The Education Committee has today published a “dry run” of how the Department for Education plans to report finances in the academy sector.
It reveals more than 100 academy chiefs are paid more than £150,000 – with two staff receiving bumper pay-offs of up to £200,000.
The dry run, covering the 2014-15 financial year, has been released today, providing an insight into how academy cash will now be monitored. It follows criticism from the National Audit Office over how the department currently records academy accounts.
The government states the new report format will enable Parliament to “track trends both in academy spending and performance”, and have more “relevant, accurate and useful” information on the sector.
The first official report in the new format will be published next year, after concerns from MPs that they could not track how academies were spending their cash.
Schools Week has pulled out the key findings:
1. More than 100 academy chiefs paid over £150,000
The dry run report, seemingly for the first time, has collated salaries paid to academy trustees – which includes principals and chief executives.
It shows that more than 111 trustees – which can include chief executives and principals – were paid more than £150,000 a year (the payment includes salary and bonuses, but excludes pension costs).
Another 13 school staff (not trustees) were also paid over £150,000.
The disclosure is likely to prove contentious, with academy chief executive pay a controversial topic. Schools Week revealed last year how some chiefs got soaring rises – while teachers’ pay was capped at 1 per cent.
Although it’s not just academy chiefs paid large sums (see story right).
2. Two academy staff got BUMPER pay offs
The report reveals the total number of exit packages paid to staff in academies – with two receiving pay-offs of between £150,000 to £200,000.
Both instances weren’t redundancies, and classed as “agreed departures”. There is also another pay-off of more than £100,000 detailed.
Schools Week has previously revealed how the 12 largest trusts paid out £1.6 million in “golden handshake” payments in the 2014/15 year.
But today’s report reveals the full scale of pay offs. There were 4,689 in total (nearly 2,000 of which were compulsory redundancies) which amounted to £52 million (table below)
The Education Funding Agency (EFA) has strict rules on handing out such deals. Trusts have to put together a business case for every pay-out, which the agency can demand to see so it can check value for money.
Trusts must also get approval from the secretary of state for any compensation deals that are more than £50,000.
3. Auditors are flagging more concerns about academy accounts
The number of “qualified” opinions (meaning the auditor has concerns, such as a lack of information or the ongoing viability of the trust) crept up from 36 in 2013-14, to 30 last year.
There has also been a rise in the number of academies from 2,691, to 2,905 – which somewhat cancels the increase out.
But, the number of “unqualified but with emphasis of matter” judgments (which means the auditor has significantly uncertainty over a disclosure) has trebled, up from 36 to 92.
The government says this rise is, in part, down to the department’s advice for “auditors to take a more rigorous approach to drawing trustees’ attention to issues of financial challenge”.
4. Academies spent more than £80m in one year repaying private firms under PFI deals
The report shows academies paid out £81 million in service charges on PFI deals last year alone. It doesn’t include figures for previous years – so it’s not possible
to check whether this is higher than previous years.
But Schools Week has reported how schools are locked into 25-year contracts that most normally rise each year. Some councils have even cut swimming lessons for pupils to make up shortfalls as costs spiral (see right).
The report also reveals the total costs the state owes private firms that built schools under PFI deals now stands at £723 million.
(Schools Week has previously covered private finance initiative deals in lots of detail – read our four-page investigation here).
5. The 50 related-party transactions over £250k
As previously reported by Schools Week, there were 52 payments of more than £250,000 classed as “related-party transactions” – payments between a trust and a related person, or company related to such person.
However the academies report also reveals there a total of 46 payments of more than £250,000 to a trust FROM a related party. However no more details are included.
6. The government is becoming much more transparent over academy spend…
According to today’s publication, next year’s sector report will include LOTS more details about academies, such as:
- Commentary on any reported frauds in the sector
- The names of trustees – including academy chiefs – paid over £150,000
- The amount trusts spent on consultancy fees
- The amount the sector spend paying staff off-payroll (which is frowned upon by the Treasury)
7. … But Neil Carmichael is still not happy
Education committee chair, Neil Carmichael, a letter to the department published today, said the department “must do more to demonstrate its commitment to
accountability of around £18 billion of public money”.
He wants the sector report to include details of large donations to trusts – including who is making them. As Schools Week has previously revealed – in a four-page investigation – it’s hard to find out just how much philanthropists are ploughing into academies.
He also wants further details about PFI commitments and more details about losses and special payments made by trusts.
He wrote: “Overall, we remain to be convinced that the revised arrangements will provide an adequate level of transparency and accountability of the department’s expenditure on academies.”
Department officials will be called before the committee again in the New Year to report on their progress.
8. DfE: There’s still more to come
Jonathan Slater, in a letter to Carmichael also published today, said the “dry run” did not include a full set of information and there are lots of accounting adjustments they are working through before next year’s report, which he plans to publish by June 30th.
He wrote: “We are currently undertaking some more detailed planning work, working with all those involved, including academy representative bodies, the Treasury and the National Audit Office”.
A DfE spokesperson added: “All academies operate under a strict system of financial oversight and accountability – more robust than in council-run schools. Where issues are identified we can and do take direct action.”