‘It’s all about the money’: The REAL reason behind forced academisation

Why are the Conservatives intent on making every school into an academy? It’s not about standards, it’s all about the money, writes Mike Cameron.

It is becoming clear to anyone with even a passing understanding of the issues that academisation is not a universal panacea that cures all of a schools ills. The evidence we have suggests the overall performance of schools will, on average, remain unchanged. Nor, if schools follow the Department for Education’s preferred option and join a MAT, is it a creator of autonomy for those working in the school.

So it is a legitimate question to ask how did we get from the Conservative Manifesto (“So we will continue to expand academies…) to the Education White Paper (“By the end of 2022, local authorities will no longer maintain schools”) in the space of less than a year? After all, nothing of significance has changed.

If school performance isn’t the reason for making schools into academies, is it purely ideological? I don’t believe this. The prime minister has already removed the most ideological education secretary from office. The reason (given privately if not admitted publicly) was because of the adverse effect he was having on voters. This conflicted with the prime ideology of the government, which is to win elections. This is a partisan point, but not intended to be pejorative, and I don’t think you’ll find many Conservatives who disagree with it.

So why now do something purely ideological in education that is unpopular with many voters, Tory MPs and most Local Authorities?

Why now do something ideological and unpopular with many voters and Tory MPs?

I’ve heard somewhere that once you eliminate the impossible, whatever remains, no matter how improbable, must be the truth.

And the truth also explains why this measure was announced as part of the budget.

It is no secret that despite continued assurances about protected funding, schools are heading towards a financial black hole. Additional national insurance costs coming this year, additional pension costs, further national insurance increases on the way. Add those to wage and cost inflation, on top of a flat cash settlement, and it leads to a position where many schools are already through their reserves and most will start to hit negative positions next year.

Politically this is toxic. For this reason: Schools with large reserves will be okay(ish). Schools with low or no reserves will be in financial trouble very soon.

Up and down the country schools will be making staff redundant. It is already happening. It affects schools irrespective of the political colour of the local authority they operate in. It gives substance to the accusation the government have at best hid the truth about the dire school funding position and undermines the economic competence argument supporting the government.

The last decent set of figures we have for school reserves (2014) shows a total of £4.7bn held in them. £2.5bn in academies and £2.2bn in maintained schools.  As around half of academies are already in multi-academy trusts [MATs: charities with more than one school] we can take an approximation and suggest around £1.25bn of those reserves are in single academies. So a total of £3.45bn of those reserves is held in single schools. This is more than 10% of the budgets of all those schools.

The problem is that the reserves are not always in the right place. There is a fix for this problem. What if we could spread the £4.7bn around equally across all the schools? Well, theoretically the Secretary of State has powers she could use to recover these reserves and spread them around. You can just imagine the hue and cry if she tried to do so.

Schools need a bit of breathing space for the system to financially restructure (i.e. “find efficiency savings”) to prevent all the excrement hitting the rotating ventilation device. And I’m estimating it will hit it at about the same time the next leader of the Conservative party will be preparing for an election winning budget.

So what if schools could be convinced to voluntarily share reserves? What if all the schools with positive reserves could be linked to all those schools with negative reserves?

And this is exactly what a MAT does. It shares the reserves across the schools involved. It also allows for financial restructuring to take place. (Cynically, it is easier to get to reduce staffing and other costs when creating a new entity).

Putting all schools into MATs enables shared reserves and flattens out financial risk, as does movement of funding from local authorities to MATs. It reduces short-term risk of school financial failure. Moreover it does so without finance appearing to be the rationale for doing so.

Putting all schools into multi-academy trusts enables shared reserves and flattens financial risk

You will not be surprised to find I see the dead hand of the treasury behind this. You can almost hear the conversation taking place.

“Your plan already envisages that you will continue to expand academies? If you want to put off financial armageddon just set a deadline for all schools to convert, and provide a few carrots. That should get more and more of them into MATs where they can share their reserves and push the problem further down the line.”

“Ok George, we’ll do just that. You announce it.”

And that, I believe, is the real reason for forced academisation.

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  1. Amanda

    Brilliantly incisive and I totally agree. It’s also much cheaper to share out the TLRs over the MAT than in one school. One HoD English would be responsible, for example, for a number of schools instead of one.

    • Dennis Gunning

      Well, let’s hope that the Department is establishing its research programme to discover whether or not an all-academy system actually does improve standards over time. It has good potential control systems against which to compare the future performance of England’s academies. If the Government’s premise is correct, then we will expect to see England’s state-funded school standards rising in comparison to systems that are not changing, such as England’s independent school system and the state-funded primary and secondary school systems in Scotland and Wales, both of which continue to operate local authority managed, comprehensive school systems. Which independent research organisations will be invited to bid for this work, I wonder?

  2. Mike puts forward a very good argument, offering a credible rationale for the fiasco we are faced with.

    The hole in the argument, (the Treasury’s not mikes) is that there will be many smaller schools, the odd basket case and most special schools, who will be unattractive to any buisness orientated MAT. These Schools no one wants are unlikly to have significant reserves, many will be barley viable, meaning as future finances tighten, they are likely to become a drain on any MAT.

    So how will DfE/Treasury convince these MATs, run by all the new business types, to take on schools when they don’t really want to? How will the sharing of deficits and surpluses happen unless all schools are in MATs.

