Source · Select Committees · Public Accounts Committee
Recommendation 8
8
We asked the Department why so many maintained schools were in deficit.
Conclusion
We asked the Department why so many maintained schools were in deficit. The Department highlighted that the financial health of the school system had held up well and that most maintained schools and academy trusts were in surplus. The ESFA noted that only four local authorities had a net deficit when all their individual school balances were combined.18 It said that it was not obvious what the drivers were for the geographical variation, for example there was no clear rural-urban split and it was not linked to deprivation.19 The Department told us that it thought a number of factors contributed to the variation across the country and the situation was challenging because the factors 8 Q 167 9 Qq 151–152 10 Q 172 11 C&AG’s Report, para 6 12 C&AG’s Report, School funding in England, Session 2021–22, HC 300, 2 July 2021, para 10 13 HC Committee of Public Accounts, School Funding, Twenty-First Report of Session 2021–22, October 2021 14 Q 96 15 C&AG’s Report, paras 8, 1.9 16 C&AG’s Report, para 9 17 C&AG’s Report, para 1.15, Figure 5 18 Qq 36, 39–40 19 Q 36, C&AG’s Report, para 1.16 Financial sustainability of schools in England 9 interacted. It explained that historical patterns of funding and the balance of maintained schools to academies in each local authority area were important factors. In addition, in some cases, capital investment and the condition of school buildings made a significant difference.20
Government Response
Not Addressed
HM Government
Not Addressed
1: PAC conclusion: 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. 35 1: PAC 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. 1.1 The government agrees with the Committee’s recommendation. Target implementation date: March 2023 1.2 The national funding formula (NFF), introduced in 2018-19, distributes funding to schools fairly, regardless of geographical location. The formula does not discriminate between maintained schools and academies. The formula is updated annually based on schools’ and pupils’ characteristics. 1.3 It is local authorities’ responsibility to supervise maintained schools, and the Department for Education (the department) expects local authorities to closely monitor maintained schools in financial difficulty, taking action as necessary under their local schemes. 1.3 The department annually publishes information on the reserves of maintained schools, based on schools’ Consistent Financial Reporting (CFR) returns, including analysis of reserves in different phases, and a local authority level breakdown. The latest statistics show a smaller proportion of maintained schools in deficit in 2020-21 compared to 2019-20. The percentage of secondary schools in deficit reduced from 27% to 19% in 2020-21. 1.4 The department monitors variations in phases and will collect perspectives on financial health and explanatory factors from local authority-maintained schools in different geographical areas. The department’s School Resource Management programme is available to schools, allowing them to access available tools and support. The expertise of School Resource Management Advisors (SRMAs) can be deployed to help local authorities and their schools identify opportunities to make better use of their funding. The department will continue to engage and support those local authorities, with schools in deficits, to request Action Plans and offer SRMA expertise to understand and provide advice on addressing these deficits.