The Department for Education has tightened the rules on how academy leaders’ salaries are set.
The new regulations, contained in the latest edition of the academies financial handbook published today, follow public concern about executive pay.
Last year, the DfE published a list of 125 academy trusts that paid at least one person a salary of more than £150,000 in 2016-17.
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And earlier this year, academies minister Lord Agnew ordered 28 trusts to justify salaries above £100,000, seeking reassurance that they were not “diverting financial resources that could be more effectively deployed on the front line of education”.
The new handbook was issued on the day that Parliament’s spending watchdog raised concerns about the DfE’s “lack of grip over academies”.
It introduces new wording to ensure that decisions about executive pay are a “reasonable and defensible” reflection of the individual’s role and responsibilities.
It extends rules about the process of setting pay to include “executive benefits” as well as pay, and adds wording saying that the procedure must keep pay and benefits “proportionate”.
The updated guidance also now makes it clear that “educational and financial performance” must be considered when setting pay.
The handbook has a new section on commercial interests.
It requires academy trust boards to know about the “broader business interests held by senior executives, and is satisfied that any payments made by the trust to executives in relation to such interests do not undermine the transparency requirements for disclosing pay in accordance with the Academies Accounts Direction”.
The handbook also strengthens the wording to protect members of staff who want to report people they believe are “doing something wrong or illegal”.
It says: “Staff should know what protection is available to them if they report someone, what areas of malpractice or wrongdoing are covered in the trust’s whistleblowing procedure, and who they can approach to report a concern.”
It also adds a section to the handbook saying trusts should appoint at least one trustee and one member of staff whom other staff can contact to report concerns.
The DfE is also introducing a new requirement that academy trusts must show how they have checked that their internal systems are effective and compliant through an independently prepared annual report submitted to the Education and Skills Funding Agency (ESFA).
Lord Agnew said: “It is important that we hold academy trusts to account to ensure that every single academy offers the best education possible and spends public money reasonably.
“To do that, trusts must have strong financial management and governance structures - so they can help young people across the country to raise their aspirations by offering an improved education - and this handbook will help trusts to deliver it.”
