Why are academies so expensive?

moneyI think academies are proving to be more expensive than we can realistically afford. A while back I posted something facetious about academy funding, breaking it down very simplistically and pointing out we could have taught every child in Britain to ski had we decided to spend the money otherwise. I would like to develop this now in a more serious way, and in doing so I have to fully acknowledge an anonymous assistant who has painstakingly helped to extract these figures from the DfE’s various publications (anonymous because this is the Internet). We start with this statement, relating to the £8.3 billion that had been spent on the project between 2010 and 2012.

“Of this £8.3 billion total, £6.4 billion was offset by money recovered from local authorities, or was distributed to schools on the same basis, irrespective of whether they were maintained schools or academies – for example sixth-form funding or the Pupil Premium for children from low income families. The Department provided a further £0.9 billion directly to 103 academies for whose pupils it does not allocate any funding to local authorities, this making recovery unnecessary”.

Department for Education and Education Funding Agency (2012) Managing the expansion of the Academies Programme


Interpreting this, we see that academies are being funded centrally, children are attending academies, and the per capita cost is being clawed back from the local authorities. Nothing controversial here. However let’s move on.  ‘A further £350m was money the Department was not able to recover from local authorities to offset against academy funding’. So here we have a statement pertaining to the actual costs of setting up the programme. Let’s look at those in more detail.

£49m on central programme administration. There are two organisations involved in the setup – the Department for Education and the Young People’s Learning Agency, and this has come about because the DfE did not have the resources to do it alone. What it has meant is that there are very high communication costs. The overall cost could have been a lot lower if a national quango had been set up to do the job.

£338m on transition costs, of which £279m seems to be spent on ‘pre-opening and start-up finding to sponsored academies’. So these are large grants paid to schools before and after opening such as school improvements (which presumably should have been funded by other routes) and the problems of high overheads as pupil numbers were building up. Remember, it was not long ago that a condition of being a sponsored academy was that philanthropic donations covered costs such as these.

£92m on academy insurance. This seems reasonable on one level but not when you consider that Local Authorities are able to amortise risks and do this considerably more cheaply.

£22m on support for academies in deficit. Once again, reasonable on one level but not necessarily the cheapest way of achieving the same objective.

£68m reimbursing academies’ VAT costs, so essentially this is just money on paper and not relevant to the overall calculations.

£29m on other grants. Lack of transparency here.

£21m double-funding academies and local authorities to ensure financial sustainability of various local authority services. Unavoidable in the circumstances but this is duplication.

£59m protecting academies from income volatility problems, again an example of something that would be unnecessary if there were no conversions.

So how much of this is actually reaching pupils? This was just for the period 2010-2012. Now we have a situation where the academicisation policy has been scaled up massively, and with it the effect of the leaky financial pipe has presumably been exacerbated. Perhaps this goes some way to explaining why school budgets are becoming increasingly stretched (in addition to the impact of National Insurance increases and so on). To me, these figures show so much duplication of effort and increased legal/accountancy/insurance costs that it hardly seems worth the candle when you could have simply reformed Local Authorities instead.





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