Lord Agnew of Oulton (Con)

My Lords, I will address my Amendment 481. This group is a bit of a mixed bag, but I think that my amendment is relevant and important, as it seeks to level the playing field by ensuring that there is a high level of financial governance for local authority schools compared to academies. Yet again, the credit must go to a previous Labour Government for setting out such strong foundations to underpin the governance of academies; comparing academies and local authority schools is like light and day. I have a reputation for being something of a martinet when it comes to the disciplined management of school finances. Various people have made fun of me over the years, which does not trouble me in the least, because every pound I have saved from wasteful and poor management in schools is then available to go to the front line in improving the education of children. The Minister might even want to call me a bureaucrat, because I have been so assiduous in that part of the system. I would love to see the overall schools budget at a much higher level, but that will not happen given the parlous state of our country’s finances. We therefore have to work with what we have. In the meantime, the level of accountability and visibility of LAs’ oversight of their own schools is murky at best. An academy trust has to complete a full external audit of its finances within four months of the close of the academic year—that is, between 31 August and 31 December. The accounts have to be filed with Companies House on that date. At that point, the full record of the trust’s financial affairs is available for public scrutiny for the year ending only four months earlier. You can get that information on any trust in England with about four clicks of a button. There is a red list in the DfE—I hope the Minister has seen it —of any trust that misses this deadline. When I was there, any trust more than a month late was immediately placed on a risk register. If schools’ managers or trustees cannot get the money right, how can they ever get the education right? It really is that simple. But what visibility is there for local authority schools? There is virtually nothing that is easily accessed. Even as the Minister for the school system, I found it an endless battle to get this sort of information. Although LAs would complain frequently about not having enough money, they were rarely forthcoming about how they were spending what they had. This is a very unacceptable state of affairs. If we look at some key categories of oversight and compare the levels of transparency, I hope noble Lords will see why this very unbalanced situation needs correcting. First, there is the accountable body. For academies, it is the board of trustees and the members sitting above that. The DfE Academy Trust Handbook sets the rules. These board members and the members themselves are on every academy’s website. For local authorities, they are their own accountable body—and try talking to that person. Secondly, there are audited annual accounts, which I have already explained. But there are no requirements for anything similar for local authority schools. It is even worse that the average frequency of an internal local authority audit of its own schools is about every three years, and it is virtually impossible to see a copy of those reports. I failed consistently when I was in the department. Thirdly, there is internal auditing. For trusts of a certain size, this is another annual requirement. For noble Lords not familiar with the term, an internal audit is not exactly as it says on the tin. An internal audit is conducted by external specialists but looks at different areas of schools’ operation beyond straight finances, such as deep dives into cyber vulnerability, payroll, the condition of the school estate and so on. There is no such requirement for local authorities. Fourthly, there are financial returns. Academies are required to submit annual accounts to the DfE and indeed a three-year budget forecast. They also need to demonstrate compliance with their chart of accounts. For local authorities, again there is no standard national chart of accounts, and they are not required to submit three-year forecasts. Fifthly, there are monthly management accounts. Academies are required to ensure that the chair of the board of trustees sees these at least four times a year. My noble friend Lady Barran actually reduced it. I had it at six, but she was right; my bureaucratic obsession probably had got the better of me. But this is not required for chairs of governors in local authority schools. Sixthly, there is related-party transaction reporting. Academies have to comply with specific rules, such as needing independent authorisation from the DfE for larger sums. It was £20,000, but my noble friend—she might correct me—lifted it to £50,000. Again, there is nothing like that for local authority schools. Seventhly, there is the publication of salaries. Academies have to disclose all salaries above £100,000, but local authority schools do not. This is required only for LA officers at LA level. Estimates I have seen indicate that there are over 1,000 staff in local authority schools across England who exceed that threshold, so any defence that it is not a material number of people in receipt of public money does not wash. Eighthly, there is website reporting. Academies are required to publish their audited accounts on their website. There is no requirement for local authorities to publish their school accounts. Ninthly, there is the accounting officer. Academies have to appoint an accounting officer with—I stress—personal responsibility for accurate and timely reporting. No such thing exists in local authority schools. Given that LAs are facing an unprecedented financial squeeze, with some virtually bankrupt, such as Birmingham, there should be no excuse for them not to up their game. The costs—which will of course be the reflexive defence for not doing anything—would be trivial against the improvement in the spending going on inside the LA schools and would be recouped many times over the cost of the audit fee. Every time I have taken over a local authority school, we have eliminated hundreds of thousands of pounds of wasteful expenditure, which is then focused on teaching. In every secondary school inside my trust, because of the very tight financial management, we have been able to extend the school day by three hours a week. If a child spends the full five years of his or her education in one of those schools, it is the equivalent of receiving another year’s education. That is what is at stake here. Norfolk is not a well-funded local authority; it is about middle ranking. We are not getting any handouts. It just shows you that, if there was more rigour in the system, it would make an enormous difference to the children in our country.