The rapid expansion of the academies programme has triggered long-standing concerns about the government’s ability to monitor thousands of schools from a single Whitehall department.
But, in recent months, these concerns have turned to legitimate fears about academy money being funnelled into the bank accounts of academy trust bosses.
And now a TES investigation has revealed that the Department for Education is relying almost entirely on whistleblowers to uncover any improper financial conduct. Of 26 full investigations conducted by the DfE’s Education Funding Agency (EFA), 21 came to light only because of whistleblowers.
‘Lack of transparency’
The finding has led the chief executive of one of England’s biggest multi-academy trusts (MATs) to express his concerns about the DfE’s record.
“When academies were first introduced, the department relied almost entirely on whistleblowers,” the CEO, who wishes to remain anonymous, told TES. “Roll forward to today, and, sadly, very little has changed. It’s almost as if the EFA is asleep at the wheel.”
Last year, a report by the Commons Public Accounts Committee warned that the DfE “relies heavily on whistleblowers to identify significant risks of failure” in academies.
Since that report, a further seven investigations have been launched by the EFA, with all but two instigated by whistleblowers.
It is very unfortunate that most of these investigations have come about because of whistleblowers
Meg Hillier, chair of the committee, questioned what ended up being missed by the government owing to its reliance on individuals coming forward.
“It is very unfortunate that most of these investigations have come about because of whistleblowers,” the MP told TES.
“What about the areas where someone was not prepared to blow the whistle? How on earth do they find out what’s going on?”
And she added: “It is absolutely vital where someone is spending taxpayers’ money that there is a higher level of accountability and transparency applied to them.”
According to Neil Carmichael, chair of the Commons Education Select Committee, the government is attempting to “strike a balance between providing autonomy and oversight”.
But he warned: “What we can’t have, however, is the inappropriate use of public money, which is something that has been cropping up recently.”
Concerns have been raised amid a series of high-profile cases featuring the founders of MATs paying themselves thousands of pounds from academy accounts for various education services.
Among them was the case of Liam Nolan, chief executive of Perry Beeches Academy Trust in Birmingham, who was forced to resign following revelations that he had paid nearly £1.3 million to a third-party supplier without any contracts.
It also transpired that he had received a second salary worth £160,000 on top of his normal earnings of £120,000. The DfE claims that the level of scrutiny over academies has never been higher, and points to the fact that academy trusts must be audited every year. But as TES has revealed (see pages 8-9), the system allows the accounts of thousands of individual academies to go without full audits.
Conflicts of interest
Beyond the rare cases where academy staff had acted fraudulently, such as at the Kings Science Academy in Bradford, one of the biggest concerns about the sector’s financial practice surrounds the issue of “related-party transactions”, along with similar potential conflicts of interest.
According to the government, related-party transactions arise when someone connected to the school is paid to carry out work for it. Such transactions are permitted under company law, charity law and under the Academies Financial Handbook, provided that “open and transparent procurement procedures have been followed”.
But some critics have called for relatedparty transactions to be banned.
The National Governors’ Association (NGA) argued that problems have emerged because the government’s push to convert more schools into academies has brought in a more corporate structure to school governance.
The association said that some people working in academies have yet to get to grips with the change in approach.
Generally, the school sector as a whole isn’t brilliant at dealing with conflicts of interest
“Generally, the school sector as a whole isn’t brilliant at dealing with conflicts of interest,” Gillian Allcroft, NGA deputy chief executive, said. “Part of that is they haven’t been used to it, as the charitable sector has.
“You come across situations where the chair of governors and the headteacher are in a relationship. And it is not secret, it is not something nefarious, and everyone knows about it when attending a meeting. But it’s allowed to happen.”
According to Ms Allcroft, good advice for those involved in academy governance is to either sell services or be a governor - but not to do both. “People have to think about the ‘tabloid test’,” she said. “What would it look like if that got published in the newspaper?”
It is a view that Matthew Wolton, partner at law firm Clark Holt, which specialises in academy conversions, subscribes to.
Mr Wolton said that while academies’ oversight was more rigorous than for local authority schools, incidents like Perry Beeches would continue to happen as the people running them were not sufficiently qualified.
“The academies programme is still in its infancy,” Mr Wolton said. “The question always comes back to where the government is going to find the right people to run all of these academy trusts.”
@RichardVaughan1
