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Public Accounts Committee attacks governance arrangements for academies

New governance, compliance and oversight arrangements for academies remain vulnerable to failure, MPs have warned.

In a report, the influential Public Accounts Committee said: “Some serious cases of governance failure and financial impropriety in academies have gone undetected by the Department [for Education]'s monitoring, raising concerns that central government may be too distant to oversee individual academies effectively.”

The report pointed out that irregular expenditure by academies and gaps in the oversight framework led the Comptroller and Auditor General to qualify the 2011-12 accounts of the Department and the Young People's Learning Agency.

“Academies' compliance with mandatory monitoring is not good enough, and it is not yet clear how well revised audit arrangements will address these issues in future,” the committee said.

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It called on the DfE and the Education Funding Agency to review the operation of the new audit and oversight regime put in place in 2013, and assess whether it is reducing risks to regularity, propriety and good governance.

The report, Department for Education: Managing the expansion of the Academies Programme, also found that inefficient funding systems and poor cost control had driven up the cost of the programme.

It said a large part of the £1bn additional cost since April 2010 had been caused by the “excessively complex and inefficient” academy funding system which had reportedly led to overpayments and errors in payments to academies.

“There was around £350m extra paid to academies which was not recovered from local authorities,” the MPs said.

“This system does not operate effectively alongside the local authority system, and makes it hard for the Department to prove that academies are not receiving more money than they should.”

The committee called on the DfE to report back by the end of 2013-14 on how its funding reforms had reduced systemic problems such as the under-recovery of academy costs from local authorities, and on how far it has brought down other additional costs.

Other conclusions from the PAC report included:

  • The value for money of the Academies Programme would ultimately depend on its impact on educational performance relative to the investment from the taxpayer. Although it was too early to assess the impact of the expansion on school performance, the DfE would need to be able to demonstrate whether value for money had been achieved. “It has yet to state how it will do so, or when.”
  • The committee was not yet satisfied that individual academies' expenditure was sufficiently transparent to parents, local communities or Parliament. The Department should state “how it will make robust, line-by-line information on individual academies' expenditure publicly available in the most cost-effective way”.
  • Forthcoming staff cuts at the DfE and its agencies may threaten effective oversight as the programme continues to expand.
  • The Department had still not made completely clear the roles, responsibilities and accountabilities of different organisations across the changing schools system. “We are particularly concerned that interventions in failing academies may be delayed if the respective roles of central and local government, as well as academies and academy trusts, are not clear.” The DfE needed to clarify and properly communicate the roles and responsibilities of local authorities, academy sponsors, the Education Funding Agency, the Department, the Office of the Schools Commissioner and Ofsted regarding these aspects of the Programme.

A copy of the report can be found here.

Margaret Hodge MP, chair of the PAC, 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.”


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