If the DfE had £1 billion to spare, should it have spent it on the strongest schools?

Henry Stewart's picture
The National Audit Office report on academies revealed the "estimated £1 billion additional cost to the Department (of Education)" of the expansion of the Academy programme from April 2010 to March 2012. Some reports have suggested the extra cost was just £350 million or that this £1 billion wasn't extra income but simply transfer of spending from maintained schools to academies.

At the Public Affairs Committee (PAC) this Monday the Permanent Secretary for Education, Chris Wormald, confirmed that this was not the case. The extra cost of the academies programme over this period was indeed £1 billion, compared to what would have been spent if the schools had remained in the maintained sector. This raises questions about priorities.

The vast majority of schools converting to academy status were already rated Good or Outstanding by Ofsted (as this was initially a condition of conversion). If there was £1 billion available, should the bulk of it (£750 million) really have been spent on the schools that were already - with their existing funding - Good or Outstanding?

(Note: @samfr pointed out that £279 million of this £1 billion went on sponsored academies. This leaves £750 million on the general academy conversion programme. The above sentence was edited to reflect this.)

"So you believe that to him that has shall be given."

That was how Austin Mitchell, Labour MP for Grimsby, put it. He asked, "Is it ... fair or right that the elite schools—the best performing schools—should be bribed to take academy status by being showered with cash, most of it more than the local authority was spending on education, which was taken from funds meant for underprivileged schools and for improving schools?" (The NAO report reveals that a substantial part of the moneyn came from funds previously intended for "underperforming schools".)

Both Rachel Wolf (of the New Schools Network) and Chris Wormald argued that the academies programme was the government's school improvement programme and argued that the strongly performing schools would help weaker ones. However there is little evidence of that happening so far.

The most surprising element of Chris Wormald's testimony was that, despite an extra £1 billion being spent, academies did not - he claimed - actually receive any extra money. This contradicts the common perception, with PAC Chair Margaret Hodge quoting the Reform survey which found that 78% responded by claiming that. She also quoted the Christopher Cook analysis for the Financial Times, that found that academies had been overpaid by £120 million. "I do not recognise those figures" was Wormald's response.

I am not sure which would be a greater indictment of the DfE, that schools were given huge incentives to convert or that £1 billion was spent on academy conversion without any school actually receiving any extra money. (The breakdown of the spend does show substantial parts of the billion went on elements like insurance and "transition costs".)

What would you have spent £1 billion on?

Imagine you were sitting in the DfE two years ago and involved in a brainstorm on how to spend a spare £1 billion. Would you have said "Let's spend it on the Good and Outstanding schools" or would you have looked for alternatives? One possibility would have been more on the pupil premium. Another would be funding partnerships of strong schools with nearby weaker ones.

Personally I would suggest learning from the London Challenge might have been a good idea. This was arguably the most successful school improvement of recent years, with 85% of the capital's schools now rated Good or Outstanding by Ofsted.  And the cost? Just £40 million, according to the TES. Half of the £1 billion would probably have paid for Challenge programmes in every region of the country, and for several years.

Details of the £1 billion

The detailed breakdown of the £1 billion, from para 15, (p9) of the NAO report:

£49 million - central programme administration
£338 million - transition costs (including the £279 million for sponsored academies)
£92 million - academy insurance
£22 million - support for academies deficits
£68 million - reimbursing academy VAT
£29 million - other grants
£21 million - double-funding
£59 million - protecting academies against year-on-year volatility in their income

"A further £350 million was money the department was not able to recover from local authorities to offset against academy funding." This totals to £1.028 billion.
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Francis Gilbert's picture
Tue, 04/12/2012 - 21:31

Yes exactly, now that all the dust is beginning to settle around academy conversion, we're seeing that it wasn't right to spend so much on existing good and outstanding schools. PGCE courses that are being judged "good" are being forced to close!

Henry Stewart's picture
Wed, 05/12/2012 - 08:59

This post was the subject of an extensive twitter discussion last night between myself and Sam Friedman (@samfr), a Special Adviser at the Department for Education..

First I must acknowledge that the NAO report details (p23) that £279 million of this money went to sponsored academies, which would have tended to be previously "underperforming" schools. This still leaves most of £750 million on the academy conversion scheme for mainly Good and Outstanding schools.

@samfr argued that none of this money went to the schools themselves and that £350 million went to local authorities. Even if accurate, this doesn't take away from my main point, that the bulk (three quarters) of a billion pounds was spent from DfE money on a programme to benefit Good and Outstanding schools. This money could have been spent elsewhere. Though if none of the £750 million actually went into schools it raises big questions about how well this public money was spent.

However is either assertion credible? It was widely believed among schools thinking of converting that there were large incentives to convert. As noted above Christopher Cook of the FT found that , due to mistakes at the DfE, £120 million was "overpaid" to converting academies. Although the DfE Permanent Secretary evaded this on Monday, Michael Gove at the time (in a radio interview) accepted it, though blaming it on mistakes in local authorities. Chris Cook gives the example of Gable Hall School in Thurrock, which received £665,000 more than it should have.

Secondly some of this money was effectively extra for converters. As Margaret Hodge pointed out at the PAC, if converters are paid what would have gone to LAs and then £92 million of insurance is paid on top, then that element of the LA grant that went on insurance is an additional payment to the school.

The £350 million for local authorities was discussed at the PAC. As the money was not ring-fenced, Richard Bacon MP pointed out that it need not have been spent on schools at all and could have gone on pot holes. But it also contradicts the belief in LAs that their education budgets were top-sliced to pay for academies. The BBC reported on 24th January 2011 that "Local education authorities face cuts of £413m over the next two years tied to the expansion in the academies programme". Leicester City Council, for example, complained that its grant had been cut by £900,000 to pay for academy conversion, even though none of its schools were converting. The TES article that covered this talked of cuts of up to a billion in LA educaton funding to pay for the academy conversion programme.

Note: I at first wrote that DfE Permanent Secretary denied (rather than "evaded") the FT figures were true. I've just realised he didn't. His response was "I don't recognise those figures. They are not in the NAO report." On reflection that seems to me a clever evasion of the question. He did not say the FT figures were incorrect.

But the underlying point is that £1 billion extra went on the academy conversion programme and that £750 million appears to have been spent on converting Good and Outstanding schools. It was interesting to read this morning that the National Audit Office felt that the £9.3 billion spent on the Olympics "delivered value for money". That phrase was missing from the NAO report on this £1 billion and the emphasis instead was on overspend and increased risks.

Janet Downs's picture
Wed, 05/12/2012 - 09:53

There are over 20,000 state schools in England. Only about 2,000 are academies (although nearly half of secondary schools have academy status). Nevertheless, spending on academies (whether conversion costs, transition costs, whatever) seems out of proportion.

I'm at a loss to understand how paying for the admin costs etc which allow a school to convert to an academy (ie change the school's structure) adds one iota to the ability of that school to raise results by, say, innovation. "The National Curriculum and rules over teacher pay and conditions both actually give considerable freedom to innovate but there is only risk - and little value - in doing so."

That was Sam Freedman in 2009 admitting that non-academies already had considerable freedom to innovate but were held back because of "the atmosphere created by high-stakes testing, and constant interventions designed with the media in mind."

It's ironic that Freedman is now special advisor to a Government which has increased the reliance on high-stakes testing, hyped up interventions, bombarded the media with press releases about how wonderful academies and chains are, airbrushed non-academies from the DfE website and attacked anyone opposing the Government's policies as "enemies of promise", "Trots" and the like.


The season of goodwill is nearly here: time for a reminder that the academy pantomime must go on at all costs.


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