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City Academies: Contracts

Volume 458: debated on Tuesday 13 March 2007

To ask the Secretary of State for Education and Skills what advice and guidance is given to academies which intend to contract for commercial services with their sponsor. (126066)

[holding answer 8 March 2007]: The general requirements relating to the procurement of goods and services are set out in the Academies Financial Handbook, which the Department issues to all academies. This includes the requirement for probity in procurement, to demonstrate that all parties are dealt with on a fair and equitable basis and to ensure that there is no private gain. In particular the Financial Handbook requires governors, including sponsor governors, to make formal declarations of their interests in external businesses and to withdraw from any discussions regarding potential contracting with that business.

In addition to any advice—or indeed directions—which the Department may give to academy trusts in relation to the procurement of goods and services, the law also precludes the payment of any charitable trustee—including the governors of an academy, of which the sponsor is one—unless legal authority for that payment is given in the charity's governing documents, or otherwise granted by a court or the Charity Commission.

The Charity Commission approves the governing documents of all companies proposed to be registered charities prior to granting registration, to ensure that any provisions conferring authority on the charity to make a payment to one of the trustees—or a company associated with a trustee—deal with conflicts of interest in a transparent manner.

All academy trusts use the Department's model memorandum and articles of association as a basis for their own, and these include standard conflict of interest provisions recommended by the Charity Commission. These typically require any trustee of the company, who has an interest in a particular contract, to withdraw from discussions in relation to such a contract. In order to comply with these provisions, a sponsor of an academy trust would, for example, be required to withdraw from any meetings at which a discussion took place on the proposed remuneration of either themselves, or a company with which they are associated.

Furthermore, Charity Law places an obligation on charitable trustees to act in the best interests of their respective charities, and contracting with a company in the knowledge that this might not be at the best terms available to the charity, would obviously be contrary to this obligation.

Advice and guidance is also provided through the designated Project Lead within the Department, and academies are also referred to the Public Procurement Regulations 2006.