The Priory Federation of Academies Trust Response to Findings for the Education Funding Agency

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The Trust Response 1. Introduction a. The Federation has been though a period of rapid and extensive organisational development since it opened in September 2008. The Trustees recognise that it is a highly visible and accountable public body and that the financial management systems that were adopted from the predecessor systems need to be supplemented with more complex systems. b. The External Assurance team stated that the findings of the review have come as a severe shock to the organisation and made the Federation realise that it needs to improve in the area of financial management. c. The shock is, in part, due to the fact that there have been numerous audits of the Federations accounts since 2008, including regular auditing by professional accountants, at significant cost, and by the DfE/YPLA. Indeed in 2011, the DfE confirmed the Federations judgement using the DfE Self Evaluation Audit that the Federations financial management systems were Outstanding. d. The Trust believes that the External Assurance team was supportive of the Federation and appreciated the overall context. Indeed, the EA, in its findings, has acknowledged that the Federation: i. is aware of the need to improve in the area of financial management ii. is aware of the need to consider the wider perceptions of its actions iii. has already put in place a number of actions iv. was very receptive to how it could manage its operations transparently v. has already made improvements in financial management by the time of the second visit. 2. The Trustees intend to work through each of the recommendations and implement them fully. 3. The Trustees point out that the EA considered the Federation team to be open and willing to make any necessary changes immediately. They further suggest that the team would have been equally willing to make these changes if they had been pointed out during any of the many visits undertaken previously, which would have avoided the current situation.

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4. This main report is structured in the following way: a. Overview b. Comment from Trustees and the Senior Team c. Recommendations 5. The Annexes include: a. Report on The Priory Developments b. Letter to Look North c. Comment on the Findings d. Procurement annex. 6. Clearly, the original findings, and this response, have been written in confidence as informal and internal documents and it is hoped that the Department finds a way of both completing its work and then enabling the Trustees, senior teams, and the 800+ staff to both implement the changes needed and to focus on the 4500 students in the Federation's care. We ask, therefore, for support from the Department over the release of their final recommendations.

a. Overview
1. 2. 3. 4. 5. 6. The Trust accepts the findings of the YPLA Report. The Trust has taken appropriate legal advice. The Trust accepted the resignation of the CEO. The Trust is reviewing the Compromise Agreement with the former FD. The Trust is reviewing its Financial Management systems. The Trust is reviewing and introducing policies that will ensure that all members of the Trust are complying with its Financial Management systems. 7. The Trusts new Finance Team has the capacity to introduce these changes. 8. The Trust believes that it has the confidence of the EFA to implement the changes; and requests a DFE appointee to the Trust to provide further support and guidance. 9. The Trust is pleased to note the EAs findings that the Federation has been receptive to advice on how it could manage its operations 10. The Trust genuinely believes that, if it had been alerted to the weaknesses of the financial routines during one of the previous audits or the compliance visits undertaken by the Department and External Auditors, the changes would already have been made and the Trust would not be in its current position.

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b. Comment from the Trustees and Senior Team

1. The Academies Programme and the Local Authority a. The Trustees are fully supportive of the academies programme, which looks to the creation of wider learning communities that are supportive of each other in order to improve the life chances of students. The Trustees were inspired by this particular project because it had support at local and national level and was sponsored by a combination of the Local Authority and local stakeholders. b. Contrary to many general misconceptions, The Priory Federation works closely with the LA: the LA is a Sponsor; it was involved in a recent Pathfinder project to help reduce the number of exclusions (signing up to a zero permanent exclusions policy); it has worked to develop DSUs in the new builds at Witham and Lincoln; the Primary build at Witham was funded by the LA and it works closely with the Federation on issues of Early Years. c. The LA was appointed the procurer for all of the new developments: the new builds at Lincoln Academy and Witham Academy, the Boarding House and Sports Centre at Priory LSST and the new build at Ruskin. d. The LA requested The Priory LSST to make a bid to the Faraday Project. It had approached other schools in Lincolnshire but they did not want to make a bid The Priory was the last to be approached. The bid was successful - it was for a seven room science suite including a planetarium, a debating/teaching room, four labs and a research base. e. A number of the predecessor schools that the LA asked the Federation to consider sponsoring were experiencing significant financial difficulties. 2. Mr Gillilands Philosophy a. The Trustees were fully aware that the aim of this particular development was to use the model created by Mr Gilliland in his work at The Priory LSST and transfer those elements to the wider communities of learning. Alongside an emphasis on targeted learning in the classroom, a major, and very publicly stated, element of this philosophy was the creation of a sense of belonging. This was achieved by a focus on developing a unique learning environment, thereby creating a sense of ownership. The environment at The Priory LSST was the model. During Mr Gillilands outstanding (Ofsted) leadership of The Priory LSST there was an emphasis on creating an inspirational learning Page 4 of 67 22-Apr-12

environment that required an appropriate and significant investment in artwork, sculptures, gardens, a chapel, a rifle range, a swimming pool and a residential centre (the list is not exhaustive). The residential centre was clearly a forerunner of the offsite provision later introduced in the Federation in the form of the French Curriculum Centre and Laughton Manor Alternative Provision Centre. The DfE expected Mr Gilliland to export the brand. b. Mr Gilliland would be the first to point out that this investment, which was undertaken on a large scale, could have been spent on other things at the school. He was always mindful of best practice guidelines on the proportion of the revenue budget to be spent on staffing. c. There are many different views on how to raise standards in education and Mr Gilliland had a particular view. 3. Mr Gillilands Philosophy in a different setting a. When Mr Gilliland was asked by the LA in 2006 to take on Joseph Ruston Technology College, before the Academies programme was initiated, the first changes made to this failing school were environmental and staffing levels. Appropriate and significant investment in artwork, sculptures (a large water feature was soon to be seen at the front of the school), the dining area, gardens and classrooms was undertaken. One student was heard saying this is too good for us. This approach was part of the reason why attitudes to learning in the school changed so rapidly. Again, this investment could have been spent in other ways; but the judgement call was to create a high quality environment. b. Similarly, Mr Gillilands philosophy used other ways to create a sense of belonging amongst students and staff. Some of these are quirky as part of their initiation, everyone is asked to walk the labyrinth at The Priory on their first day. Trustees and staff participate in training events that sometimes involve up-dates over an evening meal. Sixth Formers are invited to a Welcome Evening that creates a sense of belonging. Gifts are presented to guest speakers and, as part of a duty of care, to staff who have had bereavements, illness, a baby or a wedding. 4. Mr Gillilands Invitation to lead the Federation a. The Trustees expected these investment patterns and traditions to be carried through to the academies project because they were at the heart of Mr Gillilands philosophy and Mr Gilliland had been asked personally by the DfE if he would accept the Federation project. The DfE selected Mr Gilliland in the full knowledge that Page 5 of 67 22-Apr-12

his charismatic and forceful leadership style would be used to bring about the changes in other schools that he had made at The Priory. Representatives from the DfE met with Mr Gilliland on a number of occasions, were given tours of the school and a full insight into his philosophy and leadership style. It is a style that has not made him universally popular and has created friction in the Lincoln area; but Mr Gilliland was asked to give a five-year commitment to the Federation project. b. Being such a high profile policy, Mr Gilliland has been required to explain the academy system on numerous occasions, most notably to the BBC. The BBC has made detailed FOI requests on a number of occasions as well as requests for interviews and filming access. The Trust has devoted a significant period of time to this as well as to responding to Look North requests for further information. A selection of the information that has been provided is contained in the Annexes to this report in order to provide evidence that the Trust has attempted to cooperate fully with the press. A reporter on a local paper was invited to join the first trip to the French Centre this offer was declined. c. Consequently, Mr Gilliland introduced, as expected by the DfE, his philosophy and leadership style into the academies project. Although the Local Authority procured all of the capital projects and, therefore, they handled all money for the new builds, Mr Gillilands vision for the builds was strongly in evidence. Indeed, it is possible to walk around all of the academies and get a sense of identity. Once again, creating a unique learning environment is at the heart of these developments and this has been achieved successfully. Money could have been spent on a different design concept; but in inviting Mr Gilliland to oversee the project, the DfE was well aware of his priorities and were very supportive of them. d. Many observers have asked why the money could not have been spread evenly amongst all the schools in the country, and clearly this is a valid point; but it was not government policy at the time. e. The Trustees are, therefore, content that there was a general awareness of Mr Gillilands philosophy and style. 5. Additional Projects a. The Trustees are also satisfied that the additional projects within this programme: the French Centre and the Laughton Manor Alternative Curriculum Centre were consistent with the overarching goals of the learning community and were purchased appropriately. Both centres have experienced high levels of investment to create environments that are inspirational.

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b. Mr Gilliland has often been accused of being lavish in his designs for new builds and existing spaces; the Trust would defend such designs because the quality achieved means that they will last. The Trust is also content that this detailed approach to quality, when extended to staff accommodation, was undertaken not to gain advantage personally but to set standards that were in keeping with other areas of development. 6. The Nature of the Accelerated Programme a. The Trustees were also appreciative of the very short timescales involved and the enormous amount of work required. The Priory Federation (as well as the additional Ruskin Academy) was part of an accelerated programme despite being a very complex structure: seven predecessor sites, a new all-through academy that merged three schools and three phases initially on three sites, a merger of two schools into one academy (still not on one site). A number of these predecessor schools were underperforming educationally and were operating deficit budgets with very high staffing levels. Predecessor schools were a mixture of governance structures (Community, Maintained, VA). Each academy was to have three Ofsted inspections in two years, the final inspection being a Section 5. There was enormous pressure to make the project work in a short period of time. b. The Trustees would like it noted that despite the scale of the project, with over 800 staff involved, with serious overstaffing in a number of areas, with Union antipathy to the project nationally, and a declining economic climate, the Federation managed to transfer staff to the Federation without union action and without compulsory redundancy. They would also like it noted that there is still a considerable amount of restructuring required and this is being taken at the risk of the Federation and not the LA, which would have been required to deal with the problems if the schools had remained with the LA. The Trust would like it to be acknowledged that the LA was very supportive throughout the process of transfer. 7. From vision to reality a. Part of Mr Gillilands role was to ensure that the vision for the environment was achieved. In effect, this involved creating from nothing a sense of identity for the Academies, the French Centre and Laughton Manor, that was comparable to The Priory LSST. This required a rapid and vast amount of investment in art, sculptures, furniture, books, landscaping and a range of other items that gave the buildings their character.

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8. Trustee concerns: financial systems a. As stated in the introduction, from the Trustees perspective, financial systems appeared to be working satisfactorily. From the internal financial reports produced by the original FD, there were no causes for concern and there were regular audits from external accountants that gave further confidence. Indeed, the DfE/YPLAs own teams had worked with the Federations finance team and their reports have provided further comfort, to the point that in 2011 the Federations judgement of its financial systems as Outstanding was confirmed by the DfE. 9. Trustee concerns: poor financial record keeping a. As also stated in the introduction to this report, the findings of the investigation team have, therefore, come as a shock. It appears that a number of the transactions involved in this rapid investment programme were made in a way that was not consistent with the systems as laid out in the Finance Manual. It appears that despite appearances that all was working well, Mr Gilliland and the FD were not following the systems that would have offered them greater protection when making so many transactions. Mr Gilliland has explained that for best value it is often necessary to buy art and furniture from craft markets where it is difficult to get receipts. Systems, involving the photographing of these items, were put in place but on reflection it would have been better if the purchases been properly referenced and reported to the Trustees on acquisition. Of greater concern is that one set of invoices linked to Mr Gilliland has been changed and another set were for nonFederation activities. The Trust is satisfied that this issue has been addressed and monies have been repaid. 10. Trustee concerns: specific invoices a. The Trustees are confused, upset and angered that Mr Gilliland has put his reputation as one of the leading educationalists in the county at risk with the way that he has made personal claims to the Federation. They are heartened by his cooperation in repaying monies (in the region of 12,000); understand fully, and regretfully, that his position is untenable; and have taken legal advice on an appropriate course of action. 11. Trustee concerns: the skills of the original FD a. The Trustees accept that the original FD was not able to take the Federation forward and that the changes were made belatedly. They, along with the EFA, have every confidence that the new FD does have the ability to do so.

