News in brief

The updated version of the Academies Financial Handbook which will be valid from September 2016 is available here:

https://www.gov.uk/government/publications/academies-financial-handbook

Currently 2045 of 3381 high schools have converted and 2440 of 16,766 primary schools have converted. The number in the pipeline for conversion in September is 376. Of these 294 are converters, 62 are sponsored and 20 new provision. This is a record and beats last year’s peak. The academisation programme continues apace despite the decision not to require all schools to become academies by 2022.

’Educational Excellence Everywhere’: a summary

The Government published a White Paper setting out its proposals for reforms to the state school sector. The most significant item was a proposal that, by the end of 2020, all remaining maintained schools would be academies or in the process of conversion. Further, by 2022, local authorities would no longer maintain any schools. These proposals were subsequently withdrawn in the face of strong resistance from a number of Tory MPs but it remains the case that academisation remains at the heart of the Government’s agenda. In particular, interventions will continue in areas where local authorities are perceived to be weak.

What of the other provisions in the White Paper?

Recruiting and maintaining teachers

Qualified teaching status will be replaced with a “stronger, more challenging” accreditation based on a teacher’s effectiveness in the classroom. As part of this, schools will be given more scope to bring in experts from other fields, e.g. musicians or coders, to put them on the path to accreditation.

Allocation of Initial Teaching Training (ITT) places will be reformed, to be based on need, demand and quality, and ITT will have a greater focus on subject knowledge.

A new Standard for Teachers’ Professional Development will be established to help schools improve the quality of continued professional development (CPD). The Government has also pledged to support the establishment of an independent College of Teaching, which will be a voluntary membership organisation designed along the lines of the royal medical colleges. This will launch in 2016 and will support a new, peer-reviewed British education journal.

The feasibility of incentivising (potentially paying) teachers to publish their research and CPD on an “open-source” basis will also be considered.

Strengthening School leadership

Much emphasis is placed on better trained leaders helping to boost retention and improve classroom teachers’ practice.

Head teachers, chief executives of multi-academy trusts (MATs) and other experts would help to design new voluntary National Professional Qualifications for each level of leadership. This is to “better prepare” leaders in the system.

An Excellence in Leadership fund would be set up for the best MATs and other providers to develop ideas to tackle leadership challenges in areas where these are most needed.

Sustainable school improvement

There would be investment in 800 designated leaders of excellent schools – National Leaders of Education (NLEs) – to provide extra support.

Strengthening assessment and standards of qualification

There is a focus on developing a “world leading” curriculum and ensuring that the vast majority of pupils study the English Baccalaureate.

It is stated that maintained schools should be taking account of the experience of independent schools in building pupils’ ‘character and resilience’. For example, the proposals include making more funding available for 25% of secondary students to extend their school day to include further activities such as sport, arts and debating.

Reforming funding

The Government intends to introduce a new “fair, national funding formula”. From 2019, individual schools’ budgets will be set by a national formula rather than the current 152 locally-devised formulae. The formula will have four components:

  • a basic formula weighted by age;
  • additional pupil needs (deprived backgrounds, low prior attainment, English as additional language);
  • lump sum (extra funding for rural schools); and
  • geographical adjustment, e.g. more money for London schools.

The new formula is likely to have the effect of transferring some funding from areas which are currently better funded to areas currently less well funded.

Changing legal framework

Most schools will form or join MATs. Save in exceptional circumstances, the smallest schools will have to form or join a MAT (though small schools will still exist). Other successful, sustainable schools will be able to continue as single academy trusts. Successful MATs will take over the schools or weaker MATs. The RSC will intervene in coasting or failing academies or MATs.

It is intended that local authorities will no longer maintain schools and it might be argued this will become inevitable as more and more schools migrate out of the maintained sector. Responsibility for school improvement will transfer from local authorities to schools and system leaders. Local authorities will instead “concentrate on delivering their core functions” and will be granted more control regarding the co-ordination of all in-year admissions and appeals.

Free Schools

The Government intends to extend the free schools programme and the original version of the white paper contained a commitment to open at least 500 new schools by 2020. The University Technical Colleges (UTC) programme will be also be ‘strengthened’. Some of this new provision will be set up as ‘challenger’ schools in areas of poor education standards.

