Academies: Sponsors

Lord Storey Excerpts

Thursday 21st July 2016 Lords Chamber

Asked by

[Lord Storey]

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.

[The Parliamentary Under-Secretary of State, Department for Education (Lord Nash) (Con)]

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.

[Lord Storey (LD)]

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.

[Lord Nash]

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.