CEOs pay: what’s happening?

A recent Chartered Institute of Personnel Development survey found that median pay for bosses of the UK’s biggest companies hit almost £4m last year – up from about £3.5m in 2016. https://www.bbc.co.uk/news/business-45183881

That set me thinking about the work the DfE undertook earlier this year in relation to the pay of CEOs of Multi Academy Trusts and whether or not the findings had been published anywhere?

Readers will recall that Eileen Milner, the chief executive of the Education and Skills Funding Agency, wrote in February to the chairs of 87 MATs employing individuals earning more than £150,000, asking them to explain their rationale for doing so by early March and to justify paying these salaries.

The intervention comes two days after the Department for Education minister, Lord Agnew, said that no MAT boss should receive a larger pay increase than their teaching staff and that CEOs should have their pay cut if there is a downturn in the performance of their schools. It follows a similar letter sent in December 2016 to single-academy trusts paying leaders more than £150,000. Lord Agnew’s February letter can be accessed at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/683075/Lord_Theodore_Agnew_letter_to_chairs_of_academy_trusts.pdf

Further letters appear to have been written to some MATs in April and July seeking more information. These can be found at https://www.gov.uk/government/publications/letters-to-academy-trusts-about-levels-of-executive-pay 28 letters were sent in December 2017; 88 in February 2018 and a further 96 letters in either April or July 2018. With a final return date of 20th July, the EFSC should now have sufficient information to publish a report on the state of the most highly paid staff in the public education service.

There may be an issue relating to pensions should those not undertaking any teaching or direct site leadership of a school remain in the Teachers’ Pension Scheme. In the past, when becoming local authority staff most would have moved out of the TPS into the relevant LGPS for their authority. I don’t’ know how LGPS scheme managers and trustees, of which I am one for Oxfordshire’s scheme, would approach the arrival of such highly paid staff so near pensionable age, but the DfE does need to make clear the boundary for who can belong to the Teachers’ Pension Scheme even if they aren’t actually in a school?

The level of salaries paid to senior staff in the school system is clearly a matter that won’t go away. After all, perhaps 100 MATs paying more than most local authorities pay their Director of Children’s Services must be of concern in term of expenditure, especially once pension and other on-costs are added to the basic salary.

The problem really dates back to the Labour government and the development of Executive Headteacher roles without the government making it clear how such professionals should be paid. However, the seeds of that confusion date even further back into the early 1990s and the refusal to police the upper end of the Leadership Pay Scale for large schools facing recruitment difficulties. Failure to deal with a problem doesn’t always make it go away; sometimes it allows it to grow into a serious issue that is much harder to tackle as is now the case with the pay of CEOs of MATs.

 

 

 

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School transfer costs

Once you move from a placed base system for the governance of schools, to one where a market model is the preferred choice, it is probably inevitable that each year schools will move between Multi- Academy Trusts for a variety of different reasons. Today, the DfE has published a note on their statistic pages about the number of such moves and the financial implications. https://www.gov.uk/government/statistics/academy-transfers-and-funding-england-financial-year-2017-to-2018

In the five years between 2013-14 and 2017-18, some 628 academies moved between MATs or MACs or moved from being single entities into a multi-school trust. Even though the overall number of academies managed as national schools has been increasing year by year, the percentage of academies moving has also been increasing. In 2013-14 the percentage of academies moving between or into Trusts was 0.5% of the overall total. By 2017-18, schools moving or joining Trusts accounted for 3.3% of the overall total of academies. It would have been helpful if the term financial year had been defined in the document. It must be assumed that it refers to the DfE’s financial year and not that of academies: they are not the same, and that has caused issues with the DfE’s accounts in the past.

In the days before the academy programme it is difficult to think of any local authority school being moved to another authority’s control, although whole authorities were broken up for a variety of reasons. Northamptonshire will be the next authority to see its remaining maintained schools split between two new unitary councils, after the financial problems that beset the county council earlier this yar. The DfE might like to publish data on the costs of such restructuring alongside these costs in the academy sector, just for comparison.

