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Academies spurt leaves pound;35m black hole

`Significant risks' of further problems as agency struggles to cope, DfE report admits

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`Significant risks' of further problems as agency struggles to cope, DfE report admits

The quango responsible for funding academies has been left with a pound;35 million black hole after failing to cope with the rapid expansion of the programme.

The gap between the money given to academies by the Young People's Learning Agency (YPLA) and what it was supposed to recoup from local authorities came to light after the number of academies quadrupled to around 800 in the past year.

The Department for Education's annual report admitted the delays are a "problem" which could become "a significant issue" in 201112, with hundreds more academies expected to open. The YPLA's annual report echoed these concerns, warning of "significant risks" of more funding problems due to it being swamped with paperwork.

Agency chief executive Peter Lauener told The TES: "It's certainly been a challenge. Because of going from a small scale to a significant number in such a short time, the procedures and system were lagging behind a bit. That's still the case."

The "inherently complicated" academy funding process is "crying out for a bit more systemisation", he added.

Chris Keates, general secretary of teaching union the NASUWT, described the error as proof the YPLA "can't cope" with the pace of academy conversion.

"Schools have lost the benefits of support from local authorities, and are left with a quango that can't cope," she said. "These people have no experience in dealing with the type of support schools need with their finances. The system is in chaos."

The revelation of another funding issue affecting the academies programme will cause further embarrassment to the Government. In June, it emerged that errors in grant calculations meant some academies were receiving up to pound;300,000 too much. The difference between funding given to academies by the YPLA and the amount of money it has recouped from local authorities has been blamed on a funding "mismatch".

The pound;35 million funding gap relates to the general administration grant (GAG) received by academies, which makes up the majority of their funding.

A DfE spokesman said the problem arose because the YPLA provides the majority of schools' funding at the start of the academic year, and only recoups it during the following financial year, which starts in April.

"This mismatch has not been detected in previous years as the numbers of academies was relatively low," the DfE's annual report states.

"The increase in the number of academies during 2010-11 has exposed this problem, which could become a significant issue in 2011-12 as the programme expands significantly."

Mr Lauener insisted that the YPLA is in a "better place" than it was last year. "I need a system that has got realistic data going into it, to create academy grants entering a secure system," he added. "We can't have mistakes being made."

A DfE spokesman said: "The pound;35 million pressure referred to in the annual report is simply because we front-load payments to new academies in the academic year starting in the September, and recoup the money from local authorities' dedicated schools grant allocations on the basis of their financial year starting in April.

"This is not a real continuing cost as these timing differences are ironed out over the course of the financial year."

Original headline: Academies spurt leaves funding quango with pound;35m black hole

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