£4m cost of failed academy trust, and 5 more ESFA accounts findings

The Education and Skills Funding Agency, which distributes £62 billion of education funding, has published its annual accounts for the year end March 31, 2021.

Here’s your Schools Week guide to the key findings …

1. £500k lost on Erasmus plans, £1.6m on copyright payment

The ESFA posted “fruitless payments” of £520,000 relating to work staff did on evaluating the feasibility of a successor to the Erasmus+ grant scheme in the run-up to Brexit.

However the agency was not chosen as the “preferred delivery partner” so stopped the work. A fruitless payment is one which “cannot be legally avoided because the recipient is entitled to it even though nothing of use to ESFA will be received in return”.

Meanwhile, a £1.6m fruitless payment was recorded over a default interest charge levied by HMRC on a late VAT payment that related to copyright licenses for schools and academies. No further details are provided.

The Department for Education buys copyright licences for all state schools – covering “almost all of their copyright requirements” – to save money and administrative time.

Just £4,000 in fruitless payments were recorded last year.

2. £4m written off on failed academy trust

The government will sometimes waive debts owed by academies as part of their re-broker to new sponsors, or to support closure of trusts.

The largest sum written off relating to schools was £4.5 million for the “Shrewsbury Academy Trust”.

It appears this relates to the Shrewsbury Academies Trust which was dissolved last year. All three of its schools were transferred to the Marches Academies Trust.

Another £1.9 million was written off over the TBAP trust closure, and £1.1 million for the collapse of the University of Chester Academies Trust.

3. Cost-cutters find £125m of savings (but just a fraction enacted)

A total of 272 school resource management adviser visits were made in the 2020-21 year. Of these, 228 were to academy trusts and 44 to maintained schools across 34 councils.

Eighty-one of the visits were also Covid-specific after the scheme of sending experts to help schools balance their books was extended to meet pressures brought on by the pandemic.

However, no details were given on how many savings those schools visited actually made. A National Audit Office report released last week revealed the conversion is very low.

Of the £303 million savings identified in 979 visits up to March last year, the NAO found the third of schools who provided follow-up figures had made just £16.9 million savings so far.

The report states four in five visited found the experience “good” or “very good”.

4. ‘Rapid response hub’ to get on front foot over ‘serious’ academy failures

The ESFA now has a “rapid response hub to allow greater flexibility and swifter resolution to cases of quick and serious academy trust failure”.

It is part of a push by the organisation to “become less reactive and more preventative in its provider engagement”.

Officials spoke to 472 trusts which had forecast declining reserves across the year to “understand the issues and whether any additional help was required”.

Four in five trusts with “serious financial concerns” were “de-escalated within the target time each month, a 9.6 percentage point improvement on performance last year”.

Meanwhile, the number of trusts with an active financial notice to improve increased from 36 to 39 this year. There were a total of 59 financial management and governance reviews completed at trusts.

5. Top ESFA staff bag bonuses totalling £60k

Eight of the 13 officials who held executive roles during the past year got a bonus. Matthew Atkinson, director of provider oversight, was handed a bonus between £15,000 to £20,000, while three others got bonuses between £10,000 to £15,000.

Former chief executive Eileen Milner was the ESFA’s highest-paid on £150,000 to £155,000.

Her replacement, former regional schools commissioner John Edwards, is paid £125,000 to £130,000 a year.

6. Decline in academy probes ‘may be because of pandemic focus’

A total of 32 allegations relating to academy trusts were received by the ESFA in the 2020-21 year, down from 45 in the previous year.

Of those, 12 are still ongoing. Of eight closed cases, “irregularity” was identified at six and fraud at two.

Just one allegation led to a formal investigation, compared to 10 last year. However due to Covid, no on-site visits took place.

ESFA said the decline in the number of allegations – despite a rise of 450 more academies that year – is “not significant and may be a result of the focus on responding to the pandemic”.

Fraud losses were just under £2.5 million this year, less than half the £5.7 million recorded losses in 2019-20.

The majority of losses this year related to one case which is not yet in the public domain, ESFA said.

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