PUBLIC ACCOUNTS COMMITTEE REPORT ON ACADEMIES-SOME CONCERNS OVER FINANCIAL MANAGEMENT

Committee expresses concerns over poor cost controls and financial oversight

Comment

A Public Accounts Committee report on the Academies programme describes a system peppered with overspends and errors, but subject to little oversight.

Millions of pounds were wasted on England’s rapidly growing academies programme because of over-complex and inefficient funding systems, according to the Select Committee report.

It urges the Department for Education to tighten its financial grip on these privately run but state-funded schools.

Committee chairman Margaret Hodge, who has gained a reputation for her forthright attacks on government waste,  said inefficient funding systems and poor cost control had driven up the cost of the programme.

“Of the £8.3 billion spent on academies from April 2010 to March 2012, some £1 billion was an additional cost which had to be met by diverting money from other departmental budgets.

“Some of this money had previously been earmarked to support schools struggling with difficult challenges and circumstances. £350 million of the extra £1 billion represented extra expenditure that was never recovered from local authorities.”

A DfE spokesman said the report failed to acknowledge “the significant progress that we have made in improving our systems.

“The academies programme has been a huge success. There are now almost 3,000 academy schools – more than 14 times as many as in May 2010 – with more than two million children now enjoying the benefits that academy status brings. The programme is proven to drive up standards. Sponsored academies are improving far faster than maintained schools.

“We make no apology for the fact that so many schools have opted to convert, and no apology for spending money on a programme that is proven to drive up standards and make long-term school improvements.

“The Department for Education has made significant savings in the last two-and-a-half years and has also set aside significant contingencies, which have been set against the growth in academies.”

He added that the costs of converting academies have already fallen by more than half per academy and that further savings were expected in the future.

Conclusions and recommendations

1.  The value for money of the Academies Programme will ultimately depend on its impact on educational performance relative to the investment from the taxpayer. The Department has chosen to expand the Programme rapidly, incurring an additional cost of £1 billion since April 2010. While it is too early to assess the impact of the expansion on school performance, the Department will need to be able to demonstrate whether value for money has been achieved. It has yet to state how it will do so, or when. The Department should set out what outcomes it aims to achieve from the expansion of the Programme, and how and when it will demonstrate whether progress is on track and value for money has been achieved.

2.  Inefficient funding systems and poor cost control have driven up the cost of the Programme. A large part of the £1 billion additional cost since April 2010 has been caused by the excessively complex and inefficient academy funding system which has reportedly led to overpayments and errors in payments to Academies There was around £350 million extra paid to Academies which was not recovered from local authorities. This system does not operate effectively alongside the local authority system, and makes it hard for the Department to prove that academies are not receiving more money than they should. The Department has not yet brought other types of cost growth under control, for example academy insurance. It should report back to us by the end of 2013-14 on how its funding reforms have reduced systemic problems such as the under-recovery of academy costs from local authorities, and on how far it has brought down other additional costs.

3.  We are not yet satisfied that individual academies’ expenditure is sufficiently transparent to parents, local communities or Parliament. Despite some improvements, key information on what academies actually spend is still only available at trust, rather than individual academy, level. This limits the ability of parents to scrutinise how their child’s school is spending its money, and of communities to hold their local school to account. The Department must publish data showing school-level expenditure, including per-pupil costs, and with a level of detail comparable to that available for maintained schools, so that proper judgments can be made and comparisons drawn to assess value for money. The Department should state how it will make robust, line-by-line information on individual academies’ expenditure publicly available in the most cost-effective way.

4.  New governance, compliance and oversight arrangements for academies remain vulnerable to failure. Some serious cases of governance failure and financial impropriety in academies have gone undetected by the Department’s monitoring, raising concerns that central government may be too distant to oversee individual academies effectively. Irregular expenditure by academies and gaps in the oversight framework led the Comptroller and Auditor General to qualify the 2011-12 accounts of the Department and the Young People’s Learning Agency. Academies’ compliance with mandatory monitoring is not good enough, and it is not yet clear how well revised audit arrangements will address these issues in future. The Department and the Education Funding Agency should review the operation of the new audit and oversight regime put in place this year, and assess whether it is reducing risks to regularity, propriety and good governance.

5.  Forthcoming staff cuts at the Department and its agencies may threaten effective oversight as the Programme continues to expand. We are sceptical that the Department has sufficient resources to properly oversee the expanding Programme, especially as schools now joining are less high-performing and may require greater oversight and scrutiny. The Department should review the Programme’s central resource requirements, and the extent to which efficiency savings expected from new IT systems and assurance processes are being realised, and are sufficient to offset the need for further resources.

6.  The Department has still not made completely clear the roles, responsibilities and accountabilities of different organisations across the changing schools system. Roles previously carried out by local authorities around accountability, performance monitoring and intervention are unlikely to be operating consistently and effectively across different localities and academy structures. We are particularly concerned that interventions in failing academies may be delayed if the respective roles of central and local government, as well as academies and academy trusts, are not clear. The Department should clarify and properly communicate the roles and responsibilities of local authorities, academy sponsors, the Education Funding Agency, the Department, the Office of the Schools Commissioner and Ofsted regarding these aspects of the Programme.

Department for Education: Managing the expansion of the Academies Programme – Public Accounts Committee-April 2013

http://www.publications.parliament.uk/pa/cm201213/cmselect/cmpubacc/787/78702.htm

Note

These are telling criticisms. They suggest the need to rethink the scrutiny and oversight of academies, while preserving the principle of school autonomy. Surveys suggest that around a third of converter schools opted for academy status for financial reasons. As part of the Budget Statement 2013, the Government announced that it would conduct ‘a review of school efficiency’. To inform that review, the government said ‘we have launched a call for evidence to learn more about how schools and academies make financial decisions and the techniques that they find particularly useful. We particularly want to hear your experience of how academies make financial decisions and your opinions/ideas of how academies can improve their efficiency.’ This suggests some concerns in government over the financial management in schools (not just academy schools by the way)  and the additional risks that autonomy might bring.  There is an on-going debate on the accountability of autonomous schools and whether or not another tier is required to ensure greater accountability, given the reduced role of local authorities.Academies are directly responsible  of course to the Secretary of State, through individual funding agreements. Critics say that the Secretary of State , along with a slimmed down education department, cannot possibly  hold these schools  properly to account , even with Ofsteds support.

 

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