Conflicts of interest ‘common’ in academy trusts, MPs warn

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A warning has been issued about the potential for conflicts of interest to arise between academy schools and their sponsors.

Research published as part of an inquiry by the House of Commons Education Select Committee into academies and free schools has said that “checks and balances” on academy trusts in relation to these conflicts are “still too weak”.

Committee chairman, Graham Stuart MP, has pledged to raise the findings with education secretary Nicky Morgan when she gives evidence to the inquiry next month.

The research highlights four areas where conflicts have arisen. These are:

  • Connected transactions: for example, where an individual on the board of an academy trust benefits personally or via their companies.

  • The provision of paid for services: for example, where the sponsor supplies a school improvement, curriculum or back office service to a Trust under a licence that prevents the Trust from changing supplier.

  • Less tangible conflicts that do not directly involve money: for example, inappropriate control exerted on the school.

  • Conflicts that arise in the wider system: for example where a contracted Department for Education Academy broker also works for an academy trust that they invite to pitch for a new school.

The report stresses that the “vast majority” of academy trusts are “staffed by honourable people”.

It states: “Cases of deliberate fraud are rare and many of the instances where real or perceived conflicts have arisen are the result of people being asked to work too fast with too few controls.”

However, the report warns that some academy trust boards are not doing enough to “mitigate the risks” or are not adhering to national guidance.

The report adds: “Conflicts of interest are common in academy trusts. 

“This is not surprising given the design of academies as independent organisations spending public money. 

“In a small number of cases, conflicts of interest have not been appropriately managed and academy trusts and/or individuals have been found in breach of the guidelines, sometimes leading to a Financial Notice to Improve or even criminal proceedings.”

A key finding is that the rules governing the provision of services by an academy trust to a school may be “insufficiently robust”. The rules state that services must be provided “at cost”, which means without charging any element of profit on the goods or services provided. 

However, the report states: “We could not find evidence of whether or how the ‘at cost’ rule is assessed, but it is clear that very large sums of public money are being paid to trust board members and their companies as well as the trading arms of academy chains via this route.”

Among its recommendations, the report calls on the Select Committee to review the current “at cost” arrangements, including whether existing payments are indeed “non-profit” and, if not, what can be done. Mr Stuart said his committee would ask Ms Morgan next month what will be done to tackle the concerns raised in the report.

He added: “Academy sponsors can bring much needed skills to schools and help raise standards. This important research has identified, however, a number of loopholes in the current arrangements that could work against the best interests of academies and their students.

“The public need to be sure that academy sponsors act only in the interest of their schools and never for other purposes.”

The research was carried out by Professor Toby Greany and Jean Scott of the Institute of Education at the University of London and can be downloaded at www.parliament.uk/education-committee

 


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