Conflicts of interest in academy schools are symptoms of a wider malaise

Toby Greany
This post is co-published with The Conversation
As part of its ongoing inquiry into academies and free schools, the Education Select Committee recently published a report that it had commissioned from Jean Scott and me on conflicts of interest in academies.
We found that real and perceived conflicts of interest are common in academy trusts. These range from instances where individuals benefit personally or via their companies from their position in an academy trust, through to more intangible conflicts that do not directly involve money.
Our research was rapid and small-scale, involving a review of existing evidence, an analysis of a sample of academy trust funding documents and interviews with a range of academy leaders.
Our headline findings included that:
• Neither the Education Funding Agency (EFA) nor schools inspectorate Ofsted appear to have sufficient capacity or skills to address the issue.
• Some academy trust boards, often in the newer fast-growing trusts, are constitutionally weak, with too much executive influence and an inappropriate focus on small governing bodies. As a result they are not doing enough to mitigate risks in this area.
• The rules governing conflicts of interest appear to be insufficiently robust. Many of the examples we identified where large sums of money have been paid to organisations with direct links to trustees or executive leaders in academies were legitimate within the current rules. Such payments are allowed if they are “at cost” (in other words, “not-for-profit”), but we could not find evidence of how “at cost” is actually assessed. For example, the Aurora Academies Trust runs four primary schools in East Sussex. Under a licensing deal the trust pays its US parent company, Mosaica Education Inc, about £100,000 a year to use its patented global curriculum (called Paragon). Aurora describes this arrangement as “at cost”. Three Aurora directors have a direct or indirect interest in Mosaica Education. Meanwhile, Ofsted has criticised the curriculum in one school for lacking a local focus.
• Mechanisms to identify and address more intangible conflicts of interest and conflicts in the wider system are almost non-existent. Hopes that the new regional school commissioners – recently set up to monitor academies and free schools – and head teacher boards that sit alongside them, will address these issues are low. There is also a broader sense that the academy system lacks transparency and is overly politicised, from the top down.
Crisis or storm in tea cup?
Whether you see this as a crisis or a storm in a tea cup depends on how you look at it.
One argument is that the crisis has passed: the regulations and systems required to minimise and manage conflicts of interest in academies are now being put into place. Certainly, while the regulations were far too lax in 2010 when the large expansion of academies began, the national framework for financial management and accountability in academies has been strengthened in the past two years. Most of the larger, more established, trusts do appear to be putting stronger systems and controls in place as they develop. Cases of deliberate fraud appear to be rare.
The alternative perspective is that conflicts of interest are simply a symptom of a much wider malaise which requires urgent and far reaching attention. The academisation process has moved too fast with insufficient focus on building the capacity of the system to become “self-improving”.
Oversight from local authorities has been cut while the Education Funding Agency is struggling to keep up. The infrastructure that could have been used to build skills and capacity is also being cut, such as national leadership programmes and training for school business managers supported by the National College for Teaching and Leadership.

Australia going at slower pace

Other school systems are taking a much more measured approach. In our research, we set out how the equivalent of academy converters in Western Australia are assessed and supported. These schools need to demonstrate they have the capacity to use greater autonomy effectively, including that they have strong community endorsement.
Even then there is substantial support through training and the development of a three-year plan that explicitly draws on external expertise. The differences in the pace of change are stark: just 255 schools in Western Australia were granted the status between 2010 and 2013, compared to almost 4,000 schools in England in the same period.

What is to be done?

I do believe that most academy leaders are honourable and that cases of deliberate fraud are rare, so I don’t think we should impose heavy-handed bureaucratic systems that prevent them doing their jobs. But as one interviewee put it:
“Human nature being what it is, there need to be reasonable, non-bureaucratic checks and balances. We need it because this is not a perfect world.”
My worry is that instances of conflicts of interest in academies are actually symptomatic of wider weaknesses in the system. Some academies appear to be losing confidence that they can manage improvement themselves and are turning to the private sector to do it for them. The move by the Academies Enterprise Trust to outsource its non-teaching activities to PricewaterhouseCoopers at a cost of £400m over ten years seems problematic on many levels.
In its most recent report, the think-tank Policy Exchange has argued for a radical expansion of academy chains to encompass all primary schools. In some respects this makes sense. It is a nonsense to have the academy and maintained sectors running in parallel.
But the five-year timescales proposed for this are far too short. For any such approach to work it would need long-term capacity building: for example, through programmes to develop executive headteachers, governors and high-calibre school business managers, alongside thoughtful work to make sub-regional oversight and scrutiny effective.
As the political parties develop their manifestos ahead of the 2015 general election, it is imperative that they work with school leaders to agree a long-term vision for school and system improvement that recognises the weaknesses as well as the strengths of the current model.