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Is the Level of Senior Leaders' Pay Appropriate in Academy Trusts?

on Wednesday, 31 January 2018.

We have recently seen increased scrutiny of senior executive pay across the public sector (particularly in relation to the remuneration awarded to some university vice chancellors).

We can anticipate that the publication of accounts by multi-academy trusts will lead to interest from the media. Spring 2017 saw a plethora of news articles comparing the pay of the chief executives of trusts and scrutinising this against educational achievement and numbers of pupils or criticising leadership pay when trusts were known to be operating with significant budgetary constraints, perhaps with redundancy processes having been undertaken as a result.

In December 2017, the ESFA wrote to the chairs of trustees of single academy trusts where the chief executive was paid a salary in excess of £150k asking for rationale for this rate of pay and taking into account the role and responsibilities of the individual and the level of challenge faced in educational, financial, and geographical terms. The letter also pointed out the importance of independent scrutiny if the individual in receipt of the pay was also the accounting officer.

Academy trusts will be aware that the Academies Financial Handbook confirms that trusts must ensure the proper use of public funds, which includes ensuring that the funds are spent for the intended purpose, there is probity in the use of public funds and spending decisions represent value for money (which in itself requires trustees to ensure economy, efficiency and effectiveness in their use).

It is important for both a trust's executives and its board of trustees that they can feel confident that the level of pay set is appropriate in the context and in line with the market and that the process for setting pay is sufficiently robust and transparent. Principally, however, the level of pay must be justifiable as being in the best interests of the trust, while ensuring that the trustees' responsibilities under the Handbook are met.

For more detail on the obligations for Academy Trusts around setting executive pay and guidance for Trustees on how these may be discharged do see our full article.

VWV is well positioned to help in providing governance advice to academy trusts and also to support trustees in determining whether or not they should report a serious incident to the ESFA. For further information or advice, please contact Alice Reeve in our Academies team on 0117 314 5383.

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