Is VC pay really spiraling out of control?
David Kernohan is Deputy Editor of Wonkhe
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As soon as the public conversation turns to spending money on higher education, someone will bring up senior staff pay.
Though for most providers the pay of the head of the institution is a drop in the ocean of staff costs, the idea that universities would be far better places if vice chancellors were paid less is one that people of many political persuasions are keen to sign up to. Nobody likes a “fat cat”.
This morning saw The Times give this bandwagon another kick (does anyone else remember Andrew Adonis’ campaigns or is it just me?) with the revelation that
top universities are paying vice chancellors an average of more than £400,000 a year despite calls for restraint in their salaries.
I’m not sure how they got that figure.
For me, I would head to HESA’s Finance collection, and specifically table 11. I’m interested in what it would actually say in the job advert – so for me “basic salary paid after salary sacrifice arrangements” is the go to for me. HESA annualises this (so even if a vice chancellor is only in post two months that year, the salary would show the equivalent of what they would have got for the year).
Looking at the vice chancellor in post at the end of the financial year there are only two institutional leaders that were paid more than £400,000 in the 2022-23 financial year: elite postgraduate provider the London Business School (alumni include former Secretary of State Gillian Keegan) and the Institute for Cancer Research (which is many things, but only sometimes a higher education provider).
The idea of an average salary over £400,000 is even more confusing. For the seven largest universities in the UK, the average salary (for the person in post at the end of the year) was £281,000. For the rest of the Russell Group, it was slightly higher (at £287,000). For the higher education sector overall (287 providers in the data), the average was £183,000.
These are large salaries by the standards of most observers, although if you compare them to private companies of a similar size with a similar level of market volatility exposure it doesn’t look so impressive. Mind you, heads of FTSE200 companies almost never get to wear fancy robes so there is that to consider.
What would concern me would be if there were signs that vice chancellor remuneration was growing substantially above the rate of inflation. Here, I’m using the total value – which reflects all incumbents during the financial year (so you won’t see the averages I talk about above unless you switch the filter back).
It’s difficult to get a meaningful average for the sector as a whole (because a lot of providers have entered the sector in recent years) but the evidence isn’t there that we’ve been seeing inflation busting increases. For the biggest seven UK universities, the average has floated around £345,000 since 2018-19 – though there was a dip in the middle of the subsequent period this represents a real terms decline in value. For the rest of the Russell Group, the story is one of growth, from £293,000 in 2018-19 to £316,000 in 2022-23: although had pay risen by inflation the most recent figure should be £365,000.
Universities have had a tough time financially in recent years – and as a result we arguably have seen some real terms pay restraint among vice chancellors, the opposite of what The Times appears to be claiming. Opinions will differ as to whether this has been enough.
Obviously, these same financial pressures mean that few in HE have seen salaries grow above inflation. The closest we can get to this is plotting cost by FTE for academic and non-academic (horrible term, but the one HESA uses so I’ll keep in here for clarity’s sake) staff as a time series.
I know you’re a smart bunch of readers but just to be clear these figures do not represent an “average salary” – they show the average cost in salary or wages for one FTE staff member, with the grey line showing the average overall cost per FTE. These values could go up or down depending on the number of staff you have, and where they are on the pay scale compared to the previous year.
The thing is the cry of overpaid VCs doesn’t go away as it taps into a sense of unfairness and excess, regardless of what the fine detail of the data says. As David’s comment about the populist / right wing attacks on HE brought home to me, perception / emotional responses or ‘frames’ are often more powerful than rational presentation of the data. When many universities are in financial trouble, staff workloads, pay and conditions have deteriorated, not to mention the general cost of living issues faced by the majority of the public, I’m not sure trying to correct the popular view that VCs are overpaid will receive much of a hearing… There is also an interesting slip when David implies that the salaries are not out of kilter with private companies. But most universities in this country are not private companies, they are charities, and in many ways enmeshed in, and in some cases, formerly of, the public sector….
VCs are some of the most intelligent people in the land and are in charge of highly complex organisations, so they will be highly paid relative to many others. Also, they will have several senior staff reporting to them who do have reference points in the private sector, like Finance, IT, Estates, Marketing, Legal, so this will naturally create a lower threshold. The main issue though is that this is often used as a diversion away from the many other issues facing HE which VCs need to deal with. I’m no fan of excessive pay but equally we need to recognise the demands. I’m not a VC either!
Are you a VC, perchance?
No I’m not, and never will be – but I have worked a lot outside HE and have seen many senior comparative roles, and what the risks and rewards are. In such places, prices can be raised to compensate for cost increases (including salaries, NI, VAT, Pensions, levies) whereas in HE this is very limited. To my knowledge, my VC has had inflation minus rises for several years nor any bonus.
Perhaps we should look at the comparators in the country and internationally, the President of many US Universities is paid a lot more than our VC’s, similarly those running large companies, though taking the size of UK Universities how many could claim to be large company sized? And whats good for the Goose (VC) should be good for the Gander (staff), my industrial comparators are paid 30-40% more too, where’s MY pay increase to match?
Sure, but the US is a far richer country than the UK so that particular comparison is of little relevance. We’ve been declining so much this century that we’re now poorer than most countries in Western Europe – where as far as I am aware university presidents do not earn anything like a UK VC salary. A more appropriate comparison might be with our peers among mid-income European countries e.g. Czechia, Slovenia or Cyprus. That’s why VC salaries, even of nearer £200K than £400K, look unjustifiable to most both outside and inside the sector – this is a country full of overworked people whose labour is, except at the top, seriously undervalued.