Academy trusts demanding extra millions from DfE to take on struggling schools

DfE will need 'flexible approach' to reassure academy trusts about the risks of taking over failing schools, report says

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Multi-academy trusts are requesting and receiving “significant additional grants” in order to take on struggling schools, an analysis of academy finances shows.

The annual Kreston Academies Benchmark Report, released this afternoon, identifies “a significant movement between trusts… as a result of academies falling below academic or financial targets”.

It says that in 2016-17, 350 multi-academy trusts (MATs) shared £30 million from the Department for Education’s Regional Academy Growth Fund (RAGF) to help build capacity and help schools that were converting to academy status, or being transferred from one trust to another.

However, it says: “In many cases, the payments from the RAGF were dwarfed by negotiated settlements which were paid to MATs to take on failing schools. Given the financial pressure the sector is experiencing, it is no surprise that some MATs are requesting significant additional grants to cover the risk of assisting these poorly performing schools.”

The report cites a Tes investigation that found that 42 schools that had been ordered to become academies after being judged "inadequate" still lacked a sponsor 12 months on. It says: "In our opinion, this would be largely due to financial reasons."

In September, the DfE said it had spent £16 million in grants to move academies to new sponsors over a four-year period, excluding deficit funding.

ESFA 'struggles to find homes for some academies'

Last month, Tes revealed that the DfE spent a further £1.8 million paying off the deficits of five academies that were transferred to new homes in 2016-17.

Today’s report says: “Some MATs clearly feel that they have developed a strong negotiating position, which may be because of the difficulty that the ESFA (Education and Skills Funding Agency) has finding homes for some academies.”

It cites the example of one MAT that was so concerned about the redundancies that might be needed at a school that was due to join it that it requested "well in excess of £0.5 million to ensure it did not impact on the rest of the trust". 

The authors of today’s report also say that an unnamed MAT was allowed to set up a separate company for an incoming academy to be transferred to.

They write: “This helps to ring-fence the financial risks associated with the academy, so that it will not adversely impact on the rest of the MAT. This flexible approach from the ESFA may be needed going forwards to find homes for other academies in severe financial distress.”

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