Shifting sands

The news that the public sector pay cap is effectively dead in the water should come as helpful news for schools facing recruitment issues. I have already suggested that the use of recruitment and retention allowances could be a way around the present pay cap as it was in previous times of recruitment difficulty. Such measures are often unfair on teachers already at the school, but they also recognise the additional costs of taking up a first job or a new position in a different area.

Of course, the cost of these measures, as I suspect with the relaxing of the pay cap, will no doubt have to come from existing school budgets. I don’t see the government offering large amounts of additional funds to schools when the pupil population is on the rise and that increase has to be paid for regardless of whatever else happens. This may mean larger classes; fewer small optional subjects and the continued encouragement of older and more expensive teachers to consider early retirement so that they can be replaced by younger cheaper teachers that no longer need a guaranteed annual salary increase.  I don’t think the Teacher Supply modelling process has taken this last factor into account and it may be partly why demand has outstripped supply in some subjects.

This blog was one of the first to catch on to the penal management fee the government has inflicted on those with student loans from this month. So, it is also good news that over the weekend there has been suggestions that the government will look again at the 3.1% rate. I hope that they will bring it into line with management fees on other financial products. Even so, many families might still find extending the mortgage on the family home a cheaper option that taking out a student loan.

Reintroducing maintenance grants for those from low income families attending university is also a sensible suggestion. Far more sensible that Labour’s idea of abolishing fees and paying for the university education of those young people whose families have been happy to pay for their education up to that point in time. I know the issue that post eighteen they are adults, but as the recent NUS Report on FE launched by Vince Cable showed, there are more deserving areas of limited government funding than paying for those that have not needed or wanted to use the State for education up to the point of entry into higher education.

The other area the government needs to reconsider is the funding of trainee teachers. The lack of any coherent policy between Teach First, School Direct and SCITTs and university courses is damaging to recruitment. A common policy of fees paid by the government and a training bursary for all graduates is both clear and coherent and worked well after 2002 when it became government policy. It has no more deadweight funding attached to it than any other government employment area where new entrants are paid a proper salary during their training period. The Treasury should be reminded of that fact. It is just that the numbers are so large.  However, cutting wastage through better retention of new teachers means that the scheme could even be self-financing if trainee numbers could be significantly reduced over time.

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Top salaries in higher education

In 1995 the National Audit Office prepared a report for the Public Accounts Committee on severance payments in the publicly funded education sector after a furlough about the size of such payments. The current debate about the salaries paid to vice chancellors has an echo of the earlier concern with the methods used at the time to fund severance payments to top staff in our universities. Of course, as with most companies, there are now better governance arrangements and independent remuneration committees, designed to prevent the very political row that is currently underway about how much vice chancellors should be paid?

The business case is probably along the lines of that in order to attract top quality leaders you need to pay top salaries competitive with other parts of the world. This argument has been used by UK plc companies for many years, so the business people on remuneration committees can hardly object if university leaders advance the same argument in an increasingly global marketplace for higher education. There is also another argument that by becoming a vice chancellor you may forgo the success in your academic field, whether a possible Nobel or similar prize; a top selling text book or even just the satisfaction of teaching and research in your chosen field.

The alternative view that nobody in public service should be paid more than the Prime Minister usually ignores the non-salary benefits of a house in London and in the country and a non-contributable final salary pension that make up the total remuneration package of the leader of the government and just concentrate on the basic salary.

Where vice chancellors have probably made a mistake over the past few years of pay restraint is not to adhere to the same level of salary growth as the rest of their staff. If you are going to widen the differentials you need a cast iron public relations exercise in advance; to do so after the event always looks defensive and self-serving. Any head of human relations that doesn’t make that point clear probably isn’t reading the runes correctly.  Just saying the job is harder or more demanding isn’t enough?

The same is true for Multi-Academy Trusts where salaries of chief officers have risen over recent years, as I pointed out in a previous post ‘What is a CEO worth’ some time ago. The contrast between the pay of the chief executives of two of the larger MATs is around a couple of hundred thousand pounds. Is one underpaid?

The really interesting point with the university vice chancellors’ pay story is, however, that this time around, unlike in the 1990s, Ministers haven’t sought to pass the issue to the NAO and then the PAC, but have waded in directly. I assume that they see this as a way of diverting attention from other more concerning issues and putting the government on the side of the lecturers. Realistically, they are trying to close a stable door sometime after the horse has bolted and are only likely to catch universities that hadn’t adjusted their VCs pay to market conditions. Perhaps there should be performance related pay for senior university staff, but as large institutions they probably have to pay the heads of their professional service department competitive salaries and would you want the chief finance officer paid more than the vice chancellor? An interesting question.

