MPs warn of academies' 'financial instability'

28th January 2011 at 00:00

The Coalition's rapid expansion of the academies programme is at risk of becoming a poor use of public money, according to the Commons spending watchdog.

In a report released yesterday, the Public Accounts Committee raised concerns over the Department for Education's management of the programme and the potential for "financial instability".

More than 25 per cent of academies could need support to ensure their "financial health", it emerged.

The committee was responding to a National Audit Office (NAO) report, published in September last year, which labelled the vast increase in state-run independent schools as "risky", particularly with regard to achieving value for money.

This week's report echoes the NAO's fears, adding that many academies have "inadequate financial controls" to ensure the proper use of public money.

"As the programme expands, there are increased risks to value for money and proper use of public money," the report states.

It adds: "The Department needs to develop sufficient capacity and adequate arrangements to provide robust accountability and oversight of academies' use of public funds."

Committee chair Margaret Hodge called for tighter controls to be put in place to keep academies in line. "The NAO found that over a quarter of academies could need extra financial or managerial help to maintain long-term financial health," she said.

"In these circumstances, simply issuing guidance on basic standards of accountability and financial management is not enough."

The committee did state, however, that there had been "substantial progress" made by the original, sponsored academies, which have "raised aspirations" in some of the country's "most challenging areas".

A DfE spokesman said it recognised the issues raised by the report: "This is one of the reasons that we announced the creation of the Education Funding Agency (EFA) in the white paper published in November last year. The EFA will be dedicated to managing the flow of funding and overseeing the proper use of public funds in academies in a suitably light-touch way. In the meantime, the Young People's Learning Agency is revising and developing academies' financial control frameworks."

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