Friday 10 January 2014

Michael Gove's ideological vandalism of the education system

In January 2014 I felt compelled to write an article criticising Michael Gove's confirmation bias riddled historical revisionism, after he made a number of absurd claims about an unpatriotic left-wing conspiracy - spearheaded by the sitcom Blackadder Goes Forth - to denigrate Britain's role in the First World War.

Well over 22,000 people shared this picture on Facebook
It was so obvious that Gove was talking absolute rubbish that well over 22,000 people shared my Baldrick meme on Facebook, and as a result it was seen in the Facebook news feeds of over 1.25 million people, making it one of my most successful political memes ever.

Gove's revisionist wittering was certainly one of the most talked about subjects in the first weeks of January 2014, and as good as it is to have widespread recognition that the Secretary of State for Education is an idiot with a warped political agenda, I believe there is a much more important issue that needs addressing, and that is his policy of privatising the English education system into the hands of unaccountable private sector pseudo-charities.

As is the way with many of the most egregious Tory privatisation scams, the roots can be traced back to the preceding New Labour administration. New Labour stated the policy of bringing in unaccountable private sector interests to run publicly funded schools, and by the time they left office in 2010 there were 203 privately operated academy schools, being paid for at the public expense.

When the Tories came to power, they immediately introduced new regulations to speed up the school privatisation process and by December 2013 there were 3,522 open Academies (including over half of all secondary schools in England).

One of the conditions set upon publicly owned schools that become academies is that in most cases all of the school property deeds must be signed over, for free, to the unaccountable pseudo-charities that take control of them.

In many cases ownership of the publicly funded property (land, buildings & equipment) is entirely transferred to the private sector pseudo-charity, with the public getting absolutely nothing in return. In other cases the property is given away on 125 year leases for peppercorn rent (which is as good as a permanent transfer of ownership as far as anyone alive today is concerned).

It is difficult to put the scale of this school giveaway bonanza into financial terms because (as far as I know) nobody has attempted to monitor the value of everything that has been simply given away, or rented out at ultra-cheap below market rates. If we make a very conservative assumption that the average value of land, buildings and equipment per school is something like £5 million, and multiply this figure by the 3,000 odd schools that have been simply given away for free (or rented out for 125 years at way below the market rate), we get a ballpark figure of £15 billion.

To put this into perspective, the criminal undervaluation of the Royal Mail before privatisation led to a £1 billion windfall for the private sector at the expense of the UK public. Gove's school giveaway is at least ten times as bad, even using extremely conservative estimates.

After the publicly owned property is given away for free, the public still continues to pump money into the schools as subsidies for the private sector pseudo-charities, a familiar model of private sector parasitism upon the state. Just like the "business" models corporate outsourcing leeches like Serco, Atos, G4S, Capita, Seetec, Avanta, A4E etc, these educational pseudo-charities are entirely dependent upon the state for their income.


The Tories are ever so keen to maintain the fiction that these pseudo-charities make no profits on their taxpayer funded subsidies, but closer inspection of the way these Academy Chains operate reveals that there is an awful lot of profit to be made out taxpayer funded education subsidies. The profits just don't appear on the balance sheet, or as shareholder dividends, as they would in the corporate world.

I'll outline four methods that academy pseudo-charities have been using to extract cash from the public pocket (Topslicing, Leeching, Expenses and Transfer Pricing).


One of the most blatant ways of using an educational pseudo-charity to spin a personal profit is "topslicing". Several of the largest academy chains pay out enormous profits disguised as executive salaries.

Here is an article in The Yorkshire Post detailing how academy chains have robbed the region's schools to the tune of £9 million in order to pay dozens of "administrative staff" eye-watering six figure salaries.

Here is another article (in the Guardian) detailing some of the ludicrous salaries paid out to directors at a number of other academies such as E-Act, The Harris Federation, United Learning Trust and Ark Academies.