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12. Trustee concerns: the employment of family members a. The Trustees understand that the employment of members of Mr Gillilands family was a continuation of a practice in place at that time. The Trust agreed that family members should not be discriminated against and it was against this backdrop that their employment was taken up. b. The Trustees agree that the desire to appoint Kia Richardson (the son of the CEO) represents a serious error of judgement on behalf of Mr Gilliland, having provided fallacious information to the Trustees. 13. Trustees: conclusion a. The Trust accepted the findings of the EFA in its meeting on 11th April 2012 and is already working to put into place systems that will prevent the Trust being put in this position ever again. It feels let down by the CEO and the previous FD and has taken steps to ensure that they have not gained advantage or benefit from their actions. b. It has worked closely with the EFA and wants the opportunity to focus on the significant demands of running a complex organisation that faces challenging circumstances. c. The Trustees welcome the support of the DfE in providing an additional Trust member and in helping to reduce the pressure on the Trustees and the staff and students who are the innocent bystanders in this affair. d. The Trust is grateful to the senior team and all staff for its work during this time. It appreciates that the Federation has been under considerable pressure and enormous scrutiny for an extended period of time and hopes that this prompt and thorough response, that acknowledges the weaknesses in the previous management style and expresses a genuine commitment to achieving the highest possible standards of financial management (and is clearly already on the way to this) will enable the Federation to continue to develop. e. The Trust is concerned about the press pressure on the publication of the initial report and the Trusts response. It recognises that the rumours in the local area of a cover up are damaging; but also states that this response has been genuinely contrite, detailed and honest it was written as a report for one specific audience: the DfE.

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f. The Trust recognises that the EA investigation has found serious weaknesses in adhering to the guidelines in the Finance Manual. This can be (and is being) put right very quickly and the most serious concerns are made very specifically about the actions of a two of individuals who are no longer working for the organisation and have paid the price of their actions both financially and personally. Response from the Senior Team (I Jones, D McRae, A Madge, C Shepherd, P Ryland, R Reeve, A Turner, J Willey) 1. Support for the Philosophy a. The senior team has always been supportive of Mr Gillilands philosophy. b. Much has been made of Mr Gillilands charismatic and forceful leadership style, which meant that the decision making process, on important issues of strategy, was often very rapid and potentially without a full appreciation of the long term financial issues. This was exacerbated by the accelerated nature of the programme, the change in government and the political nature of the policy. c. The decision to purchase the French Centre was made before the Academies were opened; the decision to purchase LM was clearly one that Mr Gilliland expected to be made as part of his overall strategy for off-site provision. The successful bid for the boarding house was made prior to the Federation. The plans for the new sports centre were part of the development at The Priory LSST agreed by the DfE as part of achieving Academy status. The planetarium was a result of a successful bid to the Faraday Project that the LA had asked The Priory LSST (the predecessor school) to bid for because no other school in Lincolnshire had expressed an interest to do so. The Alternative Provision Centre was originally the Nexus Centre based at Joseph Ruston, it was then transferred to the City School buildings when the Academy build project started at Witham and then transferred to LM when the Academy build started at the Lincoln Academy. d. The FD provided the cash flow and budget projections for these projects.

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c. Recommendations:
1. Mr Gilliland a. The Trust has accepted Mr Gillilands resignation with immediate effect, without a compromise agreement or any additional or compensatory payments of any kind. b. Mr Gilliland has made repayments to the Federation for items purchased by the Federation that were raised as concerns by the EA team. These were equestrian courses and associated accommodation for his son as well as personal items that were sent to him inappropriately at his work address. Repayments of 8,396 have been made with a further 2,862 invoiced for repayment. c. The Trusts legal advisors recommend against a legal redress as a criminal prosecution in these circumstances is unlikely and a civil case would be disproportionate to the monetary value of the case (see c.1.b above) d. With Mr Gillilands immediate resignation, his loss of earnings and diminished chances of future potential employment in Education, the recovery of all claims against him, the high costs of litigation both in terms of finance and reputation it is the Trusts recommendation not to seek further legal redress. 2. Mr Davies a. The delay in appointing an appropriately qualified and experienced FD, once concerns about the incumbent had been raised, was a serious failing and has led to weaknesses in the financial management. b. The recommendation is that the Federations FD and the Federations Accountant must have appropriate skills, qualifications and experiences. c. The Trust is confident that staff recently appointed to these posts possess the necessary attributes; but in order to future proof these important posts a clear Job Description and Person Specification are to be constructed and agreed with the EFA, and can be reassessed annually along with other senior posts. d. The Trust is taking legal advice to review the Compromise Agreement with the previous FD and has currently stopped the payment in the interim.

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e. Requests for any new Compromise Agreements are to be made directly to a Full Trust Meeting after comprehensive legal advice has been taken and recorded. 3. Governance a. A full review of the governance structures will be undertaken using industry led Systems Analysis. The Trust has charged itself with achieving highly effective systems that should be in place for the successful governance of a chain of academies. This will include considering setting up an Audit Committee, which would operate at arms length from and inform the Executive Committee to ensure appropriate checks and balances at the highest level. b. Co-opt Trustees, where possible, with the following experience: e.g. Accounting and Legal - it is recognised that these Trustees cannot be used for official advice and must not circumvent the normal professional relationships that a Trust would reasonably develop. c. The Trust would like to request a DfE representative Trustee. d. Until a new structure is introduced, any changes to an existing policy (or the introduction of a new policy) must be presented in draft form at a Trusts Executive meeting and then sent to the Full Trust in advance of a meeting in order that it can be included as an agenda item at the meeting. e. We would expect that all policies be implemented for a September 2012 start. 4. Use of Credit Cards a. The Federation will have one credit card and the Academies will have one card each. They will all be held by the Finance Director. No other cards will be issued, and cards currently in use will be withdrawn. b. The use of cash advances being obtained from credit cards has been stopped with immediate effect. Any member of staff who makes cash advances, for any reason, will be subject to a disciplinary action. c. A new request form is available for any member of staff who wants the FD to use the Credit Card on their behalf. This form requires a thorough audit trail. Guidance on what is acceptable to purchase on a credit card is given as advice on the new form.

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d. The FD will countersign the Credit Card statement to ensure that everything is correct and properly supported and documented. 5. Employment of family members a. The Trust accepts the main premise of the Trustee Report on the employment of staff, which focused on the difficulties of recruiting to the Lincolnshire area. The Trust concurs that under these conditions it is often necessary to recruit without advertising the post formally as is the case in many schools. b. The Trust also accepts the YPLAs view that there are public perception issues when close family members of either the Federations senior staff or Trustees are employed and that the employment of Mr Gillilands close family members has caused considerable ill feeling amongst staff and other stakeholders. c. In future, therefore, if a close family member of either the senior staff or the Trustees is applying for a post in the Federation: i. the post must be clearly identified in the Federations staffing structure and an appropriate pay grade identified ii. the post must be advertised beyond the Federation iii. all applicants must complete the section in the Application Form: Do you have any family connection with any member of staff within the Federation or a Trustee of the Federation? If so, please explain. iv. there must be a shortlist (ideally of at least three) candidates called to interview v. the Trust is considering adding an additional stage to the recruitment process if family members of either the senior staff or Trustees are applicants. The Trust is concerned that adding an additional stage may be against best policy but would like it discussed at a Trustee meeting. Alternatively - there must be a very robust policy that fits any situation. The suggestion is as below: there must be a HR expert, independent of the Federation, on the interview panel who must be able to report to the Trust formally at the end of the process that the selection procedures were completed properly and if any impropriety were detected then the interview process would be declared invalid. d. This process will be written into a recruitment policy in a way that recognises the issues but does not discriminate against family members. The Trustees will agree on a definition of close family member and senior staff after taking legal advice.

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6. Trustee/Federation staff expenses a. There was some confusion over expenses due to the format of the original expenses claim form that included travel, subsistence and purchases. This inflated accidentally and significantly the disclosures made in the audited accounts relating to expenses claimed by Trustees and the CEO. This form has now been redesigned into a Travel and Expense form and a Purchase form. b. On too many occasions, expense claims were not completed properly. The CEO has explained that this was, in part, due to the number of pieces of art and furniture purchased for cash at craft markets. The Trustees are satisfied that this practice was stopped immediately when raised as a concern by the EA team. c. No expenses claims will be paid on the new forms unless they are completed in their entirety and have full sets of receipts attached to them. Partially completed forms will not receive payment. d. The Federation finance team will check all claims to ensure that there are no duplicate claims and the external auditors will sign off these checks. e. Credit Card checks are also to be signed off by the external auditors as part of their annual audit. f. Any claims made by the CEO or the FD are to be approved formally and recorded in the minutes by the Trust Executive committee. 7. Petty Cash a. Petty cash systems are now in place to ensure that cash advances are only obtainable from petty cash and that receipts are required for all purchases. 8. Purchasing, Control and Safeguarding of Art Assets a. A separate Art Assets inventory is being developed for the Art held on each of the sites. The Art Assets inventory will incorporate a photograph of the artwork/asset together with details of the year of acquisition, location, original cost (if known), date of disposal and disposal proceeds. The inventory will also allow for physical verification of the assets to be confirmed on an ad-hoc basis. 9. Use of the French Centre by Trustees/Federation Staff a. After investigating alternatives, the Trust has evidence that the use of its own staff and Trustees is the most cost effective way of caretaking the French Centre in the absence of the French Centre staff. Page 14 of 67 22-Apr-12

b. It understands, however, that there is a public perception issue if family members accompany staff and Trustees and that this public perception issue is of greater significance than the actual caretaking issue. c. The Trust will, therefore, issue a new policy relating to the caretaking of the French Centre that incorporates the use of alternative solutions to Trustee/Federation staff. d. The Trust will identify clearly the Caretaking duties required. 10. Procurement a. All Federation staff that have responsibility for procurement will undertake appropriate training on the latest procurement directives. b. This training will be undertaken annually, be delivered by experts in the field and attendance and feedback recorded at a Full Trust meeting. c. A full audit trail of all appropriate documentation relating to a procurement decision is to be kept by the Federation for six years. d. All procurement protocols will be in accordance with EU conformance. e. All projects in the future will be given meaningful timescales and will not be part of an accelerated programme that reduces the flexibilities for project managers.

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Annexe a: The Development of The Priory Federation of Academies: a document on the Federation website to explain the context of the funding issues

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The Development of the Priory Federation of Academies The Lincoln School of Science and Technology (LSST), subsequently The Priory LSST, was founded in 1992. At that time the intention was to create the sixteenth City Technology College (CTC) in Lincoln. The business community of Lincoln, which was sponsoring the initiative, became increasingly concerned about the difficulties existing CTC's were experiencing with their local communities, and in particular local schools. Consequently, instead of a CTC a "partnership" school was created. The school was a joint venture between the business community (Lincoln Business and Enterprise Trust) and the Local Authority. The specific remit was to provide a specialist school (Science and Technology) for Lincoln and the surrounding area, in other words, it was not intended as a replacement for the mixed comprehensive which had existed some years before on the site. The admissions policy reflects this aspiration. The vast majority of children come from the nominated 48 partner schools identified in the admissions policy. This "specialist" approach was the forerunner of the specialist schools programme which then developed throughout the UK, until now most secondary schools have at least one specialism. The site chosen for LSST had previously been a Girls' Grammar School which had become a mixed comprehensive and then closed due to falling rolls. The new school opened in 1992 with 136 pupils in Year 7 (11 year olds). The student population built up year by year, with the first sixth form joining the school in 1997. When LSST opted out as did the majority of Lincolns Secondary Schools, the ownership of the site then fell to the Governors, as with all GM schools. As part of the initial plan for LSST the LEA had committed itself to providing funding to provide facilities for the sixth form when it reached that stage of its development (September 1997). With the change to GM status that funding now had to come directly from the FAS (Funding Agency for School). In parallel with these developments British Gas decided to sell its administrative centre immediately adjacent to the existing site. The Governors asked the FAS to consider purchasing this centre instead of building on the existing site. The FAS concluded that the asking price (550,000) represented exceptionally good value for money and provided the funds to buy the centre with the costs of refurbishment being met from the remainder of the 720,000 allocated to the build. As the school continued to grow due to huge demand, reaching its current level of +1750, of which +450 are in the sixth form, the Governors continued to develop buildings from within the school's own resources. No money was provided by the LEA or Central Government for any of the new builds that took place from 1997 to 2008. These included a Sports Pavilion, for which the LEA did provide a loan (at interest, which has now been totally repaid), a swimming pool (training only not full size), a Chapel, an RE block, a History block, a Geography block and a Music block. Throughout these years the Governors consistently asked the LEA for help in meeting the schools building needs but help was not available as the LEA believed that it had higher priorities elsewhere in the County. At one point, the then Director of Education visited the school to meet Governors and examine the facilities for herself. She concurred with the Governors that not only was the school short of accommodation but that significant areas were "not fit for purpose". The purchase of the Gas Board site, while providing valuable space, had not provided fit for purpose accommodation". In particular the school desperately needed science facilities as even prep rooms were being utilised for teaching "A" level groups.

