Select Committee · Public Accounts Committee

Academies Sector Annual Report and Accounts 2019-20

Status: Closed Opened: 8 Dec 2021 Closed: 27 May 2022 9 recommendations 24 conclusions 1 report

Follow a series of work on schools funding and financial sustainability and on the end of the PFI contracts that were involved in the development of many Academies the Committee will question senior officials at the Department for Education and Education and Skills Funding Agency on financial transparency and accountability in the Academies sector. If … Show more

Reports

1 report
Title HC No. Published Items Response
Forty-Seventh Report - Academies Sector Annual Report and A… HC 994 25 Mar 2022 33 Responded

Recommendations & Conclusions

33 items
2 Recommendation Forty-Seventh Report - Academies Sector… Rejected

The Department does not fully understand the causes of variability within the financial performance of...

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 … Read more

Government response AI summary
The government disagrees with the Committee’s recommendation and says the national funding formula distributes funding fairly and it has an effective assurance programme for academy trusts.
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HM Treasury
3 Recommendation Forty-Seventh Report - Academies Sector… Rejected

The Department still does not understand well enough the conditions of the school estate, meaning...

The Department still does not understand well enough the conditions 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, … Read more

Government response AI summary
The government disagrees with the recommendation and will not collect and publish data on pupils' access to learning facilities. The department prioritizes ensuring sufficient school places and that the estate remains in a safe, operational condition.
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HM Treasury
4 Recommendation Forty-Seventh Report - Academies Sector… Not Addressed

We continue to be concerned about the Department’s understanding of asbestos within the school estate.

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 … Read more

Government response AI summary
The government response does not address the recommendation about asbestos in schools. It provides an unrelated comment about waiting times for elective and cancer treatment.
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HM Treasury
5 Recommendation Forty-Seventh Report - Academies Sector… Accepted

We are concerned that the Education & Skills Funding Agency’s decision to use public money...

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 … Read more

Government response AI summary
The government agrees with the recommendation to 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 and states that this framework is already in place.
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HM Treasury
6 Recommendation Forty-Seventh Report - Academies Sector… Accepted

We are concerned that the Department’s approach to monitoring the skills and experience of academy...

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 … Read more

Government response AI summary
The government will make regulations under section 19(7)(c) of the Skills and Post-16 Education Act 2022 to prevent trust leaders judged to be unfit from moving to elsewhere in the education system and will write to the Committee by September 2022 with a full response.
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HM Treasury
1 Conclusion Forty-Seventh Report - Academies Sector… Acknowledged

On the basis of the Academy schools sector in England: consolidated annual report and accounts...

On the basis of the Academy schools sector in England: consolidated annual report and accounts 2019/201 (SARA), we took evidence from the Department for Education (the Department) and the Education & Skills Funding Agency (the ESFA).

Government response AI summary
Acknowledges the committee's introduction regarding the Academy Sector Annual Report and Accounts, academy trusts, and their responsibilities and funding.
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HM Treasury
7 Conclusion Forty-Seventh Report - Academies Sector… Not Addressed

The Department and ESFA work closely with Regional Schools Commissioners to oversee and support the...

The Department and ESFA work closely with Regional Schools Commissioners to oversee and support the sector. Regional Schools Commissioners currently operate across eight regions in England.14 The Department stated that it was looking at the split between regional areas and whether these could be better aligned with the regional split … Read more

Government response AI summary
The department is working with Falcon Education Academies Trust and St Joseph’s Catholic MAT to pilot a new approach for schools that cannot be placed with a strong MAT sponsor and Regional Directors will engage local partners to determine the best way to develop a …
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HM Treasury
8 Conclusion Forty-Seventh Report - Academies Sector… Accepted

There has been variable take up of academisation across different regions.

There has been variable take up of academisation across different regions. For example, 29% of state-funded schools in Lancashire & West Yorkshire were academies in 2019/20, compared to 56% in South-West England.16 We asked the Department about its understanding of the reasons in these variances. The Department told us that … Read more

Government response AI summary
The government agrees with the recommendation (quoted in its response) for a clear plan for full academisation. It confirms the Schools White Paper provides the basis for this, committing to set out further detailed plans after sector engagement, piloting new approaches for harder-to-place schools, and …
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HM Treasury
9 Conclusion Forty-Seventh Report - Academies Sector… Accepted

MATs are not restricted to a geographical region.