The evidence on "topslicing" is absolutely clear: Academy bosses are paying themselves and their mates ludicrous salaries for carrying out the kinds of administrative work that local authorities used to manage on significantly lower salaries. These people are paying themselves far more than the teachers that actually do the work, in fact many of them are paying themselves significantly more than the Prime Minister, just to administer a few schools.

Here are some numbers:

For the 2013-14 academic year the absolute maximum salary for the head teacher of a very large school (outside of London) was £106,148 per year, and the absolute maximum for the head teacher of a large inner London school was £113,303 per year [source]. The salary of the Prime Minister was £142,000 per year.

The head of The Harris Federation (Dan Moynihan) received £317,999 plus pension contributions in 2010-11, and five other members of staff there were paid more than the Prime Minister during the same period. 
The head of E-ACT (Bruce Liddington) received a salary of £280,816 in 2012, plus £18,303 in pension contributions and a further £16,707 in "expenses". E-ACT paid six figure salaries to a further fifteen insiders too.

Academies Enterprise Trust shelled out a top salary of almost a quarter of a million pounds, whilst paying six figure salaries to a further 19 individuals.

In 2010-11 the Richard Rose Trust, which operated just two schools in Cumbria, lavished a salary of between £200,000 - £209,000 on one of their staff and another two-school group Basildon Academies handed over £220,000 - £230,000 to one of their directors.

Outwood Grange Academies Trust
lavished a
£182,094 salary on their director Michael Wilkins.
School Partnership Trust Academies paid their director (Paul Edwards) between £160,000 - £165,000.

It is absolutely clear that these salaries are excessive, and it is also clear that they are rocketing at way above the rate of inflation too. Against a backdrop of harsh below inflation pay increases for pubic sector workers (the teachers who actually do the work) these pseudo-charity directors are awarding themselves huge inflation busting pay hikes year after year.

According to a Department of Education spokesperson "everyone in receipt of public money has to think very carefully about the right rate of pay for staff". In other words, there are absolutely no controls on how much public cash is being poured into the troughs of privatised education for the academy executive pigs to gorge themselves upon. They are just politely urged by the DoE not to behave excessively, a request they can (and do) ignore, completely without censure.



Compared to using inflated salaries in order to pay huge "insider dividends" to executives so that they can get around the no shareholders in a charity conundrum, leeching is a much more basic and familiar method of money extraction.

Essentially it is the age old scam of making yourself (and your associates) the supplier and the buyer in a transaction involving somebody else's money.

This is not a new problem in the education system. You'd have to be some delusionally optimistic socialist to believe that all Local Authorities (the guys that used to run our schools before Gove's mass privatisation) were so well administered that nobody was making themselves a fortune by awarding contracts to their own companies, or the companies of their mates. However the problem is getting a lot worse now, and some of the academy chains are being absolutely brazen about it too.

The most high profile example is Acadamies Enterprise Trust (the one paying six figure salaries to twenty of their staff - see above) which has been procuring "services" from their own directors and trustees to the tune of half a million pounds, none of the contracts agreed under competitive tender.

AET secretary Ian Comfort bagged £232,960 on top of his salary, and other no-bid contracts were handed out to several other AET insiders too. £171,944 has been paid out to Foster Project and Leadership Development, which belongs to AET trustee Ian Forster. Large sums have also been paid out to other trustees and executives at the pseudo-charity, including Frank Butler Human Resources and Steve Leverett.

Lets get this straight: If you did this with someone else's money in a corporation, your bosses would have you behind bars in a shot (unless of course you were doing it under their explicit orders); if you did this in local government, local investigative journalists (assuming there are any decent ones in your area) would drag you through the coals on it and possibly even get you locked up for it; but because these are pseudo-charities, it seems they can get away with it with complete impunity.

