‘Faltering’ academy finances need correcting

The Local Government Association (LGA) has strongly urged the government to take control of ‘faltering’ academy finances or be prepared to let councils oversee them.

According to the Kreston UK accountancy network, eight in 10 academies are in deficit, even though academies are not supposed to run deficit budgets, with many academy trusts failing because of poor financial governance. Local authority maintained schools can run deficit budget, where necessary, as long as there is a full plan to show how the finances are going to be brought back into balance as soon as possible. Information relating to academy balances is not publically available.

The LGA says that the current system of oversight is not working, with the financial troubles highlighting the pressure that schools are under. If councils could oversee troubled academies, parents would be assured that their child’s school is well-run and financially stable, providing accountability and transparency that the current academy systems lacks.

Richard Watts, chair of the LGA’s Children and Young People Board, said: “We urge the government to get faltering academy finances under control, or allow councils to step in and oversee them, as they do with council-maintained schools that face financial challenges.

“The Department for Education cannot have effective oversight of spending in more than 7,000 academies. It says that academy finances are under stricter control than council-maintained schools, and that they are in better financial health. But the figures, where they are available, show that many academies are running up deficits and there are serious questions about financial governance in many academies.

“What we need is greater transparency in how academies are managing their finances and urgent action taken to balance the books where necessary. Councils, which have vast experience running large budgets, are best placed to do this. This would ensure democratic accountability, and give parents the certainty and confidence in knowing that their child’s school to is able to deliver the best possible education and support, without risk of financial failure.”