Episode 166: Trusts, Models and Management

Andy Psarianos

Hi, I'm Andy Psarianos.

Robin Potter

Hi, I'm Robin Potter.

Adam Gifford

Hi, I'm Adam Gifford.

Andy Psarianos

This is The School of School podcast.

Welcome to the School of School podcast.

Adam Gifford

Welcome back. It's another episode of The School of School podcast. Robin, Andy, you're physically together, you're both here. This is, I think the second time that you've been in the same room. How's things? Is it all right? Is it shaping up okay?

Andy Psarianos

I don't know.

Robin Potter

We're starting to wonder if this is a good idea.

Andy Psarianos

This is not a good idea. Yeah.

Adam Gifford

Well, you're here anyway. Listen you, you're both here. This is good.

Andy Psarianos

It is good. We're happy to be here.

Adam Gifford

Yeah, exactly. Of course you are. Of course you are. Look, some of it's been interesting. I went to a Matt show. I listened to people talking about multi-academy trusts, and it was really interesting. I was listening to someone talk about the financial models and the fact that if you've got a group of schools together, that the financial differences it could give you as compared to a standalone school in which you can't... Or it's more difficult to pull resources, that a group of schools together can start to do some pretty amazing things. They can start to... Whether it's HR or finance or those sorts of things, they can start to establish practises and structures within their organisation.

That is very different to, like I said, if you're a standalone school, but... I suppose this is true in business as well, I guess, that if things start to go wrong and you start to lose schools, and I think Robin, you looked at an article touching on this, particularly if you've got a secondary school involved and you lose one of those schools, the impact it can create... Maybe I'm just sort of throwing this open, because I'm thinking just about how carefully managed these things need to be, and I guess there'll be models from business that would translate perfectly, I'm guessing. I'm guessing. I know education, so I don't know business anywhere near as well. So yeah, I'm just interested in what you feel considerations that need to be taken, or are there tipping points? Is there such a thing as growing too quickly? The risks that are involved with it all? I don't know. I'll throw it open to you two anyway.

Andy Psarianos

Well, I think there's advantages to big groups. There's safety in numbers. It allows you to do things that are impossible, because of the scale when you're small. So if you're small, there's certain things you can't do, like CPD and plan together and do things like... You can't do it. But also sharing costs across loads of organisations can minimise the sort of operating expenses of a group. So there's lots of advantages to being big, but the problem with being big is the bigger they are, the harder they fall. When you're big, you're writing big checks, and when you're writing big checks, if things change quickly, it's hard to change something that's big quickly. So it can go wrong really quickly when you're big, in a way that if you're small, you can be nimble and you can kind of move around... Do you understand what I mean?

So just imagine that you're running a six-form entry school and every year you're filling it. That's great. But now all of a sudden, population drops and you can only fill it halfway. Well, your heating bill is the same. So some operating costs don't scale with... So now what do you do? You've got a huge building and half of it's empty and you still have to heat it. So that's just a really simplistic example, but there's a thousand things like that in any organisation. That can create problems, right? Because then it's working against you. I think that's what people are alluding to, isn't it? Have I got that right or...

Robin Potter

Well, the one issue is that the primary school enrollment is dropping, and you've got these large multi-academy trusts, but if you don't have the number of pupils to feed into the next grades, what's going to happen to them?

Andy Psarianos

Yeah. Well, that's exactly it, right? So because schools get funded by the number of pupils that they have.

Adam Gifford

I suppose it's all about ratios really, isn't it? I think one of the things is that a secondary school, by and large, they're pretty big. You're talking about 1500 children. If we say a single formatory schools around about the 200 mark, just over, two formatory, between 4 and 450... You're talking secondary schools significantly larger. So I think the ratio, if you are within a trust, you've got primary and secondaries. I think that's one consideration is working out the number of primary schools that are reliant on that one school, that one secondary school. Because if you lose them... I think the other thing too is that capacity to adjust to those changes. I'm thinking... I was talking to a head teacher and the impact of Ofsted. So if you've got a number of schools, it's almost sort of perfect storm material.

If you've got, say, three schools in a small area, in an area that's accessible by the same community of parents and families, and all of them are just on the cusp of capacity, but like you said, Robin, there's places where that population growth isn't happening or there's not children coming into that particular community, then all of a sudden, if you've got an Ofsted report that doesn't go your way, it is pretty quick that things start to unravel. You stop getting those people coming to your school, and it's that ever decreasing circles, whereas you've got fewer people coming to your school, that means you've got fewer bums on seats, which means you've got less money, which means that you might not be in a position to buy more experienced teachers or to resource things that you need, and then that might make your school less attractive.

