Beleaguered academy chain WCAT paid out more than �1m on staff “restructuring”

Wakefield, where WCAT is based.

The collapsed Wakefield City Academies Trust paid out more than £1 million in “restructuring” costs – redundancy and severance payments to staff – in the last academic year, Education Uncovered can reveal.

WCAT spent £1.094m on staff restructuring costs in 2016-17, comprising £454,000 on redundancy payments and £640,000 on “severance” pay-outs to staff, its just-published accounts disclose.

Included in the £640,000 severance bill is £232,122 in “non-contractual” pay-outs, which in itself is among the highest yet seen from an academy trust in this current reporting round.

Seventeen people received non-contractual payouts, ranging in size from £3,990 to £32,000, in settlements which took WCAT’s overall spending under this heading in the past two years to £387,270.

WCAT spent £843,000 on restructuring in 2015-16, which means its total bill on restructuring overall was near £2 million over the period 2015-17.

The revelations will only increase controversy over the spectacular fall from grace of the West Yorkshire-based chain, which just over two years ago was being hailed – and funded - by the Department for Education as a flagship trust which would help the department’s drive to increase academisation in the north of England.

Critics will question why such money is being spent on losing staff, in a chain which was allowed to expand quickly, when school finances, as also underlined in the published accounts of other large chains, are under such pressure.

In its accounts, WCAT, which is having all its schools transferred to other academy chains, gives a defence of the payments.

The accounts say: “The settlement agreements were cost effective, providing a financial saving over a contractual severance process and ongoing salary costs. A number of payments were provided for as at 31 August 2017 and will be made in 2017/18 following the announcement that WCAT was to transfer all its academies to other existing MATs [mult-academy trusts].

Yesterday, TES reported the accounts’ disclosure that the chain paid £83,000 to an IT company owned by its former chief executive, Mike Ramsay, and how he received £140-£150,000 after serving for just over two thirds of the year as chief executive.

We calculated that this would have translated to an annual salary of just over £200,000.

WCAT’s spokesperson has been approached this morning for a comment on the restructuring payments. We may return to the accounts for further reporting.

-Update: WCAT has now passed me its general statement about the 2016-17 accounts.

It is worth bearing in mind, against the below, that there have been reports of severe resourcing issues at WCAT schools in recent months, so the process of returning to “surplus” seems unlikely to have been smooth. (See here, for example).

WCAT’s statement follows in full below:

“Wakefield City Academies Trust, in the process of transferring its 21 schools to new sponsors, will continue to be financially solvent until the point it is wound-up, its annual accounts reveal.

The trustees [sic] report that accompanies the audited accounts for the year ending 31st August, 2017, also highlights the total restricted and unrestricted reserves have stayed relatively constant.

Restricted reserves were at £102.4m compared to £102.1m while unrestricted reserves were at £2.1m at August, 2017, compared with £2.2m at the end of the previous year.

Additionally, the Trust has submitted a surplus budget to the Education and Skills Funding Agency for the 2017/18 financial year.

 The report says: “Moving forward, the short and medium term financial plan details an improving surplus and reserves position on a year by year basis.” 

It goes on: “It is envisaged the trust will be financially solvent beyond the point of re-brokering and until the point of wind-up.”

Eleven academies are expected to transfer to new sponsors by April, with the remainder later in the year. The report expects the organisation to be wound up by August. 

It was in September WCAT announced it had requested the Department for Education work with it to place its academies with new sponsors.

Consequently, the report says, the corporate objectives and aims for 2017/18 were:

• To make a positive impact on the education provision to improve student outcomes and ensure the smooth transition of academies from WCAT to new sponsors
• To manage the impact of the transition on employees to minimise the stress and uncertainty of the situation
• The solvent winding up of WCAT as a company within a reasonable timescale.”

WCAT pointed out, in addition, that the DfE has said that “all appropriate processes” have been followed.