The Department does not fully understand the causes of variability within the financial performance of academy schools, and consequently may not know how to best protect the education for pupils taught in financially struggling academies. There can be a disconnect between data on the overall financial health of schools and the experience of pupils, parents and staff on the frontline. The SARA reports an improving financial position across the sector as a whole, with the percentage of academy trusts reporting a deficit falling from 7% of academy trusts in 2018/19 to 4% in 2019/20. However, the Department does not yet appear to have a comprehensive picture of how the COVID-19 pandemic has affected academy finances, nor the variability of impact. We are also concerned about the regional disparity in financial performance, with academy trusts in the North of England reporting a far higher proportion of deficits (8% of academy trusts) compared with other regions such as South East England & South London (2% of academy trusts). 6 Academies Sector Annual Report and Accounts 2019/20 Finally, the Department does not yet have a sufficient handle on excessive pay within the sector, and therefore cannot assess whether public funds are being well spent in this area. The number of trusts paying at least one individual in excess of £100,000 is rising, from 1,875 in 2018/19 to 2,245 in 2019/20, with the Department’s review on pay yet to be published. Recommendation: The Department should systematically investigate, and better disclose within the next Academy Sector Annual Report & Accounts, the underlying reasons for the variation in the financial health of academies. It should, within six months, write to us to explain how it will improve its understanding of the variation in the financial health of academy schools and determine whether further interventions are required to support the financial sustainability of academy schools.