I am at a slight disadvantage on my right hon. Friend’s latter point, because my interest in this matter was sparked by Dame Glynis Breakwell, the vice-chancellor of the University of Bath. She is right at the top of the pay league table, so my local experience clearly does not bear his point out. I would not be surprised, however, if that was the case. The trouble is that the lack of transparency around a lot of this material in the university sector means that it is quite difficult to make that comparison. Were it to be the case—and I suspect he is right—I would clearly want the universities to address it, as it is simply not acceptable.
I was interested in my right hon. Friend’s earlier point about performance-related pay, and in preparing for the debate I did look at those universities that had significantly increased the level of vice-chancellor pay in the recent past and compared that with improvements as judged by the Complete University Guide set of metrics, which is used by most pundits and commentators to compare universities. The students certainly look at those figures very closely in deciding where to go.
I stared at the figures and compared and contrasted them for some time, and I could not see any correlation between improved pay for vice-chancellors and improved metrics. Indeed, there is some suggestion that there is an inverse correlation, which rather bears down on the point about performance-related pay. I can see very little evidence of it operating here. We need to be careful about performance-related pay, because it is set by remuneration committees and, unless its terms are available for scrutiny, the goals could be eminently achievable. That would make a mockery of the whole thing, which comes back to my central point: we must have transparency in how pay is set if we are to have any confidence in our current system.
I absolutely accept that vice-chancellor pay and benefit packages are a tiny part of a multi-billion-pound consideration in higher education. That point was made clearly by Lord Willetts when he was the universities Minister. He rightly sought to put the whole thing into perspective, but my worry is that in the remuneration of vice-chancellors and senior people in higher education we have a window into what might be going on more generally in the universities sector. If we are seeing such egregious examples of the misuse of public funds and student indebtedness, as I believe we are in this case, we wonder what is happening more generally in this sector.
Universities have charitable status. The Higher Education Funding Council governs that, with this subcontracted by the Charities Commission, which has written to me on this subject. It is important that we emphasise that charities—universities, in this case—have charitable purposes; they are meant to use their moneys for charitable purposes, to demonstrate charitable good. They should not be using money unless they can demonstrate that that expenditure in some way satisfies their charitable purposes.
The University and College Union’s report of February 2016, for which I am in its debt, sheds interesting light on this subject, because it discusses not only pay, but other benefits. Although many universities did not respond to the UCU’s request for information, and so we need to be slightly guarded about its conclusions, this report nevertheless gives us some useful data. For example, it shows that Bath’s vice-chancellor spends an average of £313 a night for hotel accommodation and that Middlesex University’s vice-chancellor spends an average of £448 a night, whereas the Independent Parliamentary Standards Authority will allow MPs £150 a night in London and £120 a night outside it. I make no comparison between MPs and vice-chancellors; what I would say is that £150 a night seems reasonable. People will not often hear a Member of Parliament being nice about IPSA, but I am nice about it; for the record, I think it does a good job in general and it has pitched that about right, because we can certainly get accommodation in London for £150 a night or outside London for £120 a night and we will not be living underneath the arches. How someone can spend £448 or £313 a night, inside or outside London, is a little beyond me—it is probably beyond my experience. That is an example of what I mean about the use of funds for charitable purposes. In what way does that expenditure advance the charitable purposes of these institutions?
It gets worse, however, because the report goes on to consider air fares. Twenty-one universities that responded to the request for information—there may well be more that decided not to respond, because they do not want to share their information, for obvious reasons—ranging from high-end Bristol to the frankly obscure, send their principals only by first-class or business-class air travel. That is a remarkable thing. The vice-chancellor of the University of Bath spent £23,000 in 2014-15 on air fares and, according to the report, flew exclusively by first or business class. Members of Parliament will know full well that IPSA will take a dim view of any Member seeking to claim for anything other than economy. The Minister may well be familiar with the ability of Ministers to fly long haul by business class if they have a meeting the next day—most Departments would allow that for Ministers, and I certainly recall it—but for short-haul flights of less than three hours most certainly that particular benefit would not be got. It seems excessive for universities—remember the point about their charitable status—to have their principals and senior staff fly first or business class habitually. In this day and age, that seems wholly excessive.
It gets worse still. Many universities provide accommodation for their vice-chancellors. The report lists accommodation occupied by vice-chancellors, and some of it looks rather attractive, particularly that in Bath. At No. 2 in the catalogue is the vice-chancellor of the University of Bath, who in 2014-15 occupied accommodation worth nearly £3 million, which I think would seem excessive to most. It would probably seem excessive to the parents who have recently delivered their children to university halls of residence, many of which are distinctly shabby.
My chief concern about all this is the lack of transparency. The University and College Union makes transparency the crux of its survey and report, and it is
right to do so. In seeking the information it has sought, it has found that universities have in many cases been reluctant to engage, and we are beginning to see why. It found that 71% of those universities that responded had their vice-chancellors as members of their remuneration committees. In most walks of life, that would be considered a strange feature of a remuneration committee, even if the individual who was the subject of a particular discussion absented him or herself from the room while their issue was being discussed, because pay for an individual is not seen in isolation; it is seen against the backdrop of other senior pay within the institution and senior pay in other institutions.
I perceive a cartel operating in higher education, with vice-chancellors, and senior university staff generally, sharing each other’s remuneration processes to their mutual benefit. I am of course not in any way suggesting that there is some deliberate attempt to do that, but that seems to me to be how it might work in practice. In short, remuneration committees appear to be unsatisfactorily shadowy for organisations operating in the public or quasi-public sectors. We see instances of minutes not being published, and of redacted minutes being published. When we are dealing with public funds and student indebtedness, that is unacceptable.
My other concern is about leadership. Vice-chancellors are quintessential leaders; leading is what they do. If they are not leaders, they are nothing at all. Yet some of the most senior, such as the vice-chancellor of the University of Oxford, have been bleating about being paid less than footballers and bankers. That does not strike me as leadership. At a time of pay restraint in the university sector, as well as in others, it seems to me wholly inappropriate for the leaders of these organisations to be complicit in a system that gives them a pay rise that is way out of kilter with that being awarded to their staff. That is wholly wrong and I hope that, going forward, we will see the same sort of restraint among the senior echelons of higher education as we have seen further down the pay scale.
I shall finish by being nice about the vice-chancellor of the University of Bath, because Dame Glynis Breakwell has done a grand job, over many years, and the University of Bath is a fine institution. Dame Glynis deserves warm thanks and praise for all the hard work she has put in. I do not blame her for her extraordinarily generous remuneration package; I do blame the system that has allowed it. I am pleased that a lot of the things the Government have been talking about recently—particularly the Office for Students, which I know my hon. Friend the Minister will talk about in a moment—will help in that respect. In particular, the OfS will add transparency to the way in which senior people in higher education are paid, bearing in mind the charitable status of those institutions, and the fact that they are in receipt of large sums of public money and the proceeds of student indebtedness. If it manages to achieve that through reforming not only remuneration committees, but the general atmosphere and ethos around this, then it will have done a good job and it will be an early indication that it will be a worthy successor to the Higher Education Funding Council.
The purpose of this debate was simply to discuss how we might restore some balance and confidence to this particular element of university finances. I fear that I have hardly ingratiated myself with senior university administrators. I hope very much that we will continue
to remunerate appropriately these heads of our wonderful national institutions, but most can agree that pay for university vice-chancellors has become excessive and that, in the months and years ahead, we need to do something about it.
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