EXCLUSIVE: £16m lent to academies to ‘achieve financial stability’ in 2016/17, FoI reveals
The Department for Education (DfE) provided £16,274,804 in ‘advances’ to academy trusts in the financial year 2016/17, Freedom of Information (FoI) shows. The money was given to ‘enable trusts to achieve financial stability’. The ‘additional funding’ is repayable when the trusts ‘have reached a stable financial position’.
In other words, academy trusts in deficit or at risk of falling into the red are lent money by the DfE for an indefinite period, ie whenever the trust eventually goes into the black.
On 21 March 2018, I asked the DfE to let me know the total amount lent to academies up to the end of the financial year 31 March 2017. I also requested repayment terms such as interest per annum and duration of loan.
On 19 April, the DfE responded:
‘Academies are not allowed to take out loans. However, the department may provide advances of funding, as part of a package of support, to enable a trust to achieve the financial stability that maintains educational standards.’
I was not told the amount of any ‘advances of funding’. And I had to remind the DfE that academies can take out loans under the Condition Improvement Fund (CIF).
I asked the DfE how much had been provided in loans under CIF and the total value of advances in the financial year ending 31 March 2017.
Eventually, two months after my initial request, I received an answer. Over £16m had been lent to academy trusts in financial difficulties during the 2016/17 financial year. No CIF loans had been awarded during this period.
Whether there’s a time limit for repayment or whether advances attract interest is unclear because the DfE didn’t say. The repayment terms are included in ‘a recovery plan agreed with the ESFA [Education and Skills Funding Agency]’.
I have submitted another FoI request asking for names of trusts receiving advances in financial years 2016/17 and 2017/18 to help them achieve financial stability. I’ve also asked for names of trusts receiving CIF loans together with each amount in the financial year ending 31 March 2018.