New Rules for Academy Trust Related Party Contracts

Schools Week magazine has reported that the Education Secretary Damien Hinds has promised to crack down on academy trusts which hand out lucrative contracts to family and friends.

Speaking at the National Governors Association in Manchester, Mr Hinds was reported as saying: “I want to make sure that every pound of public money for our schools is used in the best possible way for the good of our children and society.That means taking a tough approach and this includes a new, more robust process to manage related-party transactions made by academy trusts.” He continued: “I think pretty much everyone would agree that a situation where board members could hand out unjustified contracts to companies that they or their friends and business associates have an interest in is not okay.”

CPC have sometimes come across situations where governors or trustees of academy trusts have recommended the firm they or their friends work for, commonly in areas such as audit, legal and insurance services. Currently the DfE rules allow this type of arrangement provided no one profits from the arrangement, however the public accounts committee warned these rules are 'too weak' and from April 2019 these 'related party transactions' of more than £20,000 will need to be declared to the Education and Skills Funding Agency for approval.

The best way to avoid getting tangled up in related third party transactions if you work for an academy trust is to put these contracts out to competition. The easiest way to do this is through the CPC framework agreements. Discover the full range of goods and services that can be bought through our frameworks by searching our website. Use our online quote tools to send your requirements to suppliers who will provide you with a bespoke quotation. You can rest assured that all of the providers have passed a rigorous due diligence process to win their place on the framework, enabling you to not only receive cost competitive quotations but also evidence probity in how you award contracts.

If you have any questions please contact Regional Procurement Advisor Jo Frost via email [email protected] or on 07990 763928.