Forty-Seventh Report - Academies Sector Annual Report and Accounts 2019/20

Select Committee

Public Accounts Committee HC 994 25 March 2022

Report Status Government responded

Conclusions & Recommendations 33 items (9 recs)

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Government Response (AI assessment · 33 of 33 classified)

Accepted 20

Acknowledged 1

Not Addressed 4

Rejected 8

Government response

Treasury minutes: Government response to the Committee of Public Accounts on the Forty Seventh report from Session 2021-22 · published 27 May 2022

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Recommendations & Conclusions

8 results

2 Recommendation Rejected

The Department does not fully understand the causes of variability within the financial performance of...

Recommendation

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 … Read more

Government Response Summary

The government disagrees with the Committee’s recommendation and says the national funding formula distributes funding fairly and it has an effective assurance programme for academy trusts.

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3 Recommendation Rejected

The Department still does not understand well enough the conditions of the school estate, meaning...

Recommendation

The Department still does not understand well enough the conditions of the school estate, meaning it does not know whether pupils have access to the learning facilities they need. Some academy trusts are building large reserves, and these may be … Read more The Department still does not understand well enough the conditions of the school estate, meaning it does not know whether pupils have access to the learning facilities they need. Some academy trusts are building large reserves, and these may be invested in capital projects. However, as we have previously reported, the Department does not have information on whether trusts have earmarked reserves for particular projects and therefore cannot effectively challenge academy trusts on the build-up or planned use of excessive reserves. The Department does not systematically collect comprehensive data on the capital investments held by academy trusts which are specifically aimed at improving children’s learning outcomes. It therefore does not routinely monitor how much schools have been able, or plan, to spend on capital projects of this nature, for example IT provision, science and technology labs, and arts facilities. The latest condition data collected by the Department estimates that £11.4 billion is required for essential remedial work across all schools. The Department has made available £5.6 billion of capital funding for the education sector in 2021/22, of which £1.8 billion is specifically for maintaining and improving the condition of school buildings. There is a risk that schools are not receiving sufficient capital funding to invest in facilities that enhance educational outcomes. Ofsted have reported instances where it has downgraded schools based on inadequate facilities. However, the Department may not know where to target funding to improve school facilities because it does have a sufficient understanding of where the gaps are. Recommendation: The Department should, within the next year, collect and publish data on pupils’ access to learning facilities, and the condition of such amenities, for example IT provision, science and technology labs, and arts facilities. and associated equipment. The Department should report how much capital investment is required Show less

Government Response Summary

The government disagrees with the recommendation and will not collect and publish data on pupils' access to learning facilities. The department prioritizes ensuring sufficient school places and that the estate remains in a safe, operational condition.

HM Treasury

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11 Conclusion Rejected

In our March 2022 report on the financial sustainability of schools in England, we were...

Conclusion

In our March 2022 report on the financial sustainability of schools in England, we were concerned that some academy trusts were building large reserves that meant a significant amount of funding was not being spent on educating pupils currently in … Read more

Government Response Summary

The government explicitly disagrees with the implied recommendation regarding large academy trust reserves and current reporting. It states it cannot introduce new analysis into the current SARA but commits to undertaking research into financial pressures for inclusion in the 2022-23 SARA.

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12 Conclusion Rejected

We asked the Department about the regional differences in the financial health of the sector.

Conclusion

We asked the Department about the regional differences in the financial health of the sector. In 2019/20, 8% of academy trusts in the North of England were in a cumulative deficit compared with 2% in South East England & South … Read more

Government Response Summary

The government explicitly disagrees with the recommendation (quoted in its response) to systematically investigate and disclose reasons for variation in the financial health of academies. It states it cannot add significant analysis to the current SARA but commits to undertaking research into financial pressures for inclusion in the 2022-23 SARA.

HM Treasury

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13 Conclusion Rejected

The Spending Review 2021 confirmed an additional £4.7 billion of funding for the core schools...

