ASCL Business Leadership Specialist and representative on the Education and Skills Funding Agency (ESFA) Academies Finance and Assurance Steering Group Hayley Dunn highlights the key changes from the recent update to the renamed Academy Trust Handbook.

Academy Trust Handbook 2021

For those new to the handbook, it is important to analyse the changes with an understanding of the language and the application of must and should. The use of must identifies a requirement, and the use of should identifies a minimum level of good practice that trusts should apply.

Ministerial direction

You get a sense of the direction of policy within the foreword from Baroness Berridge, the minister who oversees the handbook. The Minister states her aspiration for all schools to thrive by being part of a confident and successful multi-academy trust and describes the rebranding of the handbook as a first step. She chose to highlight three areas within her statement: parental involvement in boards, governance reviews and cyber-crime.

There is an encouragement that trusts should reserve places in their governance structure for parents, carers or other individuals with parental responsibilities, either on the trust board or via local governing bodies. The focus on governance includes promoting the use of self-assessment and external reviews – suggesting it is useful before any significant change, for example, when a trust intends to grow or where there are governance concerns. The emphasis on cyber-crime adds new requirements to the handbook, which is understandable given the recent cyber-attacks and ransom demands targeted at trusts.

Key changes

The most significant change is the broadening of the financial notice to improve (FNTI) to become a notice to improve (NTI), reflecting how the ESFA’s intervention powers may be exercised in the future in relation to matters beyond those of a financial nature.

Changing and extending the name of the handbook to the Academy Trust Handbook (also known as the Academies Financial Handbook) reflects an expansion in the topics covered, the spirit of the framework and the ministerial influence. By retaining the phrase Academies Financial Handbook, it keeps the legal reference link with other documents, such as, academy funding agreements and job descriptions.

The new iteration of the handbook includes signposting trust leaders to existing statutory requirements in other areas of trusts’ responsibilities, including safeguarding, estate management and health and safety. It would be impossible to cover these vast topic areas in anywhere near an adequate level of detail within the handbook without creating a huge tome. These subject areas are already covered with comprehensive guidance and statutes and are overseen by regulatory bodies, including the Health and Safety Executive (HSE). We anticipate a risk that trusts could be subject to sanctions from two regulators on the same issue, and potential conflict between organisations is an issue we have raised with the ESFA via the Academies Finance and Assurance Steering Group (AFASG).

Finally on the list of name changes, is the replacement of the term clerk with governance professional.

New musts

Focusing on the new musts in the handbook, there are some significant requirements that trust leaders should be aware of. These include approval for staff severance payments in some cases, awareness of cyber-crime and clarification on who cannot undertake internal scrutiny (internal scrutiny not be carried out by a member of the senior leadership team).

Trusts must obtain prior approval for staff severance payments of £100,000 or more, which includes a non-statutory or non-contractual element, and/or where the employee earns over £150,000. The types of payments likely to constitute special severance payments are settlement agreements and special leave, but is not likely to include statutory redundancy payments or payments for untaken annual leave. There is separate guidance from HM Treasury, including a proforma, for special severance business cases.

Trusts must be aware of the risk of cyber-crime, put in place proportionate controls and act where an incident has occurred. Trusts must obtain permission from the ESFA to pay any cyber ransom demands, but note that in the detail it says that the ESFA supports the National Crime Agency’s recommendation not to encourage, endorse or condone the payment of ransom demands.

While we support an ambition to provide a robust financial and governance framework, it needs to be actioned through open consultation with the sector and transparent processes to ensure it is not overburdensome.

Hayley Dunn
ASCL Business Leadership Specialist

Further information

You can download the Academy Trust Handbook 2021 online at tinyurl.com/24ee3unh

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