On the surface, everything looked perfectly normal. In the summer of 2015, Perry Beeches academy in Birmingham hired a local business to undertake a health and safety audit. By the end of autumn, it had paid £5,000 to Lampsato Ltd, run by a woman called Lynda Scotson.
But there was a catch: Scotson happened to be the wife of one of the school’s directors. He had been on the committee that approved the contract.
The set-up proved lucrative for Scotson’s company; over the next few months, the school paid out a further £15,000, until the conflict of interest was eventually reported and an investigation launched. In December 2016, a government report (pdf) found the school in breach of official rules and detailed serious financial impropriety.
This is not a unique case. Across the country, academies have been plagued by allegations of financial impropriety, conflicts of interest and even corruption.
Unlike schools under local authority control, academies are responsible for their own financial management. Although this means that developing good corporate relations is essential, many have ended up without a proper framework for transparency and accountability. A 2014 report (pdf) for parliament claimed that “conflicts of interest are common”, adding: “There is a broader sense that the academy system lacks transparency.”
Meanwhile, the Public Accounts Committee said it was concerned (pdf) that “individuals with connections to both academy trusts and private companies may have benefited personally or their companies may have benefited from their position when providing the trust with goods and services”.
Shrouded in secrecy
There is no shortage of evidence for this. Two years ago, an investigation by the Guardian found that academy chains had paid millions to private businesses run by the schools’ directors, trustees and their relatives. Examples included the Grace Academy Trust, which had paid more than £1m to or through various companies with links to Lord Edmiston, who set up the trust.
The Griffin Schools Trust was also thrust into the spotlight after it emerged that it paid more than £700,000 to a consultancy firm owned by its chief executives. And last week it was reported that another academy trust paid nearly £600,000 to a company whose directors included two of its trustees.
Some academy schools lack even the most basic transparency provisions. In November, the Department for Education opened an investigation into 19 academies that had allegedly broken transparency rules. They had apparently failed to publish a register of financial interests covering trustees or senior leaders. The DfE now says: “We have contacted all the trusts we identified as non-compliant and a majority of these are now meeting our requirements. We are working with the remaining trusts to ensure they are fully compliant.”
The true number of academies breaching transparency rules may be far higher – these findings were only based on a sample of 100 schools. In fact, those failing to publish a register of interests include some of the largest multi-academy trusts (Mats). One Mat with more than 60 schools admitted its “oversight” to the Guardian, adding: “This is being corrected as soon as we possibly can.”
But Chris McGovern, the chairman of the Campaign for Real Education, says it is far too easy for academies to get away with poor transparency. “The whole system is a secret world; it is shrouded in secrecy,” he says. “It’s not transparent, it’s a green light for corruption.”
Of course, poor transparency doesn’t necessarily mean a school has had improper financial dealings. But it’s a barrier to accountability – keeping parents, teachers and authorities in the dark about where the academy’s money is going. McGovern explains: “Behind the closed doors of a trustees’ meeting, it’s so easy for trustees to support each other, and therefore to award contracts to people they know.”
Unethical practices
Mary Bousted, general secretary of the Association of Teachers and Lecturers union, blames the string of financial controversies on “the mushrooming of academy and free school systems, without proper checks and balances”.
“There’s a steady stream of questionable or downright unethical practice coming out of some academies and Mats,” she says. “That’s including companies becoming sponsors of academies and then using them as a cash cow. If unscrupulous people want to make money out of free schools and academies, there are still too many opportunities to allow them to do so.”
Although academies enjoy lots of financial freedom, they are still subject to public standards of accountability. So their relationships with private businesses should be no less secretive than those of community state schools or other public bodies. However, many appear uneasy about financial transparency.
A freedom of information request to Mats by the Guardian highlighted how varied the approach can be. Asked for details of any payments they made last year worth more than £5,000, most quickly responded with the supplier information. But others questioned the need for transparency, or refused the request altogether.
One school replied claiming that it was “unhelpful, inconsiderate and, in my view, unnecessary” to ask to view the school’s finance data. Dozens more refused to release the records on grounds of commercial sensitivity. McGovern says this reflects a wider lack of transparency in the academy system when it comes to business dealings. “It’s not the right of the headteacher to say you shouldn’t have the information, or to question why you want the information,” he says. “The number one priority for public confidence is transparency.”
Fixing the system
Both McGovern and Bousted believe that allowing local authorities to have greater power over financial management could help clean up the system.
“Local authorities could have an important role to play in terms of the administration of schools,” says McGovern, adding that the government’s academisation programme could have simply removed local authorities’ power over the curriculum, rather than also removing their management role. “Local authorities should be given the powers to intervene if they have evidence that a school is starting to fail – either educationally or on financial probity.”
Other voices have called for a ban on academies handing any contracts to firms linked to trustees or senior staff. Kevin Courtney, general secretary of the National Union of Teachers, told the Times Education Supplement: “The best solution is surely to outlaw them, both to prevent actual cases of wrongdoing and to remove concerns about how such contracts are awarded.”
However, so long as financial mismanagement continues, it will be teachers and pupils who suffer the consequences. “Because there aren’t enough checks and balances – and because there isn’t anything like enough early intervention – things can get to a bad state before anything is done about it,” Bousted says. “And during that time, morale suffers. Teachers notice that they’re not getting the resources they need.”
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