The Government is committed to there being a UTC within reach of every city. There is an expectation that all UTCs should be part of strong partnerships with high performing secondary schools, such as MATs.

Land

To speed up the process of academy conversion, when a local authority’s community schools convert to academy status, land held by the authority for those schools will transfer to the Secretary of State, who will then grant a lease to the academy trust. The Secretary of State will take steps to ensure that the existing school estate can be used more easily for new schools and expansions where applicable. Where a school converts to academy status, the government will not take ownership of any land owned either by the schools themselves, or by any charitable trust.

The time taken to transfer land is one of the most significant blockers to academy projects completing on budget and on time. The latest news from the DfE is that how the transfer of land can be achieved efficiently remains a matter of significant debate. An alternative, may be to look at providing more resources to over-stretched local authority legal departments to facilitate more timely transfers.

The ability for maintained schools to convert to foundation status will be removed.

Legal framework and governance

The Government says that, on average, MATs begin to develop the centralised systems and functions to deliver better governance, more efficient back office arrangements and improvements to the curriculum and extra-curricular activities at around 10-15 academies. The Government expects more MATs of this size.

The Government will engage with MATs, sponsors, academies, dioceses and the wider schools sector to ensure the legal framework is fit for purpose for the long term, removing any legal differences that exist at the moment due to different dates of conversion. The legal framework will be redesigned so that it:

  • protects and promotes autonomy, alongside robust and proportionate accountability;
  • ensures ministers are able to make and evolve policy that will apply equally to both past and future academies;
  • facilitates a clear and transparent mechanism by which successful providers can expand, and unsuccessful ones can shrink or leave the system.

Funding of MATs

The Government will continue to operate a system whereby larger MATs can maintain autonomy over their capital funding, and smaller MATs and standalone academies will receive extra support, i.e. a continuation of the condition improvement fund, or similar arrangements. The Government intends to make available capital funding to support the expansion of existing provision, as well as the development of new schools. At least £200m will be available and the Government will publish later this year further information on how it will be distributed.

The two phases of the Priority School Building Programme (PSBP) will continue, refurbishing or rebuilding over 500 of the schools in worst condition by 2021. In the interim, local authorities will continue to manage capital allocations for maintained schools.

Academy sponsors

The Government wants to recruit more academy sponsors. These could include charitable trusts set up by businesses, individuals or groups of “like-minded” leaders and educators.

Education and Adoption Act 2016 – what does it mean for academies?

Following months of parliamentary debate, and having received royal assent in March, the Education and Adoption Act 2016 (the Act) is now in force.

The majority of the Act came into force on 18 April 2016. However, some parts of the Act have not commenced (and are not yet in force), such as Section 1 which relates to “coasting schools” and Section 15 which relates to local authority adoption functions. A commencement date will be appointed for these sections in due course.

Background

The Act seeks to improve the standard of education for all children in England by tackling under-performance in schools and academies and allowing the Secretary of State (“SoS”) to intervene in certain circumstances.

What does it mean for academies?

Whilst much of the Act concerns maintained schools and makes provision for underperforming schools to be converted to academies, Section 14 of the Act includes new powers for the Secretary of State to terminate academy agreements, or take other action, in respect of academies “causing concern”.

  • Intervention powers

Prior to the Act coming into force, it was recognised by the Government that its formal powers to intervene in failing academies varied depending on the terms of the academy’s funding agreement. The Government has, therefore, implemented changes to ensure that its intervention powers across all types of academies are consistent.

  • Termination rights

Under the Act, there is now a requirement for new Academy Agreements to grant the Secretary of State the right to terminate the agreement if:

  • special measures are required to be taken in relation to the academy or the academy requires significant improvement; or
  • the academy is “coasting”.

In addition, “old” Academy Agreements, namely those entered into before 18 April 2016, will be treated as including the same termination rights referred to above.

In accordance with the Act, if an academy has been judged as inadequate by Ofsted and the Chief Inspector of Ofsted has given notice that the academy requires special measures or significant improvement then the termination rights may triggered under category 1 above. For category 2, the Act makes it clear that the meaning of “coasting” will be set out in regulations (not yet in force).

