Schools funding body not robust enough, say MPs

The government agency that funds all state schools needs to be “smarter” at spotting poor money management in academies and free schools, say MPs.

The Education Funding Agency (EFA) “does not spot risks or intervene in schools quickly enough”, says the Commons Public Accounts Committee.

The agency was set up in 2012 to ensure “efficiency, accountability and transparency” in school funding.

The government said it disagreed with the committee’s interpretation.

The EFA will this year distribute £54bn to education providers, including local authorities, academies and academy trusts, but it lacks both the systems and the data necessary to carry out its responsibilities effectively, says the MPs’ report.

Schools funding body not robust enough

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Agency interventions in at-risk institutions can come too late”

Committee report finding

It succeeds in getting money to education providers on time, but “has not yet got to grips with effective oversight of how that money is spent”.

The MPs highlight flaws in gathering data from academies, analysing the information, spotting risks and intervening.

It calls on the agency to gather “complete, accurate and timely data” and “to be more robust in relation to academies that fail to comply with financial reporting requirements”.

Last year 339 academy trusts, almost one in 10, failed to submit their annual accounts on time, but by March this year the EFA had issued only eight notices to improve, notes the report.

It says the EFA relies on whistleblowers, external auditors and “broad, desk-based reviews”, which are “not sufficiently risk-focused”.

“As a result agency interventions in at-risk institutions can come too late”.

The report cites the examples of the E-Act Academy Trust, heavily criticised last year for a culture of extravagant expenses, and Kings Science Academy in Bradford, the focus of a fraud investigation.

Public confidenceIt calls on the Department for Education and the EFA to state how and when they will develop the capability for “systematic or forensic analysis” of the data in order “to spot risks and target their interventions early”.

The MPs are also concerned that academy chief executives and trustees are insufficiently vetted.

They warn of potential conflicts of interest where academies have links to private companies and say “individuals may have benefitted from their position when providing trusts with goods and services”.

The EFA has investigated 12 such transactions, which are not banned under the current rules.

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The EFA is in fact faster at intervening in failing schools than many local authorities”

Department for Education

“We feel that they are always open to accusations of conflicts of interests, even when supposedly on a not-for-profit basis, and this serves to undermine public confidence,” said committee chairwoman Margaret Hodge.

The MPs note the body’s workload is expanding as more schools convert to academy status and that it has committed to cut costs by 15%.

More: Support for better financial forecasting and management

“But it is essential that the agency now gets to grips with effective oversight to improve public confidence in the system,” said Ms Hodge.

Nick Weller, chairman of the Independent Academies Association, said he believed that as a whole “the EFA and DfE do have effective oversight of how public money is spent across the sector”.

He added: “What is needed now is early identification of problems and targeted intervention where they arise, rather than the imposition of increasingly bureaucratic centralised compliance systems indiscriminately across all schools.”

A DfE spokesperson said: “We do not agree with the PAC’s interpretation.

“The EFA is in fact faster at intervening in failing schools than many local authorities. The use of whistleblowers is an important means of gathering evidence and is by no means unusual in the public sector.

“Of course we are constantly trying to improve the EFA’s performance and we will consider the PAC’s recommendations in that light.”