By Claire West

Councils are set to miss out on hundreds of millions of pounds that could be used to protect frontline services because of the Government’s decision to top slice local authority grants to help fund academies.

Local education authorities face having their funding cut by £413m over the next two years — £148m in 2011/12 and a further £265m in 2012/13 — to pay for the central functions that academy schools provide for themselves. These include financial administration, employment practice, assessment of eligibility for free school meals and management of the admissions process.

Every council will have their funding top sliced even if they have no academy schools in their area.

However, the Local Government Association (LGA), which represents more than 350 councils in England and Wales, estimates the real cost of providing those services to new academies will be less than £60m over the two years — less than one seventh of the amount the Government is planning to cut from council funding.

According to the Department for Education’s (DfE) Academies Bill Impact Assessment, councils could expect to see a maximum saving of £103,000 for each new academy school, which they will not be funding.

There are currently 408 academy schools in England. If, as the Impact Assessment forecasts, this number increases by 200 per year, the LGA calculates that the real cost of central functions in new academies will be well below £60m over the next years — leaving council taxpayers more than £350m out of pocket.

In its submission to the Government’s consultation on the local government finance settlement, the LGA called for the additional central costs of academies to be funded by the DfE. It wants ministers to stick to their pledge that councils will not be left out of pocket as a result of the academies programme.

Baroness Margaret Eaton, Chairman of the LGA, said:

“We have made it clear that school choice is something that councils support. But it cannot be fair for local taxpayers to subsidise the roll out of the academies programme.

“As it stands councils face a bill of £413m at a time when their budgets are already facing an unprecedented squeeze. This is unacceptable when the saving from not having to provide central services to academies is less than one seventh of that amount.

“Whatever you think of academies, it cannot be right that other frontline services suffer so that the Government’s academies programme can flourish.

“The Government must think again about how it pays for the set up of academy schools so that councils can ensure they get the best deal for residents.”