School Support Teams Referral Fees – is it time for a Code of Conduct?

I’ve been reading an excellent but troubling series of articles in WhichMIS about referral fees, or “kickbacks” as they are sometimes known, being paid to the support teams who offer services to schools around ICT, management systems, finance and other systems.

Those local teams have been through the mill over the years. I got to know many of the people leading them when I worked in the sector and was responsible for their quality assurance and accreditation. At that time they were monocultural; they had been birthed from the original model of local authorities as owners of licences for management systems and they carried out the model of devolved support which suited the main provider. I cannot recall encountering anyone in those teams who was ever anything other than highly professional, ethical and entirely devoted to doing the best they could on behalf of their supported schools.

As local authorities became increasingly starved of funding, those teams looked hard at the best way to continue providing support to schools. The traded service model became common, with schools buying into different levels of provision as they needed. Then came some new kids on the block. Independent support teams worked with schools across multiple regions and authorities and brought with them a much more business-like approach. They marketed and sold their services. Those teams, once regarded as something of a pariah, have grown in number and scope; many are now significant and highly respected organisations across the sector, supporting hundreds of schools. Local support teams continue but many have been through a number of reconfigurations and mergers over time.

Local teams supported their customers through very challenging issues. Schools converting to academy status were told they needed to buy new licences, sucking millions out of school budgets simply to be provided with exactly the same product, although an argument was made that this was necessary for fair competition. Then those same teams that had contributed so well to the dominance of a single supplier suddenly found themselves competing for business against the supplier itself. Schools were offered direct support with the claim that it was better, cheaper and somehow suited the move to school autonomy rather better than the old-fashioned LA support model.

Over time the marketplace for management systems has changed. If you believe in the power and value of market forces, this is a good thing. Competition drives innovation and works to keep prices lower. Schools looking to change their management system at the moment (and they are doing so in droves) usually cite those two reasons as the key drivers for change.

It also means that support teams have had to change mindset. They clearly still need to keep schools’ needs as paramount but now they all have to operate in a highly commercial environment, with kickbacks being a bear trap that would not have existed a few years before. To be clear, kickbacks are illegal. They are a form of bribe attempting to influence how a person performs their duties. Whilst referral fees can be legitimate as part of business-to-business transactions in the private sector, their use in the public sector would contravene the principles of equal treatment, transparency and fairness necessary in procurement law. Anyone employed as a local government official within a support team needs to follow the Nolan principles of public life; receiving a kickback contravenes most of those principles in one fell swoop.

The WhichMIS articles make some helpful points about the ethics of these fees even when they are not technically breaking the law. Their existence can create conflict of interest, compromise impartiality and impact on fair competition, amongst a range of other problems.

It seems to me, though, to be a fine line between what is acceptable and what isn’t. Clearly support teams need to be paid by the MIS supplier if they provide first or second tier support to schools, but being financially incentivised when a school converts to a new supplier makes me uncomfortable, even if it may be technically legitimate. Public servant or not, the source of this money is derived from school budgets. In my view anyone who makes money from schools needs to operate to the same set of ethical principles. On the other hand, if a supplier provided additional funds to a support team to help smooth over the transition to the new system and make sure that schools derive maximum benefit from migration, then this seems entirely laudable; the key point is that the team remained impartial through procurement and there are no other clandestine benefits involved.

The minefield that support teams are having to navigate puts me in mind of a process I’ve been through myself recently. If you are of my vintage you will have been thinking about your pension. I’m happy to have taken my final salary teachers’ pension but I also have a pension ‘pot’ from working in the commercial sector. Given the size of my gas bill and wine habit, I’ve taken advice about making the most of that pot from an independent advisor. She listened carefully to my situation. She made sure she understood what my financial needs were and my plans for the future. She researched the market to find the best match for my funds. She explained the alternatives to me, helped me reach the best decision about where to invest and supported the movement of my funds to their destination. She keeps in touch with me about how the fund is performing. On that last point she tells me regularly that she isn’t responsible for Vladimir Putin or Liz Truss.

Above all, she has had to follow a very strict code. Everything she does has to be transparent. I know how much I am paying her and that she is also being paid by the provider of my fund. I don’t mind that because it is all out in the open and has to be for her to retain her accreditation. Ultimately where I invested was my decision, based on her industry knowledge and impartial, well-researched advice.

I’m not one for burdensome bureaucracy, but I wonder if now might be the right time for MIS suppliers and support teams to take a new look at the ethics and practice behind supporting schools and whether there could be a place for some form of code, somewhat like the financial conduct authority provides for my pension adviser.

Such a code might be framed like this:

  • Suppliers need to be confident they are operating in a fair and open market and ensure they comply with competition regulations. They should tender for new business fully cognisant of procurement laws and strive for best practice when dealing with new their customers. They should be clear about the functionality of their systems and transparent about pricing. They should treat support teams and schools with consideration and be conscious that their revenue comes from the public purse. They should, nevertheless, ensure their businesses are sustainable so that schools using their products can rely on them over time.
  • Support teams (whatever form they take) need to act in the best interests of schools and be paid fairly for the services they provide by their schools and suppliers. They should do that without experiencing pressure or incentives to favour any one system over another and expect suppliers to follow transparent procurement processes.  Where incentives are provided, such as volume discounts, support teams should think through how those savings may be best used to support their schools. They should make sure they know about the range of providers and inform schools about them when asked, including those they don’t currently support. They should tell schools about the possibilities, provide ways for schools to be better informed but never advise them which systems to adopt.
  • Schools need to be able to navigate the market, make sound, evidence-based and justifiable procurement decisions. They should expect suppliers and support teams to be open, honest and ethical.
  • Collectively all three groups need to be confident that everyone is working in the best interests of their pupils, teachers and leaders.

The underpinning principle of such a code must be transparency. Everyone understands that there are commercial sensibilities involved, but if holders of public office have to operate under clearly defined rules and standards of behaviour, then those providing support services and those delivering the systems should feel obliged to do likewise.

Duncan Baldwin

December 2023

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