EXCLUSIVE: Controversial £400k council loan to academy on transfer list didn’t take place, says DfE

Janet Downs's picture

Delce Academy, a junior school in Rochester, is at the centre of a puzzle about a controversial £400k commercial loan considered by Medway council in February 2018.

The school is now in the process of being rebrokered from Castle Trust after an inadequate Ofsted judgement in May.  This transfer raised questions about the loan’s reparyment.

The council’s document outlining the loan request said Castle Trust approached the council because it could not get funding from the Education and Skills Funding Agency or from the local authority basic needs grant.  Planning permission for the single-story building had already been approved in December 2017.

The Academies Handbook 2018 says academy trusts must have ESFA permission to take out loans.  I submitted a Freedom of Information request to discover if Castle Trust requested such permission.  I also asked ESFA to reveal details of the loan: lender, terms, duration and interest.

The Department for Education has replied saying the requested information  is not held by them.  It was, however, ‘aware the trust considered additional sources of funding in its planning for growth and enquired about the Department’s guidance on getting permission for a loan through the local authority…’

It would appear, then, that Castle Trust sought guidance from ESFA about a possible council loan but didn’t ask for permission to take one out.   ESFA confirms this:

‘… the trust did not formally seek nor did it get permission from the ESFA or other Department for Education function for any such loan.’

The DfE goes further.  It says ‘trust leaders have assured us that they have not taken out any such loans.’

But Medway council cabinet meeting minutes for 6 February 2018 reveal the council ‘agreed in principle to the making of a loan to Delce Academy’.  This was despite Castle Trust not having request the necessary ESFA permission.

On the one hand, Medway agreed the £400k loan; on the other, ESFA says it’s been assured by Castle Trust trustees that they didn’t take out any loan.   This suggests Medway didn’t ultimately arrange it.

I’ve submitted a Freedom of Information request to Medway council.


UPDATE 13 December 2019: Medway council has belatedly answered by FoI request.  The council confirms it did not issue the loan.


ACKNOWLEDGEMENT:  Thanks to Kent Independent Education Advice who broke this story in August.

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Roger Titcombe's picture
Sat, 28/09/2019 - 12:47

Once again, well done Janet. I admire your tenacity, but how can the DfE's accountability and oversight regime be so completely useless? These cases come more or less every week.

agov's picture
Mon, 30/09/2019 - 07:11

So, on the facts so far -

Trust considers seeking loan. Local Authority does not immediately reject considering a loan request. Government not involved. Nation in shock.

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