A couple of weeks ago Jo Johnson who is a Government Minister added his voice to that of several Parliamentary colleagues over the rates of pay received by senior University Staff. This week another case has emerged of high levels of public money being paid to a senior official. This time the sum exceeds that paid to the best paid University Vice Chancellors by around 25%! However despite this, rather than MPs wringing their hands over the pay packet concerned, one of them is claiming that the Government will need to pay even more if they are to recruit a credible successor for Tony Douglas who is a procurement specialist for the MOD. The truth is that MPs are intended to help bring political judgement into well thought through sets of processes proposed by civil servants such as Tony Douglas, but it is clear from these two cases that this judgement is more a matter of floundering around and what is needed is a great deal more rigour. On one level it makes sense for MPs to argue that anyone working for a business or charity that is in receipt of public funds such as a University, to have their pay limited to the same level as the Prime Minister. This is the approach taken by the folk involved in the various discussions around the Vice Chancellor for Bath University who is the highest paid VC and who earns £425k. However if MPs then choose to argue that the rate of pay for the highest paid civil servant, Tony Douglas may need to be raised from £530k in order to attract a successor there is a lack of consistency. The same is true of judges who earn as much as £250k which is nearly twice the rate of a Prime Minister. These inconsistencies are even starker when the University sector is compared to the Civil Service. Civil Servants are on a 100% Government payroll whereas University management are paid by charities that receive around 30% of their income from the state and 70% from the open market, albeit at rates set by the Government. Judges too receive 100% of their income from the state.

If we are going to get this resolved we need to do what credible charities that I have been involved do when reviewing their payscales. They break down each job into is various elements and cost each one based on a balance between what other charities pay for such tasks and what their donors or funders see as the value for such tasks. There are a number of sets of data available to help in such tasks. The same approach is applied to local government offices and many civil servants posts and the same should be applied to judges and vice chancellors. It is vital that this happens in a way that is open and transparent and that MPs are made aware of. Having resolved these sort of challenges we then need to apply them to the parts of the private sector that receive significant levels of public funding. Because the private sector is based primarily on a market basis this will then help influence the rest of the sector. As an example G4S which in 2013 was paid over £2Bn of Government money for various services currently pays its CEO a basic income of £1M and up to £4M more depending on his performance. This places the pay of judges, vice chancellors and even Tony Douglas into the shade, and makes the Prime Ministers pay very insignificant, even though she is paid 10 times the national living wage. It should be noted that in 2016 G4S received a total of £7.6Bn so the proportion of UK public money must be comparable to that going into our Universities!

Speaking back in the middle of the month, Jo Johnson stated to an audience of University senior staff “It is of course true that many of our universities are large and complex organisations, requiring highly skilled individuals to run them effectively. Some will be competing for managerial talent in a global market. But it is important to remember that universities are generally still charities with a not for profit public service mission and that, when it comes to VC remuneration, finding the right benchmarks is essential.”

My view is that we need benchmarks for all of the roles mentioned. The point at which a company such as G4S drop off the public radar is up for discussion, perhaps if their turnover is less than 10% state based or less than 5%. Certainly if 25%-30% of their income is coming from the public purse, they need to be held accountable for the way they operate, just as Jo Johnson and his colleagues believe is the case for Universities.