Academies are publicly funded independent state schools. They are funded directly by central government, directly accountable to the Department for Education (the Department), and outside local authority control. They have greater financial freedoms than maintained schools, for example to set staff pay and conditions. In May 2010, the Government announced its intention to allow all schools to seek academy status. By September 2012 the number of open academies had increased tenfold, from 203 to 2,309.
Academies are the Department's chosen vehicle for school reform, but increasing schools' autonomy and removing them from local authority control gives the Department responsibility for ensuring value for money. The Department has a direct responsibility to ensure that taxpayers' funds are used wisely at academies. The Department has incurred significant costs from the complex and inefficient system it has used for funding the Academies Programme and its oversight of academies has had to play catch-up with the rapid growth in academy numbers. The Department and its funding agency need to increase their grip on the risks to public money as more and more schools become Academies.
In the two years from April 2010 to March 2012, the Department spent £8.3 billion on Academies; £1 billion of this was an additional cost to the Department not originally budgeted for this purpose. Some of this expenditure led to unnecessary extra money being used by the Department which was not recovered from local authorities. To give Parliament and the public confidence that the Programme is being properly run in the interests of taxpayers, the Department must improve the efficiency of its funding mechanisms and stop the growth in other costs. Although the Department has decided to radically reduce its own running costs, it still needs to demonstrate that its oversight regime can keep pace with increasing academy numbers. It needs to ensure that accountabilities, roles and responsibilities are clear, and that it has robust mechanisms for identifying and tackling academic or financial failure in academies. Furthermore, the Department has yet to establish effective school-level financial accountability for academies operating within chains.
What will determine whether the Department ultimately achieves value for money is academies' impact on educational performance relative to the investment from the taxpayer. If the Department is to be held properly to account for its spending on academies, it must insist that every Academy Trust provides it with data showing school-level expenditure, including per-pupil costs, and with a level of detail comparable to that available for maintained schools. The Department must then publish this data so that proper judgments and comparisons can be made by Parliament and the public.
On the basis of a report by the Comptroller and Auditor General, we took evidence on the expansion of the Programme from the New Schools Network and the Local Schools Network, and from the Department for Education and the Education Funding Agency.