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Education Academies e-briefing - Winter 2017

  • United Kingdom
  • Education - Briefings

13-12-2017

In this issue:

• Successful Challenge to Ofsted’s Complaints Process

• Public Sector Apprenticeship Targets

• MAT expansion… Some food for thought

• New Pupil Exclusion Guidance For Academies and Schools in England

• New money laundering regulations – do they apply to academy trusts?

• With the date for implementation of the GDPR getting ever closer our countdown to compliance document sets out the steps you should be taking - https://www.eversheds-sutherland.com/documents/services/commercial/gdpr-tracker.pdf

 

Successful Challenge to Ofsted’s Complaints Process

Summary

An Ofsted report which judged an academy to be “inadequate” and in need of “special measures” was quashed on the basis that Ofsted’s complaints procedure, which prevented the academy from challenging the report, was unfair.

In August 2017 the Durand Academy Trust (the “academy”) successfully challenged the Office for Standards in Education and Children’s Services and Skills (“Ofsted’s”) inspection report which adjudged the academy to be grade 4: “inadequate” with a recommendation that it be placed into special measures.

Background

Her Majesty's Chief Inspector is Ofsted's most senior officer and has various powers and duties in relation to the inspection of maintained schools and academies under sections 5 and 8 of the Education Act 2005 ("the 2005 Act"). The 2005 Act makes provision for publication and dissemination of reports and states that if, on completion of a section 5 inspection the Chief Inspector is of the opinion that special measures are required to be taken in relation to the academy/school, or that the academy/school requires significant improvement, he must send a draft of the report of the inspection, in the case of an academy, to the proprietor of the school, and consider any comments on the draft that are made to him within the prescribed period.

If, having considered any comments, the Chief Inspector is of the opinion that special measures are required to be taken or significant improvement is required he must without delay give a notice in writing to the Secretary of State and to the proprietor of the academy; and must state his opinion on the report of the inspection.

Ofsted’s complaints procedure provides for 3 steps – step 1 is an informal resolution of complaints; step 2 a formal complaints procedure; and step 3 is a means of reviewing the complaints handling process.

Under step 2 it states “if your complaint is about an inspection at which a school is judged to have serious weaknesses or to require special measures, these judgments will not be reconsidered under step two of this policy. This is because all such judgments are subject to extended quality assurance procedures prior to authorisation of the judgment on behalf of Her Majesty's Chief Inspector. The school contributes to this process and may comment on the inspection findings prior to publication of the report. The scrutiny of the judgments and the consideration of any comments received from the school is undertaken by Her Majesty's Inspectors who are independent of the inspection”.

It then continues “however, once the report has been finalised, any complaints about inspector conduct or the inspection process can be considered under step two of this policy. Schools can request a review of the process confirming the inspection judgments under step three of this policy and completion of the step two complaint investigation”.

The academy was inspected over 2 days at the end of November and beginning of December 2016. The report, rating the academy as “inadequate” with a recommendation that it be placed into special measures, was sent to it on 6 January 2017. The academy commented on the report on 13 January 2017 and submitted a step 2 complaint on 20 January 2017.

Following Ofsted’s quality assurance process the judgment remained the same and its response to the academy’s comments (a few minor amendments were made) was sent on 31 January 2017. On 1 February 2017 a copy of the report was sent to the Department for Education, the Education Funding Agency (as it was then) and the Local Education Authority. Ofsted intended to publish the report on its website 5 working days later but on 7 February 2017 the academy issued its claim with an application for an interim injunction to prevent publication.

Challenge

The academy challenged the findings of the report on two separate grounds, namely that:

  • the inspection report was “so strikingly at odds with” how the academy performed in practice and was rendered unreasonable, due to the “unfair and arbitrary evaluations, factual errors and a relentless accentuation of the negative and elimination of the positive” attributes of the academy; and
  • Ofsted’s complaints procedure, which prevented the academy from challenging the inspection outcomes at stage 2, was unfair. The academy argued that under Ofsted’s procedures the more serious its criticisms the less chance there was to challenge the analysis through the complaints process and that, as a result of having been deemed “inadequate”, it never had an effective opportunity to change the outcome of the inspection using Ofsted’s internal procedures.

