A university vice-Chancellor has suggested that he deserves his salary of £360,000 as he has to oversee huge staff redundancies.

Peter Horrocks, the head of the Open University, said that his institution is undertaking “the largest re-structuring redundancy programme ever in UK university history” and so needs an “appropriate leader” to oversee the process.

During a parliamentary hearing on value for money in higher education, MPs on the education select committee repeatedly asked vice-chancellors to justify their levels of pay, with MPs signalling that greater regulation may be needed to curb high pay.

Asked by Ian Mearns, a Labour MP for Gateshead, whether vice-Chancellor salaries are “now part of a racket”, Mr Horrocks acknowledged that the issue could “potentially undermine the value of universities in this country”.

Mr Horrocks added that vice-Chancellors' salaries should not be regulated, as this would not take into account the “diversity and different needs of each institution”.

Mr Horrocks, a former BBC executive, went on to say: “The Open University, as a result of this dramatic fall of 60pc in part time study, is facing some of the most convulsive changes.

“We are going to have to carry out the largest re-structuring redundancy programme ever in UK university history as a result of this fall in part time.