By Lisa Forster, CIPFA Finance Advisory Network Advisor
Increased autonomy of our schools in the form of academisation does not necessarily mean increased accountability. This has been highlighted in a number of cases, including a Channel 4 Dispatches programme aired in July 2016, which found nearly half of 100 academy trusts surveyed had paid money to directors, trustees or their relatives.
Regulations state that academies can purchase goods and services from companies connected to sponsors and employees but these must be at cost – hence delivering best value – and reported as a related party transaction in the accounts. However this does not always appear to be the case! There have been instances whereby intermediate companies are used to mask payments from academy trusts. One example being the Perry Beeches Academy Trust in Birmingham which awarded £1.3m of work to a private company ‘Nexus Schools’ without having a contract and adequate tendering and also paid a second salary of £160,000 to the Headteacher. The second salary was not disclosed in the accounts and neither was the fact the company had links to the schools chair of governors.
Other cases involving companies that may be a little too close for comfort and seem to have a loose interpretation of ‘at cost’ services include the ‘Collective Spirit Trust’ who paid £700,000 to a firm owned by its chief executive, and the Aspirations Academies Trust (AAT) who paid more than £3,000 a day for consultancy services to a company owned by one of their co-founders and trustees. This included £38,300 for his travel bills from the US to the UK.
Margaret Hodge, ex chair of the Public Accounts Committee commented on the revelations highlighted by Channel 4 stating that the checks and balances in the system were not robust enough and 'These related party transactions should be outlawed and it is so bloody obvious. If you are getting involved in schools for the public good, then you shouldn’t be making money out of it. Yet none of this stuff ever comes out because of the regulators discovering things.'
Academies may be independent but they are funded using tax payers money, so stewardship and best value are paramount. With this in mind, should this include the lease of a top of the range Jaguar car along with insurance, servicing and new tyres, or perhaps dining at Marco Pierre’s restaurant, paying for drinks, catering and landscaping at your 50th birthday party, or even installing broadband in your French holiday home? The answer is no, but strangely and perhaps not surprisingly all these have been paid for using academy funds.
It is only right to point out that the vast majority of academies abide wholeheartedly with the regulations and abhor misuse of public monies. However it seems that greater autonomy does not always equate to greater accountability and those that wilfully mismanage public monies should be highlighted and brought to task.
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