Doing the business on pay

University academic and academic-related staff look set, after the formalities of ballots, to accept the 5.8 per cent pay offer over two years. Students can breathe a sigh of relief as the threat of disruption recedes.

The award is moth-eaten given how far academics have fallen behind. It will not even help close the growing gap with schoolteachers if this week's pay review recommendations for them are accepted in full. But at least, because of the length of the dispute, the whole 5.8 per cent will be paid this year. The second tranche is due in April in old universities and in September in new. The award could hardly fall foul of a post-election pay freeze and the baseline will be raised the full amount this year.

By the time the next negotiations come around, academics could, Dearing willing, have a pay review body. How the teachers', nurses', doctors' and senior salaries reviews fare will show how much this might improve things. A figure set by an independent review body is a stout cudgel with which to pound government and employers but it does not necessarily produce the money to meet the cost.

The Labour party has much moral credit riding on its commitments to greater fairness and to holding down public spending and public sector pay. Those on top salaries cannot expect to get the 6 per cent rises recommended this week. The doctors, too, will have a thin case; nurses and teachers may do better. In promising this week to freeze pay rises for the 5,000 top-paid public servants, Labour will strike a popular note. It may help to alter the present climate of winner-takes-all, with its sharply diverging pay levels.

Such divergence has been developing recently in the universities. The research assessment exercise is partly responsible, allowing star professors to negotiate deals outside the pay scales. The growing need for universities to raise private revenue and the evident difference it makes to have successful managers has also fuelled competition for canny vice chancellors.

The figures for top university people's pay, published by The THES this week, show this widening gap. While most academic staff are stuck in the high-Pounds 20,000 to mid-Pounds 30,000 band, the number earning over Pounds 50,000 is rising: the going rate for a vice chancellor is nudging Pounds 100,000 and, where earnings are tied to performance, as at the London Business School, we are coming within spitting distance of seeing the first academic paid Pounds 200,000. The medics remain, as for so long, peculiarly blessed.

A Labour government is likely to make sharp pay hikes for top people unfashionable. While this will reduce envy, it will not release much money. The uncomfortable message for universities is the one from the LBS. Substantially higher pay all round will be forthcoming only where the institution has substantial private sources of revenue. It will not be provided by this or any other government.