Reserves held by Academies and Free Schools
(Limited Text - Ministerial Extracts only)
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The Parliamentary Under-Secretary of State for Education (Mr Edward Timpson)
There has been some recent interest in the level of cash reserves held by academies and free schools. The Government regard 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.
Date1 | Number of academies 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.
Date2 | Number of schools 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.
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