2017-18 was the first year that the number of schools receiving grant funding on moving between Trusts fell; from 60 schools the previous year to 49 in 2017-18. However, the savings were proportionally not as significant, as the bill over the two years such cash payments may be spread was only £370,000 less. Hopefully, there will be a larger decline in such expenditure in 2018-19.

Over the five year period, the cost to the system has been some £22 million. The DfE note explains what has been covered by this grant funding.

As the DfE explains, an academy can change trust arrangements only on the agreement of the Regional Schools Commissioner (RSC) acting on behalf of the Secretary of State (prior to 2014 decisions were taken by the Secretary of State).  It may apply to do so voluntarily – for example, a single academy may apply because it wants to benefit from the greater capacity (eg school improvement) from being part of a multi-academy trust; or the transfer may be initiated by the RSC because of concerns about the performance of the academy or the trust responsible for it.  The latter scenario is sometimes referred to as re-brokerage and is similar to intervention in local authority maintained schools, which sees them transformed into sponsored academies. Of course, before academies the local authority either had to solve the problems with the school or opt to close or amalgamate it with another school.

The largest sum identified in 2017-18 was for an academy in Stockport, where the cost identified was in excess of half a million pounds. Think what that cash might have done if used in other ways.

 

Tackling Academies and Trusts

Dear Secretary of State,

When addressing the NGA recently, you said;

On those rare occasions when a school is failing – be in no doubt – we will intervene fast and we will take the serious action necessary.

In relation to maintained schools you also said that ‘an Ofsted Inadequate judgement alone would lead to hard action to convert a Local Authority maintained school to an academy.’ However, you didn’t say what intervention would mean for an existing academy declared Inadequate by Ofsted?

Can you explain what action will be taken where the school declared Inadequate is already part of a multi-academy trust?

Where the school is also under financial special measures, one might expect some form of obvious action, such as a published notice of intent to close by the Regional School Commissioner. Where the school has well above average absence rates one might expect action to intervene fast, if you mean what you said.

Now, either your words were empty rhetoric in relation to academies or you really do want all schools to be good schools and will take steps to improve inadequate schools. Can you please reassure me that no school in Oxfordshire would be allowed to drift for more than a year after being declared an Inadequate Academy by Ofsted and with a recent monitoring inspection that concluded that ‘Leaders and managers are not taking effective action towards the removal of special measures.’

If this is not a case for the use of your policy of fast intervention, perhaps you can explain why it doesn’t meet your criteria.

You are also going to take action about the transparency of multi academy trusts and the pay of those that work in central offices administering the Trust. This can only be a good thing. In Oxfordshire several of the Trusts with headquarters outside the County pay their CEOs more than the £150,000 level you recently wrote to Trusts about, whereas according to their published accounts, none of the Trusts with its headquarters in Oxfordshire has come close to this limit.

Many primary schools are not now willing to join a Trust or even become an academy because once the decision has been made it is irrevocable. However, a Trust may either broker a school to another trust or in extreme circumstances give up the school altogether, but a school may not leave a Trust, even if the terms on which it agreed to join change dramatically. Such a risk doesn’t seem worth leaving the certainty of their present governance arrangements in the eyes of many governors, especially where the central charge may be little different to that offered for the purchase of traded services by their local authority.

Your speech did little to dispel the fog of uncertainty about how the system of schooling across England works for the benefit of all pupils. Please consider how all schools can work together and where there are many MATs in an area who has the ability to coordinate both their actions, those of academies not in Trusts and the remaining maintained schools whether they are voluntary or community in nature.

The Pay of Academy Staff

In the same week that I asked a question of Oxfordshire’s Cabinet Member for Education about the number of employees with salaries over £150,000 in Multi-Academy Trusts operating in Oxfordshire, the Public Accounts Committee has commented on the same issue in a report published today. https://publications.parliament.uk/pa/cm201719/cmselect/cmpubacc/760/76002.htm

The Cabinet member was unable to answer my question as, not surprisingly, the county doesn’t collate the information. However, in my supplementary question, I identified five MATs, all with HQs outside the county, where there was on officer listed in their 2017 accounts as being paid in excess of £150,000. In due course, my list will appear on the county council website and I will publish the link here.

