Stories + Views
Audit Office raised concerns about conflict of interest between academies and sponsors
Some academies felt they were being pressurised into buying central services from their sponsors, so said the National Audit Office in 2010. NAO wrote:
“Sponsors have strong influence on the running of academies, which brings both benefits and risks to value for money. A conflict of interest may arise where they provide paid services to the academy: a quarter of academies responding to our survey said their sponsor provided paid services, and 44 per cent said they could potentially provide goods or services in future.”
The NAO, therefore, recognised a potential conflict of interest between sponsors and academies. This potential conflict of interest could equally occur when academies link with academy chains.
Concerns about conflict of interest had previously been raised in 2008 by the Sutton Trust. Its evaluation of the academies programme quoted from the Public Accounts Committee which warned against sponsors contracting services out to one of their own companies: “Such services should be routinely put out to competitive tender, so that they meet existing procurement regulations.” And In July 2011 the ATL highlighted a potential conflict of interest when the Specialist Schools and Academies Trust (aka The Schools Network), which provides services to schools, announced it was intending to sponsor under-performing schools.
Converter academies don’t have sponsors, but many will join academy chains. John Burn, OBE, ex-Academy principal, cautioned against these in his evidence to the Education Bill Select Committee. He warned that academies in federations could lose significant control over their budgets which could result in schools receiving services which they did not want and did not represent good value: “At present, there appears no restriction upon those Federations imposing services of their own choosing and paying for them from the unilateral top-slicing of their schools’ funds.”
Academies could, of course, benefit from economies of scale when central services are procured in this way, but NAO concluded that such arrangements should be tested against industry benchmarks and regularly checked to ensure value for money.
How this checking and testing will work when a school is locked into a long-term contract either with an academy chain or an education provider is unclear. Academies and free schools could find themselves trapped with a supplier who offers poor value for money.