It's just this sort of downward spiral. I think that's... When I'm talking about ratios, I suppose it's having that ability to make sure that if you take a school on that it's usually driven by Ofsted, that it has the capacity for improvement within it. Just making really sure, I guess that the schools that you take on, that you're not going to lose them. I think that must be quite tricky. But look, these things must be considered equally, growth equals revenue. So you're kind of thinking that would be attractive as well to some schools. It's a tricky old position because like you said, Andy, it could probably go wrong reasonably quickly, yet it's the same group of children.

Andy Psarianos

Well, when you're in a downward spiral, everything, it's a vortex, right? It's sucking you down and everything starts falling apart around you. What do you do in those instances? I suppose the hope is that if it's a multi-academy trust, that the multi-academy trust can put the money where it needs to go. There's kind of an overarching management structure within the organisation that allows them to say, okay, this school needs extra help. So you know what? We're going to take some of our specialists from these schools and we're going to get them to help this school. That facility is there, that they can self-organise and support each other and pick it up. But it's hard. These things take time. If you're in a downward spiral for one reason or another... But if a school's in a downward spiral, is it worth saving?

Robin Potter

Right now, they're saying that this is kind of an epidemic, so it's not one or two schools. This is happening across the country. So maybe the question first is why is this happening? Adam, you've touched on it...

Andy Psarianos

It's always happened.

Robin Potter

But it seems to be...

Andy Psarianos

It's always happened. It is now somebody else's responsibility. There's always been failing schools.

Robin Potter

Okay, so why is it coming to the forefront now?

Andy Psarianos

In the past, that would've been the government's problem or the council's problem, and now it's the trust problem. They're saying, oh, this is problematic. But the local district would've told you that was problematic when they were running the school. There may be things that are accelerating it. So population decline. What's driving that? Look, there's been some... In the past, the birth rate's been high enough that schools have been growing, that's gone down. But that's not a new thing. But that used to be immigration that would take up that... So immigrant families were coming in with kids or immigrant families were coming in and having kids and that was filling the schools. Look, I don't know enough about the UK political system, and I'm certainly not going to comment on whether it's right or wrong or whatever, but my understanding now is it's harder for, let's say European families to come over and fill the schools. So if you stop immigration, this is what happens. This is just one part of it. So now people are saying there's not enough kids for our schools. If that's the problem, if I'm understanding it right.

Adam Gifford

I think too, if you've got decreasing roles, then you could argue also there's more choice. So you might've gone into a community where there was no choice. Because everything was full and there was a waiting list, because that was just the population at that given time. If you've got schools that have got capacity, then parents have got more choice. So that's been the model that's been established over the last, what, 20 years, at least the school choice or so. I think it was the Education Reform Act, I think it was in the eighties. But that school choice and people thinking that they'd commit more time to going to other places and having a look what happens. Again, that comes back to that... There's a whole other podcast on the benefits of accountability, but also the downsides, which might be that as soon as someone gets a slightly lesser Ofsted rating and there's capacities that other schools that have got a higher rating, then is that going to be the downfall to that particular school?

The other thing that I think needs to be taken into consideration, and this is possibly whose responsibility is this one, if you've got a school in a trust with a decreasing role, it reaches a point where it's just not viable, yet in two years time, the birth rates in the area goes up. Who's responsible if they need that school again? What happens then? Who's doing the forecasting for birth rates for however many years hence? These things being done, and who has that responsibility in the end? So I think it's a really interesting one, because it's so multifaceted and there's so many parts to it. Who's the ultimate responsibility of providing education for communities? Which, yes, the funding is central, but the forecasting, the preparation, the prediction, all of those sorts of things. I genuinely, I don't know the answer to that. So I don't know who's doing that.

But what I do know is that I know lots of schools, and I've been in a school where this has happened, where it came as a surprise that we quickly needed to add on a class to our school, literally almost months before the school year is about to begin. You're thinking, but you've known these people are being born, you know families are moving into the area. So how does this come as a surprise? This wasn't a sudden influx of say, I don't know, say refugee families or something that you might not predict, like say the conflict in Ukraine. That's a different proposition. This was community growth. You're thinking perhaps a little bit of a heads-up.

Andy Psarianos

This is economics 101, right? If you were to ask an economist this question, this basically say, this is just basic supply and demand, and every organisation has to deal with this and cope with it. You have to be able to respond to how much demand is there and how much supply there is. That drives pricing. It drives everything in the economies. That's kind of the capitalist system, I guess. This is where there's a clash between governing and let's say organisations that get funding through non-commercial mechanisms are now feeling that they have to respond to market conditions, where maybe in the past they felt a little bit more isolated from that. But that's just reality, right? It's reality for everyone. I don't know. It's a really complex... You know what we need to do?

