5.1 The government agrees with the Committee’s recommendation. Target implementation date: Spending Review 2027 5.2 The Treasury acknowledges the Committee’s concerns about the challenge misalignment of the Academies Sector poses to the WGA consolidation. Prior to the arrangements currently in place from 2016-17, full consolidation of net spending by academies in DfE’s estimates, budgets and accounts was attempted, consistent with the approach for other departments’ arm’s length bodies (ALB). This resulted in repeated qualifications of DfE’s accounts and undermined effective Parliamentary control by creating uncertainty around departmental spending limits. 5.3 In 2015 a series of meetings between Treasury and DfE were held to discuss the future of reporting for the academies sector and the current approach - including the production of the Academy Sector Annual Report and Accounts (SARA) – was agreed. It was designed to enable effective departmental reporting whilst providing accountability and transparency for the financial position of the academies sector in the absence of net spending being included in Supply Estimates and DfE’s annual report and accounts. 5.4 Following the Committee hearing, the Treasury commissioned DfE to undertake further analysis of the costs and benefits of alignment. DfE are separately engaging with the NAO about the impact of changes to audit requirements, and in January 2026 the DfE Permanent Secretary wrote to the Chair of the Education Committee outlining the history behind the current reporting regime in place; and the implications of changes to ISA 600 on the audit of the Academies SARA. The letter included a proposal to continue to prepare the SARA, but on an FRS102/SORP basis and with a change to the nature of the audit engagement. 5.5 Alongside discussions about financial reporting arrangements – including a senior meeting to specifically discuss Academies reporting arrangements in light of the Committee’s recommendations - the Treasury spending team engages regularly with DfE including on Academies expenditure to get assurance of processes and controls in place including the publication of the School Costs Technical Note and annual decisions around how schools budgets should be allocated through the Dedicated Schools Grant.