‘I’m not a businessman,’ Liam Nolan, director and Accounting Officer of Perry Beeches Academies Trust (PBAT), told the BBC when news broke that the trust had been told to sort out its finances, ‘I’m a headteacher.’
Nolan gave the impression he was out of his depth and didn’t have the business expertise to run an academy trust. But the Financial Notice to Improve, dated 8 March 2016 but only just published, and two critical reports also published today (here and here) show the situation was more serious than confusion over legalities.
It appears Nolan had sufficient business expertise to become involved in a complicated arrangement with Nexus Ltd, a ‘third party supplier’ to PBAT. Nexus provided ‘the services of a CEO’ for PBAT but subcontracted the role to Liam Nolan Ltd, a private limited company whose sole director was Nolan. The Education Funding Agency (EFA) said this arrangement not only breached the Academies Financial Handbook but also contravened Treasury guidance ‘about the employment and contract arrangements of individuals on the avoidance of tax’.
Payments made to Nolan via Nexus and Liam Nolan Ltd were not disclosed in the 2013/14 PBAT accounts, the EFA found. This breached Charities Commission rules relating to remuneration received by Charity Trustees.
PBAT trustees had approved this arrangement on three separate occasions – this again breached Treasury rules. It also represented a failure by trustees in their stewardship of public funds.
The EFA found failures around procurement. PBAT had no written contract with Nexus despite spending £1,297,712 over two academic years. Neither did the trust have an ‘adequately detailed tendering policy’. The EFA judged the trust to have ‘almost no detail’ on how to show value for money.
Conflicts of interest were not appropriately managed. Trustees failed ‘to have appropriate internal control arrangements’. This laxity could increase the risk of fraud, the EFA said. The trustees could not ‘provide assurance of high standards of probity in the management of public funds.’
There was no written contract with Nexus and no written checks on goods and services received. This significantly increased the risk that ‘health and safety services provided by Nexus may not meet statutory requirements’. This was a ‘potential breach’ of Education (Independent School Standards) Regulations 2014.
The EFA said ‘Urgent action is required to strengthen governance, financial procedures and management arrangements and ensure trustees fully understand their obligations as company directors and charity trustees.’
Liam Nolan Ltd has now been dissolved. Companies House records show winding up began on 14 March 2016 shortly after the Financial Notice to Improve was issued.
In a second EFA report investigating the number of pupils eligible for free school meals (FSM), the EFA found the trust had breached the Academies Financial Handbook by not keeping any form of FSM eligibility evidence for a period of six years. Because of the lack of documentary evidence, the EFA was unable to determine whether pupils listed as FSM were eligible or not.
Perry Beeches Academy Trust joins Cuckoo Hall Academies Trust, Durand Academy Trust and Barnfield Federation as academy trusts highly praised by ex-Education Secretary Michael Gove but which have been criticised for their finances. Gove exhorted other schools to follow the examples set by these paragons. It’s to be hoped other schools do not.