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'Related-party deals are the issue, not academies'

Panorama rightly shone a light on related-party transactions - but this is an issue for all schools, says Leora Cruddas

The Labour Party should abandon any idea of returning academies to local authority control, says Leora Cruddas

Panorama rightly shone a light on related-party transactions - but this is an issue for all schools, says Leora Cruddas

The BBC Panorama programme Profits Before Pupils? The Academies Scandal, aired last night, made some very significant allegations. Most of these relate to a single multi-academy trust. I am not going to comment on the specific allegations made about this trust, but I do want to correct some factual errors and some generalisations.

There is a real problem that needs our attention – but the problem is not academies per se, and nor does it relate just to the academy sector.

Academies are not run by 'private' trusts

The programme claimed that academies are run by "private" trusts. This is simply not the case. Academies are charitable trusts whose single charitable purpose is to advance education in the public interest.

As charities, academies cannot be run for profit.

The vivid allegations made about one trust cannot be generalised to all

The programme appeared to suggest that the problems identified in just one trust were generally applicable to the way that all trusts in the country are run. This is simply not that case. The vast majority of trusts (by which I mean over 95 per cent) are financially compliant.

Misspent capital funding could not have been used as revenue funding

A considerable amount of footage last night focused on how the alleged misspent funding on capital projects could have been used to support children and young people, through, for example, teaching assistants or teachers. This is incorrect. Capital funding cannot be converted into revenue.

Of course, any capital funding should be used in the way that Parliament intends. And if it is not, there should certainly be consequences.

It is simply not the case that academies are able to hide their accounts

A number of allegations related to a lack of financial transparency. However, academies are required in law to publish their accounts annually. They are fully audited by independent auditors.

It is not true that academies are not subject to scrutiny and are not accountable

This is a common trope in the anti-academies rhetoric. It is simply not true. Academies are subject to greater scrutiny and accountability than any other type of school. They are directly accountable to Parliament, and the CEO, as accounting officer, can be called before Parliament, the National Audit Office or the Commons Public Accounts Committee.

There is a problem with related-party transactions

I would not hesitate to say that there is a problem with related-party transactions – these are typically contracts where this is some conflict of interest or financial benefit to someone in the trust in senior executive or governance role.  

I am not sure that the concept of related-party transaction is (or was) well understood in the sector. However, the Education and Skills Funding Agency (ESFA) has shone a light upon this and other aspects of financial mismanagement.

The ESFA investigates and publishes reports into trusts where things have gone wrong. Having all these reports in one place makes the problem look really significant, and makes it look like the problem is located in one part of the education sector – academies.

The greater oversight and transparency in publishing the reports has ironically led to the perception that there is a problem in the academy sector.

In fact, this is (and has been) a problem for all parts of the sector. It is just that previously (and currently) local authorities were not required to publish investigation reports in one place.

So the real story last night is not a story about academies – Panorama rightly shone a light on procurement and related-party transactions. Let’s work together to fix this problem.

Leora Cruddas is CEO of Freedom and Autonomy for Schools – National Association (Fasna), which plans to become the Confederation of School Trusts (CST). She tweets @LeoraCruddas

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