‘Shocking abuse of trust’, former PAC chair on high salaries and lavish perks for academy bosses

Janet Downs's picture
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It is a ‘shocking abuse of the trust,' fumed Margaret Hodge, former chair of the Public Accounts Committee, when told of generous salaries and perks awarded to senior figures in some multi academy trusts (MATs).

Hodge was speaking on Channel 4’s Dispatches (25 July 2016) which used Freedom of Information to discover expenses claimed by some MAT trustees.  These payouts, detailed in the Guardian, included first class travel, dining at top restaurants and relaxing at luxury golf clubs. 

Such expenses are an ‘irresponsible use of public money’, declared Hodge.

Channel 4 also highlighted ‘related party transactions’: contracts awarded to firms associated with trustees or their families.   These transactions should be ‘at cost’, follow proper procurement and declared in MAT accounts.  But Hodge wasn’t convinced the ‘at cost’ rule prevents trustees from profiting – such transactions are wrong and should be stopped, she repeated.

The National Audit Office agreed: the ‘at cost’ rule was difficult to evidence, it said.  This was especially true for services where costs were ‘subjective’.   Trustees could pay a high fee for, say, consultation from a fellow trustee claiming s/he was a highly-respected figure in demand internationally.  This was the reason given by Aspirations Academy Trust for paying a minimum ‘total day rate cost’ of $120,000 to US-based trustee Dr Russel Quaglia. 

Dispatches found high salaries paid to MAT senior executives.   Daniel Moynihan, CEO of Harris Federation, earns £395k per annum.  Husband and wife team Stewart and Paula Kenning together earn £400k pa at Aspirations Academy Trust. 

Hodge said high wages and expenses were ‘beyond belief’ and not a ‘proper use of taxpayers’ money’.  The Department for Education, however, condones them by saying they can ‘save money’.  It’s unclear how dining at expensive restaurants or servicing the CEO’s car is saving money.  The DfE says it takes swift action when abuse is discovered.  It appears, however, that eye-watering salaries to MAT chiefs, fully declared in MAT accounts, don’t amount to abuse.  And the expenses discovered by Dispatches had to be dug out via FoI – they weren’t obvious in the MAT’s accounts.

The Education Funding Agency, the department which oversees academy finances, has lost 20% of its staff.  But as every year passes, the number of academy trusts increases.  This Government is committed to all English schools becoming academies.  If taxpayers’ money is to be used for the purpose intended – education – and not used extravagantly, then rules governing how MATs use public money need overhauling.  Relying on independent auditing isn’t sufficient: auditors don’t assess value for money.   

Teachers faced with redundancy as MATs attempt to save money will understandably be angered if they discover their MAT’s executive principal has been awarded a high salary.  And parents forced to buy costly uniform from a sole supplier will be infuriated if they find out the sole supplier is an academy trustee.

The Government is responsible for ensuring taxpayers’ money is used properly.   Analysis by Dispatches and the Guardian shows it is failing in its duty to ensure money allocated to education is paid for education.  If MATs are not to be viewed as cash cows for individual trustees, then the EFA could begin by capping the salaries of MAT senior staff and banning related-party transactions. 

 

 

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Comments

rogertitcombe's picture
Tue, 26/07/2016 - 12:13

For ex-LEA heads like me, 'shocking' is not a strong enough word to describe what is going on. Yesterday we heard all about the 'unacceptable face of capitalism' in respect of the retail industry.

The Conservative government believes that an injection of capitalism is needed in order to raise standards in our schools. Henry has shown the fallacy of that, and now we have been shown the unacceptable 'pigs in the trough' faces of educational capitalism. This is a hydra-headed beast. Just controlling or decapitating one head will just result in the growth of another.

The entire beast needs to be eliminated from further corrupting our public life and degrading our school system.

See

https://rogertitcombelearningmatters.wordpress.com/2016/01/06/a-step-by-...


agov's picture
Wed, 27/07/2016 - 08:38

"‘total day rate cost’ of $120,000"

Not sure if I'm reading this correctly, but don't think that was his daily rate.

As TV programmes about education go, it was a fairly well-informed programme but still very superficial in places. It accepted at face value that the only extra money academies were given was the pro rata amount local authorities had withheld to fund central services and ignored the upfront bribe money they also got - last time I saw any figures it appeared they were being given seven times the pro rata amount. The programme only skimmed the surface of the admissions dodges and the issue of good staff fleeing from the bullying and favouritism in academies was not even mentioned.


rogertitcombe's picture
Wed, 27/07/2016 - 08:55

All true agov, but its a start. I may be wrong but I think it is the first significant example of a mainstream media investigation of an appalling scandal of Academisation. Hopefully there will me more to come. 


Janet Downs's picture
Wed, 27/07/2016 - 10:07

agov - the $120k figure was from a quote attributed to Aspirations Academies Trust in the Guardian.  'Based on 15 days’ consultancy for the AAT, the total day rate cost would be a minimum of $120,000'.


