Source · Select Committees · Public Accounts Committee
Forty-Second Report - Financial sustainability of schools in England
Public Accounts Committee
HC 650
Published 4 March 2022
Recommendations
3
We are concerned that financial pressures faced by schools could damage children’s education.
Recommendation
We are concerned that financial pressures faced by schools could damage children’s education. Research by Ofsted in 2019 found that a high proportion of headteachers reported reducing staffing levels, narrowing the curriculum and changing how they support pupils with SEND …
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HM Treasury
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4
While we wait for the much-delayed SEND review, the support system continues to fail many...
Recommendation
While we wait for the much-delayed SEND review, the support system continues to fail many children and remains financially unsustainable. In May 2020, we reported that many children with SEND were being failed by the support system and recommended that …
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HM Treasury
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Conclusions (25)
2
Conclusion
The large reserves that some academy trusts are building up mean that a significant amount of funding is not being spent on educating pupils currently in school. In the year ending 31 August 2020, nearly a quarter of academy trusts (22%) had reserve balances equivalent to more than 20% of …
1
Conclusion
On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department for Education (the Department) and the Education and Skills Funding Agency (the ESFA) on the financial sustainability of schools in England.1
5
Conclusion
In 2018–19, the Department introduced a new national funding formula with the aim of allocating funding for schools more transparently, consistently, and fairly.6 We reported in October 2021 that the national funding formula had led to a re-balancing of funding away from more deprived schools towards less deprived schools. Between …
6
Conclusion
The COVID-19 pandemic has had a significant impact on the school system but data are not yet available to indicate how schools’ financial health has been affected.11 The Department is providing extra funding to help schools cover costs relating to COVID-19, mostly for catch-up learning, but does not know the …
7
Conclusion
Maintained schools report their finances for the year ending in March. Most maintained schools were in surplus from 2014–15 to 2019–20, with 88% reporting a cumulative surplus in 2019–20. However, the proportion reporting a deficit more than doubled from 5% to 11% over the same period.15 The proportion of maintained …
8
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 …
9
Conclusion
The ESFA recognised that it needed to explore the geographical variation further and do more analysis, noting that the local authorities in the greatest difficulty were in different parts of the country. It said that, as maintained schools are funded on the same basis as academies, the position came down …
10
Conclusion
The ESFA told us that it was also keen to explore the reasons why maintained secondary schools appeared to be in more financial difficulty than maintained primary schools. The Department explained that the differences in the financial health of maintained primary and secondary schools had principally been driven by the …
11
Conclusion
Academy trusts report their finances for the year ending in August. In 2019/20, 93% of academy trusts reported a cumulative surplus, up from 88% in 2017/18. The proportion reporting a cumulative deficit fell from 7% to 4% over the same period.25 The net position for the academy sector as a …
12
Conclusion
We asked about the large reserves that some academy trusts seemed to be building up. In 2019/20, 22% of academy trusts had built up reserve balances equivalent to more than 20% of their annual income. The ESFA told us that it wanted academy trusts, as charitable trusts, to hold reserves …
13
Conclusion
The ESFA explained that, in looking at an academy trust’s reserves position, an important question was how much the trust had designated for capital works, school improvement and projects to take on a new school with challenges. If the amount left after that was more than 20% of income, it …
14
Conclusion
The ESFA said it expected that, for the very great majority of academy trusts, the level of reserves was either reasonable or, where the level on the face of it looked high, the amounts were being held for a particular purpose to support the needs of the pupils. The Department …
15
Conclusion
In 2018, our predecessor Committee, in light of its concerns about the wider issues affecting the school system, asked Ofsted to reflect on the main risks to schools’ effectiveness and the systemic causes of poor performance, including the impact of funding pressures.32 In response, in 2019, Ofsted carried out qualitative …
16
Conclusion
We have heard examples of local schools taking steps such as cutting staff, particularly teaching assistants, and reducing provision for pupils with SEND, in order to make savings.34 We also received written evidence from stakeholders in the sector about how schools had responded to financial pressures and the damaging impact …
17
Conclusion
We asked the Department whether it was aware of the measures schools were taking in response to financial pressures and if they were a cause for concern. The Department told us it had been encouraged that, during the period when school budgets were falling per pupil in real terms, expenditure …
18
Conclusion
The Department told us that staff-pupil ratios had stayed relatively stable, as had the number of teaching assistants across the school system. We note, however, that while the ratio of pupils to teachers remained relatively stable in nursery and primary schools from 2014 to 2020, varying between 20.3:1 and 20.9:1, …
19
Conclusion
Ofsted’s research also found that 44% of primary headteachers and 67% of secondary headteachers reported that responses to financial pressure had led to some reductions in curriculum breadth.41 We asked the Department whether it was monitoring whether schools were dropping humanities or languages, because they did not have the staff …
20
Conclusion
The Department has not to date carried out its own research into the impact of financial pressures on schools’ provision.43 The ESFA told us that it would now do a proper study on this area, with a representative sample of schools.44 Support for children with special educational needs and disabilities
21
Conclusion
In May 2020, we reported on the support in place for children with special educational needs and disabilities (SEND). We concluded that many children with SEND were being failed by the support system and recommended that the Department should, as a matter of urgency, complete its SEND review which had …
22
Conclusion
We asked the Department why it had not made more progress in completing the SEND review. The Department told us that the review had been delayed as a result of the COVID-19 pandemic. First, it had paused work on the review and diverted resources 38 Qq 93–95 39 Q 56 …
23
Conclusion
The Department acknowledged that the SEND review had been far too long delayed and said that the Secretary of State had now committed to publishing the results of the review in the first quarter of 2022, alongside the Schools White Paper. Members noted that the support system was still not …
24
Conclusion
We asked the Department what the metrics of success for the SEND review would be and how it would know that it had succeeded in giving the necessary support to children with SEND. The Department told us that the goal of the review was to improve outcomes for children and …
25
Conclusion
The Department funds local authorities for support for children and young people with high needs through the dedicated schools grant. The number of local authorities reporting a deficit on their dedicated schools grant increased from five of 150 in 2014–15 to 94 of 149 in 2019–20. The total deficit, for …
26
Conclusion
In our report in May 2020, we found that there were not enough state special school places in some parts of the country, meaning that local authorities had to cover the high cost of places in independent schools and spend ever larger amounts on SEND transport. We recommended that the …
27
Conclusion
The Department said it had secured additional funding in the 2021 Spending Review including a capital settlement of £2.6 billion, part of which was for additional specialist provision.53 It told us that, as well as the extra funding, it was working directly with those local authorities with some of the …