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The Faraday Project (Newton Centre) In 2006 an LEA adviser rang the school to ascertain whether we would be interested in putting in a bid for a Faraday Project". This was a national initiative in which the Government nominated a certain number of LAs who, in turn, could put forward one school from the County to take part in a competitive process for a matched funding project. The successful bidders would provide half of the total cost of the project themselves. The aim of the programme was to provide capital funding for innovative and stimulating projects aimed at raising the profile of science in the school and area. No revenue funding was, or would be, available on completion of the project. The adviser telephoned on a Thursday afternoon to ascertain our interest. He was very honest and told us we were being asked as no other LEA community School or Science Specialist School was interested in bidding. We were also given the news that if we did wish to bid we had to prepare an outline bid by noon the following day. If the school was then approved as the County's nominee we had to be prepared to give a full presentation on a competitive basis in London three days later. Despite the time frame we put together a bid that was both innovative and exciting. It caught the imagination of the DFE and we were successful. The result is the Newton Centre which opened last month. Already it is proving its worth and both our own students and pupils from other schools that have visited have been excited and enthused by the facility. As well as providing much needed state of the art labs, the Newton Centre includes a debating chamber and an immersive theatre (planetarium). The Priory Academy LSST is currently one of two "Space Hub Schools" that work closely with the National Space Centre in Leicester. When the school was successful in its Faraday bid we were then subsequently successful in proposing to the National Space Centre that we became closely linked to them. The Space Centre staff believe that the project will prove of incalculable value in stimulating interest in science in general and physics and astrophysics in particular. The matched funding element of the cost came from the school's own budget. The Faraday project is not part of the Academies programme at all, it was a totally separate initiative, not related to schools that were or about to become Academies. All of the building programmes up to 2008 when The Priory LSST became an Academy were funded from within its own budget. We were able to do this by being particularly vigilant in the management of our funds. Our staffing levels have always reflected excellent value for money and the percentage of budget used on staffing at LSST was consistently around or below 80%, the level recommended by the Audit Commission. We have always sought to appoint the best possible staff, who demonstrate both high levels of skill and personal commitment. This has resulted in very low levels of absenteeism and turnover which, in its turn, has saved money and contributed to our financial stability. As an organisation, we have always made value for money a high priority, and this has proved to be the basis of our ability to undertake self funded development programmes. Contrary to misconceptions in some quarters, The Priory LSST and now The Priory Federation of Academies has never received more funding than other schools. Indeed any analysis of LEA records show that The Priory LSST was always one of the lowest funded schools on a per capita basis in the County. On occasion it has been the lowest funded school on the LEA's funding ladder. We have been very successful in keeping maintenance costs low. We spend virtually nothing on repairs or replacement of equipment due to vandalism or general damage caused through carelessness. We spend absolutely minimal amounts on things such as broken windows or replacing broken furniture. The life span of equipment is well

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above national averages. The savings are not accidental instead they are a result of a carefully thought out policy that we call The Priory Way.

The Priory Way We believe that the extremely low levels of damage, low levels of absenteeism etc are the result of the ethos which we have created, initially at The Priory LSST and subsequently in our other Academies. From 1997 onwards, the Governors embarked on a programme to enhance and enrich the physical environment of the school. We were, and are still, convinced that the right physical environment creates the learning climate that enables young people and staff to achieve their full potential. Consequently our design decisions have been made deliberately to bring out the best in our pupils, for example, over the years we have created a garden for every year group. The idea is that if a pupil/student wishes to stay with their own year group at lunchtimes, breaks, before and after school they can go to their own garden. Only pupils from that year group are allowed in. If students want to meet friends from other year groups they go to areas we call quads. If they wish to play they go to the playgrounds. Much of what we do is aimed at making the pupils feel included and treated as human being. Therefore, for example, we do not have bells, we do not have rules barring our students and pupils from the buildings at breaks or lunch times, so if they wish to be inside rather than outside they can do so. Our philosophy is that the pupils and students are part of The Priory. We want them to feel, and be, part of the school, we want them to feel, and know, they are valued. Most of all we want them to feel and be personally responsible for themselves and to each other as part of The Priory. Consequently our students and pupils value their school and its environment and take pride in it. Furthermore, we have enhanced the gardens by a sculpture programme, mainly through Loughborough University, but also using Fair Trade opportunities and local artists. We also consciously celebrate our own students' achievements, particularly in Art. All of the paintings around the school are students work. Following a recent Ofsted inspection the HMI (Her Majestys Inspector) returned specifically to look at the Art and the Arts in The Priory and concluded that they had never come across a school where Art and the Arts were so fully integrated into the life of the school. We also believe in the value of ceremony and ritual in creating a sense of belonging. Following requests from students themselves for a "quiet space" we built a Chapel, which is literally and figuratively at the heart of the school. Outside we have a copy of the labyrinth in Chartres Cathedral. All of our new students "walk the labyrinth" on their first day before going in to the Chapel to sign "The Priory Book" to become a Priory student. This is repeated on their very last day in the school and then they "sign out". (The story from the Medieval period is that if you were unable to go on a pilgrimage to renew yourself you could walk a labyrinth instead). Visitors to the school are often invited to walk the labyrinth (261 metres). We have similar rituals in all our academies. At the City of Lincoln it involves going to the Urn to sign the book, at Witham going through the Arch and at Ruskin it is leaving your aspirations at the Tree. As part of our drive to create our own special ethos we acquired an outward bound style centre in Yorkshire. All Year Seven pupils went there in their first term for a programme of activities. Other groups from all year groups went for subject specific trips. The centre proved to be a powerful tool in helping pupils who came from over 50 different primary schools to bond and settle into "The Priory Way". This facility had to be sold due to the fact that we were unable to develop it in the way we had hoped. Nonetheless pupils, students, parents, staff and Governors all regretted its loss and

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its replacement became a high priority for the school and indeed this is the basis for the decision to purchase the Centre des Etoiles which is explained in more detail further on. Expanding Influence In August 2006, The Priory LSST was named as the highest achieving non-selective school in England. By this time the school was hugely popular with parents and heavily oversubscribed and had been judged "outstanding" in every Ofsted inspection. This was all achieved without any additional funding or support other than that available to any school. It is, perhaps, the greatest testament to the effectiveness of The Priory Way. In February 2006, an official from the DFE approached the Headmaster to enquire whether he would be willing to take on the role of Executive Headmaster of another local school, The Joseph Ruston Technology College (JRTC). The DFE and the LEA believed the school needed support, and indeed the results in August 2006 only 17% gained 5+A-C. They determined that if the school did not achieve a minimum of 30% achieving 5+ A-C grades in 2007 then the school would have to close. The Headmaster indicated to the Chair of Governors that he would be willing to take on the challenge if The Priory Governors were minded to fully support the venture. Discussions with the Board were lengthy and in depth. Some Governors not unnaturally were concerned about the close links being proposed which included a loose federation and the sharing of senior staff and Governors. No incentives whatever were offered to The Priory LSST to take on the challenge which, given the available data, was daunting in the extreme. Nonetheless, the Governors concluded that we did have something to offer and that we did have the capacity to both support a school in challenging circumstances and maintain our LSST success rate. Moreover, and this was the deciding factor, the Governors believed we had a duty to help if we could and by taking on the challenge we would show that we really did believe that "Every Child Matters". Having agreed to take on the challenge, Senior Staff began working with the Governors of JRTC, LEA and DFE on a strategy for the immediate future. The Headmaster of The Priory was appointed Executive Headmaster of the loose federation on May 10th 2006 with a remit to take over in September 2006. In 2007 the school achieved 74%, in 2008 99%, in 2009 100% and in 2010 100% (not including English and Maths). In those years the confidence The Priory Governors had that standards could be maintained at the Priory LSST proved well founded. The Executive Headmaster was asked to prepare a report with recommendations for the medium and long term future of JRTC. He concluded that the school was not viable in its present format but that it was an essential element of the community. He recommended therefore, that the LEA should consider applying for the school to be linked to the nearby Infant and Junior Schools (Moorland and Usher) with a view to the three schools becoming an all through Academy.

The Development of the Academy programme. At this time, JRTC was second on the LEA's priority list for a complete demolition and rebuild. This fact, coupled with the Headmaster's recommendation, persuaded the LEA to investigate the possibility of Academy status. In parallel with this decision, two further developments occurred. Firstly, Lord Adonis, the School's Minister, visited

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Lincolnshire, including The Priory LSST. During the visit the possibility of The Priory becoming a "lead" Academy in a "Hard Federation" with the proposed new Academy was mooted. Secondly, one of the Deputy Headmasters of The Priory LSST had been recently appointed Headmaster of another local school, The City of Lincoln Community College (City School). Links had grown between the two schools including linking timetables so that students from City School could access courses at the much larger sixth form at The Priory LSST (e.g. Law, Archaeology, Psychology, Computer courses etc). At this time, City School was number one on the LEA's priority list for complete rebuild. These factors combined to persuade the Governors of The City of Lincoln to actively seek federation with The Priory. They approached The Priory to ask if it could be included in the bid currently being produced on behalf of The Priory LSST and JRTC. The Governors of City School believed that given The Priory's track record of working with other schools, this solution was their preferred option. Following further debate between all concerned including the LEA the decision was taken to amend the prepared initial expression of interest to include The City of Lincoln. This expression of interest was accepted by the DFE and we proceeded to the formal consultation stage based on a Hard Federation of three Academies to be named The Priory Academy LSST, The Priory Witham Academy and the Priory City of Lincoln Academy. These three Academies were made up of the former Priory LSST, Moorland Infant School, Usher Junior School and JRTC and the City of Lincoln Community College. The proposal contained in the Expression of Interest documents was fully consulted upon and the results of the consultation were very positively in favour of developing the Federation and the new Academies. The DFE accepted the bids and allocated 26.29 million for the complete re-build of the City of Lincoln Community College, for the build of the new Witham Academy 24,366,000 with the LEA providing the primary element, the assumption being that this money would be recouped from the sale of the junior and infant school sites, and 6.33 million to bring The Priory LSST up to Academy standards. At this point (August 2011), the building of The Witham Academy has been completed for a September opening and within budget. The first phase of The Lincoln Academy build has been completed on time and within budget and the second phase is due to be completed on time and in budget by September 2012. The current work on the Priory Academy LSST Sports Hall and Dining Facilities is on schedule to be completed on time and within budget for this September.

Boarding Totally separate from the developments funded as part of the Academies programme, The Priory Academy LSST submitted a bid for a grant to develop a Boarding facility. The Priory Academy LSST and two other Academies were successful in gaining funding (Harefield Academy and Wellington Academy). Other state boarding schools benefited from extensive capital funding at this time, for renovation of existing facilities. The Priory's bid emphasised a number of features that are specific to the school and to Lincolnshire. 1. The Priory Academy LSST is less than five miles from RAF Waddington, the largest operational base in England. A number of service personnel, as well as current parents expressed concern that although the RAF was usually willing to keep staff posted at Waddington until the end of their child's

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compulsory schooling they were not able to do this for those who wanted to continue into the sixth form. Many of our students do desperately want to remain at The Priory for their sixth form and the option of staying as boarders was one which they welcomed. Indications from the station are that one of the reasons often quoted for the popularity of Waddington as a posting of choice is the desire to secure a place at The Priory although there is no guarantee of a place. We have built strong links with the services and indeed The Priory has its own Combined Cadet Force (CCF) as now do all our Academies. 2. Lincolnshire is a rural county and the large number of small costly sixth forms means that many students cannot access the full range of courses they want or need. In particular, The Priory is unique in Lincolnshire in being a full CISCO Academy and as such these highly technical courses are only available here. A further factor in our thinking was the need to provide for some looked after children who often find it difficult to progress into sixth forms, the boarding option gives greater opportunity for those children. The boarding house will open in September 2012. As DFE rules stipulate that charges can only be made for boarding at cost (no profit is permitted) and tuition is free, we believe the fees of approximately 10,000 per year represents excellent value for money and is below average for state boarding as well as independent schools. Centre des Etoiles As referred to earlier, the Governors, staff, pupils and parents of The Priory LSST had always regretted the loss of its centre in Yorkshire and we were increasingly concerned about the rising costs of foreign travel for students which we considered to be an essential part of a pupil's school experience. The Academies programme gave us the opportunity not only to get back a prized facility, but also to expand its scope to include the most cost effective way of offering the chance to experience foreign travel to every Year Seven child, as well as provide cost effective subject specific trips. The Centre des Etoiles was purchased at a cost of 496,382 and part funded by the sale of the previous centre and this represented truly exceptional value for money. The Year Seven trip is essentially about French life and culture as well as helping pupils who come from so many different schools, and hence backgrounds, to bond, develop a sense of belonging and learn about life in The Priory Federation. The feedback from students and staff is universally positive and comments such as "This has been the best week of my life", or "this trip has really changed my life" are not uncommon. We have no doubt that these kinds of activities have great value in helping our students make the most of their time with us. It is a very practical way of helping young people understand the world around them, learn to mix and work with others, including pupils not from their own country. The centre is used every single week of the school year excluding two weeks in January which cannot be used due to weather. In the school holidays it is often used for Cadet trips, Sports courses, University preparation courses or intervention courses for GCSE Maths and English. The University preparation courses are in our view particularly important. One course is aimed at potential first generation university students, and another is aimed at widening access to Oxbridge. On the few weeks when it is not being used directly for students we utilise it for staff training purposes. All Federation staff must do the ECDL (European Computer Driving Licence) in the first two years, and a basic first aid course in the first year. Using the centre for those staff who prefer an intensive residential programme cuts our costs and minimises disruption to children and staff

