Academies - converters in need of a hand?

Today’s Financial Times carries any article reporting that eight academies have had to be bailed out by the Department for Education in the last 18 months alone.

The article is not clear whether the eight academies were “converters” or longer established academies. What is likely is that many more of the 1500 plus academies will suffer financial problems in the next few years. Primaries without critical mass will be especially vulnerable unless they team up with larger secondaries or with the emerging schools chains.

While I personally believe in greater schools autonomy and choice, there needs to be a framework of greater support for academies. The Young People’s Learning Agency (and the soon to-be-Education Funding Agency under the wing of the DfE) is not set up provide the kind of support that the DfE’s old Academies Finance Unit aspired to provide. There are consultancies, accountancy firms and other service providers able and willing to help – normally for a fee. There is also self-help: academy finance directors and managers can get support at the academy finance directors' google group from their peers (many of whom have been in academyland for several years). Guidance can also be found in CIPFA’s new Effective Governance and Financial Management in Academies although a handbook can only take you so far however comprehensive and useful. CIPFA is also now offering a Certificate in Financial Reporting for Academies.

If local school commissioners were appointed – as suggested by the new head of OFSTED and Chris Cook of the FT – this “middle tier” between Whitehall and academies might offer some support. However, I suspect any such institutions be more a regulatory watchdog than a helping hand.

This all sounds very negative. Sorry. One thing that academies can do is seek out professional (legal, financial etc) with experience of coping with independence in a public or third sector setting. Last year I wrote to a local converter academy offering pro bona support – I did not even get an acknowledgement back.

Judging them by their results: MPs, sixth forms and value for money

Today the House of Common's Public Accounts Committee (PAC) published its report on Getting value for money from the education of 16– to 18– year–olds.

While few people are excited by a select committee report, I was a little dissappointed by the PAC report. There was plenty of common sense in the report including the observation that larger sixth forms benefit from scale economies and a promise to scrutinise the impact of the abolition of Educational Maintenance Allowances on staying-on rates. That is all reasonable and useful. Nevertheless the PAC report was a let down.

Back in March, the National Audit Office (NAO) published its own research on sixth forms and value for money - indeed, it sailed under the very same title. Many of the findings and recommendations of the NAO fed into the PAC report. However, a key finding of the NAO was that sixth form colleges deliver impressive value for money:

Sixth-form colleges, which perform best on most measures of learner achievement, are paid at a lower funding rate than school sixth forms. While the Department has taken some steps to reduce differences in the funding of different types of provider, colleges receive £280 per learner less than schools.

Sadly this message was somewhat diluted in the PAC report which noted:

School sixth forms currently receive £280 per student more than colleges.

Why was this lost in translation? I have no idea. Maybe it is because colleges lack political friends and public profile. (How many party manifestos have spouted off about schools and universities but forgotten that colleges even existed?)

To add insult to injury, the normally excellent Education Guardian had an article headlined: "Money being wasted on badly-managed colleges, say MPs". No! The PAC may have failed to applaud sixth form colleges but it did not question college management. In fact, it observed: "further education colleges have become more adept at making tough choices to improve value for money".

The Guardian article was better than its headline. It noted that PAC was concerned about the comparability of data for assessing value for money. (The NAO report pointed to the weaknesses in the quality of data coming out of school sixth forms although this was not evident in the PAC report.)

As results are published for the nation's sixth forms, there is no way that the PAC (or the sub-editors at the Education Guardian) deserve an A*.

PAC on academies: some thoughts on governance and regulation

Today is a big-ish day for education policy. At 11.30am Michael Gove published his Education Bill although the contents are previewed in parts of the media. Until then we can read about the cross-party Public Accounts Committee report on the Academies programme.

The parliamentary PAC report expresses concern over financial control in the academies sector. Unfortunately the headlines have overlooked the good news in the report’s Executive Summary:
sponsored academies… have performed impressively to date, achieving rapid academic improvements and raising aspirations in some of the most deprived areas in the country. In many cases this has been achieved through high-quality leadership, a relentless focus on standards, and innovative approaches to learning and to the school timetable.