In response to the academy’s claim, Ofsted argued that schools and academies which are found to have serious weaknesses should not be able, by pursuing proceedings, to delay the publication of the outcome of an inspection (albeit Ofsted did agree to refrain from publication pending the outcome of the academy’s claim). Ofsted further argued that it should be able to rely on its rigorous quality assurances processes.

The High Court’s Findings

The Court decided in this case that Ofsted’s complaint process “…which effectively says there is no need to permit an aggrieved party to pursue a substantive challenge to the conclusions of a report it considers to be defective because the decision maker’s processes are so effective that the decision will always be unimpeachable is not a rational or fair process”. As a result, the Court ordered that Ofsted’s report, and its content be quashed, thus resulting in the academy being removed from special measures and its previous rating of “good” remaining in place.

Significance of the Ruling

It is important to note that the Judge was not critical of Ofsted’s complaints procedure in its entirety, simply the lack of ability to challenge a judgement of “inadequate” at stage 2, which the Court considered was irrational, unlawful and unfair.

Nor did the Court consider in any detail whether the conclusions reached in the report were reasonable, although the Judge did say that he could see some considerable force in the argument put forward by Ofsted that the academy had perhaps expanded too quickly, had been too ambitious and the leadership and management systems had failed to keep up with the pace of change.

However, he also went on to say that he had significant concerns as to whether, on a fair analysis of the evidence, the academy should have been rated as “inadequate” and in need of being placed into special measures rather than the lesser category of “requires improvement”.

As a result of this case, academies may now have more fertile grounds for challenging grade 4 outcomes of “inadequate”. It is too early to tell whether there will be an increase in successful claims brought against Ofsted. However, until changes are made to step 2 of its complaints procedure or Ofsted successfully appeals the Court’s ruling (it has sought permission to appeal), it may be assumed that providers which are judged to be inadequate, may feel increasingly confident to

challenge and put pressure on Ofsted to delay publication of a report, it considers has been unduly negative.

For more information please contact:

Trish D’Souza, Senior Associate

Tel: 029 2047 7354

trishdsouza@eversheds-sutherland.com

Public Sector Apprenticeship Targets

Introduction

On election in 2015, the Conservative Government revealed ambitious targets to increase dramatically the number of apprenticeships in the UK, with the aim of supporting three million new apprenticeships for over-16 year olds by 2020. As part of its strategy the Government introduced the apprenticeship levy in April 2017. UK employers with a pay bill exceeding £3 million are subject to the levy, regardless of their engagement (or otherwise) in apprenticeship schemes or of their location within UK.

Separately to the levy, the Government has, under the Public Sector Apprenticeship Targets Regulations 2017, introduced a requirement that relevant public bodies with 250 or more employees within England have regard to achieving the target of employing an average of at least 2.3% of their staff as new apprentice starts. The regulations came into force on 31 March 2017, following a consultation exercise that ran from 25 January to 4 March 2016, and the Government’s response to the consultation which was published on 20 January 2017.

Importantly, the regulations apply to academies (subject to headcount) as well as other public bodies such as government departments, schools, local authorities, NHS organisations, the armed forces and emergency services. Statutory guidance on meeting the apprenticeship target was issued by the Department for Education on 7 April 2017.

How is headcount calculated?

In most cases it should be fairly obvious as to whether the headcount of an academy or multi-academy trust means that it is caught under the regulations. However, in borderline cases it the definition of headcount could be crucial. In any event the size of the headcount will determine the number of apprentices which the academy is tasked with employing.

The apprenticeship target covers the period 1 April 2017 to 31 March 2021 and the target will be measured as an average over the 4 year period. Whilst therefore the question of whether the academy has met the target will not be determined until the end of the four year period, the academy must, throughout the four years have regard to the target and report its progress towards meeting the target.

The number of staff working for the academy is determined by its headcount at the snapshot dates of 31 March in 2017, 2018, 2019 and 2020. Therefore, in theory, an academy may fall in and out of scope during a target period, where its headcount falls below 250 on any of the annual snapshot dates on which headcount is determined (i.e. 31 March of each year). For example, if an academy has 250 or more employees on 31 March 2018 but this falls below 250 on 31 March 2019, then it will no longer be in scope of the target in 2019/20.

