May 2011


  • Global positioning
    PISA data shows English and Welsh schools’ performance falling behind that of other countries. Or does it? And is importing other nations’ education policies the way to move up the tables? It’s not that simple, says Ian Bauckham. More
  • Business studies
    Government figures show a quarter of secondary schools have converted to academy status. But is the transition merely a change in funding distribution, or a radical overhaul of how schools operate? With a ten-week timetable, t two business managers from a mixed comprehensive in Cumbria found out. More
  • Speaking their language
    A six-year ASCL project has found that learning a group of languages at primary school can have a positive influence on children’s attitudes to languages and their choices at GCSE, though there were more surprising results. More
  • Positive gestures
    The education system is still highly compartmentalised, says Les Walton. It is time for heads, principals and others to dismantle the boundaries between their sectors and learn from each other. More
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Business studies

Government figures show a quarter of secondary schools have converted to academy status. But is the transition merely a change in funding distribution, or a radical overhaul of how schools operate? With a ten-week timetable, t two business managers from a mixed comprehensive in Cumbria found out.

The Queen Elizabeth School in Cumbria, like many others, watched the announcement of the academy programme in early summer 2010 with a combination of curiosity and caution.

As an ‘outstanding’ school, we expressed an interest and began to gather information. Like many in the public sector, our natural allegiances were to the system – a position seemingly in contrast with the independent nature of academy schools. We therefore proceeded with caution and the business management team was tasked, initially, to gather a greater understanding of the emergent situation.

We were adamant that educational and pastoral needs would continue to take priority over financial imperatives. In practice this required balance throughout the process – a continual judgment on the state of financial projections, services available from our local authority and, critically, our ability to preserve the morale, function and engagement of our most significant resource, our staff.

The school previously had funding for three specialisms. With September’s news that this income would cease, our position reached a head. With no knowledge, then, of the intended introduction of the Guaranteed Unit of Funding or a zero inflationary settlement, we were left with a budget shortfall equivalent to eight teaching staff, part-way through an academic year for which the budget had already been set.

Thanks to preparatory work undertaken, we were positioned to respond quickly. Solid financial projections were in place; via involvement with our local school’s forum, we had a good understanding of our local authority’s likely state; and most importantly, we felt we understood how academy status might impact our organisation.

At an extraordinary meeting of our governing body on 21 September, the motion was approved to apply for academy status, with a further vote before signing the funding agreement. The intention was to be in the best possible position to act on the outcome of the October spending review.

Steering group

Concurrent with our application, a steering group was convened comprising the head, three governors and the school’s two business managers. This group co-ordinated the process, considering strategies to preserve and enhance the school’s operations against a backdrop of stagnating budget settlements and inflationary cost pressures.

The head acted as a figurehead, dealing primarily with the public elements such as consultation; the business management team dealt with the operational considerations; and the governors gave an objective perspective throughout.

Speed was of the essence, with each month as an academy providing a financial enhancement equivalent to 1.5 teaching staff. With this in mind, as a team of two, for ten long weeks the academisation process became our world.

After conversion, the local authorityfunded foundation school would cease to exist and an academy trust (a company limited by guarantee), funded directly by the Young People’s Learning Agency, would take its place.

All rights, liabilities and entitlements required transfer to this new business. In facilitating this process the first step was to engage solicitors, for a fixed fee of £10,500. The conversion process included the transfer of land, staff and business concerns.

The land buildings were already owned by the governors, so were conveyed by the usual legal process (supported by a direction issued by the Secretary of State) direct from the governors to the new trust.

The transfer of staff from the old business to the new fell under the Transfer of Undertakings (TUPE) regulations, which ensure accrued entitlements and conditions at the point of transfer are honoured. With no intention to vary these, the transfer required only that we inform staff of the change, rather than formally consult.

A commercial transfer document was drawn up, to reassign all the assets and liabilities to the new entity. W We contacted our endless database of suppliers and arranged the novation of ongoing contracts.

As the old business was wound up, the new company was established and we registered with Companies House, ensuring our Articles of Association reflected our existing governance structures within the new academy trust. These variations all had to be agreed by the DfE policy team, which was at times a lengthy process.

The next step was the negotiation of the Funding Agreement, which laid out the terms under which the academy would be funded, the scope of operations, and the obligations the academy must meet. Its annexes include the academy’s admissions and SEN policies, which were agreed by the DfE policy team.

Race to the finish

The process culminated on 22 November. Directors of the academy trust had taken the final vote to sign the Funding Agreement with the Secretary of State a week earlier. With ten days to go before our planned opening date, with all preparations made, our Academy Order had not been issued.

Aware that close of business that day would be our last opportunity to make the December converters list, the two of us travelled to Sanctuary Buildings, pre-prepared Funding Agreement in hand.

The new governance structure had elevated the previous business manager position to governor/director level, by inclusion of the ex-officio post of business and finance director in the articles of association. This directorship is paired with a separate school business manager position that includes company secretary responsibility.

This structure gave the business management team authority to sign off the Funding Agreement on behalf of the academy trust; without this facility there would have been delay, at considerable cost.

After a day spent camped outside Lord Hill’s office, interspersed with myriad calls to his staff, at around 16.45, the agreement was signed. On 1 December we opened our doors as a converter academy.

The conversion will be an 18-month process, inextricably linked to preparation for cuts to sixth form funding, the requirement for further efficiencies and restructuring, implementation of financial systems, restructuring of our local authority and the emergence of teaching schools, to list but a few areas of development

Limited company

For the majority of stakeholders, principally teachers and students, nothing has changed. You have to look behind office doors to appreciate real change, and it is significant. Operating as a limited company requires continued development of the business function.

We must maximise the efficiency and sophistication of all our processes, to meet the immediate needs of our independent status and its associated risks, and to ensure our sustainability through financially precarious times ahead.

We are reviewing our policies to ensure we appropriately manage risk, as we venture into the business world with our new found independence.

We are required to produce fully audited company accounts as well as government returns at two different year-end points, requiring an upgrade of accounting software. An independent auditor has been appointed, along with a responsible officer, who will ensure our financial systems reflect our revised scheme of delegation. The company secretary must ensure annual returns are submitted to Companies House.

The prospect of a deficit budget is a thing of the past. Under company law we are prohibited from trading insolvently. We must ensure our bottom line remains in the black, whilst building suitable reserves to protect us from the unexpected.

Opportunities ahead

The truly different and exciting aspect of academy status is the flexibility with which these obstacles can now be tackled. We have the freedom to approach every challenge with a fresh perspective, working with colleagues and professional services to produce tailored solutions. The door is open for further collaboration and innovation within the system, at local, regional and national levels.

Conversion to academy status is about far more than procurement and comprehensive accounting systems; it is a fundamental shift in the leadership model of the school. The business arm of the education sector, once an optional extra, is at the fore, working at the heart of the leadership team to produce the most effective scholarship and care.

  • Steven Holmes is the Business and Finance Director and Angela Johnson is the Business Manager, at Queen Elizabeth School in Kirkby Lonsdale.

Regional briefings

ASCL is holding three regional academy briefings for business managers in the summer term. These will provide up-to-date information on academy funding streams and processes, give an overview of the changes to financial management and accounting policies after conversion, and provide guidance on the financial reporting requirements after conversion. For details see

Business studies