Academy Trust Handbook 2023 – What’s new for trust leaders?

We summarise the key changes which trust leaders need to be aware of in the recently published Academy Trust Handbook.

On 6 July 2023, the Department for Education (DfE) published the Academy Trust Handbook 2023 which trusts must comply with from 1 September 2023. The Handbook follows the Academies Regulatory and Commissioning Review, which said the DfE will revise and consolidate its regulatory approach and simplify the current edition. The Handbook therefore places some extra onus on trusts in some areas while omitting other detail from the current edition. The result is a Handbook which is 9 pages shorter than the current edition, once the separation of the schedule of ‘musts’ (or strict requirements) into a spreadsheet is taken into account.

In what follows, we briefly summarise the key changes to the current edition which trust leaders need to be aware in order to ensure their trusts are compliant from 1 September.

First, though, we need to revisit what the Handbook means when it says trusts ‘should’ do something, since some obligations are expressed in these terms. The Handbook is unchanged here and says ‘should’ identifies the minimum good practice which trusts should apply unless they can demonstrate that an alternative approach better suits their circumstances. Decisions to depart from the minimum good practice will need to be evidence-based and documented, in case the Education and Skills Funding Agency (ESFA) challenges the position.

Trust quality descriptions

Trusts should first consider the features of high quality governance described in the trust quality descriptions namely

• high quality and inclusive education
• school improvement
• workforce
• finance and operations and
• governance and leadership.

‘Should’ means trusts are not confined to these descriptions. They can therefore draw on other criteria, such as what it means to be a thriving trust, as described in Sir Steve Lancashire’s blog and in Forum Strategy’s thinkpieces on thriving trusts, where this better suits their circumstances.

Also, the obligation is to ‘consider’ (not use) the descriptions.

Skills and experience

The Handbook clarifies that the board should identify the skills and experience it needs, including sufficient financial knowledge to hold the executive to account but also says the board should address this for committees/local committees/local governing bodies. This is a marked shift since local governing bodies have tended to be constituted on a more representational basis, drawing on staff, parents and others. Trusts may therefore need to undertake skills audits and training and update their terms of reference. The scheme of delegation may also need to be updated where functions are re-allocated.

Board meetings

Trusts will no longer need to include an explanation in their governance statement (as part of their financial accounts) where the board has not met at least 6 times in the year.

Members

A trust must have at least three members but should have five or more. This differs from the current handbook where the DfE’s strong preference is for at least five members.

Similarly, the new Handbook says the majority of members should not also be trustees while the current edition says this is the DfE’s strong preference.

Scheme of Delegation

The scheme of delegation should be reviewed annually and at the next available board meeting when there has been a change in trust management or organisational structure that would impact the effectiveness of any existing scheme of delegation. Currently, the review must be annual or immediate where trust management or the organisational structure has changed.

Account Officer and Chief Financial Officer

The roles of accounting officer and chief financial officer should not be occupied by the same individual. In small trusts with a short-term vacancy in either role, both roles have sometimes been fulfilled by the same person. While not prohibited, a trust will need to demonstrate the approach better suits their circumstances. It will first need to exhaust all other options, for example by re-deploying other staff or, with prior ESFA approval, contracting the services of an interim accounting officer or chief financial officer.

Notices to Improve

Examples of when a Notice to Improve (NtI) might be issued on governance grounds include

• the trust board not being properly constituted,
• trustees failing to comply with their safeguarding duties; or
• trustees lacking the skills, knowledge and experience to exercise effective oversight of the trust’s operations and performance, including educational performance

Similarly, examples of when an NtI might be issued on financial grounds include

• an actual or projected deficit
• cash flow problems
• insolvency risk
• irregular use of public funds
• poor internal scrutiny
• breaches of related party requirements.

Related party transactions

The threshold above which prior ESFA approval must be obtained for a related party transaction will be £40,000. Currently, the threshold is £20,000 for a single contract or the cumulative value of contracts with the same related party in the same financial year.

Prior ESFA approval for a related party transaction will also not be required for

• contracts and other agreements for goods/services by colleges, universities or schools (as sponsors of the trust) and
• state-funded schools, academies and colleges.

The £2,500 threshold above which a contract must be ‘at cost’ will also not apply here.

Risk register

The board should review the risk register frequently, unlike at present, and must conduct a full review at least annually.

Management accounts

Trusts will no longer be required to share management accounts with trustees six times a year, as required by the current edition. Instead, the board must consider these when it meets and be assured it has appropriate oversight of the trust’s financial position.

Budget Forecast Return

Trusts will be required to submit their Budget Forecast Return to the ESFA by the end of August, not by the end of July as at present.

GAG pooling

Trusts must already have an appeals mechanism in place where they pool General Annual Grant from their academies. The current handbook also says an unresolved appeal by the principal of an academy can be escalated to the ESFA. In contrast, the new Handbook doesn’t confine that right to the principal of an academy and so recognises that anyone may escalate their unresolved appeal to the ESFA.

Buying for schools

Trusts should refer to the buying for schools tool to help obtain value for money and apply relevant procurement regulations. This doesn’t preclude a trust from using other resources and/or advice where they can demonstrate this better suits their circumstances.

Electric vehicle salary sacrifice schemes

These schemes will not need ESFA approval where no liability will fall on the trust if an employee does not fulfil their contractual obligations with the scheme provider.

Estates safety and management

Finally, trusts should ensure they are aware of and applying the following guidance relevant to estates safety and management:

• Good estate management for schools
• Good estate management competency framework
• Condition Data Collection
• Reinforced Autoclaved Aerated Concrete estates guidance
• School Capital Funding guidance
• Condition Improvement Fund.

Summary

The new Handbook does what the Academies Regulatory and Commissioning Review said it would do and provides a consolidated and simpler edition for trusts to use. The key changes span governance, the executive, finance, risk, estates and staff support. Trust leaders will need to consider the changes and what their trust needs to be doing over the summer to ensure it is compliant with the Handbook from 1 September.

How Wrigleys can help The education team at Wrigleys is expert in helping trusts, schools and other charitable or not-for-profit education organisations govern their activities in compliance with the requirements of their regulatory bodies. Importantly, we work within the wider charities and social economy team at Wrigleys and so have a proven track record and expertise in advising trusts and other charities and not-for-profit organisations on their governance, compliance and regulatory requirements. We also offer a governance review service to assess a trust’s effectiveness and compliance with best practice and the key requirements of the Academy Trust Handbook and the Master Funding Agreement. We are therefore ideally-placed to advise trusts on their governance and compliance requirements and ensure their continued success.

 

If you would like to discuss any aspect of this article further, please contact Graham Shaw or any other member of the education team on 0113 244 6100. You can also keep up to date by following Wrigleys Education on X. The information in this article is necessarily of a general nature. The law stated is correct at the date (stated above) this article was first posted to our website. Specific advice should be sought for specific situations. If you have any queries or need any legal advice please feel free to contact Wrigleys Solicitors.