- PAC reports concerns on emerging two-tier school system with
some “orphaned” while others “too big to fail”
Around 43% of state-funded schools now operate as academies,
educating over half of pupils in England across over 2,700
academy trusts, and the Department for Education (DfE) aims for
all state-funded schools to become part of a family of academy
trusts.
But in a report today the Public Accounts Committee says a lack
of transparency in local academy financial information is harming
parents’ ability to hold their local academy leaders and the DfE
to account, for the services they provide to pupils or for their
use of public funds.
The PAC says DfE doesn’t have “a handle on excessive pay within
the sector” - with the number of trusts paying at least one
individual in excess of £100,000 rising from 1,875 in 2019/20 to
2,245 in 2019/20 – and that the “Education & Skills Funding
Agency’s decision to use public money to prop up academy trusts
in difficulty … fails to address poor financial management within
academy trusts.”
DfE gave an additional £31 million of financial support to 81
academy trusts in 2019/20, of which £21 million was provided as
non-repayable funding. £10 million of debts held by academy
trusts was written off in 2020-21, including £5 million for a
single trust. The Committee is concerned about the “risk that a
trust becomes too big to fail and could therefore see large sums
of public funds pumped into it to keep it afloat”, while other
less ‘attractive’ schools - financially struggling schools, small
secular primary schools, schools in a rural area - become
“orphaned”.
There are also concerns over the condition of the school estate,
particularly whether pupils have access to facilities that
support learning, and the continuing threat to the health of
pupils from asbestos in school buildings - a significant and
potentially dangerous problem in many schools. £11.4 billion is
required for essential remedial work across all schools but DfE
made £5.6 billion of capital funding available for the education
sector in 2021/22, with only £1.8 billion specifically for
maintaining and improving the condition of school buildings.
Ofsted has downgraded schools based on inadequate facilities, and
“there is a risk that schools are not receiving sufficient
capital funding to invest in facilities that enhance educational
outcomes”.
, Chair of the Public Accounts Committee,
said: “Parents deserve a lot more visibility and clarity
over exactly what is being provided to their children, in what
facilities, for the vast amounts of public money pumped into the
school system. Parents and pupils have legitimate questions over
the levels of pay at their schools, the conditions and facilities
they’re learning in, and while mysterious millions disappear into
the coffers of favoured trusts, the Department has committed only
a fraction of what is required to address potential dangers to
our young people from schools in poor condition including those
where there is risk from asbestos.
“This unacceptable lack of transparency and accountability to
parents and taxpayers must be resolved before the DfE presses
ahead with plans to consolidate all of our schools into academy
trust groups. The school system at least must give our children a
strong start, on a level playing field that may be lacking in so
many other parts of their lives.”
PAC report conclusions and
recommendations
-
The Department for Education has not yet set out how it
will deliver its ambition to establish a fully academised
school sector that best supports pupils. Despite
reconfirming its commitment to full academisation, the
Department cannot yet tell us how this will be achieved for all
schools across all regions. We remain particularly concerned
over the risk that schools that may be less attractive to
existing or new academy trusts could become orphaned schools,
for example financially struggling schools, small secular
primary schools, schools in a rural area, or a school with any
combination of these characteristics. The Department needs to
take geographical considerations into account when trusts take
on new schools. There is currently regional variation in the
take up of academisation and there can be a wide geographical
spread across multi-academy trusts. Further work is required by
the Department to ensure its plans for full academisation
provide choice to parents, for example over different types of
trusts, and access to learning opportunities to all pupils
across all regions and social groups. The Department asserts
that the Schools White Paper will set out further details about
the government’s plans for academisation. However, there is a
risk that this will not provide enough detail of how
academisation will look on a practical level for pupils and
schools. Academies are not new, nor is the Department’s push
towards full academisation, so it is surprising that a detailed
plan for achieving the government’s ambition has not yet been
published.
Recommendation: When the Department publishes its Schools
White Paper it should be clear about its plan for full
academisation. This plan should clearly set out the Department’s
overall timetable, milestones and measures of success for
academisation, and how the Department will:
- Ensure academisation achieves the intended outcomes for all
pupils across all regions;
- Have a plan to support schools that may be less attractive to
sponsors; and
- Ensure clear and effective due diligence prior to a
maintained school converting to an academy, that takes into
account geographical variations and access to learning
provision.
-
The Department does not fully understand the causes of
variability within the financial performance of academy
schools, and consequently may not know how to best protect the
education for pupils taught in financially struggling
academies. There can be a disconnect between data on
the overall financial health of schools and the experience of
pupils, parents and staff on the frontline. The SARA reports an
improving financial position across the sector as a whole, with
the percentage of academy trusts reporting a deficit falling
from 7% of academy trusts in 2018/19 to 4% in 2019/20. However,
the Department does not yet appear to have a comprehensive
picture of how the COVID-19 pandemic has affected academy
finances, nor the variability of impact. We are also concerned
about the regional disparity in financial performance, with
academy trusts in the North of England reporting a far higher
proportion of deficits (8% of academy trusts) compared with
other regions such as South East England & South London (2%
of academy trusts). Finally, the Department does not yet have a
sufficient handle on excessive pay within the sector, and
therefore cannot assess whether public funds are being well
spent in this area. The number of trusts paying at least one
individual in excess of £100,000 is rising, from 1,875 in
2019/20 to 2,245 in 2019/20, with the Department’s review on
pay yet to be published.