Janet Downs's picture
Wed, 27/07/2016 - 10:17

agov - you're right that the programme only skimmed the surface but it had just 30 minutes to discuss salaries, perks, related party transactions and possible manipulation of intake by excluding SEN pupils.  That's about 7 1/2 minutes per topic.   It also repeated the myth about local authority 'control'.  Nevertheless, it was an introduction to the ways in which academy trustees can use taxpayers' money to fund expenditure which has little to do with education.


agov's picture
Thu, 28/07/2016 - 08:24

120,000 / 15 = 8,000 per day i.e. his daily rate ranges from $8,000 to $15,000. Nice work if you can get it.


Janet Downs's picture
Thu, 28/07/2016 - 07:02

Must-read blogs re academies in Kent are here and here.  The first one relates to Dispatches.  The second is about Lilac Sky Academies Trust which has just been told it must give up its academies.  This raises serious questions as to why the EFA allowed the trust to take on more schools after its Tabor Academy was judged Inadequate.  A further question is why Lilac Sky was appointed by the DfE as a broker (sorry, 'adviser') to help Regional Schools Commissioners broker deals re academies after the poor Ofsted judgement for Tabor.


Linda's picture
Tue, 02/08/2016 - 17:53

There are plenty of examples of expense scandals in non-academy schools so the real question is whether dodgy accounting, greedy expense claims and related party transactions happen more often in academies, and whether they're less likely to be exposed. I don't think the programme proved that by any stretch of the imagination.


rogertitcombe's picture
Tue, 02/08/2016 - 18:55

I was a teacher and a headteacher for 32 years. I retired in 2003. I never came across any examples of financial malpractice whatever in all that time. If you know of examples please share them. The opposite is the case. I know lots of teachers who provided resources for their pupils from their own pockets. Neither teachers nor LA school headteachers make expenses claims for normal school life. They attend parents evenings, governors meetings, school functions, run sports teams etc and are expected to pay their own travel expenses. LA heads do not have 'company cars' or school credit cards. All school accounts are audited and approved by governors, of which some are elected by parents or staff and others are usually elected local coucillors appointed by the LA. Staff are only paid expenses for rare school business trips and then it second class rail fare or a very mean fuel allowance.

All LA school expenditure is continuously visible to the LA officers. So not only would being 'on the fiddle' be totally alien to the culture of LA schools, it would be very quickly picked up and challenged by other school staff, governors, trade union reps or LA officers.

So what you are suggesting is absolute rubbish. There may be some historic isolated examples, but nothing remotely like what has been so far exposed in the case of Academy schools, which given the hopelessly inadequate  level of regulation by the DfE, is almost certainly the tip of a very large and nasty smelling iceberg.

The opportunity for self agrandisement through 'superhead' status has utterly changed the culture of schools for the worst and that's just in terms of financial management. The fact that Academy 'Executive Principals' and their MAT bosses increasingly have no teaching experience and know nothing about education outside the latest neoliberal ideology, innappropriately and disastrously borrowed from the business world of 'training' (rather than education), outsourcing and zero hours contracts is resulting in a parallel catastrophe in teaching methods and classroom practice.

It is all going to end very badly.


Janet Downs's picture
Wed, 03/08/2016 - 07:33

Linda - re related party transactions: schools under the stewardship of LAs have a small part of their budget retained by the LA for certain admin and legal services eg LAs employ (but do not appoint) school staff.  When schools become academies this small proportion (but still a substantial amount for large schools) goes direct to the academy trust.  The trust can then decide where to purchase these services.  It is in this area of services where many related party transactions occur.  As long ago as 2010, when there were few academies, the National Audit Office reported that many academies were under pressure to buy services from their sponsors.  The NAO warned this might not be best value for money.


Janet Downs's picture
Wed, 03/08/2016 - 07:52

Linda - yes, there are also examples of expense scandals in non-academies.  But these are more likely to be prevented in LA maintained schools because each one has an LA-appointed governor who would be expected to query any related party transactions involving other governors or staff members.  LAs are also far more likely to veto the awarding of high salaries to heads because the LA as employer would be paying them.   In addition, the accounts of LA maintained schools have to be consolidated into LA-wide accounts and LAs have been legally obliged since 2012/13 to report instances of fraud.

Neither system is foolproof, however, and both likely rely too much on whistleblowers.  But the fact remains that the academy system allows trustees to have greater power than governors of LA maintained schools.  As we have seen, this includes awarding contracts to companies linked to trustees or their relatives and paying senior staff high salaries.   It also allows trustees to be more profligate with public money than would be likely in LA maintained schools.    

 


rogertitcombe's picture
Wed, 03/08/2016 - 08:27

Linda - You will of course have noted the latest Academy finacial scandal. They are coming so thick and fast it getting hard to keep track. There seriousness of the offending also seems to be increasing.

http://www.bbc.co.uk/news/uk-england-leeds-36943526

"The founder of a flagship academy and two members of staff have been found guilty of defrauding the government out of £150,000.

