Academy Trust Handbook 2024 – what is new and what has changed?  

The updated version of the Academy Trust Handbook (ATH), the first version under the new Labour government, was published at the end of July 2024. Publication was slightly later than usual as a consequence of the general election purdah. Catherine McKinnon, new Minister for State (Education), has written the forward in which she thanks all in leadership and governance of trusts for their important role in supporting young people’s education.

The changes published in ATH 2024 have been developed in conjunction with sector representatives largely during the period of the previous administration. Whilst the number and scale of the changes are relatively small there are, however, significant points for trusts to be aware of and ensure they have incorporated into their systems, controls and policies.

Roles and responsibilities

Trusts are reminded of the importance of the Department for Education’s (DfE) digital and technology standards. The standards have been previously developed and published; the ATH now explicitly signposts to the standards. Whilst the wording in ATH 2024 does not state that adherence to the DfE digital and technology standards is either at the “must” or “should” level, there is a clear nudge to trusts to increase awareness.

Main financial requirements

ATH 2024 emphasises that trust’s reserves policy must include a clear plan for managing reserves. Reserves is an area which has been increasingly focussed on in recent years including that trusts must have a reserves policy, requirement for trusts with greater than 20% reserves to explain their plans for use of them, and the Good Practice Guide on Reserves which was last updated and published in November 2023 which suggested a minimum reserves level of 5% of income.

The ATH now requires all trusts to have a clear plan for their reserves including for trust growth and development, educational resources, estates improvements, school improvement and IT security. Alongside the new wording that estates standards are a potential area for which a Notice to Improve may be considered, we are seeing further emphasis for trust boards having clear responsibility for all aspects of their activities and that reserves must be used strategically to ensure that funding is targeted on areas including, for example, cyber security and buildings.

Electric Vehicles (EV) salary sacrifice schemes are significantly constrained in ATH 2024. ESFA guidance permitting EVs sacrifice schemes was only published in October 2023 but has now been paused. We understand that there has been a rethink and review by the government on this freedom across all sectors and therefore, as an interim measure, DfE/ESFA approval is now required both for any new schemes or for any additional vehicles being added to a scheme that it is already in existence.

Whilst this may be frustrating for trusts and those staff who will be impacted by this pause, it is to be hoped that the government review will be relatively speedy, and a further announcement will be made.

Internal scrutiny

ATH 2024 explains which internal scrutiny options are to be applied for trusts with annual revenue income over £50m. For larger trusts the EFSA now require having a professional internal audit service from either an in-house internal auditor or a bought-in internal audit service.

This limitation is a “should” from September 2024 and will be a “must” from September 2025. The rationale is that larger trusts need to have a higher level of scrutiny, guidance and oversight, hence why the ATH now requires a professional service. As previously, the internal audit service is expected to add value by providing important assessment and insight for trustees, CFOs and CEOs.

Additionally, where a trust uses either trustees or peer reviewers, ATH 2024 says trustees and peer reviewers performing the internal audit work should have qualifications in finance, accounting or audit and appropriate internal audit experience. Trusts should work towards this position where it is not already the case. Again, DfE/ESFA are promoting higher levels of capability towards internal scrutiny.

The Good Practice Guide on Internal Scrutiny, which was last updated in February 2024, is a useful resource.

Delegated authorities

Trusts will now be able to enter into finance leases where the lease category appears on the DfE-approved list. This is a significant new freedom. Previously, schools and trusts were only permitted to have operating leases, except where prior approval for a finance lease was granted by DfE/ESFA, which in practice was never granted. Finance leases are now permitted without the need for DfE/ESFA approval for a range of categories of assets including IT equipment, catering equipment, furniture, vehicles and LED lighting. Note that energy efficiency and solar panels are not included in the approved list and therefore must be procured as an operating lease or DfE/ESFA approval must be applied for.

The regulator and intervention

ATH 2024 clarifies that trusts need to take appropriate action to meet DfE’s cyber security standards.  As with digital standards, DfE/ESFA have published guidance on cyber security standards, which are now signposted in ATH 2024. The standards are very detailed, and so need trusts to review and understand what the implications are. Trusts should, for example, be conscious of the requirement to conduct a cyber risk assessment annually and review the risk assessment on a termly basis. It will be important to ensure that this requirement is built into the trust’s review timetable to ensure regular conduct, and evidence of consideration, of the cyber risk assessment.

The list of examples where a Notice to Improve may be issued now includes management of the school estate. This is potentially one of the more significant and contentious changes in ATH 2024 and trusts need to be clear on the implications. We note that there have been queries and concerns expressed regarding the addition of Estates Management to the examples of areas for which a Notice to Improve may be made.

We understand that the DfE/ESFA aim is to support trusts and others in the school sector to manage their estate strategically, ensuring it is safe and complies with relevant regulations. As such, a Notice to Improve would be the last resort in cases that cause serious concern. The DfE/ESFA first step would be to engage with the trust to support them in getting it right. An ideal outcome for DfE/ESFA would be never to need to use an Notice to Improve, as they are able to work with trusts constructively in addressing any issues.

The DfE/ESFA have previously clearly set out their expectations on estate management for some years, including in the ATH 2024 on asbestos and health and safety. Section 1.20 of the ATH 2024 sets out high-level expectations and provides links to advice, standards and tools for managing the school estate effectively including Good Estate Management for Schools and ensuring the necessary skills and competencies to meet these expectations.

This article was authored by Stephen Lester, ISBL Trustee