Academies:Written question - 219279

Q
Asked by Frank Dobson
(Holborn and St Pancras)
[N]
Close

Named Day

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Asked on: 17 December 2014
Department for Education
Academies
Commons
To ask the Secretary of State for Education, what estimate she has made of reserves held by academies in each year since 2006-07.
WS
Department for Education
Made on: 06 March 2015
Made by: Mr Edward Timpson (Parliamentary Under Secretary of State for Children and Families )
Commons

Reserves held by Academies and Free Schools

There has been some recent interest in the level of cash reserves held by academies and free schools. The Government regards academies’ cash holdings as reasonable. Academies cannot borrow and need to hold enough cash to manage their solvency prudently.

In January 2015 I answered two parliamentary questions (219279 and 219280) relating to the cash reserves held by academies and free schools. I would like to use this opportunity to provide additional information for individual academies and free schools and to provide corrected figures for reserves held by academy and free school trusts.

Reserves held by academies

In answering parliamentary question 219279, I provided details of academy trusts’ cash holdings for the financial years 2010-11 to 2013-14. Academy trusts can of course include more than one academy, and on reflection it is more useful and relevant to provide figures covering all individual academies as follows:

Date

Number of academies open

Total cash,

£ millions

Average cash per academy,

£ thousands

31 March 2011

469

62

132

31 March 2012

1,664

1,199

721

31 March 2013

2,823

1,859

659

31 March 2014

3,905

2,469

632

The above table shows that average academies’ cash holdings increased between 2010-11 and 2011-12 and then decreased in the following years to 2013-14. This is due to many smaller academies opening more recently and holding less cash.

A corrected version of the table in my original answer to PQ 219279 is below. This table is less representative than the above table, as it does not show the average cash held at an individual academy level.


Date[1]

Number of academy trusts open

Total cash,

£ millions

Average cash per academy trust,

£ thousands

31 March 2011

377

62

165

31 March 2012

1,524

1,199

787

31 March 2013

2,108

1,859

882

31 March 2014

2,585

2,469

955

Reserves held by free schools

In answering parliamentary question 219280, I provided details of cash holdings for free schools that are part of a free school single academy trust for the financial years 2011-12 to 2013-14. On reflection, it is more relevant to provide details of all free schools that are part of a free school academy trust, as follows. This includes free schools that are part of multi-free school academy trusts.

Date

Number of free schools in free school academy trusts

Total cash,

£ millions

Average cash per free school in a free school academy trust,

£ thousands

31 March 2012

19

2

105

31 March 2013

59

8

136

31 March 2014

129

26

202

The Education Funding Agency (EFA) holds information on free schools’ cash only where free schools are part of a single free school academy trust or a multi-free school academy trust. Where a free school is within a multi-academy trust with different types of academy, the EFA cannot distinguish the free school’s cash holding from that of the wider multi-academy trust. These schools are not therefore included in the above table.

A corrected version of the table in my original answer to PQ 219280 is below. This table is less representative than the above table as it only includes free schools that are the only school in their trust.

Date[2]

Number of free school single academy trusts

Total cash,

£ millions

Average cash per academy trust,

£ thousands

31 March 2012

14

2

143

31 March 2013

47

7

149

31 March 2014

103

20

194

Academies and free schools are independent self-managing organisations with freedoms to generate income from donations and trading activity. They cannot borrow; they can build up reserves in order to accommodate longer-term plans such as capital investment, to fund maintenance and expand as well as to manage risk and uncertainty of future funding. As public sector bodies, academies and free schools are required to apply effective treasury management policies and ensure that cash is properly controlled.

Academies and free schools typically hold a level of cash that most self-managing organisations would regard as prudent and no more. The EFA expects trusts with larger cash balances to have a clear plan as to how they will use these balances and to be able to demonstrate they have acted accordingly.



[1] We do not have comparable records of academies’ cash holdings for financial years 06-07 to 09-10.

[2] The first free schools opened in September 2011.

This statement has also been made in the House of Lords: HLWS331
A
Answered by: Mr Edward Timpson
Answered on: 05 January 2015

The table below sets out academy trusts’ total cash holdings at the end of the four most recent financial years. Academy trusts’ cash is the best representation of reserves available to trusts.

Date

Number of academy trusts open

Total cash,

£ millions

Average cash per academy trust,

£ thousands

31 March 2011

377

62

165

31 March 2012

1,524

1,199

130

31 March 2013

2,108

1,859

88

31 March 2014

2,585

2,469

96

We do not have comparable records of academy trusts’ cash holdings for financial years 2006-07 to 2009-10.

The average cash held by academy trusts has fallen over the four years partly due to many smaller academy trusts opening more recently and holding less cash. We regard academy trusts’ cash holdings as reasonable, typically representing enough to fund one month’s operations after deducting current liabilities. Academy trusts cannot borrow and need to hold enough cash to manage their solvency prudently.

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