UK regulator makes inquiries into IT systems contracts after school backlash
The UK competition regulator is making preliminary inquiries into England’s largest supplier of school IT management systems after institutions hit out at a change to their existing contract terms.
The Competition and Markets Authority has written to school leaders asking about agreements made with Education Software Solutions, a company that supplies digital information networks to about 68 per cent of schools in England.
The inquiries follow a backlash from hundreds of school leaders after ESS told clients in November that it was swapping its normal one-year rolling contracts for three-year ones. They said the extension, effective from April, did not leave schools with enough time to seek alternative providers.
The CMA said in an email seen by the Financial Times that it was considering whether ESS’s change of terms could “restrict schools’ ability to switch to alternative providers”, adding that it had “not reached a view” on whether the situation raised competition concerns.
Thousands of schools depend on the management information system, known as SIMS, for activities such as recording pupil attendance, setting assignments and managing payroll.
In January, the IT systems company added a six-month break clause to the contracts. However, school heads have pushed back, saying they felt locked into agreements with the software provider.
Micon Metcalfe, chief financial officer at the Diocese of Westminster Academy Trust, a group of schools, said she was “very uncomfortable being asked to sign up for three years” with the IT provider.
Stephen Morales, chief executive of the Institute of School Business Leadership, representing school resource managers, said its members were “deeply worried” about switching to long-term contracts with a provider that had changed ownership so recently. “They’re locked in,” he said.
This is the second time the regulator has looked into the IT management company in less than 12 months. In 2021, the CMA investigated the merger of ESS and ParentPay, a payment platforms business, after ESS was acquired by private equity fund Montagu from Capita, an outsourcing group. The CMA ultimately approved the merger, which left Montagu with a minority stake in ESS.
In November, the Department for Education advised schools to delay renewing contracts and then said a month later they should “proceed with a decision”.
The company said its updated terms of service aligned with “much of the wider market”, and that with the addition of the break clause schools have been given 11 months to switch providers.
It added it would invest “every penny of ESS profits”, totalling £40mn, into improvements over the next three years. “As the leading provider of MIS systems to the education sector, we take our role in supporting customers’ needs very seriously,” it said.
The Local Government Association, which represents local authorities, said many councils “had concerns” with the contractual changes. A “lack of time” to consider other options meant “many schools have been backed into a corner” and had “little alternative” but to proceed with the contracts, it said.
Simon Oxenham, director of resources at Southend High School for Boys in Essex, said SIMS was an “old technology” that looked increasingly unattractive and potentially expensive especially for large academy trusts that ran systems across many schools.
“The way ESS behaved is like a bully,” he said. “We wouldn’t tolerate bullying in the classroom so we won’t tolerate it from a supplier.”