Academy transfers Q&A

Whilst all academies will be familiar with the academy conversion process, many may not be as familiar with the process of an ‘academy transfer’. We are, however, anticipating that, with the move to full academisation in the education sector by 2030, an increasing number of academies will be subject to an academy transfer.

We have set out below answers to some of the most frequently asked questions in respect of academy transfers.

What is an ‘academy transfer’?

When an academy moves from its current academy trust to another academy trust, it is referred to as an ‘academy transfer’. If the current trust is a single academy trust, it will be dissolved on completion of the transfer as it will in essence be an ‘empty shell’. An academy transfer is only possible if the Regional Directors (RD) provides its agreement.

Why would an academy transfer to a different trust?

Sometimes, the ‘outgoing trust’ (the trust from which the academy is moving) will initiate the transfer, particularly where it is a single-academy trust. This is because there are benefits in the way of economies of scale, or school-to-school support, which the academy can enjoy if it joins a strong multi-academy trust. If the academy is currently part of a multi-academy trust, it may choose to transfer to a different multi-academy trust due to its geographic location.

Alternative, an academy transfer might be necessary as a result of intervention. Where an academy is rated ‘Inadequate’ by Ofsted, or where there are financial, governance or safeguarding failures, the RD and the Education and Skills Funding Agency may use their powers to terminate the existing funding agreement and transfer the academy into a new trust in an effort to improve the academy.

What are the first steps?

Before the academy transfer can go ahead, the RD would need to approve the transfer, having discussed the proposal at the regional advisory board. Once the RD has provided its approval to the academy transfer, both the outgoing trust and the new trust to which the academy will transfer will receive trust agreements, setting out the steps required from them through the academy transfer process, from the appointed Department for Education project lead. Once the trust agreements have been signed and returned to the project lead, the trusts will be expected to collaborate to manage the commercial and legal aspects of the academy transfer. In most cases it is hoped that the academy transfer process will take a maximum of six months.

What will the RD be looking for in the new trust?

When considering whether to approve an academy transfer, RD approval will ordinarily be straight-forward, particularly if the transfer is being initiated by the outgoing trust.

However, where the transfer is proposed as a result of intervention, the RD can be expected to consider several factors in respect of the new trust. For example, the RD will expect the new trust to have a strong track record of school improvement, governance, and finance. It will also be important for the new trust to be able to identify how it would support the academy which is to be transferred and that it has the capacity to do so successfully.

Who needs to carry out due diligence?

If the RD approves the academy transfer, the new trust will be expected to carry out due diligence on the academy to understand its position.

The new trust’s due diligence should include an assessment of the academy’s education provision, pupil population, finances, staffing, governance, and the property. The Department for Education will expect the new trust to confirm that it has carried out due diligence and is aware of any ongoing issues affecting the academy. Once due diligence has been carried out, the trusts can move on to agree and complete the various documents to complete the academy transfer. When the academy transfer is necessary because of intervention, the due diligence process should take approximately one month.

Will a new funding agreement be necessary?

In short, yes. The Department for Education will expect the outgoing trust to enter into a deed of novation and variation to transfer from the existing funding agreement to the new model version and transfer the funding agreement from the outgoing trust to the new trust.

The new trust may also be asked to adopt the most up to date master funding agreement if its current funding agreement is earlier than the latest model version.

How do contracts and staff transfer to the new trust?

One of the key stages of the academy transfer is the transfer of the academy’s assets and liabilities. To ensure that all the assets and liabilities, including contracts and staff, are transferred to the new trust appropriately, the outgoing trust and the new trust will also need to enter into a commercial transfer agreement. All academies will be familiar with the commercial transfer agreement from the exercise of converting to academy status.

Whilst the current model commercial transfer agreement is drafted for academy conversion purposes, the Department for Education is in the process of preparing a new version specifically for use in academy transfers.

How do we deal with the land?

In addition to transferring the assets and liabilities from the outgoing trust to the new trust, the outgoing trust will require consent from the Secretary of State to dispose of the land or lease to allow it to move to the new trust. An academy land transfer will therefore be necessary.

If you require legal support with this process, please do not hesitate to contact our education team.