Multi-Academy Trusts: Salaries

Lord Agnew of Oulton Excerpts

Thursday 14th February 2019 Lords Chamber

[Lord Storey]

To ask Her Majesty’s Government what assessment they have made of salary levels in multi-academy trusts.

[The Parliamentary Under-Secretary of State, Department for Education (Lord Agnew of Oulton) (Con)]

My Lords, multi-academy trusts achieving value for money is at the forefront of my priorities. It is essential that we challenge trusts paying high individual salaries or with high leadership team costs. We have been doing this for more than a year, we have recently re-emphasised its importance, and we will continue to do so throughout 2019. High salaries and leadership costs need to be justified, with evidence of robust processes for setting salaries and reductions where appropriate.

[Lord Storey (LD)]

I am grateful for the Minister’s reply. I know that he is concerned about this matter. I was interested to read an advert by the Floreat free school for a PA to the chief executive and for finance officers. These important posts are all to be volunteers; clearly, the school does not have money in its budget to pay for them. At the same time, the chief executive of one of our multi-academy trusts is on a salary of £440,000—nearly three times the salary of our Prime Minister. At a time when schools are having to make cuts and struggling with their budgets, does the Minister not agree that this issue needs to be properly addressed?

[Lord Agnew of Oulton]

My Lords, I will deal first with the second part of the noble Lord’s question. The trust to which he refers is the Harris trust. Frankly, it is delivering the most extraordinary outcomes for children. If you take the cost of the chief executive’s salary and divide it by the number of pupils, it offers some of the best value for money that government could ever achieve.

[Noble Lords]

Oh!

[Lord Agnew of Oulton]

Noble Lords would not be saying that if they had a child who had just received an Oxbridge offer and had been there on free school meals. On the broader question of funding in the system, we announced last year an additional £1.3 billion. We have announced plans to reform the national funding formula so that disparities across the system are gradually ironed out. We are doing a great deal to support schools in becoming more efficient, which I can perhaps deal with in responding to later questions.

[Lord Forsyth of Drumlean (Con)]

My Lords, given the concern on the Liberal Benches about salary levels and value for money, and given the fantastic success of the Harris academics—I have visited four of the schools—might my noble friend the Minister consider commissioning an inquiry to demonstrate that value for money? Perhaps he might ask Mr Nick Clegg to lead it.

[Lord Agnew of Oulton]

The question answers itself. I would not want Nick Clegg anywhere near government now that—

[Noble Lords]

Oh!

[Lord Agnew of Oulton]

He is helping himself to a salary of some $7 million per year to promote an extraordinary organisation, which is generating mental health issues among many of our young people—and I will deal with that when answering the next Question.

[Lord Watson of Invergowrie (Lab)]

Now that the advertising is over, I make the point that in primary as well as secondary academies, head teachers earn on average more than their counterparts in the maintained sector while paying their teaching staff less than teachers’ counterparts in that sector. This is the sort of avarice that results when schools are allowed to abandon national pay scales. The Minister talked about writing to academy trusts and he did so—to those where senior staff earn more than the Prime Minister. But they can ignore him, because he has absolutely no power to compel them to moderate senior pay. It is not just salaries that are out of control in academies. The academy trusts themselves are out of the control of government Ministers; that should not be the case. Will the Government introduce measures to ensure that academy trusts are held fully accountable for the public resources they spend? The next Labour Government will certainly do so.

[Lord Agnew of Oulton]

My Lords, I do not think the noble Lord understands the degree of scrutiny to which academy trusts are subjected. It is a far higher level of scrutiny than local authority schools receive. They have to submit audited accounts every year; a comparable school in the local authority sector is audited only every three or four years on average, and that information is not published or easily available. So I disagree fundamentally with the noble Lord’s point. Regarding comparable salaries in the two sectors, a head teacher of a secondary academy is on an average of about £92,000 per year compared with £88,000 for a maintained secondary head, but the heads of academy schools have more responsibilities. The noble Lord says that we do not have any leverage but, according to the results of a recent survey, the Kreston report, in the highest of six bands—schools with 5,000 to 10,000 pupils—salaries have fallen from £140,000 to £114,000.

[Baroness Garden of Frognal (LD)]

My Lords, the noble Lord has just referred to the £140,000 salary, which the Minister described as reasonable. In the world of finance that he comes from, that might be a reasonable salary. In the world of education, which I come from, it is nothing short of obscene. At a time when teachers are experiencing real pay cuts and often having to subsidise teaching materials because there is nothing in the school budget to pay for them, how on earth can the Government justify this unacceptable face of education?

[Lord Agnew of Oulton]

My Lords, the justification is very simple: you take the number of pupils in that trust, divide the senior management team costs by that number and look at the extraordinary results being achieved. These schools were failing; they had been abandoned by local authorities for decades. These children are now getting extraordinary life chances.

[Lord Harris of Haringey (Lab)]

My Lords, I first declare that I have no connection with the Harris academies. What assessment have the Government made of the correlation between academy trusts and their senior management and the number of instances of fraud or serious misconduct in the presentation of statistics?

[Lord Agnew of Oulton]

My Lords, as I said in my earlier answer to the noble Lord opposite, academy trusts are subject to a great deal of scrutiny and we continue to review this. For example, from April of this year, any academy trust requiring a related-party transaction in excess of £20,000 needs prior approval from the ESFA, the agency which manages them, and all have to be disclosed. Those are not requirements for local authority schools.

[Lord Grocott (Lab)]

My Lords, there is a crucial difference between local authority schools and academies, I would have thought, to anyone who believes in democracy. Ultimately, if parents or residents in an area do not like the performance of the schools in their local authority, they have the capacity to remove leaders in an election. Accountability via a local election is the best form of accountability. Is that not the fundamental difference between local authority schools and academies? Once the leadership of the latter is set up, there is very little anyone can do about removing it.

[Lord Agnew of Oulton]

My Lords, if that system worked, we would not have had hundreds, if not thousands, of failing local authority schools, which perpetuated themselves for decades.