Academies

United Learning broke academy rules over £133k ‘duplicate payment’

Country's largest trust also reveals it was braced for £10m deficit before autumn statement funding announcement

Country's largest trust also reveals it was braced for £10m deficit before autumn statement funding announcement

United Learning academy school

The country’s largest multi-academy trust United Learning has applied to write off a “duplicate payment” of over £133,000 made to a company that subsequently went into liquidation.

The trust said it had exhausted efforts to recoup the payment made to H & E Mechanical and Electrical Limited in October 2017, and had applied to the Education and Skills Funding Agency for permission to write the amount off this year.

The trust’s accounts for the year to August 2022 said the £133,637 payment had been “appropriately authorised” and was “not expected to constitute a loss” because full repayment was anticipated.

However, the supplier went into liquidation in March 2019. Despite agreeing a payment plan and chasing the money, no payment was received.

The trust said its management had been “robustly pursuing” repayment via legal proceedings and using a debt collection agency. It had therefore concluded in previous years that “no loss had yet crystalised”.

Trust abandons clawback of payment

But given the time that has passed, and “based on the latest advice” of lawyers, debt collectors and insolvency practitioners, the chances of recovery are “now considered to be low and accordingly we believe we should write off this full amount in the 2022-23 accounts”.

The trust is now seeking ESFA approval to do so.

United Learning’s auditor Grant Thornton said in its report that the duplicate payment had resulted in “funds not having been used as intended by parliament”.

This represents a breach of the requirements of the academy trust handbook, and “therefore constitutes a reportable irregularity”.

The trust said the payment involved a company called called H & E Mechanical and Electrical Limited, which was “involved in a capital project at one of our schools”.

“The issue is covered off in the accounts just published as we have reluctantly now written off the debt on the advice of our lawyers and the debt recovery agency,” the trust added.

Trust feared £10m deficit without government help

United Learning feared it would rack up an in-year deficit of £10 million due to “late” energy and pay cost pressures before the government announced extra funding for schools last autumn.

In its accounts, the trust said it found its original budget assumptions for the 2022-23 year would be “insufficient for the inflation on pay and energy costs”.

Energy costs soared throughout the year, and the government waited until July 19 to announce its teacher pay plans for 2022-23.

The trust’s spokesperson told Schools Week these late cost pressures amounted to “up to £15 million”.

Since approving its budget, United Learning said it modelled expected costs for the two areas, and found that without further government support it would move “from a break-even position to a deficit”.

The spokesperson said it had projected an in-year deficit of around £10 million.

However, the trust said funding announced at the autumn statement “should now support these cost increases”.

The organisation “has a strong cash position”, but “continues to review its cost base and identify efficiencies and savings to ensure it can invest in line with its strategic objectives and stay in line with budget”.

Late cost increases cost ‘up to £15m’

A spokesperson for United Learning said pay and energy pressures “have had a significant impact on our budgets”.

At the start of the year, the trust was projecting an in-year deficit “of some £10 million”. But since United Learning started the year with £65 million of cash reserves “this was not a crisis and did not threaten our stability”.

The trust has “taken and planned measured action to maintain our financial sustainability without negative impact on children”. It now projects a deficit this year of around £3 million and “to return to balance at year end”.  

United Learning said it paid teachers above the national teachers’ pay and conditions, and wanted to “maintain our pay lead in the long term”. 

“We are not, therefore, immune from the impact of government decisions, and so their very late decision to increase pay more than their original submission to the review body had the same effect on our budget as on everyone else’s.

“Likewise, while we had bought 60 per cent of our energy at 2020 prices and reset our budget expectations for the remaining 40 per cent earlier in 2022, the impact of energy and other price increases later in the year was significant.”

The late cost pressures amounted to “up to £15 million”, leading to the trust’s original projection of a £10 million deficit.

“As a large group of schools, we are not immune from the same pressures as everyone else, though our reserves and our financial capacity may make it easier for us to respond to them. “

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