Please refer to our previous briefing, which can be accessed using the link below, for further detail on the expected definition of “coasting”:

http://www.eversheds.com/global/en/what/articles/index.page?ArticleID=en/Education/Education_Briefing_Education_and_Adoption_Bill_update_Coasting_schools

DfE guidance

To accompany the Act, the DfE has issued guidance entitled “Schools causing concern – Intervening in failing, underperforming and coasting schools” (the Guidance).

In respect of academies specifically, the Guidance confirms that Regional School Commissioners (RSCs) will be responsible for addressing underperformance in academies and will effectively carry out the role of the Secretary of State (albeit that ultimate accountability will still rest with the Secretary of State). According to the Guidance, RSCs have the ability to terminate the funding agreement when an academy is judged as inadequate, and identify a new sponsor, and/or take formal action where an academy falls within the definition of “coasting”. This formal action may include issuing a termination warning notice requiring an academy to take specified action but RSCs will essentially have discretion to decide on the specific course of action required. According to the Guidance, an RSC, when deciding what action to take, will take into account factors such as performance data and any plans for the academy to improve.

In respect of the ability of RSCs to issue warning notices for reasons other than the academy being judged as inadequate by Ofsted, or meeting the “coasting” definition, the Guidance makes it clear that this will be governed by the academy’s funding agreement.

Comment

In practice, it is clear that when an academy’s performance meets one of the triggers set out within the Act, namely an inadequate Ofsted judgment or performance that falls within the “coasting” definition, its funding agreement will be regarded as including broadly the same provisions that apply to failing and coasting schools under the latest model funding agreement. The powers of the Secretary of State will, in effect, be delegated to RSCs who will now have powers to move a failing academy to a new sponsor and require a “coasting” academy to demonstrate that it can make sufficient improvement.

At this early stage, and given the discretion granted to RSCs to determine an appropriate course of action when an academy is deemed to be “coasting”, there is some uncertainty around how RSCs will now exercise the powers conferred on the SoS under the Act. However, in accordance with public law principles, the SoS (or more likely RSCs) will be required to act reasonably and take into account all relevant information including the specific circumstances of the academy before taking further action. It is therefore imperative that academies are aware of the new provisions contained in the Act and take action to address any performance issues as soon as they arise in an attempt to prevent formal intervention action being taken.

That contract you never got round to signing? It may be binding anyway…

Any academy which has ever done business with a contractor or supplier without having all the terms tied down should be aware of a recent case which suggests that it may, in fact, be bound by an unsigned contract.

It’s the case of Reveille Independent LLC –v- Anotech International (UK) Limited which decided that the parties, by their conduct, were legally bound, despite an express term to the contrary in a draft deal memo.

The facts of the case are perhaps familiar. Common sense might suggest that there is little risk involved in getting the ball rolling under a contract which has been substantially agreed, while the lawyers dot the I’s and cross the T’s. But what happens when the final negotiations break down, and the parties then disagree about what, if anything, had actually been agreed?

The case concerned negotiations for a licence to allow Anotech, a UK cookware distributor, to market its products in the US under the “MasterChef” brand which was owned by Reveille. The deal would also allow Anotech’s products to be integrated into three episodes of the MasterChef television series. The terms of the negotiations were set out in a deal memo prepared by Reveille. The memo expressly stated that it was not to be binding until signed by both parties. Anotech marked up the memo with handwritten amendments and additions, and returned a signed copy to Reveille. Reveille never signed the revised memo, and negotiations to replace the deal memo with a long form agreement broke down before anything could be agreed.

In the meantime the relevant episodes of MasterChef were recorded and broadcast and Anotech had started using the MasterChef brand in its sales and marketing. Reveille duly invoiced Anotech under the terms of the licence, but the invoice was never paid. Reveille brought proceedings against Anotech on the basis that the deal memo, as marked up and signed by Anotech, created a legally binding contract notwithstanding that it had not signed it itself. Anotech argued that no binding contract had been concluded.

