Clause 16

Children, Schools and Families Bill – in a Public Bill Committee at 9:45 am on 4th February 2010.

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Power to form company to establish Academy, etc

Question proposed, That the clause stand part of the Bill.

Photo of Ken Purchase Ken Purchase Labour, Wolverhampton North East

I want the clause withdrawn. I shall go into a little detail, but I will try to take full note of what you have said, Mrs. Anderson. First, it is necessary to understand what we mean by a company limited by guarantee. What it does not mean is that no one ever makes any money out of it. A company limited by guarantee is not a not-for-profit organisation. Often, we find members of organisations who adopt this method—a company limited by guarantee—who say that of course they have no ability to distribute profits to shareholders, because the shareholders are limited to a share of the value of £1 each and there is no dividend payable on that share. That is what they mean by not for profit. They mean not for the profit of the shareholders, but of course we find that that is a very convenient position when we start to examine some of the salary structures involved in companies limited by guarantee.

Many housing associations, arm’s length housing companies and other organisations adopt the company limited by guarantee approach. Of itself, it is of course harmless, but it can be used in a certain way. We may find that the chief executive of a company limited by guarantee that provides services previously provided by the local authority earns more—often considerably  more—than the chief executive of the local authority. It becomes a way of obfuscating a nice money-making venture.

The Government, in their wisdom—or naivety, in my opinion—propose to allow schools that want to establish academies to form companies limited by guarantee. We know what is going on. Often, people who have set up academies palm off an otherwise useless, finished, worked-out, down-at-heel executive from their company on to a school and pay his salary—it is usually a man—from school funds. That is how we get into the position we have in London, where head teachers in academies are paying themselves £200,000 a year. Recently, The Sunday Times reported that the head teachers or principals of at least 11 academies are paid more than £150,000 per annum. That is more than some directors of education who run 40, 50, 60, 70 or 100 schools. It is simply a way of putting money into the back pockets of people who would otherwise be working in education for salaries on the scale that everyone else works for.

The proposal that the

“governing body of a maintained school in England may...form, or participate in forming, a company to enter into an agreement” is simply another way of allowing public funds to be put into private pockets. We have seen quite enough of that over the past 20 to 30 years. People have been able to enrich themselves from the public purse. Whether academies are good or bad in educational terms is not the point. The point is whether we want people to enrich themselves at the cost of taxpayers through the obfuscation of forming a company limited by guarantee. The answer has to be, “No we do not.”

Where does the money come from? I have some figures from the north of the country, which is not known for having an embarrassment of riches in education. Sir Peter Vardy writes to complain that his academies in Northumberland get about £1,000 per pupil less than his academies down the road in Middlesbrough. He quoted figures showing that the amount per pupil for Emmanuel college was £5,900 and for the King’s academy was £7,463. His complaint was that Middlesbrough received about £1,000 per pupil more. So we are talking about £8,500 per pupil.

I want to tell the Committee what grants schools that are not academies in the same area receive. Cramlington high school receives £3,628 per pupil, Astley community high school receives £3,924 per pupil and Blyth community college receives a bit more at £4,413 per pupil. None of those grants approach even the lowest amount received by the academies. That is where the academies get their money; the Government have filled up their pockets. We need to know what they are doing with the money. We do not know that any more because academies are outside the Freedom of Information Act in any event.

This proposal will allow them to obfuscate even further. The Government must think carefully. I know that the Opposition would put as many such measures in place as they could. They would probably privatise the whole education system. We all know where the so-called Swedish business is heading. We all know it is about enriching privateers at the expense of the public purse.

Mrs. Anderson, I am trying hard to obey your missive to be brief. There is so much more to say. It is an utter disgrace. I wish that my Government would recognise that the track that they have gone down in this regard, including further measures being taken now, are not in the interests of schooling generally. There is a similar measure on the next page, but I shall not bother to mention it because I think I am making the point with this one. Further assistance to academies and those who are enriching themselves is unnecessary. If academies are to play any part in the serious education of people in this country we need to get rid of this enrichment culture and get down to the brass tacks again.

