A failed academy trust which is set to hand over all its schools to new providers paid more than £83,000 to an IT company owned by its former interim chief executive, new accounts reveal.

Wakefield City Academies Trust made purchases of £83,338 in 2016-17 to a company owned by Mike Ramsay, who stood down as interim CEO in May last year.

WCAT’s annual accounts for the year to 31 August 2017, published today, also say that the academy chain is “financially solvent” and predicts “year on year surpluses” until it is wound-up.  

Last September WCAT announced it was giving up all 21 of its schools after concluding it was unable to rapidly improve them.  Eleven academies are expected to transfer to new sponsors by April, with the remainder later in the year. The organisation is expected to be wound up by August.  

Wakefield City Academies Trust controversy

The chain attracted controversy in 2016 regarding payments to companies related to Mr Ramsay and his daughter.

According to its latest accounts, in 2016-17 WCAT made purchases of £83,338 from Hi-Tech Group Limited, which is owned by Mr Ramsay.

“The payments cover the provision of IT services to Wakefield City Academy and the development of bespoke software,” the accounts state. 

The payment is listed as a “related-party transaction”. Related-party transactions involve payments from an academy trust to an organisation or person connected to the trust.

They are permitted under the Academies Financial Handbook, provided that open and transparent procurement procedures have been followed, and any potential conflicts of interest are adequately and appropriately managed.

MPs’ concerns

MPs on the Public Accounts Committee yesterday repeatedly raised concerns about related party transactions in academy trusts, where people or organisations linked to the trust provide services to it.

WCAT’s accounts say that £63,721 of the purchases from Hi-Tech Group Limited related to “software development” which was “made at arm’s length following a competitive tender exercise in accordance with the trust’s financial regulations, which Mr Ramsay neither participated in nor influenced”.

“In compliance with the [Education and Skills Funding Agency] financial handbook, this service is under a written contract which states that the services are provided at cost and which gives the trust the right to inspect the company’s record to confirm this.”

The accounts show that £19,617 of the purchases related to “other IT support and supply of equipment to Wakefield City Academy”. 

“Wakefield City Academy has made regular purchases of IT support and equipment since its conversion in 2011,” the accounts state. “This supplier relationship continued after Mr Ramsay’s appointment as trustee.”

“The trustees are of the opinion that these services do not exceed cost but no formal assurance statements was obtained at the time of procurement confirming this. A statement of assurance has since been obtained. Notice has been served on this contract and it ceased with effect from 1.1.2017.”

‘Asset stripping’

According to the accounts, in the previous year WCAT made purchases from Hi-Tech Group worth £295,926.

For his work leading the trust between 1 September 2016 and 5 May 2017, Mr Ramsay was paid £140,000 to £150,000.

WCAT has been accused of “asset stripping” some of its schools by taking money out of their reserves later judged to be “not repayable”. Earlier this month the chair of the House of Commons education committee, Robert Halfon, wrote to the Department for Education minister Lord Agnew about “significant and unwarranted transfers of assets” made by the trust. 

WCAT’s accounts state: “It is envisaged that the trust will be financially solvent beyond the point of re-brokering and until the point of wind-up.

“There are reserves held as at the 31 August 2017 and the 2017/18 budget and medium-term plan show year on year surpluses,” the accounts add.

The accounts, signed off by the Mazars accountancy firm, state that “nothing has come to our attention which suggests that in all material respects the expenditure disbursed and income received during the period 1 September 2016 to 31 August 2017 has not been applied to purposes intended by Parliament”.

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