Busting the DfE’s academy mythbuster – how accurate are the DfE’s answers?

Janet Downs's picture
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“We’re often asked these questions about academies so here are some answers.”

Department for Education March 2014

So, what are these myths the DfE says it’s busting – and do the answers stand up?

Myth: “Academy trusts are private companies and can make a profit”

DfE answer: academy trusts are charitable trusts and cannot make a profit.

Is this correct? In theory, yes. But recent events show academy trustees can benefit financially from their involvement:

1The Guardian revealed how millions of pounds went to companies linked to academy trustees.

2Margaret Hodge, chair of the Public Accounts Committee, said such “related party transactions” were “just wrong”.

3Taxpayers’ money funded a culture of extravagance at academy chain E-Act.

4Private Eye asked if the academy trust which runs IES Breckland was merely a powerless “conduit” for money to be sent to the Swedish for-profit firm IES.

5The CEO of one “paused” academy chain complained to then schools minister Lord Hill: the DfE’s “unhelpful” attitude was damaging the “commercial operation” of his company. “Commercial” is not “charitable”.

Myth: Academy Trusts don’t have to publish their accounts.

DfE answer: Yes, they do. Academy accounts have to be published online.

Is this correct? Yes. But such accounts aren’t easily understood. Financial information such as funding per pupil is available for non-academies on the DfE’s school performance tables. But the same clear information is not available for academies.

Myth: There isn’t much financial accountability around academies.

DfE answer one: the financial accountability systems for academies are more rigorous than those for local authority-run schools.

Is this true? Not quite. The ex-chief executive of the Audit Commission warned the fragmented school landscape had few “essential safeguards”: academy accounts didn’t have to be publicly audited in the same way as the accounts of LA schools. Auditors working for academy trusts have a narrower brief – they don’t have to comment on value-for-money, for example, and they’re not obliged to make concerns public.

DfE answer two: There have been almost 200 detected cases of fraud in council-run schools.

Is this correct? Up to a point. The exact number is 191. But 105 of these were where schools were the victims. The 86 remaining (a very small proportion of the thousands of non-academies) amounted to £1.9m*.

Myth: if there is a problem, academy trustees are not liable for losses.

DfE answer. Wrong. Trustees can be held personally liable if they’ve acted unlawfully or imprudently.

Is this correct? Yes. But DfE@educationgov tweets reveal the Department might be concerned academy trusts don’t know always know what they’re doing. Two tweets (March 24 and 26) reminded trustees of the blindingly obvious:

“All individuals involved in the governance of an academy trust should be clear that they know who the trustees are.”

In such circumstances, it’s perhaps wise to remind academy trustees they are liable if they're neglectful.

Myth: Thousands of schools have been forced to become academies against their will.

DfE answer: Wrong. Secretary of State Michael Gove has used his formal intervention powers in only 13 cases out of 1025 sponsored academies.

Is this correct? Theoretically this could be true. But this ignores the “boiled frogs” who jumped before they’re pushed when faced with an offer they can’t refuse.

CORRECTION 31 March 2014. Answer one in the financial accountability section has been amended. I failed to make it clear the difference between the DfE answer and my comments. I've now put it right.

*p33 National Audit Commission “Protecting the public purse 2013: Fighting fraud against local government”.
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