Schools ‘risk finances’ becoming an academy

Schools may be putting themselves at financial risk by converting into independent academies, a damning report by MPs warns today (Thursday 27 January 2011).

Financial checks on schools that opt to break away from their local authority are “not fit for purpose,” the powerful Commons public accounts committee (PAC) has concluded.

Its report found that Whitehall was overstretched and lacked the staff to properly scrutinise the 400 schools that have lodged applications to make the switch.

Meanwhile, many of the 407 existing academies have “inadequate financial controls and governance to assure the proper use of public money”, because Government guidance is being flouted, it added.

One in 20 was forecasting a budget deficit last year — and more than one in four will need “additional financial or managerial support to secure their longer-term financial health”.

Margaret Hodge, the PAC’s Labour chairman, said: “We are concerned by the increasing risks to the financial management and governance of the academies programme if there is a rapid expansion.

“Simply issuing guidance on basic standards of accountability and financial management is not enough. A clear mandatory framework, with strong measures to deal with non-compliance, is needed.”

The report opens up a new front in criticisms of the controversial academy programme, which Education Secretary Michael Gove believes is key to boosting educational standards.

Previous warnings have focused on fears that allowing “outstanding” schools to make the switch — and set their own curriculum, teaching hours and pay rates — will widen the gap between good and bad schools.

Now the PAC has investigated the “light-touch regulation” of academies proposed by the department for education (Dfe) — and found it badly wanting.

Each academy is required to file audited annual accounts to the Dfe, but there were serious concerns that the monitoring process was “not fit for purpose”.

Roles were not properly separated at some academies — allowing the chairman of governors to also chair the finance committee, for example — while some finance directors were not properly qualified.

But a Dfe spokesman said it had already announced plans for a new Education Funding Agency (EFA) to ensure the proper use of public funds, adding: “The Government recognises the issues that the PAC report has raised.”