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Academies: Sponsors

Volume 774: debated on Thursday 21 July 2016


Asked by

To ask Her Majesty’s Government what arrangements are in place to ensure that sponsors of academies are not able to show unfair preference in the tendering process to companies owned by the sponsor.

My Lords, there are clear rules for academies which ensure that procurement is even-handed. They must follow the principles of regularity, propriety and value for money and have a competitive tendering policy. Connected parties may supply to their trust only under an at-cost policy and, unlike local authority maintained schools, they cannot make a profit from it. Trusts are transparent by publishing members’ and trustees’ relevant business interests and must publish details of purchases from related parties in their accounts, which independent auditors check every year.

I am very grateful for the Minister’s reply. He will be aware of a number of high-profile cases where a businessperson has sponsored a number of multi-academy trusts and those trusts have procured substantial contracts from companies that the businessperson also owns. As the Minister rightly said, we want to see transparency with proper procurement arrangements and proper auditing. Given that the Minister has said those things, they are clearly perhaps not working.

We need to get this in context. Related-party transactions are permitted and often related parties will provide services much cheaper than anybody else. In 2013-14 we identified only 13 cases in which either goods were not supplied at cost or it could not be verified that they were supplied at cost. They totalled under £500,000, which compares with the total academies revenue budget of £50 billion.

How many poorly performing schools have now been taken over by academy sponsors with a proven track record of success? How successful have academies been in recruiting good teachers?

We now have getting on for 2,000 sponsored academies. Last year, primary sponsored academies which have been open for two years improved their results by more than double those of local authority maintained schools. The benefits of academy status include the ability to employ teachers from a wide variety of backgrounds and to pay them appropriately.

My Lords, Bright Tribe, Cuckoo Hall, Dixons Kings, Durand and Perry Beeches are names the Minister will be familiar with; indeed, they are names that should keep him awake of an evening because they are just the most egregious examples found by the Education Funding Agency of where the financial requirements for academy trusts were not adhered to. Will the Minister assure the House that the new Secretary of State will do what her predecessor plainly did not—get a grip and ensure proper financial oversight of the £50 billion that, as he said, is swishing around the academy system?

I am delighted that the noble Lord is so concerned to see value for money. It is a pity he was not around in the Labour Government; when we came into power, waste was seeping out of every pore. To get the matter into context, as I said to the noble Lord, Lord Storey, in 2013-14 the Audit Commission identified 206 cases of fraud in local authority maintained schools—given the much less rigorous accounting procedures that are required in relation to those schools, that was generally acknowledged to be an understatement—compared with 22 cases identified in academies. As I said, we need to set that in the context of such a small budget. It is a great pity that people from philanthropic backgrounds are not more appreciated. This is a move started by the Labour Party under the noble Lord, Lord Adonis, and it is something that we have continued with gusto. I find this constant sniping from the sidelines very depressing.

My Lords, who is responsible for monitoring and verifying that these contracts are let at cost in the way that the Minister suggests?

First, academies are required to have their accounts audited annually by independent auditors, which is not a requirement for local authority maintained schools. These accounts are studied rigorously by the Education Funding Agency. Each school must have an accounting policy, and we have various analytical tools for evaluating the accounts to ensure that those procedures are followed correctly.

My Lords, if the Minister cannot reply today, would he care to write to me on the question of children with various disabilities, particularly behavioural problems, and the incidence of those children being in academies as opposed to local authority maintained schools? Allegations are made that academies are sometimes selective in not taking children with special needs. Could I please have a detailed report in time for us coming back?

To be clear, academies have exactly the same duties over admissions and exclusions in relation to pupils with SEND as every other state school, with no evidence to show that academies are any more likely to act against the interests of SEND pupils and prospective pupils than any other maintained streamed schools. It is perfectly clear that a great many academy sponsors are involved simply because they wish to benefit those less advantaged pupils. Where evidence is presented to us, we will take the matter very seriously and investigate.

My Lords, now that the Minister has been in post for quite a while and has been reappointed as Under-Secretary of State at the Department for Education, will he explain to the House how he is managing to reconcile the potential conflict of interest between his role as a Minister and his and his wife’s roles as directors of the Future Academies trust?

We have a very clear protocol established with the Civil Service which means that I am not allowed to be involved in any decisions that may directly affect the Future Academies trust.

My Lords, my noble friend will have shocked the House with his revelation of the massive amount of fraud in local authority maintained schools. What is being done about that?

We constantly try to encourage local authorities to take greater financial oversight of their schools. However, when we find local authority schools failing, they are often failing both financially and educationally; as I mentioned earlier, we have turned many of these schools into sponsored academies.

My Lords, I declare a non-pecuniary interest as the chair of a multi-academy trust. I will attempt to cool the atmosphere. Can we and the Minister agree that, in whatever sector and in whatever form we deal with here, whether multi-academy trusts, free-standing academies or local authority oversight, we are dealing with the issue of probity, and that the greater the transparency, the greater the confidence? This includes the allocation of large sums of money, such as £18 million for investment in improvement in the north of England that is being given to the Dixons Academies Trust. All of us have an interest in getting this right, because it is about the benefit that accrues to the children we serve.

I am grateful to the noble Lord, Lord Blunkett, for his comments. I know that the David Ross Education Trust has already benefited greatly from his involvement and I entirely endorse his comments about the importance of transparency.