Agenda item

The Director of Children and Young People (CYP) Services had submitted a series of report updates on the Government’s reform agenda for education, schools and wider children’s services to meetings of the Children and Young People Policy Development and Scrutiny (PDS) Committee (20.07.10, 07.09.10, 30.11.10, 24.01.11 and 22.02.11). The reports provided an overview of the policy direction and key areas for reform with particular focus on the academies agenda.

Members received a report that provided an update on the Academy Programme, developments within Bromley and the potential strategic implications for the Council.

The Chairman asked why so many schools were applying for academy status in Bromley. The Director explained that there were five main drivers:

1.  the overall good performance of schools which placed Bromley in the top quartile nationally;

2.  ranking by Ofsted as Outstanding or Good with Outstanding Features gave schools the automatic right of conversion from the Secretary of State for Education; 

3.  the Borough already had the highest percentage of Grant Maintained (GM) schools and it was a relatively short step to gaining academy status from GM;

4.  a high number of head teachers in Bromley were accredited as National Leaders of Education;

5.  the autonomy and perceived increased funding offered by academy status were seen by many schools as very attractive. 

The Director confirmed that the momentum of academy conversions during 2010/11 had placed the Borough in a  unique position in the UK with a very high number of schools pursuing both individual academy conversion and ‘clusters’ of schools forming academy trusts.

The Borough’s Chief Executive advised the Sub-Committee that so far 16 out of 17 secondary schools and 7 primary schools had applied for academy status.

The Director of CYP replied to a question about financial liability by advising that the Council retained statutory responsibility for a number of functions including place planning, admissions, children out of school, Special Educational Needs (statemented children) and Pupil Referral and Behaviour Support Services.  The Council would retain these functions irrespective of schools’ status.

Members were advised that a Commercial Transfer Agreement (CTA) must be completed to include the transfer of liabilities relating to staff, pensions, land and building assets and, in the case of some schools, dual use facilities and Special Educational Needs (SEN) units. The purpose of the CTA would be to protect the Council against any risks or financial liabilities and secure the Council’s future interests in the case of dual use and SEN provision.

It was noted that in the case of the five schools that had already received formal approval to convert to academy status, the CTA’s had yet to be signed off to the satisfaction of the Council.  Officers were asked if it was appropriate for the Children and Young People PDS Committee to consider the risk analysis relating to academy status. The Director confirmed that regular reports on the academy programme had been submitted to the CYP PDS Committee and the Portfolio Holder for CYP. In addition, the CTA’s relating to conversions were the subject of decision by the Executive, given the Council-wide implications.

A Member commented that the numbers of secondary and primary schools converting individually were only the tip of the iceberg as there were 38 primary schools which may convert as part of academy clusters. The Councillor asked for assurance that a termination audit would be carried out if a CTA was not in place. The Head of Finance (CYP) stated that Internal Audit had a probity of closure process and the Council became a joint signatory on the final account.  There were three main areas of risk – dual use facilities, pension liabilities and schools which had outstanding loans.

The Chief Executive confirmed that the Council had not signed any CTA’s as yet.  However the government continued to press ahead with conversions. Bromley was in the vanguard of academy policy development and was being tested on a daily basis.

The Director of CYP advised that given the Council’s unique position it was necessary to press the Department for Education (DfE) officials on a range of issues arising from the volume of academy conversions. Following further questions about protecting the Council’s interests, the Director explained that the Council had substantive experience in securing tight contract arrangements for schools transferring to former Grant Maintained status in the 1990’s whereby dual use facilities at secondary schools needed to be ‘protected’ for community/public access to the facilities.

Following a question regarding the requirement for converting schools to continue to pay towards the pension deficit, the Head of Finance (CYP) stated that schools would be required to continue to contribute and would take the deficit with them.

A Councillor highlighted a concern about capital programme schemes being planned or committed at schools such as Langley Park School for Boys being a potential risk to the Council and the question was asked as to how the Council could have right of audit over capital programmes including any unfinished projects on conversion of such schools to academy status. The Head of Finance (CYP) advised that all but three of the capital schemes in secondary schools had been completed. Of these three, one had been shelved and two were incomplete but both schools were contractually committed. The Chief Executive said that it would cost the Council more to withdraw from a project such as the rebuild programme at Langley School for Boys than to complete it.

A Member commented that under the former system for ‘academy conversion’ a failing school could wipe clean its deficit and the liability for it would fall upon the local authority. Five primary schools had been identified as being on the performance ground floor over a three year period.  Would there be an issue that sponsors might not want to take on such a deficit? Would Audit look at schools like this?

The Director clarified that originally advice from the DfE had indicated that all academy conversions would be under the new Academy Act. The Secretary of State had the right to determine conversions for any school in Ofsted category of ‘failing’ or ‘notice to improve’. In the case of any school converting using that route, the liabilities for any redundancies arising from the conversion under a sponsor partner or budget deficit would fall to the local authority. The ‘schools below floor target’ represented a new category of performance that DfE were considering, with an expectation that local authorities consider academy conversion for such schools. 

The Portfolio Holder for Children and Young People advised Members that he had sought a meeting with Ministers to highlight the range of strategic implications and risks arising for Bromley from the fast pace of academy conversion. A meeting with Lord Hill – Parliamentary under Secretary for Schools was scheduled in early April. 

It was suggested by a Member that officers look at the 2010 Academy Act as it should list the statutes that were made extant or were repealed by the Act. The Sub-Committee was advised that the Head of Legal, Democratic and Customer Services was looking into this matter.

Another question was raised on how business continuity would be achieved given the range of services which have been provided by the Council to schools.  Given the financial top-slicing of central services by academy conversions, this could limit the Council’s ability to move into a competitive position.  The Chief Executive responded that, from a corporate perspective, this was a significant issue and the Council had not as yet mapped out the full consequences. A shake up of those services previously provided to schools by the Council would be unavoidable. However, given that the budget process for 2011/12 was now complete, the Council had the year to work issues through and would look at the scope to establish social enterprise models.

The Director confirmed that local authority funding would be affected in two ways. Bromley Council’s Revenue Support Grant (RSG) had been top-sliced by the Government by £800k for 2011/12 based on a national formula of anticipated academy conversions. An indicative figure of £640k had been set for 2012/13.

The methodology for recoupment from the Dedicated Schools Grant (DSG) would be through an in-year adjustment. This would have a direct and immediate impact on central CYP services funded through the DSG including Behaviour Support, Respite and Early Intervention services. The pace of academy conversions and in-year recoupment from DSG funded services could prevent the Council from delivering statutory support functions to those schools remaining with the Local Authority because of an insufficient critical mass of services remaining. It could also limit the scope for sold services being offered to academies in the future.

RESOLVED:

(a)  that the Government’s Academy programme, developments with Bromley and local strategic implications for policy and planning be noted; and

(b)  that the specific financial implications, as outlined in section 8 of the report, be noted.