Academies will leave councils £400m out of pocket

21 Jan 11
The government's decision to support academy schools will cost councils £400m over two years, the Local Government Association has warned today.

By David Williams

24 January 2011

The government’s decision to support academy schools will cost councils £400m over two years, the Local Government Association has warned today.

Analysis of the Department for Education’s Academies Bill impact assessment has shown that councils’ budgets are to be top-sliced by £148m in 2011/12 and £265m in 2012/13. The cash will go to academies to pay for functions such as financial administration, admissions management and assessing eligibility for free school meals.

But the LGA calculated that the real cost of providing those services will be less than £60m over the two years. It has also pointed out that even councils with no academies in their area will lose money.

The body urged the government to think again, calling for the additional costs of academies to be funded centrally by the DfE. 

LGA chair Baroness Margaret Eaton, said: ‘It cannot be fair for local taxpayers to subsidise the rollout of the academies programme.

‘As it stands, councils face a bill of £413m at a time when their budgets are already facing an unprecedented squeeze. This is unacceptable when the saving from not having to provide central services to academies is less than one-seventh of that amount.

‘Whatever you think of academies, it cannot be right that other frontline services suffer so that the government’s academies programme can flourish.’

But the DfE dismissed the LGA analysis. A spokesman said that councils had been over-funded in the past, as authorities had not lost funding to provide central services when schools in their area became academies. This amounted to ‘double funding’, which was no longer sustainable.

The spokesman added that although it was still unclear how many schools would be granted academy status, the new arrangement would give councils more certainty.

Malcolm Trobe, policy director of the Association of School and College Leaders, said the cut would give councils with no academies in their area an incentive to encourage their schools to become independent.

He told Public Finance that an ASCL survey of secondary school heads suggested that more than 50% were still undecided over whether to apply for academy status, suggesting a large amount of uncertainty over how much funding councils would need.

Anna Vignoles, economics professor at the Institute for Education, said there was little clear information on how far the academies programme was reducing demand on council support services.

She pointed out that many directly funded schools might choose to buy the services from their local authorities, so councils would still receive some funding via that route.

Whether the cut turns out to be too severe would depend on two things, she said. ‘You need a realistic assessment of the number of academies and a much better understanding of which academies will continue to work with the local authority.

‘Also, I don’t think anybody knows yet whether a small standalone free school will continue to have a close relationship with the local authority – that seems a distinct possibility.’

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