 

 

Confusion over future pay

The confusion over the future of the public sector 1% pay cap that apparently highlighted differences between the Treasury and other ministers yesterday is but one symptom of the malaise at the heart of the present government. We are used to hearing of –U- turns, but what do we call a double reversal of intent since the term spin has already been appropriated in the political landscape?

Nevertheless, it is clear that pay and associated conditions of service for teachers cannot for ever avoid the effects of competition in a labour market while we live in a society where the State doesn’t direct the job you have to take.

While the labour market remains buoyant, and especially the graduate labour market, it does seem inevitable that any ceiling on pay will have adverse effects. Later today, the June data on recruitment to teacher preparation courses starting this autumn will be published and that will be another straw in the wind. Regular readers will know that I don’t expect the data to be very encouraging in terms of meeting the government’s modelling over numbers needed to be recruited.

Eventually, the pay cap in education will have to go. The government can fudge the change by making changes to the overall structure through, for instance, initiatives such as loan forgiveness schemes that reduce a new entrant’s monthly outgoings by taking over their student debt. However, that won’t help older teachers and encouraging experienced teachers to remain in the profession may be as important as attracting new entrants, if you want a balanced age profile in the profession reflecting both experience and new ideas.

Then there is the question of regional pay. Should London pay rates go up faster than those elsewhere in the country because the London area is where the problem of recruitment is most severe? The data in a previous post about percentages of unqualified teachers might support this thesis, but it could also be down to academies in London looking for a different mix of skills not adequately provided by the subjects identified in the Teacher Supply Model? Should we pay more to secondary school teachers than those that work in primary schools? Traditionally that hasn’t been the case and there seems little evidence that freeing academies form national pay rates has altered the pay landscape very much, except in one specific area.

Senior staff pay in schools, as much as elsewhere in society, doesn’t seem to have been subject to the same degree of pay restraint as classroom teachers have experienced over the past decade. I don’t buy the view that adding one or two schools to a Multi Academy Trust requires the Chief Executive to receive a pay rise to compensate for extra responsibilities.

Since academies are national schools, the government should look at whether chief officer pay in MATs is governed by any specific restrictions and whether there is at least a moral obligation to follow the government’s line on pay restraint while it is still in force.

Perhaps a learned body or a university research team could produce some pay guidelines for chief officers of MATs that relate their pay and conditions to those of chief officers in local authority Children’s Services? They might even be included in the Top Salaries Review Body since these staff in MATs are paid from government funds.

 

 

How rich are teachers?

With the details of the 2016 School Workforce Survey still awaited, we have to turn to data on salaries from the 2015 Survey, effectively reflecting pay during the 2014-15 school-year. Using the published data from the DfE, it looks as if some 8,700 of the 484,000 teachers, where the State pays their salary and the figure was disclosed, earned more than £70,000 at the reporting point. This is the figure that makes you rich if Labour is to be believed. In total that represents just 2% of the teacher workforce. However, we cannot know how many of the 22,900 with unknown salaries, earn more than £70,000. But, since over half of those where the salary was unknown were younger than 30, they are unlikely to be amongst the highest paid teachers.

By contrast to the top 2%, some two thirds of employed teachers earned less than £40,000 at the census date in 2015. They are unlikely to have seen much of a pay rise since then. The top 2% earning more than £70,000 include teachers working in London, as the summary data takes no account of the extra salary paid to teachers working in the capital; presumably because of higher costs, especially housing. It was interesting that Labour when making the announcement about taxation didn’t have anything to say about workers in London. Presumably Labour believes you are still rich in London if you earn £70,000?

Of course, pay is a crude measure of rewards, as Labour found with its pay policies in the 1970s. Too draconian an anti-high pay regime and employers turn to non-monetary benefits. The cult of the company car owes a lot to pay policies in the 1970s, a period when teachers’ non-monetary benefits came to be seriously eroded compared with those of other workers.

Public sector pay, including that for teachers, may well become an issue in the general election campaign once everyone has decided where they stand on Europe and the Tories hard BREXIT stance. I suspect many voters already know how that issue will influence their voting, especially where there are local elections and it has already been discussed on the doorsteps, as it has in my part of Oxford. Voters will want something else to talk about over the next seven weeks.

The issue is whether the many young teachers, increasingly saddled with big student loan debts and trying to build their lives, feel well off? I suspect most don’t, especially in high cost areas outside of London, of which Oxford is one. How much of the increase in jobs for teachers is due to large numbers quitting the profession: we don’t know, but with other opportunities on offer why wouldn’t you, especially if workload and low morale are affecting how you see your job.

