University of Bolton must justify vice-chancellor Prof George Holmes' £222,000 salary

Universities minister Jo Johnson issued a stark warning to institutions yesterday that they must prove the worth of their leaders or face action.

Last month, Bolton vice-chancellor Professor George Holmes said that university chief's in the UK were not overpaid and could earn more abroad.

Prof Holmes earns £222,000 a year, compared to Theresa May's current £150,000 salary.

Mr Johnson told the Universities UK annual conference that 'exceptional pay can only be justified by exceptional performance'.

He outlined plans to instruct the new regulator, the Office for Students (OfS), to take a series of steps designed to curb pay hikes.

Universities will also have to publish details of all senior staff earning over £100,000 a year, and there will be new guidance, covering issues such as the role and independence on university pay committees, which usually decide on leadership salaries.

Institutions that fail to do so could face action by the OfS, who will be able use their powers to impose penalties such as fines.

Mr Johnson said: "The debate over student finance has, rightly, increased public scrutiny of how universities spend the money they receive from fees.

"When students and taxpayers invest so heavily in our higher education system, excessive vice-chancellor salaries send a powerful signal to the outside world."

He added: "Exceptional pay can only be justified by exceptional performance, which is why I will ask the new Office for Students (OfS) to take action to ensure value for money and transparency for students and the taxpayer."

The measures will be put out for consultation before final decisions are made.

Mr Johnson is expected to urge universities to introduce 'remuneration codes' for senior staff, including publishing the ratios of top pay to median staff pay, and explanations of any salary hikes that are larger than increases in average pay across the institution.