Academy chiefs accused of conflict of interest.

How academy chiefs are ‘cashing in’ on our schools

How academy chiefs are ‘cashing in’ on our schools

Academy chiefs have awarded millions of pounds worth of contracts to companies in which they have a personal interest, MPs have warned.

In one case examined by the Public Accounts Committee (PAC) an academy chain allegedly paid £424,850 to a solicitors' firm part-run by one of its directors.

In another case an academies trust paid out almost half a million pounds to companies owned by trustees and executives of the trust.

In total, MPs found 12 cases where those connected to academy trusts had benefited personally from contracts awarded by the schools. They warned that many more such cases had yet to be revealed.

PAC chair Margaret Hodge said the Education Funding Agency (EFA) tasked with scrutinising the contracts, had allowed them to go ahead unchallenged.

"We were concerned that individuals with connections to both academy trusts and private companies may have benefited from their position when providing trusts with goods and services," she said.

"The agency has reviewed 12 such cases but it is likely that many more exist and have gone unchallenged."

These so-called 'related-party transactions' are allowed under controversial government rules, but must be declared.

"The Department for Education takes the view that these so-called 'related-party transactions' are acceptable," Hodge added.

"We feel that they are always open to accusations of conflicts of interests, even when supposedly on a not-for-profit basis, and this serves to undermine public confidence."

The sheer scale of conflicts of interest at academies may be impossible to discover.

In evidence to the committee, the department for Education admitted that it had 'no clear picture' of who owns the land and buildings used by Britain's more than 3000 academy schools.

They estimated that it would cost £30 million and an additional £8 million a year to compile and maintain the necessary data, something they judged would "not represent value for money".

The committee also found hundreds of cases where academies had failed to submit their financial returns in time, but just eight occasions where the EFA had issued any kind of penalty.

They warned that the EFA needs to be far "more robust" with academies that fail to comply with financial reporting requirements.

A Department for Education spokesperson said they were working to improve the performance of the EFA.

"We do not agree with the PAC’s interpretation," they said.

"Of course we are constantly trying to improve the EFA’s performance and we will consider the PAC’s recommendations in that light."