Tuesday, 5 January 2010

Government's key adviser on Academies makes millions... from setting up Academies
Leaked documents show ex-physics teacher behind Labour's flagship schools charges £800 a day to set up Academies
By: Jason Lewis

A KEY Government adviser on Labour's flagship City Academy scheme is now earning millions of pounds in fees from the taxpayer by setting up the controversial schools.

The scheme was at the centre of the socalled 'cash for peerages' scandal when police were called in to investigate claims that Labour was offering honours to businessmen who invested in the schools. Now a series of leaked documents, obtained by The Mail on Sunday, reveal how the Government's vision of local business helping to rescue failing schools has been replaced by fat-cat consultancy firms earning huge fees to set them up.

They charge hundreds of pounds to carry out straightforward tasks including opening bank accounts and registering with exam boards.

And they have even set up offshoot firms to become the sole supplier of compulsory school uniform to pupils - which parents complain falls apart in the wash.

One of the main beneficiaries has been Graham McAvoy, a former physics teacher who began working on the Department of Education's Academy programme in January 2001.

He became the Government's 'lead adviser' on the City Academy scheme - and drew up the key 'to do list' for establishing the Academies.

Civil servants and Ministers are banned from moving directly from drawing up Government policy to working for a private company applying for contracts from the same department.

However, the rules do not apply to advisers such as Mr McAvoy and his firm Alligan, which became one of just ten companies on the Schools Department's approved list overseeing the opening of 200 new schools across the UK with a further 100 in the pipeline.

The Academies typically replace a 'failing' school and are funded by central Government and private sponsors.

The total cost of establishing each Academy is between £20 million and £25 million.

Firms such as Alligan oversee the building and setting up of the new school, hire new staff, including the head teacher, and fit it out ready to be handed over to its new independent trustees.

Mr McAvoy set up Alligan in 1995 and the firm began 'implementation' of its first Academy project in Peckham, South London, at the end of 2002. The new school, run by multimillionaire carpet business boss Lord Harris's charitable foundation, opened in September 2003. Mr McAvoy employs a team of more than 30 staff specialising in education project management.

Now documents relating to Alligan show it has claimed fees of more than £1 million from each of the 30 new Academies it has helped set up. Alligan has opened several Academies with Lord Harris and Steve Chalke, who runs the educational charity Oasis Trust.

The confidential papers expose how the consultancy firms cash in on the system, which has been heavily criticised for handing schools to private-sector entrepreneurs, many of whom have no experience in education.

Mr McAvoy wrote the socalled 'Product Breakdown Structure' for the Government which details everything that needs to be done in the run-up to opening a new Academy.

This key document is now used by his and other firms to decide how much they charge the taxpayer in fees for every aspect of their work - however minor.

A detailed breakdown of all the firm's charges, which are understood to be mirrored by the other companies competing for the Academy contracts, shows the taxpayer is being charged hundreds, sometimes thousands, of pounds for simple tasks which are usually carried out by secretarial staff in school offices across the country.

Examples include £585 to open a bank account for the school, £585 to register with exam boards and £1,755 to register with Ofsted, the schools inspectorate.

It also charges £585 to register a change of the school's name and £1,755 to arrange the appointment of school governors. Another large fee is the £11,310 that Mr McAvoy's firm charges to draw up the new school's timetable - usually part of a head teacher's normal duties.

Leaked copies of the firm's full audited accounts, which are not available from Companies House, show it had an £8.5million total turnover during 2006 and 2007 and made profits of £950,000 over the period.

Later figures are not available as Alligan only files abbreviated accounts with Companies House. Mr McAvoy, a former teacher who lives in a flat in fashionable Primrose Hill, North London, where his celebrity neighbours include Daniel Craig and Sadie Frost, was reluctant to discuss how his firm came up with such large fees.

Asked how he justified charging nearly £600 to open a bank account and similar fees for registering with exam boards, he said: 'This is a matter for the Department for Schools.

'We have contracts with the Department and you must ask them about this.' He said that his firm's large fees for drafting timetables for the new Academies were needed because the process was 'very complicated'.

Mr McAvoy charges the taxpayer £800 for every day he spends working on Academy projects. He claimed his work for the Department for Education was unrelated to the fees his company now charges for advising on Academy projects. He said: 'I was an adviser to the Academies Division of the Department for Education between 2001 and 2003 and helped draw up the structure document which sets out everything which is required to be done to open an Academy.

'But at the time there was no suggestion this document would be used by the Department to cost the Academy programme. It was the Department's decision to use it to cost the projects. There was no relationship with the work I did and the present fees structure.

'When I helped draw up the structure document there was no suggestion it would be used to decide fees. That was the Department's decision.' Recently his firm appears to have struggled to win new contracts.

It is currently overseeing the opening of only one new Academy - in Oldham - and has been forced to lay off staff.

It has also suffered losses from a recent plan to diversify into supplying uniforms for some of its Academies.

It had hoped that the scheme - controlled through another firm owned by Mr McAvoy - would be the sole supplier of uniforms to at least six City Academies and bring in large profits. But the plan was hit by delays in production.

Internal documents show the firm was besieged by parents calling to complain about its failure to supply the uniforms by the start of term.

The report says: 'Due to supply problems and product issues, there was a constant flow of telephone calls to the company office...This led to a sea of angry parents who either could not get through at all or had to leave a message that would not be responded to for some time.

Calls were averaging at 100 an hour and messages at 30 an hour. This led to a very poor view of the company.' Installing an answer machine to deal with the irate parents was suggested but, the report says, this raised 'the issue of confidentiality and the need to prevent parents learning of problems at other Academies'.

Once the uniforms arrived the firm faced more problems when items fell apart or did not fit.

The internal management report, obtained by the Mail on Sunday, reveals the scale of the crisis.

A section headed 'The Poor Quality Of The Product' says: 'The manufacturer specialised in fashion garments. Fashion garments are not very durable and, as a result, the product easily succumbed to wear and tear. The material is also of an unconventional mix that has to be washed at 30C and falls apart after a few machine washes.'

The report continued: 'Choosing the cheapest ties which were cheap because they were smaller and thus did not prove a good fit or look when distributed to Academy pupils.

'Re-dying cloth that had been dyed the wrong colour, resulting in its falling to pieces when the students began to wear it.' It also reported the sleeves on some items were 'the same length irrespective of what size the overall garment was'.

Another problem was 'discrepancies in quality of garment (some thick, some thin) - even though the price remained the same'.

The company's reaction was to shut down the subsidiary selling the uniforms and announce it was 'under new management'.

The Schools Department said it could not discuss individual companies, the contracts it had with firms, or the detailed charges for the establishment of Academies. A spokesman said: 'The process for selecting project management companies is robust.' It also failed to answer questions about Mr McAvoy's involvement with drawing up the Academy Policy and whether this should have barred him from bidding for contracts.