To ask Her Majesty's Government what steps they have taken to audit the proportion of the UK's cash network that uses technology either (1) developed, or (2) manufactured, in states which may be hostile to the UK's interests.

To ask Her Majesty's Government what steps they have taken to audit the proportion of the UK's cash network that uses technology either (1) developed, or (2) manufactured, in states which may be hostile to the UK's interests.

To ask Her Majesty's Government what assessment they have made of the number of officials of the government of Hong Kong whose families hold UK citizenship; and what plans they have, if any, to audit the UK assets of officials of the governments of (1) Hong Kong, and (2) China.

To ask Her Majesty's Government what assessment they have made of the number of officials of the government of Hong Kong whose families hold UK citizenship; and what plans they have, if any, to audit the UK assets of officials of the governments of (1) Hong Kong, and (2) China.

To ask Her Majesty’s Government what assessment they have made of the financial arrangements and auditing of multi-academy trusts.

To ask Her Majesty’s Government what assessment they have made of the financial arrangements and auditing of multi-academy trusts.

My Lords, the financial arrangements and auditing of academies is based on a clear framework and effective oversight, with robust intervention when needed. Trusts must comply with the Academies Financial Handbook, publish audited accounts and have independent internal scrutiny. In November 2018, the academies sector annual report and accounts showed that the vast majority of trusts are compliant with financial requirements; 98% of accounts were unqualified by their auditors and 95% had no regulatory issues.

My Lords, the financial arrangements and auditing of academies is based on a clear framework and effective oversight, with robust intervention when needed. Trusts must comply with the Academies Financial Handbook, publish audited accounts and have independent internal scrutiny. In November 2018, the academies sector annual report and accounts showed that the vast majority of trusts are compliant with financial requirements; 98% of accounts were unqualified by their auditors and 95% had no regulatory issues.

My Lords, I am not familiar with the love-nest situation, but I assure the noble Lord that scrutiny of the sector is robust. From 1 April this year, we brought in a requirement that any related-party transaction in excess of £20,000 had to have pre-clearance with the ESFA, and all other RPTs needed to be disclosed. It is frustrating that I am often attacked about governance in the academies sector while there are also a lot of transgressions in the local authority sector. While researching this Question today, I discovered the 2009 case of a so-called super-head in a local authority school, who was knighted by the Labour Government, was then charged with false accounting and has recently lost his knighthood, been convicted and must repay some £1.5 million.

My Lords, I am not familiar with the love-nest situation, but I assure the noble Lord that scrutiny of the sector is robust. From 1 April this year, we brought in a requirement that any related-party transaction in excess of £20,000 had to have pre-clearance with the ESFA, and all other RPTs needed to be disclosed. It is frustrating that I am often attacked about governance in the academies sector while there are also a lot of transgressions in the local authority sector. While researching this Question today, I discovered the 2009 case of a so-called super-head in a local authority school, who was knighted by the Labour Government, was then charged with false accounting and has recently lost his knighthood, been convicted and must repay some £1.5 million.

The noble Lord is right in saying that we appeared together several years ago at an Education Select Committee. A great deal of work has been done since then. Under my tenure, we have rewritten the academies handbook twice—the latest version was released in the past few weeks and includes the change relating to related-party transactions that I

mentioned. We updated the academies account direction —the directions for auditors—in March. We have asked for additional scrutiny of new academy trusts to ensure that they have the correct governance structure. We have ensured that there is a scheme of financial delegation that maintains robust controls, that management accounts are shared with the board of trustees and issued regularly and that there is board oversight of capital expenditure and funding to ensure that it is used appropriately for capital purposes. I have written to all auditors in the sector on three occasions during my tenure to stress the importance of many of these issues. The conversation that the noble Lord and I had with the Select Committee a couple of years ago was absolutely right, but a huge amount has been done since then.

The noble Lord is right in saying that we appeared together several years ago at an Education Select Committee. A great deal of work has been done since then. Under my tenure, we have rewritten the academies handbook twice—the latest version was released in the past few weeks and includes the change relating to related-party transactions that I

mentioned. We updated the academies account direction —the directions for auditors—in March. We have asked for additional scrutiny of new academy trusts to ensure that they have the correct governance structure. We have ensured that there is a scheme of financial delegation that maintains robust controls, that management accounts are shared with the board of trustees and issued regularly and that there is board oversight of capital expenditure and funding to ensure that it is used appropriately for capital purposes. I have written to all auditors in the sector on three occasions during my tenure to stress the importance of many of these issues. The conversation that the noble Lord and I had with the Select Committee a couple of years ago was absolutely right, but a huge amount has been done since then.

My noble friend is entirely correct. Again, we have done a lot to strengthen the quality of academy trust boards. We have organised a programme called Academy Ambassadors, finding more than 1,000 commercial individuals who have volunteered to join trusts over the past four years, bringing extra rigour and scrutiny. The regional schools commissioners have carried out 1,000 trust reviews in the last academic year, which also requires that non-exec members of the board attend those meetings.

My noble friend is entirely correct. Again, we have done a lot to strengthen the quality of academy trust boards. We have organised a programme called Academy Ambassadors, finding more than 1,000 commercial individuals who have volunteered to join trusts over the past four years, bringing extra rigour and scrutiny. The regional schools commissioners have carried out 1,000 trust reviews in the last academic year, which also requires that non-exec members of the board attend those meetings.