MATs are not restricted to a geographical region. For example, the largest MAT, the United Learning Trust, is responsible for 76 academy schools spread across England.19 The Department informed us that there was a weighting towards geography when making decisions on the conversion of maintained schools to academies and that … Read more

Government response AI summary
The government agrees with the implicit recommendation on multi-academy trust (MAT) strategy, outlining plans from the Schools White Paper to achieve a fully trust-led system by 2030. This includes new regulatory approaches, defining strong trusts, and investing £86 million to build trust capacity in Education …
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HM Treasury
10 Conclusion Forty-Seventh Report - Academies Sector… Accepted

We asked the Department about the rise in primary schools converting to academies and whether...

We asked the Department about the rise in primary schools converting to academies and whether existing secondary trusts have sufficient experience and skills to take on primary schools. The Department responded that it did not have a set view on the make- up of a MAT, but that in such … Read more

Government response AI summary
The government agrees with the implicit recommendation on MAT structure and growth, detailing plans from the Schools White Paper to achieve a fully trust-led system by 2030. This involves growing strong trusts, a new regulatory review, and investment to develop a strong trust landscape.
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HM Treasury
11 Conclusion Forty-Seventh Report - Academies Sector… Rejected

In our March 2022 report on the financial sustainability of schools in England, we were...

In our March 2022 report on the financial sustainability of schools in England, we were concerned that some academy trusts were building large reserves that meant a significant amount of funding was not being spent on educating pupils currently in schools.23 For example, in 2019/20 there were 227 academy trusts … Read more

Government response AI summary
The government explicitly disagrees with the implied recommendation regarding large academy trust reserves and current reporting. It states it cannot introduce new analysis into the current SARA but commits to undertaking research into financial pressures for inclusion in the 2022-23 SARA.
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HM Treasury
12 Conclusion Forty-Seventh Report - Academies Sector… Rejected

We asked the Department about the regional differences in the financial health of the sector.

We asked the Department about the regional differences in the financial health of the sector. In 2019/20, 8% of academy trusts in the North of England were in a cumulative deficit compared with 2% in South East England & South London.26 The Department informed us that the number of trusts … Read more

Government response AI summary
The government explicitly disagrees with the recommendation (quoted in its response) to systematically investigate and disclose reasons for variation in the financial health of academies. It states it cannot add significant analysis to the current SARA but commits to undertaking research into financial pressures for …
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HM Treasury
13 Conclusion Forty-Seventh Report - Academies Sector… Rejected

The Spending Review 2021 confirmed an additional £4.7 billion of funding for the core schools...

The Spending Review 2021 confirmed an additional £4.7 billion of funding for the core schools budget in England by 2024–25.28 However, this followed real-term reductions in the two years to 2018–19, and a period of virtually unchanged average per-pupil funding in real terms between 2014–15 and 2020–21.29 We received written … Read more

Government response AI summary
The government explicitly disagrees with the committee's implicit recommendation, defending the national funding formula and reiterating that financial management is the primary responsibility of academy trusts. It notes that the 2021-22 SARA is finalised but commits to undertaking research into the impact of financial pressures …
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HM Treasury
14 Conclusion Forty-Seventh Report - Academies Sector… Rejected

The Department told us that it reviewed surpluses on an individual trust basis, particularly those...

The Department told us that it reviewed surpluses on an individual trust basis, particularly those reporting higher levels of reserves, and challenged trusts with reserves that are not designated for a particular educational purpose. We have previously reported that the Department does not have information on whether academy trusts have … Read more

Government response AI summary
The government explicitly disagrees with the implied recommendation regarding academy trusts holding significant reserves and the committee's request for action details. It maintains that primary financial management responsibility rests with trusts and defends its existing assurance programme, but commits to undertaking research on financial pressures …
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HM Treasury
15 Conclusion Forty-Seventh Report - Academies Sector… Accepted

COVID-19 has had a variable impact on the financial health of academy trusts, although the...