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alike. Since it opened in September 2009 nearly 2000 students and pupils have visited, not only providing students with invaluable opportunities but ensuring the financial viability of the facility. Laughton and the Nexus Centre When we became a Federation in 2008 we entered into an agreement with the LEA to adopt a non permanent exclusion policy. This meant that not only did we commit ourselves not to permanently exclude any child, we committed ourselves to addressing those issues that had led to the possibility of a young person being thrown out of school. We agreed not to access any of the LEA's EBSS provision (Education Behaviour Support Service) in return for a pump priming grant for three years of 120,000 per year. When it is remembered that each excluded child can cost more than 200 per day to manage and a great deal more if outside County support is required, it can be seen that once again our approach working with the LEA was extremely cost effective and directly benefited other schools in the area by freeing up provision that otherwise would have been utilised by schools in the Federation. With the pilot funding we set up and staffed the Nexus Centre. This was an "alternative curriculum" approach aimed at providing a different approach to teaching, allied to a work related programme planned with LAGAT (a local training organisation). This general approach proved to be very successful in meeting the needs of some students. Unfortunately, the building used as the base, and the subsequent one used, both had to be demolished as part of the Academies new build projects. The Trust investigated a number of options to replace the Nexus Centre and with the addition of The Ruskin Academy to the Federation in 2010 (as more fully discussed below) we took the opportunity to re-assess what we needed. We had become convinced that the alternative curriculum, including very specific vocational courses, was actually a much more relevant path for a significant number of students. We acquired the Laughton Centre as our alternative curriculum base for a cost of 1,700,000 and have begun work on an additional teaching block. From September onwards when the Centre will be fully operational, in addition to providing vocational courses related to the equestrian industry such as yard management, horse care, riding etc., we will offer courses in construction, motor vehicle maintenance, horticulture, catering, practical business and grounds maintenance. As the build at The Ruskin Academy proceeds, we will also use the Centre to provide additional capacity for students as use of the existing school buildings become restricted over the two years it will take to build the new school. We hope that ultimately the Centre may become a School in its own right. The Centre has been used in the summer term for our Nexus students and also for various groups to "meet the horses". Recently, groups of Year Five pupils visited to camp and meet the horses and this has proved so popular that we are now offering the opportunity to other primary schools in Lincolnshire. We are also using the facilities for summer holiday activities to maximise use of facilities and give even more children the opportunity to experience rural activities. The Centre will be the base for all the Academies Duke of Edinburgh Award scheme activities and we will offer the facilities to other schools doing D of E. Our purchase represents excellent value for money and everyone who visits is impressed by the current facilities as well as excited about the potential for the future.

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The Ruskin Academy In 2009, the LEA had once again approached The Priory Federation. It had concluded that two schools in Grantham (Central School and Church School) were in need of support. The LEA's conclusion was that the two schools needed to amalgamate and transfer to Academy status in order to achieve funding for a complete re-build. The Priory Federation was asked to "bid" to become the preferred sponsor. Other sponsors had been considered. The Trustees discussed the matter and on this occasion decided that this was a project we might wish to be involved in. We believed that the relative proximity of Grantham would make the project viable. The Priory Federation was given preferred sponsor status and we began working with the LEA on this accelerated programme. The consultation process resulted in a very positive response and after the normal formalities a "funding envelope" was secured. Before final ratification of the funding was complete the election intervened. The Trust, LEA and local politicians worked very hard to make the case to the Government throughout the summer holiday period to continue the project and to release the funding. This combined effort proved successful and The Trust secured just over 13 million to build the new Ruskin Academy. Currently we are working with the LEA, who are procurers, and going through the processes that will identify the successful company that will design and build the new school. As with the other builds the LEA will hold the funds and administer the payment of all contracts. Upon completion the LEA will own the land and buildings of the new academy, thus acquiring further real estate. By the end of this programme the LEA will have regained the ownership of lands and buildings from The Priory LSST, JRTC, The Central and Church schools. All of these schools, prior to becoming academies, were owned either by the Governing Bodies of those schools or the diocese. (Usher, Moorland, the junior and infant schools and City of Lincoln had remained under LEA ownership prior to becoming academies.) Value for money We would emphasise that The Federation (as The Priory LSST before) has received no more funding either in capital programmes or in revenue than is normal in other parts of the county and country. We believe passionately that the way to help young people achieve their full potential is to enhance and enrich their educational opportunities. To do this we believe schools must be innovative and be prepared to put in the effort to secure whatever resources are made available from whatever source. This, in our view, is a duty of school leadership in every school. The Trust sees its role as being in large part about making up the deficit in experience, aspiration and opportunities which confront so many of our young people today. By ensuring that they can access all those wider aspects of life that truly prepare young people, the opportunity to experience pleasant and civilising environments (for example formal dinners and events), we are giving them the best chance to compete in today's world. The following anecdote might highlight the reasons for our determination. The day after we had refurbished the dining facilities at JRTC, one of the first students to come in to the new dining room said to the dinner lady on duty "This is too good for us" but by showing the student that we believe that he deserves a pleasant environment we help him to believe in himself, to value himself and to value the education he receives. We are proud of our examination successes in all our academies, but we are equally proud of our record in dealing with challenging students, in raising expectations and

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aspirations and in our practical commitment to the integration of students with disabilities into mainstream education. Every Child Matters is not, for us, a trite slogan, it is the basic value upon which we build our programmes and take our decisions. Everything we do is based on that simple concept. We believe that not only is our approach educationally effective, it is cost effective. Increasing numbers of visitors come to view what we have done, seek advice and take away ideas for their own programmes. A recent example was the senior team and the School Council of a school in a neighbouring county. Their school had been totally rebuilt yet they were experiencing an increase in vandalism and disaffection amongst the students. The School Council members having visited The Priory asked why it felt so "right" while their own school felt "nasty". The discussions that followed were very revealing for their senior staff. The Priory Academy LSST is an exemplar/advocacy school for NET (National Education Trust) and indeed hosted a conference specifically on the role of the environment in raising standards. A group of Priory students volunteered to address the conference and explain and answer questions on what their school meant to them. The totally unrehearsed or coached comments convinced us all even more that what we do works. Recently when the local MP visited our newest Academy in Grantham, he asked some students what was the point of all of these changes (to the environment, uniform etc.) he later reported that they answered "it makes us feel good about ourselves". Future Our future plans involve the development of two 50 place DSU's (Designated Special Unit) for primary aged children based at The Witham Academy and one for Secondary aged children based at The Lincoln Academy. The Trust believes that parents of children with specific learning or physical disabilities, and the children themselves, should have the choice of being taught in a mainstream school as an alternative to a Special School, if they so wish. We believe we can offer an integrated approach which will not only meet the individual needs of students but provide them with the environment that will enable them to take their place in the world. This approach is very much in keeping with all that we stand for and is in our view another example of our commitment to the principle that Every Child Matters.

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Annexe b: Letter of response to Look North after questions were raised last year about funding.

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The Priory Federation of Academies. Statement: There are currently three separate capital projects being undertaken on The Priory Academy LSST site. It is not by design that these three projects are ongoing at the same time. The Faraday project should have been completed over a year ago. The Faraday Centre In 2006 the Local Authority approached a number of schools in Lincolnshire to ask them to bid for the Faraday matched funds grant from the DfE. The money would be used to build specialist science facilities. All of the schools contacted by the LA declined to make a bid. On the day before the deadline for the bids, the LA contacted The Priory and asked if it would be interested. The Priory said yes and by close of play the next day had prepared and submitted a bid. The bid was successful. The project spent a significant amount of time in preparation and planning and work on the build was, therefore, started late. It is a pure coincidence that the Faraday build is going on at the same time as the other builds. The Faraday Centre will provide a wonderful science facility for the students at The Priory, for students from other schools and for members of the local community. We are linked in this project with the National Space Centre, we have become a Space Hub for the region and employ a Lead Teacher who is seconded to the Space Centre. Being a Space Hub means that we have a responsibility to organise training and workshops for students in the Lincolnshire area, again demonstrating a commitment to the local community. The Sports Centre The existing sports facilities are poor. If The Priory had not become an Academy then it would have been asking the Local Authority for its support to improve the facilities, which are too small for the size of school and the range of courses that it puts on. As part of The Priorys transition to Academy status it was required to establish areas of need for capital development. Obviously, the sports facilities were its priority, and the DfEs Academies Section granted financial support for the building of a new sports facility, which will benefit Priory students, students from other schools and a range of community sports clubs. Boarding Facility. The Priory submitted to the DfE a bid for a grant to develop a Boarding facility. The Priory and two other Academies were successful in gaining funding (Harefield Academy and Wellington Academy). Other state Boarding Schools benefitted from extensive capital funding, at this time, for renovation of existing facilities. The Priorys bid emphasised a number of features that are specific to The Priory and to Lincolnshire: Page 27 of 67 22-Apr-12

The Priory is eight miles away from RAF Waddington, one of the largest RAF bases in the country. A number of service personnel expressed concern that although the RAF was usually able to keep staff posted at Waddington for the duration of their childs compulsory schooling, they would not continue this through to the Sixth Form. Many students had become very attached to the school and would have stayed as boarders rather than start a new sixth form in another part of the country. Lincolnshire is a rural county with many very small schools with small sixth forms (both very costly). These sixth forms are unable to put on an appropriate range of courses. The Priory Sixth Form, therefore, has students travelling considerable distances to access specialist courses. Indeed, some students have actually made arrangements to stay in bed and breakfast accommodation close to the school. Courses on offer include CISCO (The Priory is a Cisco and a Microsoft Academy) Archaeology, Law, Computing, Further Maths, etc.. With current funding issues for small sixth forms, it is likely that there will be even more demand. It is worth pointing out that these projects are the only capital projects that have been funded from external sources since the school was opened and that The Priory was one of the countys lowest funded schools per student funding. So there is genuine confusion as to why these projects have attracted attention in this way, particularly when the county has embarked on an Academies project programme and it has also enabled a significant number of schools in Lincoln to benefit from large capital developments. The Priory has declared a potential interest in developing riding stables for a small number of horses (The Echo claimed, in error, that this was a multi-million pound project it is not). Riding is a popular sport for many of our students, and there are many others who could not afford to go horse riding independently. There are already significant numbers of students going out to stables as part of their course and this is quite expensive. So there has been some talk about the stables wood built but it is not necessarily a current priority and is certainly not multi-million in scale. The Priory Academies programme in Lincoln is based on two other comprehensive schools that were in position 1 and 2 on the list for schools needed to be rebuilt in the BSF programme. The fact that they became academies has meant that Lincolnshire was able to turn its attention to other schools to support. The move to Academy status for these projects was with LA support and there were positive public consultation meetings, in stark contrast to some of the meetings that have been held in other projects. In conclusion, every Ofsted Inspection has judged The Priory as providing outstanding value for money. When receiving its budget from the LA, it was one of the lowest per pupil funded schools in the county. The mechanisms for funding academies are transparent. The Priory has worked hard to bid for additional funds and to achieve value for money. Many other schools in the area have attracted substantial additional funds but have not attracted public attention which is an area of confusion. Page 28 of 67 22-Apr-12

Annexe c: Findings

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DfE: all entries below are taken from a DfE report marked Protect. This report is the property of the YPLA Section 15: a. Payment of equine related NVQ at West Bridgeford Equestrian Centre for Mr Gillilands son in 2010 when not an employee of the Federation. b. Payment of equine related training and residential costs for a course run by Equine Energy held at Writtle College for Mr Gillilands son in 2010 when not an employee of the Federation.