At first instance the High Court held that the parties had concluded a binding contract on the terms of the deal memo. Anotech was ordered to pay over US$1 million to Reveille. The question for the Court of Appeal was in what circumstances will a contract be concluded when a written offer document states that it is not binding until signed, but the offeree still appears to have performed its obligations under the unsigned agreement?

There are already established principles of English law that a party can accept contractual terms by conduct provided, objectively, that the conduct was intended to constitute acceptance and acceptance can be of an offer on the terms set out in a draft, unsigned agreement between the parties). Further, a prescribed mode of acceptance can be waived by clear, unequivocal conduct.

Applying those principles, the Court of Appeal found that there was clear evidence of acceptance of the terms by Reveille by their conduct, which included integration of Anotech’s products in episodes of MasterChef and approval of use of its intellectual property in press releases. There was no disadvantage to Anotech when it too had acted as if it was bound by the terms of the deal memo.

The case illustrates the importance of ensuring that the terms of a contract are fully agreed, and documented, prior to commencing work. Where work is commenced before the terms are finalised, the parties may unwittingly form a legally binding contract on the terms suggested by their conduct – regardless of whether these are the terms the parties envisaged agreeing in the formal written document. The more significant the work undertaken the more likely the courts will be to conclude that a contract had already arisen by the conduct of the parties, even where the prescribed mode of acceptance has not been followed.

For academies, who will be entering into a myriad of contractual relationships in the course of running their schools the implications are clear. If services are delivered before all the terms of the contract are agreed, approved and signed, there is a risk that the academy might be bound by terms it doesn’t want. In those circumstances financial and governance concerns could follow. The best advice is to agree all the terms, take legal advice on the implications of the contract and sign up before allowing the contract to be performed. The lesson from Reveille is that without that, an academy might find itself with a liability which it hasn’t bargained for.

Managing difficult parents

It has been widely reported that parents, guardians and carers have increased expectations regarding the education and support provided by academies. They are becoming increasingly demanding and willing to challenge institutions, and individual members of staff, where their expectations have not been met.

Whilst many academies recognise that managing increased expectations is part and parcel of modern day education, there is a threshold where behaviour and conduct becomes unacceptable and impacts adversely on the institution, its pupils and the health and wellbeing of individual members of staff.

Unacceptable behaviour may arise in numerous forms including, for example, frequent and demanding requests and correspondence, social media postings and campaigns, damage to reputation and harassment of, and violence to, staff on and off an academy’s grounds. There is also a spectrum on which the frequency and seriousness of unacceptable behaviour will fall.

It is, of course, important for academies to foster and maintain co-operative and positive relationships with parents. When issues arise, they can, in the vast majority of cases, be resolved to the satisfaction of all parties through discussion and other informal means.

Where informal resolution fails, however, academies are faced with the difficult question as to the appropriateness and likely effectiveness of the more formal strategies which are potentially available to them. These potential strategies include:

  • arranging a meeting with the parents to discuss and seek to agree standards of behaviour;
  • sending a formal letter from the academy (or in more serious cases, from the academy’s solicitors) to explain the academy’s concerns and to set out its expectations and requirements regarding the parents’ future behaviour;
  • where the unacceptable behaviour arises from social media misuse, exploring the possibility of procuring the removal of that material through involving the parents and/or social media providers;
  • in very serious cases, seeking to involve the police, banning parents from attending the academy’s premises and/or exploring the possibility of an injunction or other court redress to manage the challenging behaviour.

The availability and appropriateness of these more formal strategies, and their likely effectiveness, will be dictated by a number of factors. These include the nature, impact and frequency of the unacceptable behaviour, any strategies previously deployed to manage the issues, whether the parents have instructed solicitors and how the parents are likely to react to the particular strategy (including, for example, whether the academy’s approach is likely to inflame the situation). It is also very important for academies to consider the process they follow when implementing these strategies and in ensuring that decisions are taken fairly and lawfully, particularly where the academy’s chosen approach is likely to adversely affect parents’ ability to engage with the institution.

