£119m in grants for academy trusts converting or rebrokering last year, DfE accounts reveal

Janet Downs's picture
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I’m not an accountant.   I admit I’m puzzled by the recent Department for Education accounts.  

The figures are big.  That’s hardly surprising.  But what to make of the nearly £119m granted to converting and rebrokering academy trusts?

Schools converting to academies receive £25k to cover legal and admin costs.  But the accounts don’t tell us how much is conversion and how much rebrokerage.  Rebrokerage is lumped together with conversion.  An attempt to hide costs, perhaps? 

The £119m was in grants not loans.  Loans to academy trusts were £761k (£949k in 2015/16).  The total amount of current loans is nearly £2m and non-current loans is £3m.

The Education Funding Agency, ‘as appropriate’, funds the purchase and development of sites which academy trusts will eventually use.  Costs associated with this come under the heading Assets under Construction (AuC).  These were £18.5m (£109m in 2015/16).  £0.4m for the costs of ‘free schools programme staff’ was included in AuC (£0.3m in 2015/16) because their work was ‘directly attributable to these capital projects’.

The Consolidated Statement of Cash Flows lists these AuCs as ‘Transfers of AuC to ATs’. Presumably this means the site and buildings are transferred to the academy trusts or free schools which will use them.  This raises the question of ownership.  Does the DfE retain the freehold or does it pass to the academy trust?  

Company House records for free school often list ‘charges’ against the trust.  For example, the Knowledge Schools Trust (West London Free School Academies Trust until four days ago) has two outstanding charges.  The ‘person entitled’ is The Secretary of State for Education (SoS) and the charges relate to the freehold of two sites.  Where such charges exist, repayment becomes enforceable if the Funding Agreement is ended or if the academy trust ‘disposes’ of the property without written consent of the Lender (ie the SoS).

I have no idea where, or indeed, whether these charges appear in the DfE accounts.  They may, however, be in the new Academy Sector Annual Report and Accounts (SARA).

Academy trust accounts are no longer consolidated into DfE accounts.  The National Audit Office previously panned DfE accounts because consolidation, bringing academy trust accounts into DfE accounts, was causing problems.  This raised concerns about error and uncertainty.    Academy trust accounts will now be summarised in the SARA.  

A dummy SARA was published last year and revealed, among other things, over 100 academy bosses received more than £150k, 50 related party transactions were over £350k and the DfE was becoming less opaque about academy spending (academy transfer costs excepted).    The next SARA is due by the end of October 2017 and before the summer recess in future years.

One revealing comment in the accounts is that governors of local academy governing boards will no longer be classified as ‘related parties’ because they are now ‘insufficiently influential’ at the academy trust.  So much for the much-promoted freedom and autonomy for schools.

Key findings from the DfE accounts are summarised in Schools Week.

NOTES: All figures have been rounded.  I've done my best to be accurate.   The figures relate to financial (NOT academic) year 2016/17 unless otherwise stated.  

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