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 left after that was more than 20% of income, it would consider the reserves to be excessive for the level of risk in the academy sector, which is low. The ESFA told us that its staff, combined with the regional schools commissioners, challenged excessive reserves, particularly if there were educational outcome issues, and that action tended to result in reserves being worked down.29