15 March 2016

Should Sixth Form Colleges become academies?

The Chancellor George Osborne has confirmed that sixth form colleges would have the opportunity to change their legal status and become academies. This was set out in his Autumn Statement as part of the on-going restructuring of post 16 education. The issue about whether sixth form colleges should apply to become academies has been under discussion since the Coalition Government first created 16-19 academies some five years ago.

Previously academies could only enrol students of compulsory school age. However, in the period since, the Department for Education (DfE) has approved the creation of some fifteen 16-19 free schools, although during the same time period no sixth form colleges have converted to academy status.

Over recent years DfE has tried to eliminate some of the inequalities between schools and colleges by:

  • introducing common 16-18 funding rates,
  • introducing a common capital funding system for schools and sixth form colleges and a common set of performance indicators.

In addition, Ofsted moved to a common inspection approach for the education of 16 to 19-year-olds in autumn last year. It already inspected 16-19 academies under the same framework as sixth form colleges.

However, in respect of the handling of VAT and regulation significant differences remain.

Academies (as schools) benefit from the following:

  • The Finance Act 2011 allows academies to recover VAT on all non-business expenditure, subject to HM Revenue and Customs being satisfied. On that basis a converting college would be entitled to a significant VAT rebate (based on the relevant VAT element in non-pay costs).
  • DfE also guarantees some of the LGPS Pension liabilities of academies and requires LGPS funds to pool academies assets/liabilities if the academies ask them to do so. Colleges do not have access to the same guarantee so conversion may well be of financial benefit. LPGS funds have classified colleges as having ‘statutory underpinning’ since incorporation and have generally allowed deficit to be recovered over 20 years or more.
  • Academies may have access to some funding initiatives which are not easily accessible to sixth form colleges.
  • Academies also currently benefit from DfE assistance with insurance costs, and the risk protection arrangement (RPA) for academy trusts is an alternative to insurance where UK government funds cover losses that arise. All academy trusts and multi-academy trusts can opt in to the RPA to start in any month up to 1 August 2016. This includes free schools, faith schools that are academies, special academies, alternative provision academies, university technical schools, studio schools and Private Finance Initiative (PFI) academy trusts. The RPA’s aim is to protect academy trusts against losses due to any unforeseen and unexpected events on the basis that the RPA will, as a minimum, cover risks normally included in a standard schools insurance policy. As well as significant cost savings for school budgets, academy trusts that opt in to the RPA will avoid the financial and time costs of procuring commercial insurance cover.

Previously, the only route for college involvement with academies was as academy sponsors, partnering with underperforming schools to bring about improvement through collaboration and shared expertise. With the ability to become an academy, one area which sixth form colleges will be looking to exploit is joining with existing academy trusts or schools to form Multi Academy Trusts. Currently many colleges have strong links with local trusts, and in some instances they have already gained support from the academy’s governors and the backing of the Education Funding Agency. However until now they haven’t been able to take the final step and become part of the academy trust.

Merging with academy trusts will help support colleges financially as it could enable the streamlining of back-office functions, such as IT services, and joint tendering for things such as energy and ground maintenance contracts which could lead to significant savings. Also, at a time when the post-16 education landscape is getting increasingly competitive, with more schools setting up their own sixth-forms there is a window of opportunity to work with schools that currently don’t offer that provision.

If a college joins a local MAT and is therefore part of the same structure as some local schools, sixth form provision may no longer be an issue. There is also no doubt that allowing colleges to convert could enable them to work in a much more independent and creative way, for example widening provision by being able to make joint staff appointments enabling more niche subjects to be offered, as teachers can be shared across schools.

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