09/06/2014 22:38 BST | Updated 09/06/2014 22:59 BST

Trojan Horse: Education Funding Agency Criticised For Being Slow To Intervene In Failing Schools

The government body responsible for allocating billions of pounds of taxpayers' money to schools, colleges and academies has been strongly criticised by MPs for being too slow to intervene in failing institutions. The Education Funding Agency was set up by the Department for Education in 2012 in order to ensure "efficiency, accountability and transparency" in the distribution of more than £50 billion-a-year in public funding.

But the Commons Public Accounts Committee said that the agency lacked both the systems and the data it needed to carry out its responsibilities effectively. It found there was no systematic or forensic analysis of the data it did hold in order to identify "at risk" institutions where there were problems of poor governance or financial management.


Instead the agency relied on a combination of whistle-blowers, outside auditors and "broad, desk-based reviews" which were "not sufficiently risk-focused" - with the result that when it did intervene it was often too late. Even when the agency is presented with data that should trigger concerns and lead to further investigation, the agency has not always taken action quickly enough," the committee said.

While almost one in 10 academy trusts had failed last year to submit their annual accounts on time, the agency had only used its penalty powers to issue "financial notices" - removing some financial freedoms or flexibilities - on just eight occasions. The committee also expressed concern that the agency did not have a "fit-and-proper persons" test for academy trustees and chief executives and it warned of the dangers of conflicts of interests where individuals with links to academy trusts and private firms were able to exploit their position for commercial gain.

While the agency had investigated 12 so-called "related-party transactions", where there was a potential conflict of interest, the committee said there were likely to be many more cases which had gone unchallenged and it called for a complete ban on such deals. Committee chair Margaret Hodge said: "The agency is too reactive and does not spot risks or intervene in schools quickly enough. It is essential that the agency now gets to grips with effective oversight to improve public confidence in the system."

The general secretary of the Association of Teachers and Lecturers, Mary Bousted, said: "The PAC report reveals the dog's dinner of a mess the Government has made of holding academies and academy trusts accountable for the huge sums of public money they receive."