The Department for Education (DfE) says ‘additional funding’ to academies may be provided ‘In the most serious cases’. But such funding is only awarded ‘as a last resort,’ the DfE insists.
Analysis of the DfE’s recovery plan for long term advances* shows there are cases where academy trusts have been advanced money when they don’t appear to be in dire financial difficulties. Harris Federation, for example, owed the DfE £600k.
Other trusts receiving significant advances but which don’t appear to be struggling financially are:
CfBT Schools Trust. Its accounts**for 2014/15 show CfBT owed £1m ‘falling due in more than one year’ to unnamed ‘creditors’. (£0 in 2013/14). The amount due to these long-term creditors has fallen roughly in line with the DfE recovery plan*. This suggests the long-term creditor is the DfE. The DfE recovery plan shows CfBT owing £854k.
The DfE says Ormiston Academies Trust owed £800k. Repayments don’t begin until financial year 2020/22 with the last payment expected four years later.
Ormiston’s accounts** show the trust received loans in academic year 2017/18 from the Education and Skills Funding Agency (ESFA). These totalled £1,724,000: £1.1m for ‘cash flow management at certain academies’ and £624k for a pilot energy efficiency project.
The total amount owed to ESFA is £1,971,000 according to Ormiston's accounts. £551k is repayable over nine year with interest of 1.83%. The £1.1m is repayable over nine years with no interest.
Ormiston told Schools Week the advances were not to solve financial problems (but the latest Ormiston accounts** said £1.1m was for ‘cash flow management’). An Ormiston spokesperson said the trust wouldn’t have been able to take over Sandon Business and Enterprise College (SBEC), now Ormiston Meridian Academy, without an ESFA loan because of the school’s ‘financial position’. But SBEC was a foundation school maintained by the local authority before becoming a sponsored academy. Any deficit would have remained with the local authority.
These examples show ESFA advances don’t always appear to be ‘last resort’. This raises questions about lack of consistency and transparency.
The Kreston report 2018, an annual academies benchmarking exercise, noted there'd been a rise in ‘additional money’ provided by ESFA or local authorities when academies need money for ‘cash flow purposes’ or in ‘unusual circumstances’ such as a fall in pupil numbers.
There doesn’t seem to be any formula to decide whether the money is provided as a grant or a repayable advance, Kreston says. Without a transparent procedure, the amount and repayment terms (if any) ‘can be down to the trusts’ powers of persuasion’.
‘…at a time where the official messages are that there is no further funding available, there appears to be a pool of money that can be accessed through skilful negotiation.’
This is unacceptable.
*Andrew Jolley unearthed the recovery plan in a much-delayed FoI response.
**Available from Companies House