Academy Schools Sector in England Consolidated annual report and accounts For the year ended 31 August 2016 Academy Schools Sector in England Consolidated annual report and accounts For the year ended 31 August 2016 Presented to the House of Commons pursuant to Section 11 of the Academies Act 2010 Ordered by the House of Commons to be printed on 26 October 2017 HC 425 © Crown copyright 2017 This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open- government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: [email protected]. Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned. This publication is available at www.gov.uk/government/publications Any enquiries regarding this publication should be sent to us at Department for Education, Sanctuary Buildings, Great Smith Street, London SW1P 3BT ISBN 978-1-5286-0067-5 CCS1017175498 10/17 Printed on paper containing 75% recycled fibre content minimum Printed in the UK by the APS Group on behalf of the Controller of Her Majesty’s Stationery Office Academy Schools Sector in England Consolidated Annual Report and Accounts 2015/16 Contents Performance Report 10 Overview 10 Performance analysis 12 1.Financial overview 12 2.Sector Development 16 3.Equality and provision for vulnerable and disadvantaged pupils 24 4.Educational performance 30 Accountability report 42 Corporate governance report 42 5.Statement of Accounting Officer’s responsibilities 42 6.Governance Statement 44 Directors’ report 62 7.Remuneration and staff report 63 8.Parliamentary Accountability and Audit Report 69 Financial statements 81 Notes to the Accounts 85 Annex 1 – Sector development data 118 Annex 2 – Academy provision by local authority 122 Annex 3 – Pupil characteristics and attainment data 129 Annex 4 – HMT Accounts Direction 141 Annex 5 – Regional report 149 Annex 6 – Key performance Indicators for Regional Schools Commissioners 162 Annex 7 – Remuneration 163 Annex 8 – Academy Trusts consolidated into SARA 2015/16 167 Annex 9 – Glossary 253 Academy Schools Sector in England Consolidated Annual Report and Accounts 2015/16 Introduction to the Academy Schools Sector Annual Report and Accounts The Department for Education (DfE) has secured agreement from Parliament to remove the academy sector from its consolidation boundary for the financial year 2016-2017 and to prepare a separate standalone Annual Report & Accounts (ARA) for the academy sector for the academic year 2015/16 – the academies Sector Annual Report and Accounts (SARA). For the financial years 2013-14, 2014-15 and 2015-16, the Comptroller and Auditor General (C&AG) provided an ‘adverse’ opinion on the DfE consolidated accounts, which included the academies sector accounts. This was caused by: insufficient evidence that the required accounting recognition criteria were met in respect of academy land and buildings assets; and a presumption under IFRS 10 Consolidated Financial Statements (IFRS 10) that the date of the accounts for subsidiaries consolidated into group accounts should be no more than three months different from that of the group accounts. This issue arose as the majority of academy trusts (ATs) were consolidated using information from their 31 August audited accounts – representing a seven-month difference from the reporting date in the Departmental group (31 March). The decision to permit ATs to submit accounts with a 31 August date was made in the interests of academy efficiency and value for money – both to align their accounting to their operational cycle (the academic year) and to avoid the additional cost of submitting two sets of accounts each year. These issues led to the C&AG’s view that misstatement and uncertainty was so material and pervasive as to require an ‘adverse’ audit opinion. To help address the issue of differing reporting periods, the Departmental group accounts and academies sector accounts are being reported and published separately. In addition to separating academy spending from that of the DfE, this new academies report brings together the reporting of financial results with the reporting of academic performance. It fulfils the reporting requirements of the Academies Act 20101 alongside the requirement to report on the finances of the sector.2 1 Section 11 of the Academies Act 2010 places a duty on the Secretary of State for Education to prepare, publish and lay an annual report on academies in England before Parliament. The legislation requires the inclusion of information on the academy arrangements entered into and the performance of academies during the year. In relation to performance, the annual report must contain information collected under 6 Academy Schools Sector in England Consolidated Annual Report and Accounts 2015/16 The Academies Act 2010 requires reporting of performance information over the academic year ending 31 July. The ‘Accounts Direction’ provided by HMT (to the Department) defines the academic year as ending 31 August. In order to meet legislative requirements performance data has been provided for the academic year as defined by the Academies Act 2010. However, where relevant, these figures have been restated for the Accounts Direction definition in either footnotes or Annexes. The ARA as a whole has been presented in line in line with Government Financial Reporting Manual (FReM), except for the derogations as noted in Annex 4. The most notable areas for deviations from the FReM are in the Remuneration and Staff report and accountability statement, with some other areas also noted. Where possible the spirit of the requirements has been followed. This new approach to reporting will not, in of itself, address the other issue previously raised by the C&AG in relation to properly recognising and valuing academy land & buildings. The Department has already undertaken a considerable amount of work to address these issues, and is working hard to establish sufficiently reliable information sources and valuation methodologies to meet these challenges as soon as possible. regulations made under section 537 of the Education Act 1996 and under the contractual arrangements academies enter into with the Secretary of State for Education. 2 In line with the accounting requirements of the FReM (https://www.gov.uk/government/collections/government-financial-reporting-manual-frem). 7 Academy Schools Sector in England Consolidated Annual Report and Accounts 2015/16 Definitions used in this report Academies are independent state schools that are directly funded by the DfE. Every academy is required to be part of an academy trust (AT), which is a charity and company limited by guarantee. Every AT enters into a funding agreement (FA) with the Secretary of State for Education that sets out the requirements for individual academies and the conditions under which grants are paid. There are a number of different types of academies, providing a range of academic provision. Type of academy Description Sponsored Sponsored academies are usually under-performing schools prior to converting to academy status. They are run via an AT by sponsors - which may include high-performing schools and colleges, universities, individual philanthropists, businesses, the voluntary sector and faith communities. Converter Converter academies are usually strongly performing schools, or schools on an upward performance trajectory, prior to converting to academy status. Free schools Free schools, which are a type of academy, are new state-funded schools. Any suitable sponsor - including local parents, private businesses and ATs - can apply to the Secretary of State for Education to open a free school. In addition, where a local authority (LA) thinks there is a need for a new school in its area it can seek proposals to establish a free school (or academy). For the purposes of this report, statistics relating to free schools will include information relating to university technical colleges and studio schools, but not new schools established by LAs. University Technical University Technical Colleges (UTCs) are academies for 13/14 to Colleges (UTC) 19 year olds, which focus on delivering technical education that engages young people and seek to meet the needs of modern business. They offer technical courses and work-related learning, combined with academic studies. Each UTC involves a university and a lead employer as well as other local employers and education partners such as FE Colleges. Each UTC specialises in one or two curriculum areas, typically some form of STEM subject, and is informed by local employer needs. Studio Schools Studio schools are academies for 13/14 to 19 year olds, which focus on delivering practical skills in workplace environments alongside offering traditional vocational and academic courses. They are small schools for around 300 students, and are 8 Academy Schools Sector in England Consolidated Annual Report and Accounts 2015/16 Type of academy Description sponsored by existing schools, colleges and community groups, and have close links to local employers. They are open year- round, and have a 9am-5pm working day. Type of provision Description Primary Provision broadly aimed at pupils aged 5-11 (more precisely, pupils of compulsory school age who have not yet attained the age of 10 years 6 months). Secondary Provision broadly aimed