DfE plan to tackle misuse of money in council schools

Holding maintained schools to same reporting rules as academies will reduce the likelihood of financial problems, DfE claims

The DfE wants to apply the same financial reporting rules to maintained schools and academies.

Holding maintained schools to the same financial standards as academies will reduce the likelihood of growing deficits or misuse of public funds, the Department for Education has claimed.

It has launched a consultation today on improving transparency in “local-authority-run schools” to bring them in line with the academies trusts.

Lord Agnew, the academies minister, said an “unprecedented level of accountability and transparency into academy finances” allowed the department to spot financial mismanagement quickly and intervene where it needed to.


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The department said in a statement today that implementing the same controls across the maintained schools sector will “reduce the future likelihood of growing deficits or misuse of funds in those schools.”

However, town hall leaders have said it is wrong to say there is more transparency in academies than maintained schools.

Lord Agnew added: “We know that many local authorities do a good job in overseeing the financial affairs of their schools, but the accountability arrangements typically in place in their schools are not equal to that of academies.

“It makes sense for both parents, and the entire education sector, that the financial reporting and accountability measures of academies are extended to local authority maintained schools, ensuring consistency across our entire state-funded education system. 

“That is why we are consulting on this, to bring parity between the financial transparency measures of local-authority-run schools and academies.”

Academy trusts are legally required to publish their annual financial accounts, which the department has previously argued means they face “higher levels of accountability and transparency than local authority schools”.

Trusts are also required to declare or seek approval for related-party transactions and report on high pay for executive staff. 

The DfE said its consultation will set out proposals for these arrangements to be adopted by local-authority-maintained schools.

Councillor Anntoinette Bramble, chair of the Local Government Association’s Children and Young People Board, said: “It is wrong to suggest that academies have more transparency and accountability than council-maintained schools.  

“A key goal of the academy programme was that schools would be subject to less oversight and control, and the Department for Education cannot have effective oversight of spending in more than 7,000 academies.

"What we need is greater transparency in how academies are managing their finances and urgent action taken to balance the books where necessary.

“Councils, which have vast experience running – and balancing – large complex budgets, are best placed to oversee the performance and finances of all schools in their area. This would ensure democratic accountability, and give parents the certainty and confidence in knowing that their child’s school is able to deliver the best possible education and support, without risk of financial failure.”

The DfE announcement comes as new analysis found oversight functions performed by academies cost more per pupil than in local authorities.

The Local Government Association commissioned the Sara Bubb Associates consultancy to look at the “middle tier” – the system of oversight of state schools which can be provided by academy trusts or local authorities.

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