Source · Select Committees · Public Accounts Committee
Recommendation 28
28
The ESFA may also provide loans to academy trusts for new academies that had converted...
Conclusion
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 difficulty, and repayment from an academy trust is therefore in doubt.73 In 2020–21 the ESFA wrote off £10 million of re-brokerage debts relating to academy trusts, meaning debts relating to the transfer of an academy from one trust to another as required by the Regional Schools Commissioner, usually where there are concerns about the performance of an academy. This included £5 million for the Shrewsbury Academy Trust.74 The ESFA informed us that this was considered to be an exceptional case.75 We therefore questioned how the ESFA measured whether there may be a risk of system wide failure, and at what level of write-offs would indicate a 69 Academy schools sector in England: Consolidated Annual Report and Accounts for the year ended 31 August 2020, page 59 70 Q49 71 Academy schools sector in England: Consolidated Annual Report and Accounts for the year ended 31 August 2020, page 26 72 Academy schools sector in England: Consolidated Annual Report and Accounts for the year ended 31 August 2020, page Annex 9 73 Education and Skills Funding Agency Annual Report and Accounts, for the year ended 31 March 2021, HC 846, November 2021, p. 99 74 Education and Skills Funding Agency Annual Report and Accounts, for the year ended 31 March 2021, HC 846, November 2021, p. 76 75 Q39 Academies Sector Annual Report and Accounts 2019/20 19 wider problem for the sector. The ESFA told us that there are high standards of financial management and governance across the academy sector and that its monitoring and assessment activities look at any deterioration in financial performance.76 Regularity of academy spending
Government Response
Not Addressed
HM Government
Not Addressed
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.