In defence of the ‘fat cats’ of academia
30 November 2017
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I see the unholy alliance of the Twitter mob and self-righteous politicians has claimed another scalp: Dame Glynis Breakwell has been forced to resign.
If you’ve missed this furore, Dame Glynis is not a historical sex offender, war criminal or transphobe. She is (or was) the Vice-Chancellor of the University of Bath. She committed the awful crime of being the best-paid Vice-Chancellor in the UK. Her salary, £434,000 plus various add-ons including a nice house, was deemed by our Jacobin politicians to be vastly excessive. She stuck out the flak from people like Sir Michael Barber, Jo Johnson and Lord Adonis for several weeks, recently (albeit narrowly) winning a vote of confidence from her university. She seems to have been a successful VC, boosting the university’s recruitment and revenue. But now she has been bullied into retirement.
Now you probably think that her pay was a bit on the high side. Compared with most of us, it was. However it is considerably less than that of some top BBC presenters whose names have been bandied around recently. At the Beeb, the scandal has been that women are paid less than men – unlike in academia, where for once a woman has been on top. But in this sector, the demand is that her pay be reduced, rather than increased, indeed that all VCs’ pay should be reduced. On average they currently earn just over £250,000 – but in the future, universities will be required to justify any salary over £150,000.
We can argue about how salaries are determined, and there may be some governance issues at Bath as elsewhere. But artificially holding pay down – and you can bet this £150k limit will not quickly be adjusted for inflation – is never a good thing. Despite a common misperception, universities are not part of the public sector – unlike the BBC, which is.
Britain has always prided itself of having an independent, autonomous higher education sector, unlike, say, Germany, where professors are civil servants. British universities are less and less financially dependent on the state – less so than many defence contractors or firms like Capita, where there is no limit on CEO pay – but successive governments have tightened their grip in a variety of ways.
Pay should not be controlled by the government. Our universities operate in an international market for talent. The equivalent of our vice-chancellors are paid far more in the USA (where in 2015 eight university presidents were paid over $2 million), in Canada or Australia. We will find it increasingly difficult to retain or attract internationally mobile academic leaders if this new pay cap holds – and of course there will be downward pressure on the pay of other staff.
And, while campus unions predictably moan about top pay, cutting VC remuneration will inevitably have knock-on effects. It will be more difficult to get people to step into middle-management roles in HE – the Deans, Heads of Department and so on who are vitally necessary to herd those academic cats, the lecturers who prefer research and conferences to teaching undergraduates. Without this intermediate managerial layer our hitherto internationally successful universities – and ultimately academic jobs – will be seriously at risk.
If you’ve missed this furore, Dame Glynis is not a historical sex offender, war criminal or transphobe. She is (or was) the Vice-Chancellor of the University of Bath. She committed the awful crime of being the best-paid Vice-Chancellor in the UK. Her salary, £434,000 plus various add-ons including a nice house, was deemed by our Jacobin politicians to be vastly excessive. She stuck out the flak from people like Sir Michael Barber, Jo Johnson and Lord Adonis for several weeks, recently (albeit narrowly) winning a vote of confidence from her university. She seems to have been a successful VC, boosting the university’s recruitment and revenue. But now she has been bullied into retirement.
Now you probably think that her pay was a bit on the high side. Compared with most of us, it was. However it is considerably less than that of some top BBC presenters whose names have been bandied around recently. At the Beeb, the scandal has been that women are paid less than men – unlike in academia, where for once a woman has been on top. But in this sector, the demand is that her pay be reduced, rather than increased, indeed that all VCs’ pay should be reduced. On average they currently earn just over £250,000 – but in the future, universities will be required to justify any salary over £150,000.
We can argue about how salaries are determined, and there may be some governance issues at Bath as elsewhere. But artificially holding pay down – and you can bet this £150k limit will not quickly be adjusted for inflation – is never a good thing. Despite a common misperception, universities are not part of the public sector – unlike the BBC, which is.
Britain has always prided itself of having an independent, autonomous higher education sector, unlike, say, Germany, where professors are civil servants. British universities are less and less financially dependent on the state – less so than many defence contractors or firms like Capita, where there is no limit on CEO pay – but successive governments have tightened their grip in a variety of ways.
Pay should not be controlled by the government. Our universities operate in an international market for talent. The equivalent of our vice-chancellors are paid far more in the USA (where in 2015 eight university presidents were paid over $2 million), in Canada or Australia. We will find it increasingly difficult to retain or attract internationally mobile academic leaders if this new pay cap holds – and of course there will be downward pressure on the pay of other staff.
And, while campus unions predictably moan about top pay, cutting VC remuneration will inevitably have knock-on effects. It will be more difficult to get people to step into middle-management roles in HE – the Deans, Heads of Department and so on who are vitally necessary to herd those academic cats, the lecturers who prefer research and conferences to teaching undergraduates. Without this intermediate managerial layer our hitherto internationally successful universities – and ultimately academic jobs – will be seriously at risk.
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Excellent piece. The problem in my view is that they take taxpayers’ money and are thus more subject to public scrutiny and criticism. Let’s take a step further. If they are becoming less financially dependent on public funding, why don’t British universities free 100% from the government and fund themselves with no government money at all?! If not all, surely the top universities in the UK which compete worldwide would be able to do it. Then they would be free to fix their salaries as they think best, as any other private company does.
The highest paid US private university president is Robert J Zimmer at U of Chicago, who is paid $ 3.3million, 40% of which is deferred compensation. Chicago’s annual income/expenditure is $3.8 billion. Harvard’s annual income/expenditure is $4.5 billion, yet its president is paid just $900,000. The President of Colorado State University is currently paid $500,000 (£376,000), following a pay rise to prevent him being poached by another institution. The annual income/expenditure of CSU is $1 billion. This is to what you should be comparing UK universities. The University of Bath has annual income/expenditure of £250 million, comparable to Slough Borough Council – a far more complex and important organisation, where, two years ago, the CEO was paid £160,000. I maintain that, for whatever reason, the VC of Bath University was being overpaid.
Breakwell was on a salary escalator: her remuneration package was high because she remained in post for a relatively long time. She was appointed VC at Bath back in 2001. The University basically performed reasonably well but not outstandingly. There was no pressure to look for a change and no sense that Breakwell had achieved what she had set out to accomplished and hence was looking for a fresh challenge. The clock ticked and as retirement approached the VC remained at the helm.
CEO tenure is rising but the median for the world’s largest companies is still around 6 years and in the UK it is significantly lower at 5 years. Breakwell could be viewed as just an outlier: there will be a few VCs who don’t last longer than 1-2 years and a few who occupy the role for several times the median. In other words, there is nothing to see here: she is just in the tail of a distribution. Alternatively, she could be viewed as someone who over-stayed her time (or was allowed by Bath’s governors to stick around past her sell-by date).
Interesting observations, but I have never argued that universities (or FTSE-100 companies for that matter) always get it right. You miss the essential point that it should not be the government that tells private bodies what to do. Already the government essentially sets pay for the entire public sector – still nearly 20% of employees – and, through the five different minimum wages it imposes, a large and growing proportion of private sector workers. In total probably about a third of all workers have their pay controlled by politicians. Do you think it is a good idea to extend this?
I would actually argue that the Head of Slough Borough Council should be paid more than £160k too. But at least Slough BC is unequivocally in the public sector. Universities are not, and to make VCs and their universities have to suck up to the boss of the Office for Students (an ex-politician, of course) is the surest way to undermine our broadly successful higher education sector.