The education secretary has warned that academy trusts that pay excessive salaries and hand out lucrative contracts to family and friends face a clampdown, under plans to make them more accountable for the money they spend.

Damian Hinds told governors today that multi-academy trust (MAT) chief executives should be paid more than the prime minister only in exceptional circumstances.

The education secretary said that his department would produce new guidance for boards to use when setting executive pay.

He also told the National Governance Association that the Department for Education was looking at creating a transparent way of assessing academy trusts.

It proposes a requirement for academy accounts to detail staff earning more than £100,000 and the percentage of teaching time those individuals undertake.

The DfE has also announced new measures to clampdown on related-party transactions

From April, for all related-party transactions to be declared to the Education and Skills Funding Agency (ESFA) and for academy trusts to seek approval for any transaction over £20,000.

ESFA chief executive Eileen Milner, wrote to challenge 117 academy trusts across the country paying a salary of more than £150,000. 

The DfE confirmed today that following a series of correspondence and meetings with these trusts, so far 18 have confirmed they no longer pay a salary over £150,000, and others have indicated they will work to revise high salaries and prevent unjustified salary inflation in the future.

Mr Hinds said: “I want to make sure that every pound of public money for our schools is used in the best possible way for the good of our children and society. That means taking a tough approach.

 “This includes a new, more robust, process to manage related-party transactions made by academy trusts. I think pretty much everyone would agree that a situation where board members could hand out unjustified contracts to companies that they or their friends and business associates have an interest in is not OK.

 “We also want to be clear about our expectations on high pay - which applies to all schools, not just academies. There is no doubt that our school system has many great leaders - and for large and complex organisations, pay must reflect the scale of the task.

 “However, pay needs to be proportionate - and pay rises for non-teaching staff should not exceed that awarded to teaching staff. And where salaries aren’t justifiable - we will say so.”  

Hinds also announced that he was writing with the Institute of Directors to 30,000 company bosses to get employees volunteering to become governors and trustees.

And he gave his backing for a new campaign to get more governors from ethnic minority backgrounds.