Plans for Ofsted to give schools a financial rating are “hugely misguided” and could risk the inspectorate’s credibility, a schools’ leader has warned.

The Department for Education has announced that it is to work with Ofsted to ensure that inspection reports include a rating for financial management and oversight.

The government said this would apply to schools, academies, trusts and colleges, and ensure that financial best practice is shared across the system.

Ofsted said the financial rating of schools was a “shared and long-term aim” that it held with the DfE to improve financial management in schools through inspections.

Background: Ofsted’s new inspection framework

Budgets: Ofsted to look at how schools are spending their money

Inspection: DfE to allow Ofsted to inspect ‘outstanding’ schools

However, the announcement by the government has been questioned by Geoff Barton, general secretary of the Association of School and College Leaders.

Ofsted inspecting schools’ finances

He said: “We think this is a hugely misguided concept.

“It complicates the role of Ofsted at a time when we have eye-watering levels of financial scrutiny through the Education and Skills Funding Agency.

“I do not think Ofsted have the capacity or capability to do this. That is not to denigrate their inspectors, but they have not been expected to look at this during a short inspection.

 “Ofsted have just reaffirmed their commitment to focus on the quality of education through their new framework. [Chief inspector] Amanda Spielman has been reluctant to draw any conclusions between school standards and funding.

“I think it will be very difficult for Ofsted to produce reliable inspection judgements about school finances on top of everything else in a one- or two-day inspection visit.  Asking Ofsted to do this could undermine their credibility.”   

Tom Richmond, director of the EDSK thinktank and a former DfE adviser, said: “Although it may sound appealing to have Ofsted inspect a school’s finances when they visit, the simple fact is that Ofsted does not have the expertise or experience within their current workforce to make snap judgements about how well a single school, let alone an entire multi-academy trust, is managing its budget.

“The Education and Skills Funding Agency is surely better placed than Ofsted to determine whether a school is managing its funding properly.

‘Lukewarm’ response from Ofsted

“The lukewarm response from Ofsted to the new plans announced by Number 10 suggests they might be nervous about being distracted from their core mission of assessing school standards.

“As our recent research at EDSK showed, there are already significant problems with the accuracy and consistency of Ofsted’s judgements, and that is before throwing in another hugely complicated variable such as the financial health of a school.”

An Ofsted spokesperson said: “We will be working with the government on our shared and important long-term aim to improve financial management in schools, including through inspection.

“With MATs increasingly making many of the important decisions that affect children’s education, we have also been calling for inspection powers in MATs.

“In the meantime, we are looking forward to the introduction of our new inspection framework from this week, where the focus will be on raising standards through looking at the real substance of education, the curriculum.”

The focus on school finances is not part of Ofsted’s new inspection framework, which launches this week following a detailed consultation earlier this year.

The DfE has also announced that it plans to expand its School Resource Management programme to “ensure the extra funding provided to schools is focused on delivering better outcomes for pupils, reduces wasteful expenditure and improves efficiency”.

There has been controversy surrounding the programme after minister Lord Agnew bet schools leaders a bottle of champagne that his advisers would be able to find savings at their school.

The DfE has also announced that it is ending the exemption preventing “outstanding” schools from being routinely reinspected. 

Ofsted has repeatedly called for this over the past 12 months. The exemption means that there are almost 300 schools that have not been inspected for more than a decade.