Source · Select Committees · Public Accounts Committee
Forty-Seventh Report - Academies Sector Annual Report and Accounts 2019/20
Public Accounts Committee
HC 994
Published 25 March 2022
Recommendations
20
The Department launched the Asbestos Management Assurance Process (AMAP) in March 2018 to better understand...
Recommendation
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 …
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HM Treasury
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22
Following our 2019 report on academy accounts and performance, the Department has continued to develop...
Recommendation
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 …
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HM Treasury
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Conclusions (31)
2
Conclusion
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 …
3
Conclusion
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, …
4
Conclusion
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 …
5
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 …
6
Conclusion
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 …
1
Conclusion
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).
7
Conclusion
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 …
8
Conclusion
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 …
9
Conclusion
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 …
10
Conclusion
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 …
11
Conclusion
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 …
12
Conclusion
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 …
13
Conclusion
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 …
14
Conclusion
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 …
15
Conclusion
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 …
16
Conclusion
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 …
17
Conclusion
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 …
18
Conclusion
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 …
19
Conclusion
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 …
21
Conclusion
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 …
23
Conclusion
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 …
24
Conclusion
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 …
25
Conclusion
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 …
26
Conclusion
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 …
27
Conclusion
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 …
28
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 …
29
Conclusion
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 …
30
Conclusion
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 …
31
Conclusion
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 …
32
Conclusion
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 …
33
Conclusion
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 …