Warning to schools over financial risks

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SCHOOLS may be putting themselves at financial risk by converting into ‘academies’, a report by MPs has warned.

The influential Commons public accounts committee has highlighted signs of financial “instability” in the Government’s drive to create a new wave of schools free from local authority control.

There are eight academies in South Yorkshire – Sheffield Park, Sheffield Springs and Parkwood in Sheffield; Trinity, De Warenne and Outwood in Doncaster; Maltby in Rotherham and the Barnsley Academy.

Another two schools have applied to become academies since the coalition came to power – Brinsworth Comprehensive and Wales High, both in Rotherham.

The MPs’ report makes clear “sponsored” academies, which started opening under the Labour government, have “performed impressively” and achieved “rapid academic improvements”.

It praises the “high-quality leadership” of teachers at the schools who show a “relentless focus on standards”.

But it delivers a blunt warning about the risks associated with the Government’s drive for hundreds more “convertor” academies – many already high-performing schools.

The report highlights “emerging concerns” that “many academies have inadequate financial controls and governance”.

It found Whitehall was “overstretched” and lacked the staff to properly scrutinise the 400 schools that have lodged applications to make the switch.

The MPs say over 25 per cent of academies may require additional money or managerial support to “secure their long-term financial health”. One in 20 were forecasting a budget deficit last year.

The Young People’s Learning Agency, which oversees academies, set aside £8.5 million to assist schools which it anticipated would be in financial difficulty this year.

Margaret Hodge, the PAC’s Labour chairman, said: “We are concerned by the increasing risks to the financial management and governance of the academies programme if there is a rapid expansion.

“Simply issuing guidance on basic standards of accountability and financial management is not enough. A clear mandatory framework, with strong measures to deal with non-compliance, is needed.”

A DfE spokesman said it had already announced plans for a new Education Funding Agency to ensure the proper use of public funds, adding: “The Government recognises the issues that the PAC report has raised.”