DfE and ESFA accounts: £3m settled out of court, bigger bonuses and millions in debt written off

The annual accounts for both the Department for Education and the Education and Skills Funding Agency have been published today, in a deluge of information released as parliament heads into the summer recess.

The accounts, covering the year to March 2019, reveal the write-off of hundreds of thousands of pounds given to academy trusts, fraud investigations and concerns over the impact of Brexit on an already stretched department.

Here are some of the things we learned.

1. The DfE made a mysterious £3m out of court settlement

During the year, the DfE settled a dispute out of court with a third party, costing £3 million.

The accounts give no information about who the third party was, or the nature of the dispute.

2. The ESFA expects to lose staff in the event of a ‘no deal’ Brexit

The ESFA is preparing to “deal with a reduction in workforce” if the UK leaves the European Union without a deal, resulting in staff being seconded to other government departments.

The accounts say the agency has agreed “where work could be slowed down or paused” in this case.

3. DfE COO and 5 ESFA bosses received up to £15k in bonuses each

Mike Green, chief operations officer and director-general of the department’s operations directorate, was one of two DfE civil servants to get a bonus this year – receiving between £10,000 and £15,000.

His was the largest bonus of the two, the other being a payment of between £5,000 and £10,000 given to deputy permanent secretary Indra Morris.

This is an increase from last year, when no bonus payments were given.

Meanwhile, five ESFA bosses also received bonuses of between £10,000 and £15,000 this year.

They included director of intervention Peter Mucklow, acting director of academies Mike Pettifer, director of apprenticeships Keith Smith, director of the transactions unit Matthew Atkinson and director of technical education Jennifer Coupland – who will be leaving the ESFA to head up the Institute for Apprenticeships and Technical Education in November.

ESFA chief executive Eileen Milner’s bonus was up to £5,000.

This is another increase from last year, when five bosses – including Mucklow and Smith – received between £5,000 and £10,000.

4. Millions of pounds worth of debt written-off

£889,000 owed by the Rye Academy Trust was written off as part of “rebrokerage debt forgiveness”, along with £543,000 for Heathrow Aviation Engineering UTC and £451,000 for UTC Plymouth.

Rye Academy Trust closed the Rye Studio School in October, and transferred its remaining primary and secondary schools to the Aquinas Church of England Education Trust this year.

Heathrow Aviation Engineering UTC closed last August and re-opened as UTC Heathrow under the Activate Learning Education Trust, while UTC Plymouth was taken over by Reach South Academy Trust in October.

Money owed for overpaid grants was also waived at the Robert Owen Academy Trust, which closed last August owing £662,000.

Two schools that closed in August 2017 also had grants waived: Bolton Wanderers Free School, which owed £353,000 and the Future Tech Studio School which owed £317,000.

5. Only a quarter of academy CEOs have reduced their pay

Over the year, the ESFA wrote to 213 academy trusts that pay more than £150,000 to one employee or have more than two employees on more than £100,000, asking them to justify the high salaries.

But the accounts say that just 50 of these have reduced their salaries since 2016-17.

6. ‘Special payment’ of £414k to academy trust

Reach2 Academy Trust was given £414,000 to support the conversion of Springfield Primary School in Birmingham.

This money included the cost of recruiting additional staff for school improvement activities, like restructuring the curriculum, but the DfE’s accounts say Birmingham City Council also contributed funds for deficit removal, capital improvements and staff reorganisation.

7. ESFA investigates

This year the ESFA received 38 allegations of fraud in academy trusts and undertook 12 site visits, including four financial management and governance reviews and two formal investigations. It also carried forward six ongoing investigations into academy trusts from previous years.

Nineteen investigations into academy trusts were completed this year, but fraud was not identified in any, and just one had an “irregularity”. Another 14 cases are ongoing, with nine nearing completion.

Nine complaints relating to the ESFA itself were escalated to the parliamentary and health service ombudsman this year, but none were accepted for investigation.

8. 31 requests to move money to high needs block approved

The ESFA considered 38 requests from councils to move funding from their schools funding blocks to their high needs blocks in 2019-20, where the movement was either more than 0.5 per cent of the total schools block funding or where the local schools forum had not agreed with the proposal.

Of these, ministers approved 28 requests in full, and three partially.

9. Research spending has grown dramatically

The DfE spent £29 million on research this year, up from £19.6 million last year and £16.7 million in 2016-17.

The majority of the money – £23.7 million – was spent on researching and evaluating policy.

10. Ministers expect the EBacc target won’t be met

Although the DfE wants 75 per cent of year pupils to be studying EBacc by 2022, forecasts show it is likely just 53 per cent will be by then.

Concerns about the difficulty and quality of teaching in modern foreign languages GCSEs have been identified, but the report also notes that Ofsted’s new framework “is likely to help push up language uptake to an extent, given its more explicit emphasis on the EBacc”.

11. More loan advances, but fewer gifts

The accounts show the ESFA handed out more than £48 million in loan advances for academies this year, up from just under £3 million last year.

Last year, the DfE handed out payments totalling £15.5 million that were classified as “gifts” but this year the gifts totalled just £1.6 million.