MPs warn of risks of academies expansion

27 Jan 2011

On the very day the government published its Education Bill promoting academies, a powerful Commons committee has warned that many of these new schools have ‘inadequate’ financial controls.

The House of Commons Public Accounts Committee (PAC) says there are ‘increased risks to value for money and proper use of public money’ as the academies programme expands rapidly.

There are now an additional 136 schools that have used the recent powers to ‘convert’ to academy status. With 271 old-style academies that makes a total of 407 academies, with many more in the pipeline.

Risks growing

The PAC report says the ‘governance risks will increase as the number of academies grows’. It says that, even when there were far fewer academies, the Department for Education’s resources for monitoring and administering the academies programme were ‘overstretched’.

Today’s Education Bill confirms the abolition of the Young People’s Learning Agency (YPLA) - which currently oversees the funding of academies - and transfers this role to the Department for Education itself.

The Department currently has 123 out of 2,500 full-time equivalent staff working on academies. The PAC says the government ‘conceded that employing sufficient people with the right skills was an increasingly tough challenge, particularly in the context of the Department as a whole having to make a 33% reduction in its administrative budget’.

The report notes that: ‘Five per cent of academies were forecasting a cumulative deficit at the end of 2009-10, and the YPLA identified that over a quarter of academies may require additional financial or managerial support to secure their longer-term financial health’.

Non-compliance

The PAC heard evidence of non-compliance with recommended auditing practices, including ‘non-separation of roles, for example the chair of the governing body also being the chair of the finance committee, the responsible officer also chairing the governing body, and the responsible officer also chairing the finance committee. All of these roles should be clearly separated.’

It added that many academies did not have audit committees and not all academy finance directors were CCAB-qualified accountants.

The PAC also found that much of the sponsor money pledged to academies had still not been paid. £26 million of capital contributions pledged, had not been received by December 2010.

The PAC’s conclusions include:

Many academies have inadequate financial controls and governance to assure the proper use of public money, and the Department and Agency have not been sufficiently rigorous in requiring compliance with guidance.

As the Programme expands, there are increased risks to value for money and proper use of public money.

The Department has failed to collect all the financial contributions due from sponsors.

The department and the YPLA have struggled to administer and monitor the relatively small number of academies to date, and must now cope with a rapid expansion across many more schools.