David Ross Education Trust cleared of wrongdoing, but is 'vulnerable' financially, ESFA rules

One of England’s largest academy trusts has been cleared of wrongdoing following complaints about its governance, but school funding bosses remain concerned about its finances.

The Education and Skills Funding Agency has ruled that concerns over board appointments at the David Ross Education Trust last year were “unfounded”, but has urged the chain to improve its monitoring of its “vulnerable” financial position.

DRET, set up by Carphone Warehouse founder and Conservative Party donor David Ross, runs 33 schools across England.

Incurring increasing deficits at the centre, over a number of years by the trust board and previous accounting officer, without adequate recovery plans does not represent proper stewardship of trust funds

As revealed by Schools Week, the trust was hit by a series of high profile resignations last January. DRET’s chair, the former education secretary David Blunkett, stood down and was replaced by Ross. The trust’s chief executive Wendy Marshall and two other senior figures also subsequently resigned.

According to the ESFA, the resignations were prompted by “perceived governance issues at the trust and relationships between the trust board, trust senior management and the David Ross Foundation”.

A two-week financial management and governance review at the trust was subsequently carried out in April 2017, but found that all of the appointments were made in compliance with the trust’s articles of association. The report into its findings was published today.

However, there remains “significant concern” about the financial viability of DRET, which is in a “vulnerable financial position with limited revenue funds”.

In June 2017, the trust forecast a deficit of £4.9million. Although the trust plans to recover the deficit over three years by introducing a shared service for “academy back office functions” and regional pooling of academy budgets, the ESFA warned the strategy “is currently untested and therefore presents a risk that the trust may not achieve the forecast savings”.

“Incurring increasing deficits at the centre, over a number of years  by the trust board and previous accounting officer, without adequate recovery plans does not represent proper stewardship of trust funds,” the agency added.

Expenses policies for relocating staff were also criticised as an “irregular use of public funds,” with payments totalling £4,614 granted for items including furniture and other household items and accessories.

The ESFA also found that DRET had not followed trust procedures when it proposed to engage a consultancy firm to carry out parental surveys at two academies, at a cost of £30,000, as its guidelines state that three quotes should be obtained for transactions of that size and a short business case should have been prepared for the director of finance.

However, as Ross’s charity, the David Ross Foundation, ultimately paid for the work, rather than the trust itself, there was no requirement to follow the trust’s guidelines.

DRET has been told to closely monitor and scrutinise its own budgets, and strengthen relationships across its academies to “provide greater transparency, fully support academies and maintain confidence at a local level in the trust’s senior decision makers”.

A spokesperson for DRET said since the ESFA completed its review in May 2017, the trust had appointed “a new and experienced executive leadership team and strengthened its board with new trustee appointments.

“The executive team have quickly brought about key improvements in financial and operational management, recognised by the ESFA as positive progress since its review over a year ago, while delivering school improvement in partnership with academies.”

The trust admitted its financial woes in March last year, and consulted on plans to cut up to 40 support staff jobs across its schools. In November, Ofsted told the trust to improve pupil progress after a focused inspection of 13 of its schools last May.