Pay packets of excellence

Many universities now have turnovers to match those of major businesses, and new figures show that academics are being remunerated comparably with or even better than professionals in the private sector.

Figures collated by the Higher Education Statistics Agency (Hesa) show that UK academics on average earned a healthy £43,486 a year in 2007-08. The Hesa data show the implementation of the new pay framework introduced over the past three years, meaning that academics enjoyed a 5.7 per cent increase from an average salary of £41,128 in 2006-07. By comparison, British workers nationally saw pay rises of 4 per cent.

The average professor took home £69,870 in 2007-08 compared with £66,282 the previous year - an increase of 5.4 per cent. Further down the scale, salaries rose more quickly. Researchers pocketed an average of £31,915, up from £30,161 in 2006-07, a 5.8 per cent rise. Meanwhile, senior lecturers picked up £46,319 and lecturers £38,105.

This puts academics ahead of some of their professional counterparts, a situation that would have been unthinkable just a decade ago. Figures from the Office for National Statistics (ONS) for 2007-08 show that professors on average took home more than lawyers and solicitors (£54,979), and lecturers more than quantity surveyors (£36,301) and secondary school teachers (£32,883). Moreover, academics also see the additional benefits of about 35 days' annual leave and a final-salary pension scheme.

But vice-chancellors have done even better, as figures collated and audited by accountants Grant Thornton on behalf of Times Higher Education show.

The average university head earned £193,970 (including benefits but not pension contributions) in 2007-08, a 9 per cent increase on the previous year, and a steeper rise than in the previous two years.

The pay pot for vice-chancellors went up to more than £30 million. The average pension contribution for a vice-chancellor was £26,129, compared with £22,452 in 2006-07 - a 16.4 per cent increase.

For the first time, vice-chancellors earned more than the average private sector chief executive. ONS figures show that in 2008, directors and chief executives of major organisations on average earned £187,213. However, when considered in terms of institutional turnover, industry bosses were still paid more (see box right).

Also, the Hesa figures do not include the annual 3 per cent increment most academic staff would have received in that year.

Jocelyn Prudence, chief executive of the Universities and Colleges Employers Association (Ucea), says once this increment is taken into account, the average annual pay rise for an academic increases to 9 per cent, paralleling that enjoyed by vice-chancellors, which Ucea places at 9.6 per cent. But this situation is set to change. The numbers reflect the economic climate of more than 18 months ago - a pre-credit-crunch world. After years of plenty, famine could follow.

"With a very different outlook ahead, we would not expect to see this trend continue," Prudence says. "Stability and sustainability of institutions remain of paramount importance during this time of economic uncertainty."

Sir Colin Campbell, former vice-chancellor at the University of Nottingham, took home the largest pay packet in higher education in 2007-08. He earned £585,000, an increase of 89.9 per cent on the previous year's figure.

A Nottingham spokeswoman explains the context for this substantial rise.

"The 2008 emoluments comprise a basic salary of £0,000, plus a payment in lieu of employer's pension contributions of £38,000 - these contributions to the Universities Superannuation Scheme (USS) for the vice-chancellor had already been made.

"In addition, Sir Colin received payment to adjust for the previous year's unmade pension contributions of £180,000, and was awarded a payment of £135,000, reflecting the consequences of his contract ending before normal retirement age."

At Imperial College London, Sir Richard Sykes and Sir Roy Anderson, his successor in July 2008, took home £429,000 between them. A spokeswoman for Imperial says a globally renowned university with a turnover of £600 million must attract and reward excellent leadership.

"An organisation this complex requires a leader with the knowledge, experience and vision to meet the challenges of the higher education market today. The demands of this job are high and the salary will reflect that."

At Thames Valley University, Peter John appeared to earn £291,000, an increase of almost 81 per cent on the previous year. But a spokeswoman for the institution says the figures represent salary, benefits in kind and national insurance contributions for both John and his predecessor, Geoff Crispin.

"There was an overlap in payment periods of six months," she says. The university adds that John earned a basic salary of £175,000, excluding benefits and pension payments.

The smaller and more specialist colleges paid the lowest salaries to their leaders. The worst paid was Mark Featherstone-Witty, principal of the Liverpool Institute for the Performing Arts, who earned £102,457.

A spokeswoman for the institution says that senior salaries are determined by a remuneration committee and benchmarked every three years, with cost-of-living pay rises awarded in between.

"These were last benchmarked in 2006 and are due to be re-evaluated this summer. It may be that other institutions review differently or simply that we are at the end of our last cycle. We want to pay fair salaries and also attract the best staff," she explains.

"The range of salaries reflects the diversity of institutions in the ecology of higher education," says Alice Hynes, chief executive of GuildHE, the representative body for higher education colleges in England and Northern Ireland.

"These payments are well deserved - I see first-hand the hard work and commitment heads give to ensure the success of their institutions. They also contribute to the infrastructure of various communities within higher education and beyond."

Within GuildHE, many senior salaries have increased. Institutions that have acquired university or university college status possess higher levels of academic autonomy, which has been recognised by pay increases.

