Academy CEO pay crackdown to focus on ‘outliers’

DfE used to focus on those earning over £150k, but a new approach has been signalled

DfE used to focus on those earning over £150k, but a new approach has been signalled

Academy leaders earning significantly more than their peers at similar trusts face new scrutiny from government.

Sector leaders welcomed a seemingly “more proportionate” approach to chief executive pay after the government said officials were looking at academy accounts to find “outlier levels of leadership pay across similar academy trusts”.

The Education and Skills Funding Agency (ESFA) used to write public letters demanding justifications from trusts that paid their leaders more than £150,000, but the clampdown has been in limbo since mid-2020.

Data blunders sparked a wider review of whether the agency’s approach was “reasonable”.

Schools Week previously reported the government was considering new methodology to decide which trusts to write to.

New emphasis on “outliers”, revealed in Department for Education academy accounts published last week, points to how the new approach might work.

But both trust pay data and how “excessive” pay cases are dealt with remain under review, with no final decisions understood to have been made or signed off by ministers. The DfE declined to comment.

More ‘proportionate approach’ welcomed

Leora Cruddas, the chief executive of the Confederation of School Trusts (CST), said: “We welcome what looks to be a more proportionate approach.”

Giving benchmarking data to the sector itself would also help it “make good pay decisions”, she added.

Geoff Barton, the general secretary of the school and college leaders’ union ASCL, said “blunt” £150,000 thresholds failed to reflect context.

Leora Cruddas
Leora Cruddas

While pay should not be “excessive”, there was a “market rate” for leaders with significant responsibilities.

The number of earners on £150,000 or more rose from 473 in 2019-20 to 563 in 2020-21.

The DfE’s academy accounts name these trusts, but do not define how “similar” trusts will be worked out, or suggest how “outliers” will be dealt with.

Sharon O’Ryan, the director of the salary benchmarking company Pay in Education (PiE), said clients often defined “similar trusts” differently, and even changed definitions after working with her.

Meanwhile the law firm Browne Jacobson has highlighted the “danger” comparing pay with particular CEOs when their pay may not be “evidence-based”, as guidance requires.

Boards are advised to consider context and compare pay with “similar” trusts.

But only 60 per cent of trustees polled by the National Governance Association in 2021 said they used benchmarking.

Sector has made ‘real progress’

While this was “useful”, Sam Henson, the association’s policy director, said benchmarking risked a “race to the top”.

The sector had made “real progress”, but economic conditions made outliers “more unpalatable”, he said.

CST research in November found “continued pay restraint” for leaders, with chief executive pay rising 1.5 per cent to £137,000 on average in 2022.

But Schools Week’s annual CEO pay investigation last year revealed the country’s best-paid leaders enjoyed bigger pay rises than their peers.

The country’s highest-paid chief executive is Harris Federation’s Sir Dan Moynihan. Accounts published for the 51-school trust this week show his pay for last year remained at £455,000 to £460,000.

The government has been dubbed “toothless” over high pay rising – despite its letters – and the schools bill’s demise leaves ministers without new powers of intervention.

But the opposite is happening among colleges, which were recently reclassified as public sector bodies.

Treasury sign-off will be needed for any new appointments paid £150,000 or more and for any bonuses in excess of £17,500.

Antony Power, a partner at PHP Law, said stricter college rules raised the question: “Will the government decide academies should be caught by similar rules?”

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