Ministers need to take control of “faltering” academy finances or let councils oversee them, Liberal Democrats in local government have urged.
The Local Government Association, which represents 370 councils in England and Wales, says the fact so many academies are in financial trouble, shows the pressures that schools are under and that the current system of oversight is not working.
This follows a series of reports which have raised concerns over the financial management of academies.
According to the Kreston UK accountancy network, eight in 10 academies are in deficit, and academy trusts are failing because of poor financial governance.
Academies are not supposed to run deficit budgets. Council-maintained schools can if absolutely necessary, on license from the local authority, providing there is a full plan to show how the finances are going to be brought back into balance as soon as possible.
This tends to happen if, for example, maintained schools have had to expand to meet demand for school places in their areas and are waiting for government funding to catch up with increased numbers of pupils.
MPs on the Public Accounts Committee have also said that academy trusts needed to show the highest standards of governance, accountability and financial management, and that many trusts were falling short.
And in a recent report on academisation, the National Audit Office recommended that the Department for Education should apply financial risk and due diligence tests to all academies and trustees.
The LGA says these highlight the need for the Government to either take control of faltering academy finances or let councils oversee them, to give parents assurance that their child’s school is well-run and financially stable.
It says parents are currently denied this due to a lack of accountability and transparency in the academy system.
Unlike for council-maintained schools, information relating to academy balances is not publically available.
Councils currently oversee the budgets of maintained schools, making sure that the books are balanced, money is being spent appropriately, and any inconsistencies or concerns are spotted and dealt with quickly.
The LGA says councils are ready and willing to step in to make sure this is the case for academies.
Cllr Lucy Nethsingha, LGA Liberal Democrat Spokesperson for Children and Young People, 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.
“The whole point about the academy programme was that schools would be subject to less oversight and accountability. Now we are seeing the consequences, with growing concerns emerging around the financial stability of 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 is able to deliver the best possible education and support, without risk of financial failure.”
NOTES TO EDITORS