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My Lords, academies are independent, self-managing organisations. Academies cannot borrow, except in exceptional circumstances, and so can build up reserves in order to accommodate longer-term plans that reflect their success and popularity, such as capital investment to fund maintenance or expanding provision for greater pupil numbers. They also need to hold cash to pay short-term obligations such as salaries.
Comparing net current assets of academies with the closest equivalent measure in local authority maintained schools shows that academies have 51 days’ cash, whereas local authority maintained schools, which can obtain money for capital from their local authorities, have 25 days’—51 days is a prudent buffer.