The headcount is defined in the regulations as those who work for the academy within the meaning of section 230(3) of the Employments Right Act 1996 and any apprentices working for the academy, whether the apprenticeship agreement is with the academy itself or with an apprenticeship training agency. Reference to section 230(3) means that the headcount is wider than employees as it includes not just those who work for the academy under a contract of employment but also those who work under any other contract whereby they undertake to personally perform any work or services for the academy, where the academy is not the client or customer of any profession or business undertaking carried out by the individual.

The statutory guidance states that in calculating the headcount academies and other public bodies should include:

  • those staff on their payroll (including apprentices), on whose behalf it makes National Insurance Contributions, including staff on permanent and fixed-term contracts and those who work full-time and part-time;
  • other members of staff who have a fixed term contract;
  • staff who are on maternity, paternity or adoption leave;
  • staff who are on sick-leave or any other type of extended paid leave;
  • apprentices employed by the public body through an Apprenticeship Training Agency (ATA); or
  • employees on secondments or loan only if the academy is paying for the majority (more than 50%) or all of their wages.

However, the headcount should not include:

  • those employed through employment agencies;
  • those working on a zero-hour contract;
  • bank staff;
  • employees in sub-contracted organisations who are not paid directly from the payroll; or
  • those on career breaks.

What do academies have to do?

Those with 250 or more staff have a target to employ at least 2.3% of their staff as new apprentices over the period of 1 April 2017 to 31 March 2021. An apprentice is counted towards the target if they ‘ordinarily work in England’. The determining factor is where the apprentice is based which involves considering where they ordinarily start and end their day and where they live.

The academy needs to “have regard” to the target and publish prescribed information on an annual basis so that the progress made towards meeting the target can be assessed.

The statutory guidance states that the duty to have regard means that, in making workforce planning decisions, academies should actively consider apprenticeships, either for new recruits or as part of career development for existing staff, who will count towards the target, in the year in which they begin their apprenticeship.

Academies should use the Apprenticeship Activity Return (see below) to explain how they have had regard to the target and, if they have failed to meet the target, the factors which have hindered them. The explanations need to be sufficiently detailed to evidence the actions taken/mitigating factors and may include:

  • providing evidence which identifies where the academy has actively considered apprenticeships, either for new recruits or as part of career development for existing staff;
  • identifying where the academy, in attempting to have regard to the target, has encountered and attempted to overcome challenges in employing apprentices;
  • that the academy employs a higher proportion of apprentices on two or more year apprenticeship programmes and is planning a major recruitment the following year which would bring the average number of apprenticeship starts up to or beyond the target.

Reporting obligations

Academies within the scope of the target are required to provide to the Department for Education an annual return of two parts (Data Publication and Apprenticeship Activity Return) within 6 months after the end of each reporting period (i.e. by 30 September each year). The first reporting period runs from 1 April 2017 to 31 March 2018 so the first annual return needs to be provided by 30 September 2018. A template will be provided detailing the exact format in which the information should be presented. Academies will also need to publish the Data Publication in a way which is easily accessible to the public, for example on its website. They will be no requirement to publish the Apprenticeship Activity Return.

The first section of the annual return is the Data Publication. The purpose of this is to provide information on the academy’s headcount and the number of apprentices employed so that the progress the academy has made towards its target can be assessed. The following information is required:

  • the number of employees whose employment with the academy began in the reporting period in question;
  • the number of apprentices who began to work for the academy in that period and whose apprenticeship agreements also began in that period (this includes employees who were already working for the body before beginning their apprenticeship, as well as new apprentice hires). This figure also needs to be expressed as a percentage of the number of employees in the paragraph above;
  • the number of employees employed by the academy at the end of that period; and
  • the number of apprentices who work for the academy at the end of that period. Again, this figure also needs to be expressed as a percentage of the number of employees in the paragraph above.

In addition, if the reporting period is the first reporting period in the target period, the number of apprentices who worked for the academy immediately before that period will also need to be provided.

