Academies: Where Did The £1 Billion Go?

Henry Stewart's picture
When the National Audit Office revealed the £1 billion overspend on academies, many assumed this was caused by the incentives paid to individual schools to convert.  At the Public Accounts Committee Margaret Hodge noted (p28) that 78% of schools that converted did so because of the extra money available and quoted Christopher Cook's analysis in the Financial Times, which found academies were overfunded by £120 million in 2011/12.

(A later article by Chris gives the example of Ashfield School receiving an extra £943,000, 10% of this budget, and this time suggests overall £174m extra will go to academies due to DfE blunders. However this data is for 2012/13 and is not included in the NAO £1 billion. It is additional to it.)

Despite the evidence Chris Wormald, Permanent Secretary at the DfE, insisted that no extra money at all went to academies overall. If some got more than they did before (as was clearly the case) than others must have got less.

£1 Billion Overspend Yet None of It Went to Schools!?

burning moneyIt is hard to believe this is true, that effectively some schools converted and got less funding than before. Certainly none appear to have complained about it. However, if true, this is surely even more damning. The DfE claimed at the Public Accounts Committee that of the £1 billion extra that was spent, none of it ended up in schools.

That was the extraordinary message that the head of the Department for Education brought to MPs: They had spent an extra £1 billion and yet none of it had ended up in teaching and learning, or in bringing any educational benefit to the nation's children.

The NAO report makes clear (p23) some of this wastage. £43 million was spent on "pre-opening funding to converter academies" (presumably legal costs and the like), as well as the £279m to pre-opening and startup funding for sponsored academies. Another £43 million went on central DfE administration costs. Then there was £92 million spent on insurance costs.

The insurance funding was needed because academies were no longer covered by local authority insurance. One would have hoped that somebody would have spotted that insuring individual schools would be far more expensive than insurance for all schools in a borough, but this seems to have come as a surprise and have led to tens of millions of extra costs.

A Catalogue of Failure

This wasted £1 billion deserves extra coverage. The National Audit Office produced a carefully worded but clearly critical report. The Public Accounts Committee produced a damning report about the waste of public funds, agreed by a committee on which the majority are Conservative MPs.

Chris Wormald justified the spend on the basis that the academies programme was the government's main improvement programme. In response the Public Accounts Committee stated that whether this was value for money would depend on the "impact on educational performance". As I've written before, the evidence to date is clear. The bulk of the £1 billion was spent on converting already Good and Outstanding schools. On average the GCSE results for these schools had risen in the year before conversion but fell in the year after they became academies - suggesting the money was indeed wasted. (Figures at the bottom of this post.)
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