In the Public Accounts Committee Report, issued today, it is clear that the government wrote to all stand-alone academies where in their accounts up to August 2016 there was an officer paid more than £150,000 to ask for an explanation by the 15th December 2017. I haven’t seen an FOI request for the responses. The original letter from the ESFA of 4th December only went to 29 single academy trusts (i.e. academy trusts with only one school in the trust) where the ESFA could identify from the accounts that the trust was paying at least one person over £150,000 and was to ask why such large sums of money had been paid.

In February this year, the Minister wrote to all Chairs of academy trusts in England saying:

 ‘I believe that not all boards are being rigorous enough on this issue. CEO and senior pay should reflect the improvements they make to schools’ performance and how efficiently they run their trusts. I would not expect the pay of a CEO or other non-teaching staff to increase faster than the pay award for teachers. I intend to continue to challenge this area of governance. My view is that we should see a reduction in CEO pay where the educational performance of the schools in the trust declines over several years.’ DfE letter 21st February 2018 reference 35 in the PAC Report.

There has been a history of neglect over senior staff salaries dating back to the Labour government and the emergence of the Executive Head or Principal position soon after the start of the century. Such a grade was never formally recognised in the pay and conditions agreements, and once Mr Gove freed up pay for academies, with no government restraints in place, it was open season for those that wanted to see pay rise to closer to what could be earned in the commercial sector. Buying former DfE officials was also always going to be expensive, but was no doubt one of the justifications used. Using public money to pay related parties is often even less acceptable, as the PAC note in their Report.

We heard of related party transactions where the rules were not properly followed, or where there were doubts about the propriety of the transactions. For example, Wakefield City Academies Trust purchased IT services worth £316,000 from a company owned by the Chief Executive of the Trust, and paid a further £123,000 for clerking services provided by a company owned by the Chief Executive’s daughter. We similarly heard that the founder of Bradford Academy, who was a former teacher, was ordered to repay £35,000 after being sentenced to prison for defrauding the school. The founder and other former members of staff at Kings Science Academy paid £69,000 of Government grants into their own bank accounts. There have also been problems with related party transactions at the Bright Tribe Academy Trust, which resulted in schools being removed from the Trust.

Academy trusts are required to demonstrate to the satisfaction of their own auditors that related parties have not made a profit from the relationship (i.e. that transactions are at cost or below). We were concerned that determining whether a service has been delivered at cost is dependent on information from the supplier, who may have a vested interest in manipulating or inflating this information and is in a position to do so. We questioned whether there were incentives for trustees to take advantage of the system, due to the weaknesses in the system of oversight. The Department, noting our dissatisfaction with the current processes, committed to reflect on the adequacy of the current arrangements. Following our evidence session, the Parliamentary Under Secretary of State for the School System wrote to all Chairs of academy trusts to remind them of the need to scrutinise any related party transactions, and to ensure that a full and proper procurement process is following and the trust is able to demonstrate that the services have been provided at cost.

Paragraphs 10 and 11 of the PAC Report: https://publications.parliament.uk/pa/cm201719/cmselect/cmpubacc/760/76002.htm

Should local authorities be required either to provide audit services for all academies or at least to review the accounts of those academies with responsibility for schools within their locality? The LGA could apportion responsibility for MATs that cross boundaries in order to ensure that all are looked at by at least one authority that could then report to the appropriate local scrutiny committee.

Public money, especially in a time of austerity, should be spent in the most effective way. TeachVac has cost the government nothing, but demonstrate how a low cost recruitment site works for the benefit of all. The notion of ‘public service’ and not ‘profit from public funds’ must once again be to the fore.

 

 

 

 

Productivity gain or worsening working conditions?

Ahead of the ASCL Conference in Birmingham this weekend, there is a report in the press today about rising class sizes in secondary schools.

