Austin Macauley 10 June 2014

Report: funding agency urged to get a grip on academies

The governance of England’s growing number of academies is going unchecked due to failings by the agency responsible for funding schools, according to MPs.

A report by the Committee of Public Accounts said potential conflicts of interest and a general lack of financial transparency was not being tackled.

‘The Education Funding Agency’s work has expanded rapidly and, while it has succeeded in getting money out to schools on time, it has not yet got to grips with effective oversight of how that money is spent,’ said committee chair Margaret Hodge.

The EFA, which manages £54bn of funding a year for state schools, has no way of knowing whether academy chief executives and trustees are ‘fit-and-proper persons’, she said.

‘We were concerned that individuals with connections to both academy trusts and private companies may have benefitted from their position when providing trusts with goods and services. The agency has reviewed 12 such cases but it is likely that many more exist and have gone unchallenged.

‘The Department for Education takes the view that these so-called “related-party transactions” are acceptable. We feel that they are always open to accusations of conflicts of interests, even when supposedly on a not-for-profit basis, and this serves to undermine public confidence. We are therefore calling on the agency to reconsider its policy which permits related-party transactions.’

She said the agency was ‘too reactive’ and did not spot risks or intervene in schools quickly enough.

‘It needs more complete, accurate and timely information on academies’ finances and to get much tougher on those who fail to comply with reporting requirements: nearly one in ten academy trusts failed to submit their accounts on time last year,’ she said.

The committee has called on the EFA to introduce a ‘fit and proper persons test’ at individual academy and academy trust level.

Mrs Hodge said: ‘We recognise the scale of the task that the agency faces as it deals with an expanding workload whilst reducing its costs by 15%. But it is essential that the agency now gets to grips with effective oversight to improve public confidence in the system.’

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