The oversight of thousands of publicly-funded academy schools, which once operated under the auspices of their local authorities but are now subject to semi-private management by charitable trusts, is a mess.
Anyone in any doubt about that would be well advised to read a staggering government investigation report on one of the larger academy trusts, published without fanfare – though drawing some media coverage last Friday (24 March).
The Education Funding Agency’s “Financial management and governance review” focused on the extraordinary case of the Birmingham-based Academy Transformation Trust, about which I reported last year for the Observer. As of last year it had 22 schools in the Midlands, Suffolk, Norfolk and Essex and an income £78.4m.
The report delves into recent remarkable developments at the trust, starting on 27 October, when its chair, Stephen Tilsley – a seasoned company director with 30 years’ experience running a major engineering firm – decided to suspend its chief executive, Ian Cleland, an equally experienced former school inspector and manager.
The report says this had happened against the background of some serious financial problems at the trust, including a proposal at a trust board meeting last July that its budget for 2016-17 would be £3.5m in deficit.
The most extraordinary development came next, however, as on 14 November Mr Cleland used powers he said were set out in the trust’s articles of association – its constitution – to sack Mr Tilsley as a director. This meant Mr Tilsley could no longer chair the trust, either.
The report documents how four former trustees resigned over the period 20 October to 24 November, and that, between 14 and 22 November, Mr Cleland appointed four new trustees himself. The board, including some of these new trustees, elected a new chair on 21 November. On the same date, the board unanimously agreed to lift Mr Cleland’s suspension as CEO.
The EFA’s investigatory report into ATT’s financial management and governance offered a series of seemingly very serious criticisms, including that:
- There had been “inadequate financial management of individual academies”.
- There had been a “failure of the personal responsibility on [Mr Cleland] for the financial resources under the trust’s control”.
- There had been predictions within the trust that it could go “bankrupt” if three Norfolk primary schools which had some financial reserves left it. In December, the report states, Mr Cleland agreed with the government’s Regional Schools Commissioner for the area that they could leave the trust and I understand they have now left.
- It had been operating without any individual with an accountancy qualification employed by it in its central team. This represented a “significant risk” for ATT.
- And that, summing up: “Without evidence of a sound basis for decision making, the trust board is unable to fully demonstrate proper stewardship, and acting in a manner that would command broad public support.”
Yet Mr Cleland remains in post as CEO, the board is intact since late November and the only concrete action proposed by the report in response is that the trust “urgently address” its problems, including commissioning an independent review of governance.
The case throws up many questions about oversight in England’s fast-changing schools sector, where the number of semi-independent academies has ballooned from 203 to more than 5,000 since the former education secretary Michael Gove pledged to put “rocket boosters” under the scheme in 2010.
Perhaps the most fundamental is which set of legal documents governing how academy trusts are to operate carries most weight, when there is a seeming clash between them.
A little excursion into academies jargon is required here. Multi-academy trusts have two levels of governance, at the top of which are “members”, who approve the trust’s constitution and can appoint and dismiss the second tier of governors, who are called “trustees”.
Mr Cleland, the CEO who also acts as ATT’s accounting officer and thus signs off its accounts, was able to sack the chair and appoint new trustees because ATT’s government-approved constitution named him as a “member” as well as an employee. He was also shown in the trust’s articles of association not just to be a member, but a special category of “founding member”, of whom there were only two at the trust’s foundation in 2012. By 2016, he was the only one left.
Mr Cleland was therefore correct in arguing that ATT’s articles, which were agreed by the Department for Education under Mr Gove in 2012, allowed him to appoint trustees, and to sack those he appointed. This would seem to allow the strategic governance and day-to-day management of this organisation to be under the complete control of one person.
How these arrangements ever got agreed is a good question. But the EFA report further argues that the trust was not following the guidance of another legal document under which academies operate: the Academies Financial Handbook.
This stipulates that “governance structures in which members are also employees are not considered by the DfE to be best practice” (and yet Mr Cleland, as CEO and “founding member” was both) and that trusts “are encouraged” to have at least five members, though ATT “routinely” had fewer.
Both of these clauses are not met in several other major academy trusts: I can think of another two large ones where the chief executive is also a trust member, for example. So are these chains also to be called out by the EFA?
The publication of the report might be seen by supporters of academies as at least a sign that problems in the governance and management of schools are being investigated, and with some degree of transparency. But it is not clear that the EFA can do much to address the concerns it has put forward.
Mr Tilsley told me that while he welcomed the report, little seemed to have come of it. He said: “If a school had a report like this from Ofsted, it would be deemed inadequate, the head and the governors would probably go because it was in special measures and a new regime would come in. Yet when a multi-academy trust is similarly judged, nothing happens. That cannot be right.”
He added that the case stood to put off potential academy trustees from the business world, as there did not seem to be a regulatory “framework which was enforceable” in relation to academy trusts.
Almost as a postscript, though, I can add now that there has been one major development as a result of the EFA report: at ATT’s own instigation, Mr Cleland has resigned as a “founding member” of the trust. ATT has also commissioned the National Governors’ Association to carry out a governance review, while an independent review of its financial management has been launched and a new full-time chief financial officer will be recruited.
The chain has pointed to its desire to turn around its schools – it cites vastly-improved Ofsted records since it took them on – as a reason that it dug into its reserves. And it says Mr Cleland only sacked Mr Tilsley after consulting the government’s Regional Schools Commissioner.
The fact that the school is able to cite an Ofsted record of 75% of its primary schools and 90% of its secondaries as rated “good”, compared to 10% and zero when it took them over, must be weighed in its favour.
But this case seems to carry many implications for what often seems a confusing and risky approach to regulation. At the very least, it raises serious questions about what exactly governance, oversight and accountability mean in England’s rapidly-deregulated schools sector.
There is a post-postscript to this story: Stephen Tilsley, the former chair of ATT, had continued until this week to act as the chair of governors at one of its schools: Bristnall Hall Academy in Sandwell, west Midlands. ATT’s board has now sacked him from that post, its new chair telling him in a letter that his presence at Bristnall Hall “is not in the best interests of the trust or the academy”.
Warwick Mansell is a freelance education journalist