Revealed: the fat cat salaries paid by training providers

6th July 2018 at 00:00
After decades of underinvestment in FE, the eye-watering pay packets of some college leaders have proved controversial. But, until now, little was known about the salaries forked out by their independent counterparts. Here, Julia Belgutay and George Ryan reveal how some ITP bosses take home more than the best-paid principals

The pay of college principals has long been a contentious issue. In April, unions expressed outrage at the fact that the number of college leaders paid over £200,000 or more had doubled in two years to 17 in 2016-17.

But while the annual publication of college accounts by the Education and Skills Funding Agency (ESFA) has made keeping track of leaders’ pay relatively straightforward, there has been less transparency when it comes to the rapidly growing sector of independent training providers. This includes private firms, as well as employer providers and not-for-profit and voluntary sector organisations.

With the expansion of the apprenticeship programme, training providers have increased in prominence. Data compiled by the Association of Employment and Learning Providers (AELP) has revealed that independent providers are responsible for the delivery of three-quarters of apprenticeship starts.

Accordingly, some of the largest received sizeable income from the ESFA in 2017-18, not least Learndirect, the UK’s biggest provider, which gained notoriety after being rated “inadequate” by Ofsted in August 2017. Its ESFA income for the year stood at £70 million.

Now Tes analysis reveals that some directors at independent training providers (ITPs) are earning more than the highest-paid college leaders in the country. Of the largest 30 ITPs in terms of their income from the ESFA, seven pay at least one of their directors over £200,000 in salary alone, with almost all also paying pension contributions.

Those seven providers collectively paid £4.9 million on their directors in a single year, according to the most recent available accounts data.

Learndirect paid over £700,000 to its directors in the 18 months leading up to January 2017, with £264,000 spent on its highest-paid director alone.

And while pay for some directors at ITPs seems to exceed that of many college leaders, teaching staff salaries tend to be lower than in colleges. According to the most recent report by the Education and Training Foundation, median pay for college full-time staff was £28,700 in 2016-17, compared with £26,000 at independent providers.

Jon Richards, head of education at support staff union Unison, says it is “outrageous these executives are being paid such vast sums while apprenticeship numbers are dropping”.

“Some of the cash in their pay packets even comes direct from taxpayers,” he adds. “Employers should boycott these training providers, and look instead to further education colleges to run apprenticeship courses.”

But an AELP spokesperson says that a comparison with college principals’ pay “isn’t really appropriate, because a significant proportion of the large providers’ income comes from commercial training for employers and these providers cover a whole range of business”. “It also has to be recognised that independent training providers must earn their government funding, – ie, they only receive money on delivery, unlike grant-funded institutions,” the spokesperson adds.

BCTG Limited, which was graded “requires improvement” by Ofsted in 2016, states on its website that it is an independent lead provider that managed over 6,500 apprenticeships, 1,200 adult education budget-funded learners and 300 ESFA learners on behalf of 35 providers in 2015-16. It received more than £17.7 million from the ESFA in 2017-18.

Its most recent accounts, for the year up to the end of March 2017, state that £1,015,633 was paid to its highest-paid director. This was also the total amount paid to directors, however, the accounts state that there were two directors working for the company that year.

Meanwhile, Kaplan Financial, a provider offering financial, accountancy and business training, received more than £15.6 million from the ESFA. It paid its highest-paid director £481,000 in a year, according to its accounts made up to December 2016, as well as £13,000 in pension contributions.

The total remuneration package to directors that year was £579,000. The accounts stress that the figures “include amounts for services provided to other group companies”.

QA Limited, which offers training at 20 learning centres across the UK, paid £474,075 to its highest paid director in the year to June 2017, with a total remuneration package of £1,206,463 for directors.

The accounts also reveal that two directors received contributions from the company to money-purchase pension schemes.

Lifetime Training Group, Learning Curve Group and Ixion Holdings all also paid their directors significantly over £200,000 for a year (see table, opposite).

By comparison, the highest paid college principal in 2016-17 was Matt Hamnett, then principal of North Hertfordshire College, who was paid £294,000.

Robert Halfon, chair of the Commons Education Select Committee, says the public will find it difficult to understand how directors of training providers are paid sums that vastly outstrip those of others working in the training and skills sector.

“When public monies are involved, it is absolutely vital that executive pay is linked to performance to ensure that the taxpayer is getting bang for their buck,” he adds.

“I have concerns about the quality of training provided by some subcontractors, and the public will want to be reassured that these training providers are delivering courses that are up to scratch.”

A spokesperson for QA Group says the number quoted for the highest paid director is total emoluments, not just salary, and relates to William Macpherson, group chief executive of QA Limited.

They add: “William heads up the QA Group, which is comprised of four divisions. In the year in question, our apprenticeships division represented less than 15 per cent of our overall business.”

A spokesperson for Kaplan says: “We do not, as a matter of company policy and for privacy reasons, comment on employee compensation.”

BCTG says it is “unable to confirm” any details about pay, after a request to verify the pay of its top director.

Babcock declined to comment.

Learndirect, Learning Curve Group, Lifetime Training and Ixion Holdings did not respond in time to requests for comments.

@tesfenews

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