Financial Sustainability of Schools in England

Public Accounts Committee Closed Inquiry
Opened: 21 Oct 2021 Closed: 26 Apr 2022 Parliament page
In a 2016 investigation the NAO found that on the basis of the Department for Education’s planned funding at that time, schools would need to find significant savings to counteract cost pressures caused mainly by rising pupil numbers and increases in staff costs. Since then Government has increased funding for … Read more
10 Recommendations
17 Conclusions
1 Report
1 Oral session
4 Letters
1 Event
Activity timeline 8 events
28 Apr
2022
Report published
28 Mar
2022
Correspondence
4 Mar
2022
Report published
31 Jan
2022
Correspondence
24 Jan
2022
Correspondence
8 Dec
2021
Oral evidence
8 Dec
2021
Correspondence
8 Dec
2021
Formal meeting (oral evidence session) · The Grimond Room, Portcullis House
Oral evidence sessions 1 session
8 Dec 2021
View on parliament.uk
Financial Sustainability of Schools in England
Indra Morris · Children’s Services, Communications & Strategy Group Susan Acland-Hood · The Department for Education Warwick Sharp · Education and Skills Funding Agency
Title HC No. Published Items Response
Forty-Second Report - Financial sustainability of schools in Eng… HC 650 4 Mar 2022 27 Responded
Recommendations & Conclusions
27 results
2 Recommendation Accepted
Forty-Second Report - Financial su…
The large reserves that some academy trusts are building up mean that a significant amount...
The large reserves that some academy trusts are building up mean that a significant amount of funding is not being spent on educating pupils currently in school. In the year ending 31 August 2020, nearly a quarter of academy trusts … Read more
Government Response
The Department wrote to the Committee on 23 March about academy trusts holding large reserves; will seek information from trusts with reserves over 20% of income about their plans for these funds in July 2022; and is exploring further guidance to help academy trusts strike the right balance between holding sufficient reserves and using funds to benefit current pupils.
HM Treasury
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3 Recommendation Accepted
Forty-Second Report - Financial su…
We are concerned that financial pressures faced by schools could damage children’s education.
We are concerned that financial pressures faced by schools could damage children’s education. Research by Ofsted in 2019 found that a high proportion of headteachers reported reducing staffing levels, narrowing the curriculum and changing how they support pupils with SEND … Read more
Government Response
The department will commission research on how a sample of schools has experienced and responded to previous financial pressures and on the anticipated impact of the additional funding announced for schools; publication is expected by end-March 2023.
HM Treasury
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4 Recommendation Accepted
Forty-Second Report - Financial su…
While we wait for the much-delayed SEND review, the support system continues to fail many...
While we wait for the much-delayed SEND review, the support system continues to fail many children and remains financially unsustainable. In May 2020, we reported that many children with SEND were being failed by the support system and recommended that … Read more
Government Response
The government published the outcome of the SEND Review in the Special Educational Needs and Disability and Alternative Provision Green Paper on 29 March 2022 and will publish a national SEND delivery plan later in 2022.
HM Treasury
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1 Conclusion Not Addressed
Forty-Second Report - Financial su…
On the basis of a report by the Comptroller and Auditor General, we took evidence...
On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department for Education (the Department) and the Education and Skills Funding Agency (the ESFA) on the financial sustainability of schools in England.1
Government Response
The government provides a basic acknowledgement of the report and the evidence session, without addressing any specific findings or recommendations.
HM Treasury
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5 Conclusion Accepted
Forty-Second Report - Financial su…
In 2018–19, the Department introduced a new national funding formula with the aim of allocating...
In 2018–19, the Department introduced a new national funding formula with the aim of allocating funding for schools more transparently, consistently, and fairly.6 We reported in October 2021 that the national funding formula had led to a re-balancing of funding … Read more
Government Response
The government agrees to thoroughly investigate the geographical variation in the financial health of maintained schools, determine the underlying causes, and decide whether some schools or local areas need extra support from 2022-23, with a target implementation date of March 2023.
HM Treasury
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6 Conclusion
Forty-Second Report - Financial su…
The COVID-19 pandemic has had a significant impact on the school system but data are...
