The prospect of a widening pay gap between elite institutions and the rest of the pack has been raised, as the University of Exeter considers pulling out of national bargaining to give staff pay rises beyond the reach of the "poorest" institutions.

David Allen, Exeter's registrar and deputy chief executive, recently urged staff to back a move to local bargaining. Durham University is already considering such a move.

Both universities are among the top 10 in the country in terms of the proportion of students with grades of AAB or better at A level, leaving them well placed in the competitive market to be introduced from 2012.

The government has said that universities will be allowed to compete for as many students as they wish at the AAB level or above, while 20,000 student places will be stripped from core allocations and auctioned off to institutions that charge fees of less than ?7,500.

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The University and College Union says institutions wishing to switch to local bargaining may tempt academics by offering pay rises and highlighting recent low UK-wide deals, such as the offer of a national pay rise of just ?150 for next year.

But universities will seek changes to contracts and increased "academic productivity" in return, the union argues.

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Mr Allen addressed Exeter staff in a presentation on 12 July, a video of which has been seen by Times ÖйúAƬ.

Considering the general prospects for ÖйúAƬ, he said there would in future be "two types of university: AAB universities and ?7.5K universities".

Addressing the issue of national pay bargaining, Mr Allen said: "Why should we pay the same as Aberdeen? Why should we be tied to the affordability of the least able to pay when we are going to be one of the more successful universities?"

He described national negotiations as "simply reviewing an already existing pay spine and paying what the poorest university can afford".

Mr Allen said he would "like to be able to sit down with the trade unions and say, 'We think we can reward staff better if we have a more local approach to pay bargaining than the current arrangements', which are rather stuck in the 1970s, it seems to me."

The national pay spine covers a range of staff from cleaners to senior lecturers.

The national award, negotiated through the Universities and Colleges Employers Association, was 0.4 per cent this year and 0.5 per cent last year - raising fears that pay could become uncompetitive.

Durham will conduct an appraisal of local bargaining in time for 2012.

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Its executive committee noted that any "advantages around possible local bargaining in the future would be related to increasing competitiveness, not controlling costs", according to minutes from a meeting in February.

Imperial College London, which is already outside national bargaining, has offered ?500 or a 2 per cent rise (whichever is greater) for next year, above the ?150 Ucea offer.

But at London South Bank University, which withdrew from national bargaining in March 2010, staff have yet to receive the 0.4 per cent or 0.5 per cent awards.

Local UCU members held a one-day strike in June in protest at the decision to withdraw.

Michael MacNeil, the UCU's head of ÖйúAƬ, said of universities wishing to leave national bargaining: "Every time additional pay is offered as an incentive, they want something back, which would often be a renegotiation of key parts of the contract."

Mr MacNeil said the main buzz phrase used by university human resources staff at present was increasing "academic productivity". But he said they were discussing the concept "without actually defining what they mean by that".

Mike Robinson, national education officer for Unite, said: "Nobody on the trade union side ... wants to end national bargaining, but in reality Ucea subscribers are coming very close to making the system unworkable."

A Ucea spokesman said the pay offer for next year "was made against a background of institutions facing considerable uncertainties and is in alignment with the mandate given to us". He pointed out that the 151 institutions opting into national bargaining was the same number as last year.

Matthew Knight, chair of Universities Human Resources, said the number of universities actively considering withdrawing from national bargaining was "fairly small".

But he added that universities pulling out "would do it in order to have in place arrangements which are different to those which apply nationally, which means differences in contracts - relying less on incremental pay spines, more on individual performance-related salaries".

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john.morgan@tsleducation.com.