There were some colourful exchanges during one evidence session in front of the committee. Here are two excerpts:
Sir David Bell, Permanent Secretary of the DfE, discussing the most recent version of the Statement and explaining how the system was changing: "Only a year and a half ago, we had 200-plus academies; we now have 1,300, and that has changed the landscape quite considerably. In this world of accountability, we want individual schools to have greater freedoms while at the same time maintaining a high level of accountability for public funds. At times, this Committee has asked us whether we have got that balance absolutely right, or whether we are leaving too much out there to individual schools and not holding them to account.
"To some extent, the statement as it is at the moment is trying to find a way through that tension. The world is very different to the one I first knew as a head teacher, when, in a sense, accountability was completely at local authority level. Then it was decentralised, and over time it has become more and more decentralised. I accept the point that there is more to do, and I am not even sure whether, by the time you bring back the next version, it will be the final statement. What is the situation going to look like when you have 5,000 academies and more chains? We might have to keep this under review as the system changes."
Sir David Bell, being cross-questioned about the Priory School's financial arrangements, including the purchase and renovation of a property in France:
Sir David Bell: "What you have is a local authority or, in this case, a group of schools..."
Margaret Hodge: "Four schools."
Sir David Bell: "...deciding that it is appropriate, as part of their efficient management, to have a facility that can be used by the students."
Margaret Hodge: "Do you really believe that?"
Sir David Bell: "I do believe that. The danger is that we sit in Whitehall and second-guess every decision made by every school in the country. Frankly, it is the road to madness if we do that."
Margaret Hodge: "It is the road to madness, but we have to ensure that there is value for money for every pound of taxpayers' money spent. When these stories reach us, you began thinking, “Crumbs, this is the beginning of things going badly wrong,” in terms of our getting value for money for the taxpayer—and this is only the start. So you justify it all; you are quite happy with that."
Sir David Bell: "I am happy for individual schools to justify the decisions that they are making. If those decisions are commensurate with improvements—in
some cases, dramatic improvements—in the school's performance, I am happy with that."
Margaret Hodge: "Are you happy, from the Treasury?"
Paula Diggle, Treasury Officer of Accounts, HM Treasury: "It causes me a certain amount of interest and alarm, I must say, but I do not claim to be close to it, and it is for DFE to make the judgment."
MP Meg Hillier, asking questions about accountability in schools of Peter Lauener Chief Executive of the YPLA:
Meg Hillier: "If there is a cosy relationship—we know that there can be
interesting relationships, cosy or otherwise, between heads and their governing bodies in any school—I am not quite confident that you are on top of that."
Peter Lauener: "You are describing the relationship between the chair of governors and the head, who in an academy would be the accounting officer. There are two other things that would act as a check on that, and possibly a third as well. First, there is a further concept of a responsible officer, who would be someone independent from the management line. In a large organisation, it is someone who would be head of internal audit. We ask the academies to appoint a responsible officer. Again, the expectations for that
role are set out in the financial management and governance framework.
The second potential check on what you describe is through the annual audit of the accounts by an external auditor."
Meg Hillier: "But that annual audit didn't query salaries of £280,000 or sudden jumps in salary."
Peter Lauener: "It's a fair point. I would not expect them to challenge that if it was within the properly agreed remit of the governing body and affordable in
the financial accounts of the academy trust.
The third thing that I was going to mention is that, again, we look to the financial management framework, which says that we expect academies to
appoint whistle blowing arrangements to accommodate whistle blowers and, indeed, to run their own complaints policies. Then we are a backstop if
someone feels their complaint has not been dealt with.
So there is a sort of further system, and very often, when something is not quite right—I'm not talking particularly about academies, but the whole public
system—someone else says, “I don't like the look of that.” Sometimes, they write to the National Audit Office; sometimes, they write to us; and sometimes,
they talk to the press. All of those things can happen and they are all things that can trigger a follow-up action."
Margaret Hodge: "But what you should do, when they write to the press and you get press reports, is look at the systems and see whether or not the systems themselves can cope with it is really the point, surely. I think we will make that point, even if you don't, but it is so glaringly obvious."
Meg Hillier: "It is very brave to be a whistle blower in a small environment like a school, where you think the chair of the governors and the chair have a close relationship."
Peter Lauener: "I absolutely accept that."
Fiona Mactaggart MP : "The personal experience that I have had of whistle blowers is that it has taken three before anything gets done."
Meg Hillier: "In one case, the advice was to go to the Department, which is a huge step for somebody if they can't get attention properly from the governing
body. One last point is that we seem to be hearing—perhaps this is a bit of a brutal summary—that there is a huge challenge, whatever system we have, in keeping on top of school expenditure, but we seem to only know there is a problem after the event; there are no early warning signs for budgetary financial management problems in schools. Is that a gross oversimplification?"
Sarah Healey Director, Education Funding Group, Department for Education: "In local authorities, there are lots of early warning systems in good local authorities that take their responsibilities on the financial management
of schools well. Indeed, the very fact that very few schools get into consistent financial difficulty suggests that those early warning systems work and that those interventions are happening. Most schools that end up in deficit do not stay there for very long and come out of it again. I think that suggests that there are very good early warning systems in place in most local authorities to manage the finances of individual schools. With regard to academies, Peter can say more than me."
Peter Lauener: "Some of the things I described earlier, looking at key ratios like the proportion of the expenditure plan to be on staff salaries and, obviously, the current ratio and things like that, are designed precisely to allow us to pick up problems before they happen and drill down and get more detailed information. We want a light-touch system with really good drill-down information and real rigour about the expectation of complying with the system, and much more detailed drill down when these warning flags go up."