Ministers need to take control of “faltering” academy finances or
let councils oversee them, town halls urge today.
The Local Government Association, which represents 370 councils
in England and Wales, says the fact so many academies are in
financial trouble, shows the pressures that schools are under and
that the current system of oversight is not working.
This follows a series of reports which have raised concerns over
the financial management of academies.
According to the Kreston UK accountancy network, eight in 10
academies are in deficit, and academy trusts are failing because
of poor financial governance.
Academies are not supposed to run deficit budgets.
Council-maintained schools can if absolutely necessary, on
license from the local authority, providing there is a full plan
to show how the finances are going to be brought back into
balance as soon as possible.
This tends to happen if, for example, maintained schools have had
to expand to meet demand for school places in their areas and are
waiting for government funding to catch up with increased numbers
of pupils.
MPs on the Public Accounts Committee have also said that academy
trusts needed to show the highest standards of governance,
accountability and financial management, and that many trusts
were falling short.
And in a recent report on academisation, the National Audit
Office recommended that the Department for Education should apply
financial risk and due diligence tests to all academies and
trustees.
The LGA says these highlight the need for the Government to
either take control of faltering academy finances or let councils
oversee them, to give parents assurance that their child’s school
is well-run and financially stable.
It says parents are currently denied this due to a lack of
accountability and transparency in the academy system.
Unlike for council-maintained schools, information relating to
academy balances is not publically available.
Councils currently oversee the budgets of maintained schools,
making sure that the books are balanced, money is being spent
appropriately, and any inconsistencies or concerns are spotted
and dealt with quickly.
The LGA says councils are ready and willing to step in to make
sure this is the case for academies.
Chair of the LGA’s Children and Young People Board, Cllr
, said:
“We urge the Government to get faltering academy finances under
control, or allow councils to step in and oversee them, as they
do with council-maintained schools that face financial
challenges.
“The Department for Education cannot have effective oversight of
spending in more than 7,000 academies. It says that academy
finances are under stricter control than council-maintained
schools, and that they are in better financial health. But the
figures, where they are available, show that many academies are
running up deficits and there are serious questions about
financial governance in many academies.
“The whole point about the academy programme was that schools
would be subject to less oversight and accountability. Now we are
seeing the consequences, with growing concerns emerging around
the financial stability of academies.
“What we need is greater transparency in how academies are
managing their finances and urgent action taken to balance the
books where necessary.
“Councils, which have vast experience running large budgets, are
best placed to do this. This would ensure democratic
accountability, and give parents the certainty and confidence in
knowing that their child’s school to is able to deliver the best
possible education and support, without risk of financial
failure.”
NOTES TO EDITORS
1. Kreston UK accountancy network
Academies Benchmark report https://www.duntop.co.uk/pdf/Academies-Benchmarking-Report-2018.pdf
2. Public Accounts Committee report on
academies https://www.parliament.uk/business/committees/committees-a-z/commons-select/public-accounts-committee/news-parliament-2017/academy-schools-accounts-report-published-17-19/
3. National Audit Office report on
converting maintained schools to academies https://www.nao.org.uk/report/converting-maintained-schools-to-academies/