However, the Summary goes on to make serious criticisms:

Many academies have inadequate financial controls and governance to assure the proper use of public money, and the Department and Agency have not been sufficiently rigorous in requiring compliance with guidance. In developing a new financial handbook and governance framework, the Agency should make it compulsory for all academies – sponsored and converter – to comply with basic standards of governance and financial management. This should include segregation of key roles and responsibilities, and timely submission of annual accounts.

Academies will have to consider and act on the concerns raised in relation to governance:

We heard evidence of non-separation of roles, for example the chair of the governing body also being the chair of the finance committee, the responsible officer also chairing the governing body, and the responsible officer also chairing the finance committee. All of these roles should be clearly separated. There was further evidence of a shortfall in financial assurance and challenge owing to academies not having audit committees – against Departmental recommendations and Charity Commission good practice. We also heard that not all academy finance directors are CCAB-qualified accountants, again counter to recommendations in the Academies Financial Handbook.

Quite a few academies may not like all or some of these criticisms. It is a fair point that academies may struggle to arrange their governance structures with a standalone audit committee when so many claim that they have difficulty recruiting one governor who is an accountant or auditor. If academies do not move on these issues, they will find that they are censured by the YPLA auditors.

Even without the PAC report, there was a strong case for academies to review and strengthen their governance and financial management. They are high-profile and publicly funded organisations with their reputations at risk if they do not demonstrate compliance with high standards of governance.

(I should declare an interest: I work with academies and provide Responsible Officer services – the quasi internal audit of basic financial controls mandated by the Academies Financial Handbook.)

The report touches on the nature of regulation for the academies sector:

In future [sic] there must be greater clarity about what is required as opposed to what is recommended. Too much in the current framework is permissive, and there is insufficient mandated practice to prevent individual academies adopting practices which do not comply with basic standards of good financial management and governance.

I would agree that there is a need for a clearer distinction between “must” and “should”, particularly in the Academies Financial Handbook. However, I believe that academies should be encouraged and cajoled individually and collectively to raise their standards of governance so that regulatory input can be focused rather than broad-brush and heavy-handed. For a long time I have argued for a code of governance agreed by and for the academies sector leveling-up standards with a “comply or explain” approach. It works in other sectors.

Strangely the report is out-of-date on one issue before it is published when it states:

From January 2011, all academy trusts became exempt charities. This means that the Secretary of State for Education has replaced the Charity Commission in the role of Principal Regulator, and academy trusts submit their accounts to the Department only

Due to delays, the Charity Commission is - for now – the Principal Regulator. Hopefully, when there is a new Principal Regulator (presumably the YPLA and then its successor the EFA), they will use the right mix of regulation, self-regulation and governance to strengthen internal financial control across the academies sector.

Academies: the significance of numbers and the future of regulation

So one in ten English schools are now academies – marking a doubling of academy numbers. I do have some sympathy with commentator Conor Ryan’s tweet that:

It is not the number of academies, but their contribution to school improvement that matters most.

As a former advisor to the last government Conor Ryan blogs:

it is simply ridiculous to claim that the marginal governance and financial changes involved in converting an outstanding school to an academy are in any way comparable to the huge task involved in gaining secure sponsorship and leadership for a new academy in a tough area or an academy replacing a failing school.

The setting-up of academies planned by the previous government and the conversion process allowed by the current government mean that there is a significant challenge and workload associated with regulating them. (On top of that free schools are in the pipeline.) It is therefore ironic that a fog of uncertainty has descended on the future regulation of the academy sector since the regulatory changes planned for 1 January appear to have been postponed. The Young People’s Learning Agency is funding and overseeing the sector, but Third Sector reported yesterday that it has not formally been made the new Principal Regulator to replace the Charity Commission.

The how and when of the YPLA's replacement

Tucked away in yesterday's Schools White Paper was the announcement that the Young People’s Learning Agency will be “replaced” by the Education Funding Agency. Perhaps re-badged would have been a more accurate description – the staff of the YPLA will be brought in-house into the Department for Education from being a standalone Non Departmental Public Body.I expect some other DFE staff will be included as the EFA will have a role in relation to schools which are not (yet) academies.

There was some uncertainty about the date of the change but according to the YPLA website the transition is assuming April 2012.

