How many academy trusts are a “vehicle” for investors wishing to profit from running England’s schools?

Janet Downs's picture
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Involving businesses in education was a central plank of Labour’s sponsored academies programme – a business could sponsor schools providing expertise and pledging money. But the National Audit Office (NAO)* discovered snags: some sponsors didn’t honour pledges and some academies felt pressurized to buy services from sponsors.

Sponsors are no longer required to donate money but the potential remains for backers to profit from involvement. In theory, academies can’t be run for profit – they’re run by charitable trusts. But these trusts can outsource the running of schools to for-profit providers.

This happened at Breckland free school. Trustees handed over management to IES, a Swedish for-profit provider which has been bought by a US private equity firm. Another for-profit Swedish firm involved with academies is Kunskapsskollan – its not-for-profit subsidiary, Learning Schools Trust, operates four academies. The Trust shares the same registered address as LST Trading Ltd**. Its four directors are also directors of Learning Schools Trust. It’s unclear what LST Trading actually trades in – it doesn’t seem to have a website.

GEMS Learning Trust, described as a non-profit arm of GEMS Education, bid to run free schools despite not being listed as a Department for Education (DfE) approved academy sponsor. GEMS is a for-profit education provider with global ambitions which has come under criticism in the past for increasing fees and closing non-viable schools. In March 2013, GEMS announced it was raising up to $1 billion for expansion – education, like the “health care industry”, had the potential to grow, said GEMS CEO.

Ex-Ofsted chair, Zenna Atkins, was at the helm of GEMS for a few weeks after leaving Ofsted before joining Wey Education. She left Wey under a cloud but Wey expects to recover from the turmoil. Its subsidiary, Zail Enterprises Ltd hopes its new “vehicle”, Wey Education Schools Trust, will be able to open its first school in 2014.

The company is confident “Zail will become the leading provider in private sector led state schools”. Its Preliminary Announcement (31 May 2013) said:

“Whilst it is too early to provide reassurance that the Company will ultimately achieve its ambitions…your Board is committed to establishing a business capable of making a return to shareholders.”

Wey Education Schools Trust is on the DfE approved list – but it’s a “vehicle” for a company which wants to make a return to investors. This doesn’t seem to bother the DfE: Zail said the department “has confirmed that it will introduce Zail to a failing school looking for a sponsor when the appropriate opportunity arises.”

I previously wrote about another approved sponsor, Prospects, and how its managing director claimed the DfE’s “unhelpful” attitude was threatening the profitability of his business.

This raises the question: how many other schools trusts are “vehicles” for firms wanting to profit from running state schools? How many have directors linked to firms which supply services for schools? Would their schools be required to purchase services from the sponsors? This can, as the NAO said, lead to conflicts of interest and may not be the best value for money.

Remember, when such firms become involved in education "They are not interested for altruistic reasons. It's an investment." ***

*See faq above What did the National Audit Office (NAO) really say about academies in 2010?

**Information from Duedil

***Sam Freedman, ex-advisor to Education Secretary, Michael Gove, speaking in 2008

UPDATE 26 September 2013.  GEMS Education Trust is now listed on the latest DfE "approved" list dated 11 September 2013.  It was not listed when I wrote the thread above.

Download DfE official list here.

 

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