Trust schools, BSF and PFI – where's the fit?

Graham Shaw, Senior Solicitor, Schofield Sweeney Projects Team explains the meaning of trust schools and where they fit within PFI

Recently the Government's trust school vision became a reality as the first trust schools opened their doors to pupils, staff, parents and local communities. Given that this changes the landscape of local education provision, we need to understand how this will impact on those forms of education provision that feature across the sector, most notably the Government's flagship Building Schools for the Future (BSF) programme and schools PFI.

Before we can examine the fit between trust schools, BSF and schools PFI, we first need to understand what we mean by a trust school. In this regard, our starting point is the Education and Inspections Act 2006 (EIA), which, ironically, makes no use of the trust school phrase but describes the process of becoming a trust school as 'the acquisition by a foundation or a foundation special school of a foundation established otherwise than under the [School Standards and Framework Act 1998]' (which, until the EIA, was the conventional way for a foundation school to acquire a foundation). As such, a 'trust school' is a foundation school (whether primary, secondary or special) and part of the local authority family of maintained schools, receiving its own delegated budget and, like any other foundation school, employing its staff and setting its own admissions criteria.

Insofar as the foundation is concerned, this holds the school land on trust for the school and appoints foundation governors to the school governing body just as with any other foundation school. However, unlike foundations acquired by other foundation schools, it can also have other wider objects and, as such, be involved in other activities such as regeneration and wider service provision although all such activities must be charitable given that the foundation will be constituted as a company limited by guarantee (each member 'guaranteeing' its liability up to 10 pounds) and registered as a charity with the charity commission. In this regard, the members of the foundation may be drawn from the charitable, voluntary, further education, higher education and business sectors, the participating schools and the local authority (as commissioner and partner) and will normally reflect the objects and activities of the foundation.

Now we have established what is meant by a trust school, we can more sensibly look at the implications for BSF and schools PFI, and how these programmes will work together. In this regard, the key issue to consider is how the capital funding will work where a trust school is to benefit from new or refurbished premises.

Under BSF this is straightforward given that the Government already fully funds capital costs for all other foundation and voluntary-aided schools. As such, we can be confident that the Government will do likewise for trust schools.

We can also be confident the Government will fully fund capital costs under PFI, even though it only provides 90% capital funding for voluntary-aided schools, since capital costs for all other foundation schools are fully funded and it would be nonsensical to differentiate between trust and other foundation schools on this basis.

Aside from capital funding, the trust school and its foundation will both need to be named in any Official Journal of the European Union (OJEU) notice for a new BSF or PFI scheme to comply with procurement law. Once the private sector partner has been selected, the trust school and its foundation will then be required to contract with the local authority on the same basis as a voluntary-aided school.

Under PFI, this will involve the trust school entering into a Governing Body Agreement to surrender the delegated budget to the local authority to fund the PFI and provide the trust school with input into design development, phasing, decanting, inspection and third party use.

Where premises are to be refurbished or provided under BSF using a PFI contract, the trust school will again enter into a Governing Body Agreement with the local authority on a similar basis. However, if the scheme will form part of a later phase, the trust school and the foundation will also enter into a Procurement Agreement with the local authority whereby the local authority will agree to develop the design requirements for the trust school with the Local Education Partnership (LEP) in accordance with the Strategic Partnering Agreement.

In circumstances where the trust school will be built under BSF using a design and build contract but will form part of a later phase, the trust school and its foundation will again enter into a Procurement Agreement with the local authority on a similar basis. Whether or not the scheme will be a sample project or form part of a later phase, they will also enter into a Development Agreement with the local authority to govern design development and other matters between the local authority (on behalf of the trust school and foundation) and the LEP. Once the new premises are practically complete, the trust school will then assume the rights and obligations of the local authority in the design and build contract with LEP by operation of a Deed of Novation with the local authority.

In the above we have contemplated what will happen where an existing trust school is to have its premises refurbished or reprovided under a new BSF or PFI scheme but not looked at the implications for an existing BSF or PFI project where a school chooses to become a trust school under the EIA. As such, we need to consider what will happen in these circumstances to complete the landscape of future education provision.

As we now know, a trust school is a foundation school supported by a foundation acquired under the EIA, which holds the school land on trust for the school. A school, which becomes a trust school, will therefore need to change from a community or voluntary school (where it is not already a foundation school) and there will need to be a transfer of title in the school land to the new foundation. In a PFI scheme (whether pursuant to BSF or as a stand-alone project), this will be achieved by an authority change. Similarly, under a BSF design and build contract, this will be treated in the same way as an authority change.

Under BSF (using PFI or design and build) and a stand-alone PFI, the authority change will also need to capture the revised contractual arrangements, which will be required to reflect the above requirements. The extent to which these arrangements will be relevant will depend on whether we are dealing with PFI or design and build, and whether the scheme is still in procurement (and, if so, how far this has progressed).

Earlier I enquired about the fit between trust schools, BSF and PFI given that the impact on the education landscape of the trust schools programme could have major implications for Government investment in the refurbishment of the entire schools estate. The answer to this query, as demonstrated above, is that there is a clear fit between trust schools and BSF and PFI on the key issues of capital funding, procurement and contract structure. As such, the real test for the Government is not how well the pieces of the jigsaw fit together but whether the trust school programme will deliver step change in educational attainment. Given PricewaterhouseCooper's generally positive 4th annual report on academies, itself the sister scheme to the trust school programme, the future looks bright for trust schools in this regard.

From http://www.projectdatafile.co.uk/feature_story.asp?id=22