I am afraid it does not, my Lords, because the Harris trust is delivering the most extraordinary level of education improvement in the country. If you take the cost of that senior management team and divide it by the number of pupils in that trust, you will see that it is extraordinarily good value.

I am afraid it does not, my Lords, because the Harris trust is delivering the most extraordinary level of education improvement in the country. If you take the cost of that senior management team and divide it by the number of pupils in that trust, you will see that it is extraordinarily good value.

I am not sure if the noble Baroness is worried about them being in post for too long or too short a period of time. Given that the programme has existed at scale for only about six years, perhaps she is worried about the short length of tenure. The department is fully geared up: all Companies House filings of retirements or new appointments to boards go through to the ESFA and where we see what we would call unusual actions—for example, a number of trustees retiring simultaneously—we will escalate that as a matter for review.

I am not sure if the noble Baroness is worried about them being in post for too long or too short a period of time. Given that the programme has existed at scale for only about six years, perhaps she is worried about the short length of tenure. The department is fully geared up: all Companies House filings of retirements or new appointments to boards go through to the ESFA and where we see what we would call unusual actions—for example, a number of trustees retiring simultaneously—we will escalate that as a matter for review.

My Lords, an academy trust is a single legal entity, so the individual schools are part of that. But the noble Baroness is quite correct that there is a full external audit carried out on academy trusts every year. That is unlike local authority schools, where the average frequency of audit is about every four years, so I can assure her that the scrutiny is far higher than for local authority schools.

My Lords, an academy trust is a single legal entity, so the individual schools are part of that. But the noble Baroness is quite correct that there is a full external audit carried out on academy trusts every year. That is unlike local authority schools, where the average frequency of audit is about every four years, so I can assure her that the scrutiny is far higher than for local authority schools.

My Lords, for those who do not know, I was the founding chairman of the Inspiration Trust, so I am fairly familiar with it. When I took on this post, I agreed with both the ethics committee in the Cabinet Office and with the Department for Education that I would have no say in any decisions made about that trust. I resigned both as a trustee and as a member and have had nothing to do with any governance decisions from the department. The noble Lord shakes his head; I am afraid he is absolutely wrong. I have had no oversight of that trust since I became a government Minister.

My Lords, for those who do not know, I was the founding chairman of the Inspiration Trust, so I am fairly familiar with it. When I took on this post, I agreed with both the ethics committee in the Cabinet Office and with the Department for Education that I would have no say in any decisions made about that trust. I resigned both as a trustee and as a member and have had nothing to do with any governance decisions from the department. The noble Lord shakes his head; I am afraid he is absolutely wrong. I have had no oversight of that trust since I became a government Minister.

My Lords, the first priority is competence. We want good, strong people on these trusts who will challenge the senior leadership teams and also provide support and encouragement. Beyond that, diversity is extremely important, and we are very aware that we need to get more minority groups involved, but my first priority has been to ensure that we have strong people on the board.

My Lords, the first priority is competence. We want good, strong people on these trusts who will challenge the senior leadership teams and also provide support and encouragement. Beyond that, diversity is extremely important, and we are very aware that we need to get more minority groups involved, but my first priority has been to ensure that we have strong people on the board.

My Lords, my noble friend is entirely correct. A few dozen trusts have not performed as well as they should have on governance, but we have that in any large organisation—we now have over 1 million adults in the academies sector, and things go wrong. However, we have seen tremendous progress. We now have over half a million children in schools that were previously failing local authority schools and are now rated good or outstanding by Ofsted. According to last year’s Progress 8 scores, converter academies have outperformed their comparable local authority schools on every category and type of child—white, mixed, Asian, black, Chinese, SEND pupils and those in receipt of SEND support.

My Lords, my noble friend is entirely correct. A few dozen trusts have not performed as well as they should have on governance, but we have that in any large organisation—we now have over 1 million adults in the academies sector, and things go wrong. However, we have seen tremendous progress. We now have over half a million children in schools that were previously failing local authority schools and are now rated good or outstanding by Ofsted. According to last year’s Progress 8 scores, converter academies have outperformed their comparable local authority schools on every category and type of child—white, mixed, Asian, black, Chinese, SEND pupils and those in receipt of SEND support.

To reassure the noble Lord, an academy trust is scrutinised not only by the Department for Education; we are co-regulators with the Charity Commission and, when a person becomes a trustee of a trust, he or she is also a director, as in company legislation. We expect the highest levels of probity, and we act when that does not happen.

To reassure the noble Lord, an academy trust is scrutinised not only by the Department for Education; we are co-regulators with the Charity Commission and, when a person becomes a trustee of a trust, he or she is also a director, as in company legislation. We expect the highest levels of probity, and we act when that does not happen.

The noble Baroness is correct that whistleblowers play an important part in the regulation of the system, but I assure her that that is not the whole story at all. We rely on the external audit reports that we receive from auditors and we issue financial notices to improve wherever we come across wrongdoing. However, I am happy to look into whistleblowing procedures to ensure that we are protecting their interests when they are used.

The noble Baroness is correct that whistleblowers play an important part in the regulation of the system, but I assure her that that is not the whole story at all. We rely on the external audit reports that we receive from auditors and we issue financial notices to improve wherever we come across wrongdoing. However, I am happy to look into whistleblowing procedures to ensure that we are protecting their interests when they are used.

To ask Her Majesty's Government who appoints the auditors for multi-academy trusts; and whether the auditors' report is open to inspection by school governors.

To ask Her Majesty's Government who appoints the auditors for multi-academy trusts; and whether the auditors' report is open to inspection by school governors.