New report discusses the scapegoating of vice-chancellors’ pay and probes the question of how to fairly set the rate of vice-chancellors’ remuneration

The Higher Education Policy Institute has published a new report, Because you’re worth it: Are vice-chancellors worth the pay they get? (HEPI Debate Paper 33, attached), written by Lucy Haire, Director of Partnerships at HEPI.  

The paper argues the following: 

• UK universities are high-revenue organisations, receiving up to £2.2 billion annually, and have enormous local, national and international influence, so high-quality leadership is essential. 
• Vice-chancellor pay is not a Wild West, but determined carefully by remuneration committees, who draw on guidance such as the Higher Education Senior Staff Remuneration Code and the Code of Governance published bythe Committee of University Chairs (CUC).  
• In 2022, the top three highest earning UK vice-chancellors received £714,000, £542,000 and £539,000 and the average remuneration in 2021 was £269,000. This is more than the UK Prime Minister, but less than institutional leaders of private sector companies with similar revenue. 
• UK vice-chancellors earn less than their equivalents both in the US, where vice-chancellors earned up to $2,509,687 (£1,966,274) a year in 2022, and in Australia, where they earned up to AUD $1,515,000 (£792,700) in 2021. 

The report makes the following seven recommendations to universities:

1. Combat divisive rhetoric by redoubling efforts to increase awareness of the complex roles of higher education leaders. 
2. Strengthen the capability of institutional governing bodies on pay remuneration. 
3. Attract the best candidates by making key documents on remuneration more flexible.
4. Seek a wide range of advice when setting remuneration rates.
5. Develop innovative and flexible strategies to align performance with remuneration. 
6. Encourage a wide range of applicants to apply to leadership positions. 
7. Consider reviewing remuneration rates, as well as terms and conditions, of staff across all roles in the higher education sector.

Lucy Haire, author of the report, said: 

‘Every vice-chancellor I have met in over a decade of working with universities has been impressive. The range and complexity of their impactful work, the challenges they face and especially the relentlessly public-facing nature of the role deserve a lot of credit. While pay should never be the only focus of those who lead educational and research institutions, it should also never be a barrier to attracting the very best. Paying leaders substantial pay packages does not preclude reviewing low pay and poor terms and conditions elsewhere in the sector. It is not a zero-sum game nor a race to the bottom. I hope that this report provides a counter-narrative to the political and media voices who, from time to time, happily whip up a storm about vice-chancellor pay, and that the report offers a little context about how senior pay is determined.’

Isabel Nisbet, former CEO of Ofqual, panellist for the Independent Review of Education in Northern Ireland and university board member, said: 

‘Having served as a lay governor of no fewer than four – very different – universities, I know how difficult it is to strike the right balance in decisions about the starting pay and pay increases for vice-chancellors. This Debate Paper explores the differing positions taken about vice-chancellors’ pay and provides some very informative comparisons. Lay governors have to try to judge what remuneration levels would sustain informed public confidence. We have to think about the views of students and members of staff as well as the need to get the best people to take on the huge and demanding responsibilities of modern vice-chancellors. This paper explores the ground and rightly challenges some of the assumptions that we bring to these debates.’

HEPI Director Nick Hillman said: 

‘This HEPI Debate Paper offers a new perspective by examining the pay of vice-chancellors specifically, the comments on the topic by some prominent political figures and a few snapshot comparisons with other sectors and countries. While discussing a range of opinions, it argues that being over-critical of high pay for vice-chancellors would be counterproductive.’ 

Previous HEPI reports have examined university leadership, for example A University Turnaround: Adaptive Leadership at London Metropolitan University, 2014 to 2018 (HEPI Policy Note 9, October 2018) by Professor John Raftery, Interim Vice-Chancellor of the University of Wolverhampton and former Vice-Chancellor of London Metropolitan University and Turning Around a University: Lessons from personal experience (HEPI Debate Paper 32) by Professor Susan Lea, the former Vice-Chancellor of the University of Hull. Another HEPI report in collaboration with SUMS consulting, Comparative Study of Higher Education Academic Staff Terms and Conditions by Emma Ogden, examines the pay and conditions of academic staff generally.