Academies ‘pushed’ into taking out government loans for urgent building work

The TES is reporting that hundreds of academies have been “pushed” into applying for loans to pay for urgent building improvement work because of a serious shortage of capital funding.

Nearly 700 – or about one in seven of all open academies – have had to go cap in hand to the Department for Education in a bid to borrow money to repair crumbling buildings.

But headteachers’ leaders are urging academies to be “extremely cautious” before applying for a loan in light of the tougher financial conditions being forecast. They warn that interest charges will only add to the pressures on schools.

Academies and sixth-form colleges have been eligible since April to apply for loans of up to £4 million at a “favourable rate” from the Condition Improvement Fund, with repayment periods lasting up to 10 years.

Malcolm Trobe, deputy general secretary of the Association of School and College Leaders, warned academies to “think very carefully” about applying for the cash, and highlighted the difficulties faced by the post-16 college sector.

“[Academies] are being pushed into this position as a result of the limited amount of capital money available through the Condition Improvement Fund,” Mr Trobe said. “Institutions are keen to avoid their building stock falling into a really problematic condition.”

Read the full story in the October 30th edition of TES

More at: Academies ‘pushed’ into taking out government loans

 

See also from the TES on loans: FE loans system ‘not working’ after drop in applications

 

What do you think about the revelation that one in seven academies has had to borrow money to pay for building repairs? 

With budgets set to be cut over the next few years, are they likely to be storing up difficulties with repayments for the future?

Please give us your reactions and feedback in the comments or via Twitter…

 

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Comments

  1. Applicants have to pass a stringent application procedure which involves time-consuming form filling etc.  It’s unclear why this should be necessary when improvements could be vital.  Addressing ‘poor building condition’ shouldn’t rely on some official deciding the merits of the case. 
    The DfE allows expansion of good or better academies under the scheme.  But it suggests academies wanting to expand should consider setting up a free school.  But expansion clearly isn’t ‘condition improvement’ and could be taking money away from schools who urgently need it for repairs.
    https://www.gov.uk/guidance/condition-improvement-fund

  2. DfE guidance re CIF says academies taking out loans would ‘demonstrate their commitment to the scheme’.  https://www.gov.uk/guidance/condition-improvement-fund  This implies they wouldn’t be committed if they didn’t put themselves in hock for several years.
    Repayments are made via ‘abatement of revenue funding’.  In other words, academies locked into CIF loans will receive less money.  It would seem reckless to enter such an agreement when budget cuts loom.

  3. andylutwyche

    SchoolsImprove Only real benefit of acad conversion was access to £ that LA schls were not allowed (divisive?). If no £ no point converting

  4. andylutwyche

    SchoolsImprove What happens if the schools that have taken out DfE loans default on the repayments? Do the DfE repossess the school?

  5. JorgeDan1

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