Downsizing trust ‘failed to balance books quickly enough’

The Castle Trust faces questions over its finances.

The Department for Education has slapped strict spending controls on an academy trust accused of failing to balance its books rapidly enough after it was stripped of a school.

The Castle Trust, which is now preparing to close, has been issued a financial notice to improve after it “failed to act quickly enough to make the necessary plans and implement sufficient changes to achieve a balanced budget”. This was after a “significant change” affecting its income, the letter said.

The trust’s 2018 accounts show “ongoing plans to expand” beyond its two primaries. But it says the DfE cancelled a planned free school in 2018.

One of the primaries, Delce Academy in Kent, was rebrokered to the Inspire Partnership last year after an ‘inadequate’ rating, while Greenway Academy’s handover to GLF Schools was signed off in February.

Despite regulators praising “positive progress” with the West Sussex academy’s looming transfer, the trust breached rules by failing to “approve a balanced budget and maintain the trust as a going concern”.

The Education and Skills Funding Agency said the trust had also failed to ensure “regularity and propriety”. ESFA also said it had been forced to provide two “non-recoverable” bailouts.

The DfE would not reveal what the “necessary plans” were. But it said trusts must “review their structures” to balance budgets when significant changes dented income.

Castle’s 2019 accounts highlight a four-strong trust leadership team, down from six the previous year. Last year’s accounts are overdue and the trust did not confirm current central staffing. But pay statements suggest Karen White, the chief executive and head of the 370-pupil Greenway Academy, earned at least £105,000 last year, about £284 per pupil.

Schools Week analysis suggests the figure is far higher than the per-pupil pay of many trusts warned over high pay by the government in recent years.

Matthew Clements-Wheeler.
Matthew Clements Wheeler

Matthew Clements-Wheeler, a former chair of the Institute of School Business Leaders, said trusts downsizing to one school still had the “paraphernalia” of a MAT. Boards needed to cut back central teams, but added that staff giving up pay or jobs voluntarily would be like “turkeys proposing Christmas”.

Ruth Rule-Mullen, a partner and head of public sector employment at Forbes Solicitors, said trusts were duty-bound to review spending after any reduction in “school business need”.

But redundancy could only be considered where work had ceased or diminished.

Staff pay cuts also cannot be easily imposed. “You have to either agree it via consultation, or consult with a view to termination and re-engaging,” Rule-Mullen added.

Chris Purchase, the trust’s chair, confirmed he had since resigned over alleged ESFA “intransigence”. But the regulator, trust and Purchase declined to provide further details on ESFA’s specific demands.

Charlotte Pearce Cornish, a director of education consultants Premier Advisory, said a lack of clarity from ESFA left some trusts “wondering whether they should focus on cost-cutting or investing in central capacity to focus on growth.”

Raj Unsworth
Raj Unsworth

Raj Unsworth, a governance expert, said small trusts hoping to expand faced their own “balancing act” over the size of their central team. “It’s a trap people fall into – recruit too quickly, and you’re in trouble with too many people without anything to do.”

Clements-Wheeler said policy direction was clear. “Ministerial and public tolerance of problems with small MATs is shrinking.

“Failing MATs will be stripped of schools and monitored closely, and the renamed Academies Financial Handbook indicates a greater desire to regulate to ensure the rapid dissemination of good practice.”

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