Academies given less than two weeks to justify high salaries

5th December 2017 at 09:25
The ESFA has written to the chair of trustees at 29 standalone academy trusts, including 13 'at risk of financial difficulties'.

Academy trusts paying leaders more than £150,000 have been given until next Friday to explain their "rationale" to the Education and Skills Funding Agency.

Eileen Milner, who joined the ESFA as its chief executive last Monday, has written to the 29 standalone academy trusts paying a salary of least £150,000, according to their 2015-16 financial returns.

A separate letter has been sent to 13 of the trusts, which are deemed to be at risk of experiencing financial difficulties.

The move follows a Tes investigation into academy pay last month, which revealed that almost one in five of the highest paid academy bosses were paid at least £200,000 a year, before their pensions were taken into account.

Both letters are addressed to the chair of trustees at the academies concerned. One states: "Your 2015-16 submitted accounts showed you are paying an executive salary above £150,000.

"I am writing to you in your capacity as chair of trustees to request further information on your rationale for setting this level of salary."

It continues: "You will be aware that there has been considerable scrutiny over taxpayer-funded executive salaries in recent months.

'Justifiable' salaries?

"While I recognise the excellent work that is carried out in many trusts to deliver high-quality education to children, trusts have a responsibility to ensure value for money and that salary payments are transparent, proportionate, reasonable and justifiable. The Education and Skills Funding Agency has a responsibility to ensure that best practice is exemplified in the system to ensure this accountability."

However, the second letter, sent to trusts with only one academy that are also believed to be at risk of financial difficulties, states: "ESFA takes proactive steps to assess risk and prevent financial issues arising in trusts and schools.

"Using this risk-based approach, our view is that your trust is potentially vulnerable from a financial perspective or is at risk of experiencing financial difficulties in the future, and therefore it is critical that you are reviewing all aspects of your expenditure, including salaries."

In the most recent version of the Academies Financial Handbook, a new paragraph has been inserted, stating that the board of trustees must ensure that its decisions about levels of executive pay follow a "robust evidence-based process and are reflective of the individual’s role and responsibilities”.

In line with that duty, Ms Milner has asked for "further information on the rationale for the level of pay you set and the due process followed". This response may include:

  • The role and responsibilities of the individual;
  • The level of challenge they face: educational, financial, and geographical (such as being in "opportunity areas" or social mobility "cold spots").

In March, Tes revealed a near-universal refusal among academy trusts to provide details of why they gave their chiefs large salary hikes.

The letter adds: "As I am sure you will appreciate, the person in receipt of a high salary is generally also the accounting officer. This, therefore, increases the need for independent scrutiny by the non- executive board members to ensure that a salary of this level is appropriate for a single school."

The response must be sent by 15 December.

The Department for Education declined to name the academy trusts that have received the letter.

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