DfE permanent secretary Chris Wormald (pictured above) and the Education Funding Agency’s chief executive officer Peter Lauener and chief financial officer Simon Parkes faced strong criticism over the alleged ‘related party transactions’ at a Public Accounts Select Committee hearing.
Committee chair Margaret Hodge cited examples of academies paying between £12,000 and almost £500,000 for services provided by trustees, family members or friends.
Given that such deals are permissable where the supplier doesn’t make a profit, Wormald said that “the question is: was profit being made out of that related party transaction?” But Hodge replied: “Why not say they cannot do it? There are plenty of builders, accountants and project managers out there – you don’t have to go to family or friends. It’s just wrong.”
Parkes began: “Where they can give evidence of value for money...”, but was cut short by Hodge, who told him: “Nonsense! I just think that’s a nonsense argument.”
Lauener said the agency has developed a predictive reporting tool which is “nearly ready to run”, designed to spot financial irregularities.
Wormald noted: “It is clear that the committee feels very strongly on that point [related party transactions], so we ought to go away and consider the points that you have made.”