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Exclusive: Questions raised as DfE lets two MATs off £1.4m of debt

Calls for transparency as Tes investigation reveals inconsistencies in how DfE treats different academy trusts

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Calls for transparency as Tes investigation reveals inconsistencies in how DfE treats different academy trusts

Two academy trusts will not have to return £1.4 million the Department for Education spent paying off the deficits of two troubled academies they took on, Tes can reveal.

By contrast, another two academy trusts are being expected to repay similar deficit payments the DfE made for academies that they took on.

In December, Tes revealed that the DfE, through the Education and Skills Funding Agency (ESFA), spent more than £1.8 million paying off the deficits of five academies that were transferred to new sponsors in 2016-17.

At the time, the DfE said that “in the very rare cases where the ESFA provides extra funding, trusts are expected to pay this back”.

However, a further Tes freedom of information request has revealed that, in fact, £1.4 million of these deficit payments will not have to be repaid.

The remaining £424,000 will have to be repaid by the two academy trusts that took on the other three academies.

The news has sparked questions about why some cases are treated differently to others, and calls for more transparency about how such decisions are made.

Mary Bousted, joint general secretary of the National Education Union, told Tes: “There’s a lack of transparency and there appears to be lack of consistency as well about the financial obligations of trusts taking over academies.”

She said there was a now a “buyers’ market”, with academy trusts basing decisions about taking on schools on their academic and financial status, and refusing to take on those with deficits.

She added: “The problem appears to be bespoke solutions creeping up all over the place to solve the government’s problem [of orphan schools]. Academy trusts have to be given bungs to take on these schools.”

Three of the five academies that attracted DfE deficit payments last year were originally part of the now-defunct Lilac Sky Academies Trust in Kent.

Two of these Lilac Sky schools, Martello Grove Academy and Morehall Academy, went to the Turner Education Trust, which has until August 2019 and August 2020, respectively, to repay deficit payments totalling £174,000.

However, the third Lilac Sky school, Knockhall Academy, went to the Woodland Academy Trust, which the DfE said will not have to repay the £699,547 deficit payment.

The other school whose new sponsor does not have to repay its deficit payments is the Totteridge Academy in Barnet, London, which was previously in a single academy trust and moved to United Learning in November 2016.

Its £685,674 deficit funding is listed as “non-recoverable” by the DfE.

Phil Reynolds, from accountancy firm Kreston Reeves said it was not clear why some trusts have to repay deficit payments and some do not, adding that “ultimately only those involved will know the true answer”.

He said: “I think ultimately the key thing this may or may not boil down to is negotiation. How good were the acquiring trusts at making a case that (a) they needed the funding and (b) they couldn’t pay it back?

“It’s interesting that the two significant deficit payments are the ones which were effectively ‘written off’. It could be that the trust put forward a very strong case that the educational need was so great that without this level of support the school was doomed to fail.”

United Learning told Tes that it was clear throughout the re-brokering process that it would not take on any school with an accumulative deficit which “if we took it on, would impact on our ability to fund our other schools”.

He added: “We would only support the school therefore if we did not inherit repayment of the deficit.”

A DfE spokesperson said: “Our priority is always to make sure all children get the best education possible, and this funding was provided to ensure the trusts could provide the necessary support to the academies. 

“In the very rare cases where additional funding is provided, trusts are expected to pay this back.

“However, in exceptional cases such as these where additional funding is absolutely necessary to stabilise the school’s finances and ensure minimal disruption to pupils’ education, the Education and Skills Funding Agency can provide a grant.”

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