£1 billion is the estimated additional cost to the Department for Education (DfE) of expanding and operating the Academy Programme, says the National Audit Office
(NAO) even though the DfE has reduced the estimated additional cost per open academy (excluding transition costs) by 53% between 2010/11 and 2011/12. The DfE spent £8.3 billion on the Programme from April 2010 to March 2012 - £1 billion of this was additional cost.
The NAO’s 2010 Academies report (see faqs above) found that many academies were performing impressively. However, it warned that this performance, which was not uniform, couldn’t be used to predict the future performance of the academy model. Expansion “would increase the scale of risks to value for money”. It now concludes the DfE was “unprepared for the financial implications of rapid expansion”, the funding arrangements hadn’t operated as predicted and this “rapid cost growth” put pressure on the DfE’s finances requiring it to shift funds from other budgets to manage risks.
It’s too early to say whether academy conversion will raise results, the NAO says. It will return to this in the future and ascertain whether the programme was value for money.
That’s the focus of this report – value for money. But the NAO’s research didn’t include capital expenditure nor assess the impact on local authorities’ finances and services.
The NAO found the most common reasons for becoming academies were:
• obtain greater freedom to use their funding as they see fit (78 per cent);
• obtain more funding for front-line education (77 per cent); and
• be able to innovate in raising educational standards (65 per cent).
An earlier survey by Schools Network and Reform
also found that 78 per cent of schools converted because they thought they’d receive additional funding. So, did converter academies benefit from receiving that portion of funding previously retained by local authorities (LAs) to pay for LA services? The NAO found that converters have experienced increased costs in some areas, such as those related to academy status, and decreases in others. Nearly half, however, felt “less free from bureaucracy” than they’d expected.
Although only 1% of academies are thought to be at financial risk and more academies are complying with “basic good governance” than in 2010, the NAO warns that failures would risk the reputation of the Programme. It believes the potential for risk will increase when “satisfactory” schools convert although it recognizes the DfE is attempting to balance the conflicting pressures of “strong stewardship of public money “and “light-touch” oversight.
The NAO found it’s not yet possible to compare financial data of academies and maintained schools - individual academies didn’t always report. The DfE had published principles for assessing value for money in schools but a more detailed framework for academies was still being developed.
Although it’s estimated that 48% of secondary pupils attend academies only 5% of primary pupils do so. The DfE originally forecast that around 600 primary schools would convert in 2011/12 but the actual number was 325. It appears, then, that primary schools are not rushing to convert. This is probably why the DfE is enforcing academy conversion. The NAO says the DfE is creating over 300 new primary academies from [allegedly] underperforming schools: the DfE will “stimulate the supply of sponsors for primary academies” by offering an extra £40,000 over the £25,000 conversion grant. This is expected to “make the sponsor pipeline more predictable”. It also adds £12 million to the cost of the Academy Programme.
Commenting on the NAO report, a DfE spokesperson
said, "We make no apology for the fact that more schools than even we imagined have opted to convert, and no apology for spending money on a programme that is proven to drive up standards and make long-term school improvements.
The spokesperson ignores the fact that most schools did it for the money, brushes aside the inconvenient truth that academies don’t perform better than comparable schools (see faqs above) and other initiatives, such as the City Challenge,
were more successful than the sponsored academy programme.