University leaders will have to justify their pay following new requirements published today by the Office for Students.
From now on, universities will need to provide the Office for Students with details about the total remuneration package paid to their vice-chancellor, and will be required to justify those salaries. The OfS will then publish full details of those salaries in an annual report in order to secure greater transparency.
Nicola Dandridge, chief executive of the Office for Students, said:
‘Students and taxpayers need to be confident that our university leaders are paid appropriately and deliver value for money. High levels of pay that are out of kilter with pay levels elsewhere and which cannot be justified are unacceptable.
‘The Office for Students is today setting out our increased expectations around senior pay. Higher education providers will have to give us full details of the total pay package of their vice-chancellor. In addition, they will have to provide detailed justification of this package.
‘As part of this, we will be looking at the ratio between the head of institution’s pay and the pay of the other staff at the institution. This will provide additional visibility and transparency – and enable us all to ask tough questions as necessary.
‘These disclosures will become part of our regulatory requirements, and if a provider fails to comply with these requirements or fails to provide justification this may amount to a breach of our regulatory conditions, and we will not hesitate to intervene.’
Our accounts direction, which gives guidance to providers on preparing their annual financial statements, requires providers to supply a range of information about the financial arrangements for their head of institution, including:
- full details of the total remuneration package, including basic salary, any performance-related pay, pension contributions, and other taxable and non-taxable benefits
- a justification for the package
- the relationship between the head of provider's remuneration and that for all other employees in their institution, expressed as a pay multiple.
The justification must include an explanation of what value the head of institution has delivered, and the process by which their performance was judged.
Providers must also disclose the number of staff (anonymised) with a basic salary of over £100,000 per annum, broken down into bands of £5,000.
- Read the accounts direction.
- Providers must submit their audited financial statements, including details of senior pay, by 3 December 2018. We will publish the data on head of provider remuneration from 2019.
- This year is a transitional year for the OfS, as it moves towards assuming its full regulatory responsibilities in August 2019. The Office for Students will consider senior staff pay beyond the head of provider in 2019.
- Decisions about the levels of senior staff remuneration are for individual governing bodies to determine: the OfS has no powers to set pay for providers. But the OfS can and will intervene if there is evidence that a provider’s poor management and governance is leading to a lack of transparency about the setting of senior pay, or where the pay is not justified. Where a provider has breached an ongoing condition of registration the OfS can impose a range of interventions and sanctions, including applying specific conditions, monetary penalties (from 1 August 2019) and ultimately suspension from the OfS Register. Suspension affects a provider’s ability to access public funding and the ability of new students to access student tuition fee and maintenance loans.
- The OfS also acts as principal regulator for those universities which are exempt charities (that is, charities exempt from registration with the Charity Commission). If it identifies issues as a result of its enquiries or investigations that are relevant to charity law it can refer them to the Charity Commission, which will decide whether it wishes to investigate further.