Alpha Plus Group, which owns a host of elite independent schools in London, is seeking to remove its teachers from their current pension scheme in response to a change in government policy that increases its cost.
In October, the UK government proposed to increase employer contributions for all schools in the Teachers’ Pension Scheme (TPS), from 16 per cent to over 23 per cent. The move has major implications for the budgets of independent schools in the UK, which rely on parents’ fees to cover costs.
Alpha Plus, which includes the Wetherby School in West London that educated princes William and Harry, Hugh Grant and Romeo Beckham, has recently sought to expand on the back of its prestigious brand but has faced rising losses.
This month, Mark-Hanley-Browne, the group’s chief executive, wrote to parents to inform them of a pensions consultation process with teachers at thirteen of the group’s schools:
The Directors have discussed this situation at recent board meetings and I hope you will be pleased to hear that we are not prepared to pass on increased costs to parents in the form of rises in the school fee, as a direct consequence of the TPS situation. Instead, we are currently consulting with teaching staff on an alternative proposal to remaining in the TPS.
Alpha Plus is owned by an entity based in the British Virgin Islands and backed by Sir John Ritblat, former chief executive of British Land, as part of a move to branch out from property into the world of prestige education. The group’s ambitious expansion plans have seen it borrow nearly £130m in retail bonds since 2012 and open a new school in Manhattan.
The pensions dispute comes after the group suffered losses of £13m last year, which it says are inevitable costs of expansion. Its debts are secured against prime London property, which it says has increased in value over recent years. A £48.5m retail bond it issued in 2012 comes due at the end of this year.
According to the group’s letter, teachers would be expected to sign a variation to their contract, and that if they refused to do so, the group would “terminate the current contract of employment of that person, and immediately offer to reengage them on the same terms; except for their pension arrangements”.
The group’s latest financial statements show that 364 teachers across the group are part of the TPS, and employer contributions are estimated to be £2.75m to August 2019.
The National Education Union represents several hundred teachers across the independent schools that make up the Alpha Plus Group, and its representatives have been handing out leaflets outside the gates of its West London schools.
“It’s not my usual day to day work — in leafy Notting Hill where children are dropped off by nannies,” says Glenn Kelly, the regional officer dealing with the issue.
“They don’t recognise the Union, and they refuse to negotiate with us … and they’ve refused to meet with us on site,” he adds. “It’s a brutal response from an employer that you wouldn’t expect in education”.
The group has deposited £40m it borrowed from retail bonds with its parent company in the British Virgin Islands. In his letter to parents, Mark Heanley-Browne said: “it has always been intended that this money be used to finance the Group’s expansion in the form of new schools … it is not available to finance day-to-day operational expenditure which, of course, should be covered by school fees”.
One parent at one of the group’s schools said that fee increases over recent years had caused tensions with some of its customers, and pointed to a lack of competition in the private school West London market. At Wetherby, fees are currently £7,525 per term.
A spokesperson for Alpha Plus said the group is proposing to provide access to a Group Personal Pension Plan, and that it is not seeking to reduce its costs of funding teachers’ pensions, but instead is aiming to prevent extra costs being introduced into the budget for next year.
“The pension changes are for all schools, both independent and state. As such, Alpha Plus Group is not alone in trying to find a resolution,” he said.