Universities spend £600 million on severance pay in four years

Annual severance payments to staff at English universities rose by almost 70 per cent in four years to reach an annual total of almost £190 million, it has emerged.

Data from the Higher Education Statistics Agency show that more than £600 million was spent on compensation for “loss of office” to almost 37,000 people from 2016-17 to 2019-20.

The annual total climbed continually over the period and reached £188 million in the 2019-20 academic year, the tail-end of which was hit by the pandemic, representing loss-of-office payments to 11,300 people.

This was a 15 per cent increase on the £163 million in severance payments made by English universities the year before and 69 per cent higher than 2016-17, when it was £111 million.

Such payments are often made to staff taking the option of voluntary redundancy but may also include senior leaders such as vice-chancellors who agree to leave posts early.

Ruth Levin, senior national education officer at the Unison union, said: “Universities should invest in creating new jobs and keeping experienced staff, not paying them to leave.

“This approach makes no sense, especially when many higher education employers are struggling to recruit essentially because rates of pay are so low.”

More than a dozen universities shelled out a total of more than £10 million in severance payments over the period, with the highest total, £37 million, spent by the University of Manchester, one of the largest institutions in the sector.

Around half of this was spent by the university in 2019-20 on payments to 870 people, the data show, with the £18.5 million annual total also being the biggest amount in the English sector that year.

A spokesman for Manchester said the university had “undergone several programmes of change” over recent years and 2020 had seen “a voluntary severance scheme as part of measures to control costs during the pandemic”.

“As with all decisions which affect staffing levels, we worked closely and transparently with colleagues and in consultation with trade unions.” 

Other universities with large severance payment totals over the period included the University of Plymouth, which spent £27 million from 2016-17 to 2019-20, and the University of Nottingham, which spent £22 million.

Most of Plymouth’s total was spent in 2018-19, when the institution ran a “voluntary leaving scheme” that was “open to all staff as part of a university-wide programme to realign our cost base and prioritise future strategic investment in key areas”, according to a spokeswoman.

“It reflected both voluntary leaving financial incentives as well as statutory pension payments,” she added.

Nottingham, meanwhile, spent £15 million on severance payments in 2019-20 after bringing in “an enhanced voluntary redundancy scheme” alongside other budget saving measures to tackle projected income losses of £150 million from the pandemic.

“This meant that we did not have to make any compulsory redundancies and were able to weather the significant financial impacts of Covid-19,” a spokeswoman said.

The voluntary Senior Staff Remuneration Code for Higher Education, published by the Committee of University Chairs in 2018, says that severance pay must be “reasonable and justifiable”, while the former regulator, the Higher Education Funding Council for England, said in 2017 that there “should be no perception that poor performance is being rewarded”.

Senior leaders receiving large pay-offs during the period covered by the Hesa data include Peter Horrocks, vice-chancellor of the Open University, who was paid £242,000 on top of his £321,000 salary when he quit in 2018. Bill Rammell received £187,000 “compensation for loss of office” when he left the University of Bedfordshire in 2019, while Christina Slade got an extra £429,000 on leaving Bath Spa University in 2017.

Meanwhile Russell Group institutions spending millions on severance pay have previously been accused of trying to shed academics who they perceived to be underperforming ahead of the research excellence framework.

simon.baker@timeshighereducation.com