Governing responsibly: tackling the weaknesses in the governance of academy trusts

The conduct of academy trusts is never far from the news. Just last week the spotlight was on the Education Funding Agency’s (EFA) for its failure to publish a review into alleged financial irregularities at Bright Tribe Academies Trust. The Labour Party at its conference promised to give local authorities greater oversight of academies’ finances.

In many ways the question marks over academies are unfair. Most trusts are being competently led, managed and governed. Indeed the academy governance model has a number of virtues. It is more flexible and less bureaucratic than the traditional model of governing maintained schools. The advent of board decision-making has placed a greater emphasis on getting people with the right skills round the table. The separation between board and school-level governance roles is enabling schools leaders to focus more on leading learning

However, as in other other areas of life a relatively few bad apples are tarnishing the reputation of the whole multi-academy trust (MAT) sector and eroding public confidence in the academy model. There have been four problems:

  1. Over-rapid expansion of academies. It hasn’t just been one MAT but probably up to 20 that have been encouraged and allowed to expand too fast. Sir David Carter and Michael Wilshaw were pretty damning about this in their evidence to the Education Select Committee in July. And it is not entirely clear to me that the lessons have been completely learnt. Where were boards of directors when this level of expansion was driven by over-ambitious CEOs took place? Where was the exercise of due diligence?
  2. Poor financial oversight. Since March 2014, 45 academy trusts have been issued with financial notices to improve. In some cases the issue relates to deficits, in some cases to lack of financial systems, in some cases to fraud and in some cases to inappropriate payments (in particular the issue of third party payments to those connected with the board and associated failures to declare interests, follow due process and adhere to proper contractual procedures).
  3. Questionable remuneration packages. In July  The Observer exposed ‘the extravagant expenses’ paid to  a number of senior MAT employees. In March Sir Michael Wilshaw tartly told the Secretary of State in March 2016 that the “Salary levels for the chief executives of some of these MATs [subject to batch inspections by Ofsted] do not appear to be commensurate with the level of performance of their trusts or constituent academies.”
  4. Weak control of academic standards and progress. Since 2012, more than 160 academies have received warning, pre-warning or termination notices (50 in the last academic year). In part this is related to the over-rapid expansion of academies between 2010 and 2013 but in part it is separate. Between September 2015 and June 2016, 119 academies had to be re-brokered from one sponsor to another And the rate of progress in moving schools out of Ofsted categories is nothing to shout about – though  we should remember that MATs have taken on some of the toughest schools in the system.

These are the symptoms of something being amiss with academy governance in at least part of the sector. The symptoms are serious but we also need to dig below the surface and identify the deeper problems. To start with some boards and CEOs seem to have lost their moral compass. They may have started off committed to improving outcomes and life chances for young people but somewhere along the way they got seduced into building empires, making money and rewarding friends and colleagues. They fall into a mindset where they seem to think that that they own the MAT – it is ‘their’ organisation to do with as they please.

Second, MAT governance is too heavily weighted towards upward accountability – i.e. to Ministers via regional school commissioners – and not sufficiently rooted in reporting to parents, pupils and the local community. A system built on heavy upward accountability tends to foster a culture of compliance and game playing in order to meet targets and expectations. A process that values stakeholder engagement requires a more open, transparent and inclusive approach to performance and the rate of progress. They are not, of course either/or options – both are needed. But funding agreements prioritise accountability to the centre rather than to the locality.

Third, there are structural weakness in the academy governance model. There is not a sufficient separation between those who serve as members of a trust and those appointed as directors. So when it comes to appointing (or dismissing) directors the decisions are effectively in the hands of a self-perpetuating caucus. In addition the respective roles of the chair and the CEO are not always thought through and delineated.

Some MATs have made the mistake of carrying over the culture of governance and the personnel from the schools they inherited without understanding the  statutory responsibilities of director. In other MATs they have failed to properly consider and agree which decisions are to be taken at board, which at cluster and which at academy level. Consequently they find that their schemes of delegation are confusing and directors and local governors come into conflict with the central MAT.

Perhaps most worrying is the misapplication of the concept of earned autonomy. The assumption in some MATs is that if a school is performing strongly it should have maximum freedom and the MAT should not interfere with its leadership and management. Of course the strengths and identify of such academies should be respected but the whole point of a MAT is to grow a teaching and learning model where schools are continually and ever more deeply engaging with, learning from and support each other. That requires a shared purpose, shared leadership, shared systems, shared resources and shared accountability. MATs are, at best, unlikely to reach their potential and, at worst, storing up problems for the future if the MAT is simply a holding body for a series of largely autonomous units.

Fourth, some MATs have  believed their own hype. Business guru, Jim Collins, describes the classic pathway to failure of once highly successful corporations: they succomb to ‘hubris born of success’, engage in ‘an undisciplined pursuit of more’ and practise ‘a denial of risk and peril’. Those descriptors apply all too aptly to the actions of some of our MATs.

Fifth, there are systemic weaknesses in compliance systems. In some MATs monitoring systems are patchy – they do not have a real-time grip on academic or financial performance and pupil wellbeing. Internal audit procedures are not always well entrenched. External auditors are missing key issues. The EFA is overstretched having to oversee more and more and more academies with fewer resources. We have to rely on Freedom of Information requests and whistle-blowers to identify a number of the worst abuses.

