Academies Bill [HL]

I support what my noble friend Lady Morgan has just said, with particular reference to Amendment 11A. We need to distinguish sharply between deficits and surpluses. At the moment, unless the policy has changed in the past 18 months since I was in the department, schools with deficits are not allowed to transfer to academy status. The deficit must be written off before the school can transfer. I remember many long and very difficult negotiations with local authorities about how deficits would be dealt with. The issue of deficits then becomes very important if not clarified. Schools with deficits, particularly those with difficult relationships with their local authority because it quite rightly is seeking to get to grips with the deficit, might regard the opportunity to transfer to academy status as a way of evading their responsibilities to deal with the deficit. It can be in no one’s interests that that should happen. If a school is being poorly managed, its budget may be suspended under Section 66 of the Education and Inspections Act 2006. It is not clear under the current Bill what will happen to schools whose budgets are suspended. I should welcome clarification from the Minister on that point, perhaps in writing. There is a statutory procedure for a school’s budget to be suspended, which has to do with very poor management, so will such a school be allowed to transfer to academy status? I imagine that it would be allowed to apply but would not be allowed to transfer. I think that the general principle should be that schools with appreciable, non-trivial deficits should not be enabled to transfer to academy status until the deficit is dealt with. In the early phases of the expansion of academies I find it inconceivable that a school with a large deficit would be able to transfer in any event, as I cannot see how it could be rated as outstanding if it has a non-trivial deficit. That is an important point in terms of taking the policy forward. Will the Minister confirm that it is not the Government’s policy to allow schools to transfer to academy status as a way of evading responsibility to manage their budgets properly if they are currently in deficit? On the issue of surpluses I take the view entirely of my noble friend Lady Morgan. I do not believe it right that schools should be penalised for being well managed and accumulating surpluses. I can see no reason whatever for a school that has a surplus to have that surplus seized by the local authority if the school chooses to become an academy. That raises the issue of excessive surpluses. As I know only too well, an excessive surplus is a much debated concept. It may seem excessive to the local authority but, generally, it does not seem excessive to the school, which regards the fact of the surplus as a testament to its excellent management of its own affairs. I am sure that if you ask a school about the purpose for which it has maintained that surplus, it will give you 100 good reasons why it needs the surplus and 100 good reasons why it should not be seized by the local authority. Therefore, I do not have much sympathy with the notion that schools with surpluses should not be able to transfer to academy status, but I believe that there is an issue about deficits which the Government need to address.