The second section of the annual return is the Apprenticeship Activity Return. The purpose of this is so that the actions taken by the academy towards meeting the target and the challenges faced in achieving the target can be assessed.

The return includes quantitative and qualitative elements.

The quantitative information is the headcount on the day before the first day of each reporting period in the target period and the number of apprentices who began to work for the academy in the reporting period in question and whose apprenticeship agreements also began in that period, expressed as a percentage of the headcount on the day before the first day of each reporting period in question. This will enable the Department for Education to assess the progress a body has made towards meeting the target.

The qualitative information to be provided by the academy is:

  • the action that it has taken to meet the apprenticeship target set for it;
  • if it has failed to meet the apprenticeship target set for it, an explanation of why the target has not been met, actions it has taken to overcome the challenges it has faced and/or any mitigating factors which demonstrate the academy’s commitment to apprenticeships;
  • the action that it proposes to take to meet its future target; and
  • if it considers that a future target is not likely to be met, an explanation of why that is so.

Where bodies are not in scope, there is no obligation for them to provide their Data Publication and Apprenticeship Activity Return for that reporting period.

What happens if the target is not met?

The statutory guidance is silent on this point but in its response to the consultation exercise the Government stated that public sector bodies should set out how they have considered their target, for example in workforce planning, recruitment, and the results of this. If this means that the target had not been met to date then the body should set out the plans to redress this. However, if a body could not show that it ‘had regard’ to the target the Government would “work with them to see what support is needed to enable them to meet the target in future years”.

For more information please contact:

David O’Hara, Principal Associate

Tel: 0161 831 8541

davido’hara@eversheds-sutherland.com

MAT expansion… Some food for thought

Introduction

We attended and delivered a workshop at the Optimus MAT Summit recently. It was an interesting and informative conference whose focus was reflective of Government’s current agenda – school improvement and MAT growth. Whilst there are many different ways to attack the issue of school improvement, MAT growth is quite simply – take on more schools and in doing so, secure economies of scale and consistency (whilst continuing, of course, to secure school improvement). Speakers at the conference advocated the principle of identifying the best teaching (and administrative) practices across the MAT’s schools and ensuring that these are applied across the MAT. In theory, this seems a sensible and straightforward approach but, in practice, we know this is not so easy to achieve.

It is essential that a MAT’s trustees and executive team fully understand the workings of any school proposing to join their MAT – educationally, financially, legally and most importantly, culturally. By identifying the strengths and weaknesses of the school, its pupils, its staff, its other stakeholders (and its finances), before the school joins the trust, the MAT is more likely to be able to develop and successfully implement its improvement plans.

Getting a “full understanding” has to be more than pouring over a few statistics and attending a couple of meetings with the Head. Too often we see MATs being pressurised to take on new schools in a fast track process without really having the time and opportunity to identify potential risk issues and, more importantly, decide how these risks can be tackled with the resources available. This can lead to difficulties in integrating the school into the MAT and in many cases leads to financial problems and quality issues later down the line as MAT’s don’t meet the outcomes they had hoped to achieve.

Key tips to ensure success

As legal advisors, we have advised numerous MATs on their expansion projects and have a lot of insight into what has gone well and what has gone very wrong. Some of our suggestions on best practice prior to taking on a new school are set out below:

  • School visits and meetings with governors and senior leaders of the school will be invaluable in assessing the culture of the school and their approach to quality and risk. In parallel with this, desktop due diligence is important as it will give a MAT time to review information and practices about the school. Ensure your information requests tease out the information you want to see and are sufficiently broad to cover the range of risk issues within a school. We have a standard legal due diligence questionnaire which can be adapted, but MATs also need to think about financial, regulatory, quality and performance information which legal due diligence won’t necessarily cover. Do not be rushed into taking a school into your MAT without satisfactory due diligence responses from the school or a thorough consideration of the issues arising from those responses by your Board.
  • Although capacity is often a real issue which means that sparing the time of your senior people to undertake the due diligence exercise is difficult, it is worth investing that time in key individuals. In the long run they will start to understand fully the exercise they are undertaking and deliver a more robust assessment of risk. Upskilling internally will, eventually, allow less reliance on external providers and result in a reduction in professional fees spend.
  • Recognise that the school joining your MAT is likely to want to undertake due diligence on you. The more open and transparent both parties are with each other, the more likely the conversion will be a success. As part of this ensure that the school joining your MAT fully understands the governance framework of your MAT and the extent to which their local governing body or advisory board is (or is not) able to make their own decisions once operating in the MAT.
  • The information you request from an existing academy that is looking to transfer into your MAT- as opposed to a maintained school that is converting - should be just as comprehensive. Often we see MATs relying on the fact that the school has undergone a recent academy conversion as evidence that it must be “sound” and relatively “risk free”. This of course is not always the case. Whilst nothing can substitute doing your own due diligence, if your MAT does have limited time and financial resources to throw at this exercise then at least ask to see copies of the due diligence reports/land reports etc. undertaken on conversion if it was a relatively recent exercise. Many professionals will allow their reports to be specifically addressed to a third party and relied upon for a limited fee.
  • The level of estates due diligence undertaken on conversion is very often limited to completing the land questionnaire. For MATs taking on new schools, bear in mind that the school’s estate is both a significant asset and a potentially significant liability. Take time to explore the condition of the site; ask to see any condition surveys and maintenance plans; understand what liabilities the MAT will have as tenant of the site; ensure that for recent works, the MAT will have appropriate rights of action for defects whether by having collateral warranties novated to the Trust or by being able to force the Local Authority to enforce warranties on the MAT’s behalf. Avoid a situation where the MAT finds out the entire heating system needs to be replaced after the event.
  • Fully understand and get comfortable with the staffing structure. If there is over staffing or there are competency issues, aim to get those resolved (and properly) before the school joins the MAT or, ensure you have determined (and can afford) the costs of doing it yourself.
  • We know that contracts can be long, wordy and very dull, but getting a handle on a school’s approach to contracting and spending, and taking time to look at the detail of the most significant supply arrangements, could ultimately save the MAT unnecessary costs and resources in the future. Being tied into onerous and costly arrangements for a long period of time may have a significant impact on your financial modelling. Standardising supply terms and costs across a MAT is an obvious way of reducing costs and is to be encouraged, but MATs need to understand how this can be achieved when a new school has existing contractual arrangements which may be costly to terminate. Conversely, generous terms should be seized upon and explored for the benefit of the wider MAT.
  • Don’t underestimate the importance of chemistry and trust. If the two parties understand each other’s strengths and weaknesses, there is transparency throughout the process, there is some commonality in the aspirations for the school on joining the MAT, and fundamentally, each party has trust in the other’s ability to bring about/maintain a successful school once in the MAT, the partnership is more likely to be a success.

None of the above guarantee that your expansion will be everything you hoped but they are the best way to a least maximise your prospects of success and avoid an outcome that only disappoints all parties.

For more information please contact:

Morag Roddick Principal Associate

Tel: 0121 232 1514

moragroddick@eversheds-sutherland.com

Helen Cairns, Principal Associate

Tel: 0161 831 8291

helencairns@eversheds-sutherland.com

New Pupil Exclusion Guidance For Academies and Schools in England

The Department for Education’s new statutory guidance on the exclusion of pupils from maintained schools, academies and pupil referral units in England came into force in September 2017. The new guidance applies to pupils excluded from 1 September 2017 and replaces the 2012 guidance in relation to such exclusions. It sets out the legal responsibilities for those who exclude students from educational settings, including head teachers, principals of academies, governing bodies and academy trusts. The guidance can be found here.

The introduction of the new guidance follows a Government consultation process in relation to the proposed revisions to the 2012 guidance. The Government explained that its proposals were designed to provide greater confidence to head teachers on their use of exclusion powers and to provide greater clarity to governing boards and independent review panels on their consideration of exclusions. The Government’s response to the consultation, which was published in July 2017, is accessible via this link.