COVID-19 has had a variable impact on the financial health of academy trusts, although the full data is not yet available. The 2019/20 SARA reports that the financial stability of the sector has improved due to the work being done by the Department and ESFA to improve financial management in … Read more

Government response AI summary
The government states it agrees with and has implemented the explicit PAC recommendation 5 to set out criteria for providing additional funding to academy trusts in difficulty. A transparent framework detailing eligibility criteria and conditions for financial support was published in November 2019, with annual …
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HM Treasury
16 Conclusion Forty-Seventh Report - Academies Sector… Accepted

When we examined academy schools’ finances in March 2018, we were concerned that some academy...

When we examined academy schools’ finances in March 2018, we were concerned that some academy trusts appeared to be using public money to pay excessive salaries. We recommended that the Department should challenge all academy trusts that were paying 32 Q 92 33 Q 64; Committee of Public Accounts, Financial … Read more

Government response AI summary
The government agrees with the implicit recommendation to address concerns about excessive salaries. It commits to new regulations under the Skills and Post-16 Education Act 2022 to prevent unsuitable trust leaders from moving, will launch a regulatory review in May 2022, and will provide a …
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HM Treasury
17 Conclusion Forty-Seventh Report - Academies Sector… Accepted

The number of academy trusts paying at least one individual above £150,000 increased to 473...

The number of academy trusts paying at least one individual above £150,000 increased to 473 trusts (17% of trusts) in 2019/20, from 340 trusts (12%) in 2018/19. Almost two- thirds of trusts (1,772; 64%) in 2019/20 reported paying at least one individual between £100,000 and £150,000, compared with just over … Read more

Government response AI summary
The government agrees with the implicit recommendation to address increasing levels of higher pay. It commits to new regulations under the Skills and Post-16 Education Act 2022 to prevent unsuitable trust leaders from moving, will launch a regulatory review in May 2022, and will provide …
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HM Treasury
18 Conclusion Forty-Seventh Report - Academies Sector… Not Addressed

The Department has estimated that the land and buildings within the academy estate is worth...

The Department has estimated that the land and buildings within the academy estate is worth £56.3 billion at 31 August 2020.43 We asked the Department about its understanding of the academy estate and any concerns it had about its condition. The Department told us that it had not identified any … Read more

Government response AI summary
The government response addresses a different PAC recommendation (PAC recommendation 3) regarding collecting and publishing data on pupil access to learning facilities, which it explicitly disagrees with. It describes existing efforts on estate data collection, but does not directly engage with the provided conclusion #18's …
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HM Treasury
19 Conclusion Forty-Seventh Report - Academies Sector… Rejected

The Department told us that it does not collect data on the suitability of facilities...

The Department told us that it does not collect data on the suitability of facilities in the same way that it does for the condition of the schools estate, and does not systematically collect information on capital projects aimed at improving educational outcomes, such as science labs. It explained that … Read more

Government response AI summary
The government explicitly disagrees with the recommendation (quoted in its response) to collect and publish data on pupils' access to and condition of learning facilities. It states it prioritizes ensuring sufficient school places and a safe, operational estate, and is rolling out Net Capacity Assessments …
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HM Treasury
20 Conclusion Forty-Seventh Report - Academies Sector… Accepted

The Department launched the Asbestos Management Assurance Process (AMAP) in March 2018 to better understand...

The Department launched the Asbestos Management Assurance Process (AMAP) in March 2018 to better understand how well asbestos is managed across all schools.51 When we examined academy schools’ finances in March 2018, we were concerned that the Department did not have enough information about the extent of asbestos in schools … Read more

Government response AI summary
The government agrees with the explicit PAC recommendation 4 to urgently chase the remaining non-responders to the asbestos management survey. It has shared details with regional teams and the HSE, and will provide a progress update to the Committee by September 2022, with comprehensive data …
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HM Treasury
21 Conclusion Forty-Seventh Report - Academies Sector… Accepted

The Department told us that when it first ran the process, 88% of schools responded.

