Paying Teachers 33million Not To Teach – O’Dowd’s Teacher Scrappage Scheme

Recently the Minister of Education announced a proposal, which apparently has Executive approval, to spend £33m on a scheme to allow senior schoolteachers to retire five years early, allowing 500 newly trained teachers to take up posts. This is equivalent to £13,200 per teacher, per additional year of retirement. The Department indicates that 2,350 teachers qualify in principle, which means that there will be a process to decide who will be entitled. It also notes that 1,414 graduate teachers do not have a permanent teaching job.

The Department’s most recent actuarial report notes that there are 25,700 contributors to the teacher’s pension scheme with a total payroll of £950m, which equates to an average annual salary of £36,964 per teacher, and that there are 20,400 pensioners under the scheme drawing annual pensions of £280m, or £13,725 per retired teacher. Eagle-eyed observers will note the shortfall between the average annual pension and the early retirement spend proposed by the Department; but it’s likely that they expect this to be made up from the lower salaries paid to newly-recruited teachers compared to their more experienced counterparts.

The scheme is remarkable in that, at £66,000 per post, it is probably the most expensive subsidised job creation scheme in the history of the Executive since 1998, especially given that, technically, the scheme creates no new jobs; senior teachers are to be paid not to work. This is more reminiscent of the controversial European Common Agricultural Policy which pays farmers not to grow produce on their land. Closer to home, it reminds me more of the Labour government’s scrappage scheme for cars – a plan which allowed people with enough money to consider buying a new car a £3000 discount if their existing vehicle was ten years older or more. The scrappage scheme was later criticised not only because it spent public money to the benefit of the kind of people who can afford to buy new cars, but also because many perfectly serviceable cars were needlessly written off.

Furthermore, the proposal is a generous extension to an already ample superannuation scheme. Based on current life expectancy at age 65 – around about 88 years – those who successfully obtain early retirement at 55 are likely to draw a pension for at least 33 years, a total of around £452,925 before accounting for the fact that the scheme protects pensioners from inflation. Early retiring teachers will, on average, draw a pension for longer than they actually worked. For a regular worker to build up a pension pot of this value and retire at 55, he would have to save £13,321 every year starting from age 21. Even then, assuming he drew down his savings, he would end up with a savings pot unprotected from institutional failure, inflation, or the possibility that he would live beyond 88. Purchasing an annuity yielding the same pension over the same period would cost significantly more.

Few reasonable people could dispute the fact that a strong education system, underpinned by a properly-compensated teaching profession, is a crucial component of a flexible, diverse, and prosperous economy. But by extending an already generous pension scheme, the Minister proposes to feather the beds of a group of professionals who already benefit from a retirement plan of a kind unavailable to the vast majority of the working population.

This comes at a time when the rest of the workforce are expected to seek work in other parts of the country when there are no vacancies available locally. There have been several reports over the past few months showing that other parts of the UK encounter acute difficulties filling teacher posts. The Minister’s proposal can be seen as a way to mollycoddle 1,414 unemployed teachers who are unwilling to travel elsewhere to pursue their career.

So how did we end up in a situation where we are spending £33m to pay 500 senior and experienced teachers not to work? Wouldn’t it be better to avoid the additional expense in the first place by training fewer teachers – which would have allowed us to raise the bar of entry to prospective student teachers, pocket the surplus training costs, and keep the £33m?

To answer this question it is worth taking a look at the context, in a year when Stephen Farry, the Minister for Employment and Learning, was blocked by the Executive from cutting the so-called “premia” payment, totalling approximately £2.2m per year, to the two major university colleges. Critics of Farry’s plan at the time, both inside and outside of the Government, argued that the cuts would force the immediate closure of St Mary’s and the imminent closure of Stranmillis.

Farry’s cuts were opposed most vocally by Sinn Féin, the same party whose minister is fronting the early retirement proposal. When looked at in the round, it becomes apparent that the Executive’s overarching objective is to prop up the teacher training colleges with extraordinary grants via the Department of Employment and Learning – overruling its minister to do so – and then use the Department of Education to artificially create jobs for the extra graduates by retiring senior teachers early. Taking the University College funding and the retirement scheme together, the cost of implementing this zero-job scheme is £44m over five years.

By now, it is unlikely to have escaped the reader that, aside from being a politically-motivated waste of public money spent to benefit a select few, the scheme makes a mockery of oft-repeated claims from the Executive, not least in the 2011-15 Programme for Government, that it aims to re-balance the economy, stimulate entrepreneurship and promote private sector investment. It is difficult to take the Executive’s claims to support economic reform seriously when it is willing to spend £44m to train teachers for jobs that do not exist, and then doctor up teaching posts in an effort to disguise this fact. How can private sector investors or entrepreneurs have confidence in an administration that sends mixed messages by using public money to create pseudo-jobs, rather than investing in the skills needed to ensure the economy of the future can be adequately staffed?

The decision to spend money in this way on teachers, rather than education and training for skills which are in demand, comes on the back of three successive reports, from various sources over the past five years, which paint a gloomy picture of the state of educational attainment among children from working class backgrounds. While two of the reports come from loyalist political sources,  there is undeniable consensus a serious problem exists, which especially (but not exclusively) effects socially disadvantaged boys from the Protestant section of the community. The rush to ensure that vacancies are created so that surplus teachers can be gainfully employed sits uneasily alongside the lack of urgency to address skills shortages in other sectors. A recent high profile example was the farcical situation where, in a city which was once ranked among the heavy engineering capitals of the world, firms based at the Shipyard were unable to call upon a local pool of trained tradespersons to work on refurbishment contracts, and instead had to recruit contractors from abroad. How many apprentice metalworkers or equipment specialists could we train with £44m? How many school leavers could we provide with a pathway to a career in IT ?

Judging by their actions, a cynical person might conclude that the Executive places substantially greater priority on pump-priming a segregated education system than it does on investing in schools, in training, or in the general welfare of the deprived communities the major parties often claim to be in politics to defend. The Executive cannot hope to reform the economy while committing public money to forestalling social and economic change. Parties, in particular parties which bang the drum of “protecting vulnerable members of society” would do well to reflect on the impact of the decisions they are making.

Software engineer living and working in greater Belfast. Pragmatic social democrat with the odd leaning towards capitalism. Political interests include economic policy, social and political reform.

Alliance Party member, but writing in a strictly personal capacity.