DfE 'does not understand' impact of funding pressures on schools, MPs claim

Public Accounts Committee also said the department lacked teeth when it came to dealing with failing academy trusts.

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The Department for Education does not understand the effect funding pressures are having on the quality of education in schools, the Public Accounts Committee has found, and the department must improve its oversight of the system.

In a report examining academy trusts and their accounts, MPs also said the department had no effective way of issuing sanctions in the event of “serious failings” in the sector.

The report highlighted that the department had not succeeded in meeting a 2017 pledge to improve its understanding of the squeeze on schools.


The impact of the tight finances has acknowledged by education secretary Damian Hinds, who has said “it is challenging for schools making the numbers add up” amid increasing pensions and National Insurance costs alongside rising pupil numbers.

The department has said it would use assessments including Ofsted inspections, to ensure schools were making “desirable” efficiency savings, but MPs said that Ofsted is still “not providing that assurance”.

The report also highlighted that the committee had since been told by the chief inspector of schools were being forced to make “difficult choices” as a result of funding cuts.

“We understand that Ofsted and the ESFA have started to seek to join up their work, but the department still does not understand the impact of funding pressures,” the report said. To remedy this, Ofsted should examine and report on whether the need to make savings is affecting the quality of education and schools outcomes, it urged.

As well as doing more work to understand the financial sustainability of the sector as a whole, the committee called on the DfE to include a specific analysis in its annual report on academy trusts’ financial performance, based on size and locations, it said.

The report also raised major concerns about transparency around academy trusts’ finances. It said the ESFA regularly carried out investigations into academy trusts’ financial management and governance but was “not sufficiently transparent about the results of inquiries”. Results were not always made public, and there were often “lengthy delays” to those that were published, it said, calling for a two-month publication deadline to be instated after inquiries have finished.

The committee also said the department had no effective way of issuing sanctions in the event of “serious failings” at academy trusts.

It highlighted the example of Durand Academy Trust, which was judged “inadequate” by Ofsted in a report last year that said it its leaders were not “fulfilling their responsibilities to ensure pupils’ welfare”. Its former executive headteachers was awarded a lump sum payment of £850,000 despite what the committee called a “catastrophic failure of governance”.

Although the department can issue a ban on teaching or being a school governor, the committee said it had been told by the Education and Skills Funding Authority there was “nothing to stop people involved in malpractice from acting as trustees or governors elsewhere, for example at a further education college, or from setting up businesses that could trade with the education and training providers that it oversees and regulates”.

The department was told by the committee to set out a plan to strengthen its oversight of academy trusts by March.

Responding to today’s report, a DfE spokesperson said: “We do not accept the PAC’s negative characterisation of academies, in which standards of education have risen for thousands of pupils.”

They added: “The majority of academies are delivering a great education and – as recognised by the PAC – we are taking robust action in the small minority of cases where they are not meeting the high standards expected.

"Academies are subject to higher levels of accountability and transparency than local authority schools. Academies must publish their annual accounts and this year we added new requirements on related party transactions.

"We have also taken steps to increase accountability by publishing lists of trusts who do not return accounts on time; and by challenging trusts who pay high executive salaries.”

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