There has been “extreme concern” in the government over an academy chain, facing a large deficit budget, that paid its interim chief executive more than £82,000 for 15 weeks’ work, a leaked draft report reveals.

It reports the findings of an investigation in the summer, which concluded that Wakefield City Academy Trust (WCAT) - which runs 21 primaries and secondaries across Yorkshire - has been put in an “extremely vulnerable position as a result of inadequate governance, leadership and overall financial management”.

The draft report from the DfE’s Education Funding Agency (EFA), seen by TES, says that a “lack of openness and transparency” about the removal of trustees from the board raises questions about whether decisions had been taken in the best interest of the trust.

But the trust has told TES that some of the matters raised in the draft report, written in August, were “legacy issues” relating to its previous management. It had formed a new board early in July.

Under the spotlight

Last week, the academy chain came under the spotlight after it emerged it had paid almost £440,000 to IT and clerking companies owned by the interim chief executive, Mike Ramsay, and his daughter.

The draft EFA report says that WCAT was predicting large deficit budgets over the coming five years and was in urgent need of a “robust and detailed recovery plan”.

Today, the trust said its projected deficit budget had stood at -£16 million. But the trust’s new board was “now projecting a surplus budget over the same time period of £4 million - a £20 million turnaround”.

The EFA found that Mr Ramsay, the former chair of the board, was paid £82,025 between February and May this year - despite there being no formal agreement in place about his role, responsibilities and accountabilities. There was also no record of the board approval to appoint Mr Ramsay into the role.

A review of invoices submitted by the interim CEO revealed that the trust had been paying mileage costs to Mr Ramsay at a rate of 82p per mile - rather than the approved rate in the trust’s policy of 42p. He was paid £3,229 in mileage expenses from February to May - of which £1,457 was outside the trust approved rates.

It is understood that trust paid the higher rate after taking legal advice because Mr Ramsay was a contractor.

The report also reveals that the trust had discussed offering Mr Ramsay a 12-month contract outside the normal payroll, but the EFA advised the trust that this “off payroll” arrangement would have breached official guidance.

It is understood that Mr Ramsay is on the payroll.

‘Serious breakdown’

Other key findings from the investigation between June and July include that:

• There had been a “serious breakdown in the management, governance and oversight” by the board of trustees since the start of the year. Trustees of the board had not been kept informed of decisions - and all minutes of meetings since January had not been formally documented and ratified. In April, the majority of trustees of the board resigned, and then in June and July, three of the four new trustees were removed. The review team were unable to ascertain any definitive reason for their removal.
• All the invoices for payments to the interim chief executive were overseen by the chief operating officer, a direct reportee of the interim CEO, rather than the chair of the board - an arrangement described in the draft report as “inappropriate”.
• There was no chief financial officer in post.
• Wakefield City Academy were unable to produce the list of students receiving pupil premium payments.
• The trust was charged £2,520 after cancelling a booking at a golf and conference centre - which was deemed a “waste of public funds”.

Last week, the Department for Education (DfE) refused to comment directly on whether it had found any wrongdoing at the trust.

But the draft report found 16 breaches of the Academies Financial Handbook (AFH) by the trust and made 19 recommendations - including a fundamental review of all costs at the trust.

The EFA concluded: “The trust has been in an extremely vulnerable position as a result of inadequate governance, leadership and overall financial management. The recent appointment of new trustee and the work of the iCEO (interim chief executive) have over the last few weeks and months gone some way to rescuing the situation, which nevertheless remains of extreme concern.”

‘Necessary improvements’

A Department for Education spokesperson said: “We do not comment on leaked documents. We are working with Wakefield City Academy Trust to ensure necessary improvements to financial management and governance are made.”

Wakefield City Academies Trust chair, John Hargreaves, said: “Following their visit to the Trust and two of its academies in June, the EFA outlined a number of issues from its inspection. These observations, some of which were legacy issues relating to the previous management of the Trust, were discussed in a draft document in August.

“A number of the observations were not accurate and have been strongly refuted by the Trust. Subsequently, the EFA made a number of recommendations that were to be addressed within a robust action plan and the strategic plan created and implemented by the new Trust board.

“All of the recommendations made by the EFA have been satisfactorily completed or are underway given the time frames involved. The members of the Trust, working with the iCEO, took action early in July forming a new board which now has nine directors with three functioning committees.”

Dr Hargreaves added: “The EFA confirmed this month the Trust was ‘actively making progress’ against the recommendations. It has asked for a further progress report in January. All of this work undertaken by the new board, iCEO and business and education teams at WCAT is about providing the best education possible in our academies.

“The Trust has, over the past two years, taken responsibility for schools with longstanding financial issues, serving some of Yorkshire’s most challenging communities. We are seeing positive signs on the educational front that they are being turned around by our dedicated and hard-working staff, despite all the difficulties they have faced.

“The board and executive team’s focus is on those students and staff. We are looking forward and won’t be distracted by what’s gone on in the past.”

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