The Public Accounts Committee today warns that the DfE’s reliance
on national figures that indicate schools are in reasonable
financial health is masking “significant variation and challenges
for individual schools”.
The Committee has significant concerns on more-deprived schools,
measured by proportion of children eligible for free school
meals, “faring worse than less-deprived schools under the
Department’s new funding system” - while some academy trusts are
building up large reserves, meaning a significant amount of
funding is not being spent on educating pupils currently in
school.
Some of the steps that schools have taken to maintain their
finances have adversely affected children’s education: cutting
staff, dropping subjects from the curriculum and further reducing
the support system for pupils with special educational needs and
disabilities (SEND) which “continues to fail many children and
remains financially unsustainable”.
The Department for Education also “has little assurance” that
extra £4.7 billion committed for school funding in the 2021
Spending Review “will be enough to cover cost pressures including
the impact of the COVID-19 pandemic”.
, Chair of the Public Accounts Committee,
said: “DfE’s airy assurances about the healthy books
of academies in particular mask some cruel divides between the
haves and have nots - unacceptable differences in life chances
for our children and young people from the get-go, through no
fault of their own.
“But we see the Department’s apparent disregard for the
inequalities exposed and exacerbated in the pandemic in the
catchup provision debacle, and in all the children and their
families still struggling, years after the promised review, with
the poor provision for special educational needs and
disabilities.
“Rather than the Department blithely looking for laurels to
rest on it must grasp that it’s not ok for any group of our
children to be abandoned in the system that it oversees.”
PAC report conclusions and
recommendations
-
The Department does not understand well enough why
there is so much geographical variation in maintained schools’
financial health and why maintained secondary schools are under
particular financial pressure. In the year ending 31
March 2020, 11% of maintained schools were in deficit overall.
However, the proportion of maintained schools that reported a
cumulative deficit varied considerably between local
authorities in England, ranging from 0% to 46%. In 26 local
authorities, more than 20% of maintained schools were in
deficit. Maintained secondary schools are under particular
pressure: more than a quarter of these schools were in deficit
in 2019-20, compared with one in ten maintained primary
schools. The Department emphasises that the financial health of
the school system overall has held up well and that most
maintained schools are in surplus. It suggests that there are a
variety of possible factors that may be causing the
geographical variation in schools’ financial health and the
difference between primary and secondary schools, such as
historical patterns of funding and the condition of school
buildings. It lacks robust evidence, however, and accepts that
it needs to do more work to understand better the
variability.
Recommendation: The Department should thoroughly
investigate the geographical variation in in the financial health
of maintained schools, determine the underlying causes and decide
whether some schools or local areas need extra support from
2022-23 to be sustainable.
-
The large reserves that some academy trusts are
building up mean that a significant amount of funding is not
being spent on educating pupils currently in school.
In the year ending 31 August 2020, nearly a quarter of academy
trusts (22%) had reserve balances equivalent to more than 20%
of their annual income. Taken together, academy trusts had a
cumulative surplus of £3.1 billion. The average balance per
pupil held by academy trusts was £689, up from £608 in 2017/18
and more than double the average balance per pupil held by
maintained schools. Academy trusts may build up reserves for a
range of reasons, such as when they are planning capital works.
Where reserves are not being held for specific purposes, the
ESFA considers balances of more than 20% of a trust’s income as
excessive given the low level of risk in the academy sector. It
asserts that it challenges academy trusts with excessive
reserves, particularly if it has concerns about educational
outcomes. However, the Department is not in a position to do
this effectively as it does not have information on whether
academy trusts have earmarked reserves for particular
projects.
Recommendation: The Department should:
- write to us, within one month of this report being published,
with details of the specific actions it has taken where it has
concerns about academy trusts holding significant reserves;
and
- investigate those academy trusts with reserves equivalent to
more than 20% of their income to establish whether the reserves
are justified (including the extent to which they are designated
for specific purposes), and write to us within six months with an
update on the results of this work and any action it plans to
take.
-
We are concerned that financial pressures faced by
schools could damage children’s education. Research by
Ofsted in 2019 found that a high proportion of headteachers
reported reducing staffing levels, narrowing the curriculum and
changing how they support pupils with SEND because of financial
pressures. We have heard similar examples of our own local
schools having to curtail provision, such as cutting teaching
assistants, to balance the books. Some of these actions risk
harming education. The Department asserts that pupil-teacher
ratios and the hours taught in different subjects have remained
largely stable at national level. It acknowledges, however,
that there is cause for concern about a small number of
subjects, such as design technology. We also note that the
pupil-teacher ratio has in fact risen in secondary schools. The
Department’s school resource management initiatives aim to help
schools to squeeze non-staff spending rather than cutting back
on education provision. To date, however, it has not properly
researched the impact of cost pressures on schools. The ESFA
has now committed to carrying out its own study to assess the
impact on provision of the measures adopted by schools in
response to financial pressures.
Recommendation: In carrying out its research, the ESFA
should collect sufficient, reliable evidence on the impact of
financial pressures on schools at local level, including on
whether they are leading to schools narrowing their curriculum
and reducing staffing.
The Department should set out, in its Treasury Minute response,
when it plans to publish the results of the ESFA’s
research.
-
While we wait for the much-delayed SEND review, the
support system continues to fail many children and remains
financially unsustainable. In May 2020, we reported
that many children with SEND were being failed by the support
system and recommended that the Department should, as a matter
of urgency, complete its SEND review which it had begun in
September 2019. The SEND review has still not been completed,
and families continue to be frustrated by the support system.
The Department has now committed to publishing the results of
the review in the first quarter of 2022, alongside the Schools
White Paper. The aim of the review is to improve outcomes for
children and young people with SEND. The Department says that,
as well as educational attainment, the impact measures will
cover life outcomes, such as the number of young people with
SEND not in education, employment or training, and health and
wellbeing. It is essential that the review is completed so
improvements can be made. We are also concerned about the
financial sustainability of the SEND system, for example some
local authorities are struggling to cover the high costs of
places in some private special schools. The Department expects
that increased funding, including for more places in state
special schools, and extra support for some local authorities
with large high-needs deficits, will help to improve the
sustainability of the system.
Recommendation: The Department should set out in the SEND
review (which it has committed to publish in the first quarter of
2022) what improvements it is aiming to achieve and over what
time period, and make clear what specific metrics it will use to
assess whether the support system is improving and becoming more
sustainable.
