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Schools: Academies

Volume 756: debated on Monday 27 October 2014

Question

Asked by

To ask Her Majesty’s Government what steps they are taking to improve the financial regulation of academy schools.

My Lords, academies are subject to considerably more rigorous financial regulation than local authority maintained schools. For example, they have to publish annual, independently audited accounts; local authority maintained schools do not. They are subject to the rigorous oversight of the Education Funding Agency and anyone in a governing relationship with an academy, or an organisation closely linked to it, can provide services to a local authority maintained school at a profit; they cannot to an academy. However, we are continually looking at ways to refresh the financial regulation of academies.

I thank the Minister for his reply, but is he concerned about the increasing number of stories of academy chiefs being paid inflated salaries, heads employing family members and friends to provide school services, lavish expenditure on hotels and travel and, recently, a head paying £26,000 for furniture for her office? This is not their money, it is taxpayers’ money, but it seems that a small minority are using the academy funding system as a cash cow. Does the Minister accept that the Government’s centralised oversight of these schools makes it more difficult to supervise academy school expenditure effectively? Does he now accept that that was a mistake?

The noble Baroness picks out some isolated examples. I point out to her, as I have before, that 36 of the 55 pre-warning notices that this Government have issued to academy sponsors have been to sponsors approved under the previous Government. This Government have considerably tightened up financial oversight and improved things such as control of grants. Of course, these figures are but nothing compared with the £10 billion overspend the National Audit Office tells us that the previous Government were heading for under the Building Schools for the Future programme.

Will my noble friend tell us whether there is any information about the innovations and improvements that heads have been able to make since so many of them were given the freedom to manage their own budgets?

My noble friend is quite right that there have been many examples of this, including more efficient purchasing, longer school days, greater freedom over the curriculum, the ability to employ subject-specific teachers in primary schools, the ability to find the money to engage more effectively with the professional communities and business, and the generation of income more effectively from their own facilities.

My Lords, while rigorous financial regulation is important, I am alarmed to hear of a high-achieving school in a deprived area in west London where children are made to endure classroom sizes of up to 80 without adequate toilet facilities. The DfE will not release money for new premises until the financial management is completely up to scratch. Does the Minister agree that it is wrong to use children in this way?

I do not recognise the example to which the noble Lord refers. I would be grateful if he would write to me as regards his specific example. The pressure on pupil places has been considerably relieved by the amount of money that this Government have spent on them, but I would be particularly interested to hear about this case.

My Lords, is the Minister concerned to hear that a head teacher said at a recent seminar that she was having to pay rent arrears and pay for food in her impoverished community to enable children to get to school, to be able to concentrate and to do well? She was embarrassed to do this but she felt that she had to.

Of course I am concerned about the point that the noble Earl makes. We have introduced universal free school meals particularly to enable pupils who come from the most disadvantaged backgrounds to be ready to learn when they arrive at school.

Will the Minister say, where instances of apparent fraud have been notified in accordance with the guidelines, what action the Government have taken?

Where we receive an instance of fraud we immediately investigate. The EFA has investigated 35 cases of fraud in academies in two years. That compares with 191 reported in maintained schools over one year. If we feel that there are causes for concern we will inform the police or, in more minor cases, introduce a financial notice to improve.

My Lords, can the Minister tell the House how many of the cases of fraud that have been alleged were uncovered by investigation by his department or by Ofsted, and how many by whistleblowers?

I do not have the exact answer to that question, but it is likely that a high proportion of all cases of fraud, whether in academies or in local authority maintained schools, will be uncovered by whistleblowers.

Is my noble friend confident that the Government’s financial controls are sufficiently extensive and rigorous?

I am confident of that. Since this Government came into power we have halved the cost of running the Department for Education, halved the cost of building schools, and reduced by more than one-third the cost of opening sponsored academies.

My Lords, since we have time, could the Minister now try to answer the question posed by my noble friend Baroness Jones?