Department for Education 'too slow' to identify academies in financial trouble, say MPs

Written by Jim Dunton on 3 April 2018 in News
News

Public Accounts Committee tells ministry to up its game on keeping track of schools operators at risk of going broke

 

Public Accounts Committee chair Meg Hillier. Credit: CSW/Louise Haywood-Schiefer

The Department for Education is too slow to react when trusts running academy schools fail to meet required standards and is not doing enough to identify organisations at risk of financial failure, MPs have warned.

A new report from parliament’s Public Accounts Committee says officials need to be more proactive at monitoring excessive salaries and cases of financial abuse in trusts.

MPs were concerned that the department could not specify how many trusts were currently in deficit, while the most up-to-date publicly available figures – indicating 165 trusts in the red – were from August 2016.


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Following the debacle over the government’s continued funding for failing education and skills provider Learndirect, PAC chair Meg Hillier said it was vital that DfE demonstrated that no academy trusts were too big to fail.

“More than two million pupils are taught by academies in England,” she said. “The governance and financial management of these schools is fundamentally important to pupils’ educational outcomes and future life prospects.

“If parents, parliament and others are to hold them properly to account, it is vital they have timely access to transparent and detailed information. Academies and the trusts that run them must be judged against the standards expected of other schools funded by the taxpayer.

“The cost of failure where an academy chain runs several schools is hugely damaging for pupils, and government needs a better grip of when chains are at risk of failure.”

Hillier said that in addition to a lag in academy schools data becoming available – 2016-17 figures are not due to be published until October – the committee had found there was “too often” a disregard for financial probity in so-called “related party transactions” involving people connected to an academy trust.

“Publication of the sector’s annual report and accounts is a step in the right direction,” Hillier said. “But this information would have more practical value were it to be published quicker and with more comparative detail.

“Excessive trustee salaries deprive the frontline of vital funds and it is alarming that, in two-thirds of cases where government has challenged individual trusts on pay exceeding £150,000, it has not been satisfied by the response.

“The Department for Education must assert its authority in this area as part of a more proactive strategy to safeguard pupils’ education and public money across the sector.

“That means identifying more quickly trusts at risk of financial difficulty, enabling it to intervene effectively.

“It must also demonstrate it has a coherent plan to protect schools’ assets and pupils’ interests should a multi-academy trust fail.”

In addition to calling on the DfE to speed up its reporting of academy trust data, the PAC suggested annual reports should contain a more detailed analysis of the performance of trusts of different sizes and geographic-based data.

Other demands included a request for the department to extend its work on challenging academy trusts considered to be paying excessive salaries, and proposals for action to be taken when those salary levels cannot be justified.

MPs also called on DfE to tighten the rules on trusts entering into related party transactions in its next Academies Financial Handbook, which is expected in July.

 

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