Response Section 15: a. Mr Gilliland has repaid to the Federation the expenses claimed for equestrian training at The West Bridgeford Equestrian Centre. b. Mr Gilliland has been invoiced the costs of the Equine Energy course and residential fees.

c. Payment of tax advice special fees relating to Mr Gillilands personal tax c. Mr Gilliland has been invoiced for the tax advice that he issue. received from Buzzacott d. Personal purchases using Federation credit cards. d/e. Mr Gilliland has reimbursed the Federation for the cost of the personal items purchased on the Federation Credit e. Inappropriate nature of personal purchases using the Federation credit Card. card and delivered to the Federation address. f. Use of a flat at the Manor House, Laughton Manor as a residential property and the costs in refurbishing this. f. Mr Gilliland did use the flat as a residential property for a short period, the benefits of refurbishment remain with the Federation. The Trust is assessing the benefits of residence and will approach the appropriate agencies once an initial assessment has been made. g. The Federation did not pay the costs of Mr Gillilands removal.

g. The Federation may have paid removal costs in relation to the move to/from the Manor House, Laughton Manor.

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h. Establishment of a private apartment at French Centre and the costs of refurbishing. i. Use of the French Centre by family members for activities not related to Federation business.

h. see f i. The use of the French Centre by family members is now subject to a new draft policy of Cover for the French Centre, which is to be presented to Trustees in the near future (draft available). Mrs Gillilands Dance Group trip income was incorrectly paid into the Priory Fundraising Trust, which has now been transferred to the Federation account j. Mr Gilliland purchased two laptops from the Federation using a depreciation formula established by the Head of ICT and the FD. 16&17: The FD authorised the transactions outside the procedures laid out in the Finance Manual. All claims made by the FD and the CEO must now be made at an Executive Committee Meeting and recorded in the minutes. The RO will audit these claims on a regular basis. All RO reports will be sent to the Trustees and form the basis of an agenda item at a Full Trust Meeting.

j. Purchase of Federation laptops.

16. In May 2010 Mr Gilliland claimed expenses of 2,480 related to three invoices for attendance at the West Bridgford Equestrian Centre. Mr Gilliland stated that these were for students from the Ruskin and other academies attending alternative curriculum activities. The three invoices that we extracted from the accounting records showed the dates of training and amounts due. These did not match the three invoices we were in possession of. The invoices we held stated that the training was for Mr Gillilands son, Kia (Keir) Gilliland. All other information on the invoices was identical to the invoices submitted by Mr Gilliland with his claim. 17. Mr Gilliland confirmed his son undertook training at West Bridgford but claimed he paid for the training. He was unable to offer an

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explanation as to why the invoices were exactly the same as those that related to his sons training apart from the reference to his son. He stated he would look into the matter. 18. A payment was made by the Federation in January 2010 to Equine Energy Ltd for 1,095. No invoice was held in the accounting records to support what this payment related to but it was accounted under equestrian which is why we identified it. Mr Gilliland stated that this was a training course for his son that he agreed with the Finance Director (FD) could be paid from his life insurance entitlement of 2,000 per year. Mr Gilliland explained as part of his contract the Federation agreed to pay his life insurance. As Mr Gilliland already had life insurance he had agreed with the FD and the Chair that he could spend up to 2,000 per year on personal items. The Equine Energy training was paid for out of this allowance. 19. Credit card statements for Mr Gilliland and the FD contained payments to Writtle College for 234.04 and 29.38. Mr Gilliland stated that the payment on his card to Writtle was for items he purchased when he stayed in the area while his son undertook the training. However information we were in possession showed the payments to Writtle related to residential accommodation for his son while undertaking the training. The payment of 29.38 on the FDs related to an extra nights accommodation for his son. 20. Two further payments in 2010 that were accounted for under equestrian were identified that were paid for with Mr Gillilands Federation credit card one for 472.50 to South Essex Ins and 41 to Grundy Agriculture. No receipts were available for either purchase and 18: See sections 16&17. The FD authorised the transactions outside the procedures laid out in the Finance Manual. All claims made by the FD and the CEO must now be made at an Executive Committee Meeting and recorded in the minutes. The RO will audit these claims on a regular basis. The Trust had not agreed to pay vouchers in lieu of Mr Gillilands insurance.

19: The claim was authorised by the previous FD. The CEO has been invoiced for these items (234.04 and 29.38) together with the items listed in 20 below.

20. Mr Gilliland has been invoiced for the South Essex Ins (472.50) and Grundy Agriculture (41) payments.

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Mr Gilliland could not recall what was purchased. 21. A payment of 990 was paid by the Federation in April 2011 to Buzzacott Chartered Accountants in connection with advice in respect of an accommodation benefit in kind for the CEO. Mr Gilliland confirmed this was work that related to his personal tax position and did not relate to Federation business. 22. As discussed below there has been extensive use of the Federation credit cards. A number of these purchases appeared to be for personal use and Mr Gilliland confirmed that he had purchased personal items that came out of the 2,000 allowance discussed above. In July and August 2011 Mr Gilliland made two payments to the Federation for 1,253.39 and 1,349.76 in relation to personal items he had purchased from Amazon between December 2009 and July 2011. Mr Gilliland stated that he had repaid these amounts as the new FD suggested that he should repay the Federation for any personal items purchased. 23. Mr Gilliland admitted that some of the personal items purchased using the Federation credit card and delivered to the Federation offices were of an inappropriate nature to be delivered to a school site (e.g. sex games and supplements). He stated that these would only be opened by him as staff did not open mail addressed to him. 24. Mr Gilliland stated that it was his intention to live in the flat at the Manor House at Laughton Manor however following the tax implications advice received (as above) he decided against it. He stated he did live in 21: see section 15c Buzzacott

22: Mr Gilliland has repaid 2603 for purchases made between December 2009 and July 2011.

23. This cannot happen again with the new procedures that have been put in place regarding the use of Credit Cards (draft procedure available)

24: Any future requests / arrangement for live-in staff will be brought to the Full Trust for their consideration, including any tax implications.

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the Manor House for four to six weeks but did not live there full time. His wife lives weekdays in the North of England and they meet at weekends. He stated that he would have moved in full time if the tax implications had allowed. 25. The ground floor of the Manor House was used as the alternative curriculum centre from September until January, when the new classrooms were completed. The top floors consisted of the flat that Mr Gilliland intended to live in. The flat has been refurbished to a high standard, for example: kitchen units and installation cost in the region of 14,000 plus VAT; three bathrooms cost in the region of 10,000 plus VAT this was utilising some of the existing sanitary wear. 26. We have seen invoices that show the total costs of refurbishment were in the region of 45,000 plus VAT. In invoices relating to carpets, flooring, curtains, blinds and some furniture in the region of 25,000. 27. Since Mr Gilliland left (we believe in July or August 2011) the flat has not been occupied. Mr Gilliland stated that its use has not yet been determined it may be used for Teaching school residential accommodation (if this is approved), for a live in equestrian centre manager or for the free school staff (if this is approved). 28. The French Centre consists of a Farm House (occupied by the caretakers) with apartment (referred to as the cave) attached and 25: The original budget for the kitchen fit out was 5,000. Mr Gilliland independently, and without authority, arranged for different equipment to be installed and this took the cost of the kitchen over the original budget.

26: In addition to fitting the flooring, further work had to be carried out in order to make safe the floor this increased the costs. Mr Gilliland chose curtains and blinds but did not have the authority to increase the cost beyond budget. 27: The accommodation/office/rooms will be used by the Federation for training, alternative provision and potentially accommodation for LM staff and residential AP students.

28: The Trust does not condone the use of its property for exclusive personal use and the draft policy on Cover for the

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student accommodation block with apartment above. Mr Gilliland stated that apartment above the student accommodation was used by the bus driver transporting the pupils to the Centre. The cave was used by Mr Gilliland and family when they visited the French Centre. he stated although he had first call on the accommodation it was not exclusively for their use. He stated he did have some personal possession there but not many. 29. He was asked if the FD has brought his personal possessions back from the French Centre. He stated that Mr Davies had brought some things back from the French Centre but not Mr Gillilands personal possessions. 30. We raised concerns about the high cost of using David Edney, a local builder in France, for refurbishment of the flat and cave.

French Centre will reflect this clearly.

29: The Trust was not aware of this, and any such issues will be reflected in the draft policy mentioned in Section 28.

30: Mr Gilliland coordinated the work undertaken by David Edney. The Trust is aware of concerns over the costs incurred; specific changes to the procurement policy will ensure that there is no concern regarding future work undertaken in France. 31: The Trust confirms that income generated by the use of the Federations assets should not be paid into the Priory Fundraising Trust account and any monies that have been paid have been reimbursed to the Federation account.

31. We asked Mr Gilliland if the French Centre had ever been used for non Federation activities. He stated that it had been used by his wife in September 2010 for a dance school week. This was at a time when the Centre was not being used by the Federation as it was at the start of the new term. The arrangement was that participants (about 10 people) received accommodation and possibly breakfasts and one evening meal. They paid for all other expenses themselves and paid a cost for accommodation that Mrs Gilliland repaid to the Federation. When we followed this up it was identified that a cheque for 1,270 was paid to the

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Priory Fundraising Trust. Arrangements are being made to transfer this amount to the Federation. 32. Mr Gilliland purchased two laptops from the Federation in February 2012 paying 710 for them. One laptop was used by his daughter when she was engaged as a consultant and subsequently employed. Mr Gilliland stated the laptop had been in his possession since his daughter left the Federation in August 2011. The other laptop was an old one that he used. The ICT manager and the new FD were consulted about these purchases however it is not clear that the Federations own policy was followed in the disposal of these assets (e.g. the laptops were no longer of use to the Federation and sale to members of staff). 33. We discussed these issues with Mr Terry Coffey, the Chair of Governors. He stated: He was not aware of payments for training/accommodation at West Brigford and Writtle College. He had been informed this week about the Equine Energy training that was paid by the Federation. He was aware of the arrangements for the life insurance allowance of 2,000 agreed with the previous FD. He was aware that Mr Gilliland was thinking of living at Laughton Manor but he had informed him there would be tax implications if he did this. He said this may have been minuted at one of the Executive Trust meetings. However he was not aware that the Federation has paid for the professional advice in relation to tax implications He was not aware of the costs of refurbishment of the flat at Laughton Manor but stated the Federation always refurbished property to a high 32: See 15j

33: Mr Coffey expresses the views of the Trustees

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standard. He was not aware of personal purchases by Mr Gilliland of an inappropriate nature. 34. During the EA review it was identified that Mr Gillilands daughter had been engaged as a consultant. We were informed that Mr Gillilands son and wife may have also been engaged / employed by the Federation, his son under a different name due to a name change. 35. We have seen evidence that Mr Gillilands son and daughter were CRB checked but were informed that his wife had not been. Mr Gillilands son was CRB checked in his new name of Richardson however we were informed by Ann Turner that Mr Richardson declared his previous name when completing his CRB form. We were informed that neither Ms Gillilands or Mr Richardsons CRB checks revealed anything that would prevent them working with children. Anna Gilliland CEOs Daughter 36. Ms Gilliland was engaged by the Head of the Priory LSST, Mr Ian Jones, to undertake work in connection with the new Boarding facilities. Mr Jones stated that Ms Gilliland was a known quality having worked for the school before it became an academy. He stated she had the necessary experience and the ability to work across the Federation. Mr Jones stated that he monitored Ms Gillilands work and she delivered what was required. She worked at the Federation offices but the work also required travel. She was provided with a laptop and phone by the 36 - 38: The previous FD completed the necessary paperwork for the employment of Ms Gilliland and also set the pay grade. The payment of expenses to Ms Gilliland for a flight to Bali to produce the itinerary for the Federation Diving Trip was made by the previous FD who did not raise the issue with the Head of The Priory Academy LSST. A Risk Assessment and Fact Finding visit would be an expectation in planning for a trip involving students; but the Trustees 34: The Trustees acknowledge that the employment of family members of senior staff has caused concerns and will, in the future, ensure that a rigorous process of recruitment and selection is undertaken including the setting of appropriate pay scales (see Recommendations above). 35: Concerns have been raised that Mr Gillilands charismatic and forceful leadership style circumvented normal procedures when it came to the employment of his family. The Trust concurs that it has opened itself up to this criticism and that the checks and balances identified in the Recommendations section on the Employment of family members will ensure that this could not happen again.

