Colleges with the biggest pay gap between principals and staff revealed

Colleges defend ‘high’ gap between FE principal and staff salaries. Unions say it cannot continue

Colleges defend ‘high’ gap between FE principal and staff salaries. Unions say it cannot continue

Investigation

Over one in 10 college boards pay their principals seven or more times the median employee salary – several of which have recently been hit by strikes over low staff pay, FE Week can reveal.

Experts have branded a pay multiple of this level as “high” while unions have lashed out at principals earning up to 10 times more than their workforce who can “insulate” themselves from the cost-of-living crisis as lower-paid staff reportedly turn to foodbanks to get by.

But colleges with the largest gaps have defended the so-called high multiples, explaining they are due to the college generating higher turnover than the sector norm, factoring in relocation costs, and in some cases including pension contributions as part of principal take-home pay.

‘That sounds quite high to me’

Colleges must report their pay multiples as part of their annual financial reporting to the Education and Skills Funding Agency. It is calculated by dividing the highest-paid member of staff’s basic pay (in most cases, the college principal or group chief executive) by the median pay of the rest of the full-time-equivalent workforce.

Out of 127 general FE colleges in England with published accounts and one accounting officer for the full 2021/22 academic year, FE Week identified 15 colleges with pay multiples of seven or more.

The average pay multiple for general FE colleges that have had one principal has sat at 5.7 consistently in the last four years. But while the sector average hasn’t moved, individual college pay gaps have.

The single biggest pay multiple hailed from Weston College, whose principal Paul Phillips earned a basic salary of 9.6 times more than the median pay of his full-time staff in 2022.

This was an increase from 8.75 in 2021, which a college spokesperson said was due to the median pay value dropping from an uptake in administrative roles in 2022, usually lower paid than lecturer salaries.

“The pay multiple is higher than that of the sector average as a result of the Weston College Group generating turnover significantly higher than sector norms, with activities extending far beyond the traditional remit of further education,” the spokesperson added.

Phillips’ basic salary in 2022 rose by £36,000 to £258,000 and includes a £60,000 payment for external consultancy work with agencies like the ESFA. On top of that, Phillips received £75,000 in pension contributions and was awarded £29,000 in benefits in kind, the nature of which the finance director cannot reveal without permission from Phillips, a spokesperson said. His total remuneration package for 2022 was £362,000.

While the college did not explain the 16 per cent basic salary rise, its accounts praised Phillips’ accomplishments in the year at length, including receiving a knighthood and his “impressive” role as a national leader of further education.

Weston College staff planned to strike throughout late September until a last-minute pay offer from management was initiated.

“That sounds quite high to me,” said Imran Tahir, a research economist from the Institute for Fiscal Studies, when asked if pay multiples of seven, eight and nine were normal for a public sector organisation.

Tahir, who co-authored a recent report on college teacher pay, said median staff salaries in the FE sector tend to be low which will “pull the multiple up”.

“I imagine there isn’t a lot of variation in median salaries between colleges, so what is likely to be driving the difference in pay multiples between different colleges is principal salary,” he told FE Week.

“I think the question is better framed as why do some colleges pay their principals such high salaries? It’s these high-paying colleges which will have the high pay multiples.

“I don’t have a definitive answer to that question I suspect different colleges will have their idiosyncratic reasons for paying their leaders especially high salaries.”

The IFS report found that in 2010/11, the median salary (adjusted for inflation) was £42,500 for a college teacher. The median dropped to £34,500 in 2022/23 – a 19 per cent fall.

University and College Union general secretary Jo Grady said: “College staff have been hit with over a decade of real term pay cuts, many now have to use food banks to survive, and pay is so low colleges face a recruitment crisis. It cannot continue.”

However, Tahir acknowledged that the “continual decline” in college funding would make it hard for colleges to find money from their existing budget to pay their staff.

Strike action over low pay

Low salaries and rejected inflation-linked pay offers in FE have been the subject of a wave of staff strikes in recent years. A country-wide ballot for college strikes is on the cards later this year.

“Principals earning up to ten times more than the average staff member are able to insulate themselves from a cost-of-living crisis that is pushing their employees into poverty,” Grady told FE Week.

“College principals have a small window to reallocate resources and protect their staff or they will be hit when strike ballots come.”

Three colleges in FE Week’s analysis with the highest pay multiples in England have been hit by such strikes in the last 12 months.

One is Bridgwater and Taunton College, whose principal Andy Berry earned a basic salary of £180,000, up from £162,000 in 2021. The college reported the second-highest pay multiple of 9.2, up from 8.66 the previous year. Last September, the college’s campuses were met with a 10-day strike over pay.

Bridgwater and Taunton College did not respond to requests for comment from FE Week.

Strikes engulfed Tyne Coast College earlier this week, which reported an 8.65 pay multiple for 2022, a nudge higher than 8.52 in 2021.

