The largest academy chain in England has been slapped with a notice of financial concern by the Education Funding Agency (EFA).
In a letter to the Academies Enterprise Trust (AET), EFA director for academies and maintained schools Sue Baldwin said she had “significant concerns about the volatility shown in the series of financial projections” provided by the trust.
The trust will now lose some of its spending powers and remain under notice until it meets a set of conditions set out in the letter, including arrangements for sufficient oversight of the finances of the trust and efforts to bring individual academies out of deficit.
In the letter, Ms Baldwin says she is following up on correspondence sent in September in which the EFA said it was minded to issue such a notice and requested further information.
It says: “The financial information provided does show an improvement in the overall financial position and we recognise some progress.
“However, we have significant concerns about the volatility shown in the series of financial projections provided to us and the ability of the Trust to forecast and therefore, critically, to secure finances across the group.
“At the same time, while I recognise that the board has improved structures and processes for oversight of the financial management of the Trust and its academies over the past year, this needs to be further strengthened.
“This letter and its annexes therefore serve as a written notice to improve financial management, control and governance at the trust.”
It continues: “Upon receipt of this financial notice to improve, all of the delegated authorities as identified in the academies financial handbook will be revoked, and all transactions by the trust previously covered by these delegations (regardless of size) must come to the EFA for approval.
“These delegated authorities shall be returned to the trust providing that the terms set out in the [notice] have been complied with and continue to be complied with, to the satisfaction of the Secretary of State.”
The letter, which is addressed to new trust chair Rupert Gather, comes after the Department for Education (DfE) made a u-turn and decided to intervene into the trust’s plans to outsource non-teaching roles in a contract worth up to £400m.
In a letter seen by Schools Week in September, schools minister Lord Nash said that any final decisions about the outsourcing would be for Education Secretary Nicky Morgan to decide, despite the fact Dominic Herrington, the former director of the DfE’s academies group and now South East England and South London Regional Schools Commissioner, had told MPs in February that it was a matter for the board of trustees, not the DfE.
A trust spokesperson said: “We are disappointed that the EFA has found it necessary to issue us with a financial notice to improve.
“Over the past year we have strengthened our governance and financial management review processes with our academies in order to maintain financial stability and provide a sustainable future.
“We recognise the challenges that some of our academies face financially, and are continually working with these academies to improve their financial projections and performance.
“The EFA has recognised an improvement in our overall financial position, and the progress that has been made.
“With the changes we have implemented, we are confident that we will be able to demonstrate to the EFA further improvement in our governance and financial management over the coming months.”