Chair's statement on managing the expansion of the Academies Programme

• Report: Department for Education: Managing the Expansion of the Academies Programme
• Public Accounts Committee

The Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts, today said:

"Academy schools lie outside local authority control and are directly accountable to central government. It is therefore the responsibility of central government – and, in particular, the Department for Education – to make sure that the public money being spent on the academies programme constitutes value for money.

This will ultimately depend on the impact of the programme on educational performance relative to the money the taxpayer is putting in. It is too early to say but what concerns us is the lack of clarity over how, or when, the Department intends to assess progress and the failure to ensure transparent school-by-school data to allow us and the public to judge value for money.

The number of academies has rapidly increased, resulting in a considerable growth in costs.  Inefficient funding systems and poor cost control have driven up the cost of the programme.

Of the £8.3 billion spent on academies from April 2010 to March 2012, some £1 billion was an additional cost which had to be met by diverting money from other departmental budgets. Some of this money had previously been earmarked to support schools struggling with difficult challenges and circumstances. £350 million of the extra £1 billion represented extra expenditure was never recovered from local authorities.

The funding system for academies has not operated effectively alongside the local authority system and has made it hard for the Department to prove that academies are not receiving more money than they should.

The Department must publish detailed data showing school-level expenditure, including costs per pupil, so that proper comparisons can be made with the data for maintained schools.

Effective oversight of the programme is crucial as it continues to expand. We have already seen some instances where public money has not been used appropriately. We have also commented before on the failure of too many academies to produce audited accounts on time. These signs make proper monitoring of the programme vital. We are sceptical that the Department is up to the job as cuts are made to its staff and those of its agencies."

Margaret Hodge was speaking as the Committee published its 41st Report of this Session which, on the basis of evidence from the New Schools Network and the Local Schools Network, and from the Department for Education and the Education Funding Agency, examined the expansion of the Academies Programme.

Academies are publicly funded independent state schools. They are funded directly by central government, directly accountable to the Department for Education (the Department), and outside local authority control. They have greater financial freedoms than maintained schools, for example to set staff pay and conditions. In May 2010, the Government announced its intention to allow all schools to seek academy status. By September 2012 the number of open academies had increased tenfold, from 203 to 2,309.

Academies are the Department’s chosen vehicle for school reform, but increasing schools’ autonomy and removing them from local authority control gives the Department responsibility for ensuring value for money. The Department has a direct responsibility to ensure that taxpayers’ funds are used wisely at academies. The Department has incurred significant costs from the complex and inefficient system it has used for funding the Academies Programme and its oversight of academies has had to play catch-up with the rapid growth in academy numbers. The Department and its funding agency need to increase their grip on the risks to public money as more and more schools become Academies.

In the two years from April 2010 to March 2012, the Department spent £8.3 billion on Academies; £1 billion of this was an additional cost to the Department not originally budgeted for this purpose. Some of this expenditure led to unnecessary extra money being used by the Department which was not recovered from local authorities. To give Parliament and the public confidence that the Programme is being properly run in the interests of taxpayers, the Department must improve the efficiency of its funding mechanisms and stop the growth in other costs. Although the Department has decided to radically reduce its own running costs, it still needs to demonstrate that its oversight regime can keep pace with increasing academy numbers. It needs to ensure that accountabilities, roles and responsibilities are clear, and that it has robust mechanisms for identifying and tackling academic or financial failure in academies. Furthermore, the Department has yet to establish effective school-level financial accountability for academies operating within chains.

What will determine whether the Department ultimately achieves value for money is academies’ impact on educational performance relative to the investment from the taxpayer. If the Department is to be held properly to account for its spending on academies, it must insist that every Academy Trust provides it with data showing school-level expenditure, including per-pupil costs, and with a level of detail comparable to that available for maintained schools. The Department must then publish this data so that proper judgments and comparisons can be made by parliament and the public.