Academies Bill [Lords]

I seek to provide the shadow Minister with some reassurances on the various concerns that he has raised about surpluses. I support his objective that the whole system should be transparent and properly accountable. I think he is perhaps unduly concerned, but he is right to tease out some more information through what I believe are probing amendments. I shall address them in order and then turn to his points on the PFI. Amendment 76 would widen the definition of the surplus to take account of all liabilities not being transferred to an academy, including any liabilities that a local authority incurred on behalf of a school. In calculating the surplus, local authorities will follow normal accounting procedures and take into account expenditure in respect of which work has been done or goods received but invoices have not yet been paid. As we see the new converters as continuing schools, we will seek to ensure that local authorities are not left to fund any remaining costs that would otherwise have been charged to the school's budget—that is only fair. If a school has ongoing commitments such as an internal loan, we will expect it to continue those payments and the local authority to accept that. For the same reason, it would not be appropriate to offset against the surplus any liabilities incurred by the local authority on behalf of the school that would not otherwise have been charged against the school's budget. We understand that closing the old school's accounts can be a lengthy process, and that authorities are concerned that they might pay over a final cash sum to the academy in accordance with the regulations, only to be left later with outstanding bills without any funding, which would not be fair. We are drafting guidance on the calculation of surpluses, which I hope will give the hon. Gentleman the assurances he seeks. It will cover debtors and creditors, bank accounts and internal loans and is being developed with partners including the Chartered Institute of Public Finance and Accountancy. There is also a model commercial transfer agreement for adoption by the school's governing body, the academy and the local authority, which will deal with possibilities such as he described.