An analysis by teaching unions has suggested 62% of secondary schools have had to expand class sizes between 2014/15 and 2016/17. The study, conducted by the NEU, NAHT and ASCL – as well as non-teaching unions Unison, GMB and Unite – showed that of 150 local authorities, 83% saw a rise in average class sizes across their secondary schools, while 14% have seen a fall and 3% saw no change.

This report should come as no surprise to anyone connected with education. Indeed, I would predict that class sizes will continue to increase in size over the next few years as the secondary school population expands from its low point reached in 2014 and budgets also come under pressure.

However, there is an argument to be had about the usefulness of class sizes as a measure. They can be affected by factors such as the degree of non-contact time allowed to staff; policy over options at GCSE and for post-16 courses as well as space considerations.

An alternative measure is the Pupil Teacher Ratio. Even here there are now problems: how do you define a teacher. Do you only include those with QTS and exclude Teach First and School Direct trainees, as well as any other unqualified teachers or cover supervisors?

Anyway, I have included the changes in PTRs across different types of secondary schools since the School Workforce Census was introduced. The result confirms the findings from the unions and could have been researched without the need to waste valuable time in hard-pressed local authorities. As an added bonus, these are DfE approved numbers, so the government cannot quibble about them.

Changes in Pupil Teacher Ratios in secondary schools
2011 2012 2013 2014 2015 2016
All State funded Secondary schools 14.9 14.9 15 15 15.3 15.6
Converter academies 15.2 15.8
Sponsored academies 13.6 15.3
All academies 14.8 15.6
UTCs/Studio Schools 12.9 13.8
Free Schools 12.6 15.3
LA maintained 15 14.9 14.8 14.9 15.1 15.4

The big change has come since 2015 and probably reflects the loss of extra funding academies received in the early days of the Gove period at the DfE. The effect the loss of that extra cash has had on the funding of these schools is now obvious: sadly, once becoming an academy there is normally no way back. For that reason, heads gathering in Birmingham might want to examine the value for money of back offices at MATs.Source DfE SFR 25/2017 Table 17a

After all, it was the heads that complained for decades about the dead hand of local authority expenditure. Having been released from the frying pan of Local Authority spending patterns they must not fall straight into the fire of MATs with high relative overheads.

There are many other issues that secondary heads will need to consider at their conference. Perhaps one of the most pressing is finding the teachers to fill these classes that now have more pupils in them. It may be a productivity gain, but it does impose a greater workload on teachers and may the class size and PTR changes partly explain the growing loss of teachers with 3-5 years’ experience previously discussed on this blog.

In passing, the head teachers might also want to reflect upon the changing nature of the teacher vacancy market that helps provide the teachers. With the TES group reporting a loss of 2016-17 and the DfE working on a new vacancy platform, how teachers are recruited could become an important area for discussion over the next few years.

As one of the instigators of TeachVac, the free platform for vacancies, I am, of course, not an idle by-stander in this debate.

Schools’ Costs

At the beginning of February the DfE published a note to help the School Teachers’ Review Body (the STRB) and other interested parties understand about costs for schools in England at the national level over the period2018-19 to 2019-20. You can read the document at https://www.gov.uk/government/publications/schools-costs-technical-note

Many school leaders and governing bodies will find the DfE’s analysis reads like something created in a parallel universe. Core funding over the two year period the DfE states is to increase at 3.1%, slightly ahead of government predictions of inflation at a predicted 2.9% over the same period. If these percentages turned out to be correct, then schools overall would find budgets under less pressure than expected. However, the DfE’s analysis doesn’t take into account any variations to local government pension schemes rates for employers, as they were not known at the time the technical note was put together. The analysis cannot also prejudge what the STRB will do about pay rates for teachers as a group. Will they hold the line or recognise the recruitment challenges schools in some parts of the country are facing and the system as a whole is facing in trying to entice graduates to train as teachers in some subjects.

