Academy regulation 'too weak'
Academy schools are paying large sums of public money for services provided by trust board members and their companies but the system for regulating potential conflicts of interest is too weak, expert research has found.
A report commissioned by the cross-party Education Select Committee found weaknesses at several levels throughout the system and claimed "questionable practices" were being signed off within the existing rules.
Education Secretary Nicky Morgan will be questioned about the "loopholes" in academy regulation when she appears before the committee next month.
The research by experts from the University of London's Institute of Education found that the system for guiding and regulating academies had improved since 2010, but there were still problems.
"The widespread view is that the vast majority of academy trusts are staffed by honourable people working hard to address educational under-performance , often in challenging circumstances.
"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.
"Nevertheless, the general sense from the literature and the evidence collected for this study is that the checks and balances on academy trusts in relation to conflicts of interest are still too weak. In the course of the research we came across a significant number of real or potential conflicts of interest that we found concerning."
The report added: "There is a broader sense that the academy system lacks transparency and is overly politicised, from the top down."
One of the areas of concern identified by the research was that rules governing sponsors providing paid services to their academies were "insufficiently robust".
Sponsors providing services, such as for school improvement or back office support, can charge if they are doing the work "at cost" and not for profit.
But the research, by Professor Toby Greany and Jean Scott, recommended that the committee should review this system.
Their report said: "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."
Examples of real or potential conflicts of interest highlighted in the report included Aurora Academies Trust, which runs four primary schools in East Sussex and pays its US parent company, Mosaica Education, about £100,000 a year to use its patented global curriculum.
An Aurora spokesman quoted in the report said: "The licence is on an 'at cost' basis in accordance with a tripartite agreement between the trust, Mosaica and the DfE (Department for Education)."
The Academy Enterprise Trust, which runs 80 schools, has paid nearly £500,000 into the private business interests of its trustees and executives over the past three years for services ranging from project management to HR consultancy, the report said.
The report raised concerns about "intangible conflicts" not directly involving money, such as those seen in the "Trojan Horse" schools in Birmingham, or in the case of a further education college deciding to close the sixth form of a school it sponsors.
It also highlighted potential conflicts of interest where individuals on trust boards benefit personally or through their companies from their position.
One anonymous interviewee told the researchers about an academy "where the head teacher had spent £50,000 on a one-day training course run by their friend", a decision which was not run past the governors.
In another academy "the chair of governors had told all staff that if they discussed with students or used text books referencing abortion or contraception they would be dismissed".
The researchers' report said: " The ability of the system to pick up on intangible conflicts that do not involve money seems almost non-existent."
The report backed the findings of the Commons Public Accounts Committee, which included introducing a "fit and proper persons test" at individual academy and academy trust level.
It also recommended that the Education Select Committee should consider whether further steps are needed to strengthen the regulations for governance in trusts. The MPs should also examine whether the Education Funding Agency, which is responsible for financing and monitoring academies, should be split up to create a separate regulator or transformed into a new quango.
The researchers also recommended that the committee should review the arrangements for the new regional commissioners and head teacher boards.
The Education Select Committee's Tory chairman Graham Stuart said: "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.
"We will question the new Secretary of State when she gives evidence to the inquiry next month and ask what will be done to tackle these concerns. The public need to be sure that academy sponsors act only in the interest of their schools and never for other purposes."
A DfE spokesman said: "As the report recognises, the vast majority of academy trusts are focused on raising standards of education - often in our most challenging areas.
"All academies are subject to a strict oversight and regulatory regime which has been further tightened since 2010. We are clear that no individual or organisation with a governing relationship to an academy can make a profit from providing it with services. We have also made clear to all academies the consequences of breaching those rules and will not hesitate to take action where we think that has happened.
"We will consider the report's findings carefully."