£1m bonus for bosses at college accused of £36m financial scandal

Senior staff at a university involved in a £36m financial scandal last year have been given performance-related pay bonuses worth a total of £1m.

The payments by London Metropolitan University come as it attempts to pay back £36m to the Government for overclaiming for the number of students on roll.

Last November, The Independent reported how the university failed to declare accurately the number of students that had quit courses – netting millions of pounds it was not entitled to.

The £1m worth of handouts has provoked fury from union leaders who say 350 jobs have been axed to make savings. In addition, Malcolm Gillies, the vice-chancellor, recently wrote to all staff asking them for suggestions as to how it could make savings.

Max Watson, chairman of LMU's Unison branch, said: "Staff are sick and tired of hearing about the need to tighten belts and make savings when our overpaid senior managers award themselves these banker-sized bonuses. This is London Met not Barclays." He added: "Our pay offer currently stands at a pitiful 0.4 per cent with further cuts on the horizon and we've got our workload doubled to cope with the job of losses of last year. I wonder how students feel about their fees going towards such bonuses – especially for the very same senior managers who steered us into the unprecedented financial scandal of last year."

The rises are confirmed in an internal email sent by a senior member of the university's human resources department which said: "PRP (performance related pay) for around 200 Research Institute Directors, Academic Leaders, Professional Managers, Senior Managers and Professors total around £1m per annum."

By contrast, just £100,000 is paid as "merit awards" to support staff and £600,000 to academic staff.

LMU was left in a financial dilemma following the revelation it had overclaimed for students. Its then vice-chancellor, Brian Roper, and its entire governing body quit. A report into the situation said senior executives "share collective and in some cases line management responsibility for the failings in relation to data quality". A subsequent inquiry by the law firm Eversheds ruled out disciplinary action against members of its executive board.

LMU has been told it must start repaying the £36.5m to the Higher Education Funding Council for England at the rate of £10m a year from this September. The university claimed in a statement yesterday that it was "misleading" to refer to the payments as bonuses. "Performance-related pay has, from the founding of the university in 2002, formed an embedded part of the contract for academic staff and for senior staff more widely," it said.

"Two separate but similar schemes operate: one for around 200 senior staff and the other for all other levels of academic staff.

"PRP is not a 'bonus' paid on top of annual salary. It is paid for performance against specific targets, set annually and measured by quantifiable output."