Taking Scottish schools out of council control ramps up financial risk, CIPFA warns

6 Jan 17

Proposals to reform the Scottish education system could expose schools to significant financial risks, CIPFA Scotland has warned.

In a submission to the Scottish Government unveiled today, CIPFA claims that the proposal to take schools out of local authority control means that Scotland’s 2,500 schools could be left without adequate direction and support, and the skills to manage their finances sustainably.

The institute warns this could undermine schools’ ability to drive improvement and deliver excellence.

CIPFA Scotland also questioned whether an English-style academy system would improve outcomes for pupils. According to the submission, a comparison with educational reform in England revealed “no material performance improvements for academies when compared to local authority maintained schools”.

The institute is urging the Scottish Government to consider updating governance arrangements to support reforms as quickly as possible. This should cover issues such as skills for staff, which it said was especially important if schools are to manage their own finances. As such, it said the proposals might mean that the role of the head teacher becomes more commercially focused.

How school access local authority cash, and how these resources will be allocated to schools would also need to be established, and any transition would need to be carefully planned. CIPFA advises a ‘shadow period’ to be put in place to smooth the handover process.

The institute also observed that the way in which future capital investment will be funded would be a key issue, considering the Scottish public sector had limited borrowing powers.

Other financial issues would be establishing the VAT status of schools, alongside seeking clarity on the future ownership of public finance initiatives and non-profit delivering assets, valued at £4bn.

Don Peebles, head of CIPFA Scotland, warned of the risks of transitioning financial responsibility without a detailed plan in place, and highlighted the limited impact of structural change.  

He said: “Without detailed plans to replace the financial management role of local authorities, schools could be left rudderless which would expose them to great financial risk.

“We hope the reform will bring out the desired change but CIPFA believes that structural changes alone will not deliver improvement to educational outcomes.”

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