Higher Education and Research Bill (Eighth sitting)

Ben Howlett Excerpts

Committee Debate: 8th Sitting: House of Commons
Thursday 15th September 2016 Public Bill Committees

[Wes Streeting]

It is a pleasure to serve again under your chairmanship, Sir Edward. I hope we will have the opportunity to hear more about your mind-expanding experiences at university. That was highly enlightening.

Britain has one of the best higher education systems in the world, educating millions of students from this country and around the world. Behind that success are hundreds of thousands of dedicated staff, ranging from university leaders and those who educate students on a daily basis to the many staff who perform essential support functions, from processing admissions to keeping our campuses clean.

Like any good employer, universities should invest in their staff and ensure that they are paid fairly. My motivation for tabling these amendments is to tackle two things. One is excessive high pay at the top of our universities, and the other is some of the remaining poverty rates that continue to be paid to staff working in and around higher education, particularly those working for university contractors.

I will begin with high pay. It is important to say that as leaders of universities, vice-chancellors carry serious responsibilities for a large number of staff, manage huge budgets and have to consider a wide range of activities, from research and innovation to educating students. It is right that we pay vice-chancellors at a rate that enables us to recruit and retain the very best leadership from this country and around the world. I certainly do not begrudge vice-chancellors appropriate payment for the work they do or, indeed, use the ludicrous benchmark that appears from time to time of comparing vice-chancellors’ salaries with the Prime Minister’s.

I have been concerned, however, about excessive rates of pay rises in recent years, particularly at a time of restraint in public spending and with students paying more than ever for their higher education. I do not use terms such as fat cat lightly, but vice-chancellors who have decent and appropriate salaries have been receiving fat-cat pay rises with little justification and certainly inappropriate scrutiny from institutional remuneration bodies.

I know that the Minister is concerned about that. In the HEFCE grant letter for this year, the Minister and the former Secretary of State for Business, Innovation and Skills, the right hon. Member for Bromsgrove (Sajid Javid), included a specific reference to excessive high pay at the top and urged universities to show greater restraint— incidentally, not only in terms of pay and pay rises, but in awards made to vice-chancellors on exit. I hope that the Minister will see the amendments as friendly ones that would help to pursue the issue that he and the former Secretary of State raised in the grant letter and could really make a difference.

[Ben Howlett (Bath) (Con)]

The hon. Gentleman makes a very good case for open and transparent processes in relation to vice-chancellors’ pay. I have a lot of sympathy with him about that. However, is he aware that this Government have already introduced gender pay gap reporting? For the institutions he mentions, the amendment would simply mean a duplication of legislation. We should look at enhancing the current legislation.

[Wes Streeting]

The hon. Gentleman is right to refer to the gender pay gap in higher education. There is something like an £8,000 difference in the pay awarded to male and female academic staff. My amendments do not deal specifically with the gender pay gap, but instead address the inequality between pay at the top and at the bottom.

The amendments would address those issues in two ways. The first is to require universities to publish the pay ratio between the highest-paid staff and the lowest-paid staff and the median rate of pay. That would get remuneration committees to think hard, when telling front-line staff that they cannot afford pay rises, about whether they are applying the same principle to staff at the top. According to the Times higher education survey, one in 10 universities paid their leaders 10% more in 2014-15 than the previous year, while average staff pay rose by just 2%. It is incredibly demoralising for university staff, academic staff and support staff when they feel they are exercising pay restraint but see university leaders not leading by example.

Publishing the pay ratio would bring about greater equity and a greater focus on low pay. I do not see any good reason why any university in this country should not be an accredited living wage employer. I hope that one outcome of the amendments would be to reinforce many of the campaigns led by students unions and trade unions to persuade universities to become accredited living wage employers.

As well as proposing publishing information to push for transparency, the amendments would strengthen accountability by including staff and student representatives on remuneration committees. That is important for two reasons. One is that staff representatives, through the University and College Union and other trade unions, and student representatives, through their students unions, bring a degree of independence from the process. They have a legitimate interest in ensuring fair pay from a staff perspective and also from a student perspective, in terms of ensuring that their fees are well spent.

There is also a broader point, which ties into the interesting exchange earlier about the idea of a university being, as well as all the things that the Minister set out in his response to my hon. Friend the Member for City of Durham, a community. An important part of a university is the academic community in the university. It is not made up just of university leaders and staff; students are also part of it, and I think that it is important to include them in the decision-making process.

I therefore hope that the Minister looks favourably on the amendments. They would reinforce the signal that he has already sent through the HEFCE grant letter. They would help to concentrate more effectively the minds of remuneration committees, as well as bringing about a wider range of perspectives to ensure that they are reaching the right conclusion, to the benefit of students, staff and the taxpayer. I hope that the Minister supports the amendments.

[Joseph Johnson]

I thank the hon. Member for Ilford North for his amendments, to which we are giving some thought. However, I emphasise that the public interest governance condition that the clause contains is a vital component of the new regulatory framework and is designed to ensure that providers are governed appropriately, as he wants them to be. That is in recognition that some providers’ governing documents—in particular, those of providers accessing Government grant funding—are of public interest.

Let me first explain how we envisage the public interest governance condition working. Clause 14 explains what the condition allowed for by clause 13 is. It will be a condition requiring certain providers’ governing documents to be consistent with a set of principles relating to governance. The principles will be those that the OFS thinks will help ensure that the relevant higher education provider has suitable governance arrangements in place. That is not new. Legislation currently requires the governing documents of certain providers—broadly, those that have been in receipt of HEFCE funding—to be subject to Privy Council oversight. That is the backdrop.

Let me deal with the amendments. I do not believe that amendment 25 is necessary, and it could be confusing. The arrangements are already set out and designed for the primary purpose of ensuring that appropriate governance arrangements are in place and that best practice is observed. The introduction of the term “practices” through the amendment would risk changing the scope of the public interest governance condition to give it a much wider and more subjective application and imposing a significant and ambiguous regulatory burden on the OFS. That would stray outside our stated policy objective and beyond the OFS’s regulatory remit.

The suggestion in amendments 26 and 27 is to include principles relating to transparency of remuneration as being helpful for potential inclusion within the consultation process. We resist those also. We do not think that it would be helpful at this stage to make them mandatory components in clause 14. That is because, as I am sure the hon. Gentleman will appreciate, higher education institutions are autonomous institutions and the Government cannot lightly dictate what autonomous institutions pay their staff. As the hon. Gentleman said, we have already as a Government recently expressed concern about what appears to be an upward drift in senior salaries. The previous Secretary of State in the Department for Business, Innovation and Skills and I put this explicitly, as the hon. Gentleman said, in our most recent HEFCE grant letter. We clearly stated that we want to see sector leaders show greater restraint. The hon. Gentleman will also know, as a seasoned veteran of the HE sector, that higher education institutions are now obliged to publish the salaries of their vice-chancellors anyway, but as I said, we are watching this issue very closely and doing everything we can to urge the sector to exercise restraint, without crossing the line and interfering in the practices of autonomous institutions.

[Ben Howlett]

Will my hon. Friend give assurances, however—I agree this should not be put in the Bill—that he will work with the new OFS to ask them to look at remuneration, and also make sure that transparency is at the very heart of the OFS in relation to remuneration?