It is not as if AET is a rotten apple at the bottom of the barrel either. They are the single largest taxpayer funded academy group in the UK


Another large pseudo-charitable academy chain that has been caught out awarding large untendered contracts to insiders is E-Act which has been handed ownership of 35 taxpayer built schools, and all of the taxpayer funded subsidies that come with them. They have also been criticised for their "extravagant expenses claims, first-class rail travel and "a culture of prestige venues" for meetings".

Expenses are a classic method for extracting personal wealth from public enterprises. I won't go into it in detail because I'm assuming that we are all familiar with the kind of brazen expenses scamming of Westminster politicians, and their absolute refusal to stop despite the glare of press coverage that has continued ever since the expenses scandal broke in 2009.

It is safe to say that there are an awful lot well-to-do academy trustees and executives all over England claiming every penny they can get away with in expenses, eating fine food in expensive restaurants, meeting in exclusive conference centres, staying in luxury hotels for pseudo-charitable junkets and traveling in luxury vehicles or in first class, wherever they go.


Transfer Pricing

One last profit extraction mechanism I'm going to look at is Transfer Pricing, which is a term that should be familiar to anyone that knows a bit about tax-dodging*.

Transfer Pricing is an accountancy trick which allows institutions to extract profit in a particular geographic location. It is usually used by corporations in order to make it appear that company profits were made in tax haven economies, when the massive bulk of their business was actually conducted elsewhere.

To give a fictional example: Slock Coffee Shops do the majority of their European business in the UK but they import all of their coffee beans via a subsidiary in Switzerland. The beans are then sold to Slock Coffee outlets in the UK at well above the market rate, which is excused with the narrative that Slock Coffee beans are in some way unique, hence the higher price. This technique allows Slock coffee to extract their profits in low-tax Switzerland, (despite having virtually no coffee shops there) and to pay virtually nothing in UK tax (despite the vast majority of their European trade being done there).

This transfer pricing trick has been used by foreign companies in order to extract profits from the Torified education system too.

One example is the Aurora Academies Trust which runs four primary schools in Sussex which demands that all of their schools must use the Paragon Curriculum, meaning that they pay a £100 per student per year premium to the American company that owns the patent on the curriculum; Mosaica Education Inc. These fees add up to £100,000 per year.

It will come as absolutely no surprise to learn that Aurora Academies Trust is owned and operated by a UK subsidiary of Mosaica Education Inc.

What is the rationale for British schools full of British children paying over the odds for an American curriculum, other than to spin a profit for the US corporation that owns the academy group?

It might be understandable if the US education system was a world leader, but it is absolutely not. The US is plummeting down the league table of academic standards even more rapidly than the UK.

Perhaps it would make sense if these schools were paying over the odds for curricula from highly successful education systems like Finland, the Netherlands, Japan or South Korea, but paying over the odds for a curriculum from a nation with a failing (and massively price-inflated) education system is frankly ludicrous.

The Paragon Curriculum is clearly designed for American, not British kids and even then it has been heavily criticised by US teaching unions and several of the schools that have used their services, only to find that the curriculum was not aligned to state standards, meaning that kids were failing their exams in alarming numbers. If this US company can't even properly tailor their curriculum to the educational standards of Louisiana, it is extremely difficult to imagine how their curriculum would be appropriate for British kids.



One of the most shocking things about the school privatisation agenda is the number of Tory party insiders who have benefited from this scheme to give away our schools to unaccountable private sector interests. Another shocking aspect is the way that Britain's archaic and undemocratic honours system is being used to reward the profiteers that run these pseudo-charitable academy chains.

Probably the most high profile Tory insider to profit from the Tory school privatisation agenda is "Lord" Philip Harris, an unelected Tory member of the House of Lords who is most famous for being the boss of Carpetright. His Harris Federation group now controls over a dozen schools in London (all of which have had their name changed to "Harris ..."). The ownership of several of these schools was forcibly converted to "Lord Carpetright's" academy chain against the wishes of the staff, the children and local residents.

