The Swedish company given the go-ahead last week to run a Suffolk school is expecting to make £5m profits this year.

[mrz]

www.guardian.co.uk/education/2012/jan/28/state-schools-private-sector-revolution?CMP=twt_gu

Nick Clegg, the deputy prime minister "Let me reassure you: yes to greater diversity; yes to more choice for parents. But no to running schools for profit, not in our state-funded education sector."

In the UK a for-profit organisation cannot directly run an academy or free school. The school is operated by an academy trust which is a charity. The trust is responsible for governance of the school and is held accountable if the school has problems.

In the case of the school mentioned in the Guardian article, the academy trust is outsourcing management of the school to a Swedish company. However, the academy trust is in charge and remains answerable for the school's performance. If they fail to do their job properly the Secretary of State can appoint new governors or terminate the academy agreement completely.

but the charity trust running the school can "outsource " to the profit making arm of their company to administer the day to day running

This sort of reminds me of the break up of British Rail- instead of having one body responsible for the whole shebang, suddenly we had Railtrack + and whatever 'provider' tendered for the rolling stock. All well and good. Til things went wrong. Like crashes. Suddenly we had DECADES of legal argument, blame dodging and so on.

Can anyone else foresee this with a charity 'taking over' a school- then 'outsourcing' the actual provision? I guess we'll find out when 'something goes wrong'...

Mmm?

mrz - If the academy trust owns a profit-making company any profits made by that company will go back to the trust which is required, by law, to use the funds for its charitable objects, i.e. running the school. The trustees cannot benefit personally from their position as trustees, so they cannot receive any payment either from the trust or the profit-making company.

And none of that alters the basic point that the trust is responsible for the governance of the school and will be held accountable for any problems. This is not like British Rail where we ended up with train operating companies running trains over track belonging to Railtrack using rolling stock provided by someone else, leaving no-one with overall responsibility (which was a stupid idea). Here it is clear that the academy trust runs the school and is responsible for everything. If they choose to subcontract stuff that is up to them but they retain overall responsibility and are answerable if it goes wrong.

prh47 - yeah, right, an efficient business will carry loads of spare capacity, of course... That's not the culture of business in this country - the UK has a taste for taking costs out of businesses, rather than investing in, for instance, equipment, the way the Germans do.

State schools are not for profit. Private schools are not for profit. Church schools are not for profit. There's a reason for that - and a reason that we should be very, very careful before we turn schools into businesses.

It's all very well to say the Academy Trust will be a charity - it sounds all nice, caring and sharing, but the regulation of charities in this country is very poor at picking up or preventing bad practice. I've known of cases where the Charities Commission isn't bothered in the slightest when someone points out to them 'this charity hasn't filed any accounts for X years' and doesn't act particularly interested when a dodgy director steals £250k.

(Although the dodgy director did go to prison, that was only as a result of the actions of a new trustee, who noticed what was going on and went to the police.)

But then i assume the users of the charity (you, the parents) will make sure to keep things honest.

Going back to 125 year leases and land reverting to an LA - I wonder what might happen in a borough where schools have been run by Academy chains and the LA have lost the expertise and will to be involved in education ?

When the 125 years ends or the school founders what will become of the land?

Westminster have already freed up valuable land by relocating a public library onto an Academy site producing a "shared " facility between school and public .
The school does not have a library of it's own so effectively has already lost part of it's land .
More in common with selling off school playing fields I suppose but leasing land to private companies whose control will strengthen as the LA's experience of being involved in education weakens and becomes more distant does not fill me with confidence that the land and buildings will remain in the public domain .

At the end of the 125 years either the lease will be renewed or the land and buildings will be available for the LA to use, either as a school or for some other purpose.

edam - No, an efficient business will not carry loads of spare capacity, but you are suggesting a business won't allow itself any opportunity to grow. A business needs to maximise its revenue and minimise its costs. The two are interdependent - push costs down too far and you will lose revenue, either through customers becoming dissatisfied and taking their business elsewhere or through being unable to take opportunities for growth. Pushing revenue up too far in the short term can also be damaging longer term. A school that wants to increase its revenue cannot put up its charges so the only option available is to take on more pupils, provided that doesn't change the school to such an extent that parents no longer want to send their children there.

