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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Idle cash is not not useful cash?

Is holding some £2.4 billion pounds of public money in reserves a good use of our money? The DfE revealed that in August 2017 academies and their Trusts were holding this sum in reserves against committed and potential future needs. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/728768/Academy_revenue_reserves_2016_to_2017.pdf.

The position seems to have worsened over the most recent period, as the DfE note states that: ‘This is a decrease of 0.6 percentage points from 94.5% of trusts in 2015/16. 95.7% of academies (6,715) were in trusts that were in surplus or breaking even at the end of 2016/17’. Despite noting that figures could not be provided at an individual school level, the DfE does state that:’ Smaller trusts are more likely to have a deficit. This means that only 4.3% of academies (300) were in trusts that were in deficit at the end of 2016/17.’ Of course it is possible for some schools in a Trust to have positive balances and others to have a deficit. Following Lord Agnew’s recent letter to auditors of academies and Trusts, it is perfectly possible to transfer funds between schools in this situation, something not possible in the maintained sector.

The note doesn’t seem to consider whether benchmarks for levels of reserves are appropriate for academies and MATs? In the past 5% of turnover was considered sufficient for secondary schools and 8% for primary schools to hold as reserves. Even allowing for central costs, MATs should not be holding significant amount sin reserves.

Earlier this week, I raised concerns with Oxfordshire’s the accounting for positive balances held by maintained schools and schools with deficits. I have the same concern about the use of a table showing ‘net’ reserves in the DfE’s note. Any lay person looking at the table and associated text might think that the net position was because deficits could be offset against surpluses. As noted, that is possible at the level of the schools within an individual Trust, but not between schools in different Trust as far as I am aware. For MATs the table really needs to be split into two sections; deficits that can be covered within a MAT and MATs where all schools are in deficit or stand-alone academies where there is no current provision for covering the deficit other than by reducing expenditure within the academy to a point where the deficit is eliminated.

The STRB might be helped to be made aware of any regional trends in schools with deficits that might relate to pay decisions. The alternative is that schools and MATs with deficits are randomly spread around the country and are the result of poor leadership rather than the consequence of any policy decision.

Although the Command Paper on Legislating for the Withdrawal Agreement between the UK and the EU (Cm 9674) contains a section on rights to residence of EU citizens, the DfE could usefully publish a paper on how school budgets, including those of academies might be affected, should a percentage of EU citizens decide to return home, possibly because of their jobs transferring to another EU country, after March 2019 and Brexit.

Some five per cent of pupils in Oxfordshire’s schools have EU citizenship of a member state of than the UK. Some 14 schools, mostly in and around Oxford has more than 10% of such pupils at the last count. Any significant withdrawal might put their finance sunder some strain.

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.

 

More or less local democracy in our school system: who cares?

The Public Accounts Committee (PAC) at Westminster has published a short and interesting Report into ‘Converting Schools to Academies’. https://publications.parliament.uk/pa/cm201719/cmselect/cmpubacc/697/69702.htm

There is little to disagree with in the Report. The process has been expensive and has caused problems with the remaining statutory duties of local authorities. The Committee cited pupil place planning as an issue, but could have included SEND issues and the education of children taken into care. They could have also realised that Free Schools and the dalliance with the 14-18 sector that brought us UTCs and Studio Schools also contributed to the problems with pupil place planning.

Oxfordshire is one of the few, (perhaps the only?) local authority to require a regional school commissioner to appear before its Education Scrutiny Committee each year to give an account of progress of academies within his remit. The answers to the Scrutiny Committee’s questions have revealed a weak and probably largely ineffectual system for improving school performance among academies. The PAC were right to comment on the need for better links with the Education and Skills Funding Council and the RSCs.

Of interest to Oxfordshire was the PACs comments about small rural schools and academies. Oxfordshire has a large number of small rural primary schools that are much loved by the county. The PAC said

Small rural schools, particularly primary schools, can face particular difficulties in finding suitable sponsors. Low pupil numbers may make rural schools financially unviable and their geographical isolation can make it more difficult for multi-academy trusts to provide support. The Department told us that, since 2010, 1,379 rural primary schools had registered an interest in becoming an academy. Of those, 984 had gone on to apply to become an academy, including 262 that were small rural primary schools.

 The PAC asked what, particularly for small rural schools, the barriers were to becoming academies and how the barriers could be addressed. The Department told us that, in principle, the opportunity presented by a joining multi-academy trust should be greater for a smaller school than a larger one, because there was the potential to achieve more economies of scale.

One wonders why, if the point on economies of scale is true, it is secondary schools that have rushed to become academies while these small primary schools have held back, even in many diocese where they already had links outside of the local authority. It may be that under the 2010 Act many original converters became stand-alone academies and only now are they joining together into multi academy trusts.

