the lowest.

Last but not least, as they consider these options, there may vice chancellors who decide that this could be a moment to volunteer a significant reduction in their own salaries. That would be a demonstration, both symbolic and genuine, of their commitment to both value for money and public service. It would make a significant contribution to changing the public debate.

Once the OfS is formally constituted we will decide how to proceed. In the meantime, the ball is in the sector’s court.

By managing this and other immediate issues well, we – all of us responsible for the future of higher education – can help pave the way to the golden age that lies ahead.

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