Some colleges such as Tyne Coast have blamed the high multiples on including pension contributions into basic principal pay. Most general FE colleges have a separate row in their accounts for pension contributions, but several in FE Week’s analysis have been paid as salary instead.

A Tyne Coast spokesperson explained that the £237,000 basic salary includes £45,000 of employer pension contributions and reflects Lindsey Whiterod’s dual role as chief executive of Tyne Coast College and chief executive of Tyne Coast Academy Trust.

In the case of North Warwickshire and South Leicestershire College whose pay multiple was 7.6, its accounts said the chief executive’s pension contributions “ceased during this period and have been paid as salary”.

A spokesperson told FE Week the “apparent change to the pay multiple relates solely to this change”.

Meanwhile, the highest reported basic principal salary was Gerry McDonald from New City College, who leads negotiations on pay with trade unions on behalf of the AoC. He earned £294,000, which included pension contributions. This reflects a rise from his 2021 basic salary of £241,000 to include £57,000 in lieu of pension contributions. 

The college accounts explain that McDonald became a deferred member of the Teachers’ Pension Scheme in July 2021, and the college did not make any pension payments during 2021/22, so the board agreed to add it to his basic pay.

As one of London’s largest colleges, New City College’s pay multiple for 2022 was 8.72, up from 7.03 the year prior. 

Staff at four New City College campuses went on strike last October. The college declined to comment when approached by FE Week.

Elsewhere, “the contribution for relocation benefits” was Coventry College’s reason for the increase in its principal’s basic salary increase to £156,000 in 2022. A college spokesperson said its pay multiple rise from 7 to 8.5 was because most staff had not received a pay rise in up to 10 years. 

The spokesperson explained that since the principal was appointed in 2020, all staff received a 1 per cent pay rise, there will be a review of curriculum salaries next year for almost a quarter of staff, and it paid out a 9.7 per cent national minimum wage increase early and rolled out a 3 per cent pay-rise from April 1, 2023.

On the other side, three colleges with high pay multiples reported a decline this year: Derby College Group (DCG), Burton and South Derbyshire College, and Luminate Education Group. The latter two explained this was due to pay awards given to staff during the year.

Burton and South Derbyshire College said their pay multiple of 8.32 was due to the chief executive Dawn Ward’s “decades of experience in successfully leading colleges, including our overseas operations and staff”.

“Inevitably, this length of experience and related remuneration would inflate BSDC’s ratio in comparison to the sector average,” a spokesperson added.

NCG, which has a pay multiple of 7.23, explained that it is a “complex organisation made up of seven colleges” and due to the “nature of the role and its nationwide remit, the role of CEO isn’t comparable with a traditional principal’s role in an FE college”.

Luminate Education Group said that as one of the largest FE corporations in the country with a turnover of over £100 million, thousands of students and staff, which includes two higher education institutions, the principal’s renumeration “reflects the responsibility of the operations and performance of a large and complex organisation”.

And the LTE Group, which runs The Manchester College as well as several other training providers, added: “During 2021/22 the LTE board mandated pay restraint for senior roles, and the chief executive and executive team received a lower annual pay increase than other colleagues, with the majority of employees across the group being awarded a pay rise which was at least twice as high, in recognition of their contributions in delivering high-quality training and education to our learners.

“We appreciate the difficulties colleagues face caused by the rising cost of living and, as an organisation, we will continue to lobby the government, alongside other industry bodies, for additional funding for pay.”

Data blunders

On May 24, the EFSA published its annual college accounts spreadsheet.

According to publicly available data, 20 colleges had pay multiples above 7. However, after FE Week reached out to all of them, five claimed the calculations were wrong.

Some have even republished accounts and informed the ESFA of the miscalculation, such as North Kent College, whose pay multiple was originally 10 until a spokesperson clarified that it was a human error and its actual pay multiple for 2022 is 6.5, a drop from 6.7 in 2021.

Two colleges said the error was made by using the median salary of actual staff pay, which includes casual staff, invigilators, and part-time staff, against ESFA guidance which requires all colleges to calculate the pay multiple using the median pay of full-time equivalent staff.

FE Week did not count colleges with more than one principal in 2021/22 in its analysis.

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7 Comments

  1. Turkeys don’t vote for Christmas.

    We’ve had more than a decade of stagnant budgets, where more for less is the mantra.

    Those that decide where those ‘efficiencies’ must come from are not going to shine a light on themselves are they!

    Bottom line is that less funds make it to actual delivery, contributing to lower participation and fewer opportunities.

  2. Ian Vonn

    No surprise to see NCG there with the usual excuse for under paying staff and over paying executives. 7 Colleges with billions of ‘group’ staff. Whilst the CEO writes daft articles. What a waste of tax payer money

  3. Someone’s already said this, but it’s a point worth reiterating – these college principals get paid their pensions in salary because they have maxed out their allocation….now, as a low level college lecturer, can you ever imagine maxing out your pension allocation. Nope, but the fat cats keep getting fatter, don’t they….time for action, please, UCU….