Andrew Adonis is right. Through all the fun we’ve been having as he’s raised issues about higher education, there have been some key themes he’s returned to. One is that fees are too high and that you could reduce them by cutting management salaries. As the summer has worn on we’ve had different versions of this formula, and many people have cruelly mocked his lordship’s maths. Several of the best twitter spats were between Lord Adonis and Danny Blanchflower (Professor of Economics at Dartmouth College) who accused him of getting his sums wrong.
Here’s Lord Adonis interviewed in Cherwell:
However, Adonis argues that those who have challenged him on this point, such as economist Danny Blanchflower, “haven’t done the maths”. At Oxford, if the total pay of the 452 individuals earning over £100k was cut by 25%, every undergraduate could have their fees cut by £1000 next year. A change which would enormously benefit every student, and affect just 3% of its staff.
This is true. Lord Adonis was right.
Oxford’s published financial statement shows the salary banding of staff above £100k (another of those OfS requirements that universities are already doing). There are 451 people listed there.
If you add up the 451 people (using an assumption for these purposes that they are all on the midpoint in these salary bands) they are paid a cool £65million. A quarter of that would be £16.3million, which would easily be enough to reduce home & EU fees by £1000 (Oxford has a little over 10000 home & EU UG students). There are a few caveats though. Firstly Lord Adonis doesn’t want this trick to be done just once, he thinks they should reduce fees by £1000 for five years. That can’t be done just by taking successive 25% slices off management salaries (in the last year they’d all have a negative salary).
Lord Adonis has also continued with his assumption that all 451 are part of a bloated management. That can’t be right. For a start, Oxford, as with other universities, splits out clinical staff where it makes payments on behalf of the NHS. The Medical Sciences division is very large at Oxford – a third of those 451 are getting an NHS payment – that probably constrains the ability to cut those wages. But, just as the 152 clinical staff highlights that there are doctors in the 451, so a large proportion of the remaining 299 are going to be professors rather than deputy directors of HR. There’s a clue – the highest paid person in the university got £880,000. That can only be because they got paid a royalty on some form of intellectual property in that year – why else would they get twice the pay of the VC? Clearly this person, and many others of the 451, are highly transferable. After all, Professor Blanchflower has been taunting Lord Adonis from his chair at an Ivy League college in New Hampshire.
So, sadly, if Lord Adonis was right about the maths, he’s hardly right about the data underlying the figures. This is not a cadre of 451 administrators who’ll gladly take a 25% pay cut. Even if this could be done, it’s a one-off, a windfall that could not be taken again.
But, although some policy makers and newspapers think that there are only two universities in England, this is not a game that you could easily play at other universities. This is the version of that table from Oxford Brookes University.
A quarter of these salaries only raises £337500, which is only 0.4% of Brookes’ £77million Home & EU UG FT tuition fees. Brookes has slightly more UG students than Oxford, so raiding its management salaries would see a fee reduction of £30 per student. As an ex-poly, no doubt Lord Adonis has a different fate in mind for Brookes.
Here’s the problem. ‘Doing the maths’ is superficial. The assumptions made are staggering, especially those about the uniformity of the sector. They also refuse to deal with the funding system as it is established. If Oxford had a windfall £16million it would be well advised to leave its fees exactly where they are. Reducing the fee only really saves the Treasury money – if they had £1000 per student, they’d be much better advised to sink it into supporting students who need the money.
We’re promised a ‘major review’ of student finance and university funding. It’s vital that it does not start from a naive assumption about costs, from management salaries to differential costs between courses. Lord Adonis seems to think this Herculean task can be done quickly (he’s referencing the Augean stables now) and he’s wrong again – this won’t take a day or a month, but should take a year. No more bodged attempts at this please.