Funder blunders in English schools

The British government’s academies programme sets out to do something ambitious: to move England’s schools out of the century-old local authority system and turn them into independent charter schools. There has been surprise that this programme – which only started in mid-2010 – has been so popular. Half of all secondary schools in England are academies or are converting into them.

The reason, put briefly, is simple: in most local authorities, if a school becomes an academy, it can get a load of cash. That is what schools say. It is what I – and others – have reported repeatedly. I asked one head teacher why he was converting in September 2010. He said: “A conservatory”.

The only institution which has consistently argued otherwise is the Department for Education, which (for months) denied it was happening, and blamed bad form-filling by local authorities. Happily, even they have acknowledged the errors (while blaming Labour for them).

Things have improved: the overpayments are smaller in 2011-12 than they were in 2010-11: here is the distribution of the overpayments. Each point on the line is a local authority, ranked by the size of the overpayment per pupil.

And here is the geographical distribution of errors – per child – for each local authority in England in 2011-12. The deep reds are the unlucky eight LAs where academies are substantially underpaid. The blues are areas where schools got too much cash.

Conversion-for-cash really matters: the DfE expected fewer than 400 academy converters by this stage – not 1,400. That’s 1,000 schools more than the DfE expected, and it means a lot more local authorities (LAs) have been emptied out than were budgeted for.

There are a number of academy supporters (and academy chains) who wring their hands at this error. The fear is that some schools which jumped to become academies for the cash windfall may not have the strength of leadership required to stand alone.

So it matters. Indeed, I have had a steady flow of questions about it for the past month. So here is a slightly simplified account of the process involved in the error.

The principle behind academy funding is straightforward: every child gets the same spending, whether they attend an LA school or an academy. But this is not simple.

LAs spend money on things for LA schools, like pupil transport: so-called “central services”. If you are an academy, however, you have to provide some of these services yourself. So you get grants in lieu of those services which should equal the amount paid for those services: the Local Authority Central Services Equivalent Grant – or Lacseg.

The problem arises because, for reasons that are unclear, the DfEsets these totals months before it knows how much LAs will actually spend in each area (method here). Then, even if it discovers that its estimates are clearly wrong, it refuses to correct them.

We can work out what the “right” number is pretty easily: each LA eventually tells the DfE what it’s spending. By totting up the right columns, you can work out the “correct” numbers for Lacseg for each local authority. I’ve done so here for secondaries.

So we know that the DfE estimated the Lacseg should be £551 for a pupil in Islington in 2011-12. But, in truth, the LA was only spending £219. This means a 1,000 pupil secondary would enjoys a £332,000 overpayment from converting to become an academy.

The list of 2011-12 converters’ budget boosts, as played out in real life, is available here.

The uplifts were bigger for schools that converted in 2010-11 — and were sometimes so large that the DfE decided it could not correct them in one go. Those schools are continuing to be overpaid. (Tables for these schools, with a bit more explanation, are here.)

This is quite daft: if the DfE paid a flat fee of about £200 to all academies, it would be a more accurate mechanism with smaller errors than their attempts at localised estimates. There is, however, a more interesting point about all of this.

Even if they got the numbers right, this funding mechanism would create incentives for lots of schools to convert. Lacseg is fixed across the whole of each borough. So an affluent school in Lewisham would get £475 in Lacseg, and a poor one would also get £475.

But, in truth, the poor one is likely to be receiving ahigher level of service from the council: poor kids need more help. So, even if they were ultra-overpaid, a poor school might think “I think £475 a head is not enough to cover the cost of the LA services I’d lose.”

By contrast, a rich school with no troublesome kids and few special needs might get little benefit from central services. So even if their Lacseg were much too low, they might fancy converting. For then, it’s basically money in lieu of a set of services that they do not use.

That might explain why richer pupils are more likely to go to a school that has converted than poorer ones. The cash advantage for converting to become an academy is bigger for schools in more affluent areas.

Paul Champion

Mobile: 07540 704920

Skype: paulchampion31
Twitter: @blogapprentice


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