Have we reached peak MAT CEO pay?

12th January 2018 at 00:00
Some trust executives are volunteering to cut their pay by as much as 40 per cent – but their decision is not necessarily motivated by altruism. Jonathan Owen and Will Hazell report

Inflation-busting pay rises for already highly paid academy chain bosses have become a familiar but controversial feature of today’s cash-strapped schools system.

But could pay for academy chiefs finally have peaked?

Tes can reveal that some trust executives are now volunteering to forego pay rises or even slash their salary – in one case by 40 per cent.

Meanwhile there are moves among some academy chains for a new system of self-regulation when it comes to pay for their leaders.

Those who have decided to cut or hold down their salary highlight funding pressures, or say that accepting an increase would send the wrong message to teaching staff who have endured years of pay restraint.

Debbie Godfrey-Phaure is one of those who has reduced her salary because of financial pressures at her trust.

The chief executive of Avonbourne International Business and Enterprise Academy Trust – which runs two secondary schools, a primary and a sixth-form college in Bournemouth – has gone from earning £150,000-155,000 in 2016 to a salary of £88,913 – a drop of more than 40 per cent. Her new salary came into effect in June 2017.

‘This is a nationwide picture’

In a letter to Tes, Professor Chris Shiel, chair of directors at the trust, says: “Like many schools and multi-academy trusts, Avonbourne Trust has been examining ways to make efficiencies as pressures on education budgets grow. This is a nationwide picture.

“The CEO of the trust took an individual decision, which is permanent…to voluntarily reduce her hours and salary as an efficiency measure. No other individual in the trust has taken a similar decision.”

“In reality, the CEO still works full-time hours. We are grateful for their ongoing commitment and hard work on behalf of the trust.”

Godfrey-Phaure is not the only MAT boss who has requested a pay cut. Maura Regan, chief executive at the Carmel Education Trust, which runs four primary and three secondary schools in County Durham, has also asked for her salary to be reduced.

Jennifer Moorhouse, business manager at Carmel, tells Tes: “Maura Regan’s pay has decreased over the last three years. Our financial statements, although not yet approved by the board, will show Ms Regan’s salary has further reduced in the year to August 2017 at her request.”

According to the trust’s accounts, her salary has decreased from £155,000-160,000 in 2015 to £130,000-135,000 in 2017.

Those advising academy chains are reporting similar examples of restraint.

Phil Reynolds, senior manager of audit and assurance for academies and education at accountancy firm Kreston Reeves, says he is aware of “academy-trust leaders taking a deduction in salary voluntarily to help ensure their academy trust remains financially viable”.

Restraint is also the order of the day at Outwood Grange Academies Trust, which currently runs 22 academies across the North East and East Midlands. Sir Michael Wilkins, the founding chief executive of the trust, who retired in September 2016, saw his remuneration decline from £201,000 in 2014-15 to £173,000 in 2015-16.

The current CEO, Martyn Oliver, is paid less still, at £168,675. “That’s the bottom of my [pay]scale, and I’m holding myself on the bottom,” he tells Tes.

 

Katy Bradford, the trust’s chief operating officer, says: “Outwood Grange Academies Trust takes its responsibility for providing value for money to the taxpayer very seriously. The trust’s current CEO, Martyn Oliver, has been a key driver in ensuring that decisions made across the trust fit the value metric”.

“An example of the trust’s commitment includes, for the past two years, the board has constrained (indeed, reduced) the level of pay for its CEO, who fully endorses and promotes this approach, and was the driver of discussions to implement the move. This commitment to pay restraint has extended across the trust’s executive leaders, who have voluntarily refused the annual cost of living increment for three years.

“The CEO himself recently turned down the formal written offer of a pay increase following a judgement of ‘outstanding performance’ at his performance review.”

Oliver explains he and his colleagues “just didn’t feel comfortable” taking the cost of living increase at a time when the government had capped teacher pay awards at 1 per cent.

“I understand that, as CEO of 22 academies, I am paid well,” he says. “However, the trust’s ultimate wish is to be able to improve the pay of staff at the lower salary bands across the organisation. I share this aim totally. For me, ensuring that pay restraint is exercised at the highest executive level is a significant and symbolic step towards achieving this goal”.

 

But it would be wrong to suggest this growing mood of self-control among academy chiefs is entirely about symbolic steps and setting examples. A straightforward shortage of cash also appears to be a factor.

At Avonbourne, the trust’s annual report for the year ended 31 August 2017 says it had a “difficult year, where the impact of financial pressures has made itself felt”. Pressures included rising employment costs, below capacity schools, and the cost of opening and running a new primary school.

The trust was issued with a financial notice to improve by the Education and Skills Funding Agency in April 2017 because of “weak financial management” and “continued concerns around the financial management by the board”.

According to the trust’s annual report, it has made “significant budget cuts”, and is in “liaison with the ESFA who are making financial support available during the period until secondary pupil numbers recover”.

In a report for the trust’s annual general meeting last year, Godfrey-Phaure reveals that she even trained to become an Ofsted inspector in a bid to generate more income for the trust.

‘Sign of the times’

Mary Bousted, joint general secretary of the NEU teaching union, welcomes pay restraint from MAT CEOs as a “very good thing”.

“It looks very wrong for teachers to be under austerity pay rates and MAT pay rises to be going through the roof,” she says.

But Geoff Barton, general secretary of the Association of School and College Leaders, strikes a note of warning: “Our view is that schools should be properly funded and that nobody should feel they should have to forgo a pay award to which they are entitled.”

He adds: “The fact that it is happening is a sign of the times. We know that it also happened in the 1990s when school budgets were under severe financial pressure, but we have not heard of anything like it for a long time”.

Barton says it is not just MAT CEOs exhibiting pay restraint. He has seen a similar trend with heads, too. “We have come across some instances of heads who have not taken up proposed pay awards, and in one or two cases, a proposed performance-related pay bonus,” he says. “These are personal decisions that reflect the severe funding pressures on schools.”

 

A DfE spokeswoman says: “It is essential that every pound is used efficiently for maximum impact on young people’s education with academy trusts free to set their own salaries for staff.”

So have we seen “peak MAT CEO pay”, and is this the start of a trend towards decreasing executive remuneration? Bousted is unconvinced. “It’s still the case that generally the pay differential in MATs is higher than it is in local authority schools – and that’s still the trend. A few swallows don’t make a summer in terms of justifiable levels of MAT CEO pay.”

However, she says one thing that has changed is that huge pay increases for MAT bosses are no longer politically palatable following the recent “furore” about excessive vice-chancellor remuneration in the higher education sector.

“There must be plenty of MAT CEOs and MAT governing bodies who are looking down the barrel of a gun thinking ‘when is the shot going to be fired at us?’

“I do think that the zeitgeist has changed.”

 

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