One of the country’s first ever free schools has been censured after handing the government “inaccurate” budget forecasts while racking up deficits of over £300,000.
Langley Hall Primary Academy Trust, in Slough, has been issued with a notice to improve by the Department for Education, which also raised concerns over “significant” related-party transactions that went undeclared.
Officials found the free school failed “to act” to maintain viability as it breached academy rules over “financial management and governance”.
“The trust has breached the academy trust handbook and its funding agreement over consecutive years and has not remedied the breaches despite opportunities to address them,” the notice said.
Parent donations
Accounts for 2022-23 and 2023-24 expressed “significant uncertainty” over “the trust’s ability to continue as a going concern”, having recorded deficits of £313,000 and almost £380,000 respectively.
They “noted the failure of the trustees to act to address the deficit position and mitigate the risk” indicated “inadequate financial management and governance”.
The documents show the trust has been informing “parents of the continual patterns of decreased funding over the past seven years”.
In 2018, it “introduced a voluntary contribution scheme for parents enabling them to make a financial donation”, with amounts between £10 and £20 per term suggested.
A letter has been sent out “again this year explaining how these funds are used and requesting their continued financial support”.
Concern over related-party transactions
The notice stated forecast in-year surpluses were “not sufficient to return the trust to a positive position”. Its board of trustees was “required to notify the ESFA of that fact and failed to do so”.
“Additionally, the budget forecast returns submitted by the trust in summer 2023 and 2024 were inaccurate and did not reflect the financial position of the trust,” the notice continued.
“The budgets themselves were not adequately monitored…as the actual in-year surplus forecast achieved for 2022-23 and 2023-24 varied greatly from that forecast, increasing the cumulative deficit year on year, indicating a failure to act to maintain financial viability.”
But the breach officials are “most concerned” by centred on the trust’s “failure in successive financial statements to disclose all related-party transactions”.
They are aware of “significant” transactions between the academy and Langley Hall Arts Academy, a private secondary school.
‘Weak financial position’
These “have not been disclosed” since the independent opened in September 2022, despite “it using trust assets, having staff in common, and occupying buildings leased” by the academy.
Langley Hall Primary headteacher Sally Eaton and head of commercial strategy Chris Eaton helped found the private school. They are listed as consultants on Langley Hall Arts Academy’s website.
“This letter…serve[s] as a written notice to improve financial management at the trust,” the notice added.
“It reflects the weak financial position of the trust and continued concerns on governance and oversight of financial management by the board as well as the failure to disclose related party transactions.”
Langley Hall Primary was among the first 24 free schools to open under the coalition government in September 2011. Twenty-three are still operating.
The first free schools
Of these, eight have moved into new academy chains. Only six of the free schools are still in standalone trusts. Langley Hall Primary is one of them.
Government data shows how mergers are changing the profile of the academy sector. The average size of a trust has increased from 3.1 schools in 2019 to 5.3 this April.
Analysis also suggests that the proportion of chains that are single-academy trusts has fallen from 58 per cent to 47 per cent over the past six years.
A report by the Kreston group of accountancy firms this year said large MATs had a better financial performance and were “more confident about the future”.
“So, if the sector is trying to ensure that it is financially sustainable then the obvious solution would be for MATs to become large or at least for the smaller MATs to become larger.”
Langley Hall Primary and Langley Hall Arts Academy did not respond to our requests for comment.
Your thoughts