7 things we learned from the PAC on academy accounts

The public accounts committee has held its second session into academy finances, and grilled some of the highest ranking civil servants in the Department for Education.

The DfE’s permanent secretary Jonathan Slater was joined by the Education and Skills Funding Agency’s chief executive, Eileen Milner, and director of academies and maintained schools, Mike Pettifer, to face questions ranging from related party transactions and CEO pay to banning trustees from working in other schools.

Here are seven things we learned

1. Specialist team will monitor related party transactions

From April, the government is bringing in a rule that all trusts must declare every single related party transaction, and must get approval from the ESFA for any that are above £20,000.

Milner said they were putting together a small specialist team work on identifying related party transactions but added that some of the controversial transactions can have “benefits”.

She added that the £20,000 figure was “a place to start”. But added: “What we are very open to doing, having run this through for a year, is to come back and say to you that on the basis of what we’ve seen, on the evidence of what we’ve seen, we might reduce it to zero. We might take it to £10,000. We might put it to £40,000.

“But we need a bit more evidence and we need to instil this discipline of declaration into the sector.”

 

2. More justification for high salaries needed

Milner said she has written out four sets of letters to academy trusts asking them to justify the high salaries of their staff, and that she expects to write a fifth in the spring.

She added that around 40 trusts have had to have conversations with the minister for providing unsatisfactory evidence around the “transparency, proportionality and justifiability” of the salaries paid.

Slater said there some “well-known cases” of trusts paying “significantly more” than £150,000, but insisted the government was “chasing them up”.

More guidance on salaries is expected in the next six to 12 months.

 

3. Government wants to flex powers to ban bad trustees

Asked by committee chair Meg Hillier why there is no “naming and shaming” of trustees and governors who have been found to have misused tax payers’ money, Slater insisted individuals could be banned from both teaching and governance.

However, he later admitted that just one governor had been banned from governance by the DfE.

Asked if the ESFA needs further powers to restrict and sanction governors and trustees, Milner said she would like to “test the powers they already have”.

Milner said the ESFA was seeking “to uncover in a systematic way the names of people who under their watch irresponsible things happen” and prevent them from joining other boards, or even disqualifying them as directors.

It follows investigations by Schools Week showing a disparity between headteachers – who get hauled up before misconduct panels – while chief executives, and trustees, don’t fall under those rules.

 

4. DfE claims it’s responsible for collapsed trusts’ documents

Meg Hillier asked Jonathan Slater what happens when a trust “goes down”. It follows Schools Week’s investigation last week that found lots more trusts are collapsing – with serious questions over what happens to its documents.

Slater said the government requires the return of all documentation by the trust, but this goes against what the DfE previously told Schools Week – that the trust’s liquidator is responsible for keeping hold of important documents.

Our investigation prompted concerns from Julie Rayson, a local councillor and campaigner at the Whitehaven Academy in Cumbria, to point out that many documents relating to its former trust – Bright Tribe, which is due to close – “can’t be located”.

When asked about trusts shredding documents, Slater said he would be “appalled” if anything was shredded.

 

5. The ESFA claims it’s always watching

Asked about the government’s oversight of academy finances, Pettifer insisted that “every single accounts return is looked through” by the ESFA and any “significant” concerns are investigated “if necessary”.

Milner added that the ESFA doesn’t wait for the accounts “to tell us there is a problem”.

She said the ESFA takes it “very seriously” and said it was one of the reasons trusts are now asked to give three-year financial forecasts.

“We are working to prevent rather than react to failure, because that really has got to be our ambition,” she said.

 

6. Asbestos is ‘no issue’

Although 23 per cent of schools have not yet responded to the DfE’s asbestos survey, prompting the government to extend the deadline three times, Slater insisted there was not a “danger”.

“We haven’t as yet identified any example – any example – of a school that has got an asbestos problem that it is not able to resolve because of a lack of resources. If we saw an example of an asbestos problem that needed to be dealt with, we would make sure it got dealt with,” he said.

 

7. Slater’s disputes Dunraven’s ’48-hour’ rebroker claim

The public accounts committee heard on Monday that the Dunraven Education Trust had been given two days to decide if it was going to take over troubled Durand Academy.

However, Slater disputed this today, and insisted Dunraven had just been asked to respond “quickly” as to whether they would take part in three months due diligence to decide if they should take the school on.