This means that there are now three separate governance systems for our schools, often running alongside each other; maintained schools, mostly primary schools; standalone academies, mostly secondary schools and Trusts that can be either primary, secondary or a mixture of both with a smattering of all-through schools as well.

These separate systems are expensive to operate and can cause problems as the PAC Report demonstrated. The DfE will, at some point, have to think how to re-join the parts into a whole. For me, one key question with be the place of local democratic accountability in the system. Do we want an NHS style school system with little local accountability or one more akin to what there was between 1944 and the early 2000s, with a significant role for a democratically elected local body aligned to the rest of local government? Regular readers of this blog will know where I stand.

How to run a National School

Recently Lord Agnew, the PUS for the School System wrote to firms that audit academies and their Trusts/Committees. Now a letter from a Minister carries with it both political and administrative weight when compared to one from a civil servant writing on behalf of their political masters. Lord Agnew’s letter can be found at https://www.gov.uk/government/publications/letter-from-lord-theodore-agnew-to-academy-trust-auditors

In the letter, , in the words of the DfE website, Lord Agnew ‘shares across the audit sector several key points that will help boards govern more effectively and make best use of the freedoms they have.’

So what are the key points in the letter? General Annual Grant (GAG) pooling is the first point specified.

Lord Agnew reminds the auditors that ‘The opportunity to pool GAG is particularly valuable, in particular to simplify the provision of support to weaker schools in a MAT until they can grow their pupil numbers. It is worth remembering that a MAT is a single financial entity.

This isn’t a power generally available to local authorities in relation to maintained schools and typifies the different power arrangements between schools in MAT/MACs and those schools still in the maintained sector. Interestingly, he doesn’t ask the auditors for a time limit on taking money away from some schools to support others. Auditors might like to consider whether this cross-subsidy between schools should really be open-ended or in need for regular justification, since Regional School Commissioners seem to differ in their approach to such weak schools. Auditors can provide helpful national guidance by acting in concert on this point.

By the time Lord Agnew has reached Auditors’ management letters, he is telling audit firms that, ‘We would like to see the recommendations made by auditors being implemented in a timely manner with scrutiny at board level to ensure that this is the case.’ Now whether or not he sees it as a duty on the auditors to see that the contents of these letters are addressed is an interesting question. Of course, if the issue is really serious, then the auditors should quality the accounts. However, this is something auditors are generally reluctant to do, even though the DfE itself isn’t unfamiliar with the process in terms of its own accounts and their relationship with the academy sector.

Lord Agnew also hope his letter will open up debate between the auditors and their clients. His list of Operational Challenges is interesting. These include,

  1. Are your clients using a standard employment contract for all teaching staff so that they can be cross deployed to different schools?
  2. Are they using the same exam boards in all their schools to enable cross school marking and also to optimise the point above?
  3. Do they have a central electronic purchase order system to ensure strong controls on expenditure?
  4. Do they have a central bank account that simplifies bank reconciliations and ensures that there is constant, easy visibility of the cash position?
  5. Are they benchmarking their supply costs and if over a number of years the level is constant have they considered employing permanent staff to fill some of this requirement thereby improving the quality and removing agency charges?
  6. Are they accessing the Department’s procurement arrangements if they are providing better value than they can achieve on their own?

The first of these is highly interesting in the sense of moving back to controlling the lives of teachers. When I joined Haringey, in 1971, my contract specified a school but added that the council had the right to move me to another school. With all schools in the Authority in a tight geographical area this wouldn’t have had much to concern me, even if was in use, which by then it wasn’t. With MATs/MACs spread across large areas, it might be helpful to understand whether this policy, advocated by the DfE, is having any effects on recruitment and retention of teachers both at classroom level and, more specifically, in terms of promotion to middle leadership if it means a house move to a different area?

If these powers are to be enforced on academies, then presumably they are both important and useful for our school system. In that case, why aren’t local authorities allowed to create them for maintained schools and what is the future for stand-alone academies?

Perhaps Lord Agnew will write to Directors of Children’s Services explaining why these operational challenges don’t matter in the remaining maintained schools?

 

 

‘intervene fast… take the serious action necessary’. Promises

Why has the Regional School Commissioner for North West London and the South Central Region not issued any warning notices to any school about poor performance since the end of 2016? The updated DfE list of such notice published earlier this week  https://www.gov.uk/government/publications/list-of-letters-to-academy-trusts-about-poor-performance reveals that the last notice issued was in December 2016 and that was to a school issued a pre-warning notice at the start of that year. Indeed, all the schools issued with notices in 2016/17 had previously received an earlier letter, meaning no new school in the region has been added to the list since early 2016.