Whichever strategy an academy chooses to implement in a particular case, there are a number of important considerations for it to remain mindful of:

  • Are parents raising concerns which engage one of the academy’s internal procedures (for example, a complaints procedure) and how should that impact on the academy’s management of the parents’ inappropriate behaviour?
  • Are there any particular factors causing, or contributing to, the parents’ behaviour and, if so, should that affect how the academy manages the concerns? For instance, where a medical condition or disability is affecting how a parent behaves, academies should ensure they consider their equality obligations and any adjustments which may be required to their normal processes.
  • Academies should ensure that pupils are not treated any differently or suffer any detriment as a result of the behaviour of their parents.
  • Academies should remain mindful of the legal duties they owe to other pupils and members of staff and consider any support they may implement, and any steps they may take, to mitigate the impact of inappropriate parental behaviour.
  • Are there any steps which may be taken to manage the risk of reputational harm (for instance, seeking the removal of material posted on social media and ensuring the academy is prepared to respond appropriately in the event of press interest)?
  • Academies should ensure they maintain an appropriate audit trail in relation to any concerns which arise and the steps they choose to take (remaining mindful of their obligations in relation to data protection), to assist in justifying their approach should parents seek to challenge that, whether through an external body (for example, the Education Funding Agency) or the courts.

During Autumn 2016, we will be delivering a series of seminars in our offices which will explore further the overarching legal framework and the key legal and practical issues which arise for academies in this area, including the various potential strategies available in managing unacceptable behaviour. Further information will be available when our 2016/2017 education seminar programme is published.

Employment references - liability to the subject of a reference

If an academy provides a reference, then it owes the subject a duty to take reasonable care to ensure the information it contains is true, accurate and fair, and does not give a misleading impression. The key risks of not doing so are as follows:

  • Unlawful discrimination

Refusal to provide a reference is can be discriminatory so can providing one. Particular care should be given to comments about performance, attendance or sickness absence where there is a risk that these may amount to unlawful discrimination on grounds of disability. A reference must also not victimise the subject if they have previously complained of discrimination. Note, the recipient of a reference must also be careful about any action it may take following receipt of a potentially discriminatory reference. By way of example, if an academy refers to an employment tribunal claim for unlawful discrimination that the subject of the reference has brought and this leads to an offer of employment being withdrawn, there would be a risk of a successful claims for victimisation against both the former and prospective employers.

  • Defamation

An untrue statement that disparages the reputation of a person in the estimation of right thinking members of society may amount to defamation. Where the statement is in writing it would be libel and where it is an oral reference it would be slander. A defence is available if it can be said that the referee has a legal, social or moral duty or interest to make it and the recipient a corresponding duty or interest to receive it (referred to a “qualified privilege”). That privilege is lost if the communication is made with malice, i.e. the maker knows or has reason to believe the statement is untrue or is recklessly indifferent as to its truth. An academy cannot, therefore, be successfully sued for defamation over the contents of a reference (even if its contents are untrue) provided it believes that the information in the reference is correct and the reference is provided without malice. Importantly, academies must be able to justify and support any comments made and show either that they are true or that there is an honest belief that the contents of a reference are true. Privilege may be lost if the communication is made to a third person without the necessary duty or interest in it. References should therefore always be marked "Private and Confidential" and "for the addressee only".

  • Negligence

An academy could be sued for negligence if it provides an inaccurate reference. The duty of care which employers owe to employees when preparing references requires consideration of whether a reasonably prudent employer would have expressed the opinions which were stated in that particular reference. The duty extends to ensuring the accuracy of the facts upon which any opinion expressed in the reference was based. If negligence is found, the academy would be liable for any damage suffered as a result of the reference, e.g. lost earnings as a result of the withdrawal of an offer of employment.

  • Malicious falsehood

If an individual can show that a reference given by an academy contains untrue words that were published maliciously (that is, the academy knew the words were untrue or was recklessly indifferent as to their truth) they may also have a claim for malicious falsehood.

Managing the risks

To manage the above risks as well as those from claims by recipients of references, academies should have a written policy covering who can provide references, in what circumstances, what they can include and what they should not include. A template reference may also be helpful for the sake of consistency. Adding appropriate disclaimers to the foot of all references will also assist.

