Schools may be forced to pay conversion costs

Schools could have to dig into their own pockets to pay the legal costs of conversion after Chancellor George Osborne announced in his Budget speech on Wednesday that every school must become an academy by 2022.

The chancellor said schools will be expected to either become an academy by 2020, or have an academy order in place to convert by 2022.

Those that do not have plans will face sanctions from the government who will be given “radical new powers” of intervention.

The Department for Education (DfE) currently gives schools £25,000 to cover costs related to converting their legal status. At these rates it would cost nearly £400 million to convert the remaining 15,632 schools.

But Schools Week can reveal the Treasury has so far put aside just £140 million to cover costs – less than £9,000 per school.

Antony Power, a partner at law firm Michelmores LLP, said: “If they [the government] cut it back that far then I think most schools will be dipping into their own budgets to convert.”

He said the liabilities of pensions alone is costing £3,000 for schools that convert in one part of the country. The cash also has to cover setting up the academy trust company, working out the governance structure, producing a funding agreement and leasing land.

Local authorities pay fees towards the conversion, but many have now starting charging schools to recoup these costs.

There are also extra costs for converting specific schools – such as those with private finance initiative (PFI) contracts or church schools.

Mr Power added: “For schools with complexities, unless they have deep pockets, I cannot see how they will be able to afford to convert.”

However Jonathan Simons, head of education at think-tank Policy Exchange, said it could be done – although he acknowledged it would be a push.

“It’s going to be a very high volume of conversions taking place over a period of time. This means an opportunity for the DfE to do this in a much cheaper way because of economies of scale.”

Some in the sector have branded it a payday for lawyers during the “worst funding crisis in some schools’ history”.

Christine Blower, general secretary of the National Union of Teachers, said: “That the government is willing to squander millions of scarce education funding on legal, accounting, consultancy and other fees to turn schools into academies will anger parents as much as it angers the teaching profession.

“It shows that the government’s priorities are simply wrong and how out of it touch it is with the realities facing schools.”

But Mr Simons added that £140 million across all schools, in the context of a multi-billion pound schools budget, was unlikely to make much difference.

The Treasury said that more cash could be available to academies schools – but it was dependent on how much the DfE was willing to contribute towards another budget pledge for £500 million to speed up the implementation of the national fair funding formula.

The plan is to gradually phase in the funding changes so every year a small amount would be taken from the schools set to lose out, and be handed over to the schools set to benefit.

But Mr Simons says this extra cash could be given to the schools that will benefit – meaning they reach their national funding level quicker.

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  1. Gavin Booth

    If this is actually the case it would yet again impact unfairly on small rural primary schools. These schools would not be able to support the costs of their own conversion and instead would become reliant on a large MAT chains absorbing the costs. Yet again limiting their ability to strategically choose their own direction and potential partners. Much more thought needs to be given to how this policy will work in large shire counties and coastal communities.

    • Jenny Lloyd

      And this applies to smaller inner city schools as well (we’re currently 170 growing to 210). And this is on top of other stealth costs such as schools bearing the cost of increased pension contributions on top of increased NI contributions in the current budget round.

  2. Michael Bailey

    I have already had to save over £35,000 this year. I can’t afford to convert. What’s more important a school structure or being able to fund the staff to teach the children? This is political meddling of the worst sort. Schools will be damaged and morale cannot sink any lower. Budgets have shrunk in real terms and the government just keeps throwing money away on their pet projects. How much have free schools and studio schools cost? How many have had to close? Who is the government accountable to for wasting important education funding? We have been quiet for too long!

  3. To my mind the biggest problem with conversion is the cost of transferring software licences etc. over to the new company. Some of the prices for accounting software merely to switch the name to a new legal entity are, to my mind, disgusting and nothing more than a money making scheme for the companies involved. I cannot and do not see how it can cost several thousand pounds to switch a licence over.