    It seems there are two main options
    They could compel mats to take on schools, though the prospect of mainly secondary Academies taking on massed ranks of primaries, whilst everyone knows that no one wants this outcome, looks particularly unappealing. Shotgun wedding like this will end in tears and occasionally blood.

    The other alternative is to incentivise mats to take on difficult schools. This is also fraught with difficulties, bringing in market forces, undermining fairer funding and probably still leaving some schools left behind. Bribery may work, but the costs (not just monetary) would be significant.

    There is a third option, an organisation of last resort in each region. That would almost certainly require both compulsion and extra funding incentives. This would look and feel very much like an LA and as a result, won’t be popular in DfE.

    All of this is without mentioning the role of churches and diocese in all this, which adds another layer of complexity for many small schools.

    As Jonathan Simons said, “this is perhaps the trickiest policy issue” and it is one that clearly needs a great deal more thought.

    • There is another reason for the bundling of schools into MATs. It paves the way for running schools for profit. A little-known document, ‘Blocking the Best’, was produced by Policy Exchange and the New Schools Network just before the 2010 election. It recommended running schools for profit. It admitted the politics wouldn’t be easy, but one way to do it was to make schools ‘independent’ and they would then be able to outsource to a for-profit provider. Academies are, of course, technically ‘independent’ schools.
      For-profit providers aren’t going to be attracted by just one academy – but a whole bunch of them clustered in a MAT would be more attractive. Any academies which were a drag (eg small rural schools) could just be closed – MATs have the power to do this. Parents might protest but the only way to save the academy would be for the DfE to persuade another MAT to take it on perhaps by offering a generous transfer fee.

  3. Ian Coupe

    Coming at this as a property specialist, I think the word “maintain” has been missing from the discussion surrounding the Tory policy. It costs a huge amount to build and maintain school buildings. What is the future of maintenance? I think that conglomeration into multi-billion pound education corporations is the ultimate aim of the policy. It may take twenty years but that is where economic necessity will lead. Having a million different contracts is extremely burdensome and inefficient.

  4. Alistair Thomas

    Whilst I can see your point entirely, the government could achieve redistribution of surpluses simply by changing the rules for maintained schools. This would be an overt act of theft rather than a covert one thorough Academies, and consequently harder to pull off without reputational damage.

    The problem with the Academy system is that any surplus is just as likely to find its way into the pockets of MAT trustees in the form of justified remuneration for all their hard work than it is to be applied to improve pupil outcomes.

    There is another equally compelling reason for forced academisation which can only come about by forcing the process. Central government is tired of local government interfering with or slowing progress on national policy. They are in cahoots with the Whitehall civil service who are keen to expand their central fiefdom no matter what the cost to the local civil service. It’s not about money, it’s about power.

    Whether I’m right or you’re right or we’re both right to some degree, what I can assure you about is that this has nothing to do with the best interests of pupils or parents.

  5. Richard Newton Chance

    There could be a less dramatic explanation. The fair funding consultation proposes funding all schools directly (not via the local authority). I am not sure you can do that without having all schools as legally accountable entities. Also not sure there is any legal way of money finding its way into the pockets of MAT trustees. They seem very adamant that privatisation is not on the cards. Most MATs down our way are secondaries forming MATs with their partner primary schools.

    • Alistair Thomas

      MATs are not schools. MATs are a different type of middleman. MATs have considerably more power to top-slice from the notional schools under their control than LAs do with the notional schools under theirs. There is all sorts of legislation which prescribes what LAs can and can’t do and it is subject to oversight by the Schools Forum. No such checks and balances exist for MATs.

      I use the word notional with respect to schools because there is only one legal entity, one funding agreement with HMG, in a MAT. Most mainstream schools are part of the LA (VA schools are an exception and there are others), basically the LA is the employer, just like a MAT. The LA observes the notion of a school unit now in much the way as a MAT will. Stand-alone Academies and all those in an umbrella trusts are the only schools that have separate legal and funding status.

      I’ve always found it hard to work out exactly who pays the salaries of the LA officers. Certainly some of it comes from the ESG – the services money but probably not all. None of it comes from the DSG. Some of the DSG may pay for services where salaried LA officers provide the resource.

      The ESG funds are given directly to Academies/MATs so I guess you could still say that the service money pays for the executive functions of a MAT, but the DSG and ESG are merged in the one Academy fund so it’s harder to tell. In many MATs, the trustees are paid executives, sometime highly paid executives. However the executive salaries are agreed between trustees and Members, those salaries are paid for from the school pot.

      I think the privatisation line is overplayed just as in the vast majority of Academies, the executives don’t put their needs ahead of those of their pupils, but the possibility is there and the Willshaw report showed that when those possibilities are exercised by less scrupulous or less competent MAT executives, there is very little external oversight to correct matters.

      It would make far more sense for LAs to continue providing services to all education providers so teachers can focus on education. LAs have the expertise and capacity to support 100s of schools very efficiently and could support Academies/MATs easily if they all had the same business year. In some respects MATs fragment the system further, mke it less efficient, more expensive.

      The real contention is school improvement. School improvement / education vision is the domain of education experts – you don’t want local politicians or local bureaucrats telling school leaders how best to educate our pupils. Find a way for local education leaders to manage school improvement across a county and across a region with county collaboration and you have a form of local governance that will serve 10x better than any central approximation of the same. Centralising everything will be very expensive, damage county-level cohesion, and won’t work.