Playing devil's advocate for a moment, state schools already use profit making companies for a wide variety of purposes - running the canteen, maintaining the buildings, cleaning, caretaking, secretarial services, providing supply teachers, headhunting senior staff and so on. I don't know anyone who argues that these things mean a school is run for profit. So at what point do we cross that line? If the governors of a state school chose to subcontract management of the school to a profit making company, would we say that school is being run for profit? Or is it only when the profit making company actually controls the school?

Just to be clear, I am neither for nor against schools making a profit. As far as I am concerned the important thing is that a school delivers a good quality education and does not cost the state more than comparable schools. As long as it achieves that goal I don't really care whether or not it makes a profit.

There's a massive and obvious difference between a school buying stuff that it needs and being privatized. Buying exercise books from a stationers is not comparable to handing over building, land and all other resources (including staff) to a commercial organisation. Even one dressed up as a charity.

As for cleaning and catering, contracting out those services has been a disaster for schools and the NHS - why do you think Jamie Oliver et al had to fight such a battle to get school dinners to have some sort of nutritional value? Why do you think hospital catering and cleaning went so badly wrong?

But building and land are not being "handed over" to anyone. They remain under LA control but leased to the academy trust. And you cannot "dress up" a commercial organisation as a charity.

Yes, you can. You get your charity registered with its charitable aims, then you set up a company to be the trading arm. Then, to take just one example, you get lots of lovely public money from the primary care trust to look after people with learning disabilities, and buy yourself a caravan park, which is what you are actually interested in running. And you justify it by saying you are taking all your residents on holiday.

The thing is, people and organisations don't always do what they say they will, or what they are supposed to do. When there's lots of public money involved, and a public service that is kind of important, like healthcare or education, it is right and proper to be cautious.

(Btw, I work for the business arm of a charity - all entirely legitimate, worthy and above board. But not every charity is the same, sadly.)

I am not sure what you think the point of such an arrangement would be. The trustees of the charity cannot benefit from their position. They cannot therefore receive dividends from the trading subsidiary nor can they be employed or receive any other payment from it.

Yes, a charity can own a profit making company. But I would regard "dressing up" a commercial organisation as a charity to mean that there is a profit making company which is owned by a charity as a means of allowing the trustees (who control the charity) to make large profits. Such an arrangement would be a criminal offence.

No, it doesn't have to be about the trustees making off with the cash - although that does happen, I've heard of two cases in the last six months. It has to do with whether it's OK to privatize education. Whether it's OK to break up public services. Where the democratic accountability sits. If I want to protest about state education now, I can lobby my councillors or my MP. Once all schools are turned into academies, where do I go if I'm not happy with education policy? Who can I hold to account? Will academies count as public bodies for the purposes of the Freedom of Information Act?

you hold the school to account. Basically, if it is rubbish, don't send your children, it goes bankrupt. It is in a businesses interest to provide a good service or it goes bankrupt. The real trouble with public services is that there is no alternative, so if it does not suit your needs, you are still compelled to use it. The only way to make it better is for govt to set targets. these do not, however, match what people want.
I would like people to say one area of life that has no public bodies (such as food) and say they would prefer the govt to take over.

You go to the Secretary of State.

My concern with the Acedemy programme is that it brings schools under direct Whitehall control, never dreamed of, let alone attempted, by even those governments most keen on nationalisation. The previous administration, which creted this system, and the current one, which continued it, are clealy both going to be pretty hands off in how their legislated central control is exerted. But it'll be anyone's guess on whether a future, more authoritarian/totalitarian administration (of either hue) would choose to exert those powers in other ways.

It's not uncommon to SE posters on MN saying "the government/PM/minister/bogeyman should go something about this" when the "this" is something that is LA responsibility. Even when LA responsibility is pointed out, it's often still "blame the Govt" because of advance funding arrangements. Well, those who post in that vein would, logically, be very pleased with move to this set up, as it is shifting the actual responsibility to those to whom they alread attitude it.

I completely agree with you, *edam, especially about how they love to call themselves 'charitable trusts' which makes them sound all lovely and kind and helpful.

A reliable inside source tells me that Harris academies are all carpeted by Harris himself at a non-discounted rate, for example.