Philip Harris has donated nearly half a million pounds to the Tory party in recent years.
Another high profile beneficiary of the Tory school privatisation agenda is the hedge fund manager and massive donor to the Tory party "Lord" Stanley Fink, who is the chairman of ARK academies, a group which now controls 18 taxpayer funded schools.
Stanley Fink has donated over $2.6 million to the Tory party.
"Lord" John Nash is yet another Tory party donor that is deeply involved in the school privatisation agenda. He has established an academy chain called Future Academies which controls four schools in London. Future Academies hit the headlines in 2013 after it was revealed that they had appointed a 27 year old with absolutely no teaching experience as the head teacher of one of their schools.

In January 2013 Nash was parachuted into the anti-democratic House of Lords by David Cameron in order that he could become Parliamentary Under Secretary of State for Schools. The conflicts of interest in having a guy that operates four privatised but taxpayer funded schools working as a schools minister with responsibility for privately operated taxpayer funded schools is incredibly obvious. Another obviously worrying aspect is the fact that a staunch supporter of, and generous financial donor to the Tory party is now responsible for overseeing the national curriculum that is taught to our kids.

John Nash and his wife have donated nearly £300,000 to the Tory party.
Another Tory cashing in on Michael Gove's school privatisation bonanza is the former treasurer of the Tory party Alan Lewis. He is the "patron" of the Kings Science Academy in Bradford and also the owner of the land on which the school is built, meaning that £12 million in public funds look set to flow into his bank account over the coming years. In early 2014 it was revealed that the head of Kings Science Academy has been arrested over allegations of fraud.
Alan Lewis has donated at least £374,000 to the Tory party.
David Cameron has used the archaic and undemocratic honours system to reward several academy bosses -  the ones that are "topslicing" education funds in order to pay themselves and their mates six figure salaries. Here are a few examples:

Dan Moynihan - the guy that bags over £317,000 a year for chairing Lord Carpetright's chain of Harris Academies - was handed a knighthood by David Cameron in 2012.

Robin Bosher - the head of primary education at Harris Academies - also bagged a knighthood from David Cameron in 2012.

Michael Wilkins - the guy that takes over £180,000 as director of Outwood Grange Academies Trust - was handed a knighthood by David Cameron in 2014.


Michael Gove and the Tory party have been waging ideological war on the education system and the mainstream corporate media are pretty much letting them get away with it.
  • They have given away countless £billions worth taxpayer funded infrastructure, for free, to unaccountable private sector interests, including to a number of major Tory party donors.
  • The virtually unregulated shambles they have introduced has created countless opportunities for the unscrupulous to pillage taxpayer funds that are supposed to be used to educate our children.
  • They have allowed academy bosses to "topslice" extraordinary salaries and inflation busting pay rises for themselves at a time when teachers (the people that actually do the work) are having their wages repressed with below inflation pay rises.
  • They have allowed schools to set up extremely dodgy financial arrangements, where the directors and trustees divert taxpayers' cash into their own businesses and personal accounts via no-bid "service" contracts.
  • They have allowed foreign corporations to establish academy chains in order to extract vast sums out of the education system (and out of the country) by charging for the use of their curricula.
  • They have used the UK's archaic and undemocratic honours system to lavish Lordships and Knighthoods upon the people who are milking the privatised education system for everything they can get out of it.
If the Labour party had any backbone at all they would be promising to put an end to this shambles by forcing academies to hand back the property deeds to schools that were built at the taxpayer's expense, and by imposing regulations on their wages and business practices. But instead all we get is silence.

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More articles from
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The "unpatriotic left" fallacy
What is ... Wage Repression?
What do Tory donors get for their cash

The "Making Work Pay" fallacy
What is ... a Justification Narrative?

Note: This article was amended in April 2015 to give a little more detail on the way that school properties have been simply given away, or leased out at below the market rate on 125 year contracts.


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