1.On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department for Education (the Department). We also took evidence from the National Governance Association, the Devon Association of Primary Heads, and the Northern Education Trust.
2.Academies are publicly-funded independent state schools. They differ from maintained schools in that they are independent of local authorities, and are managed by charitable companies known as academy trusts. Academy trusts have more freedoms and responsibilities than maintained schools. They can, for example, set staff pay and conditions, and determine their own curriculum, and they are directly responsible for financial as well as educational performance. Academy trusts are directly funded by, and accountable to, the Department, through the Education and Skills Funding Agency. The Department’s underlying objective for academies is that they should improve educational standards in schools. At January 2018, 7,472 of the 21,358 state-funded schools in England (35%) were academies: 72% of secondary schools and 27% of primary schools. Of these, 6,996 had converted from maintained schools and 476 were free schools (new schools set up as academies). Academies were teaching an estimated 47% of pupils.
3.The law requires the Department to direct all maintained schools that Ofsted has rated as inadequate to become academies, with the support of a sponsor. A sponsor is an organisation the Department has approved to support an academy. Most sponsors are groups of schools that have formed multi-academy trusts. Other maintained schools, including schools rated as good or outstanding, may apply to become academies voluntarily. The Department works through eight regional teams, each led by a regional schools commissioner, which coordinate the process of approving the conversion of schools to academies and matching them, where necessary, with approved sponsors.
4.A number of academies have failed, including some high profile examples such as Durand Academy Trust, Wakefield City Academy Trust, and the Whitehaven Academy which was run by Bright Tribe Trust. The Department agreed that parents at Whitehaven had been let down by management at the most senior levels. We have previously raised concerns about the impact that any failure of a multi-academy trust will have on pupils, because the consequences are more severe and the solutions more challenging than when a single school fails. Some multi-academy trusts are so big that any failure of the multi-academy trust will have a negative impact on the education of a large number of children.
5.When academies fail, the Department has to identify a new sponsor; it told us that it ‘re-brokered’ 2.5% of academies in 2016–17. In the case of the Whitehaven Academy, the Department said that it was in the final stages of discussing with the new sponsor, Cumbria Education Trust, measures to improve educational standards and to address problems with the condition of the buildings at the school. The Department could not tell us how much that process would cost, but said that it would seek to hold to account people who had not done their job properly. It confirmed that loans and capital funding had been allocated for the Whitehaven Academy and that, if the money had not been spent for the intended purposes, it had the levers to recover funds from Bright Tribe Trust. The Department acknowledged that, as with any school that fails, the financial deficits of failed academies are written off by the taxpayer.
6.The Department told us that one of the lessons of the past few years was that there is a trade–off between speed and quality. It had focused on increasing the number of academies quickly, but this had created risks and some academy trusts had subsequently encountered problems that the Department had needed to manage. The Department confirmed that it had to provide funding when academies failed, but that it had not set money aside just in case there were further failures. The National Governance Association agreed that, where things had gone wrong, in part it was because growth had been pushed too fast and some trust boards had not undertaken due diligence checks properly. It argued that the Department needed to be more honest and transparent about reviewing instances where academy trusts had failed and about learning from mistakes.
7.The Department told us that it collected information about risk in sponsor trusts to help mitigate the risk of trusts failing. The most recent data, up to 2015/16, show that the Department had assessed 15% of existing sponsors as high risk and 55% as moderate risk. We asked the Department whether it was worried by these figures. The Department argued that this position showed that it was thinking carefully about the capacity of multi-academy trusts to take on new schools, and that the figures illustrated the challenge for multi-academy trusts of expanding to support additional schools.
8.Headteacher boards, which advise regional schools commissioners about applications to convert to academies, previously considered just one year’s forecast financial data. The Department highlighted that, since March 2018, headteacher boards have required all schools applying to convert, and the multi-academy trust if schools are applying to join one, to set out a three-year financial forecast, so there was more data than there used to be to inform the assessment of applications. The Department conceded, however, that it would be foolish to claim that there would not be any more governance or financial failures among academy trusts in the future.
9.Although academies take on significant new financial responsibilities, the Department does not carry out its own checks to ensure that all trustees and senior leaders are fit and proper persons. We asked why, given the extent of problems, the Department does not carry out due diligence checks for all academy trustees and senior leaders for every school that becomes an academy. The Department said that it checks new trustees, but that it does not carry out tests for governors and headteachers who have already been running maintained schools. It committed, however, to think again about the extent of the checks that it carries out.
