Multi-academy Trusts

Lord Storey Excerpts

Wednesday 10th July 2019 Lords Chamber

Asked by

[Lord Storey]

To ask Her Majesty’s Government what assessment they have made of the financial arrangements and auditing of multi-academy trusts.

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

My Lords, the financial arrangements and auditing of academies is based on a clear framework and effective oversight, with robust intervention when needed. Trusts must comply with the Academies Financial Handbook, publish audited accounts and have independent internal scrutiny. In November 2018, the academies sector annual report and accounts showed that the vast majority of trusts are compliant with financial requirements; 98% of accounts were unqualified by their auditors and 95% had no regulatory issues.

[Lord Storey (LD)]

I wonder how robust these procedures are. The Minister may recall that, a few months ago, the newspaper headlines were saying that an academy leader had established a love nest in his office and had spent £100,000, I think, on various gifts and pleasures. This went on for a number of years but was not picked up by any audit or inspection—it was a whistleblower who shone a light on what was happening. The Minister will also be aware of the large number of transactions by chief executives of academies to companies that they own or are owned by family members. For example, in 2016 £120 million was spent on contracts with companies owned by chief executives or their family members. Surely, we need systems that stop this happening, because this is money that should be spent on schools and their pupils.

[Lord Agnew of Oulton]

My Lords, I am not familiar with the love-nest situation, but I assure the noble Lord that scrutiny of the sector is robust. From 1 April this year, we brought in a requirement that any related-party transaction in excess of £20,000 had to have pre-clearance with the ESFA, and all other RPTs needed to be disclosed. It is frustrating that I am often attacked about governance in the academies sector while there are also a lot of transgressions in the local authority sector. While researching this Question today, I discovered the 2009 case of a so-called super-head in a local authority school, who was knighted by the Labour Government, was then charged with false accounting and has recently lost his knighthood, been convicted and must repay some £1.5 million.