It is worth noting that Michael Gove has backed off from the idea of a direct EFA-schools relationship seen in an earlier draft of the White Paper. I suspect that this is a tactical retreat. You can only eat an elephant one bite at a time.

It is ironic that the survival of the Skill Funding Agency and the (de-quangoed) YPLA/EFA were not advocated in either manifesto of the Coalition parties for the post-16 funding landscape.

Government U-turn on a national funding system for schools and 16-18

Today the FT Westminster Blog reports that that the government is backing down on a national school funding system. It quotes Michael Gove on the Andrew Marr Show as saying:

The Financial Times ran a report of what they thought was going to be in the white paper, fair play to them, journalists often anticipate events, but the truth is that we will be funding schools through local authorities as we do at the moment.

The Westminster Blog says that it had a copy of a draft copy of the white paper and the details of their story were confirmed by civil servants at the Department for Education.

Where all this leaves the Young People’s Learning Agency is unclear. The draft seen by the Financial Times included this paragraph:

The Young People’s Learning Agency (YPLA) will extend their current responsibility for funding Academies and Free Schools to funding all schools becoming the Education Funding Agency from April 2013. It would administer the national funding formula to all schools directly as well as post 16 funding ensuring that the maximum amount of money goes directly to schools in a fair, transparent and equitable way. Local authorities will pass the national funding formula allocation directly to maintained schools until the Education Funding Agency comes into existence.

I suspect the YPLA will carry on even though the government has U-turned on the broader reform. Sadly this may mean that the inequalities in 16-18 funding between schools and colleges persist.

The YPLA and plans for nationalising schools funding

Tucked away in yesterday's Financial Times article about plans for a national schools funding formula was a clue to the fate of the Young People's Learning Agency:

Officials are preparing for the transition to a new funding system to begin in 2012, with a new independent Education Funding Agency taking over finance for “all schools and sixth form provision” from 2013.

Of course, this may not happen. Councils and councillors - not least Conservative ones - may be most unhappy about the policy which may appear to run contrary to "localism" rhetoric. The Conservative backbencher Douglas Carswell has already voiced doubts on his blog. The plans would create a super quango dispensingover £30billion each year. Moreover, there are many practical obstacles to a more rational and transparent allocation of resources to schools.

School heads may welcome the move now but not necessarily when they realise that many of their schools may be losers - 60% of secondary schools according to research by the Institute of Fiscal Studies in the Spring (a pdf of the research paper is available).

Michael Gove may be in for another bruising battle.

Post-16 alphabet soup – who survives and how?

Maybe I was naive but I thought we might learn today something of the new regulatory landscape in post-16 education. However, today's quango hit list merely notes on the Young People’s Learning Agency:

Under Consideration - Subject to education structural reforms

I thought that the Skills Funding Agency and Higher Education Funding Council might merge. It was in the Liberal Democrat manifesto. But according to the Times Education Supplement this is now unlikely. Vince Cable has changed his mind. On today’s list HEFC survives as a quango.

So maybe the YPLA and the SFA may merge? The SFA was not mentioned on today’s list as it is an Executive Agency rather than a quango.

Setting colleges free: the full coalition agreement

The full coalition agreement published yesterday does mention colleges.

The Government believes that our universities are essential for building a strong and innovative economy. We will take action to create more college and university places, as well as help to foster stronger links between universities, colleges and industries.

We will seek ways to support the creation of apprenticeships, internships, work pairings, and college and workplace training places as part of our wider programme to get Britain working.

We will set colleges free from direct state control and abolish many of the further education quangos. Public funding should be fair and follow the choices of students.

On quangos it sounds like the Conservative manifesto:

We will set colleges free from direct state control and abolish many of the further education quangos Labour have put in place. Public funding will follow the choices of students and be delivered by a single agency, the Further Education Funding Council.

While there is no explicit reference in the coalition agreement to reviving the FEFC, a re-arrangement of the funding bodies for post-16 education (excluding universities) may only be a matter of (legislative) time.

The new coalition and education

The new coalition agreement (pdf available) has a section on education. It talks about schools and universities - but no mention of colleges. Maybe we will soon learn what is to happen to general FE colleges, sixth form colleges and the quangoes that fund them.