Ministers face questions about how they will maintain independent financial oversight of academies after announcing they will close the Education and Skills Funding Agency (ESFA) and beef up the role of powerful regional directors.
The government announced this week that the ESFA will be “integrated into the core Department for Education” by March next year.
The two-stage move will give schools a “single point of contact for financial management and support”, the government said.
But the announcement has prompted concerns that regional directors could be overly influenced by ministers.
For instance, regional directors were tasked with growing the academy agenda, while the ESFA was tasked with independently investigating cases of financial mismanagement in schools.
Scrapping ESFA ‘bad news for transparency’
One former ESFA official, who wanted to remain anonymous, said it was “bad news for transparency and fairness in education”.
“The ESFA was a key, rational bulwark against the cronyism of regional directors. This government stripping away of the checks and balances of executive agencies does nothing for pupils.”
Another anonymous former official said funding and audit functions “become problematic if you get too close to a particular policy or strategy”.
“The risk will be they become less independent to take decisions on how to get things done well, because they’re so close to the department’s policy-making machine.”
But others were more positive. Leora Cruddas, the chief executive of the Confederation of School Trusts, said her organisation had “long called for a single regulator”.
“This is an opportunity to strengthen regulation by bringing the different regulatory functions of the ESFA and Department for Education regions group together.”
Schools’ financial support and oversight functions will transfer from October 1 and be brought together with the regions group, nine areas overseen by regional directors.
This will support the launch of regional improvement teams by January, allowing a “single regulator model with governance and accountability sitting in one place”, said the government.
Education secretary Bridget Phillipson added: “This will provide a single seamless voice to schools and ensure that financial improvement is central to school improvement.”
Funding and assurance functions will be centralised on March 31 next year, when the ESFA will close.
“Moving the agency functions back into the department will bring benefits to the individuals and organisations we support as well as to the taxpayer,” Phillipson said.
“It will enable a single, joined-up approach to funding and regulation to improve accountability.
“We will be working closely with our staff, unions and stakeholders across the education sector to finalise and deliver our plans for closing the agency.”
‘Shifting deckchairs won’t solve problems’
As of July, 736 staff worked at the ESFA. The DfE expects 95 per cent of agency staff to be retained. All will be able to stay within the wider department, if they choose.
Despite “not being the driving factor”, the move will result in “some efficiencies”. But the department would only say: “We can’t give an exact figure at this point, but it’s a small cost saving.”
The agency already underwent a huge restructure after a review by Sir David Bell. It was stripped of wide-ranging policy functions and lost half its staff.
Set up in 2017, it is responsible for delivering and assuring £75 billion of funding for 25,000 education settings – making it one of the biggest funding operations in government.
It is the second education-related quango to get the axe under the new Labour government. The Institute of Apprenticeships and Technical Education is expected to close by April with some functions transferred to Skills England, now being set up.
Pepe Di’Iasio, the general secretary of the Association of School and College Leaders, said: “If this reorganisation produces a more efficient and joined-up approach to the oversight of school and college funding that is obviously something we welcome.
“However, shifting the deckchairs will not solve the overriding problem that the current level of school and college funding is totally inadequate. This is the issue that we most need the government to address at the forthcoming autumn budget.”
David Withey, ESFA’s chief executive, added: “I am proud of the achievements of the ESFA – delivering timely and accurate funding, positive support to providers in financial stress and strong assurance to taxpayers on how their funding is used.”