Perhaps the political party offering most on improving workload, CPD and morale might win the teachers’ vote this time around. Here’s what the 2015 Lib Dem offer was in 2015:

Guarantee all teachers in state-funded schools will be fully qualified or working towards Qualified Teacher Status (QTS) from September 2016

  • Introduce a clear and properly funded entitlement to professional development for all teachers
  • Raise the bar for entry to the profession, requiring a B grade minimum in GCSE maths and English
  • Establish a new profession-led Royal College of Teachers, eventually to oversee QTS and professional development.
  • Continue to support the Teach First programme
  • Establish a new National Leadership Institute

So certainly room for more this time around, especially on workload pressure; retaining teachers in the classroom and making everyone working in education feel properly valued as a public servant.

Readers are reminded that for the past four years I have been the Lib Dem spokesperson on education on Oxfordshire County Council.

 

More about Finance

The well-respected institute for Fiscal Studies has published a document highlighting the effects of the pay freeze on the public sector since the recession hit in 2008. https://www.ifs.org.uk/uploads/gb/gb2016/gb2016ch6.pdf

In relation to education, the IFS comments that ‘The Department for Education (DfE) is planned to see a budget cut of 1.9% over the period 2015–16 to 2019–20, a smaller cut than planned for most other departments.’ However, over the whole period since 2010–11, the total DfE budget is expected to be cut by 8.5%. This is still low in comparison to the cuts inflicted on some other government departments where results such as the recent jail riots suggest cutting too far can have serious consequences.

One of the issues for education, with this level of public spending, is around pay. After all, education is still a people intensive activity, with relatively low levels of capital expenditure and technology only recently starting to play a significant role in the delivery of learning.

As the IFS makes clear, part of the real-terms cut to public service spending over the last parliament was achieved by holding down public sector pay. Indeed, as the authors of the IFS document remind readers, pay was frozen in cash terms for all but the lowest-paid public sector workers in 2011–12 and 2012–13, and pay awards were limited to 1% across most of the public sector in 2013–14, 2014–15 and 2015–16.

They note that since private sector wages were also growing slowly over this period, such pay restraint did not have a particularly adverse impact on relative wages. By 2014–15, average pay in the public sector was about the same level relative to the private sector as it had been in 2010–11, and still well above its pre-crisis (2007–08) level.

However, the IFS authors anticipate that going forwards, private sector wages are expected to grow more rapidly. The OBR’s latest forecast is that average earnings across the private sector will grow by around 17% (in cash terms) between 2015–16 and 2019–20. The government’s announced 1% limit on annual pay increases for a further four years from 2016–17 is therefore expected to reduce wages in the public sector to their lowest level relative to private sector wages since at least the 1990s. This could result in difficulties for public sector employers trying to recruit, retain and motivate high quality workers, and the IFS suggests, raises the possibility of industrial relations issues.

This confirms what the view this blog has taken ever since the four year deal on a one per cent per annum rise was announced, that where alternative graduate jobs exist in the private sector, teaching looks less enticing as an area of work than in the past. However, with the cuts in budgets, this may matter less if schools cannot afford to offer the same number of jobs.

As mentioned in earlier posts, what happens to the numbers leaving the profession will be the key to whether the recruitment crisis of recent years either eases or remains a problem in a range of subjects across much of the country? I expect English to be the subject to provide an early steer as the free pool of trainees is relatively smaller as a proportion of overall trainee numbers than in many subjects, so schools not involved in training new teachers may struggle to recruit in 2017.

1% pay rise for most teachers likely in 2016

The main teacher associations have now submitted their joint evidence to the School Teachers Review Body (STRB). This follows the publication of the DfE’s evidence to the STRB just before Christmas, although it is dated November 2015. The date is significant, since it presumably allows the DfE to ignore the evidence from the 2015 ITT census and instead rely upon the School Workforce Census taken in 2014 along with the 2014 ITT census as the most up to date information they have on the workforce in schools and in training.

I assume that the STRB could ask for supplementary evidence or commission their own secretariat to update the DfE’s data if it isn’t in the associations’ evidence. The STRB can also look further at the vacancy figures, as they have done in the past.

Nevertheless, the trends and pressures in the system are visible from the evidence that is available and have largely also been rehearsed in front of the Select Committee over the past couple of months.

One chart that struck me in the DfE’s evidence was Figure 10 on page 43. It may be no accident that the East of England and the South East were the two regions with the largest mean and median negative salary differences between classroom teacher salaries and private sector graduate professional salaries. As TeachVac www.teachvac.com has revealed, along with London, these are the two regions where teacher recruitment is at its most challenging.

