Memorandum is still hard to understand

by
29 September 2017

The latest agreement over church schools is good in parts, says Howard Dellar

 

ISTOCK

THE new version of a Mem­orandum of Under­standing between the Charity Commis­sion for England and Wales and the Depart­ment for Education (DfE) is, in the main, good news for church schools, includ­ing acad­emies.

All church schools are charities, as are all church-school site trusts. Many clergy, churchwardens, and other members of con­gregations act as trustees, directors, and gov­ernors of these. So I very much welcome the new material provided by the Charity Com­mission, and the clarifications that it contains.

The section of the Memorandum devoted to the part played by the Commission has been much ex­­panded, and emphasises:

• the fundamentally charitable nature of all educational charities; that they must act “independently of private, governmental or political interests”;

• the independence of the Com­mission itself from the Govern­ment and its ministers; the accountability of all educational charities to the Commission;

• and the limited nature of the position of the Secretary of State as Principal Regulator of those educational charities that are tech­nically “exempt charities”.

 

ALL of this is good news for site trustees, school gov­ernors, and academy dir­ectors. It emphasises their auto­nomy, and their duty to act inde­pendently for the good of their charity and its beneficiaries: the schools and their pupils.

The section produced by the Charity Com­mission now strongly highlights the inde­pendence of the charity and, therefore, the duty of the directors/trustees to act in the Trust’s interests, even if they con­flict with the views and require­ments of the Secretary of State.

A practical example of this in recent times has been the clear advice from the Charity Commis­sion that site trustees should not voluntarily accept publicly funded land status for their property as a condition of funding for capital expenditure. In consequence, this requirement was withdrawn by the Govern­ment.

The Memoran­dum states that charities must be “in­­dependent from the state”; it cannot, there­fore, be a proper use of private charitable funds to support the ordinary revenue re­­quirements of an acad­emy, or to wholly fund capital works that would normal­ly be subject to state grant.

The DfE part of the Memoran­dum has also been substantially revised — along with much ma­­terial in the appendices — but it remains disappointing, overall. I have long felt that there was a confusion within the minds of ministers and some officials about the dis­tinction between the powers that the Secret­ary of State has as Principal Regulator of edu­cational “exempt charities”, her powers under various other statutory provisions in the Edu­cation Acts, and the rights that she has in consequence of the con­tracts she enters into with academy trust companies (the Funding Agreements).

These are, in my view, very much separate, but I see their confusion continuing in the DfE section of this Memorandum.

 

THE Memorandum is also dis­appointing be­­cause it fails to address three main issues about academies which urgently need clarifi­ca­tion. First, how do charity law and edu­cational law (and, indeed, the DfE’s policies) fit to­­gether? For example, the require­ments in the Academies Financial Handbook in respect of dealing with “connected parties” (for example, paying trustees or their companies for professional services or supplies that they might provide) go beyond those required by the Charities Act.

Why is there this difference, and what justification does the Secretary of State have for refusing to acad­emy directors what the Charities Act gives to all other charity trustees? Also, some sections of the current academy-model articles are contrary to Char­ity Commission guidance, but have not yet been corrected.

In matters such as this, the Charity Com­mission and the DfE must agree on what good govern­ance looks like so that they do not add to the burdens of the school governor or the director of the acad­emy trust company.

Second, is it still felt appropriate and effect­ive for academy trust com­panies to be com­panies under the Companies Act con­tracted to the Secretary of State and at the same time exempt charities regulated by the Secretary of State? There are, I believe, ten­sions and poten­tially serious conflicts of interest here that need addressing.

And, third, what is the funda­mental posi­tion of academies (and other educational bodies) that are subject to both the Charities Act and to detailed contracts with the Secret­ary of State, and therefore to statutory and extra-statutory re­­quirements that enable the Secretary of State to have significant controls over what are supposed to be inde­pendent charities?

Are education exempt charities funded by the state actually able to behave in an inde­pendent way in the interests of their charity, as the Commission’s part of the Memor­andum requires. Or is the whole system fundamentally flawed?

 

Howard Dellar is a partner in, and head of, the Education, Ecclesiastical and Charities Depart­ment at Lee Bolton Monier-Williams. He writes in a personal capacity.

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