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Federation whilst engaged as a consultant. Mr Jones stated that she was employed as a member of staff after the new FD raised concerns about the possible tax implications of consultancy work when the Federation was her only client. 37. Ms Gilliland was paid 868 expenses for a trip to Bali in July 2010 which Mr Jones stated was to establish an itinerary for a dive holiday for boarding. This was developed although has not yet been put into practise as boarding did not open as planned in 2011. 38. We have not seen any documentation justifying the reasons for Ms Gillilands engagement. Mr Jones stated there was a job description for the role but the payment arrangements and contracting would have been the responsibility of the previous FD, Mr Davies. The Chair of Governors, Mr Terry Coffey, was also involved in the decision to engage Ms Gilliland and he was adamant that Mr Gilliland had not been involved in the decision to engage Ms Gilliland. 39. Ms Gilliland was originally engaged as a consultant in May 2010 and was paid as a consultant/contractor from May 2010 to April 2011 at a cost of 55,585. This figure was not declared in the 31 August 2011 accounts as a third party transaction as we were told it was not clear from YPLA guidance what constitutes a close relative, which would require a declaration to be made. Linda Gilliland CEOs wife 40. Mrs Gilliland was paid 6,030 in October 2008 for consultancy work in relation to the French Centre. We were informed by Mr Gilliland and

consider that there was an error of judgement in the arrangement to pay for the flight in this case. The Trust will invoice Ms Gilliland to recover the money by invoice, week commencing 23.04.2012.

39: The Federations accountants offered this advice; but the new policy will have an agreed definition of family members.

40-41: The Trust confirms the one-off payment to Mrs Gilliland for consultancy work across the Federation.

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Mr Coffey that Mrs Gilliland had been involved in advising on the refurbishment of the Centre in 2008 on a voluntary basis and that Mr Coffey suggested she should be paid for some of the work she had undertaken, hence this one-off payment was made on receipt of an invoice from Mrs Gilliland. 41. Mr Coffey stated that Mrs Gilliland does a lot of unpaid work for the Federation, for instance she had been involved in the creation of the Chapel on the LSST site and had not been paid for any of that work (there is a dedication in the chapel acknowledging her involvement in it). Kia Richardson CEOs son 42. We were informed that Mr Richardson had been employed at Laughton Manor from April 2011 to 31 July 2011. We were informed that Mr Gilliland had not been involved in the decision to employ him. Mr Coffey informed us that he had made the decision to employ Mr Richardson as Mr Richardson had previously worked with horses (at an equestrian centre in West Brideford). Once the Federation bought Laughton Manor they needed to employ someone urgently to stay on site as they were concerned about possible vandalism as some threats had been made. They therefore did not advertise the post. Mr Coffey also stated that Mr Richardson had worked for the Federation on a previous occasion three or four years ago. 43. We were provided with a payroll listing for Mr Richardson that showed he received gross pay of 4,558.69 for the period 1 April 2011 to 30 June 2011 plus untaken holiday pay. The listing also showed that Mr Richardson was then paid 11,923.12 gross pay between 31 October 2011 and 31 December 2011. During our visit we asked Mr Coffey the 42-45: The FD calculated additional payments to KR in lieu of notice due to his loss of position and living accommodation. The Trust did not know that the FD had carried out the exercise and were surprised at the format he used. Similar instances in the future will be presented to a Full Trust meeting for approval.

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reasons for these additional payments but he said he would have to follow-up and get back to us. 44. On further follow-up we received the following information: Mr Richardson was employed from February 2011 to June 2011 receiving gross pay of 7,073.44 (including holidays not taken). The reason we were initially informed the employment was from April 2011 was because they had changed payroll providers in April 2011 and the old payroll system had not been checked. Mr Richardson resigned in June 2011 but the Governors agreed to pay three months salary in lieu of notice as Mr Richardson had lost both his job and his home he was paid three months gross pay of 3,861 in October 2011. Mr Richardson then wrote to the Finance Director (FD) to enquire about unpaid overtime he had done at Laughton Manor. Mr Davies, the FD, worked out that Mr Richardson had performed eight hours overtime for every Saturday and Sunday he was at Laughton (Mr Richardson lived on site and was on call 24/7) this was paid at time and a half for Saturday and double time for Sunday. Gross pay of 4,271.64 was paid in November 2011. Mr Richardson wrote again to the FD enquiring about unpaid weekday overtime when working at Laughton. The FD calculated that Mr Richardson had worked 4 hours overtime every week day night. The overtime was paid at basic rate and a gross payment of 3,790.48 was paid in December 2011. 45. We asked for a copy of the Trustee minutes that agreed the three months in lieu of notice payment to Mr Richardson despite his resignation. We were informed that this was not discussed at a Trustee

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meeting but was agreed between the Chair, Mr Coffey, and the Vice Chair, Maureen Crosbie. 46. We asked for a copy of Mr Richardsons contract of employment and received this on 9 February 2011. The contract states that Mr Richardson was employed from 7 February 2011 at Laughton Manor and was signed by Mr Coffey on 26 January 2011. This presented a discrepancy as in January the Federation were still negotiating for the purchase of a property at Ropsley, which they bid for instead of putting in a bid Laughton Manor. When we raised this contradiction with Ann Turner, the Development Co-ordinator, she stated that this was her mistake as they were originally going to bid for Laughton Manor and she had mistakenly put this on the contract. Mr Coffey confirmed it was his signature on the contract. The sale for Laughton Manor was not completed until April 2011. 46. The Trust can confirm KRs employment and pay started on 7th February 2011.

47. On further follow-up the Federation stated that: 47 50: See previous Mr Richardson was employed from 7 February 2011 to undertake preparatory work for the opening of the Equestrian Centre. Mr Coffey was reluctant to share the letter sent to Mrs Crosbie agreeing the payment in lieu of notice as he considered it contained personal sensitive information that was not relevant to the investigation. However he has confirmed that he agreed the payment. Overtime is not mentioned in his contract of employment but is in the local government terms and conditions document which the Federation work to. However when we spoke to the Head of Laughton Manor he was not aware that Mr Richardson had been paid any overtime. He stated that Mr Richardson had two rest days a week and was available on site to work outside of his normal hours.

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48. It is not clear why overtime was not paid to Mr Richardson when he completed it in February to July and why he had to write to the Federation requesting first payment of weekday overtime and second payment of weekend overtime. 49. When we spoke to Mr Coffey about these payments during our second visit he stated: Keir Richardson resigned his position because of anticipated interest from the News of the World in a proposed article aimed at bringing the Priory, and particularly the Executive Head, into disrepute a fact which was reported by me personally to each and every trustee AND to the Department for Education through CfBT. The fact that the NOTW ceased production before they were able to print their revelations presumably only meant that the interest in the Gilliland family moved in another direction. 50. Mr Coffey did not want to go into further details as they were of a personal nature that was not felt to be relevant to the investigation but stated that Mr Richardson resigned to avoid bad publicity for the Federation which is why he was paid his payment in lieu of notice. 51. Mr Richardsons contract of employment did not require him to live at Laughton Manor, however he did live in accommodation provided by the Federation (a one bedroom cottage attached to the Manor House) for which rent was not paid. The tax implications in respect of benefits in kind have not been reported to HMRC. Federations History of Employing Family Members 51: there was a requirement for someone to live on the premises to be responsible for the livestock as a condition of the insurance arrangements, this includes out of hours duties and care to animals.

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52. We were informed that the Federation does have a history of employing relatives of staff and Mr Gillilands relatives are not the only ones that have been employed Mr Davies son is also employed by the Federation. 53. In July 2011 a Trustee has raised concerns about the transparency of appointments within the Federation. A sub-committee consisting of three Trustees was set up to look at all appointments within the Federation between September 2008 and July 2011 and the policy on appointments. The Committee comprised Maureen Crosbie, Ian Wright and Ian Jones. A report was produced and discussed at the October Trustees meeting, and we have been told was shared with YPLA as part of the minutes of that meeting. The report stated: that in every single case we concur that the decision to appoint directly without the benefit of an external advertisement has been the correct and sensible one and concluded: There was no evidence that family members of staff already employed within the Trust had not fulfilled their duties satisfactorily nor is there any evidence that proper procedures and assessments had not taken place. We therefore recommend that the current practices remain in place. We find no logical basis to change the system which operated since 2008 so effectively and to the benefit of the Trust. 54. The Trustees accepted the recommendations in the report. We discussed with Mr Gilliland and Mr Coffey the practise of employing relatives and the fact that the senior members of the Trust need to ensure that decisions made can be supported, are documented and are transparent.

52-54: the new policy on employing family members (see Recommendations above) addresses these issues.

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Former Finance Director, Steve Davies 55. We were informed the former Finance Director (FD) Mr Steve Davies retired in December 2011 but was being paid to 31 March 2012 as he had accrued holidays from the last three years. A holiday slip/record was not available to verify this. 56. Mr Davies has been FD since the Federation was incorporated. He is not a qualified accountant and the Federation were advised by DfE during an earlier review that Mr Davies was not qualified and that they should consider replacing him. Mr Davies has agreed a compromise payment of one years salary (around 84,000) with the Federation. We were informed that this was cheaper than other options considered and the agreement suited both parties. 57. Mr Davies had a company credit card and using this he paid for Mr Gillilands sons accommodation at Writtle College to undertake a course (as discussed above). Mr Davies was also involved in making the payment to Equine Energy Ltd for the training course the only information to support this payment is a handwritten note from Mr Davies giving the supplier name, amount to be paid and a annotation stating Today - the note has Mr Davies signature on it. 58. Mr Davies is a sailor and is currently sailing his boat in the Caribbean. He has been provided with a satellite phone by the Federation which the Federation continues to pay monthly rental for. It is not clear whether or

Former Finance Director, Steve Davies 55 56: On the advice of the DfE, the Federation made the decision to replace Mr Davies because he was not appropriately qualified. As part of discussions between Mr Gilliland and Mr Davies gardening leave from December 2011 to 31 March 2012 was agreed without the knowledge of the Trust and a compromise payment for one years salary (84,000) was agreed. The Trustees consider this Compromise Agreement to be inappropriate and are seeking legal redress and the Trustees have stopped the payment being made.

57. The Trust is unable to comment on why Mr Davies authorised the payments but note that these procedures were outside of those laid out in the Finance Manual. Draft policies on the use of Credit Cards and the Claims of the CEO and the FD will prevent this happening in the future.

58: Mr Davies purchased the satellite phone without informing the ICT department, which was not able to support and monitor its use. Although Mr Davies clearly

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when the phone was purchased. We have seen claims for rental cost amounting to 652.28 between November 2010 and February 2012. We were informed that this phone had been provided so that the Federation could contact Mr Davies while he was on holiday on his boat. 59. Mr Davies has also purchased a number of items using the company credit card including his own leaving gift of a Deluxe Metal Sextant at a cost of 505.90. Mr Coffey, Mr Gilliland and Mrs Willey (the new FD) were all aware of this purchase. Use of Credit / Charge Cards 60. The EA team raised concerns that, because credit card payments were not supported by receipts, VAT paid could not be reclaimed by the Federation. 61. As stated above we reviewed credit card statements for 2010-11 and some for 2008-09. 62. During our first visit there was no complete record of the number of credit cards and account details of credit cards held by the Federation however Mrs Willey, the new FA, was confident that we had statements for all the cards that had been paid by the Federation. Mrs Willey stated that Mr Davies, the former FD, would have had a list of all cards but did not pass this over when he left. At one time, according to the Federation Finance Manual, Mr Gilliland held six cards, one for each academy and one for the central Federation and a French charge card, but now holds only one. Mrs Willey was in the process of identifying and recording all cards held and had made progress on this at the time of our second visit.

found this method of communicating with his team useful, the purchase should not have happened in this way. It has been cancelled. 59: The Leaving Present, agreed by Mr Gilliland, was to be purchased from the Priory Fundraising Trust this has now been corrected.

60/61: Agreed

62: addressed in previous section. Furthermore, the Trustees agree that there were too many credit cards. Steps have been taken to reduce this to one credit card for the entire Federation and one for each Academy, they are all to be held by the FD, with appropriate checks on usage (see Recommendations above).

