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34 Part Three Managing the expansion of the Academies Programme
3.12 A school’s cost base may change when it becomes an academy. Cost pressures
may arise if individual academies lose economies of scale previously achieved through
local authority group purchasing. Conversely, there may be opportunities to reduce
costs, for example, by negotiating with a wider range of suppliers.
3.13 Comparable routine data on changes in schools’ costs is limited, but our survey
suggests converters have experienced increases in several areas. (Figure 10).
Respondents ascribed some increases (including senior leadership pay) to decisions
to spend more for higher quality, but attributed others to the requirements of academy
status (Figure 11 on page 36). Increases were most frequently cited in back-office
areas such as finance and accountancy, and administrative staff and services. The
Department pays academies LACSEG (see Part Two) to buy such services, although
some academies report that cost pressures remain. 7
3.14 In every category covered by our survey, some respondents have experienced cost
increases and some decreases, suggesting there may also be potential for sharing good
practice in reducing costs across the academies sector.
3.15 Staff costs typically account for around 80 per cent of schools’ total expenditure.
Although academies can set their own pay and conditions, available data suggests
their teaching staff costs are broadly comparable with the maintained sector. The small
number of academies reporting changes to these costs in our survey ascribed these
mainly to decisions to adjust capacity.
Oversight and assurance
3.16 The Department and EFA are accountable to Parliament for academies’ funding
and overall value for money. They need adequate mechanisms to assess risks and
support intervention, and to demonstrate that academies are making proper use of
public money. Academy trusts’ funding agreements with the Secretary of State allow him
to compel them to correct underperformance; he can also appoint new governors or
directors or, ultimately, terminate the agreement.
3.17 Effective oversight requires robust information about financial and academic
performance, and the capability to act on assessed risks. The Department also needs
to avoid unnecessary bureaucracy or costs. Academies’ responses to our survey
suggest some tension between their expectations of reduced bureaucracy and their
subsequent experience:
• Forty-seven per cent of converters feel less free from bureaucracy than they
expected before conversion.
• Seventy-one per cent report increases in costs for accountancy/finance staff and
services, mainly to meet the demands of the academy compliance and reporting
regime. (Figures 10 and 11).
7 We asked respondents to report a cost increase in LACSEG-related categories where they felt the cost was greater
than the LACSEG available to meet it. As academies do not receive a detailed breakdown of their LACSEG funding
by cost category, these findings are indicative and should be treated with caution.