Is the Office of the RSC not communicating to the DfE or has the RSC decided that the Secretary of State’s words in his speech to the NGA that ‘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’ doesn’t apply in the North West London and the South Central Region?

It cannot be that there are no Inadequate schools within the region, although there may not be many. The RSC appears also never to have issued any sort of notice to a school run by any of the faith groups in his region. This may explain why the school I highlighted in my previous blog post hasn’t received any overt indication of concern about performance, except from Ofsted when it declared it Inadequate in the spring of 2017 and received expressions of further concerns in the two follow-up s8 monitoring reports.

Is the RSC for the North West London and the South Central Region trying a new policy, at variance with the words of the Secretary of State, by seeking to improve schools beyond the glare of publicity? Interestingly, the figures for number of notices issued by the North West London and the South Central Region are also matched by some other regions that have also not published any notices in 2017/18, whereas the RSC for the South West has issued five of the 12 notices in 2017/18.

There are clearly Inadequate academies, as rated by Ofsted, in the regions where no notices have been published in 2017/18  as well as previously rated Inadequate schools where progress to return to an effective standard of education has been unsatisfactory. How are RSCs handling these schools now the notices seem to have fallen out of fashion? How will the Secretary of State’s promise to intervene fast be acted upon if the general public do not know what action is being taken by an RSC?

The Secretary of State has also promised more openness from Headteacher Boards and their minutes, so that is one possible way forward. Local politicians might also like to call RSCs before their Education Scrutiny Committee to given an account of how the RSC’s Office is raising standards in their local area among the academies and their Trusts. Oxfordshire’s Education Scrutiny Committee has been holding such meetings for the past three years with the RSC or their Office. Sadly, the ESFC have yet to agree to such a meeting despite two academies being in financial special measures for more than two years.

 

Daft, illogical or just plain stupid?

The DfE’s recently published revised statutory guidance for the Induction of NQTs is dated April 2018. https://www.gov.uk/government/publications/induction-for-newly-qualified-teachers-nqts The DfE website shows the Guidance as having been updated on the 1st April. Now, were this Guidance published anywhere else but on the DE’s own website, one might assume it was an elaborate April Fool’ day joke. But, one must presume that some hapless official was charged with uploading these changes on the day that the Teaching Regulation Agency (presumably TRA for short) replaced the now departed National College for Teaching and Leadership (NCTL). Whether the TRA will follow in the footsteps of the RAF and have an illustrious history lasting more than 100 years is probably not even a matter for debate. If it lasts 100 months it might be said to have done well.

This Guidance is another example of a ‘fine mess’ our school system in England has become. To quote from the document:

All qualified teachers who are employed in a relevant school in England must, by law, have completed an induction period satisfactorily, subject to specified exemptions (see Annex B).

The list of relevant schools includes a maintained school; a non-maintained special school; a maintained nursery school; a nursery school that forms part of a maintained school; a local authority maintained children’s centre; and a pupil referral unit (PRU).

Keen eyed readers will notice that missing from this list of ‘relevant schools’ where Induction is mandatory are independent school in England; academies; free schools; 16–19 academies; alternative provision academies; and city technology colleges. Induction can be served in these institutions, even in some cases independent schools, but it isn’t a requirement, as it is for NQTs working in ‘relevant schools’ as listed in the appropriate paragraph of the Guidance.

Schools in special measure – no mention of the term inadequate here- generally, even if a relevant school, cannot employ NQTs or offer Induction unless HMI have granted permission. But, that is what you might expect.

Interestingly, a teaching school that is an accredited ITT provider cannot be the appropriate body for an NQT for whom it recommended that the award of QTS should be made. However, the ban doesn’t seem to extend to other schools in the same academy chain.

So two schools next to each other. Both state-funded and employing new entrants into the profession can have very different rules governing the Induction Period of that NQT. Is that satisfactory? Should the DfE now accept that regardless of the historical nature of a school’s governance, if it is state-funded the same rules should apply to the Induction of new entrants to the profession?

Although fewer Children’s Centres now exist than was the case a few years ago, I do wonder whether they are suitable places to serve an Induction Year.  One requirement is that the Induction Year involve(s) the NQT regularly teaching the same class(es). Can this really happen in a Children’s Centre?

Perhaps the next revision might be based upon recognising the common needs of NQTs regardless of the type of school where they start their teaching careers. But, perhaps, there will finally be a wholesale review of this part of a teacher’s career following the recent consultation exercise on Strengthening Qualified Teacher Status and career progression and perhaps, the term ‘Teacher’ might finally become a reserved occupation title, only usable by those appropriately qualified and with QTS: we can but hope.