Uncovered: pay rises and fraud victims at academy trusts

3rd February 2017 at 00:00
One chief executive saw his pay break through the £400,000 barrier
TES examines the accounts of 20 MATs and discovers huge redundancy payouts and dwindling reserves

Academy trusts are publishing their annual accounts for 2015-16, revealing in detail the reality of schools’ finances in England as funding cuts bite.

TES analysed documents from 20 of the biggest and most high-profile trusts* and uncovered fraud, rising executive pay, redundancies and dwindling reserves.

Reporting team: Martin George, Will Hazell, Eleanor Busby and Helen Ward

The bosses' salaries keep rising

The pay of academy trust bosses has continued to climb, new documents show.

A TES analysis of the published accounts of a sample of high-profile academies shows that virtually all of them increased the pay of their senior leaders in 2015-16.

In the 20 sets of accounts that TES looked at, the highest individual earner was Sir Dan Moynihan. The Harris Federation chief executive’s pay rose by a minimum of £20,000 from £395,000-£400,000 to £420,000-£425,000.

Ian Comfort, the former chief executive of the Academies Enterprise Trust (AET), who was paid £236,000 in 2015-16, enjoyed a rise beyond his £220,001-£230,000 pay band of the previous year.

His successor at AET, Julian Drinkall, will be paid even more, with a salary of £240,000 this year.

Toby Salt, chief executive of Ormiston Academies Trust – who is about to become chief executive of the AQA exam board – earned £205,001-£210,000 in 2015-16, up from the £200,001-£205,000 pay bracket of the previous year.

Alan Yellup, chief executive of Wakefield City Academies Trust until May 2016, had a salary of £180,001-£190,000 – a year previously he had earned £160,001-£165,000. And he was succeeded by Mike Ramsay, interim chief executive, who was paid £127,153 for 26 weeks’ work.

As well as chief executives’ pay rising, the number of senior leaders with big pay packets also increased.

At Oasis, eight employees earned £110,001-£120,000 in 2015-16, compared with five the year before, and six took home £100,001-£110,000, compared with only three in 2014-15.

At Ark Schools, five people earned more than £150,000 in 2015-16, up from three the previous year.

Meanwhile, at Outwood Grange Academies Trust, the most highly paid employee moved from £200,001-£205,000 to £170,001-£175,000. The trust said this was because then chief executive Sir Michael Wilkins reduced his hours.


MATs hit by fraudsters

Hundreds of thousands of pounds has been paid into fraudulent bank accounts by multi-academy trusts.

Academy chains were tricked into sending significant sums to con artists, and thousands of pounds are yet to be recovered, accounts reveal.

United Learning paid a “valid, appropriately approved” construction invoice of £240,800 into a fraudulent bank account during 2015-16, and the chain is still working to recover £19,917.

The trust’s annual report concludes that the incident – spotted a year ago – showed that “internal controls in place were insufficient ”.

United Learning told TES that it had contacted the police, recovered “the vast majority” of the stolen money, and had “tightened” controls.

Bright Futures Educational Trust fell victim to a similar crime, paying a “valid, appropriately approved invoice for £15,999 into a fraudulent bank account”. It has introduced extra controls, recovered most of the cash and is “working to recover the remaining £5,297”.

Griffin Schools Trust also lost out to fraud, paying £10,734 to a false account, after changing a supplier’s bank details last year.


Millions more spent on redundancies

Academy trusts spent millions more getting rid of staff in 2015-16 than in the previous year, a TES analysis suggests.

Accounts indicate that rising redundancy and severance costs were often connected to financial pressure, with trusts shedding staff to stick within squeezed budgets.

Many of the trusts TES looked at increased the amount spent on “staff restructuring” in 2015-16. Of the 15 that published this information, costs rose in 10 and fell in only five.

The biggest spender overall on staff restructuring was Ormiston Academies Trust, which spent £1,423,000 in 2015-16, compared with £855,000 the year before.

The largest increase in staff restructuring costs was for Wakefield City Academies Trust, which spent nothing on redundancy and severance payments in 2014-15 but £843,000 in 2015-16.

The biggest proportional increase in restructuring spend was for GLF Schools, which had a fivefold increase from £52,000 to £260,000. The trust said: “We are committed to treating our present and former staff fairly and with integrity when funding pressure leaves schools with no option but to reorganise.”

The extra money on staff restructuring at Oasis also seemed to be connected to financial pressure. Oasis Academy Lister Park had a deficit of £1,078,000 – the biggest in the trust – and spent £411,000 in restructuring costs over two years.

Oasis, which spent a total of £1,363,000 on staff restructuring in 2015-16, also had the largest individual payout, with one member of staff receiving £49,500 in non-contractual severance pay.

However, there were some trusts that decreased their redundancy and severance spending after 2014-15. The largest academy chain in the country, the Academies Enterprise Trust, had one of the highest spends on staff restructuring, at £1,400,000. But this actually represented a decrease compared with £1,666,000 a year previously.

United Learning also brought down its spending on restructuring, from £1,163,000 in 2014-15 to £1,017,000 in 2015-16.


Trusts pooling schools' cash

Academy trusts are using money from financially successful schools to help cover deficits in others.

The increasing centralisation of funds given to individual academies has led to warnings that parents would be “furious” if they knew money was being taken away from their children’s schools.

Accounts also reveal chains are struggling to meet targets for cash reserves as financial pressures bite, but still have tens of millions in the bank.

E-Act’s accounts show that it has pooled schools’ surpluses. In 2014-15, E-Act schools had surpluses of up to £1.7 million, and three had deficits of up to £631,000. But in 2015-16, the schools had surpluses of no more than £9,000, with head office moving from a £4.5 million deficit to a £2.9 million surplus.

The trust’s accounts say all funds will be used to educate E-Act students, and add: “Due to E-Act adopting a new funding agreement, funds are largely retained centrally and hence no single academy is now carrying a deficit of funds.”

But Angela Rayner, Labour’s shadow education secretary, criticised the policy. “That cannot be fair, and I imagine it will stoke up a fair amount of resentment among some academy leaders,” she said. “Parents would also be furious if they knew.”

Accounts for Oasis, which runs 47 academies, said the trust was “expected to resolve the financial challenges we have across the trust internally”, and said this “increasingly means sharing funding between our academies”.

The accounts show that, in 2015-16, it had five schools with deficits of up to £1.1 million, while others had surpluses of up to £845,000.

The trust said: “We believe it is right to continue to support some of our most challenging academies from the resources available to us as a whole.”

Oasis told TES that it did not take money from its schools without their consent, and added: “Although we operate as a family of academies, each individual school is ultimately responsible for the administration of its own budget.”

The accounts for Ark Schools, where four out of the 34 schools showed a deficit, say it will use “intra-academy loans” to support them, as well as monitoring their budgets and performance.

The trust said the loans were underwitten by Ark and schools could still access their reserves.

@geomr and @Eleanor_Busby

*The 2015-16 accounts analysed by TES were from the following academy trusts: Academies Enterprise Trust, Ark Schools, Aspire, Bradgate Education Partnership, Bright Futures, Delta, E-Act, GLF Schools, Griffin Schools, Harris Federation, Oasis Community Learning, Ormiston, Outwood Grange, United Learning, Cabot Learning Federation, David Ross, Greenwood, Kemnal, Reach4, Wakefield City Academies​

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