Driven by data; ridden with liberty.
It’s that time of year again. Much like Christmas Carols, the inevitable drone about the Vice-Chancellor’s pay barely changes. A group called ‘Bath Students Support Our Staff’ stated on social media that: “Our VC was struggling to get by on £356k per year so the [University of Bath] just announced a £27k pay rise. No money for staff though”. Open letters to the Students’ Union say tuition fees are “lining the pockets” of the University of Bath’s “increasingly greedy” senior management.
According to their 2012 accounts, the university spent £185.7m annually, with £104.1m expended on staff costs, which include wages, National Insurance and pension contributions. That year’s income was £196.6m, where £70.7m came from tuition fees and education contracts. Increased money from tuition fees was completely counterbalanced by HEFCE grant reductions. The 2012 operating surplus was just under £11m, diminished by £6.5m from its 2011 figure. Despite the UCU’s complaints, surpluses serve as an insurance against an uncertain future. Furthermore, these collated funds can be augmented with loans to finance larger projects, like the £5m student centre.
In their recent strikes, the three staff union’s principal concern is that pay has stumbled behind inflation. From 2002 to 2012, overall staff costs swelled – in real terms – by about 25%. If the university were to have kept staff remuneration in lockstep with RPI-inflation from 2008, whilst maintaining current employee numbers, wages and salaries alone would surge upwards by at least £12m, eclipsing the 2012 surplus.
The Vice-Chancellor’s emoluments – her salary with benefits-in-kind – have reached £383,000. These increases have largely been off-set by cuts to the Vice-Chancellor’s pension scheme. Even if our Vice-Chancellor were to be paid nothing, and her emoluments were shared equally with the university’s employees – of whom there are over 2,500 – then each person would receive less than £110. This money would satiate few complaints raised about low pay amongst university staff.
Instead of castigating the senior management as “greedy” for accepting these salaries, it should be considered why such salaries are offered in the first place. Fundamentally, this is a knowledge problem. People are usually unaware of what management does, concluding managers add nothing. It is difficult for outside observers to calculate what managerial guidance is worth. For example, Warren Buffet once sat on the board of the company that publishes the Washington Post, whose director said: “Mr Buffet’s recommendations to management have been worth – no question – billions.” We don’t have enough specific information to deride the Vice-Chancellor’s emoluments as unfair. Our university is clearly succeeding, especially as higher education becomes more globalised in competition and collaboration.
Inconsistently, the open letter contrasts the Vice-Chancellor’s pay to other Vice-Chancellors in Britain, but compares lecturer pay to that of industrial employees, rather than other academics. According to the Times Higher Education, the average staff cost of full-time academics at the University of Bath is £47,808, broadly similar to the UK average of £47,609. Despite insinuations of cronyism, no-one decides their pay-packet: the university’s Remuneration Committee sets all senior officers’ pay. The members of this committee are the Vice-Chancellor, the Council’s Chair, the Treasurer and two other members elected from the university’s Council. The Vice-Chancellor ceases to sit on this committee when it assesses her salary.
There are some admirable and viable campaigns to ameliorate low pay amongst university staff, possibly funded by eroding the surplus. However, this is not a limitless well, and there will remain many difficult trade-offs to be made between pay standards and staff numbers, as well as hard choices over new buildings and academic facilities. Sniping about the Vice-Chancellor’s salary spoils these campaigns and is just cheap.