Universities that pay their vice-chancellors more than the prime minister’s salary will have to justify the pay or face fines, under sanctions to be announced by the universities minister on Thursday.

Jo Johnson is expected to warn a conference of university leaders that “exceptional pay can only be justified by exceptional performance”.

He will say he is instructing the new regulator, the Office for Students (OfS), to introduce a rule that any institutions paying their vice-chancellor more than £150,000 will have to explain their decision to do so. Those that do not comply will be subject to action by the watchdog, which will be able to impose penalties, including fines.

Universities will also have to publish details of all senior staff earning more than £100,000 a year, and guidance will be issued on the role and independence of the remuneration committees that decide salaries.

Mr Johnson’s warning comes after a summer in which vice-chancellors have been fiercely criticised by unions, students and politicians for their high salaries, which average more than £280,000 and typically rise each year by above-inflation increases.

“When students and taxpayers invest so heavily in our higher education system, excessive vice-chancellor salaries send a powerful signal to the outside world,” Mr Johnson will say. “Greater restraint is required.”

Louise Richardson, vice-chancellor at the University of Oxford, this week criticised “mendacious” press attacks on salaries.

“My own salary is £350,000. That’s a very high salary compared to our academics who I think are, junior academics especially, very lowly paid,” Prof Richardson told a conference. “Compared to a footballer, it looks very different, compared to a banker it looks very different. But actually, we operate, as I keep saying, in a global marketplace.’’

In an interview with the Financial Times, Janet Beer, the new head of the sector group Universities UK, also questioned why vice-chancellor pay was compared to the “arbitrary . . . nonsense” figure of the prime minister’s salary.

However, Mr Johnson will tell the UUK conference on Thursday that universities should introduce “remuneration codes” for senior staff, including ratios of top pay to median staff pay, and explanations of any salary increases that are larger than rises in average pay across the institution.

All the proposed measures will be subject to consultation before final decisions are made.

Before the speech, the Department for Education announced that Nicola Dandridge, the OfS chief executive, and Michael Barber, its chair, had both announced they would show leadership on the issue by cutting their salaries by about 18 per cent and 10 per cent respectively.

Ms Dandridge will earn £165,000 a year after being offered £200,000, while Sir Michael was offered £60,000 on a part-time basis and has accepted £54,000.

Sally Hunt, general secretary of the University and College union, criticised vice-chancellors for having hidden behind “shadowy remuneration committees” when it comes to their pay.

“Over two-thirds of vice-chancellors sit on their own remuneration committees and three-quarters of universities refuse to publish full minutes of the meetings where leadership pay is decided,” Ms Hunt said.

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