Payout given to retiring principal must be paid back

A university has been told to repay £119,000 by its funding body after an investigation found a payout to its ex-principal – who now chairs an influential college commission – breached financial rules.

The Scottish Funding Council, which oversees further and higher education funding north of the border, has today published its report into the University of Aberdeen and its former boss Sir Ian Diamond.

Diamond, who is leading the College of the Future commission, triggered his 12-month notice for his role as university principal in July 2018 – the same month he retired from the role.

He originally announced his plans to retire in August 2017.

The former principal’s total remuneration disclosed in the university’s financial statements for 2017-18 was £601,000. This included a salary of £282,000, pension contributions of £30,000 and “contractual notice period payment and related expenses” of £289,000.

After examining over 500 pieces of evidence, today’s report states that in approving the terms of the settlement agreement, there was “no documented assessment of value for money”.

Officials found that the university was paying two principals while Diamond was on gardening leave.

“By defining the former principal’s ‘formal’ notice date as the date immediately preceding both the successor principal taking up his post and the former principal moving to a 12 month period of ‘gardening leave’, the university incurred the cost of two principals over the 2018-19 financial year,” the report said.

“In addition, over the 2017-18 financial year, the principal received his full salary while having significantly fewer duties and responsibilities than those constituting the full role of principal, and we have seen no evidence that the value for money consequences of that arrangement were assessed.”

The report notes that the ‘Heads of Terms’ for the settlement agreement were approved by the remuneration committee, but there is “no evidence that sufficient documented information was supplied so that members could be assured university policies and interests were observed”.

The settlement agreement was “correctly disclosed”, according to today’s review, but “in our view the additional payment of £60,000” for “outplacement support should also have been disclosed”.

The SFC concludes that there was “non-compliance with several financial memorandum requirements”.

Officials have now said it requires £119,000 to be repaid and for the university to undertake an externally-facilitated review of its governance procedures and culture.

Esther Roberton, who was elected in 2019 to the role of senior governor of the University of Aberdeen, said the university accepts the findings and has “already repaid the £119,000 to the Scottish Funding Council”.

“We will address the issues raised in the report and take lessons from it,” she added.

A spokesperson for the university confirmed that Diamond has not had to personally repay any of his settlement agreement.

Diamond, who became the UK’s National Statistician in October, was unveiled as the chair of the College of the Future commission in May 2019.

The commission includes 16 people and aims to set out a “new vision” for colleges in England, Northern Ireland, Scotland and Wales.

It is being supported by nine organisations including the Association of Colleges.

Leaders of colleges in England have previously faced questions over payments they received during their notice periods.

In May, the University and College Union criticised pay rises and 12-month notice period extensions for all the executives at Stephenson College, which came into force in 2015 ahead of a merger consultation.

And Mike Hopkins, the former principal of Sussex Downs College, was paid £80,000 by the college while on gardening leave for five months after his provider merged with Sussex Coast College Hastings last year.

This was despite the fact Sussex Downs was facing a deficit of £1.9 million and planning a wave of staff redundancies. He also received a final payout for leaving, but it is not known how much this was.