Executive pay in the Education sector

Executive pay has been a hot topic in the sector for a number of years as individual cases of ‘excessive pay’ ended up being splashed across the media.

In an effort to control these salaries the ESFA has published guidance on setting pay to encourage restraint, and has made it a requirement for Trusts to justify paying one salary over £150,000 or more than one salary over £100,000.  When we were writing this year’s benchmark report we had time to consider the question: have these measures have been effective?  In short, our conclusion was – no, not really.  But is this a problem?

When you look at the graph above you can see that average headteacher salaries have increased by 3.9% for primary schools, 5.7% for secondary schools, and 4.3% for MATs. So salaries have increased by significantly more than the rate of inflation and, crucially, by more than the rate of increase in income per pupil.
If we look at the average salaries for SBMs/CFOs then the increases are even higher: 4.6% for primary schools; 6.8% for secondary schools, and; 7.1% for MATs. So increases in executive pay are across the board, and are greater than the teacher pay rises.

However, to put this into context, in the previous two years headteacher and SBM salary increases were more modest amounts, the increases in income per pupil this year have been impacted by Covid, and the average size of MAT has continued to grow. We also need to consider whether this wage inflation is even a problem.

It is incumbent on all Trusts to ensure that they are obtaining value for money, but just because rates are increasing does not mean that a Trust is obtaining any less value.  It may simply reflect the fact that the market rate for organisation leaders, and finance professionals have increased. Or it may be reward for more responsibility and improved performance. The key thing for Trusts is to demonstrate how they arrived at decisions on pay, and that they have considered a wide range of factors, including both academic and financial performance.

Due to the impact of Covid, it has become harder for Trusts to effectively financially plan but the savings generated by schools being closed have meant that most had better financial results in 2019/20 than they had anticipated. These results do not on their own provide evidence that value is being obtained, but what is clear is that the pandemic has made the role of school leadership more demanding, requiring additional time and effort by all. There is always a balancing act between ensuring fair reward for successful leaders, whilst also ensuring that the budget is balanced. The pressures of Covid have brought this balance more sharply into focus.