The DfE also helpfully comment in their technical note that their high level analysis indicates that if the 25% of schools spending the highest amounts on each category of non-staff expenditure were instead spending at the level of the rest, this would save these schools an aggregate £1 billion that could be spent on improving teaching.

As regular readers of this blog know, TeachVac www.teachvac.co.uk was conceived for this very same reason to offer a free recruitment platform for schools that would create savings from recruitment in order to support expenditure on teaching and learning.  We know that TeachVac is saving schools money now, just as the DfE’s own vacancy scheme will if it ever becomes an effective player in the recruitment market.

By 2019-20 the DfE sees academies as bearing the brunt of the cumulative net pressures as a result of the growth in pupil numbers and the fall in protection payments. The maintained sector will have to cope with the effects of local authorities retaining schools block funding for Education Support Grant (ESG) general rate duties over the three year period.

These figures act as a warning to the remaining maintained schools considering becoming academies. They need to consider the financial situation very carefully in the context of their own situation as well as these national figures to see whether they would be better or worse off.

The fact that the DfE has also apparently written to MATs and MACs where the chief officer earns more than £150,000 asking for a justification of the salary is also interesting. I heard one suggestion, not supported by the person making it, that these high salaries were the price the system paid for school leaders taking on the leadership of failing schools. A more insulting argument to the teachers and other staff working in these schools is difficult to envisage.

Might we perhaps be moving away from basic market economics and back to a negotiated national system of pay and conditions there are many that would welcome the better cost control such discipline would bring back into the system. However, the basic rules of supply and demand will always be difficult to ignore.

 

 

Can you trust the data?

How often do government departments have to reissue press notices? Following intervention from the Office for Statistics Regulation, the DfE have been placed in that position. The OSR letter can be read at
https://www.statisticsauthority.gov.uk/wp-content/uploads/2017/09/DfE-statistics-Ed-Humpherson-to-Mike-Jones.pdf The revised press notice and the other issue about MAT transfers raised by OSR concern matters dear to the policy objectives of Ministers, so any potentially misleading data are of concern.

However, the DfE statisticians also have to battle with others that don’t always provide data that is of top quality. As reported in an earlier post, about local authority expenditure per pupil, there are a couple of local authorities in one table in that Statistical First Release where the data must be suspect because of the reported level: it both cases, way too low.

Then there is the case of under-reporting by schools in areas such as fixed term exclusions and more specifically for the number of pupils placed on reduced timetables, but not excluded. This is an area where more work is needed to discover what is actually happening, not least in the academy sector. This work is important because of the potential safeguarding aspect.

Local authorities and the local Safeguarding Board may not be in full possession of the facts if academies do not fully report to the DfE. It would be a simple change to add to the funding letter that academies are required to report all statistics via the local authority where they are located unless the Regional School Commissioner has explicitly provided for an alternative system that is as rigorous. At present, this is an issue with one part of the dual system not working as well as the other and creating potential risks for young people.

At least these days, as with the re-issued DfE Press notice mistakes can be rectified when noticed. In the former days before the internet such mistakes could become set in stone. One of my first communications with government was to point out that pupil teacher ratios provided in a written parliamentary answer and reported in Hansard were wrong. I think the first local authority in the list missed the PTR and was allocated that of the next by mistake. It wasn’t picked up before printing and went into the record. An error notice appeared later, but who checks written PQs for later revisions? Nobody, I would hazard a guess. As a result, anyone using that data source would have inaccurate data. It doesn’t matter now, but might have then. One year, the Department had to re-issue a whole Statistical Volume because of the number of printer’s errors.

Today, the record can be set straight quickly and easily, even if the original error is retained as well.

Statistics are important as a source of information under-pinning decision making and debate, hence the need for accuracy. The question of management information that is separate from statistics is one that has always interested me. In some areas, such as the labour market for teachers, I have always believed up to the minute information is important to spot changes in trends as early as possible. However, this data is often in a raw state and not 100% accurate. Where to draw the line between management information and statistics is an interesting and ever changing debate as technology provides ever more exciting tools for data collection and analysis.