The COVID-19 pandemic has had a significant impact on the school system but data are not yet available to indicate how schools’ financial health has been affected.11 The Department is providing extra funding to help schools cover costs relating to … Read more
HM Treasury
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7 Conclusion
Forty-Second Report - Financial su…
Maintained schools report their finances for the year ending in March.
Maintained schools report their finances for the year ending in March. Most maintained schools were in surplus from 2014–15 to 2019–20, with 88% reporting a cumulative surplus in 2019–20. However, the proportion reporting a deficit more than doubled from 5% … Read more
HM Treasury
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8 Conclusion Acknowledged
Forty-Second Report - Financial su…
We asked the Department why so many maintained schools were in deficit.
We asked the Department why so many maintained schools were in deficit. The Department highlighted that the financial health of the school system had held up well and that most maintained schools and academy trusts were in surplus. The ESFA … Read more
Government Response
The government agrees with the Committee’s recommendation and states that the national funding formula (NFF) distributes funding to schools fairly, regardless of geographical location. They are introducing a consistent approach to budget planning and monitoring across local authority-maintained schools, including analysis of reserves in different phases, and a local authority level breakdown.
HM Treasury
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9 Conclusion Accepted
Forty-Second Report - Financial su…
The ESFA recognised that it needed to explore the geographical variation further and do more...
The ESFA recognised that it needed to explore the geographical variation further and do more analysis, noting that the local authorities in the greatest difficulty were in different parts of the country. It said that, as maintained schools are funded … Read more
Government Response
The government agrees to thoroughly investigate the geographical variation in the financial health of maintained schools, determine the underlying causes, and decide whether some schools or local areas need extra support from 2022-23, with a target implementation date of March 2023.
HM Treasury
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10 Conclusion Accepted
Forty-Second Report - Financial su…
The ESFA told us that it was also keen to explore the reasons why maintained...
The ESFA told us that it was also keen to explore the reasons why maintained secondary schools appeared to be in more financial difficulty than maintained primary schools. The Department explained that the differences in the financial health of maintained … Read more
Government Response
The government agrees to thoroughly investigate the geographical variation in the financial health of maintained schools, determine the underlying causes and decide whether some schools or local areas need extra support from 2022–23 to be sustainable and will monitor variations in phases and collect perspectives on financial health from local authority-maintained schools in different geographical areas.
HM Treasury
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11 Conclusion Accepted
Forty-Second Report - Financial su…
Academy trusts report their finances for the year ending in August.
Academy trusts report their finances for the year ending in August. In 2019/20, 93% of academy trusts reported a cumulative surplus, up from 88% in 2017/18. The proportion reporting a cumulative deficit fell from 7% to 4% over the same … Read more
Government Response
The department is planning to use the next Budget Forecast Return (BFR) in July 2022 to seek information from trusts with reserves over 20% of income about their plans for these funds.
HM Treasury
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12 Conclusion Accepted
Forty-Second Report - Financial su…
We asked about the large reserves that some academy trusts seemed to be building up.
We asked about the large reserves that some academy trusts seemed to be building up. In 2019/20, 22% of academy trusts had built up reserve balances equivalent to more than 20% of their annual income. The ESFA told us that … Read more
Government Response
The Department wrote to the Committee on 23 March about academy trusts holding large reserves; will seek information from trusts with reserves over 20% of income about their plans for these funds in July 2022; and is exploring further guidance to help academy trusts strike the right balance between holding sufficient reserves and using funds to benefit current pupils.
HM Treasury
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13 Recommendation Accepted
Forty-Second Report - Financial su…
The ESFA explained that, in looking at an academy trust’s reserves position, an important question...
The ESFA explained that, in looking at an academy trust’s reserves position, an important question was how much the trust had designated for capital works, school improvement and projects to take on a new school with challenges. If the amount … Read more
Government Response
The government will use the next Budget Forecast Return (BFR) in July 2022 to seek information from trusts with reserves over 20% of income about their plans for these funds and explore further guidance to help academy trusts strike the right balance between holding sufficient reserves.
HM Treasury
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14 Recommendation Accepted
Forty-Second Report - Financial su…
The ESFA said it expected that, for the very great majority of academy trusts, the...
