William Eichler 26 August 2016

Councils call for oversight of academy finances after string of abuses

Council chiefs are calling for local oversight of all school finances following a series of abuses by academies and free schools.

The Local Government Association (LGA) urged the new Education Secretary to give councils the power to make sure money given to schools is spent on education and support for children.

The call comes after a number of abuses in academies were unearthed by whistleblowers and journalists, rather than the Department for Education’s (DfE) Education Funding Authority (EFA) which is responsible for their financial oversight.

One example of financial abuse cited by the LGA was from the Kings Science Academy in Bradford.

The founder and two members of staff were found guilty earlier this month of transferring £150,000 of DfE grants into their own bank accounts.

The LGA also highlighted the fact that since 2012 the largest 40 academy trusts spent more than £1m on executive expenses, and they noted the case of the Perry Beeches Academy Trust in Birmingham which paid more than £1.3m to a third-party supplier without contracts.

‘We are told that academies and free schools are subject to more financial scrutiny than council-maintained schools, yet we keep hearing that millions of pounds of taxpayers’ money, which has been earmarked to make sure our children get a good education, is disappearing into the back pockets of those in charge,’ Cllr Richard Watts, chair of the LGA’s children and young people board, said.

‘Parents have a right to know that their children have access to the best possible education and support at school – and that money for teachers and equipment isn’t instead being spent on first class train tickets or topping up chief executive salaries.’

‘Effective auditing of school accounts must be in place for that to happen,’ he added.

Councils oversee the budgets of maintained schools, but academies and free schools are monitored by the EFA which currently oversees the accounts of around 5,000 academies.

The EFA is an agency of the DfE which has received an adverse opinion from the National Audit Office (NAO) on the truth and fairness of its financial statements due to concerns about academies.

‘Providing Parliament with a clear view of academy trusts’ spending is a vital part of the Department for Education’s work – yet it is failing to do this,’ said the head of the NAO Amyas Morse.

‘As a result, I have today provided an adverse opinion on the truth and fairness of its financial statements. The Department will have to work hard in the coming months, if it is to present Parliament with a better picture of academy trusts’ spending through the planned new Sector Account in 2017.’

‘The National Audit Office has raised serious concerns about the ability of the DfE to effectively monitor academy trusts’ spending, even before the planned expansion of the academy programme, and we don’t believe it can possibly have effective oversight of spending in more than 20,000 schools,’ said Cllr Watts.

‘Centralising control of schools isn't working; oversight needs to be devolved down to local councils.’

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