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Councils call for powers to prevent financial abuses in academies

Academies are at risk of financial fraud without better oversight, councils have said as they called for restoration of their powers over school finances.

The LGA said that it does not believe the Education Funding Agency (EFA) is capable of fulfilling its role of academy financing oversight.

Earlier this year, the National Audit Office’s annual report into the Department for Education’s (DfE’s) finances said that it was “failing” to come up “with a clear view of academies’ spending”.

Cllr Richard Watts, chair of the LGA’s children and young people board, said: “The National Audit Office has raised serious concerns about the ability of the DfE to effectively monitor academy trusts’ spending, even before the planned expansion of the academy programme, and we don't believe it can possibly have effective oversight of spending in more than 20,000 schools. Centralising control of schools isn't working; oversight needs to be devolved down to local councils.

“With their experience in managing large budgets, knowledge of their local areas, and their reputation as the most efficient, transparent and trusted part of the public sector, councils are best placed to keep an eye on all school spending if they are given the power and resources to do so. Not only would this bring democratic accountability back into the process, it would make sure that the best interests of local children were protected.”

Back in May, the then education secretary Nicky Morgan was forced to back down on a plan to turn all schools into academies after widespread controversy, but a new Education for All Bill was then introduced intended to give the government new powers to turn the worst-performing schools into academies.

Scandals involving academy finance include the founder and two members of staff at Kings Science Academy in Bradford being found guilty of transferring £150,000 of DfE grants into their own bank accounts, and the payment of more than £1.3m to a third-party supplier without contracts at the Perry Beeches Academy Trust in Birmingham.

A spokesperson for the Department for Education said: “All academies operate under a strict system of oversight and accountability – more robust than in council-run schools — ensuring any issues are identified quickly. Unlike other schools their accounts are scrutinised by an independent auditor and we have considerably more financial information about academies than we ever had for council-run schools.

“The academy programme puts control of running schools in the hands of teachers and school leaders - the people who know best how to run their schools. They also allow us to tackle underperformance far more swiftly than in a council-run system where many schools have been allowed to fail for years.”

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