IS IT sustainable for academies to be set up as charitable companies when, increasingly, the trustees running the schools cannot act independently owing to fear of control from government agencies such as the Education Funding Agency, or OFSTED, and of intervention from the Secretary of State?

Although the Government can establish charities, these organisations are supposed to be independent, or they should not be set up as charities. They should exist to carry out charitable purposes, not implement government policies. A body set up to carry out the policies or directions of any governmental authority might engage in much the same sort of activities as a charity might undertake, but it would be carrying out those activities in order to further the purposes of the Government, not the purposes of the charity.

THE latest challenge to the sustainability of academies as properly independent charities came just before Christmas, when the Government put down successful amendments during the report stage in the Lords on the Education and Adoption Bill, relating to existing academies.

The significant development is an amendment, whose effect is to require that funding agreements now include intervention and termination powers, including “coasting” provisions equivalent to maintained schools. The amendment seeks to do this by amending the Academies Act 2010. A new section that will have particular effect is the proposed Section 2D, which states that “An old Academy agreement is to be treated as if it included the new termination powers.”

The funding agreement is the contract between the academy company and the Secretary of State. In the past, all clauses in old funding agreements were respected. The trustees and the Secretary of State had to enter into a deed of variation to change them to move to a new agreement.

It remains to be seen how this might operate in practice, but it is unsatisfactory for charity trustees to have a contract they entered into with the Secretary of State unilaterally varied, without any room for negotiation.

Unilaterally varying contracts is a new departure for the Government, and could be open to legal challenge. Indeed, while on the one hand the funding agreement is all about the use of public money, significant private charitable money has often been used to assist academy companies in their growth and development. This is especially the case with regard to church academies.

Furthermore, it will be interesting to see if those entering into contracts with the Government in other areas feel it necessary to buttress agreements with additional provisos and penalty clauses in the face of such unilateral action.

SO, THE Government’s education policy is at something of a crossroads. Either it wants to let academies be free independent charities (the original vision), or it should come clean and say that they are schools controlled by central government. If the latter is now the preferred vision, they would do better to turn back the clock and run schools not through charitable companies, but through a legislative framework.

If the former remains the vision, for it to work properly the regulatory framework for academies needs reviewing so that the EFA is a proper independent regulator, not a combination of regulator and controller. This seems to be the fundamental choice that the Government faces.

Whatever the arrangements for governance of academies, the majority of the sites of church schools are, of course, owned by a separate charity, which has its own duties in respect of the land and the religious character of the school.

The Education and Adoption Bill is expected to receive the Royal Assent before Easter.

Howard Dellar is head of the Ecclesiastical, Education and Charities department of Lee Bolton Monier William, Solicitors. The views and opinions expressed in this article are those of the author, and do not reflect the official opinion of LBMW or its clients.