Question to the Department for Education:

To ask the Secretary of State for Education, what steps his Department has taken to improve the scrutiny of (a) finances and (b) academic performance at academies as a result of the collapse of the Wakefield City Academy Trust.

The department continually reviews and improve systems and processes to oversee academies. We have strengthened our processes for monitoring the overall performance of MATs and ensuring growth is sustainable and delivers improvement. We have also improved support available, for example, through funding professional development programmes for MAT trustees[1] and funding Academy Ambassadors to match high calibre business leaders with academy trusts. Academy Ambassadors work closely with academy trusts and Regional Schools Commissioners to identify trust boards where additional business expertise would improve the governance of the trust and any skills or background that would be particularly desirable in light of the opportunities and challenges the trust is facing.

The department has a robust system of financial accountability. Processes are founded on a clear framework communicated and regulated by the Education Skills and Funding Agency (ESFA), with effective oversight and compliance based on proportionate risk assessment, and robust intervention when things go wrong. ESFA scrutinises a broad range of academy trust data and intelligence to identify risk, including audited accounts and a number of annual financial returns.

All academy trusts must publish details of their financial performance in annual accounts. To ensure strong external scrutiny, all academy trusts must have an annual external audit of their annual accounts by a registered statutory auditor and the department expect trusts to act on audit findings as an opportunity to strengthen their systems. The ESFA’s focus is much broader than intervention, working with the sector to continue building capacity and expertise in financial management and forecasting. To reinforce the importance of three year financial planning the ESFA are further strengthening budget forecasting, the ESFA CEO Eileen Milner wrote to academy trusts in March 2018 setting out the requirement for all academy trusts to submit three-year financial forecasts.

Where concerns arise, ESFA works with trusts to prevent financial instability and enable them to recover their financial position and return to stable governance. Intervention is always proportionate, risk-based, and linked to non-compliance with requirements set out in the Academies Financial Handbook and academies’ funding agreements. The sector remains in a stable position, with just over 1% of academy trusts subject to an active Financial Notice to Improve.

We constantly keep under review the financial control and reporting framework for academies and introduce any necessary enhancements through the Academies Financial Handbook and the Academies Accounts Direction, both of which are re-issued on an annual basis.

[1] https://www.gov.uk/guidance/school-governors-professional-development