Photo of Vernon Coaker Vernon Coaker Minister of State (Department for Children, Schools and Families) (Schools and Learners) 10:00 am, 4th February 2010

May I say to my hon. Friend the Member for Wolverhampton, North-East that there is clearly a difference of view? He is right to ask all of us questions all the time and to challenge all of us all the time and, where there is a policy difference, to try to get the Government to justify what we are doing. By reiterating the points that he has made passionately, forcefully and clearly, he reminds us that those of us who think that academies have a role to play should justify that thinking. It is right that he does that.

To respond to my hon. Friend, we have tried to see that academies play a part over the past year or two. He knows that many clauses apply to academies and that they challenge us about that, saying, “Why are you making this apply to us?” We say, “Because you’re state schools.” Academies have certain freedoms, which I know that my hon. Friend disagrees with, but they are state schools, and that places certain obligations on them. However, they have a role to play in certain circumstances to try to help raise achievement, alongside other types of schools. We do not regard them as the only answer. The Opposition want every school, both secondary and primary to be an academy—the “let the market rip” approach—whereas we believe that differences in schools, and different types of schools, help raise achievement. That is a point of difference between my hon. Friend and me. We do not disagree on many things, but we disagree on this matter. I respect my hon. Friend for making that point, because he passionately wants to raise achievement.

I should like to reassure my hon. Friend on two points that he specifically raised. Academy trusts cannot make a profit, although I know that he was making a point about the diversion of funds into some of the companies, and so on, which he feels should be spent on the front line.

On my hon. Friend’s point about freedom of information, I understand that that matter is under consideration at the moment. He might be interested to know that there is discussion in the Ministry of Justice about the extension of freedom of information and whether that should include academies.

Clause 16 will give maintained school governing bodies in England the power to form an academy trust to enter into a funding agreement with the Secretary of State to establish an academy. Currently, maintained school governing bodies do not have the power to set up an academy trust directly; they must first set up a school company. The clause allows them to form an academy trust, should they wish to do so, to try to help with the general improvement in secondary education that we  are seeing, and where appropriate to establish an academy, if that fits in with the general secondary school provision in a particular area.

Photo of Ken Purchase Ken Purchase Labour, Wolverhampton North East

The point is that this power will allow schools to become trading entities. Telford College of Arts and Technology already does that, although under what guise I am not sure. It sells educational materials and lectures to schools in the rest of the area and makes a tidy little sum, which all goes back to Telford, where the head teacher is paid far more than the chief executive of Shropshire council, who runs the whole county. This is what happens. My hon. Friend the Minister must see that the trading-company approach to education is an “open sesame”—an open door—to those who would enrich themselves at the expense of the public. He mentions freedoms, such as they might be, but if he thinks they are so good and so essential to education, why not give them to every school?

Photo of Vernon Coaker Vernon Coaker Minister of State (Department for Children, Schools and Families) (Schools and Learners)

Part of setting up academy trusts is about trying to share good practice. In the example he uses, the head teacher and services from one school go to another school to share that good practice and to help it develop its own good practice. Yes, this may add a cost in terms of teacher time or resources and materials, but that is not used as a profit in the traditional sense of the word. It is then reinvested into educational services either in that school or in the general educational provision.

I know that my hon. Friend and I disagree on this point. I think that academies make an important contribution to secondary school standards. I want every secondary school, whether academy, national challenge trust, local authority maintained school or whatever, to achieve the very best. We are seeking to help those governing bodies who would want to establish academy trusts to do so in a controlled and collaborative way. By sharing that experience and expertise, hopefully we can raise standards across every school.

Question put and agreed to.

Clause 16 accordingly ordered to stand part of the Bill.

Clause 17 ordered to stand part of the Bill.