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63. In reviewing the statements for Mr Gillilands credit card, receipts were not attached to the statement, although some work had been undertaken between the visit by EA and our visit, to attach receipts that were still held to the statement this mainly related to receipts from Amazon. 64. On the use of credit cards the Federations Finance Manual states: Expenditure will be at the discretion of the Chief Executive or Finance Director or Heads of Academy and wherever possible supported by receipts. In any case the monthly statements are fully itemised and these are to be checked and signed off independently. 65. Mr Gilliland stated that he was informed by Mr Davies that he did not have to provide receipts as the credit card statement provided details of what had been spent. This was confirmed by others interviewed during our visit. 66. The policy on use of credit cards states the purpose of the card is for the sake of convenience and to cut down on the requirement to carry petty cash or write individual cheques. However the use of the cards seem to extend much further than this, for example: Withdrawals of cash - as covered above. Purchases of electronic items such as Ipads (two identified), Bose Wave system, Nintendo DSI, Play station 3, Wii, iPod touch, washing machine, laptops, dishwasher, microwave, various items from Currys (no receipts). Receipts were present for some of these items. Items from Homebase on one statement in June 2011 six separate purchases were made for items totalling 820.77, another in in May 2011 had five purchases totalling 1,435.18 but no receipts were provided.

63 68: It is clear that a significant number of credit card purchases made by Mr Gilliland were not supported with receipts. The Trustees, who were not aware of a private discussion between Mr Davies and Mr Gilliland over the provision of receipts for Credit Cards, have demanded that this method of making purchases be stopped immediately. The Trust is confident that the new measures put in place will prevent a recurrence of this problem.

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Purchase of alcohol from John Lewis, Sainsburys, Asda. 8,564.14 spent at Marks and Spencer on bedding and sofas. Purchase of a caravan and a flatbed truck. Large numbers of DVDs and books purchased from Amazon some appear inappropriate for School children (e.g. 18 certificates which we were informed would go to the French Centre for the use of staff). Purchase of yoga and dance DVDs (totalling over 200 in 2010/11). Ferry costs to France and other purchases in France. Purchases of meals in local hostelries/restaurants. Two receipts were annotated Sarah leaving meal (111.55) and Phil Boyd Wilson leaving drinks (218). Purchase of meals and food in France, which included 315 spent on 25/12/10 on Mr Gillilands credit card for, we have been told, Christmas lunch that was authorised by Mr Coffey, the Chair of the Trust although it is not clear whether all Trustees were aware of this. 67. We asked Mr Gilliland for information on some of the un-receipted purchases on his credit card: The items purchased in France relate to the refurbishment of the French Centre - when they visited the Centre basic supplies had not been purchased by the resident Centre Managers. The bedding and sofas were for the French Centre. Dvds, books, playstation, wii etc were for the use of pupils at either the French Centre, Laughton Manor or the School libraries. Items from Homebase were purchased for Laughton Manor. The caravan and flatbed truck were for Laughton Manor. The yoga and dance DVDs were for the use of pupils. The Federation do provide alcohol for functions, including, with the agreement of parents, a glass of wine for pupils attending the welcome

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to the 6th form dinner. 68. As identified by EA there have been a number of purchases by credit card where the Federation could have reclaimed VAT if they had retained the VAT receipt. We are not able to identify the amount of reclaimable VAT that has been lost due to their practise of not retaining receipts. 69. On 3 February 2012 an email was sent to all Heads and Finance Officers stating that credit card purchases must be supported by a valid VAT receipt. Trustee/Federation Staff Expenses 70. A number of the issues were identified by the EA team in relation to expenses. These are summarised below with further findings from our review: Claims were not supported by receipts, or were only supported by photocopied, handwritten or personal credit card receipts. As well as the claim being unsupported this also prevents the Federation from reclaiming as VAT that may be reclaimable. The email of 3 February 2012 sent to all Heads and Finance Officers requires receipts to be provided for all travel and subsistence claims. Trustees had been making purchases as if they were staff (e.g. purchases of items and equipment for the French Centre) and the way these expenses had been accounted for made it appear as if they were Trustee expenses (i.e. travel and subsistence expenses). This has resulted in inflated Trustee expenses being identified in the annual accounts for 2009/10 and 2010/11. The new FD has taken action to identify what were actual Trustee expenses and other items purchased by Trustees. These items are now being accounted for appropriately. Mr Gilliland also 70/71: clarification has been provided on the requirement for receipts. The claim form that accidentally inflated Trustee expenses because it included Purchases has now been redesigned. The new system will prevent the possibility of duplicate claims. ref: Financial Management of the French Centre: Mr Gilliland has explained that many of these claims were for items purchased in local arts and crafts markets where receipts are not necessarily given The new FD has issued guidelines stating that expenses will only be paid if supported by receipts. The duplicate payments made to the CEO and the Vice Chair have since been repaid to the Federation.

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paid personal coinage of 1,261.81 into the Federation and received a cheque but this was accounted for as an expense claim for Mr Gilliland further inflating expense figures. Expense claim forms were not always completed or completed properly, signed or authorised. This is a particular concern as a duplicate payment resulted (see below) as Mr Gilliland was not required to sign a claim form for his expenses. If he had been required to sign he may have identified he had already been paid the expense. Duplicate payments for expenses were identified by the EA team and they also raised concerns about possible payments in sterling when they should have been in euros. Follow-up of these issues confirmed a duplicate payment made to Mr Gilliland of 2,2622.49 on 20/05/11, which had already been claimed on 21/03/11 as 2,591.29. Mr Gilliland explained that this was caused as the payment was for furniture purchased in France which was not delivered immediately. He claimed for the purchase on his return to the UK but the Finance team retained the receipt until the furniture was delivered and then processed it to pay Mr Gilliland again. A duplicate payment for 53.64 euros (49.67) was claimed by Mrs Crosbie. Mr Gilliland and Mrs Crosbie have now refunded the duplicate payments. No further duplicate payments were identified during our review however we were not able to review all claims. It is not always clear whether sterling or euros are being claimed. We followed-up the one case identified by the EA team and the Federation have confirmed that it was sterling that had been claimed and paid. Expenses have also been claimed for: Making cash payments to casual labour at Laughton Manor. Purchase of meals and alcohol (issue covered under charge/credit cards). Purchase of travel for Trustee/Staff family members travelling to the French Centre (covered under the use of the French Centre).

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71. The Federation Finance Manual details the Trustee Expenses Policy and this was updated in June 2011. The manual requires that a claim form is completed and this has to be authorised. All claims are required to be supported by receipts. The policy was clearly not being complied with. Use and Control of Petty Cash 72.As well as the use of petty cash at the Central Federation, academies, Laughton Manor and the French Centre concerns were also raised about cash advances being given to staff outside of petty cash arrangements and cash advances being obtained from credit cards. 73. The main petty cash floats for 2010-11 were reviewed for the central Federation, Witham and Ruskin (Manthope site) Academies. 74. The records provided for the Witham Academy were transaction listings only as receipts are filed separately for each month with other monthly financial information. We did not have time to obtain and review the receipts for this academy. 75. The records for the Ruskin Academy (Manthope site) were reviewed and no issues were identified. Full records and receipts for all transactions were present. 76. For the central Federation 21 transactions were reviewed. Of those two transactions did not have receipts (purchase of lunch for staff member travelling to an academy of 11 and a cash advance to the CEO 76: see 72 above and the Hospitality policy is currently being changed and will be presented to the Trustees shortly. Use and Control of Petty Cash 72: The new FD has introduced systems that prevent this happening.

73-75: We agree with the observations and note that no further action is required.

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of 40) and two transactions only had part receipts (no receipts for taxis of 63.10 and a sandwich order for a number of staff in London for 23.16). The majority of the transactions relate to the provision of lunch for staff members or visitors to the Federation. The Federations policy on entertainment and hospitality states: The Trust places great value on always treating staff, visitors and indeed anyone associated with the Academies with the utmost respect and this is reflected in our general approach to issues to do with hospitality; and It is expected that the budget will be used for meals/refreshments, taken while members of staff are engaged on school business, whether during the school day, outside the school day, or on days when the school is not in session. 77. In reviewing credit card purchases for 2010-11 and some for 2008-09 one cash advance obtained by Mr Davies, the former Finance Director, was identified (for 200 euros) and five advances by Mr Gilliland were identified (for various amounts, all euros apart from one in dollars). As explained in the EA report on occasions Mr Gilliland purchased art items for the academies and centres from markets and such like and could not always obtain a receipt. When cash advances are obtained he records what has been purchased with the advance in a file he retains, together with receipts, where available, and a photograph of the item purchased. 78. We reviewed the file and it held details of 21 purchases that cash advances had been used for. However one of the advances we identified on Mr Gilliland credit card statement was not in the file and a record of what Mr Davies had used his cash advance for was not recorded. 79. Since the review the Federation have issued instructions that any 77-79: As stated previously, Mr Gillilands purchase of art and furniture without obtaining receipts, whilst sometimes in accordance with the Finance Manual (supported by a photograph of the item) has caused problems. This practice has been stopped.

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cash advances should be funded from petty cash only and not from credit cards.

Control and Reconciliation of Bank Accounts

Control and Reconciliation of Bank Accounts.

80. We identified 20 accounts that were holding a balance at 31/08/11. 80. The FD is in the process of reducing the number of bank These covered the central Federation, the French Centre and LLST, accounts in use. Lincoln, Witham, and Ruskin academies. Reconciliations on the central accounts were undertaken weekly and the Academies and French accounts when bank statements were received. We requested and received copies of the Lloyds General account Ref 1410 covering the period 31/12/10 to 31/08/11. There were four accounts currently in use for the French Centre though only the 1st, 2nd and 4th contained balances (10787, 11392, 6155) at the 31/08/11. 81. The reconciliations were present on the related account files and had been prepared by the accountant. We did not re-perform the reconciliations. Purchasing, Control and Safeguarding of Art Assets 81. Agree and note that no further action is required.

Purchasing, Control and Safeguarding of Art Assets

82. The EA team raised concerns about the acquisition of artwork and the 82: see 76 79 above. identification of all art assets held in the Federation. The concerns about acquisition stemmed mainly from the practice of the CEO using cash advances to purchase artwork with what appeared to be no documentation to support what had been purchased. This issue is covered in paragraphs 76-77 above.

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83. Since the visit by EA the Federation has done a lot of work to identify and inventory all their artwork and, where applicable assign it a value (much of the artwork was purchased for the predecessor school). There will be an inventory of artwork for each of the Federation sites. This was still a work in progress at the time of our review. 84. On the advice of the EA team the Federation have now detailed a budget for Mr Gilliland to use for art purchases and a separate account code for them. Financial Management at the French Centre 85. The financial management of the French Centre has been split between the Central Federation and the on-site caretaking team. Payments in relation to the centre may be made by cash, debit card or cheques drawn on the French bank accounts. The EA team raised concerns around the heavy reliance on cash payments and the lack of transparency that this presented. We are unable to give any additional assurance on the use of funding drawn in this way other than the statements of the CEO that they mainly funded the acquisition of art/artefacts for the Centre. A documented folder containing photographs of the items in situ was held by the CEO. Use of the French Centre by Trustees/Federation Staff 86. The EA team raised concerns about the cover arrangements for the French Centre when the resident caretakers are on holiday and Trustees

83: The Trust has already implemented a Federation wide system it is a work in progress.

84. Mr Gilliland is no longer in post. The Interim CEO will not access the art budget, the new CEO can decide on how to use this budget in accordance with the Finance Manual. Financial Management of the French Centre 85. Cash payments and withdrawals are no longer permitted.