The ESFA said it expected that, for the very great majority of academy trusts, the level of reserves was either reasonable or, where the level on the face of it looked high, the amounts were being held for a particular … Read more
Government Response
The government will use the next Budget Forecast Return (BFR) in July 2022 to seek information from trusts with reserves over 20% of income about their plans for these funds, and is exploring further guidance to help academy trusts strike the right balance between holding sufficient reserves and using funds to benefit current pupils, building on existing Charity Commission guidance.
HM Treasury
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15 Recommendation Accepted
Forty-Second Report - Financial su…
In 2018, our predecessor Committee, in light of its concerns about the wider issues affecting...
In 2018, our predecessor Committee, in light of its concerns about the wider issues affecting the school system, asked Ofsted to reflect on the main risks to schools’ effectiveness and the systemic causes of poor performance, including the impact of … Read more
Government Response
The department will commission research on how a sample of schools has experienced and responded to previous financial pressures and on the anticipated impact of the additional funding announced for schools, with publication expected by end-March 2023.
HM Treasury
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16 Conclusion Acknowledged
Forty-Second Report - Financial su…
We have heard examples of local schools taking steps such as cutting staff, particularly teaching...
We have heard examples of local schools taking steps such as cutting staff, particularly teaching assistants, and reducing provision for pupils with SEND, in order to make savings.34 We also received written evidence from stakeholders in the sector about how … Read more
Government Response
The department will commission research on how a sample of schools has experienced and responded to previous financial pressures and on the anticipated impact of additional funding, with results expected by end-March 2023.
HM Treasury
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17 Recommendation Accepted
Forty-Second Report - Financial su…
We asked the Department whether it was aware of the measures schools were taking in...
We asked the Department whether it was aware of the measures schools were taking in response to financial pressures and if they were a cause for concern. The Department told us it had been encouraged that, during the period when … Read more
Government Response
The department will commission research on how a sample of schools has experienced and responded to previous financial pressures and on the anticipated impact of the additional funding announced for schools, with publication expected by end-March 2023.
HM Treasury
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18 Conclusion Deferred
Forty-Second Report - Financial su…
The Department told us that staff-pupil ratios had stayed relatively stable, as had the number...
The Department told us that staff-pupil ratios had stayed relatively stable, as had the number of teaching assistants across the school system. We note, however, that while the ratio of pupils to teachers remained relatively stable in nursery and primary … Read more
Government Response
The response addresses a different conclusion and recommendation (PAC conclusion 3). The government agrees with the Committee’s recommendation and states that the department will commission research on how a sample of schools has experienced and responded to previous financial pressures and on the anticipated impact of the additional funding announced for schools. Publication is expected by end-March 2023.
HM Treasury
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19 Recommendation Accepted
Forty-Second Report - Financial su…
Ofsted’s research also found that 44% of primary headteachers and 67% of secondary headteachers reported...
Ofsted’s research also found that 44% of primary headteachers and 67% of secondary headteachers reported that responses to financial pressure had led to some reductions in curriculum breadth.41 We asked the Department whether it was monitoring whether schools were dropping … Read more
Government Response
The department will commission research on how a sample of schools has experienced and responded to previous financial pressures and on the anticipated impact of the additional funding announced for schools, with publication expected by end-March 2023.
HM Treasury
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20 Recommendation Accepted
Forty-Second Report - Financial su…
The Department has not to date carried out its own research into the impact of...
The Department has not to date carried out its own research into the impact of financial pressures on schools’ provision.43 The ESFA told us that it would now do a proper study on this area, with a representative sample of … Read more
Government Response
The department will commission research on how a sample of schools has experienced and responded to previous financial pressures and on the anticipated impact of additional funding, with results expected by end-March 2023.
HM Treasury
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21 Conclusion Accepted
Forty-Second Report - Financial su…
In May 2020, we reported on the support in place for children with special educational...
In May 2020, we reported on the support in place for children with special educational needs and disabilities (SEND). We concluded that many children with SEND were being failed by the support system and recommended that the Department should, as … Read more
Government Response
The government published the outcome of the SEND Review in the Special Educational Needs and Disability and Alternative Provision Green Paper on 29 March 2022, with a national SEND delivery plan to be published later in 2022.
