Heads in academy chain which paid out £500,000 in “unusual payments” could lose control of vital contracts, warns union.

Janet Downs's picture
UNISON is warning that academy heads in the Academies Enterprise Trust (AET) chain could lose control of vital services. The AET group has invited “expressions of interest” from organisations who would deliver “all transactional, commercial and centre of excellence services” to the group in a 10 year contract worth between £200m and £400m.

“AET is seeking to establish a shared services vehicle to deliver all transactional, commercial and centre of excellence services to the AET Group in conjunction with a commercial provider.”

AET Contract Notice 14 December 2013

These services include back office services such as procurement; IT and HR including recruitment; identification of “business opportunities” and “investment opportunities”; and supporting education “delivery” through “challenge, monitoring and support”.

The delivery of these services, says AET group, which comprises AET, its for-profit subsidiary AET Solutions Ltd, London Academies Enterprise Trust and Unity City Academy, will be “via the setting-up of a joint venture, which it is envisaged will be a Limited Liability Partnership ('LLP') or another appropriate corporate structure with a commercial provider ('Joint Venture Partner').”

Such a “vehicle” could reduce the freedom of heads to make decisions about what services will best meet the needs of pupils in their academies. The codes on AET’s “Contract Notice” reveal that such things as special education services, careers guidance and welfare services for children and young people would be included in the services delivered by the vehicle.

No partner is likely to join this Joint Venture Partnership unless a profit can be made. Unison is concerned that this will turn the provision of education into a profit-making business.

AET, a rapidly expanding chain, was sent seven warning letters by the Department for Education concerned about performance in seven of its academies. In July 2013, the Observer discovered unusual payments of nearly £500,000 to the private business interests of AET trustees and executives. Earlier in the year, it was reported that AET had been barred from taking on more academies although the chain denied this: it had always planned to stop growing when schools in the pipeline had converted.

MP, Ian Swales, complained that an AET academy, Eston Park, in his constituency had plummeted from Good to Inadequate (Special Measures) under AET’s management. Education Secretary Michael Gove replied:

“…one or two academy chains have not done everything they promised. In the case of the organisation he mentioned, we have taken steps to deal with that”.

What these steps are is unclear unless Gove was referring to the warning letters. But whatever they were it hasn’t stopped AET embarking on a process which UNISON describes as having “all the hallmarks of the sort of ill thought out procurement that the Treasury has warned about”*.

UNISON believes AET’s plan casts doubt on AET’s stated Moral Purpose of remaining a not for profit organisation and violates its Core Principle “to devolve accountability” down to local governors, academy leaders, students and teachers.

*'Badly delivered procurements deliver badly executed projects which are more likely to be subject to escalating costs and delays, increasing the cost to the public purse and reducing the value for money achieved.' (HM Treasury Review of Competitive Dialogue, page 5).

CORRECTION 26 March 2014. The original article said "In July 2013, the Education Funding Agency (EFA) discovered unusual payments of nearly £500,000 to the private business interests of AET trustees and executives." It was the Observer that discovered the payments. The article has been corrected.
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Henry Stewart's picture
Fri, 31/01/2014 - 19:40

Well done Janet on getting this story out, now also in the TES: http://bit.ly/MFIizS

Two weeks ago, in response to the Guardian revelations, the DfE claimed: "The rules are clear. No individual or organisation with a governing relationship to an academy can make a profit." (Huffington Post: http://huff.to/1gyhJtp)

This post shows the DfE is talking nonsense and the Guardian was right.

It is clear that this will be a for-profit contract (they are seeking a "commercial partner") and AET will have a majority stake in the company delivering a contract worth between £200 million and £400 million.

AET seems unable to move its schools our of under-performance, but they do seem to have a plan to make money from them. AET are set to make millions from this tender. Will the DfE do anything to stop them? Can they?

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