Although the University of Wales, Lampeter paid Robert Pearce, its former vice-chancellor, a comparatively small basic salary of £121,901, he received the highest pension contribution in the sector, at £172,056. He retired in 2008, so the contribution includes the USS retirement funding charge.

The largest drop in salary - almost 30 per cent - was seen at the University of Wales, Newport. This was also explained by a change at the top. In 2007-08, two vice-chancellors were on the payroll.

"We actually had two vice-chancellors - one who was retiring due to ill health and one incoming," a spokesman for Newport says. "The following year we had just one vice-chancellor, so it looks like there was a big drop."

David Fletcher, a spokesman for the Committee of University Chairmen (CUC), points out that although the overall cost of remunerating vice-chancellors seems huge, it represents only 0.2 per cent of higher education's total staffing costs.

"These remuneration packages reflect what it takes to attract, retain and reward talented individuals undertaking demanding roles as chief executives of multimillion-pound, world-class organisations," he says. "Change in the overall rate of pay for vice-chancellors and principals in 2007-08 is much in line with the increases that staff in the sector have received during the same timescale."

Diana Warwick, chief executive of Universities UK, agrees. She says universities need to ensure they are recruiting and properly remunerating "individuals able to run complex, multimillion-pound organisations, which are operating in an increasingly competitive global market".

"They lead a highly successful sector, which is worth more than £45 billion a year to the UK economy," she says. "That success can also be seen in the high satisfaction rates in the National Student Survey (NSS) for 2008, and the excellent outcomes of the most recent research assessment exercise."

The NSS showed that students' overall satisfaction in UK higher education increased from 81 per cent in 2007 to 82 per cent in 2008, and in the RAE, 54 per cent of submissions from across the sector were judged 3* or 4* - "world leading" or "internationally excellent".

"Vice-chancellors' remuneration levels were also comparable with chief executives of public-sector bodies over that period," Warwick adds.

Nevertheless, change is coming. "We're aware we are now in a different economic climate and higher education institutions are facing the same economic uncertainties as everyone else," she says.

But Sally Hunt, general secretary of the University and College Union, says the figures are worrying given the prevailing economic climate.

"At a time when universities are pleading poverty and asking staff to exercise restraint or risk losing their jobs, it is rather unfortunate and perhaps a little distasteful that vice-chancellors have enjoyed pay increases almost double those of the rest of the academic community.

"These rises are from the middle of a three-year pay deal that we were told was on the brink of affordability. That those at the top were pocketing twice the pay rise they begrudged staff at the time is extraordinary. It should not come as a surprise that staff are sometimes sceptical when their 'leaders' ask for belts to be tightened," Hunt says.

A closer look at the statistics reveals a worrying trend. Despite efforts to address the problem, a gender bias still exists in academia (see box, page 45).

Perhaps unsurprisingly, the Hesa figures reveal that academics employed at research-intensive institutions earn more than their counterparts at new universities.

In 2007-08, an average Russell Group academic took home £44,210 a year, while those working at Million+ institutions had to be satisfied with £41,407. Yet the 2008 RAE exposed many "pockets of excellence" in post-1992 universities. In this light, perhaps the pay picture will look rather different in two years, providing post-92 research stars are not poached by the elite.

London Business School paid its staff the highest average salary, head and shoulders above the rest of the sector at a staggering £138,574 a year, plus the highest salary at the professorial level - £177,522.

"London Business School competes in a global market for its faculty and seeks to apply worldwide conditions of service and remuneration to attract the best business and management thinkers," says a spokeswoman for the institution.

Among the major universities, the London School of Economics also paid highly, offering an average salary across all academic grades of £54,562. The smallest and most specialised colleges paid the lowest average salaries across all grades.

Middlesex University lags behind the rest of the sector, paying its academic staff an average of just £36,806 a year. The institution declined to comment on the figure. Thames Valley University staff did not fare much better: they took home £37,229 on average.

"The statistics collected show the overall average salary for academic staff," a Thames Valley spokeswoman says. "As a university we are quite unique in that we are a big provider of further as well as higher education. We employ a large number of lecturers, so the overall average salary of our academic staff is likely to be a lot lower than other institutions employing more staff at senior levels."

But many new universities reward their staff handsomely. Bucks New University paid slightly more than the national average and was the most generous of the Million+ institutions, offering staff an average of £43,541 a year. The university came top of the Halifax-Times Higher Education quality-of-life index published last year, partly because its salaries were higher than the UK average.

Ruth Farwell, vice-chancellor and chief executive of Bucks New University, says: "We recognise that salary is one of many reasons why employees are attracted to a particular institution. Academic employees are attracted by factors such as a commitment to quality teaching and work-life balance, and we are fortunate to be able to offer a good package.

"Our employees have been central to our success so far. Rewarding them is critical to the success of the university, and so we're pleased to hear that remuneration for our academics remains competitive among comparable institutions in the sector."

Among the Russell Group, at first glance it seems that the University of Oxford paid the lowest average salary at just £40,829 a year, but the nature of joint appointments at the institution, where pay is split between Oxford and its colleges, gives a misleading impression.

