Struggling school trust finances land it on Government watch list

A trust running two schools in Langley has been slapped with a ‘notice to improve’ by the Government following significant concerns over its financial management – which can lead to serious consequences.

The trust concerned is Langley Hall Primary Academy Trust, which has broken the rules and ended up in a ‘weak financial position’, says the Department for Education (DfE).

Crucially, the trust has been spending more money than it brings in and hasn’t managed to fix the shortfall.

For this reason, there remains ‘significant uncertainty’ over the trust’s ability to keep running normally.

About the schools’ trust

An academy is a state-funded school which, instead of being controlled by the council, is run by an academy trust (a charitable company).

This particular trust runs Langley Hall Primary Academy, which is split into upper and lower schools in Station Road and St Mary’s Road.

Academies must abide by rules in the Academy Trust Handbook, a Government document. In a letter to the chair of the trustees, the DfE said the trust breached several of the handbook’s rules on financial management.

These breaches are significant enough to warrant a formal warning, called a ‘notice to improve.’

If an academy trust doesn’t improve soon, the DfE can take stronger action. This could stretch to replacing trustees and leaders.

In the most serious cases, the DfE can terminate a trust’s funding agreement. This usually means the affected schools move into another academy trust.

What mistakes were made?

One of the most notable errors was the trust’s failure to balance its books.

By September 2022, the trust had a deficit of about £201,100 in its rainy-day fund, known as its free reserves.

Reports ‘clearly showed this’ yet ‘no plan was put in place to reverse the negative trend’.

Worse, by the end of August 2023, the free reserves had dipped even further into the red, reaching more than £313,300.

This is a breach of the rules, which state that the board of trustees must ensure the trust is financially sustainable.

Worse, the board was required to notify the DfE of its deficit – and failed to do so in good time.

Moreover, financial plans submitted in 2023 and 2024 were inaccurate and did not show its true financial position.

But the ‘most concerning’ breach was surrounding ‘related party transactions.’ In plain English, the trust wasn’t transparent about business deals with other organisations linked to it.

Now what?

Following the notice to improve, the trust loses the freedom to make all its financial decisions independently. The DfE will have to sign off on several of them in advance.

Moreover, if it looks as though the trust will not be able to meet the conditions of the notice on time, the DfE will consider stronger action.

In the most extreme cases, outside regulators can be asked to step in. This can result in leaders being barred from running schools or charities again.

The DfE says it ‘understands the decision may be disappointing’ and recognises its notice might create additional pressure – but says it will support the trust while it makes the necessary changes.

Langley Hall Primary Academy Trust did not respond to a request for comment at the time of going to press.