Why we need to prise open the outdated academies handbook and let the light in

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Academy schools currently find themselves on a burning platform. Custodians of a school estate that needs to be managed in the face of rising energy costs, depreciating, poorly maintained and heat inefficient buildings, as well as challenging net zero carbon targets – they assume responsibility for an estate without the financial wherewithal to maintain it.

Despite accounting for over 50% of the Governments estate portfolio, schools are allocated a mere 15% of the total fund pot to maintain it.

The DfE itself admits that the current annual capital investment of £2 billion falls woefully short of the £15 billion required to transform our aged school estate into a fit for purpose, learning environment.

The need to produce Streamlined Energy Carbon Reports (SECR) and evidence carbon savings via annual account returns, places further burden on Trusts. Again, the school estate has seen less Public Sector Decarbonisation Scheme funding compared to other government estates.

If we accept that government funding is finite and that we have a huge financial gap to fill, to maintain and future our estate, what about relaxing the rules contained within the academies handbook for the purposes of borrowing?

Other public sector asset managers are not subject to the same financial restrictions as academies and can access and assess a variety of financial products to assist with the upkeep of their estates.

The academies handbook, the bible by which all trusts must adhere, currently prohibits borrowing.

Typically, auditors and solicitors have also interpreted operating leases and power purchase agreements as loans, despite them differing to an asset or finance lease. The absence of any clear direction on the use of these vehicles, naturally deters both auditors and trusts from pursuing any option that is not officially sanctioned by the DfE.

Thats not to say that some pioneering trusts havent tried to seek clarity and approval from the DfE for alternative funding routes. Oasis Community Learning Trust with its 52 schools for example, sought to gain approval for the phased delivery of major solar PV scheme to 14 of its school buildings, to be funded under a Power Purchase Agreement (PPA).In the absence of any clear approval from the DfE, the trust decided to proceed on the provision that the DfE wouldnt formally object.

The permitted use of similar funding mechanisms could really help other academies address their own energy efficiency challenges.

Many schools who do not have the CAPEX for self-funding LED lighting schemes, would make use of an operating lease to pay for such installations and likewise PPAs to support solar pv ones and benefit from both cost and carbon savings.


So, what could the DfE do to help?

There are a number of quick ways that the DfE could act to remove the handcuffs from Academies, such as:

Remove the ambiguity in relation to permitted funding routes and terms and conditions via clear guidance set out in the Academies handbook.
A further helpful step would be to produce compliant application templates for funders to adhere to.
Apply the Public Works Loan Board (PLWB) principle and agree capped and fixed interest rates for trusts to borrow at.
The DfE could devise a credit rating system for trusts, (similar to agencies such as Moodys or S&P apply to banks) and extend the current assessment criteria for awarding Condition Improvement Fund (CIF) loans, based on % turn over, reserves and in year surplus.

Without a change, the school estate will continue to fall into an ever-deeper state of disrepair and further remain off course for meeting future carbon reduction targets.

Tim Warneford, March 2023


Read Tim Warneford’s article in School’s Week: Net Zero: Dfe must remove the handcuffs on estates spend here.