Closer analysis shows a significant jump between the salaries of senior lecturers and professors at a number of universities. Aston University, known for its Business School, had the highest gap in income - an average leap of £36,151 between the two grades.

While a senior lecturer took home £48,609 a year, a professor earned £84,760. A spokesman for Aston says: "We want to retain and reward dedicated staff and we have introduced a number of staff initiatives and a performance-related pay scheme, which is ... not used at many universities.

"Last year, for example, the grade for senior lecturers was expanded by adding six discretionary points to ensure we continue to recognise achievement and foster progression."

Young researchers starting a career in the arts in London found themselves better off than their counterparts in the rest of the UK. In 2007-08, the University of the Arts London paid the highest salary to its researchers in the subject, £40,902.

"The innovative work undertaken by our researchers advances scholarship in art, design and media to inform learning and teaching, and goes a long way to ensuring the university remains at the forefront of arts research, education and practice," says Keith Bardon, pro rector for research and enterprise at the University of the Arts London. "It also underpins knowledge transfer and supports a range of partnerships with creative industries."

In contrast, researchers at the University of Wales, Newport took home about half that, with a pay packet of £20,599 a year. A spokeswoman for the university says this is because the data include research assistants alongside researchers. This is likely to become more transparent when new grade tables are introduced by Hesa next year.

"The university has a small number of dedicated researchers leading major projects and benefits from the excellent work of its research assistants," she says.

Those already struggling on lower salaries in the sector are unlikely to take comfort from the 2009 pay negotiations set to begin at the end of the month.

In two years the economy has soured, and healthy pay rises in the public sector are likely to be a thing of the past.

"Everyone is conscious of the present economic climate - the pressures will be equally felt by the higher education sector," says John Porter, chair of the GuildHE Governance Executive Network. "The pay outcomes during this next period will no doubt reflect that financial context."

The CUC's Fletcher concurs. "We are all aware that the sector is not immune from the economic uncertainty facing us all at this time and we would expect to see a different pattern of remuneration ... in the year ahead," he says.

Vice-chancellors are already talking about setting an example. Two university heads have mooted the possibility of accepting a pay freeze next year. Politically, it is good to be seen to be sharing the pain. Although pay packets in the sector are healthy today, they are unlikely to stay that way.

LIKE FOR LIKE, V-CS STILL RECEIVE SLIM PICKINGS

For the size and scope of their institutions, university heads are comparatively low paid. While vice-chancellors now earn more than the average chief executive of a private sector company, averages distort the true picture.

When compared with those managing organisations with similar-sized turnovers, vice-chancellors still see slim pickings.

Russell Group universities pay their vice-chancellors a premium for managing research-intensive and internationally renowned institutions.

Their salaries are higher than the overall average across the sector, but this represents the complexity of their jobs.

At the University of Edinburgh, Tim O'Shea earned £229,000 in 2007-08, including benefits but excluding pension contributions. The university employs 7,691 staff and has a turnover of more than £555 million a year.

As a point of comparison, consultancy firm Mouchel (which works with public bodies to boost efficiency and drive down costs) is slightly larger than Edinburgh in terms of employees, but has a comparable annual turnover of £600 million.

But Richard Cuthbert, chief executive of Mouchel, takes home £410,000 a year, almost twice O'Shea's wage.

THE GLASS CEILING IS STILL UP THERE

Figures from the Higher Education Statistics Agency show that there is an enduring gender disparity in the higher education sector when it comes to salary. The average male academic income across all grades was £45,809 a year in 2007-08, compared with the average female income of £39,547.

But when analysed more closely, it appears that the averages mask a more complicated picture.

The figures are distorted by the fact that there are still many more men in the most senior academic positions than women. Grade by grade, most academics earn the same salary for the same job, regardless of their gender.

Nevertheless, some alarming figures persist. London Business School paid its men over £44,000 a year more than its women.

A spokeswoman for the institution explains that efforts to tackle gender inequality could not yet be declared a complete success.

"While London Business School has been successful in recent years in increasing the number of women faculty, most have been recruited at junior levels, which accounts for the disparity between male and female salaries. The school routinely scrutinises faculty salaries to ensure that it does not discriminate on the basis of gender."

At King's College London, a £12,425 disparity in salary exists between male and female academic staff. A spokeswoman for King's says the university takes gender equality seriously and is not complacent about the issue, but the content of the salary survey means that the data are misleading, as they include all academic posts, including "other grades".

"Using the 'other grades' category skews King's figures, because it includes a number of clinicians and consultants with large NHS salaries who are mostly male, but are also King's staff.

"King's has the largest medical school in the UK, therefore the largest number of these joint appointments. If they are taken out of the equation, we believe we compare favourably with most institutions," she says.

Sally Hunt, general secretary of the University and College Union, says: "For years we have heard enlightened rhetoric in higher education about the issue of unfair pay for women.

"Sadly, there are still wide gaps in our institutions and there is not yet enough being done to root out the problem.

"We would like to see mandatory equal pay audits as a start to unearthing the scale of the problem, and then a concerted effort by institutions to work with the unions and consider remedial action to close the pay gap."