Sajid Raza, 43, Shabana Hussain, 40, and Daud Khan, 44, made payments from Department for Education (DfE) grants into their own bank accounts.

The grants were given to set up Kings Science Academy in Bradford in 2011. It opened in 2012.

The three were found guilty at Leeds Crown Court following a six-week trial.

Granting bail, Judge Christopher Batty told them "I am very much considering custody" for September's sentencing."

 


agov's picture
Wed, 03/08/2016 - 11:08

"There are plenty of examples of expense scandals in non-academy schools "

There are some. Can you substantiate this 'plenty' claim of yours? Especially bearing in mind the large number of LA schools and the amount of time they have existed as compared to academies.


agov's picture
Wed, 03/08/2016 - 11:08

"So not only would being 'on the fiddle' be totally alien to the culture of LA schools, it would be very quickly picked up and challenged by other school staff, governors, trade union reps or LA officers."

Exactly so. That's because normal schools usually work very much on a co-operative and open basis aimed at promoting the good of the school and its students. Academies are essentially businesses run by Trusts composed of small numbers of people who may have all sorts of motives and whose decisions and financial involvements may be little-examined and rarely challenged, especially so in those academies where staff are terrorised by the 'principal' or chief executive and fear for their own salaries.


agov's picture
Wed, 03/08/2016 - 11:09

"each one has an LA-appointed governor who would be expected to query any related party transactions involving other governors or staff members"

Not quite. As part of the enforced reconstitution of governing bodies, LAs no longer appoint governors they only nominate one, and only one, governor. The governing body does the appointing but could reject the nomination. The LA governor has no more or less responsibilities than any other governor (with the possible exception of the chair). All governors would be expected and have a right to query any dodgy-looking dealings though in practice the chair, or the chair of the finance committee, would most likely be the governors who would spot, or be made aware of, any problems (irrespective of how they became members of the governing body).

"LAs are also far more likely to veto the awarding of high salaries to heads because the LA as employer would be paying them."

Don't think the LA could exercise a veto as salaries come out of the schools delegated budget and it is for governors to decide how, in broad terms and specifically including salaries, the budget would be spent. However, the LA might raise questions about any particularly outlandish salary. Ultimately the LA could disband the governing body if there were serious concerns about the way it exercised control and supervision of school finances. Though, for what it's worth, my experience is that parent governors are generally the ones most keen to award HTs the highest possible reasonable salary.

But, as you imply, parent and other governors contribute time and other things for free and rarely claim any expenses. Governors in LA schools may have to be business-like in some appropriate areas but, in contrast to academies, are not there to run a business. It true however that many Trustees and others involved with academies still seem very naïve about what academies are really about and hence some seem genuinely hurt and uncomprehending as the bribe money for converting to academy status runs out: idiots.


Janet Downs's picture
Wed, 03/08/2016 - 11:34

agov - thanks for keeping me up-to-date with LA school governance issues.  I sometimes feel as if I'm running to keep still with so many changes going on at once.  Re salaries of heads in LA schools - there was one instance recently where an LA reduced a head's salary because it thought it was inflated.  However, I can't find the reference (I've tried, believe me).  You're right, however, about the money coming from the school's delegated budget.


rogertitcombe's picture
Wed, 03/08/2016 - 11:36

Thanks agove - As ever you are more up to date than me. When I retired from headship (2003) LEAs were still LEAs and the Director of Education had a team where Senior Officers had responsibility for liaison and oversight of particular schools. I must say that it seemed to me to be a very good system that worked well. I always had a lot of respect for the particular senior officers in the schools where I had senior management responsibilities. This was in Leicestershire and Cumbria. 


agov's picture
Thu, 04/08/2016 - 09:43

Yes, a system that generally worked very well. Currently however, as academisation takes more and more money away from LAs, the LA has less and less ability to exercise such oversight. Locally the pretend halt to compulsory academisation by Nicky Morgan led to an announcement by the LA that it would likely at some point be obliged to compulsorily academise any remaining maintained schools due to an inability to continue maintaining them. I suppose Theresa May's radical new broom might sweep away the academy programme along with all the other rubbish she's clearing out but there seems no sign of that.


Janet Downs's picture
Thu, 04/08/2016 - 15:44

agov - I suspect the plan all along was to get to a tipping point when LAs had insufficient funds to continue to offer services to their LA-maintained schools.  The next phase is to replace academy trusts with for-profit education providers.   This would be justified by saying there aren't enough 'good quality' academy chains to take over all England's schools.   


agov's picture
Fri, 05/08/2016 - 08:52

Yep, and many academies will likely be easy targets. Those of them that continue to value education (rather than just teaching to the test) are likely, in general, to get results ostensibly 'worse' than chains focussed on business and so be vulnerable to spurious accusations of poor quality. Some academies still seem blissfully unaware that they have been setup to fail and keep assuming that at some point the money tap will be turned back on so their budgeting problems will disappear: they gullibly thought spending money like water was forever.


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