An education specialist from law firm Womble Bond Dickinson (WBD), Kevin Robertson, partner and leader of the firm’s Education Group, has outlined new government guidance around local authorities setting up multi-academy trusts.

“One of the more eye-catching elements of the recent white paper was DfE opening up the possibility of local authorities being allowed to set up their own multi-academy trusts – something a number of local authorities have looked at doing in recent years but were precluded from doing so. The sector has been awaiting the detail of how these "LA MATs" might work, and some of that is now provided in the latest publication from DfE issued last week.

“The guidance is aimed at allowing local authorities to better understand the process they will need to follow and crucially sets a deadline of 31 July 2022 for registrations of interest by those areas wishing to take part in what DfE are referring to as an initial ‘test-and learn exercise’.

“The key points if this new process are as follows:

  • Registration closes 31 July.
  • DfE expect the initial group to be a small number, but they will look for geographic diversity and a mix of school types.
  • The aim of the test and learn exercise is to review and refine DfE's approach before any further decision on proceeding with the roll out of local authority established MATs is made – so note that at the end of this exercise DfE may decide to stick with the current policy position of not permitting local authorities to set up their own MATs.
  • The proposal process and contents of the applications is the same as for any party looking to set up a MAT including setting out governance, leadership and financial plans.
  • A key issue to date has been the impact of the maximum 19.9% of Members/Directors being local authority associated persons (so called LAAPs) as set out in the Local Government and Housing Act 1989. The proposal is to remove this restriction for Members of the MAT (a reminder that academy trusts are companies limited by guarantee and so have "Members" rather than shareholders). But note the restriction will not be lifted in relation to the trust board of directors (referred to as "trustees) for LA MATs. DfE remind local authorities that if a company does have more than 19.9% LAAPs then they do still need to consider the implications of this in terms of that company then being potentially a local authority influenced or controlled company.
  • Regarding conflicts of interest, local authorities will need to consider the issues of so-called "related party transactions" i.e., those contracts and similar with MAT Members and/or directors or their connected entities - so any services the local authority intends to provide to the MAT are potentially caught by this regulation (which is set out in the Academy Trust Handbook which binds all academy trusts).
  • The £25k conversion grant is still available for schools looking to join an LA MAT.
  • The approvals process will be overseen by the newly named Regional School Directors (the new name from September 2022 for what were previously known as Regional School Commissioners).

“Whilst the guidance takes the next step towards the possibility of LA MATs being created, eagle-eyed readers will note that it is clear that DfE's policy remains that they prefer new converting schools to join existing MATs rather than form new entities. So, by the end of the initial test-and-learn exercise, the creation of the first LA MAT may be no closer than it was before the white paper was published.”