School funding: Concerns over excessive CEO pay, redundancy costs & consultancy fees

Written by: Pete Henshaw | Published:
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Much education funding does not reach the front-line, with excessive levels of academy leadership pay now ‘hardwired’ into the system, the NASUWT says. Pete Henshaw reports


The cost of chief executive remuneration in the 20 largest academy trusts stands at £4.72m – or an average of £236,000 per chief executive, according to a report into education funding. On top of this, unspent school reserves, redundancy and other costs mean that a significant proportion of education funding is not reaching the front-line.

Published by the NASUWT, the report summarises the long-standing problems of the eight per cent real-terms cuts to school funding since 2010. While unions continue to argue the case for increased school funding from Westminster, the NASUWT report – entitled Where has all the money gone? (2021) – says we should also be making better use of the money we do have.


Excessive CEO pay

The report’s biggest concern is with executive leadership pay in multi-academy trusts (MATs). Quoting the latest available figures – from 2018/19 – it finds that 325 academy trusts remunerated at least one trustee more than £150,000 – this is up from 146 trusts in 2017/18. Additionally, in 2017/18, 27 trustees were remunerated at more than £190,000, rising to 65 in 2018/19 (although 2018/19 figures include employer pension contributions). The report cites some salaries of as much as £300,000 and even £450,000.

It states: “The cost of chief executive remuneration in the 20 largest academy trusts in 2018/19 is £4.72m, or an average of £236,000 per chief executive across the 20 trusts. The DfE (Department for Education) is unable or unwilling to disclose the total cost of leadership pay in the academy sector, which is the minimum information which should be in the public domain for the system to be accountable.”

The DfE has said that it is challenging trusts over high remuneration. In 2018, it contacted trusts to warn that executive pay must not increase at a faster rate than that of classroom teachers and wrote specifically to all trusts with executives earning more than £150,000 a year (SecEd, 2018a).

However, the NASUWT says that the DfE’s challenge “does not seem to be working”.

It is not the first time concerns have been raised. In 2018, Emma Knights, chief executive of the National Governance Association, said that the “astronomical sums” being paid to some chief executives were a result of “group-think” by boards dominated by people with a background in the private sector (SecEd, 2018b).

NASUWT national president Phil Kemp did not hold back during his address at the union’s annual conference earlier this year. He said: “The snouts have to come out of the trough and the public purse protected from those who will take advantage of the increasing deregulation of our education system. Those taking these huge salaries should hang their heads in shame.”


Balances and reserves

Another bone of contention for the NASUWT is how much schools are holding in their reserves. As of March 2019, maintained schools were holding in reserve a total of £1.54bn (an average of £111,000 per school). This is around 6.5 per cent of local authority revenue for maintained schools. Meanwhile, in academies, the total cumulative surplus in 2018/19 was £2.8bn and there are 189 trusts with a surplus greater than £3m, according to DfE figures published in July 2020.

It should be added that Covid costs will have shrunk many schools’ reserves given the lack of sufficient government funding to cover the extra costs of the pandemic.

While there is a debate to be had about how much schools should sensibly hold in reserve, the NASUWT points to Ofsted’s 2016 investigation into a number of academy trusts which resulted in it warning the DfE about excessive reserves: “This poor use of public money is compounded by some trusts holding very large cash reserves that are not being spent on raising standards For example, at the end of August 2015, these seven trusts had total cash in the bank of £111m.” (Ofsted, 2016)


Redundancy payments

The report is also critical of high amounts being spent by academy trusts on redundancy. Figures from the DfE’s 2019 Sector Annual Report and Accounts show that 2,016 compulsory redundancies in 2018/19 cost the taxpayer £27m. The report also highlights that the total cost of “exit packages in the academy sector in 2018/19 was £59m” – pointing to 52 packages of between £50,001 and £100,000 and six of £100,000-plus.


Consultancy and supply

In 2018/19, academy trusts spent £230m on consultants, an increase of £29m when compared with 2017/18 expenditure.

The report again quotes an Ofsted investigation of seven MATs which found that in 2014/15 they spent £8.5m on education consultancy, including “to compensate for deficits in leadership”.

Meanwhile, the report bemoans the “exploitation” of schools by supply agencies: “Expenditure by schools and academy trusts on supply agencies has reached eye-watering proportions. (Our) research indicates that in 2015/16, £792m was paid to supply agencies by schools and academy trusts.”


Funding row continues

In 2019, the DfE announced increased funding to the schools budget of £2.6bn in 2020/21, £4.8bn in 2021/22 and £7.1bn in 2022/23 (compared to 2019/20 funding levels). A further £700m was added to the high needs budget.

However, the NASUWT says that the additional funding for schools from 2020-23 “does not fully compensate for 10 years of austerity”, pointing to analysis from the Institute for Fiscal Studies showing that it represents a 7.4 per cent expected real-terms growth in spending per-pupil over the 2020-23 period, which effectively means that since 2010 we will have seen “no real-terms growth in spending per-pupil over 13 years” (SecEd, 2019).

The NASUWT’s report adds: “Much education spending still does not reach the front line. Substantial levels of unspent reserves, inefficient and wasteful school-level procurement, together with excessive levels of academy trustee and CEO leadership pay, are now hardwired into the school system. The NASUWT believes that there is need for urgent change in these areas.”


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