Recommendation: The Department should systematically
investigate, and better disclose within the next Academy Sector
Annual Report & Accounts, the underlying reasons for the
variation in the financial health of academies.
It should, within six months, write to us to explain how it will
improve its understanding of the variation in the financial
health of academy schools and determine whether further
interventions are required to support the financial
sustainability of academy schools.
-
The Department still does not understand well enough
the condition of the school estate, meaning it does not know
whether pupils have access to the learning facilities they
need. Some academy trusts are building large reserves,
and these may be invested in capital projects. However, as we
have previously reported, the Department does not have
information on whether trusts have earmarked reserves for
particular projects and therefore cannot effectively challenge
academy trusts on the build-up or planned use of excessive
reserves. The Department does not systematically collect
comprehensive data on the capital investments held by academy
trusts which are specifically aimed at improving children’s
learning outcomes. It therefore does not routinely monitor how
much schools have been able, or plan, to spend on capital
projects of this nature, for example IT provision, science and
technology labs, and arts facilities. The latest condition data
collected by the Department estimates that £11.4 billion is
required for essential remedial work across all schools. The
Department has made available £5.6 billion of capital funding
for the education sector in 2021/22, of which £1.8 billion is
specifically for maintaining and improving the condition of
school buildings. There is a risk that schools are not
receiving sufficient capital funding to invest in facilities
that enhance educational outcomes. Ofsted have reported
instances where it has downgraded schools based on inadequate
facilities. However, the Department may not know where to
target funding to improve school facilities because it does
have a sufficient understanding of where the gaps
are.
Recommendation: The Department should, within the next
year, collect and publish data on pupils’ access to learning
facilities, and the condition of such amenities, for example IT
provision, science and technology labs, and arts facilities. and
associated equipment. The Department should report how much
capital investment is required to provide all pupils with access
to such core facilities.
-
We continue to be concerned about the Department’s
understanding of asbestos within the school estate.
Asbestos is a significant, and potentially dangerous, problem
in many schools. We have previously found that the Department
did not have a complete picture of asbestos in school
buildings, or enough information to ensure that the risks were
being properly managed. The Department has developed its
understanding of how well asbestos is managed in schools
through its asbestos management assurance process launched in
March 2018 but appears unconcerned that the 7% of schools yet
to return their asbestos survey could be the worst affected
schools without the budget to resolve this. The Department
asserts that those schools yet to respond to the asbestos
management survey would be picked up in the school condition
survey. However, it has still not earmarked specific funding
for asbestos management, or determined whether this is a
barrier to schools engaging with the Department on asbestos
risks.
Recommendation: The Department should urgently chase the
remaining 7% of schools who are yet to respond to the asbestos
management survey. The Department should write to the Committee
within six months setting out its full understanding of asbestos
across the estate, detailing the asbestos risk arising from the
non-responders, along with its plans to manage the asbestos risk
in schools.
-
We are concerned that the Education & Skills
Funding Agency’s decision to use public money to prop up
academy trusts in difficulty fails to address poor financial
management within academy trusts. Academy trusts have
been set up as charitable companies, with more freedoms and
responsibilities than maintained schools, including being
responsible for managing their own finances. There is a tension
between this autonomy and the oversight role by the centre via
the Education & Skills Funding Agency which is required to
provide assurance to the Department who hold ultimate
responsibility for the delivery of education in England. The
Department provided additional financial support of £31 million
to 81 academy trusts in 2019/20 to support financial recovery,
build capacity, facilitate a transfer of academy schools
triggered by financial or educational factors, or as a
short-term advance. Of this, £21 million has been provided as
non-repayable funding. The Education & Skills Funding
Agency has reported that £10 million of debts held by academy
trusts have been written off in 2020-21, including £5 million
for one trust. We are concerned that there is a risk that a
trust becomes too big to fail and could therefore see large
sums of public funds being pumped into it to keep it
afloat.
Recommendation: The Education & Skills Funding Agency
should, within the Treasury Minute response, set out the criteria
it uses to determine whether it is appropriate to provide
additional funding to academy trusts to support financial
recovery, or to write-off an academy’s debt.
-
We are concerned that the Department’s approach to
monitoring the skills and experience of academy leaders, and
the lack of remedial action for leaders of failing academies,
risks further failures across the sector. The
Education & Skills Funding Agency’s monitoring and
intervention activities are designed to consider the
effectiveness of governance arrangements within academy trusts.
However, there is no requirement for trustees to hold financial
qualifications, even where these individuals sit on a trust’s
finance or audit committee. The number of instances where the
independent auditor found some element of income or expenditure
may have been incurred outside permitted use, or instances
where the trust’s internal procedures have not been complied
with, has risen to 9% of trusts in 2019/20, in part driven by
the impact of the pandemic on the internal controls of
academies and their spending. The Secretary of State has used
its ?her powers under Section 128 of the Education and Skills
Act 2008 against 10 individuals, suggesting quite a high
threshold for debarring directors of academy trusts. There is a
risk that the powers available to the Department do not go far
enough to prevent leaders of failing academy trusts from moving
elsewhere within the education system. We remain concerned that
the Department does not have a sufficiently joined up approach
to dealing with misconduct, monitoring the potential
re-deployment of leaders of failing academies within the
education sector, or capturing insights from poor performance
across the sector.
Recommendation: The Department should write to the
Committee within 6 months detailing how it will better identify
and address cases of failed leadership within academies. This
should include how it will ensure the necessary lessons are
learned to avoid similar incidents from occurring in future
elsewhere in the sector.
