Source · Select Committees · Public Accounts Committee
Recommendation 5
5
We are concerned that the Education & Skills Funding Agency’s decision to use public money...
Conclusion
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.
Government Response
Not Addressed
HM Government
Not Addressed
5.1 The government agrees with the Committee’s recommendation. Recommendation implemented 5.2 Local authorities provide a support mechanism for maintained schools in financial difficulty, while the department is responsible for supporting academies in financial difficulty. 5.3 Academy trusts are responsible for managing their own finances and should have the leadership and management capability to resolve any issues themselves. The Education and Skills Funding Agency (ESFA) works closely with academy trusts and will support and challenge them to find the best outcome. Before any additional support is provided, the department expects academy trusts to make use of all support and tools and have a plan to address financial concerns. 5.4 In the most serious cases, and as a last resort, the ESFA may provide additional funding to preserve education provision. Academy trusts are expected to repay any additional funding once they have reached a stable financial position, and non-repayable funding is only used where there is no other means to protect pupils’ interests. 5.5 Provision of additional financial support is transparent. A framework for receiving additional financial support was published in November 2019. This framework sets out the different types of financial support available to academy trusts and for each type: • the eligibility criteria; • the potential conditions of funding; and • how the conditions of funding may vary depending on the value of funding. 5.6 Annual data on the provision of financial support, against this framework, is published alongside the Academy Sector Annual Report and Accounts, with further details set out in the ESFA annual accounts.