"Government failing to learn from high-profile academy failures" say MPs

REPORT SUMMARY

In the rush to convert large numbers of schools to academies, the Department did not pay enough attention to ensuring that its scrutiny of applicants was sufficiently rigorous.

It is now strengthening how it examines prospective academies’ financial viability and sponsors’ ability to improve the schools they are taking on, but these issues should have been addressed much earlier and the changes do not go far enough.

It is particularly worrying that the Department still does not seem to be learning the lessons from high-profile academy failures that have been costly for taxpayers and damaging to children’s education.

The one-off costs to the Department for Education of converting schools to academies have been £745 million since 2010-11, but the full cost of conversion, including spending by schools and local authorities, is unclear.

We are concerned, however, that the Department is failing to give a clear sense of direction for maintained schools, academies, local authorities, pupils and parents.

Its policy for converting schools to academies is unclear, and there is substantial regional variation, not only in the extent to which schools have become academies but also in the quantity and quality of support available to struggling schools. 

COMMENT FROM PAC CHAIR MEG HILLIER MP

“The interests of pupils should be paramount in education but the increasingly incoherent schools system is putting this principle at risk.

“Government’s haste in pushing ahead with academisation has come at a cost, with high-profile failures indicating significant weaknesses in its assessment regime.

“The DfE accepts it should do better and we expect it to demonstrate it understands the reasons for these failures and will act on the lessons. It must strengthen scrutiny of prospective academies and sponsors.

“We are also concerned about how the stated aim of academisation – to drive up educational standards – is panning out in practice.

“There is a risk that pupils at poorly performing and smaller schools, less attractive to academy trusts, will be left behind.

“Costs associated with conversion can reduce funding available to local authorities to support remaining maintained schools. Academisation can also undermine councils’ ability to provide school places.

“Oversight of the sector has become confusingly complex, which can place unnecessary burdens on schools and risks weakening decisions in the conversion process.

“Government must meet these challenges and be far clearer about the direction of travel if stakeholders, not least parents and pupils, are to have faith in its approach.”

CONCLUSIONS AND RECOMMENDATIONS

The checks that the Department carries out before schools convert to academies have not prevented a succession of high-profile academy failures that have been costly to the taxpayer and damaging to children’s education. When an academy fails the Department must intervene to find a new sponsor; it ‘re-brokered’ 2.5% of academy schools in 2016‑17. As we have reported previously, the cost to pupils and the taxpayer of failure are particularly high for multi-academy trusts. Some trusts have experienced very serious problems, including well-known examples such as the Durand Academy Trust, Wakefield City Academies Trust and Bright Tribe Trust which ran Whitehaven Academy. The Department accepts that, at Whitehaven, for example, parents have been let down by management that has not been up to the task. It tells us that it is putting in place a new sponsor for Whitehaven but concedes that, with any academy trust that fails and has a financial deficit, the deficit has to be covered with additional public funding. The Department recognises that in the past it has focused on converting large numbers of schools quickly. We consider that this has been at the expense of rigorous due diligence checks and risk assessment. More recently the Department has strengthened its scrutiny of the financial health of prospective academies, although it acknowledges that there is still more to be done.

Recommendations:

The Department should review academy trust failures to identify lessons for its scrutiny arrangements. It should write to us by October 2018 setting out the main reasons for the failures and how it proposes to strengthen its scrutiny of prospective academies and sponsors to ensure that risks are being well managed before and after conversion.

The Department should set out how it plans to improve transparency for parents, to ensure they have access to information and are built into the accountability system. The Department should inform us whether it is still considering whether parents should become members of academy trusts to help with transparency issues.

Some schools that are required to or want to become academies find it difficult to attract potential sponsors or find multi-academy trusts to join. The Department is of the view that it is important to convert good and outstanding schools to academies so that, as part of multi-academy trusts, they can support the underperforming schools in the trust that need most help. In addition, small schools in particular can potentially benefit from the economies of scale offered by joining a multi-academy trust. Some small rural primary schools are unattractive to multi-academy trusts because they are financially vulnerable or geographically isolated. Academy trust boards have a legal responsibility to keep their trusts solvent, meaning that they are not willing to take on schools that appear financially unsustainable. Small schools can also place a relatively greater administrative burden on academy trusts than large schools, relative to the income they contribute to central costs, and they may be less able than larger schools to add value to the trust. Schools that Ofsted has rated as inadequate must convert with the support of a sponsor but there is a shortage of suitable sponsors with capacity to provide effective support, particularly in the north of England.