If the net effect of high pay overall for graduates is to drive up the cost of services in these areas then a one per cent pay rise for teachers will have the most effect on recruitment in these areas. One solution would be to review the boundaries of the extra-national pay areas to extend them out beyond London. It is worth noting that the mean difference was negative across all regions in 2014/15 and it was only the median that was positive for teachers, and in just four regions, the North East, North West, Yorkshire & the Humber and the West Midlands. In the other five regions both the mean and median were negative for teachers’ salaried when compared with the private sector. Apparently, this is due to some graduates earning very high salaries, although this seems less likely in the Home Counties than in Inner London.

It is also not clear why the DfE had to resort to using resignation and early retirement data from the whole of the public sector in Figure 4 rather than using data from the School Workforce Census just for the teaching profession? Could it be that the resignations data looks more favourable across the whole of the public sector than just for the teaching profession? However, with so many young women in teaching – Figure 6 suggest around 30% of the classroom teacher workforce was below 30 in November 2013 (sic) and 74% of these were women – resignations as a result of starting a family are likely to be above the long-term average.

What is also clear from the DfE evidence is the concentration on the EBacc subjects, in some cases to the complete exclusion of data on other subjects. The STRB might like to ask the DfE to remedy this short-comings since they are responsible for the pay of all teachers and not just those in the EBacc subjects.

One relatively new idea from the DfE is to allow schools to extend the concept of a season ticket loan to also cover a loan to teachers for a deposit on rental properties through what is known as a salary sacrifice scheme. This might help attract new teachers into some areas providing the cost of repayments plus the monthly rent wasn’t so high as to still be off-putting at current salary levels. Indeed, the government might put pressure on landlords to reduce the level of deposits required.

The DfE on behalf of the government make much of the need for public sector pay restraint all the way through the remainder of this parliament and their view that overall pay increases should be capped at 1% until 2020.

The associations may well be worried by Figures 8 & 9 in the DfE evidence that show academies with lower median salaries than maintained schools. This is headed average salaries although the DfE haven’t used the mean as the measure of central tendency. Could it be that academies use more unqualified teachers and Teach first trainees and this is bringing down their median salary or is their retention rate worse than I maintained schools? This evidence is contained in the School Workforce Census and the STRB might like to ask more about what the evidence reveals.

Overall, there isn’t much new data since the DfE has used mostly data already in the public domain. However, I would be surprised if the STRB did more than warn about teacher supply on this evidence unless the associations have made a much stronger case. Expect the one per cent overall to be announced for 2016, even if it is nuanced in favour of some groups.

 

Last word is not the most important

It is not often that I get the last word, but that has literally happened in the latest Report of the Teachers’ Pay Review Body that can be found at: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/318574/STRB_24th_Report_Cm_8886_web_accessible.pdf Alright, I know it is only an acknowledgement of the fact that I and the Chief Executive both provided them with a briefing. In my case, one (unpublished) on teacher supply matters.

What remains of far more importance than my evidence is the discussions of the STRB about pay and recruitment to the profession that are neatly summarised in paragraph 3.56 of the Report:

3.56 As this chapter has identified, there is clear and consistent evidence that both the starting and profession-wide pay of teachers is less competitive relative to other professional occupations in several areas of the country, and that this gap is widening. Our evidence also suggests able graduates in other professions progress more quickly in the first three to five years and have more opportunity to reach higher levels of earnings as their careers progress subsequently. This heightens the risk of those in the profession feeling under-valued and recruitment and retention suffering as a consequence.

Now that is a real warning to government about teacher supply going forward. What is curious is that despite London being thought of as the least competitive part of the country in salary terms for new teachers, applications to train in London have been increasing at faster rates than elsewhere in the country this year. I don’t think it is because would-be teachers know that school teachers in Inner London do well compared to others entering the labour market with first degrees; and so they should after an extra year of training, since they fare less well against those entering the labour market with higher degrees. May be it is because of a separate London attraction factor despite the negative high prices of housing and transport in the capital.

I think the STRB have made clear that governments in the future have a real problem in relation to teacher supply that has been articulated on this blog before; but is good to read in an official publication. Increased pupil numbers, and increased demand for graduates from the wider economy, both exert real pressure on the labour market for teachers. While it was good to see that teachers joining the profession between 1997 and 2009 had relatively high retention rates, there is no guarantee in the next economic cycle that this outcome will continue unless pay keeps pace with the private sector. Interestingly, there is clear evidence that the pay reforms of the early 2000s boosted teacher retention by a couple of percentage point overall, and probably more in certain specific subjects and areas.

The STRB Report is useful evidence for NQTs negotiating starting salaries in the new market driven world. Any teachers except those in English, PE and history, are clearly in a position to start salary bargaining at say point M3 on the old scale as a starting salary just to take account of the training year. If they don’t already do so, the professional associations should be offering advice on pay bargaining to new members, and monitoring the results. I expect to be offering schools a new service along these lines, starting with secondary trainees in the class of 2014.