“Worsening” high needs cost pressures, £600 million of “irregular” grant spending and bumper pay boosts and payouts for senior officials and ministers have been revealed in the Department for Education’s (DfE) annual report and accounts.
The document, which is laid before Parliament, sets out all DfE spending and performance in the 2024-25 financial year.
Here’s what we learned…
1. High needs cost pressures declared ‘major issue’
The DfE has updated its risk register to upgrade high needs cost pressures from “critical – very likely” to a “major issue”, with the risk said to be “worsening”.
The report warned there is a risk that, “despite substantial real terms increases in high needs funding, high needs cost pressures continue to increase which could result in some local authorities becoming insolvent, citing SEND pressure as a contributing factor”.
Despite the urgency, government has pushed back a decision on the future of the controversial ‘statutory override’ – keeping huge SEND funding black holes off councils’ balance sheets for another two years.
2. Regions group now costs £274m
The DfE’s regions group, which replaced its system of regional schools commissioners in 2021, has been growing significantly in recent years as it takes on more responsibilities.
It now costs a whopping £274 million – up 150 per cent since 2021-22, when it cost £109 million.
A chunk of this is for running the regional director offices, which make important decisions on academies (and have also seen costs balloon).
3. £600m ‘irregular’ grant spend identified by auditor
The DfE paid out £88.3 billion in resource grants and £5.5 billion in capital grants in 2024-25.
Gareth Davies, the comptroller and auditor general to the House of Commons, said he identified irregular grant spend in several areas.
Within the core department, he identified estimated irregular grant spend of £61 million relating to various grant streams.
“I also identified an estimated £588 million of irregular spend within ESFA and £63 million of known irregular spend,” he added.
No further details on which grants were irregular and how was provided.
4. Bumper pay rise for top boss …
DfE permanent secretary Susan Acland-Hood saw her salary band rise to between £180,000 and £185,000 pounds last year, up from between £170,000 and £175,000. Her pension benefits also increased from £108,000 to £137,000.
It means her pay and benefits rose by 12.3 per cent, compared to a DfE staff average of 5.2 per cent.
5. … and big increase in exit packages
The DfE and its agencies and arms-length bodies paid out £3.9 million in exit packages to 64 departing staff in 2024-25. In 2023-24, it had paid £1.27 million to 30 people.
Two of the exit packages last year were worth between £150,000 and £200,000, while six were between £100,000 and £150,000.
Exit packages are for staff who are made redundant or retire early. It does not name which staff the payments relate to.
The DfE also sometimes makes special “severance payments” when employees or contractors resign, are dismissed or reach an agreed termination of contract.
In 2024-25, it made 23 payments totalling £1.3 million up from two payments totalling £115,000 in the year prior.
The highest payment was £142,186.
6. £17k payout for Keegan
Ministers get severance payments when they leave office, regardless of whether they resign, are sacked or voted out as MPs.
The report shows Keegan received £16,876 last year after losing her seat, while departing schools minister Damian Hinds and skills minister Luke Hall got £7,920. Former children’s minister David Johnston received £5,593.
The document also shows £7,920 was also paid out to Nick Gibb and Robert Halfon, who both resigned as ministers in late 2023.
7. £234k to Keegan’s husband company, £21k to Smith’s consultancy
It’s not just axed ministers getting pay days.
The report details related-party transactions, spends by the DfE with organisations linked to ministers and board members.
It shows £234,000 was spent with Centerprise International Holdings Limited, an IT provider of which former education secretary Gillian Keegan’s husband is a non-executive director.
Meanwhile, £21,000 was paid during the year to Jacqui Smith Advisory Ltd, a company owned by the current skills minister Baroness Smith. And £14,000 went to Steve Crocker Consultancy Ltd, run by DfE board member Steve Crocker.
The accounts do not state what the payments are for.
8. Consultancy and ‘contingent labour’ spend jumps
The report highlights spending on consultancy, something Labour has pledged to cut back, and on “contingent labour”, which is the use of staff or specialist contractors to cover short-term requirements like absences, peaks in workload or unfilled vacancies.
It shows spending by the DfE and its agencies on contingent labour increased from £32.9 million in 2023-24 to £36.8 million in 2024-25.
Overall, the consultancy spend only went up from £10.1 to £10.2 million, but just taking the department itself into account, the spend rose from £5.3 million to £6.6 million.
9. £533k ‘special’ payment for work DfE cancelled
The DfE also made a “special” payment of £533,000 to Skanska, a multinational building company based in Sweden.
This was a “final settlement for work completed…under a school construction contract that was terminated by the department”.
No further details are provided.
10. More UTC and free school write-offs …
The DFE has to report every year how much debt it writes off when it re-brokers an academy to a new sponsor. It made the following write-offs over £300,000 last year:
UTC Warrington: £825,000
The Seckford Foundation Free Schools Trust: £755,000
The Queensmill Trust: £726,000
Bright Futures Educational Trust: £369,000
Aquinas Church of England Education Trust Ltd: £301,000
11. … and £3m lost over council grant misuse
The DfE also reported that it wrote off £3 million for Medway Council.
The ESFA’s annual accounts, also published today, said the council “incorrectly” used its dedicated schools grant funding for SEND services, which are the statutory responsibilities of the council and should instead be funded from the general grant.
But the DfE report adds: “In certain limited circumstances the department may choose to write-off grant overpayments arising from other reasons.
“In all situations, the department has taken a view that seeking recovery of funds would not be value for money or could imperil continued education provision.”
The document also details a “cash loss” of £300,000 relating to Pendle Primary Academy. But there is no explanation.
12. DfE loses £393k on cancelled media campaigns before election
The department has also reported a loss of £393,000 paid out to Manning Gottlieb OMD for media campaigns that were cancelled during the pre-election period, when public bodies are restricted on what they can announce.
A further £663,000 loss resulted from the expiration of the Erasmus+ contract, “preventing recovery of funds”.
13. Audit warning over pension scheme and school building schemes
The Government Internal Audit Agency (GIAA) provides the internal audit service for the department.
For 2024-25, it provided a “moderate” opinion, “which states that some improvements are required to enhance the adequacy and effectiveness of the framework of governance, risk management and control”.
The documents show it identified “unsatisfactory assurance” relating to the constructed schools commercial controls (2023-24 audit programme), and “limited” assurance relating to the teachers’ pension scheme transition programme, which involves the current provider Capita handing the scheme over to the incumbent Tata Consultancy Services.
No further details are given.
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