As I see it, these are in part issues about scale, accountability and where the governing bodies true interests lie. i used to work for a small charity and when we needed some painting doing, we contracted the CE's son, as that is his trade and he did a good job. When there was a job he couldn't do, we got quotes and contracted someone else. This is very different to a governing body passing a resolution to only contract the contractors in their own business wing, as ARK have recently done in regards to their construction work. Purchasing power is very, very valuable.

These decisions/resolutions are made by the governing body appointed by ARK, whose interests lie in supporting ARK, not the children in the school.

Youngermother1, you have a charmingly naive and unthought-through insight into the reality of unaccountability in schools. If a school is run by an academy which 'fails', then another one which 'fails' and then another one etc etc (this could easily happen in Ofsted's ever-changing framework), do you think that schools being taken over every 18 months or so, with a corresponding change in staff, uniform, length of school day, curriculum, ethos, SLT, etc etc is in any sense a reasonable model of education, especially for primary children whose home life is very unstable (some of out children in temp accommodation are being moved every month or so at the moment).

Where academies have replaced 'underperforming' community schools, about one third remain under 'floor targets' and over a quarter have declining results. Christine Blower made a very insightful statement this week when, rather than gloating about the obvious lack of success in the academy model, she pointed out that changing governance doesn't overcome the challenging intake faced by some schools and other barriers to educational success and that it would be helpful for Gove to actually engage with teachers.

The reality of 'holding a school to account' is far more complex that you suggest. What if you can't move your children? What if the head refuses to answer your phone calls/e-mails and is so rarely in the school that no-one knows what he looks like?

There's an academy near us which claims that no parents/carers (900 pupils, so 700 or so parents/carers?) are interested in being parent/governors, so they don't have any. Only 24 parents returned a questionnaire at the last Ofsted, and not one wrote an additional comment. How exactly would you go about calling this school to account?

Another anecdote - a friend of mine's son is at a secondary academy sponsored by RBS. They close the school some days so that they can use it to host corporate jollies. My friend left lots of phone messages with the Head, e-mailed, wrote, and then wrote to RBS and eventually Gove to complain about this. (This happened the day after a letter home stressing how essential 100% attendance is for educational progression). No-one has responded (she wrote last September). What else do you suggest that she does to hold this school to account?

Yes, academies are public bodies under the Freedom of Information Act. Academies are also subject to public sector rules regarding purchasing and contracts.

I don't have any information about the allegation regarding the Harris Federation but I would note that Lord Harris has provided a huge amount of funding to the Federation over the years, far more than any profit that would have been derived from carpeting the schools.

As I have explained before, if ARK contract any work to their fully owned trading subsidiary, any profits come back to ARK to be spent on the schools instead of going to an independent company for distribution to shareholders. If you are correct as to what ARK is doing (and I have no information on that) it should mean that more of the money coming into the schools is available for spending on the schools. I fail to see what you think is wrong with that.

Could you enlighten us as to which academy is "sponsored by RBS" and behaving as described?

Oh, yeah, it's really easy to hold an Academy to account by not sending your child there. Because the Academy trust will really listen to parents who don't have children at their schools. And because there's such a wide choice of school choices for every family - lots of spare school places, given the baby boom. Local authorities are already drawing up serious plans to teach children in shifts, FFS, there is so little room in existing schools.

If any of the posters here have knowledge or strong suspicion of a breach of the public sector procurement rules by an academy (as the example above seems to suggest), then please could I urge you to report this to SoS immediately. Failure to report makes you complicit.

Abuses need to be tackled with the same vigour as they are now with LA controlled schools (as it is essentially the same mechanism and standards, and the potential for abuse via contracts going without proper scrutiny to eg a councillor's friend has been, sadly, demonstrated).

The purpose of the legislation is to enable more schools to open , more places to be available and popular schools to expand.
At present, the LA decides on new schools and if it has 'enough' places, even at failing schools, they will not open new ones or allow popular ones to take more pupils.
Failing acadamies should do just that and fail, not repeatedly change hands.

So an academy 'fails', and what happens to the children?

They go to other schools, or the school merges with a local successful school - this is what happens in private schools.
I suppose I fundamentally cannot see how better and more choice and ideas in education can be a bad thing.

It's also pretty much what happens when an LA opts to shut a school (failing, or falling numbers).