Conclusion

The Spending Review 2021 confirmed an additional £4.7 billion of funding for the core schools budget in England by 2024–25.28 However, this followed real-term reductions in the two years to 2018–19, and a period of virtually unchanged average per-pupil funding … Read more The Spending Review 2021 confirmed an additional £4.7 billion of funding for the core schools budget in England by 2024–25.28 However, this followed real-term reductions in the two years to 2018–19, and a period of virtually unchanged average per-pupil funding in real terms between 2014–15 and 2020–21.29 We received written evidence from the Catholic Education Service, which told us that while funding had increased, it may not be meeting the increasing pressure of rising costs. It explained that one Catholic diocese reported an increase in funding of 16% since 2015/16, but an increase in staff costs of 20% over the same period.30 The 2019/20 SARA reported a similar trend, with General Annual Grant (GAG) funding from the Department, the primary form of grant funding to academy trusts, increasing by 8% while staff costs increased by 12% compared with 2018/19.31 The Department recognised that the pandemic has resulted in increased 23 Committee of Public Accounts, Financial sustainability of schools in England, Forty-Second Report of Session 2021–22, HC 650, 4 March 2022 24 Academy schools sector in England: Consolidated Annual Report and Accounts for the year ended 31 August 2020, page 28 25 C&AG’s report, Financial sustainability of schools in England, HC 802, November 2021, para 1.22 26 Academy schools sector in England: Consolidated Annual Report and Accounts for the year ended 31 August 2020, page 13 27 Q 38 28 HM Treasury, Autumn budget and spending review 2021, December 2021, para 2.20 29 C&AG’s report, School funding in England, HC 300, July 2021, paras 7, 17 30 AAR0001 – Academies Sector Annual report and Accounts 2019–20, Catholic Education Service, 24 January 2022 31 Academy schools sector in England: Consolidated Annual Report and Accounts for the year ended 31 August 2020, page 15 Academies Sector Annual Report and Accounts 2019/20 13 schools’ costs in certain categories, such as ICT resources, caretaking and cleaning, and that some areas that generated inc Show less

Government Response Summary

The government explicitly disagrees with the committee's implicit recommendation, defending the national funding formula and reiterating that financial management is the primary responsibility of academy trusts. It notes that the 2021-22 SARA is finalised but commits to undertaking research into the impact of financial pressures on schools, with outcomes to be included in the 2022-23 SARA.

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14 Conclusion Rejected

The Department told us that it reviewed surpluses on an individual trust basis, particularly those...

Conclusion

The Department told us that it reviewed surpluses on an individual trust basis, particularly those reporting higher levels of reserves, and challenged trusts with reserves that are not designated for a particular educational purpose. We have previously reported that the … Read more

Government Response Summary

The government explicitly disagrees with the implied recommendation regarding academy trusts holding significant reserves and the committee's request for action details. It maintains that primary financial management responsibility rests with trusts and defends its existing assurance programme, but commits to undertaking research on financial pressures for the 2022-23 SARA.

HM Treasury

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19 Conclusion Rejected

The Department told us that it does not collect data on the suitability of facilities...

Conclusion

The Department told us that it does not collect data on the suitability of facilities in the same way that it does for the condition of the schools estate, and does not systematically collect information on capital projects aimed at … Read more The Department told us that it does not collect data on the suitability of facilities in the same way that it does for the condition of the schools estate, and does not systematically collect information on capital projects aimed at improving educational outcomes, such as science labs. It explained that these facilities are taken into account by Ofsted when assessing a school’s performance, and we noted that a school’s rating will sometimes be 39 Committee of Public Accounts, Academy schools’ finances, Thirtieth Report of Session 2017–19, HC 760, 30 March 2018 40 HM Treasury, Treasury Minutes – Government response to the Committee of Public Accounts on the Twentieth to the Thirtieth reports from Session 2017–19, Cm 9618, May 2018 41 Academy schools sector in England: Consolidated Annual Report and Accounts for the year ended 31 August 2020, pages 24–25 42 Q78 43 Academy schools sector in England: Consolidated Annual Report and Accounts for the year ended 31 August 2020, page 93 44 Qq 98–98 45 Condition of School Building Survey: Key findings, May 2021, p.4 46 Q100; Department for Education Main Estimate 2021–22: Estimates memorandum, para 1.4 Academies Sector Annual Report and Accounts 2019/20 15 downgraded because it has small or old classrooms, for example.47 We had previously challenged the Department on the buildings data it collected, noting that in some instances there may be no issue with the condition of the school building but the conditions for learning may not be fit for purpose.48 We asked the Department how it considered whether it would get better educational outcomes as a result of the investment as part of schools’ bids for funding. It accepted that it had a better and more detailed understanding on the condition and funding for the maintenance of schools that are in poor condition than it did for the suitability of facilities. It explained that, while it considered suitability important, it was difficult to prioritise that over other concerns such a Show less

Government Response Summary

The government explicitly disagrees with the recommendation (quoted in its response) to collect and publish data on pupils' access to and condition of learning facilities. It states it prioritizes ensuring sufficient school places and a safe, operational estate, and is rolling out Net Capacity Assessments for teaching space, but not the specific amenity data requested.

HM Treasury

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22 Recommendation Rejected

Following our 2019 report on academy accounts and performance, the Department has continued to develop...

Recommendation

Following our 2019 report on academy accounts and performance, the Department has continued to develop the sector financial information disclosed within the SARA.58 However, as previously reported, we were also concerned about the level of information available to parents.59 In … Read more

Government Response Summary

The government explicitly disagrees with the recommendation to publish annual details of per-pupil allocation for each academy school. It explains that the 2021-22 SARA is already being finalised and that existing assurance programmes for academy trusts are effective, while committing to undertake research into financial pressures for the 2022-23 SARA.

HM Treasury

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