The Public Accounts Committee has published a highly critical assessment of the DfE’s handling of key academy issues.
A failure to determine how many trusts are currently in debt, executive pay, the lack of data on asbestos and the DfE’s 14-month delay in issuing its own annual academies report were all flagged by the Committee as giving cause for concern.
The Public Accounts Committee has now provided the DfE with its own ‘notice to improve’ by recommending key areas where it could do better.
- ESFA approval for related-party transactions
The committee recommended that the Education and Skills Funding Agency (ESFA) should be involved in the approval of such transactions.
Although related-party transactions cannot currently be carried out for profit, the committee stated that it was “not convinced” by the DfE’s argument that academies sometimes benefit by receiving services at a reduced price. The Committee raised particular concerns that costs might be “open to manipulation”. Figures for 2016 reveal that 40 per cent of academy trusts spent £120million on related-party transactions.
- Analyse trusts by geographic area
The committee highlighted the difficulties parents and communities have in understanding whether their local trust provides good value for money. Currently, DfE consolidated accounts do not provide a breakdown of trusts based on relative size or geographic area.
- CEO salaries
The Committee criticised some academy trusts which “appear to be using public money to pay excessive salaries”.
The committee cited recent intervention by the ESFA which has asked 29 single academy trusts to explain salaries in excess of £150,000, but had received unsatisfactory responses from two thirds of trusts questioned.
The committee stated that “unjustifiably high salaries use public money that could be better spent supporting front-line teaching staff”. It has now challenged the DfE to take action and report back to the committee.
- DfE intervention for failing trusts
The committee raised questions regarding the lack of DfE support for academy trusts at risk of financial difficulty.
It highlighted the fact that, as things currently stand, the DfE is not able to identify how many trusts are currently in debt and does not expect to have this data available until October 2018.
The committee’s report stated: “This uncertainty, and the lack of up-to-date information, does not instil confidence in the effectiveness of the ESFA’s financial monitoring.” As a result it has called on the DfE to set out how it intends to improve the way that it identifies and intervenes when trusts are at risk of running a deficit.
- Protection of school funds and assets
Following the Wakefield City Academy Trust case, which involved claims that a number of schools were stripped of their savings by the MAT before it collapsed, the Committee has called on the DfE to take tougher action.
The Committee asked the DfE: “whether schools which had transferred a surplus to a multi-academy trust upon becoming an academy would get their money back if the trust were to fail”. The DfE was not able to provide a satisfactory explanation regarding the allocation of funds and assets in such a situation. As a result, the Committee has tasked the DfE with putting in place procedures to protect funds and assets, and set out how they should be redistributed to schools after a trust fails.
- Data on asbestos
The DfE admitted to the Committee that it still does not possess comprehensive data on the extent of asbestos in schools.
Following its first property survey in April 2017, the issue of asbestos was not covered and following a second survey, only a quarter of schools responded.
The DfE’s latest property survey is currently underway and, given that local authorities and academy trusts have a duty to ensure that information on asbestos is publicly available, it is hoped that the latest information gathering exercise will provide a fuller picture on the issue.