Academy bosses’ pay should follow “rules” that are “in line” with other parts of the public sector like the NHS, the schools minister has said, as government prepares to announce curbs on CEO salaries.
Schools Week understands the government will announce controls on MAT CEO pay alongside the long-awaited teacher pay award for September, which could come as soon as tomorrow.
In a Q&A with this newspaper, Georgia Gould said “nothing is off the table” as the government seeks to ensure salaries and annual pay rises awarded to academy trust executives are “proportionate and justifiable”.
Senior managers in the NHS must have high salaries signed off by officials, with pay at the largest trusts capped at around £280,000. Academy trusts face no such rules, with six bosses now earning over £300,000 and the highest earner on more than £500,000.
The Department for Education said in its white paper that it would “tighten” rules in the academy trust handbook to “prevent excessive increases for individuals carrying out broadly similar roles”.
Gould told Schools Week: “School leaders are important public servants but we need to make sure our rules are in line with those across the public sector whether that’s leadership of NHS trusts, senior staff in justice.”
“The white paper earlier this year made clear that we’d take steps to make sure executive pay was proportionate and justifiable. We’re looking at the best way to do that but nothing is off the table.”
‘These are public funds’
Gould added her comments applied to “overall salaries but it also goes for some of the excessive increases we see in pay year on year, which can be out of kilter with both peers carrying out similar roles and the rises received by the wider workforce”.
As previously revealed by Schools Week, the pay of some CEOs increased last year by as much as £110,000. Ninety per cent of those earning above £200,000 were given rises.
Analysis of almost 1,100 trusts showed that when broken down per pupil, pay ranged widely, with some executives paid the equivalent of around £150 or £200 per pupil while others earned around £5 or £10 per pupil.
Gould continued: “It is for trust boards to set pay, but they should be in no doubt about our expectations: these are public funds, and executive pay must represent proper value for money.”
The National Governance Association (NGA) has previously called for the academies sector to consider adopting a pay system similar to the NHS.
Deputy chief executive Sam Henson welcomed the schools minister’s comments as “a welcome direction of travel”.
But he added: “Epectations around “proportionate and justifiable” pay already exist. The problem is they are interpreted inconsistently, with no shared, enforceable framework.”
‘Enforceable framework needed’
Henson stressed a need to “move beyond guidance and towards a clear national framework that gives boards confidence and consistency in decision-making”.
“The system’s historic upward ratchet on executive pay cannot be corrected through expectation-setting or strongly worded letters alone,” he said.
“A well-designed framework, similar in principle to NHS banding for senior roles, would bring transparency and proportionality without resorting to a blunt national cap that risks unintended consequences.”
Schools Week‘s latest analysis found the average pay of CEOs stood at £142,000, up more than 5 per cent on the £135,000 average seen the year before.
In comparison, the median pay for a secondary head last year was £117,601.
Leora Cruddas, chief executive of the Confederation of School Trusts said: “We agree with the minister that the principle is that trust boards set executive pay, and that in doing so they need to be mindful that these are public funds.
“We need the most talented leaders in our schools and trusts – those who have demonstrated that they can make a difference to children’s lives. Trust boards must be able to recruit and retain these leaders in our school system.”
How does NHS system work?
The NHS has its own pay framework for “very senior managers” (VSMs).
For all roles, except 36 chief executives of integrated care boards, any salary that exceeds £170,000 must be sent to NHS England for sign-off.
NHS England hands these requests over to central government if they do not comply with the NHS framework.
The framework bands pay by trust turnover, or by the number of patients an integrated care board cares for.
It states CEOs at NHS trusts or groups of trusts with the very highest turnover – over £1 billion a year – should be paid a maximum of £279,163.
Local remuneration committees are responsible for ensuring trusts follow national pay frameworks.
Pay rises are set by government each year, following recommendations from the independent senior salaries review body (SSRB). Last year, government awarded VSMs a 3.25 per cent increase.
The Ministry of Justice also sets out salary scales for senior members of the justice system.
The most senior judge in the land, the Lady Chief Justice, is paid £325,010 a year, while justices of the Supreme Court receive £280,311, and senior district judges (chief magistrates) £187,743.
Academy trusts free to set CEO pay
Academy trusts are currently free to set their own executive salaries, frequently drawing fire from critics who say closer oversight is needed.
Government publishes guidance on setting CEO pay, stating salaries should “be justified and…in the best interests of the academy trust”, should “reflect the individual’s responsibilities” and “demonstrate value for money”.
Executive pay is decided by a trust’s board of trustees.
The academy trust handbook states pay decisions must “follow a robust evidence-based process and are a reasonable and defensible reflection of the individual’s role and responsibilities”.
It states that decisions must be “transparent, proportionate an defensible”, and “may be challenged by DfE”.
The DfE sent letters to 37 “outlier” trusts in 2023, seeking assurances over pay in an apparent crackdown.
But this led to no further action, and 28 of the 37 have since increased their chief executive’s pay.
