For-profit colleges in the UK gave their leaders huge pay packages as the coronavirus pandemic hit.
Analysis of financial accounts published by three of Britain’s largest private higher education providers – the London School of Science and Technology (LSST), BPP University and BIMM Institute – shows that their directors earned more than some of the UK’s highest paid vice-chancellors last year thanks to generous awards of pay, dividends and company shares.
At the LSST, a college chain with seven campuses across London, Luton and Birmingham, directors Syed and Hassnain Zaidi received £920,000 in 2019-20, of which £650,000 was dividends and £270,000 remuneration.
In the previous two years, Mr and Mrs Zaidi received £688,000 and £519,000 in dividends and pay from the college, which now charges annual tuition fees of up to £9,250.
Overall, the school, whose students received £2.9 million in tuition fee loans and £7 million in maintenance support in 2019-20, recorded an after-tax profit of £5.9 million on its £27.6 million turnover that year.
At BPP University, which enjoyed a 19 per cent profit margin (£17.9 million) on its £94 million turnover, vice-chancellor Tim Stewart received £372,985 in salary, bonus and benefits, although its unnamed highest paid director also received £294,000 in qualifying services as part of £1.2 million paid to directors.
The university’s owner, BPP Holdings, also paid £510,000 to an unnamed director who is also due £1.2 million under a long-term incentive plan, accounts show.
In its accounts, BPP University, whose students claimed £10.2 million in postgraduate loan support that year, and its holding company said they received £1.3 million in government coronavirus grants.
At BIMM Institute, which has five UK music schools and received almost £28 million via student loans, its seven directors were paid a total of £962,362 in 2019-20, of which the highest paid director received £242,458, according to its holding company’s accounts.
The financial statements also state that shares and loan stock of £11.2 million was due to the directors at the year end, up from £5.3 million in 2019. In November 2020, the Sovereign Capital-owned company was sold to an investment firm, with the college group later incorporated in Luxembourg.
The bumper payout followed controversy over high pay for university vice-chancellors, despite some taking pandemic-related pay cuts. Leaders of Russell Group universities were paid on average £386,000 in 2019-20, according to a Times Higher Education analysis.
Jo Grady, general secretary of the University and College Union, said there was “no justification” for the generous allowances to institutional leaders.
“Staff are rightly tired of the hypocrisy from senior staff when it comes to pay,” said Dr Grady. “It’s still clearly one rule for those in the classroom and another for those in the boardroom – the lack of self-awareness from university leaders when it comes to their own pay is an embarrassment for the sector.”
In a statement, the LSST said directors’ dividends accounted for just 2.4 per cent of revenues and pay only 1 per cent.
As the college’s activities were “growing in size every year”, directors’ remuneration and dividends were “reducing when compared with the growth level” and “are at a fair and reasonable level”, it added.
“Dividends are not remuneration; they represent a return on the shareholders’ investment,” it continued, pointing out that student satisfaction had increased in 2020 and that the college was “performing a constructive role in widening participation in local communities”.
BPP declined to comment and BIMM did not respond to THE’s enquiries.
