Education: Academy Chains

Lord Nash Excerpts

Wednesday 15th January 2014 Lords Chamber

[Baroness Jones of Whitchurch]

To ask Her Majesty’s Government what controls are in place on the disbursement of public funds by academy chains to their directors and trustees or private contractors linked to them.

[The Parliamentary Under-Secretary of State for Schools (Lord Nash) (Con)]

My Lords, the relevant rules that academies must abide by are quite clear and have been considerably tightened under this Government. No individual or organisation with a governing relationship to an academy can make a profit; any goods or services delivered by these parties to these academies must be delivered transparently and at no more than cost; and proportionate and fair procurement processes must always be followed. As charities, academies are required to adhere to accounting standards. These require the full disclosure of related-party transactions, and independent auditors check those disclosures every year. Unlike local authority schools, academies produce and publish annual third-party audited accounts.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I thank the noble Lord for that reply and of course I accept that the accounts of these firms are audited. However, is the Minister concerned by reports of excessive sums of taxpayers’ money being paid to academy chain directors for travel, subsistence, consultancy and legal services? Is he also concerned that many of these businesses are employing members of their immediate family to provide services for the academies, and does he accept that academy chains lack the involvement of parents and the local community, which could provide a degree of independent scrutiny and governance for the academies? What more is his department planning to do to get a grip on the situation, which seems to be one of prioritising the expansion of the academies over the protection of public money?

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[Lord Nash]

I stand by my original Answer regarding the rigid regime that academies operate under, and resent any allegation that we do not have a grip of the situation. When we came into the Department for Education in May 2010, we found a department with, frankly, a very poor understanding of value for money. Since then, we have halved the cost of building schools under the previous Government; by 2015 we will have cut the cost of running the department by half in real terms; we have slashed the amount of money spent on sponsored academies from an average of more than £300,000 under the previous Government to under £100,000; and we have substantially tightened the rather loose arrangements that the previous Government had in force in relation to these arrangements. I stand by the results of the academies. Sponsored academies open for three years improve their results by 12% versus 5% at secondary level, and primary converter academies are far more likely than local authority schools to be rated outstanding at their next Ofsted when they have previously been rated good.

[Lord Forsyth of Drumlean (Con)]

My Lords, did my noble friend have the opportunity over the Christmas Recess to read the interview in the Times given by our noble friend Lord Harris of Peckham about the huge success in transforming the lifetime chances of youngsters in this country? Would a responsible Opposition not be asking why we are not getting value for money like that from local authority schools, which are cheating a generation of those opportunities?

[Lord Nash]

I entirely share my noble friend’s sentiment. We should be praising philanthropists like my noble friend Lord Harris and encouraging more of them into the academies programme, as we are attempting to do. In 2013 the Audit Commission carried out a survey of annual detected fraud and corruption within local authorities and reported 191 cases of fraud in schools. My department is considering what we can do about improving procedures in local authorities in relation to this.

[Lord Foulkes of Cumnock (Lab)]

My Lords, what are the arrangements for the trustees and directors of these companies declaring their interests?

[Lord Nash]

My Lords, it is absolutely clear that both trustees and directors of these companies must declare their interests in the accounts.

[Baroness Perry of Southwark (Con)]

My Lords, does my noble friend agree that the most important form of accountability is the accountability of the school to its pupils, and their parents, to raise the standards of achievement? The huge success that my noble friend has already described is surely evidence of the success of the accountability that has left academies accountable to their pupils to raise standards.

[Lord Nash]

I agree entirely with my noble friend. The sixth largest economy in the world cannot tolerate a system whereby our schools are rated in the 20s for developed countries. That is what our reform programme is all about improving.

[Lord Whitty (Lab)]

In replying to the Question, the Minister was trying to be very reassuring. Does that reassurance extend to a circumstance where a charity or an academy chain, having taken over the running of a school, then decides to dispose of property attached to it? Do the proceeds from that property go back to the school or do they accrue to the academy chain or charity?

[Lord Nash]

The noble Lord asks a very good question. In just about every case—if I can find other cases that are relevant to this answer, I will identify them for him—the land stays with the local authority, with a 125-year lease to the academy, so the circumstances that the noble Lord refers to are unlikely to apply. Certainly, nothing like what he mentioned could possibly happen without the consent of the Secretary of State.

[Lord Edmiston (Con)]

My Lords, I declare a personal interest as a sponsor of Grace Academy, which has featured in recent articles. Is the Minister aware that many sponsors have put multiple millions into the academy programme rather than taking funds out?

[Lord Nash]

I share my noble friend’s sentiment entirely. I am fully aware of that. I am extremely grateful to him for his support of the academy programme and, as I said earlier, we should encourage more philanthropists like him to come into the system, rather than trying to score cheap points against them.

[Lord Griffiths of Burry Port (Lab)]

My Lords, does the Minister agree that, while there is a full-blooded debate to be had about the relative merits of academies and schools that have some local authority involvement—a debate that I suggest will have its full import when we have rather more evidence from the academies than we have at the moment—it does not do anybody any good to castigate those schools that are not yet academies and whose results are manifestly brilliant and would hold any academy’s results to shame? Can we have some assurance that the language we use is not polarised in a way that damages schools in the public sector?

[Lord Nash]

I agree entirely with the noble Lord. Many schools that are highly successful are not academies. The noble Baroness, Lady Jones, recently took me to visit Morpeth School in Tower Hamlets, which is an excellent example of a non-academy, highly successful school.

[Baroness Hussein-Ece (LD)]

Who are some of these academy chains responsible or accountable to? For example, the Academies Enterprise Trust has grown to the size of a local authority. At least local authorities are accountable to the electorate. Who is AET accountable to when it has more than 60 company directors on more than £60,000 a year?

[Lord Nash]

All academy chains have a rigid financial reporting system. They have to publish their accounts and are actively and rigorously monitored by my department. I assure the noble Baroness that we keep a keen eye on all the academy chains.

[Lord Peston (Lab)]

My Lords, the noble Lord, Lord Forsyth, referred to raising standards for all children. If the schools that the Minister is talking about are so good, why do not any noble Lords opposite send their own children—or more likely, their grandchildren—to those schools, as many of us did, because we felt it was our responsibility to be supportive of local schools?

[Lord Nash]

I believe that a number of noble Lords do send their children to such schools, and I hope that in time, because of the success of the entire state programme, many more will.

[Lord West of Spithead (Lab)]

My Lords, bearing in mind the history curriculum that is taught in academy schools, does the Minister agree with his Secretary of State, who wrote in a recent article that those on the left were unpatriotic?

[Lord Nash]

I applaud my right honourable friend the Secretary of State’s objectivity in all matters.