Related-party transactions put our integrity at risk

Written by: Russell Hobby | Published:
Russell Hobby, general secretary, National Association of Head Teachers

It is time to end related party transactions because they risk eroding trust in schools, says Russell Hobby

Related party transactions: it is time for them to stop I think. A related party transaction is when a public or charity official awards a contract or makes a payment to a company in which they or a family member has a financial interest.

This sounds like an obscure legal issue but it is not. It risks eroding the high trust in which the teaching profession is held because it shields decisions and payments from proper scrutiny. Several examples have been highlighted in the press recently.

These transactions may once have played a useful role in the early days of a more autonomous system and I wouldn’t suggest for a minute that they are all entered into with bad intent. But it is time for the education system to move on from using them, much as the charity sector has.

The most troublesome use of related party transactions is to pay school leaders more without it showing up clearly. The saddest part of this is that parents and the public don’t actually mind good heads earning decent money. They just, rightly, expect it all to be above board and accountable.

My advice to members for handling additional income from consulting activities and system leadership – valuable activities which should be encouraged – is to have all the money go straight into the school’s budget. The governing body can take this income into account when setting the leader’s base pay and in doing so be confident that everything is transparent, documented and traceable.

A head is, usually, a full-time employee of the school – the school should receive some benefit from their external activities if these generate additional income. I know many heads that operate in this way already. They contribute to the wider system and also clearly demonstrate the benefit to their own school.

Trust matters. It gives school leaders and teachers influence and it gives them freedom to act. It helps them stand up against short-term political interests. Trust is also in short supply in public life these days, as profession after profession, from bankers to automotive engineers, takes a tumble. Our society no longer bestows trust easily or automatically.

Teachers are still highly trusted and we should not do anything to endanger that, it’s one of those things where you don’t know what you had until it is gone. For the most part, related party transactions and similar activities are actually holdovers from a more innocent age but education is now high-stakes and highly scrutinised.

School leaders are a very visible part of the profession and will find questions asked. We don’t need the government to regulate these things for us – we can set and demonstrate the highest moral standards for ourselves.

Perhaps there are other practices we should look at too, before other agencies do that for us. Strategies for exam choice and entry have received some recent attention; it’s a grey area. Covert selection through complex admissions practices or hurdles to weed out less committed parents is especially pernicious and violates a basic tenet that we should improve our schools without harming the schools around us. Raising standards through selection is not improving the system at all, it is just rearranging the challenge.

But even under these pressures it is important to remember that integrity is alive and well in all sorts ofparts of the system. Take for example the secondary special school head I spoke to the other day: “We are one of the most highly selective schools in Kent.” Uh oh, I thought. “Yes, we won’t accept any student with more than a Level 1 in year six. They’re not challenging enough for us.” That’s more like it. And there’s plenty more like it.

  • Russell Hobby is general secretary of the National Association of Head Teachers. Visit


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