Some multi-academy trusts (MATs) that received a share of a £31 million government fund to expand have become concerned about their long-term financial viability, a new report has revealed.

Financial concerns were raised by MATs that took on schools with large deficits or which have not been able to grow as much as expected.

The fears are revealed in an evaluation report by the one-off Regional Academy Growth Fund (RAGF), to which trusts had bid to access cash to fuel their expansion.

The document says that some of the trusts backed by the fund said they were “concerned about financial viability in the longer term”.

“This was reported, for example, in cases where MATs had taken on schools that had large deficits or where they had not grown as much as anticipated, thereby not generating as much income as initially anticipated,” says the report.  

It also shows that the Department for Education’s regional teams think some trusts that had expected to take on three or more schools in 12 months “had been overly ambitious and did not always take into account the potential for complex due diligence and conversion processes”.

The report also shows that some trusts that received funding have not taken on more schools.

When the fund was launched, trusts were invited to apply for money if they were seeking to grow their capacity, take on more schools or set up a new hub or cluster of academies. In 2016-17, the DfE awarded £31m of RAGF money to 350 academy trusts.

The evaluation report, published today, highlights financial concerns among “a small number” of MATs. It adds that most trusts would prefer the creation of an annual fund rather than a one-off grant to support their expansion.

The report says: “One-off or discrete funding was perceived to be useful in circumstances where specific investments for improvement were identified, for example, training and installation of software.

“However, if a MAT was taking on an underperforming school or creating a new hub/cluster, it was felt that funding on a rolling basis, generally over three-to-five years, would help to improve and support schools so as to establish the sustainability of a hub.”

The report adds that there was a general sense among participants that school improvement took time, and for many MATs this meant between two and four years.

Tes reported earlier this year that MATs were requesting and receiving “significant additional grants” to take on struggling schools, according to an analysis of academy finances.

The Kreston Academies annual benchmarking report said that “in many cases, the payments from the RAGF were dwarfed by negotiated settlements that were paid to MATs to take on failing schools”.

Today’s evaluation report also reveals that seven trusts that had missed out on RAGF funding had requested “more clarity and transparency” in the bidding process.

The RAGF is one of several funds that the government has created in an attempt to support the MAT system to grow. Grants were awarded in 2016-17.

The evaluation report says that overall “perceptions and experiences of RAGF among successful applicants were very positive”.

It adds that the grant has enabled trusts to grow and to make progress towards school-improvement targets.

However, it says that in some cases, growth has not taken place or has been slower than expected.

The fund has since been replaced by the MAT development and improvement fund.

The DfE also launched the Northern Fund in 2015, which saw five trusts given a share of £10m to create regional hubs of academies.

Two of the recipients, Bright Tribe and Wakefield City Academies Trust, have since become engulfed in controversy and are giving up all of their schools.

The RAGF fund helped to establish 10 new hubs of academies around the country, none of which were in the North of England.