Academy Trust Intervention Powers
New measures to strengthen the Secretary of State’s ability to intervene in underperforming academy trusts
What are the New Powers?
In May 2022, the DfE announced that in the run up to full academisation, they were asserting increased regulatory power over Academy Trusts themselves, setting specific standards and also expanding the range of powers the DfE can use both Trust wide and individual academy level.
Previously, legal obligations on Academy Trusts have been a mix of statutory obligations (legislation and regulation) and contractual obligations through funding agreements, with DfE intervention at academy level only in recent years. This meant that the DfE could criticise Academy Trusts, but they could only take immediate practical action against them by removing their academies through termination (or threatened termination) of individual academy funding agreements.
The government expects these measures to come into force in September 2023, alongside the Academy Trust Standards measures.
What Does This Mean to Academies?
The new powers will focus on addressing weaknesses in governance and management, for which trusts are accountable. In particular, these powers will be the way in which the new Academy Trust Standards will be enforced when they are introduced as part of the Bill.
The measures are intended to allow trusts to be improved rather than transferring their schools to another trust. In summary, the legislation will introduce the following: 1. A power to issue a Notice to Improve and impose financial restrictions on academy trusts 2. A power to issue a compliance Direction 3. A power to direct the appointment of trustees and to replace existing trustees with an Interim Trust Board 4. Statutory powers to terminate funding agreements
The government has not always been able to intervene adequately in the small number of trusts that have fallen short of the standards it requires, and these intervention measures will help to address this in the future.
Termination powers currently in individual funding agreements will be incorporated into legislation so the powers can be applied consistently across the academy sector.
Compliance Direction
Where a failure to properly discharge a specific duty is identified, the department may issue a direction, specifying the action which the trust must take or refrain from taking in order to ensure compliance with that specific duty. If these issues are resolved, no further intervention action will take place. If the identified issues are not resolved, or if there is non-compliance with the restrictions in the Notice to Improve or the Direction, the department will consider taking further intervention action.
In the case of non-compliance with a Direction, the department may choose to issue a Termination Notice which could result in the trust’s funding agreements being terminated and the academies transferring to a different academy trust.
In the case of a failure to comply with a Notice to Improve, the department may: • Appoint an interim trust board to take over the running of the academy trust, or • Direct the appointment of additional trustees, or • Issue a Termination Notice The department may also use these powers if the safety of staff or pupils at one or more of the trust’s academies is threatened or if there has been a serious breakdown in the trust’s governance or in the management of its academies.
The department’s existing powers to intervene at individual academy level will remain largely unchanged, save for the fact that the powers will now be set out in statute rather than in individual academy funding agreements.
Why is this Legislation Required?
(From the DfE document Academy Trust Intervention PowersSchools Bill Factsheet)
"The intervention framework for trusts has not kept pace with developments in the academy sector. The current intervention framework facilitates intervention mainly where failures occur at an individual academy, rather than addressing issue at trust level. It relies on a limited menu of powers, mostly contractual, which are ultimately limited to the termination of funding agreements. These limitations mean intervention activity can be slow or ineffective, and that it can be difficult to remedy specific breaches of requirements which may not, in themselves, justify termination action. This risks the provision of education and the efficient use of public funds and has the potential to undermine confidence in the sector.
The new intervention powers will extend the ways in which we can tackle failings, including through an approach which supports improvement at trust level. This will provide a range of options so that the Secretary of State can act proportionately and quickly to secure improvement without necessarily having to transfer the school to a different academy trust. The new intervention powers will also override existing provisions in funding agreements which vary depending on when the academy agreement was entered into. The new statutory powers will ensure that intervention can be taken consistently across the sector providing greater clarity and certainty to schools, parents and academy trusts."
Notice to Improve
The government proposes to introduce new trust-level intervention powers to facilitate more proportionate, transparent and effective engagement with single and multi- academy trusts. Where weaknesses are identified by the inspecting body, the DfE may issue the trust with a Notice to Improve, setting a time-frame by which those weaknesses must be addressed. This will impose certain financial restrictions on the trust whilst the notice remains in place.
Delegated Power
This power will enable the Secretary of State to issue directions to academy proprietors requiring them either to take specific actions, or not take specific actions to ensure compliance with certain statutory duties and the requirements of their funding agreements. The statutory duties which will be subject to the power will be set out in secondary legislation made by the Secretary of State.
The department intends to use this power to address specific breaches of legal requirements or to prevent unreasonable performance of those duties. It is likely to be used where there are otherwise no significant underlying concerns about the academy trust.
Criticism
These new powers have drawn criticism from Stone King - a nationally recognised top-ranked law firm. In their legal briefing on the Academy standards and intervention powers, they write; " The Bill itself is therefore predictably all stick and no carrot. The Policy Notes which accompany the Bill are at pains to stress that the full academisation of the sector will be done with Academy Trusts rather than to them, but the backstop powers introduced by this Bill are profound and introduced at a much quicker pace than we might have expected from the recent White Paper."