Prising the lid off ‘Britain’s biggest property start-up’

1st September 2017 at 00:00
DfE’s secretive property-buying vehicle allowed to ignore public-sector pay cap

It has a £2 billion budget and calls itself “Britain’s biggest property start-up”, with a remit to find and buy hundreds of free-school sites. But very little is known about the Department for Education’s arm’s-length body, LocatED, even though it was set up nearly a year ago and was operating in shadow form for at least a year prior to that.

Obtaining information about LocatED is challenging. But Tes has discovered that “pay flexibility” for the people it employs was a major reason for setting up LocatED as an external body, as set out in the DfE’s business case for the organisation, which the department initially refused to release.

The document explains: “The current inability of the DfE/EFA [Education Funding Agency] to provide the necessary pay flexibility would be overcome through being able to provide greater flexibility for a specialist organisation (within parameters agreed with HMT [Her Majesty’s Treasury] and the Cabinet Office).”

Without this, it adds that the “DfE/EFA is unable to recruit and retain the necessary expertise to undertake more commercial and complex deals”.

More leeway to pay more

What does “pay flexibility” mean in relation to a non-departmental arm’s-length body such as LocatED? A former Westminster insider says it means that the body can, subject to Treasury sign-off, pay its staff more than standard civil service pay at any level; increase their pay by more than the 1 per cent pay cap; and pay them more than the prime minister.

The DfE does not deny that this is correct. A spokesman says: “All pay scales are subject to approval by HMT; LocatED cannot set its own pay scales without agreements. What’s more, any proposed salary is subject to rigorous scrutiny.”

But this scrutiny is not being carried out by the public, nor the media. We do not know how much senior LocatED staff are paid, since the DfE refuses to provide salary information for any of the organisation’s board members, and its annual accounts are not due to be published by Companies House until June 2018.

However, at least one senior role at LocatED has been advertised with an annual salary above Theresa May’s £150,000: the role of executive director for land and development, which attracted a basic salary of up to £157,000 “plus performance scheme”.

The department also refuses to confirm exactly how much has been spent on LocatED in any of the three years leading up to 2017-18. It said the most recent year’s budget would be issued in a letter from a minister to LocatED in April 2017 “and published on LocatED’s website at that point”.

But, more than four months later, as Tes went to press, the letter had not appeared on the site. This week, the DfE said that a “version” of the letter would be published by the end of the year.

‘The jury is still out’

In June, LocatED published board-meeting minutes covering the three months up to April – after Tes asked for them under a freedom-of-information request – but no minutes have since been published.

LocatED can certainly expect a lot more scrutiny in future. Meg Hillier says the House of Commons public accounts committee, which she chairs, will “undoubtedly” be looking at the body’s role, as well as the free-schools programme more generally.

Asked whether she thinks LocatED is delivering value for money, she says: “The jury is still out. It has been set an almost impossible challenge.” Hillier accuses the government of pursuing its target for opening new free schools “at any cost”.

A DfE spokesperson says: “LocatED is saving the taxpayer money by providing the commercial and property market expertise to secure sites more quickly and at better value.”

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