Use of the French Centre by Trustees/Federation staff 86 90: The Trust will consider the new policies on the Cover Arrangements for the French Centre by

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or Federation staff cover for them. Those providing cover were usually accompanied by their partners and in some instances children. There was also the question of what arrangements were in place for board when people covered at the Centre. The EA team also took the view that the current arrangements were not sustainable and the Federation should put cover arrangements on a more regular basis. 87. We discussed cover at the French centre with Mrs Turner and Mrs Willey. They stated that the cover was to undertake specific duties that have to be performed on a daily basis at the Centre (e.g. flush all toilets and run all showers as the Centre relies on a septic tank). A schedule of daily, weekly, monthly and annual routines and tasks have been documented by the caretakers and are recorded when carried out. This and the fact that their insurance cover requires someone to be resident at the Centre is the reason that cover is provided by the Trustee/Federation staff. We understand that there are valid reasons for using Trustees/Federation staff as detailed above and also to ensure safeguarding issues do not arise when pupils do attend the Centre. However at the time of our visit none of this justification has been documented. 88. The issue of Trustees/Staff being accompanied by partners/children was explained as the location of the Centre was quite isolated so the Federation would not expect staff to travel/stay there alone, and they believed the costs of funding partners would provide value for money when compared to having to employ someone to reside at the Centre. 89. The issue of providing board for Trustees/Staff was not clear, however from credit card statements it is clear that both Mr Gilliland and

Trustees/Federation staff, which will address the issues raised here. There is currently no clarity over subsistence allowances for those at the French Centre, this has caused confusion. Clear guidelines are currently being drawn up in the French Centre policy

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Mr Davies have used their company credit cards whilst in France to purchase items at supermarkets and meals at restaurants. Examples of these include: Mr Gillilands card used on Christmas day 2010 at Le Manoir de la Dro at a cost of 314.84 we have been told that this was for Christmas lunch that was authorised by Mr Coffey, the Chair of the Trust. Mr Gillilands card used on December 2010 at Les Briconautes at a cost of 199.05. Mr Davies card used in June 2011 at Le Pressoir at a cost of 312.42. 90. At the time of our visit Mrs Turner was developing the business justification for Trustees/Federation staff to provide cover at the French Centre and a case showing that funding the Trustee/staff travel and subsistence (a maximum of 20 per person per day was proposed) proved value for money when compared to quotes obtained for 24 hour surveillance of the property (a copy of the draft was provided). However the policy will need to be agreed by all Trustees. Procurement Practices 91. Concerns were raised by EA that The same suppliers were being used continually. EU procurement directives were not being complied with. Credit card purchases and expense claims were being used to purchase goods and services circumventing more appropriate procurement routes. 92. During the review we: Reviewed the declarations of interest made by Federation trustees and Procurement Practices 91. The Trust accepts that in some cases the same supplier is used on a regular basis as they provide the type and quality of work required to provide consistency across the Federation. See point 103. EU regs: see 102 107. Credit Cards: see point 108. See points 93-97 and 98-108 and 32-54

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staff members. Used Riskdisk software (credit reference software) to identify if any Federation trustees or staff members were directors / shareholders of companies frequently used by the Federation. Reviewed a number of procurements to understand how the procurement had been undertaken and who had been involved in the decision to use the supplier. Discussed the engagement/employment of relatives of trustees/senior management and reviewed trustee minutes when this issue was discussed. Reviewed credit card and expense claim purchases. Declarations of Business Interests 93. The following Trustees / staff have declared links with suppliers the Federation does business with: Terry Coffey, the Chairman, owns a company, Jointine that is a tenant of the Lindum Group, who the Federation have used for a number of their large building/refurbishment projects (see later). Mr Coffey also declared a link with Nicholsons who undertake the Federations annual audit of their accounts as they also audit Mr Coffeys own company. Mr Coffey stated that he did not participate in Trustee/Executive meetings when procurement decisions were required and Lindum / Nicholsons were bidders. We have seen evidence of this in Executive meeting minutes. However although Mr Coffey did declare an interest in Lindums during discussions for the St Katherines House refurbishment in December 2008 a note of the discussions also indicate that he did participate in the decisions stating his preference was for Lindums as it was better placed in the financial climate to start and finish the work. The note also reflected that two large construction companies in 93 97: Declaration of Interests/Pecuniary Interests: Additional Information has been sent to Trustees and further advice will follow from the new FD.

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Lincolnshire had recently gone into liquidation. Ann Turner, Company Secretary and the Federations Development Coordinator, declared an interest in R&SL North, a building contractor owned by her cousin. Although R&SL North have been invited to tender for work we cannot find evidence that they have been a supplier to the Federation. 94. A number of other trustees and staff have declared links with other companies but none that we identified as being suppliers to the Federation. 95. Mr Gilliland did not declare any interest/links with companies in his 2011 declaration but in his 2010 declaration he did declare his links with his daughters company ANO Services. 96. We were informed that Maureen Crosbie, the Deputy Chair, is a shareholder in Marks and Spencers and used her discount to purchase items for both the French Centre and the Boarding Wing. However Mrs Crosbie has not declared that she is a shareholder of Marks and Spencer. 97. Our review of Riskdisk information for the Lindum Group, R&SL North and Jointine found no links (as directors or shareholders) between companies and the Federations trustees and senior staff. 98. Procurement Policy and Practices The current Procurement Policy for the Federation states: All goods/services ordered with a value over 50,000, or for a series of contracts which in total exceed 50,000, must be subject to formal tendering procedures. Purchases over the threshold may fall under EU 98, 99,100, 101, The Trust acknowledges the comments on procuring and is aware of the EU requirements. As with Academy builds procured by the Local Authority there is a commitment by the Trust to employ local comapanies/labour wherever

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procurement rules, which requires advertising in the Official Journal of the European Union. Guidance on the OJEU thresholds is given in Annex 3d to the Academies Financial Handbook. 99. The policy does not identify what is meant by formal and all the procurements we reviewed during our visit were either restricted tenders, where companies had been invited to submit a tender, or single tenders. No procurements had been advertised in OJEU or been subject to open tendering, the market has therefore not been tested. It is clear that some tenders should have been advertised in OJEU but some could also be classed as construction work which is subject to the higher EU threshold of over 3 million. 100. In reviewing documentation to support procurement decisions we were able to identify some evidence of tenders from more than one supplier for individual pieces of work and decisions on which supplier should be used being discussed and agreed at Executive meetings. However all the paperwork we would expect to find was not present and the Federation cannot therefore demonstrate that the purchasing decisions made are transparent. 101. We discussed procurement activities with Ann Turner, the Company Secretary and Development Coordinator, who has dealt with all the major procurements since the Federation was established. She stated that the Federation policy was to use local Lincolnshire suppliers wherever possible. She was able to give background on why sometimes single tender procurements were made but the reasons were not documented in the file.

possible.

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102. Another area of concern is that there are no contracts in place for work undertaken. Major work for hundreds of thousands of pounds has been awarded to companies and contracts have not been signed to protect the interests of the Federation. Mrs Turner stated that work is managed via the work schedule agreed with the supplier. Work Awarded 103. Mrs Turner stated that they do have some preferred suppliers for Academy fixtures and fittings as there is a Priory look that they want to achieve in all their academies so they have suppliers that they know can deliver this. For example the supplier they use for some of their furniture is the only supplier that can provide the look and feel they want. They have a particular supplier they use for any new garden developments as they know what the Priory want and believe they get good value for money as they charge little for the design. For other work they do not have preferred suppliers but Mrs Turner stated that much of the time the work has to be undertaken at short notice and in a short timescale so some suppliers cannot react as quickly as required. 104. t is clear that the Lindum Group have received a lot of business from the Federation over the last three years from information provided we estimate payments over the last three years by the Central Federation to Lindum to be in excess of 6 million. Sometimes the work awarded to Lindum has been as part of a tender exercise and sometimes on a single tender basis. When we discussed this with Mrs Turner she stated that the Lindum Group were at an advantage when they bid for any work such as new buildings (pods) as they know the design and the Priory way from previous work undertaken. Examples of contracts awarded to the Lindum Group are detailed below:

102, 103 Design work for garden areas are not charged by the local company used by the Trust. The market has been tested in terms of inviting other suppliers to price for work, particularly at the Ruskin and Witham Academies. In those instances design work was being charged and the price was then reflected in the quotes making them unaffordable or that the timescales requested by the Trust could not be met. The Trust did minute at the Executive meeting that work such as this would not require the usual 3 quotes. The Trust is reviewing the tendering policy and will work with the EFA to produce a robust document. The Trust is currently looking at an agreed contract with their legal advisers, which can be used alongside the new policy for any projects in the future.

104: The Trust acknowledges that time constraints put on the procurement team must be realistic and allow them to test the market using the procurement policy in the correct manner. The Trust accepts that unreasonable timetables for work to be carried out have resulted in the policy being circumvented. The Trust also acknowledges that budgets must be able to be managed by the procurement team and not be exceeded to the point where the value of the work is over the EU limits.

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Contract

Tendered Should have been advertised in OJEU? The French 1.4million No Yes Centre (started as refurbishment refurbishment 500,000 but then work expanded)

Estimated value

Reasons for selection

Laughton 400,000 Manor building pod and some refurbishment of Farmhouse

Did contact some suppliers to ask if they would tender but short

No interest from suppliers in France (not advertised, word of mouth) and did not think they would get other British suppliers to go to France to do the work No building No one else pod classed as tendered for construction. pod note Other work in file four less than EU other threshold. suppliers contacted but three did not

The original scope of works was confined to the refurbishment of the Eastern barn to provide mixed accommodation, with some minor refurbishment of the existing farmhouse, as attached schedule cost 02/06/08 . Ms Peltier, a French Notaire was employed to help French process. Paul Sexton, an independent professional was engaged directly by Mr Gilliland to advise on procurement issues and services requirements. Following Mr Sextons advice the local Mayor was approached to provide names of contractors in the vicinity who would provide bona fide tenders for the works. However timescales submitted by local contractors failed to meet the minimum requirements of Mr Gilliland and an alternative contractor was approached to provide budget figures and timescales to complete by target date of September. At this time the total sums involved for the initial project were 585k, which we were advised were well below the minimum threshold for EU public procurement directives. The contractor was engaged to carry out the refurbishment of the Eastern barn in accordance with initial requirements and under the supervision of Paul Sexton. During initial design stage feasibility assessment a local architect Etienne Voison was engaged to liaise with the local authority building control departments, Veritas. Due to issues with mixed sexes and French fire control requirements the Architect advised that the scheme was enlarged to provide separate sex accommodation by

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notice and no one would.

Faraday project building

1.4million Yes

respond because of time constraints. One said they would look at specification but did not submit a tender. For windows for Farmhouse one other company bid but Lindums was just under 20,000 cheaper. No - building Two other pod classed as quotes construction. received Lindums cheapest. Quotes undertaken

utilising the Western barn. As such the contract sum was extended to provide for the unforeseen requirements of local regulations, and a revised contract sum of 1,074,000 agreed.

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St Katherines 205,552 House refurbishment

Yes

Yes

Witham Academy swimming pool

750,000

Yes

No construction

in Feb/March 2008. Two other quotes Lindums in the middle (9,000 difference between all three). One other quote Lindum cheapest by over 400,000. Lindums were also used for the Priory LSST pool (prior to 2008) 105 Agree

105. Lindums were not awarded the contract for the running track at Priory LSST after bidding for it. The award went to another supplier who was slightly cheaper and the company selected (Balfour Beatty) were already undertaking other work at the site and included extras in their

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quote that Lindums did not include. 106. A considerable amount of work was undertaken at the French centre by David Edney Enterprises. In the period 01/09/10 to 31/08/11 this totalled 80,803.44. We were unable to establish documentary evidence as to how this English speaking French builder was recruited and can only rely upon a statement from Mrs Willey that he was recruited by Paul Wilson, a surveyor used on the French project. The payment trail has been traced through the invoices and French bank accounts from which he was paid. 107. By not complying with EU Procurement Directives the Federation are running the risk of a challenge by other suppliers that could be taken to the High Court or the European Court of Justice. The penalties for noncompliance with the EU Directives were strengthened in 2009 with the introduction of the amended Remedies Directive. Under this penalties for non-compliance, for example for not advertising in OJEU, can be severe, including the suspension of any tender exercise or contract that has been awarded through not following the Directive and unlimited financial damages to the supplier challenging and possibly the supplier whose contract has been ended as a result of the challenge. Purchase of Goods and Services Using Credit Cards/Expense Claims 108. The sections on Use of Credit/Charge Cards and Trustee/Federation Staff Expenses contain examples of purchases of goods and services which have circumvented the Federations own procurement policy. As invoices/receipts have not always been supplied for the credit card/expense claim purchase the Federation has not been able to re-claim VAT on these purchases. A number of purchases have 108 The new policy on the use of credit cards will resolve this issue 106/107 Arrangements for any procurement at the French Centre since completion by Lindum Construction were managed by RTG and LG. This arrangement no longer exists and any further expenditure will be managed using the new procurement policy by the procurement team.

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also been made in France, paying the French equivalent of VAT, which, we understand, cannot be reclaimed in the UK. This has resulted in a loss of revenue for the Federation. Other Issues Refunds to the Federation as a Result of Visit 109. During our review we identified: An invoice for 27,780 received on 31/08/2011from Budget Stretcher (UK) Ltd had been paid by the Federation. However an email attached to the invoice indicated that the payment should have been made by Balfour Beatty as it related to an academy new build. Balfour Beatty were invoiced for the amount on 2 February. A payment for 531 for Health Screening was made twice using a company credit card the 2nd time because the company stated they had not received payment. A refund of 531 was obtained from the company following our visit. Duplicate payments to Trustees for expenses claimed (as detailed above) amounting to 2,640.96 have been refunded by Mr Gilliland and Mrs Crosbie. 109 The Trust was asked to order the goods for the new academies this way by the LA and BB. This was because BB did not have the company on their procurement list. BB has been invoiced for the goods concerned.

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Annexe d: Procurement annexe

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