The government has let two leading academy trusts off the hook over millions owed in sponsor contributions, after a decade of fruitless efforts to reclaim the cash.
The Department for Education has now written off almost £5.8 million owed by the Harris Federation and more than £3.6 million owed by Oasis Community Learning, official documents reveal.
Kevin Courtney, joint general secretary of the NEU, called the decision “outrageous”, while an expert questioned why better mechanisms were not in place to claim cash.
Efforts to secure cash ‘exhausted’
Oasis and Harris, England’s fourth and sixth largest trusts respectively, were required to donate funds towards the costs of opening new academies in the 2000s. Contribution requirements were ditched for sponsors in 2009 to encourage more to come forward.
But the DfE’s annual accounts published this week stated that the department “has written‑off outstanding contributions from academy trusts relating to a legacy policy area, where prior to 2010, sponsors were required to make financial contributions to the cost for opening an academy”.
“Various attempts have been made to claim the contributions over the last ten years, but all are now considered exhausted.”
DfE claims for a total of at least £10.5 million owed in sponsorship costs by four trusts have now been “waived or abandoned”, the report stated. However, only claims for contributions above £300,000 are listed, so the real figure for write-offs may be higher.
Official records suggest Harris had £8.9 million in centrally held revenue reserves last summer, the most recent data available, while Oasis had £6.8 million.
A Harris Federation spokesperson said: “The contributions date back to the early years of the academies programme, but have not been required for over a decade.
“At an average of around £175,000 for each of our 51 schools, our reserves are being put to good use for pupils including through a significant and long-planned IT refresh, and for catch-up provision including Saturday schools and holiday clubs.”
Oasis was approached for comment.
Anne West, a professor of education policy at the London School of Economics, said: “This does raise questions about the funding agreement between MATs and the secretary of state, and the ability for government to ensure promises are honoured.”
Sponsor contributions now abandoned
The two other trusts listed as having seen outstanding contributions written off are the Wren Academies Trust, for £782,000, and Tudor Grange Academies Trust, for £380,000.
But a TGAT spokesperson and the DfE said it had been listed in error, and the report should have included Leicester city council’s written-off contributions instead.
Inigo Woolf, chief executive of the London Diocesan Board for Schools which sponsors Wren Academies, said it and other co-sponsors and external funders “made up the balance of the contributions requested” for each early academy.
She added: “I am pleased that LDBS met all its commitments in full but when the Academies Act 2010 was passed which removed the requirement for funding by sponsors, the external funders, which were mainly charitable bodies, no longer felt that donations were appropriate.”
The cash owed dates back to the early days of the academies programme, when sponsors were expected to cough up funding towards their launch.
The earliest academy sponsors had to provide 10 per cent of the capital costs of new buildings over the lifetime of the building works, capped at £2 million.
This was tweaked in 2007-8 to an endowment fund requiring contributions between £1.5 million and £2 million for each new academy. The funds were payable over five years.
Courtney said: “The premise of the sponsored academy programme was that wealthy donors would make a significant contribution to the cost of setting up new schools.
“To see some of the biggest sponsors effectively avoid this commitment is outrageous.”
Long-standing struggle to secure cash
But some trusts not paying up has been an issue since the beginning. 88 academies had still not received £42 million of the £148 million owed to them in capital costs by March 2010, according to a National Audit Office report.
As of 2016, almost £13 million was still owed.
As for endowment funds, more than half of the academies promised them between 2007 and 2010 had not received anything by March 2010. Sponsorship rules were ditched altogether by September 2009 under the Labour goverment.
West said similar issues had arisen even under the city technology colleges programme which preceded academies. “The big question is – why is there no mechanism in place?”
She said cynics might assume the real problem was “political will”, given the government’s reliance on larger MATs to take over schools, but there was “no evidence for this”.
She also noted the government had sought to recoup public funds via legal action recently, supporting the defunct SchoolsCompany Trust in suing former trustees over unpaid bailout loans.
£10m rebrokering costs written-off
More than £10.2 million in other debts owed by eight different trusts – not including Harris or Oasis – has also been written off to “facilitate” transferring academies over to new, “more sustainable” trusts.
As revealed in the ESFA’s accounts last month, the largest write-off was £4.5 million for the Shrewsbury Academies Trust.
The DfE said the write-offs related to a “legacy policy” discontinued over a decade ago, and noted building reserves was “prudent financial planning” particularly where trusts were expanding.