The Department told us that when it first ran the process, 88% of schools responded. It explained that 93% of schools had now responded to the survey, and that it was pursuing the remaining schools and had built asbestos assurance processes into its condition data collection work which should help … Read more

Government response AI summary
The government agrees with the recommendation (quoted in its response) to address asbestos concerns, stating it has shared details of non-responding schools with regional teams and the HSE. It is gathering updated asbestos compliance data through the Condition Data Collection 2 programme and commits to …
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HM Treasury
22 Recommendation Forty-Seventh Report - Academies Sector… Rejected

Following our 2019 report on academy accounts and performance, the Department has continued to develop...

Following our 2019 report on academy accounts and performance, the Department has continued to develop the sector financial information disclosed within the SARA.58 However, as previously reported, we were also concerned about the level of information available to parents.59 In 2018–19 the Department introduced minimum per-pupil funding levels for all … Read more

Government response AI summary
The government explicitly disagrees with the recommendation to publish annual details of per-pupil allocation for each academy school. It explains that the 2021-22 SARA is already being finalised and that existing assurance programmes for academy trusts are effective, while committing to undertake research into financial …
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HM Treasury
23 Conclusion Forty-Seventh Report - Academies Sector… Accepted

The Department told us that many trusts actively explain their use of budgets to parents.

The Department told us that many trusts actively explain their use of budgets to parents. We asked the Department whether the current arrangements should be more transparent, so that parents can see what academies are spending per-pupil. The Department told us that its online benchmarking service allowed viewers to identify … Read more

Government response AI summary
The government states that the primary responsibility for financial management rests with the academy trust and accountability is rigorous via audited accounts.
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HM Treasury
24 Conclusion Forty-Seventh Report - Academies Sector… Not Addressed

When we last reported on the academy accounts, back in January 2019, we were reporting...

When we last reported on the academy accounts, back in January 2019, we were reporting on a SARA that carried forward a qualified audit opinion since its inception in 2015/16 due to a limitation of data available to verify the fair recognition and valuation of the £45 billion of land … Read more

Government response AI summary
The government's response focuses on asbestos management and condition data collection, which is unrelated to the committee's conclusion about the Whole of Government Accounts and academy year-end reporting.
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HM Treasury
25 Conclusion Forty-Seventh Report - Academies Sector… Accepted

The Department explained that the resolution of the qualified opinion on the WGA continues to...

The Department explained that the resolution of the qualified opinion on the WGA continues to be discussed between the Department and HM Treasury, albeit has been deprioritised while government focuses on its response to the COVID-19 pandemic. The Department told us that it envisaged that it may be particularly challenging … Read more

Government response AI summary
The government states it has already addressed the historic qualified opinion on the Whole of Government Accounts regarding land and building valuations. It has introduced its own programme of revaluations using qualified surveyors to ensure accuracy.
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HM Treasury
26 Conclusion Forty-Seventh Report - Academies Sector… Accepted

ESFA’s responsibilities include funding education and training for children, young people and adults; providing assurance...

ESFA’s responsibilities include funding education and training for children, young people and adults; providing assurance that public funds are properly spent, achieve value for money for the taxpayer, and deliver the policies and priorities set by the Secretary of State; and intervening if there is a risk of financial failure.69 … Read more

Government response AI summary
The government states that the primary responsibility for financial management rests with the academy trust and accountability is rigorous via audited accounts.
Read full response →
HM Treasury
27 Conclusion Forty-Seventh Report - Academies Sector… Accepted

An academy trust reporting a cumulative deficit must agree a recovery plan with ESFA to...

An academy trust reporting a cumulative deficit must agree a recovery plan with ESFA to put the trust back on a financially sustainable path. Where an academy trust is reporting a cumulative deficit, it may require financial support, as part of that recovery plan. The SARA reported that non-repayable funding … Read more

Government response AI summary
The government states that academy trusts are responsible for managing finances, and the ESFA provides support and challenge; additional funding is a last resort and is expected to be repaid with frameworks for financial support already in place.
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HM Treasury
28 Conclusion Forty-Seventh Report - Academies Sector… Accepted

The ESFA may also provide loans to academy trusts for new academies that had converted...