Whilst the new guidance does not change the legal framework relating to exclusions, or alter the overarching process of decision making, it seeks to remove ambiguity and offer greater clarity from a role and process perspective including, in particular, regarding the role of the governing body to consider reinstatement and in relation to independent review panels. As a result of these changes and the increased emphasis on the importance of these aspects of the process, academies will wish to ensure that governors are aware of what is expected of them.

The new guidance includes a specific reference to the extension (or ‘conversion’) of fixed-term exclusions into a permanent exclusion, noting that this is unlawful. It also states, however, that it may, in exceptional cases, be appropriate for a further fixed-term exclusion to be issued or for a permanent exclusion to begin immediately at the end of the fixed-term period.

The new guidance also introduces two non-statutory annexes which set out further information for head teachers and parents about the processes that should be followed when determining whether an exclusion decision should be made, how that decision should be reviewed and what information should be provided.

The first non-statutory guide (Annex B) is for head teachers, academy principals and teachers in charge of pupil referral units. This contains guidance on early intervention, taking the decision, considerations in relation to the governing body and independent review panel and post-exclusion action. Amongst other things, the guidance states that there must be a behaviour policy; there should be a system in place to ensure that the head teacher is aware of a pupil showing persistent poor behaviour or not responding to low level sanctions; wherever possible to avoid the permanent exclusion of those with EHC plans, statements of SEN or looked after children; matters to consider when taking the decision whether to exclude and informing the parents of the exclusion.

The second non-statutory guide (Annex C) is for parents/carers. This contains guidance on reasons for exclusions, the exclusion process and arrangements for the child after exclusion. This includes information about the legal obligations on an academy or school when excluding a pupil, the right to question the decision and where to get independent advice.

As a result of the responses to the consultation the DfE has said that it will produce a further non-statutory guide for governors which will be issued in due course.

For more information please contact:

Trish D’Souza, Senior Associate

Tel: 029 2047 7354

trishdsouza@eversheds-sutherland.com

David Horan, Senior Associate

Tel: 0161 831 8281

davidhoran@eversheds-sutherland.com

New money laundering regulations – do they apply to academy trusts?

The Money Laundering Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (“the Regulations”) are now in force. These Regulations impose obligations on trusts and trustees as well as separate requirements on UK body corporates. We have received a number of questions as to whether the Regulations apply to academy trusts.

Firstly, dealing with the more onerous obligations applying to trusts and trustees. The Regulations introduce a number of provisions applying to the trustees of a relevant trust which include the obligation to maintain accurate and up-to-date records in writing of all the beneficial owners of the trust and to provide certain information to a relevant person where the trust is entering into a relevant transaction with that person.

However, the definition of a “relevant trust” for these purposes is a UK trust which is an express trust. Academy trusts are incorporated companies and whilst they contain the word “trust” in their name and hold assets on charitable trust, they are nevertheless companies. Therefore the trust and its trustees will not fall within the definition of a “relevant trust” for the purposes of the Regulations.

Nonetheless, the Regulations are applicable to academy trusts since, as mentioned, there are separate obligations, although less onerous, imposed on UK body corporates. This term is defined as a body corporate which is incorporated under the laws of the United Kingdom and therefore includes academy trusts.

This obligation means that when an academy trust enters into a relevant transaction with a relevant person or forms a business relationship with a relevant person, it must, on request from the relevant person, provide the relevant person with certain information.

The information which body corporates are required to provide is as follows:

  • Its name, registered number, registered office and principal place of business;
  • It’s board of directors or, if there is no board, the members of the equivalent management body;
  • Its senior persons responsible for its operations;
  • The law to which it is subject;
  • Its legal owners;
  • Its beneficial owners; and
  • Its articles of association or other governing documents.

In addition, if, during the course of a business relationship, there is a change in the identity of the individuals or information above then the academy trust must, within 14 days of becoming aware of the change, notify the relevant person of the change and the date on which it occurred.

It is worth noting, however, that this obligation is only a reactive one. In other words, the academy trust only needs to provide this information if it is asked to do so by a relevant person.

Relevant persons, for the purposes of the Regulations, are credit institutions; financial institutions; auditors, insolvency practitioners, external accountants and tax advisers; independent legal professionals; trust or company service providers; estate agents; high value dealers and casinos.