HM Treasury
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22 Conclusion Accepted
Forty-Second Report - Financial su…
We asked the Department why it had not made more progress in completing the SEND...
We asked the Department why it had not made more progress in completing the SEND review. The Department told us that the review had been delayed as a result of the COVID-19 pandemic. First, it had paused work on the … Read more
Government Response
The government published the outcome of the SEND Review in the Special Educational Needs and Disability and Alternative Provision Green Paper on 29 March 2022, with a national SEND delivery plan to be published later in 2022.
HM Treasury
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23 Conclusion Accepted
Forty-Second Report - Financial su…
The Department acknowledged that the SEND review had been far too long delayed and said...
The Department acknowledged that the SEND review had been far too long delayed and said that the Secretary of State had now committed to publishing the results of the review in the first quarter of 2022, alongside the Schools White … Read more
Government Response
The government published the outcome of the SEND Review in the Special Educational Needs and Disability and Alternative Provision Green Paper on 29 March 2022, with a national SEND delivery plan to be published later in 2022.
HM Treasury
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24 Conclusion Accepted
Forty-Second Report - Financial su…
We asked the Department what the metrics of success for the SEND review would be...
We asked the Department what the metrics of success for the SEND review would be and how it would know that it had succeeded in giving the necessary support to children with SEND. The Department told us that the goal … Read more
Government Response
The government agrees with the Committee’s recommendation and published the outcome of the SEND Review in the Special Educational Needs and Disability and Alternative Provision Green Paper on 29 March 2022.
HM Treasury
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25 Conclusion Accepted
Forty-Second Report - Financial su…
The Department funds local authorities for support for children and young people with high needs...
The Department funds local authorities for support for children and young people with high needs through the dedicated schools grant. The number of local authorities reporting a deficit on their dedicated schools grant increased from five of 150 in 2014–15 … Read more
Government Response
The government published the outcome of the SEND Review in the Special Educational Needs and Disability and Alternative Provision Green Paper on 29 March 2022, with a national SEND delivery plan to be published later in 2022.
HM Treasury
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26 Recommendation Accepted
Forty-Second Report - Financial su…
In our report in May 2020, we found that there were not enough state special...
In our report in May 2020, we found that there were not enough state special school places in some parts of the country, meaning that local authorities had to cover the high cost of places in independent schools and spend … Read more
Government Response
The government published the outcome of the SEND Review in the Special Educational Needs and Disability and Alternative Provision Green Paper on 29 March 2022 and will publish a national SEND delivery plan later in 2022.
HM Treasury
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27 Conclusion Accepted
Forty-Second Report - Financial su…
The Department said it had secured additional funding in the 2021 Spending Review including a...
The Department said it had secured additional funding in the 2021 Spending Review including a capital settlement of £2.6 billion, part of which was for additional specialist provision.53 It told us that, as well as the extra funding, it was … Read more
Government Response
The government published the outcome of the SEND Review in the Special Educational Needs and Disability and Alternative Provision Green Paper on 29 March 2022, with a national SEND delivery plan to be published later in 2022.
HM Treasury
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Government Response AI assessment · 25 of 10 classified
Accepted 21
Acknowledged 2
Deferred 1
Not Addressed 1
Total 10 recs + 17 conclusions
Correspondence 4 letters
28 Mar 2022 Correspondence from Susan Acland-Hood, Permanent Secretary, Department for Education, re 42nd PAC Report of Session 2021-2 – Financial Sustainability of Schools in England, dated 23 March 2022
Parliament page
31 Jan 2022 Correspondence from Greg Ellwood-Hughes, Head of England, Parentkind, re - PAC inquiry Financial Sustainability of Schools in England Parentkind response, dated 10 December 2021
Parliament page
24 Jan 2022 Correspondence from Susan Acland-Hood, Permanent Secretary, Department for Education, re Financial Sustainability of Schools in England, dated 14 January 2022
Parliament page
8 Dec 2021 Correspondence from Southend High School for Boys relating to the Committee's inquiry into the Financial sustainability of schools in England, dated 23 November 2021
Parliament page