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Academies in poorly-funded areas face cash crisis

Academies in poorly funded areas of the country could face bankruptcy, according to a cross-party campaign group for a fairer financial system for schools.

Ivan Ould, chairman of the F40 campaign that represents the lowest-funded education authorities in England, issued the stark warning at a meeting of his executive committee earlier this month. “Problems with the EFA [Education Funding Agency] are beginning to manifest themselves, and it is not too unrealistic to anticipate school bankruptcies at some point,” said Mr Ould, according to the minutes of the meeting.

The fear is that individual, or “single converter”, academies that are not part of a wider  chain nor financially linked to a local authority. Without that link, it is not clear how an academy would be rescued should it start losing money.

They could possibly turn to the EFA, which distributes money for state education, but some members of the F40 argue the body is not working properly.

For example, a Public Accounts Committee report last year found that the EFA’s work had “expanded rapidly” in recent years and had struggled to maintain “proper oversight” of whether the money is well spent.

Mr Ould said yesterday: “What happens to a single converter academy when it goes into deficit? Who bails it out? Some schools could end up operating on a deficit model.”

More broadly, the F40 has proposed changes to the schools funding model so that money is spread across the country more evenly. Mr Ould is a Conservative councillor in Leicestershire, for years one of the lowest funded local education authorities.

The Conservatives have broadly agreed to reform, and the coalition acknowledged the problem by giving the poorest schools £390m of extra money last year. Mr Ould is due to meet education minister Sam Gyimah this week to discuss potential changes

A Department for Education spokesman said: “Academy trusts operate under a strict system of oversight and accountability,  which means any issues are identified and that we can take swift action.”

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