Latest Public Sector News

26.09.16

Councils face ‘significant financial challenge’ if all schools convert to academies

Government proposals to convert all schools to academies will cost councils £320m, the LGA has warned.

An LGA survey of its members found that if the government adopts the ‘sponsored’ method of multi-academy trusts, it will cost £320m because any debt built up by schools will remain with councils when they convert.

Even with the ‘converter’ method, where schools operate as a stand-alone organisation and sometimes take on their debt, councils would lose £120m.

Cllr Richard Watts, chair of the LGA's children and young people board, said: “If all schools are encouraged to become academies at some point, this will have significant financial implications for councils.

“The money that councils are predicted to lose could be better spent on recruiting, training and keeping excellent teachers, and making sure children are safe and have the equipment and support they need, in buildings that are fit for purpose.”

In addition, councils say they will lose £80m a year in business rates, because academies receive an 80% business rates relief.

The LGA was strongly opposed to proposals in the March Budget for every school to become an academy. Nicky Morgan, the then education secretary, eventually backed away from the proposals.

However, the Queen’s Speech in May included an Education for All Bill, which was described as designed to “move towards a system where all schools are academies” by granting the government new legal powers to force schools in the worst-performing local authorities to become academies.

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