Academy trusts get £21m in non-repayable bailouts

The Academies Enterprise Trust received £2 million, one of more than 80 trusts bailed out in a single year

The Academies Enterprise Trust received £2 million, one of more than 80 trusts bailed out in a single year

21 Dec 2021, 12:35

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The government propped up more than 80 academy trusts with bailouts in a single year, including a £2.05 million grant for Academies Enterprise Trust, official documents reveal.

Trusts received a combined £31.28 million in financial lifelines from the Education and Skills Funding Agency in 2019-20, according to the government’s newly published annual report for the academy sector.

In the year to August 2020, 53 trusts, including 11 university technical colleges, received £20.84 million in emergency handouts that will not be repaid. Another £10.44 million was offered in loans. Data has not been published for previous years.

The report states extra financial support will “only be approved in the most serious circumstances” and on a case-by-case basis when trusts have explored all other options.

The government prioritises loans, but offers non-repayable funding “when there is no other means to protect pupils’ interests.”

AET handout ‘part of turnaround programme’

Trusts propped up include England’s third largest, AET, which now has 57 schools. It received the second largest bailout of the year – none of it repayable.

The report says only that the cash was for “enabling financial recovery”.

A spokesperson for AET said the payment related to “an historic agreement with the DfE dating back to 2016-17 which was part of AET’s turnaround programme”.

The trust’s 2020 accounts state it had already received a £5.69 million ESFA loan “in line with the trust’s turnaround strategy”. The loan was interest-free and only repayable once the trust’s reserves exceeded £12 million. They stood at £8.7 million last year.

AET, once the biggest trust in the country, was banned from expanding in 2013 amid concerns it had grown too rapidly. It received a financial notice to improve a year later, with worries over its “ability to forecast and therefore, critically, to secure finances across the group”.

It was ordered to draw up plans to tackle individual academies’ budget deficits and make central savings. The trust saw a change in leadership and the notice and associated DfE spending controls were lifted in 2017.

Biggest bailout for collapsed free school sponsor

The largest bailout went to the now-collapsed Chapel Street Community Schools Trust, one of the biggest early free school sponsors, with a £2.48m grant and £145,072 loan.

Its board voted to wind up the trust in September, after handing over six schools and closing another last year. It had been on ESFA’s radar since at least 2016 when a financial notice was issued, only four years after its launch.

The trust’s 2019 accounts highlighted some how some schools had proved “more challenging and therefore more expensive” than expected. They also pointed to legal delays securing a permanent home for one primary, accounting issues and “significant challenges” maintaining cashflow.

The trustees’ report also criticised “unrealistic and unmanageable” ESFA repayment plans and academy finance rules “which would not be out of place in a large plc”. Being a small trust “almost guarantees that some of these standards will be inadvertently breached”.

Trust lacked chief finance officer

The Hinckley Academy and John Cleveland Sixth Form Centre Academy Trust received the third largest bailout, with a £1.435m grant and £55,000 loan.

The trust had received one financial notice in 2016 for failing to balance its budget. It received another in 2019 for remaining in deficit, failing to implement recovery plans and not repaying an ESFA loan.

Its 2020 accounts say there was “no suitably qualified or experienced chief finance officer in post” and “no evidence that value for money was obtained when procuring goods and services”.

The DfE said the recent bailout was to facilitate the standalone trust’s transfer to another trust, with the secondary joining The Futures Trust in late 2020. It has been approached for comment.

‘Propping up the academy programme’

The news comes only a few days after Schools Week revealed the government had let two leading academy trusts off the hook over millions owed in sponsor contributions, as efforts to claim them have been “exhausted” after a decade trying.

The DfE has written off almost £5.8 million owed by the Harris Federation and more than £3.6 million owed by Oasis Community Learning, according to departmental accounts.

Oasis and Harris, England’s fourth and sixth largest trusts respectively, were among early sponsors required to donate funds towards the costs of academy launches in the 2000s.

The DfE said the write-offs related to a “legacy policy” discontinued over a decade ago, as donation rules were subsequently ditched for new sponsors.

Meanwhile ESFA accounts earlier this month show it also wrote off more than £10 million on failed academy trusts last year, more than double the previous year’s figure.

Kevin Courtney, joint general secretary of the National Education Union, said both non-recoverable grants and the write-offs were part of a “pattern whereby debts owed by academy trusts are frequently forgiven or written off in the interests of propping up the academy programme”.

“The government should come clean about its double standards in relation to academy finances and ensure all schools are provided with adequate financial support and funding.”

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