Carbon Reduction Agreements

In recent years strategies to reduce energy consumption have become increasingly popular for academies and other educational institutions. It’s not surprising. Energy can be a significant component of the fixed costs of running any building. So finding effective ways of saving energy can make a real difference to an academy’s books. It’s a complex area however and one where engaging the expertise of an external consultant is usually a worthwhile exercise.

Commonly, consultants use a three stage process to reduce energy usage in an academy:

  • determine the amount of energy that an organisation consumes, and how it consumes it;
  • develop a methodology for reducing energy consumption; and
  • implement an action plan to reduce energy consumption.

To achieve stage 1 the consultant will typically go into each part of the academy site[s] and evaluate energy consumption. With the help of monitoring equipment the consultant will assess how the various buildings are used, what the general practices are for use of the buildings and identify whether equipment is running in the buildings when it shouldn't be, e.g. PCs running at the weekend.

The skill of the consultant lies in taking readings from that monitoring equipment and using it to generate a methodology which will help the academy reduce its carbon footprint. And then implementing an action plan.

The key to the success of the project is usually making sure that the scope of the consultant’s appointment is right and careful and early thought is given to the terms of the contract. Here are some points to consider when contracting with an energy consultant:

  • What measure of performance will be used to calculate the consultant’s fee? Often the contract may be drafted so that the consultant will get 50% of the value of energy savings made over a particular period. That may be a week, a month, a quarter, or however you see fit. Whilst such a provision might be fine in principle, it is vital to check that the clause contains a longstop date so the fees payable are finite.
  • Always check payment clauses. If the academy agrees with a consultant that the consultant will only be paid when he/she finds and makes savings, make sure that the consultant can’t invoice you before they should do! Take care to ensure that the provisions of the agreement are clear about when the consultant can raise an invoice - and be clear about what “amounts becoming due” actually means.
  • Even if the contract terms are clear, it is also worth being careful to ensure that moneys have in fact become due when the invoice is raised. It has been known for consultants to invoice in relation to payments that they believe will fall due before they actually do. Not only may that be contrary to the letter of a contract, the practical impact is that the academy would then accrue a debt on its books even though it has not actually become payable. If this practice is pursued then, over time, large debts could begin to sit on the academy’s books before any money has actually become due and owing.
  • Beware also of any contractual terms which suggest that, if there is a late payment at any stage, any amounts that could conceivably become payable under the agreement crystallise and become payable (even though the savings have not yet been made). If an academy wishes to keep a consultant incentivised, it is very important to avoid these clauses.
  • The consultant should always be under an obligation to provide the data upon which they calculate energy savings and there must be an ability to independently verify this.
  • Consider how payment works where the academy comprises more than one site or several buildings or the contract relates to more than one academy. If the agreement covers multiple buildings or sites across the academies, consideration needs to be given to what happens if either: (i) the academy acquires more property; or (ii) it disposes of property that is the subject of the agreement during the term.
  • Logically if a site is disposed of, energy savings are no longer being made on it. If a consultant is being paid based on the value of the energy sayings they find for the academy, the amount that they can recover decreases when a property is sold. It is often the case, therefore, that the contract provides for a proportion of costs of energy savings that would have been made to be paid off as a lump sum when a site is disposed of. In practice, these are often difficult to calculate and a methodology needs to be agreed in advance.
  • It is perhaps fair to expect that the nature of the energy saving will change over time. In that case the agreement needs to change with it. As a consultant becomes more familiar with an estate and starts to understand how it consumes energy, logically it should also be able to make suggestions to find more energy savings.
  • The contract should be structured to encourage a long term approach. So for example, consideration needs to be given to the ongoing monitoring of savings. How accurately is this working and how can it be independently verified over time? This is of course especially important when a consultant will use that data to calculate the amount of money they invoice for.

Often a contract will include an offer of training to staff that educates them about how carbon reductions can be made. If that is the case then the quality and length of training needs to be agreed up front. Consider also building flexibility into the agreement to make sure that staff are getting the right training for the specific academy’s estate - which may well change over the lifespan of the agreement.

We understand that making savings is a big consideration for academies and the education sector generally.