Recommendation: The Department should set out a clear plan by October 2018 detailing how it will support schools that want to convert to become academies, including how it will overcome barriers faced by small rural schools. The Department needs a clear set of options including an option for schools that cannot secure a sponsor or find a multi-academy trust to join.

Local authorities can incur significant costs when schools become academies, which affects their capacity to support their remaining maintained schools. The Department does not collect data on the costs incurred by local authorities in supporting the conversion process. A survey by the Local Government Association suggests that the average cost to local authorities, in terms of staff time and spending on things such as legal fees, has been between £6,400 and £8,400 for each maintained school that becomes an academy. Some local authorities have chosen to charge schools fees to recover these costs; evidence suggest the charges may range from £2,500 to £20,000 per school. Local authorities also retain any financial deficits accumulated by those schools directed by the Department to become academies because they have been rated as inadequate by Ofsted. The National Audit Office estimates that the total cost to local authorities of these deficits was approximately £7.8 million in 2016-17. In 2017-18 the Department withdrew funding (worth £77 per pupil in 2016-17) that it had previously provided to local authorities for school support and improvement services. We heard that local authorities now tend to focus their limited resources on the weakest maintained schools, leaving good schools with little support.

Recommendation: The Department should develop a better, up-to-date understanding of the costs that local authorities incur as part of converting schools to academies, and the extent to which these are accurately reflected in the fees charged to schools. It should use this information to assess whether it should contribute to the costs that local authorities incur.

Local authorities’ ability to fulfil their statutory responsibilities, including their duty to provide school places, is undermined in areas where a high proportion of schools have become academies. The proportion of schools that have become academies, and the relative proportion of primary schools and secondary schools that are academies, varies widely across the country. In Bromley, 93% of schools are academies, compared with just 6% in Lancashire, Lewisham and North Tyneside. Nine local authorities have no maintained secondary schools and over a third of local authorities have fewer than 50 maintained schools. Regardless of the extent of academisation, local authorities still retain important statutory responsibilities, including a duty to ensure there are enough school places for local children. However, they have no control over the number of places in academy schools. There can be particular challenges in finding appropriate places for looked-after children. The Department emphasises that it is vital for regional schools commissioners and local authorities to work closely together, and says that that three-quarters of multi-academy trusts have formal relationships with local authorities.

Recommendation: The Department should require all academy trusts, as part of their funding agreements, to work with local authorities on school place planning and school admissions, including for vulnerable groups of children. The Department should also outline how this will be monitored.

The Department’s arrangements for oversight of schools are fragmented and incoherent, leading to inefficiency for government and confusion for schools. A large number of disparate people and organisations – including the Department, regional schools commissioners, the Education and Skills Funding Agency, Ofsted, local authorities, education advisers, multi-academy trusts and church dioceses – are involved in supporting schools’ conversion to become academies and overseeing their subsequent educational and financial performance. It is clear that, from schools’ perspective, the oversight system is confused and can be burdensome. In May 2018, the Department recognised, in announcing a consultation on the accountability system for schools, that school leaders can feel accountable to multiple masters, with different demands placed on them. Furthermore, fragmented systems for sharing information between the Department and the Education and Skills Funding Agency increase the risk of duplication of effort, error or omission, meaning that decisions about converting schools to academies or matching schools with sponsors are not as soundly based as we would expect them to be.

Recommendation: The Department should set out, as part of its consultation on school accountability in autumn 2018, how the Education and Skills Funding Agency and regional schools commissioners will work together more effectively. Its proposals should (i) identify and address unnecessary burdens on schools, and (ii) ensure that oversight of schools is made more coordinated and effective.