Spotlight on FE executive pay seems to be the direction of travel

As well as more general legislation bringing in gender pay gap reporting, levels of executive pay for universities have been hitting the headlines and ministers have asked academies to justify salaries of over £150,000.

To date there has arguably been less focus on the further education sector, but this looks set to change.

This week ESFA published the college accounts direction for 2018-19 which states that there is a ‘need to demonstrate to stakeholders that decisions made on executive pay are evidence-based, proportionate and represent value for money’.

To aid with greater transparency in this area, the ‘accounts direction’ brings significant additional disclosure requirements around pay for executives and other high paid staff (in simple terms those earning over £60,000 per annum).

This brings the disclosure requirements in this area for FE colleges closely in line with those required by the Office for Students (OfS) in their current accounts direction, something that colleges registered with the OfS will need to comply with in future anyway.

One of the main changes is the need to justify the total emoluments of the accounting officer, linking this to value and performance and explaining the processes adopted for judging this, such as benchmarking. Similar disclosure is also required for the total emoluments of all key management personnel.

In addition, colleges will now be required to disclose specific information comparing the accounting officer’s emoluments with that of other employees. This will need to be based on both their basic salary and their total emoluments.

The accounts direction encourages colleges to disclose more information in this area to help enhance transparency and understandability, including whether they have adopted the AoC’s ‘The Colleges Senior Staff Remuneration Code’ which was released in late 2018.

Latest available data for all colleges released by the ESFA (for 2016-17) showed basic pay for accounting officers averaging £130k and ranged from £66k to nearly £300k.

Whilst the circumstances and challenges for each institution will differ, including financial health, Ofsted ratings and size, those colleges with data that is out of line with their peers may come under increasing focus and pressure to more closely align with the rest of the sector.

Dominic Blythe, director at RSM