The government has written off £800,000 it was unable to claw back from free schools.
Schools Week revealed last month that the DfE needed to claw back £11 million from more than 100 free schools after they failed to recruit the expected numbers of pupils in the past academic year.
New free schools are initially funded on anticipated numbers. The Education Funding Agency (EFA) then reviews how many pupils are on roll at the end of that year and retrospectively retrieves or hands out extra funding.
Figures released after a parliamentary question from Labour MP Diana Johnson show the government is still to claw back £1.2 million it dished out in 2013-14. Another £700,000 handed out that year has been written off.
For 2014-15, the government is still to collect £2.9 million, with a further £100,000 written off.
This raised “serious concerns about financial mismanagement”
Johnson told Schools Week this raised “serious concerns about financial mismanagement” that she would flag to the National Audit Office, the government’s spending watchdog.
“It is irresponsible for the government to waste money on a chaotic free school funding system that is simply not fit for purpose.”
Free school critics have said the ability to have debts written off shows “special treatment”.
It is not clear what the specific reasons were for the write-offs, but it could relate to free schools closing without being able to repay their debts.
The Department for Education’s (DfE) annual accounts published last week show this is a problem among university technical colleges (UTCs).
For instance, the government wrote off £1.8 million of claw-back funding from Royal Greenwich UTC, which is converting to become a mainstream secondary school, because the debt would put “severe financial pressures” on its new sponsor, University Schools Trust, east London.
The DfE said it worked closely with schools each year to review estimates and minimise the likelihood of significant adjustments.
Schools Week also reported last month that councils must now estimate how many pupils will move to free schools opening in their area to help with recoupment.
Under the old system, the government recouped cash it gave directly to free schools from their council’s dedicated schools grant.
If a free school was set up because of a places shortage identified by the local authority, this recoupment started from the first year.
However, for free schools established through the government’s central application process, recoupment started from the second year.
The government said this was unfair and meant that for seven months of the first year, pupils in those free schools were “double funded”. The new system is now in place.