Academy funding contracts could mean an insecure future for some schools

Peter Newsam's picture
The defenestration of Michael Gove and the new academic year is a good time to take stock of the pre-election position of the academy programme. The merits of the seven different kinds of academy, of which ‘Free’ schools are just one, are not at issue. It is well established that many academies are excellent schools or are in well-led chains. It is equally clear that some are not.

All academies, good or bad, have one thing in common: they are government schools. An academy is a school created by the Secretary of State, originally under section 65 of the Education Act 2002, by means of an agreement he makes with ‘any person’ to ‘establish and maintain’ a school. The agreement takes the form of a terminable funding contract under which the Secretary of State agrees to make annual payments, of an unspecified amount, to that ‘person’ , in practice a set of trustees, for running a school to be known as an academy. As an academy is a school created by and wholly dependent for its funding on a government minister, in plain English it is a government school.

Government schools, in the form of academies, are described as ’independent’   because section 172 of that same 2002 Act, headed ‘Children with special educational needs’ declares that any school mentioned in the Act ‘which is not a school maintained by a local education authority’ is to be called ‘independent’. As academies are maintained by a government minister rather than by a local authority, by a legislatively legitimised abuse of the English language academies are entitled to be called ‘independent ‘ schools.

Only the easily fooled will confuse the ‘independence’ of an academy with that of a school that is genuinely independent (see Oxford English Dictionary) such as Eton or Westminster. Academies are always described as ‘State’ schools. That suggests that, like Louis XIV, an individual government minister constitutes the State itself, an over-ambitious presumption perhaps. Nomenclature aside, the essential point is that academies are government schools, individually funded as the Secretary of State thinks fit, and it would be most unwise of their trustees or for anyone else to believe otherwise.

What is the point of the lengthy academy funding agreements? Anyone with experience of funding schools knows that individual contracts with them are unnecessary. If a properly established method or formula for funding schools exists , money can be paid to the schools directly. That England is the only country in Europe trying to fund thousands of its schools by contract illustrates the absurdity of that approach.

For all their absurdity, funding contracts enable the Secretary of State, as Nigel Lawson argued many years ago, to establish precise control of the total sum of money spent on each school each year. By adjusting his funding accordingly, these contracts can also enable the Secretary of State to persuade, even force, schools to do what he wants. His power to use funding to secure compliance is close to absolute.

Were a future Secretary of State to dislike seeing schools in sub-standard premises or sixth forms unable to teach their students to what he decides is an acceptable level, he would not need to consult anyone else before deciding not to fund some aspect of an academy’s functioning that he has reason to find objectionable. As ‘academy freedoms’ cannot be secured by contract with an individual government minister, it is strongly in the interest of academy trustees that funding contracts be replaced by some statutorily guaranteed way of retaining their freedom to manage themselves within an agreed system, applying to all schools, of being held to account for their performance.

For his part, why should any Secretary State want to have thousands of government schools contracted to him? If the trustees of an academy misbehave, he is personally to blame. He or his predecessor chose the wrong trustees. If financial or other forms of misdemeanour occur unchecked, that also is the minister’s fault.

Under his contract, two of his officials are entitled to attend and speak at any meeting of an academy’s governing body and all documents, financial and other, are sent in to his department before any such meeting takes place. In an initially warmly praised and then suddenly criticised academy in Birmingham, no official ever appears to have turned up at any meeting of the governing body and no one seems to have read the documents the academy submitted to Mr Gove’s Department before it was found to be a hot bed of something or other.

As the Home Secretary correctly pointed out, only to be criticised by the Labour Party for doing its job for them, Michael Gove had proved incapable of exercising even the most basic supervision of an academy created by him and accountable to him for its use of taxpayers’ money under his contract with trustees chosen by him.

If contracts are not in the interest of academies themselves and even Michael Gove, by sprinkling a few Commissioners round the countryside, had recognised that he was unable to manage his contracts effectively, why this continued determination to press on with what amounts to the nationalisation of England’s schools?

The answer is that it is much easier to privatise a nationalised system, like the railways used to be, than a democratically managed one, as the fragmented school system in England still partly remains. As locally elected people persist in getting in the way, privatising a major public service like education requires the elimination of any form of local government. That is the purpose of the contract system and it is well on the way to being achieved. Once a fully nationalised system is in place, there will be barrow-loads of contracts for the Secretary of State to hand out for deserving hedge funds and others to manage. Transferable contracts are at the heart of the privatisation project.

What of the immediate post-election future? The rapid move towards the nationalisation of England’s schools by means of contracts with a government minister is seen by the present coalition partners and by some remarkably innocent others as a great reform for which Lords Baker, Adonis and Mr Gove deserve warm congratulation. If these people have their way, presumably the drive towards nationalisation will continue.

But where does Labour stand on this issue? Its leadership appears to believe that it would be hugely difficult to be rid of funding contracts in the face of fierce opposition. Opposition from whom? Labour has not yet grasped the extent to which parliament has placed direct control of education in England into the hands of this or any future Secretary of State.

There are two obvious ways schools can be made to do what that individual wants. The first, successfully employed by Michael Gove, has been to give schools more money and other benefits to become contracted to him as academies. The second way to get those same institutions to do what the minister wants is for him or her to find good reasons (all administrative acts need to be found ‘reasonable’ if challenged) to give less money to those that don’t.

Within six months of taking office, a resolute Secretary of State could ensure that academy trustees would find it strongly in their interest to terminate their contracts with him in exchange for an agreed form of statutorily based assurance of their continued right to be equitably funded and to manage themselves. A future Secretary of State could fund schools as persuasively to bin their contracts as Michael Gove has done to cause them to sign them with him in the first place. Funding contracts with a government minister can provide schools that are entirely dependent on him with many good things. A secure future is not one of them.


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Janet Downs's picture
Mon, 17/11/2014 - 12:32

Classifying schools as ‘independent’ paves the way for them to be run for profit as Policy Exchange wrote in its report Blocking the Best which was warmly welcomed by Gove before the last election:

‘At present academy sponsors are barred from making a profit…There is no legislative reason why profit should not be allowed (these schools are simply classified as independent schools). (p41)

The paper suggests a reason why the Labour party hasn’t opposed widespread academy conversion:

‘When Tony Blair introduced academies, officials and the most radical ministers (including Lord Adonis and John Hutton) knew that allowing profit would provide a significant boost to the market, but the politics were considered unworkable.’ (p41)

When market forces are introduced into education, then equity goes out of the window. It's a pity these 'radical' Labour politicians haven't grasped that.

Roger Titcombe's picture
Mon, 17/11/2014 - 14:03

Sir Peter's thread is profoundly clear and rational, by a respected 'establishment figure' who clearly knows what he talking about and cannot be accused of party political bias.

It needs to be read very carefully by everybody with an interest in the future of the English education system and especially by Ed Miliband and Tristram Hunt.

agov's picture
Tue, 18/11/2014 - 11:12

So it is Roger. Unfortunately as Theresa May seems to be the best hope for a more sensible education policy I'm not expecting many changes any time soon.

(2nd attempt at posting)

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