ESFA ‘sorry’ as academy trust handbook issued days before taking effect

With a caretaker government in power, the 2022 academy handbook includes only limited changes

With a caretaker government in power, the 2022 academy handbook includes only limited changes

24 Aug 2022, 13:07

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The government has finally published its latest academy trust handbook, apologising for giving schools just days to digest the document before it takes effect.

But the 2022 edition contains few major changes. They include allowing trusts to enter into most indemnities without prior approval, and relaxing restrictions on related party transactions for religious authorities.

The limited reforms – despite the recent schools white paper and plans for new academy trust standards – could reflect the current political limbo before a new prime minister takes office.

The government is also still reeling from a major backlash against its schools bill, dubbed a ministerial “power grab” that threatened academy freedoms.

The Education and Skills Funding Agency tweeted that it was “sorry” the document was later than in previous years. “This year’s edition places no new requirements on trusts and we hope this will make implementation more straightforward for you,” ESFA said.

The timing of the publication gives schools less than six working days until the new handbook takes effect. It leaves leaders, finance and governance professionals, boards and members at more than 2,500 trusts – as well as auditors – with little time to ensure they are acting in line with the rules.

Trusts which fail to comply with the handbook risk breaching their funding agreements with the government.

The sector had voiced frustration at the delay. Phil Reynolds, CEO of school finance consultancy PLR Advisory, called earlier this month for “some common courtesy” from ESFA, clarifying the situation.

Academies minister Baroness Barran writes in the foreword that there are only a “small number of changes to ensure the right level of day-to-day autonomy”.

The four stated changes include removing the need for trusts to seek ESFA approval for more expensive indemnities if they are in the “normal course of business”.

These are described in linked documents as unavoidable costs trusts could reasonably assume to be authorised. Any novel, contentious or repercussive indemnities still require approval. Indemnities typically involve offering compensation if contractual obligations are not met.

Separate new guidance on handling indemnities also states trusts are now expected to maintain contract registers of known indemnities.

Another change loosens restrictions on religious authorities’ provision of services to help trusts develop their religious character and ethos.

Currently related parties can only provide trusts with such services if they are at cost and follow open, fair competition, but there is an exemption for dioceses. This has been widened to cover all religious authorities.

The handbook also makes clear that trusts only need prior ESFA approval before they issue the special – non-contractual – part of any severance payment.

The previous handbook implied they could not make severance payments per se before any package including a special element was signed off. Many staff are contractually entitled to severance payments.

A fourth change in the latest edition confirms a loosening of reporting burdens on trusts, though it has already been announced previously. Trusts no longer have to submit an academies budget forecast return outturn or BFRO each May, submitting only the annual academies budget forecast return or BFR.

Reynolds told Schools Week: “It’s welcome there’s not any significant changes at a time when school leaders are worrying about things like balancing budgets and getting ready for another school year. The question will be what comes next year.”

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