Is the city academy programme in ruins?
By Mike Baker
BBC News education correspondent
Will it have a knock-on effect on the government's proposed trust schools, which also rely on outside sponsors supporting state schools?
These questions have been prompted by the unexpected, and most unusual turn of events that have spread from the cash-for-honours inquiry into the sponsorship of city academies.
The shock waves are still rippling out through England's education system after the arrest of Des Smith, the head teacher and former member of the Specialist Schools and Academies Trust.
He is said to have told an undercover reporter that academy sponsors might be offered a knighthood or a peerage.
This week Mr Smith said through his solicitor he "categorically denies the allegations and will be contesting them vigorously".
'Message to millionaires'
But at the NUT conference last weekend, many delegates felt his arrest was a turning point in their battle against city academies.
As NUT executive member Martin Reed argued in the debate on academies: "we are beginning to win hearts and minds ... there are cracks in the edifice of this government".
Setting aside the conference hall rhetoric, just how much damage has been done?
Sara Tomlinson, a delegate from Lambeth, put it even more strongly: "My message to the millionaires is that we won't try to sell you used cars if you don't try to run our schools."
However, setting aside the conference hall rhetoric, just how much damage has been done?
First, let us just remind ourselves what sponsors have to do to get a city academy started and what role they get in return for their cash and support.
According to a briefing for potential sponsors from the Specialist Schools and Academies Trust, they are expected to make a charitable donation of 10% of the building costs of the proposed academy, up to a total of £2m.
Typically an academy costs about £25m to build so, as the brief puts it, the donation of £2m provides a government capital "leverage of 12.5 to 1".
The government funds the entire running costs of the academy at the same rate as for other local schools.
In return, the sponsors get to choose the name and specialism of the academy.
They set up a new charity and appoint the majority of the school's governors. The governors appoint the head teacher and set the strategic direction of the academy.
It is the governance part of this deal that is so controversial.
Few object to philanthropists investing their money in inner city schools.
The government investment is more controversial as a few schools gain disproportionate amounts of capital funds. But since most academies replace very poor buildings in deprived communities that is not the main objection either.
No, the critics' main objection is to the undue influence given to sponsors in return for a donation worth only 8% to 10% of the capital investment.
As the former Labour Party leader Lord Kinnock has put it, sponsors "get control of the governance" and that is "a distortion of control".
If the sponsors were simply rewarded by getting their name on the building, and the glow of satisfaction of triggering substantial government investment, the academies would not be so controversial.
The concern about the sponsors' role in governance arises from a suspicion about their motives.
Philanthropic individuals might now think it better for their reputation to make a donation to a theatre, a park or a charity
The NUT leader, Steve Sinnott, raised the prospect of fast-food manufacturers using sponsorship to make a "back-door entry" into schools, as a way around the ban on marketing to young people.
However, as yet, anything as crude as that seems unlikely.
There are concerns that a few sponsors have a specific agenda. The one most usually cited involves the supporters of the teaching of creationism.
Others wish to see schools with a greater focus on business or technology.
So, to return to the original question about whether sponsors will be deterred by the bad publicity, much will depend on their motives.
If individual sponsors fear aspersions will be cast upon their motives, suggesting they are after a knighthood or a peerage, then - yes - there could be a deterrent effect.
This could particularly deter philanthropic individuals who might now think it better for their reputation to make a donation to a theatre, a park or a charity rather than to a city academy.
There is no doubt that some of the individuals who gave money to city academies are feeling hurt.
One I spoke to was very upset, complaining that he had become "a pariah" just for giving money and time to an institution to teach children.
On the other hand, any sponsor who is determined to influence the ethos of a school - whether it is to encourage creationism or any other faith or specialism - is less likely to be deterred from sponsoring an academy. Their belief in their cause would, presumably, drive them on.
So there may be a dent in the sponsorship drive for academies but it is not likely to halt it. Most sponsors are not wealthy individuals but charities or faith groups.
As has been commented, the Church of England is not going to be deterred from sponsoring academies by the cash-for-honours affair. After all, bishops already have access to the House of Lords.
So the academies programme will continue but it is perhaps more likely that future sponsors will be organisations rather than individuals. Indeed, more than one in three of the first 100 academies have faith groups as their sponsors.
Meanwhile, whatever their motives, the issue of governance remains. Nor is this a small matter.
The city academies are funded directly by government. Once there are 200 of them, the secretary of state will become the biggest provider of secondary education in England, responsible for more secondary age pupils than any single local education authority.
Yet the control of the schools will remain in the hands of the sponsor governors. How closely will the education secretary be able to monitor the strategic management of each academy? And where is the democratic accountability?
Meanwhile, the new breed of academies - the trust schools - will soon appear on the horizon, if the education bill goes through Parliament.
Sponsors will be sought for these too. The difference, of course, is that trust sponsors will get influence without having to put in any cash.
As Chris Waterman, executive director of the Confederation of Children's Services managers, puts it: "you pay 10% of the purchase price to buy the freehold of an academy but you get a trust for nothing; that is not selling but giving away the family silver".
So far only a few potential trust sponsors have come forward. All have been charities or businesses.
If they have a mission to influence schools, they will probably be undeterred.
However, the days of the wealthy individual school sponsor may already be coming to a close.
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