Department for Education: Managing the expansion of the Academies Programme - Public Accounts Committee Contents

2  Governance, oversight and accountability

13.  Our previous report on academies highlighted the vital need for robust accountability and oversight arrangements across the expanding Programme.[32] However, we expressed concern that governance, compliance and oversight systems have not kept pace with academy numbers, and that the Department is only now—over two years into the expansion—starting to address key risks to value for money.[33]

14.  In 2011-12 the Department and the Agency did not have proper mechanisms in place to ensure the regularity of academies' expenditure.[34] The C&AG qualified the 2011-12 accounts of the Department and the Young People's Learning Agency (YPLA) because their oversight framework could not provide assurance over academies' severance payments in excess of contractual commitments.[35] As academies had made such payments without obtaining the required approval from HM Treasury, and the Department could not show that all such cases had been identified and retrospectively approved, the C&AG could not certify that the public funds provided to academies had been used for the purposes intended by Parliament.[36]

15.  For 2012-13, the Department and the Education Funding Agency (EFA) have agreed revised arrangements with HM Treasury, which give academies delegated authority to make such payments up to £50,000 without prior approval.[37] It is important, however, that the Department remains aware of all such payments, and is able to report them for scrutiny by Parliament and the public.[38]

16.  There have been a number of serious cases of governance failure and financial impropriety in academies, some of which the Department and its Agency failed to detect until alerted by whistleblowers.[39] One example is the Priory Federation of Academies Trust, where the Chief Executive resigned following the inappropriate use of public funds, which remain the subject of a police investigation. We were particularly concerned to learn that the Priory trust had previously assessed its own financial management and governance as outstanding, and that this grade was subsequently validated by the YPLA.[40]

17.  The Department tells us that is has since overhauled its assurance and monitoring arrangements. It now focuses more on the trust, rather than the individual academy, and places greater reliance on local academy auditors to obtain assurance over regularity.[41] It is too early to conclude whether these new arrangements will address such risks in future, and we will continue to challenge both Departmental and academy trust Accounting Officers to ensure they understand their responsibilities for proper use of public funds.[42]

18.  Since May 2010, the number of central staff overseeing finance and assurance in academies has doubled, while the number of academies has seen a tenfold increase in the same period.[43] We would not necessarily expect the ratio of central staff to academies to remain constant as the Programme expands, but we are concerned that the number of academies may be outstripping the Department and EFA's ability to oversee them—particularly given academies' continuing poor compliance with mandatory monitoring and information returns. In 2011-12 over half of academies submitted their self-assessment returns late, and nearly 100 academy trusts failed to file their statutory accounts on time.[44]

19.  The Department and EFA could not tell us how many staff they are intending to employ to oversee academies in future, although they suggested that headcount will not need to increase in proportion with academy numbers owing to economies of scale and efficiency savings from new IT systems.[45] However, we remain sceptical that the Department has sufficient systems and resources to oversee the Programme as it continues to expand, especially given the wider reductions to central resources and headcount which the Department has recently announced.[46] Keeping a grip on governance and performance in individual academies will be all the more challenging in future, since schools now joining the Programme are less high-performing, and may require greater oversight and scrutiny than those which have done so to date.[47]

20.  The Programme is driving far-reaching changes to the landscape of education provision in England. Various roles and responsibilities are shifting away from local authorities and onto other players, who are likely to be more distant and centralised than under previous arrangements.[48]

21.  When schools become academies, responsibility for their academic and financial performance passes from the local authority to the Department and the EFA respectively.[49] However, local authorities retain some overall statutory responsibilities for young people in their area. The Department suggested that, in addition to these specific responsibilities, it would expect local authorities to retain some detailed knowledge of all educational provision in their area, including academies.[50] At the same time, the Department and other witnesses suggested that academy trusts, particularly multi-academy chains, should also play a key performance-monitoring and intervention role in between academies and the Department and EFA.[51]

22.  We heard conflicting views about whether inconsistency or uncertainty in the roles of these various players had created an accountability gap. [52] We are not convinced it is clear who is accountable for performance monitoring and intervention in academies, nor how the Department can know whether the system is operating consistently, effectively and with minimum bureaucracy across different localities and academy structures.[53] We expressed concern that interventions in failing academies may be delayed if roles and responsibilities are not clear, or if central oversight is too distant to identify school-level problems before young people's futures are put at risk.[54]

32   Committee of Public Accounts, 17th Report of Session 2010-11, The Academies Programme, HC 552, para 5  Back

33   Q 155 Back

34   Qq 147-150, 157 Back

35   C&AG's Report, para 3.25 Back

36   Qq 158, 160, 167 Back

37   Q 165 Back

38   Q 166 Back

39   Qq 217-218 Back

40   Q 147 Back

41   Qq 148, 157 Back

42   Q 151 Back

43   Q 221 Back

44   Qq 152-156 Back

45   Qq 224, 226, 229, 232 Back

46   Qq 225-230 Back

47   C&AG's Report, para 1.31 Back

48   Qq 28, 142, 211  Back

49   Qq 125, 142  Back

50   Qq 137, 139, 140 Back

51   Qq 37, 38, 135 Back

52   Qq 28-32 Back

53   Qq 137, 138 Back

54   Qq 134-136 Back

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Prepared 23 April 2013