Changes to the Academies Financial Handbook – 2021

Back in June, the Education and Skills Funding Agency (ESFA) issued its annual update to the Academies Financial Handbook. The new handbook took effect on 1 September and so it’s important for all academy trusts to be familiar with its contents and particularly those things that have changed from the 2020 edition. The purpose of this ebriefing is to summarise the changes and any particular action trusts need to take.

The first thing to note is that the handbook has been re-named as simply the Academy Trust Handbook. This change is long overdue as ‘Academies Financial Handbook’ has for some time been a misnomer with the document including an ever-increasing volume of governance as well as financial requirements. This change recognises the evolution and that ESFA is as much concerned about good governance as good financial management.

Other changes (with reference to the relevant section in the handbook) are as follows:

1.4 – A new obligation to ensure that anyone who is or becomes an academy trust member is not subject to a direction under Section 128 of the Education and Skills Act 2008, which prohibits individuals from taking part in the management of an academy trust. Trusts ought to have a membership application form in place and a declaration on this point, from a potential new member, should be added to the form.

1.11 – A new paragraph emphasises the requirement to have at least two parents on the board of a single academy trust (SAT) and on the board or on each local governing body in a multi-academy trust (MAT).

1.15, 1.17 and 1.20 – New sections have been added, emphasising the board’s responsibilities within a trust regarding safeguarding, health and safety and estate management and in each case, there are links to additional guidance. These are areas in which trusts should already be up to speed, but regard should be had to the additional guidance to ensure trusts are fully compliant in these areas.

1.23 – This section emphasises that a SAT headteacher or principal and a MAT CEO are not automatically a trustee. The trust’s Articles of Association must permit appointment as a trustee, the headteacher/principal or CEO must wish to serve as a trustee and the members must formally appoint. The section also states DfE’s ‘strong preference’ that no other employees should be trustees and that no trustee should fulfil a staff role even on a voluntary basis. The aim is to maintain separation of roles and, therefore, accountability. Trusts which have staff as trustees should review this position and consider changes to the composition of the trust board and, if necessary, the trust’s Articles of Association.

1.32 – This new provision encourages independent external reviews of board effectiveness and suggests they should be undertaken “routinely as part of a wider programme of self-assessment and improvement”. Trust boards should give consideration as to how, when and by whom this form of review might be undertaken.

1.36 – A new requirement to advise the Regional Schools Commissioner’s office (RSC) of the departure or planned departure of a trust’s accounting officer to “discuss (the trust’s) structure and options, including plans for recruitment”. The intention here is not clear but one wonders if this is another situation that DfE/ESFA will use to target single academies and small MATs and encourage them to merge into other MATs.

1.49 – The clerk to the governing body / MAT board is now to be known as ‘governance professional’. This section goes on to give examples of the role of the governance professional which in essence seems to be to steer the trustees on governance matters. The aim, therefore, seems to be to emphasise that the expectations are well beyond the traditional role of a clerk in preparing agendas and taking/circulating minutes. Academy trusts should, therefore, consider the role of their clerk/governance officer and how it fits alongside these expectations.

1.51/52 – These sections confirm the requirement for enhanced DBS checks to be in place for all staff, trust members, trustees and committee members including members of local governing bodies.

2.4 – A new requirement that a MAT’s scheme of delegation should be reviewed annually or “when there has been a change in trust management or organisational structure”.  The location of this section suggests the specific reference here is to a scheme of delegation of financial powers. However, an annual review of the broader scheme of delegation would also be best practice.

2.32 – This section clarifies the disclosure requirements in relation to payments to employees whose annual benefits exceed £100,000.

2.52 – The requirement to supply information to ESFA or its agents, and to do so when and how the ESFA requests it, is strengthened although “ESFA will consider the impact on the trust in the deadlines it specifies”.

6.18-6.22 – The financial notice to improve has been re-named as simply a notice to improve recognising that ESFA can (and does) also intervene on broader governance issues. Failure to comply with an NTI is a breach of the academy trust’s funding agreement. A trust in receipt of an NTI must publish it on its website where it must appear until lifted by ESFA.

It has been said that academies are more regulated than any other form of school. Judging by the ever-increasing length and scope of the Academy Trust Handbook this would seem to be a fair assessment.

For more information

If you require advice in relation to any matters covered by this ebriefing or on any other governance matters in connection with your academy trust, please contact Phil Watts or Chris Whittington in our education team.

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