The ESFA may also provide loans to academy trusts for new academies that had converted from maintained schools to settle any local authority deficit, which should be repaid over an agreed period of time. These loans may be impaired and written-off where ESFA judge the trust to be in financial … Read more

Government response AI summary
The government states that academy trusts are responsible for managing finances, and the ESFA provides support and challenge; additional funding is a last resort and is expected to be repaid with frameworks for financial support already in place.
Read full response →
HM Treasury
29 Conclusion Forty-Seventh Report - Academies Sector… Accepted

Each academy trust as a charitable company is required to produce annually its own audited...

Each academy trust as a charitable company is required to produce annually its own audited accounts.77 External auditors are appointed by the local academy trust in accordance with the Academy Trust Handbook. Auditors are required to provide an opinion on ‘true and fair’ of the accounts in addition to a … Read more

Government response AI summary
The government states that the primary responsibility for financial management rests with the academy trust and accountability is rigorous via audited accounts.
Read full response →
HM Treasury
30 Conclusion Forty-Seventh Report - Academies Sector… Accepted

In 2019/20, 9% of trusts received a modified regularity opinion i.e.

In 2019/20, 9% of trusts received a modified regularity opinion i.e. a regularity exception was identified, compared with 7% in 2018/19. A regularity exception means that the auditor found some element of income or expenditure that may have been outside its permitted use, or where the trust’s own agreed procedures … Read more

Government response AI summary
The government states that the primary responsibility for financial management rests with the academy trust and accountability is rigorous via audited accounts.
Read full response →
HM Treasury
31 Recommendation Forty-Seventh Report - Academies Sector… Accepted

The Academy Trust Handbook requires relevant trust staff to hold appropriate financial qualifications and experience.81...

The Academy Trust Handbook requires relevant trust staff to hold appropriate financial qualifications and experience.81 However, this requirement does not extend to trustees, including for trustees sitting on audit or finance committees. We therefore asked how the Department and ESFA ensured that academy leaders and trustee had an appropriate level … Read more

Government response AI summary
The government will make regulations under section 19(7)(c) of the Skills and Post-16 Education Act 2022 to prevent trust leaders judged to be unfit from moving to elsewhere in the education system and will write to the Committee by September 2022 with a full response.
Read full response →
HM Treasury
32 Recommendation Forty-Seventh Report - Academies Sector… Accepted

The Department told us that it collected information about academy trust governance arrangements.

The Department told us that it collected information about academy trust governance arrangements. However, the Department told us that it is more likely to use the information collected from ESFA’s monitoring and assessments over financial performance and other data collected from trusts as a means for monitoring the composition of … Read more

Government response AI summary
The government will make regulations under section 19(7)(c) of the Skills and Post-16 Education Act 2022 to prevent trust leaders judged to be unfit from moving to elsewhere in the education system and will write to the Committee by September 2022 with a full response.
Read full response →
HM Treasury
33 Recommendation Forty-Seventh Report - Academies Sector… Accepted

We have previously reported on the limited sanctions at the Department’s disposal to sanction trust...

We have previously reported on the limited sanctions at the Department’s disposal to sanction trust leaders who may be responsible for malpractice, including misuse of funds, across the sector. In our 2019 report on academy accounts and performance, we were concerned that the Department did not have an effective regime … Read more

Government response AI summary
The government will make regulations under section 19(7)(c) of the Skills and Post-16 Education Act 2022 to prevent trust leaders judged to be unfit from moving to elsewhere in the education system and will write to the Committee by September 2022 with a full response.
Read full response →
HM Treasury

Oral evidence sessions

1 session
Date Witnesses
24 Jan 2022 John Edwards · Information Commissioner's Office, Susan Acland-Hood · The Department for Education, Warwick Sharp · Education and Skills Funding Agency View ↗

Who gave evidence

3 witnesses
WitnessOrganisationSessions
John Edwards · Information Commissioner Information Commissioner's Office 1
Susan Acland-Hood · Permanent Secretary The Department for Education 1
Warwick Sharp · Director, Academies and Maintained Schools Education and Skills Funding Agency 1

Correspondence

1 letter
DateDirectionTitle
7 Feb 2022 Correspondence from Susan Acland-Hood, Permanent Secretary, Department for Educ…