Government to change law on local authority academy expenses

The change follows market concerns that the current wording of the Academies Act prevents authorities from continuing payments under a historical project finance initiative (PFI) arrangement where a school rebuilt using this funding method has converted to academy status.

The proposed new law explicitly states that a local authority will not be breaking the law where it provides "financial or other assistance in respect of the academy... by making payments in respect of some (but not all) of the expenses of maintaining the academy".

It adds that a local authority may also provide premises, goods or services to an academy or make premises, goods or services available to be used for the purposes of the academy.

Academies are self-governing schools operating with funding from central Government rather than from local authorities.

Under the Academies Act, which makes it possible for publicly-funded schools to become academies, a local authority must "cease to maintain" the school on the date on which the school opens as an academy.

The Department for Education (DfE) said that a local authority contributing to the expenses of academies, whether in money or in kind, did not amount to "maintaining" a school.

"The current law does not prohibit local authorities from contributing to the expenses of academies... but the Government wishes to put the matter beyond doubt," it said in a statement.

Earlier this month the DfE published a legal opinion which stated that a local authority "would not be acting unlawfully" by continuing to make payments towards a school building under a pre-existing PFI arrangement.

In September a Sheffield secondary school rebuilt ten years ago under a PFI scheme delayed its transition to academy status as a result of concern over whether the payments would be considered "maintenance" under the Act.