Education Matters – Academy Trusts and the importance of robust governance

Headlines surrounding mismanagement of Academy Trusts seem to have dominated sector news over the past year, in the wake of the Bright Tribe Trust scandal. The ripple effect of this and other high profile governance scandals is still being felt throughout the sector, with an ever-increasing regulatory burden for Multi-Academy Trusts.

A Panorama investigation into the Bright Tribe Trust aired in September 2018 revealed significant conflict of interest issues, school closures following asbestos disturbance and misuse of £255,000 of government funding for fire-safety works. Government-appointed trustees now managing the Trust have ring-fenced £1.5m in preparation for a finding of ‘improper use of grants’.

The Trust was also criticised for a ‘lack of rigour’ when handling conflicts of interest, which included an agreement to allow the Trust founder Michael Dwan’s brother to run a nursery on-site rent free until 2027.

Outwood Academy Trust has also seen negative press over the past year, in relation to its controversial use of ‘consequence rooms’, reports by whistle-blowers relating to disturbing ‘flattening the grass’ assemblies where teachers would scream at students in order to provoke a response with the aim of then expelling them in front of an audience to make an example of them, and allegations of executive intimidation of school staff.

Kevin Courtney, joint General Secretary of the National Education Union comments that “the academies programme has drastically reduced transparency and accountability of schools with parents having little say or access to information about how academies are run.”

However, there is no sign of the academy conversion initiative slowing down; in fact, quite the contrary. Additionally, the press has analysed Department for Education data and reported that the number of primary schools being moved between Multi-Academy Trusts has trebled during the same period. This figure may in part be explained by concerns over so called ‘untouchable schools’, which, due to deep rooted governance issues and financial instability, are pushed from Trust to Trust, or are simply without any sponsorship.

Understandably, in the wake of high profile scandals within the sector, the Public Accounts Committee has called for more rigorous oversight from the Department for Education.

Lord Agnew, Parliamentary Under Secretary of State for Schools, attributes the majority of bad headlines concerning academies to poor governance, and this opinion is reflected in the most recent updates to the Academies Financial Handbook, which introduces some key governance-related changes, such as:

• an increased emphasis on the importance of robust governance, with an emphasis on the role of Trustees of Multi-Academy Trusts in applying the highest standards of conduct in line with the Academies Governance Handbook
• the strong suggestion that Academy Trusts should appoint a non-trustee Clerk to aid with the efficient functioning of the Board. Particular emphasis is placed on the Clerk’s role in ensuring that the Board is compliant with relevant frameworks
• the requirement that Trusts must notify the ESFA about any governance changes in the Trust within 14 calendar days. Failure to notify the ESFA, or if the information submitted is not of acceptable quality, may trigger an investigation
• numerous changes to the Internal Scrutiny section, with a particular expansion into the principles of ‘internal scrutiny’ and the insistence that the principles are covered by a scheme of work, which is driven by the audit committee and is informed by risk.

The latest Academies Financial Handbook also clarifies the process for establishing executive salaries and reinforces the fact that no individual may be involved in the decision-making process for setting their own salary, in an attempt to abate continued negative press around excessive salaries for Academy CEOs.

The high profile failings and increased regulatory emphasis on governance demonstrates the importance of robust governance and policy within Multi-Academy Trusts. This is important for the effective running of Trusts, and should also be high on the agenda of Trustee Boards both from a regulatory and reputational perspective. However, for some Boards, it might seem like an insurmountable task to stay abreast of the ever-increasing governance requirements without compromising on education strategy.

The Birketts multi-disciplinary Education Team comprises lawyers with specialist expertise in this sector and is well placed to provide pragmatic advice to Multi-Academy Trusts in relation to: Academy Conversions, governance, employment, commercial contracts, safeguarding, student issues and more.

We have also just launched a new fixed-fee Academies Retainer Package exclusively for our Academy Trust clients, allowing us to offer you a highly cost-effective solution for your day-to-day legal advice needs. Please get in touch with Liz Brownsell or another member of the Academies Team to find out more.

This article is from the October 2019 issue of Education Matters, our monthly newsletter for HR professionals. To download the latest issue, please visit the newsletter section of our website. Law covered as at October 2019.

The content of this article is for general information only. For further information please get in touch with Liz Brownsell.