10.Most academy schools now join multi-academy trusts, and the Department sees this as a way of encouraging collaboration between schools in order to improve educational standards and secure efficiencies. We heard from the National Governance Association, the Devon Association of Primary Heads and the Northern Education Trust that multi-academy trust boards carry out due diligence to understand the issues they are taking on and that trusts do not automatically accept any school wishing to join. Critically, because trustees have a legal responsibility to keep the trust solvent, it would be irresponsible for them to take on a school knowing that it was not financially sustainable.
11.The Devon Association of Primary Heads observed that larger schools can bring stability and skills to academy trusts, making them more attractive than smaller schools that can need an amount of central support out of proportion to what they contribute to the trust’s central costs. We asked if this meant that multi-academy trusts were taking on only financially robust, well-resourced schools, leaving local authorities to continue to support smaller and more vulnerable schools. The Northern Education Trust told us that almost all of its schools had been in financial difficulty, because it had taken on schools in special measures or with serious weaknesses. For some schools, a significant amount of money might be required for redeployment of staff, redundancy costs or building works. The Devon Association of Primary Heads noted that if schools were a good fit with the rest of the trust, boards would want to find a way to bring them in, but only if they believed they could restructure the schools to make them solvent.
12.The Department accepted that finding the right sponsor for a school could be difficult and take time, and that it could be harder in some parts of the country than in others. Written evidence from the National Governance Association supported the National Audit Office’s finding that how near to each other schools in multi-academy trusts are is important to their success. However, particularly in the north of England there are relatively few sponsors near underperforming schools.
13.The Department has taken longer than intended to convert a sizeable proportion of underperforming schools: 63% of maintained schools rated as inadequate between April 2016 and March 2017 had not opened as academies nine months later. In written evidence, London Councils raised concerns that inadequate schools had been unable to find sponsors, despite working closely with the regional school commissioner, and that in some cases local authorities had needed to broker interim arrangements on the school’s behalf. The Department explained that the time schools take to become academies is related to the number of academy schools in the area, the capacity of sponsors to take on more schools, and local factors such as the role of church dioceses that may control land.
14.Small rural schools, particularly primary schools, can face particular difficulties in finding suitable sponsors. Low pupil numbers may make rural schools financially unviable and their geographical isolation can make it more difficult for multi-academy trusts to provide support. The Department told us that, since 2010, 1,379 rural primary schools had registered an interest in becoming an academy. Of those, 984 had gone on to apply to become an academy, including 262 that were small rural primary schools. We asked what, particularly for small rural schools, the barriers were to becoming academies and how the barriers could be addressed. The Department told us that, in principle, the opportunity presented by a joining multi-academy trust should be greater for a smaller school than a larger one, because there was the potential to achieve more economies of scale. It was seeking to draw attention to small schools that were working together successfully, citing Peterborough diocese rural schools as an example. It said that it was doing further work to identify what practical steps schools might take, which it expected to publish early in the new year.
15.The Department stressed that it needed good and outstanding schools to join academy trusts to provide capacity to support schools that need to improve. We heard from both the National Governance Association and the Devon Association of Primary Heads, however, that some well–performing schools do not want to convert. One reason is that some school governing bodies do not want to become part of a bigger institution in which they would have less of a role. The Devon Association of Primary Heads added that, for a small school that is already working well, becoming an academy can seem burdensome. The National Governance Association said that the Department had not emphasised enough the benefits of schools coming together in federations or multi-academy trusts: specifically that schools could learn from each other and share resources, teachers and good practice. These were the things that would make a difference to children.
1 Report by the Comptroller and Auditor General, , Session 2017–19, HC 720, 22 February 2018
2 , paras 1–2, 5–6, 10; Figure 1
3 , paras 3–4, 3.2
4 Q 72
5 Q 65
6 Committee of Public Accounts, , Thirtieth Report of Session 2017–19, paras 5, 25
7 Qq 72, 105; National Education Union (), para 43
8 Qq 64–67
9 Q 67
10 Q 69
11 Q 70
12 Qq 70, 85
13 Q 28
14 Q 74
15 Q 73; , para 3.18
16 Q 73
17 Q 82
18 Qq 86–88
19 , para 16
20 Q 72; , Recommendation b
21 , para 1.18
22 Qq 18, 20, 23
23 Q 17
24 Q 22
25 Q 23
26 Q 20
27 Qq 19, 24–25
28 Qq 75, 81
29 National Governance Association (), para 4.1; , paragraphs 19, 3.11, 3.13, Figure 11
30 , para 18
31 London Councils (), para 5
32 Q 81
33 West Sussex County Council (), para 10; , paras 3.9–3.10
34 , paras 3.9–3.10
35 Qq 119–120; Department for Education ()
36 Q 120
37 Qq 124–125; Department for Education ()
38 Q 76
39 Qq 15, 20
40 Q 17
41 Q 15
Published: 11 July 2018