Academies ‘pushed’ into taking out government loans

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This is an edited version of an article in the 30 October edition of TES. To read the full article, subscribe to TES

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, TES can reveal.

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.”

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