We should discuss, we should get an economist on the podcast and discuss this with an economist and see what their point of view is. Because this is stuff economists talk about all the time. Everything has a cause, has a root cause. I suggested that maybe immigration has something to do with it, but it could be all kinds of other things. But why are organisations dysfunctional? Why don't they know that this is going to happen, that there's going to be an influx of students this year or whatever? Why are they always caught at the last minute trying to... Well, because most of the time they don't have to worry about it. They only worry about it when it becomes a problem.

If you've worked in any organisation, you understand that. Most of the companies I've ever worked in, in my life, organisations always deal with whatever's urgent, which sounds like, well, that's an obvious thing. But then there's... The interesting thing is there's always enough urgent things to do that all you're ever doing is working on urgent things. You think, well, why does that happen? Even in a company where things are very predictable, why does that always happen? Well, that's because it's the nature of people. When you look at ultra successful systems, they have better systems. They kind of engineer it better, so that these things aren't as big of problems, I suppose.

Adam Gifford

Yeah. I think too... I think that touched on another point that I was listening to a multi-academy trust talking about their finance model and comparing it to my experience with some finance supports that I've had in schools, which is there's two kind of obvious models, that... It's pretty obvious which is the favourable one, which is the someone comes into a school and looks at your finances and says, "Yes, you are right. That is your bottom line." So you've done your accounting, and that's great, and that's your bottom line. so whatever issues you have with that, or whatever you want to do with that money, you are accurate. That is right. That's what you do have to spend.

But I was listening to another MAT, and I think that this is what everyone should aspire to, but perhaps you need that sort of, I don't know, the economies of scale that MATs offer, where they were talking about a finance system that said, "You bring us your problems and we'll find you the way to fund them." So it was like a solutions focused rather than just an accountancy, we'll check your numbers to make sure you've added up the columns correctly. This was like, this is my budget at the moment, and I think I've added up my columns correctly, and it's not looking great, but what I really want to do is this, and handing it over to finance people to say, so find a solution for me. Find me something that means that it can be done. Now, obviously...

Andy Psarianos

That's dangerous, but I... Yeah.

Adam Gifford

Yeah, it can lead to some tough conversations, but I think that there is a difference between those two and trying to find something where you can make things happen. We know, we know that the number of times we get told we can't buy the books or we can't do this because we simply don't have the money, but maybe it's a case of, well, the money's there. It's just how you organise it to use it. Now you allocate it.

Andy Psarianos

I think the reason for moving towards multi-academy trusts is there are some significant issues with the old model. There were significant issues because the government, the Department for Education couldn't reach into a school and save it if it was catastrophic. There are catastrophic schools, whether we want to admit it or not. The local council had to do it. The DFE had no jurisdiction. They knew that that model was not a sustainable model, because it was happening too much. So that was sort of, I believe one of the big motivations, and I think the hope is that if you can give the ownership of the problem to an organisation, the hope is that they're going to solve those problems, especially if it's not guaranteed that they're going to be around. If they're not succeeding, they can be yanked out, can't yoke out...

You can't yank out a local council. You can't say, okay, local council, you guys aren't working, so we're going to crush you and put in another local... It doesn't work that way. Those people get elected, and there's another system in place, so when it fails, there's no way to fix it. But with the multi-academy trust, if a multi-academy trust isn't working, a DFE can say, "Sorry, guys, you guys aren't working. We're going to switch it up." So I think that's a big motivation, and I think the hope is that the right kind of people will be attracted that can solve these kinds of problems, because they exist.

Those people exist all over the place, because you know what? All the things you're talking about, any organisation that isn't publicly funded has to deal with all this stuff all the time. Everyone is always... There's always a precipice on the end where everything can shift and the company goes bankrupt. Every company faces that constantly. So they have to navigate that landscape. I think the hope is that people who know how to do that are going to start running the multi-academy trusts and be able to find ways, be clever, and find ways by delegating that authority to people and letting it happen. Because I guess the idea is, or the feeling is that civil servants in the past have not been the right people to do those things.

Adam Gifford

Yeah, yeah. No, I completely agree. I think we've seen it in action. We've seen it in action. We've seen these trusts do it, and I think coming back to the article and the fact that it's about due diligence, it's about having systems in place that are robust. It's all of those things, using the skills to ensure that that model is as safe as you can make it, and that all of those necessary elements are there.

Andy Psarianos

Thank you for joining us on The School of School Podcast.