Sixth, some MATs are struggling to get full value from their trustees/directors. In part this may be – particularly in fledgling MATs – there is a failure to appreciate the implications of being on a company board means and exercising the legal responsibilities of a director. In part it may be because boards fail to get the right blend of skills round the table and in part it may be because a trust does not put sufficient effort and resource into training and developing its board and governors (or academy council members).

So what’s to be done about this state affairs? Here is another of my ‘lists of 10 useful suggestions’ – this one targeted on improving MAT governance.

  1. Establish and live by your values throughout the organisation. Effective MATs are grounded in the vision and mission of what they are trying to achieve and have adopted core values of how as a group of academies they will work together.  Leaders model these values which have been been discussed with staff and shared with the wider school community. Developing and instilling the value base of the organisation is probably the single most important way of improving MAT governance.
  2. Review the governance structure. Review how many members the MAT has and make sure that most of them do not serve in a dual capacity as directors. The EFA should consider lowering the threshold for having an audit committee from £50 million to £10 million but in the meantime MATs need to make sure that their internal audit mechanisms and reporting arrangements are robust.  A remuneration committee should also be the norm (it won’t meet many times a year) and it should have access to good independent advice.
  3. Be clear about what’s to be decided at what level within the MAT and reflect that in detailed schemes of delegation, governance handbooks and training programmes. Getting this right may be demanding and involve hard conversations but ideally the arrangements will be co-constructed and so command support across the MAT. All who are exercising responsibility – board members, the centrally employed staff of the MAT, governors/academy council members and senior and middle in individual academies – each needs to have a precise understanding of their respective accountabilities. That includes CEOs and chairs of boards having a clear understanding of how they will exercise their remits.
  4. Adopt a growth strategy having regard to a MAT’s wider context. There is a lot of pressure on MATs to expand – both to reach what is considered a viable economic scale of operation and to help with improving struggling schools.  Those can be perfectly reasonable objectives. But good governance will also consider another dimension of growth – depth. What does the MAT need to do to develop its organisational capacity and business systems, its staff and leaders and, above all, what are the priorities for improving teaching and learning? These factors need to be looked at alongside expanding the number of academies. Sometimes growth means having a period of consolidation rather than accepting more academies. As and when expansion is the right course then the board needs to insist on applying thorough due diligence to each and every academy it is minded to take into the MAT.
  5. Operate real time tracking systems across all areas of activity. Smart data systems and easy-to-read dashboards should, of course, track educational progress and performance and monitor financial out-turns. But they should also encompass other areas of activity such as attendance (of staff and pupils), pupil mobility, staff turnover, behaviour, exclusions, health and safety, applications for entry, safeguarding and looked after children. Directors need the information to able to spot worrying trends,  provide challenge and authorise and – where necessary – insist on corrective action.
  6. Step up a gear on training and development for directors and governors/academy council members. That starts with MATs looking at their induction programmes to ensure that new trustees understand their statutory responsibilities as company directors. For those in governance positions in local academies it will mean them understanding what their role is – and how fits into a broader governance framework. It will also involve identifying accurately the development needs of directors and governors. Doing this then provides a platform for a cross-MAT training programme. By bringing together those involved in governance across the MAT, training sessions will help forge links and relationships and contribute to building the social capital of the MAT – as well deepening knowledge of key issues.
  7. Practise strong local accountability so that a MAT feels answerable to local stakeholders alongside its obligations to government. A MAT can do this by adopting a transparent and open approach that enables local people to access its data, finances and outcomes of its meetings. MATs can also engage with parents and local communities through parent councils, family learning, online communication and consultation sessions. I would also argue that mature governance would see MATs encouraging their schools to be collegiate: collaborating with other schools and the local authority on issues such as place planning, admissions, special needs and vulnerable groups of children.
  8. Observe the advice of Russell Hobby, General Secretary of NAHT. Russell argues that headteachers (and MAT leaders) should be paid through a single base salary, set by the trust and approved by the trustees. If senior leaders are undertaking additional work over and above their normal roles the proper way for that effort to be recognised is through their salary rather than them taking a share of any income generated for the trust. Russell also advises MAT leaders to avoid employing close relatives and related-party transactions which have been open to abuse.
  9. Provide a stronger mandate to and oversight of external audit and establish an independent regulator. It is wishful thinking to expect the EFA to oversee and check the financial proprieties of each academy trust. The rising number of academies and MATs will just swamp the diminishing resources of the EFA. Better for the EFA to focus on improving the quality of external audit  by ensuring the audit framework is fit for purpose, that appointment of auditors is undertaken properly and that audit firms are held to account for weaknesses and irregularities they fail to spot. And better still if there were also an independent regulator of academy finances that reported to the House of Commons Public Accounts Committee.
  10. The sector (i.e. MAT leaders) to step up and provide leadership. We are moving to to a school-led system. So, just as we are looking to school leaders to provide the system leadership and commitment to improve all schools, we should likewise expect MAT leaders and board chairs to step up to the plate and lead moves for more effective governance – as has been done in the corporate sector. The MAT sector might draw up a code of conduct for MAT directors. It could develop some training and self-evaluation tools for MATs,  provide opportunities for debate and exchange of practice and establish a forum for engaging with regulators and the media.

It’s not too late to do something about the weakness in MAT governance. But time is running out. Each new scandal and fresh revelation chips away at the trust in the academy governance model and provides ammunition for those who would be quite happy for MATs to fail. Let’s act before it’s too late.

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