Out-Law Guide | 06 Mar 2012 | 10:06 am | 5 min. read
The Government, as part of its 2010 Programme for Government (37-page / 425KB PDF), stated its intention to help parents, community groups and others to improve the education system by starting new schools.
To do this it has given schools the option of becoming "academies". By doing this they would obtain more control over budgets and assets while retaining the same level of funding as mainstream schools. The main legislation governing academies is the Academies Act 2010, amended by the Education Act 2011.
This guide outlines the process involved for schools considering converting to academy status and the main issues to consider.
Why become an academy?
One reason is to have greater freedom of choice. Academies will have more control over how they use budgets than they would as schools. The governor of an academy will have greater autonomy than the governor of a school. There are also no restrictions on how academies source the services they require.
It is worth noting that schools will not qualify for a new building simply by becoming academies.
Do academies have any additional responsibilities post-conversion?
Yes. All converting schools have a responsibility to support a weaker school in their area. Additionally, if a school applying for conversion already provides support for pupils with special educational needs, it is expected that it will continue to do so as an academy post-conversion.
Mainstream schools are funded by local authorities based on a fixed sum of money per pupil. Funding for academies comes from central Government as opposed to local authorities and is based on the level of local authority funding which the school received pre-conversion. The academy trust enters into a standard form funding agreement with the Department for Education (DfE). The DfE's intention is that converting to an academy should not affect the level of funding received.
For capital projects, academies can apply for Government funding.
What does a school have to do to become an academy?
To become academies, schools must convert to a new legal entity which is responsible for running the academy and managing the land and other assets. This is an academy trust, which is a company limited by guarantee and which has charitable status. All existing school contracts will be transferred to the academy trust, which will also negotiate any new ones.
If a school's governing body decides to covert the school must to apply to the DfE to become an academy.
There are two approaches to establishing an academy. The first approach involves the establishment of an academy trust by a school converting to an academy.
The second approach involves a charity acting as the academy trust to create a "sponsored" academy. The charity enters a funding agreement with the DfE and passes the funding to the academy. This approach allows charities to use their awareness of other charitable grants which are available, increasing the chances of extra funding for the academy. See "Academy funding" above.
Can all schools apply to become an academy?
All schools, including primary, secondary and special schools which are performing well can apply to become academies, either individually or as part of a partnership with other schools as part of an academy trust. Performing well means meeting certain standards set by OFSTED, by the DfE relating to performance in exams, or other matters which a school can use to demonstrate that it is performing well. For schools which do not have all of this information, such as infant schools, separate criteria are relevant, including OFSTED reports. Schools can apply regardless of their size.
Schools which are not performing well can apply to convert, as long as they apply in partnership with a school which is performing well.
How long will conversion take and what will it cost?
According to the DfE the process will usually take around three to four months if no complicated issues are involved. The cost of conversion will vary, and the DfE will contribute £25,000 to each school to assist with the costs. This might be increased in exceptional circumstances, for instance if the school has already signed a contract under the Private Finance Initiative (PFI), a form of Public Private Partnership.
The DfE's rationale is that schools which wish to convert should devote some of their own resources to the process, as this will incentivise them to keep costs to a minimum and have as little impact on the DfE's overall education budget.
If a project is already underway at a school under the now-discontinued 'Building Schools for the Future' scheme and that school wishes to convert to an academy there is no standard approach. The DfE has said that BSF projects in this situation will continue until the construction phase of the project is complete. After completion, responsibility for the building and contracts already in place should then be transferred to the academy trust.
If a PFI project is already underway, the DfE has said that the PFI contract will continue and the converting school will not be "bought out" because the contract is between the local authority and the private sector.
Facilities Management (FM) arrangements are likely to be in place under any existing PFI arrangement. It is important that these dovetail with the academy's operating and maintenance obligations.
Conversion also involves a simultaneous transfer of employees from the school to the academy. This may raise employment law issues under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). The academy would probably also wish to avoid picking up TUPE and related-risks associated with FM arrangements under the PFI.
Concerns have previously been raised that local authorities did not have the legal authority to undertake some functions relating to the conversion of schools into academies, but this is not now seen as a problem.
What about land arrangements?
If the converting school owns the land there will be a transfer of freehold interest to the academy. The Secretary of State for Education will issue a "direction" to enable the transfer.
If the local authority owns the land, they will grant a 125 year lease of the land and school buildings to the academy trust so that it can access the site to run the school. The academy would, under its lease, be required to accept a full repairing and insuring obligation, accepting responsibility for repair of defects in any of the school buildings.
The academy would be keen to ensure it has an extensive and robust leasehold interest in order to perform its functions properly.
Any new property issues have to be resolved before a school can open as an academy, bearing in mind the arrangements already in place through the original PFI or BSF project and finance documents.
This may be further complicated if the original PFI schemes were multiple or 'batched' schools, not all of which are part of the proposed academy conversion. In this situation a distinction may be needed to be drawn in the project and finance documentation between those schools that will convert and those that will not.