Academy conversion cost | How much does it cost to convert to an academy?

How much does it cost to convert to an academy?

One of the key considerations for a school, when it is considering whether to become an academy, is how much the conversion process will cost. The short answer is that it will vary from school to school and area to area – however, the following will hopefully provide some useful information.

The Department for Education's conversion grant

The Department for Education's £25,000 conversion grant is intended to be a contribution towards the costs associated with converting to an academy. Historically, this grant has been more than enough to cover the costs of the conversion process. However, with more and more local authorities, foundations and dioceses charging for their part in the process, cost pressures are increasing.

The £25,000 grant is a flat rate and is not influenced by the size of the school or the complexity of the conversion. Every school that receives an Academy Order will receive the grant and it is the issuing of the Academy Order that triggers the payment.

How far will the grant go towards meeting the costs of conversion?

This will depend on the specifics of the school. There are, however, a number of factors that may influence how far the grant stretches:

  1. Pre-approval costs. Schools should wait for approval in principle for the conversion before incurring any costs. Any costs unnecessarily incurred at this stage will need to be met by the school, as the start-up grant can only be released after approval. If you are appointing advisors at this point (and we would recommend you do), make sure they agree not to charge unless and until you receive the conversion grant.
  2. Legal costs. There will be costs incurred in dealing with the legal side of the conversion process and will vary depending on who your legal advisors are, how complex the conversion is and how involved the school wishes the legal advisors to be in the process. The typical conversion requires production of governing documents, transfers of the school from the control of the local authority, investigation into and transfer of land to the academy trust and employment law issues. Behind these basics are also a plethora of strategic considerations and issues that may not become clear until the process is underway.
  3. The local authority. A significant and increasing number of local authorities are now requiring that converting schools contribute towards their costs. The amount they charge can vary from a few thousand pounds to in excess of £7,000.
  4. Type of school. Faith schools have their own rules for academy conversion and specific advice should be sought from the relevant religious authority relating to costs. Similarly, private finance initiative (PFI) school conversions will have significant costs implications, owing to the large (and potentially complicated) PFI funding contracts involved. There is an additional grant of up £12,000 available for PFI schools but even this is sometimes not enough to cover the additional costs.
  5. Other costs. Another significant cost that will need to be paid by converting schools is an evaluation of the pension liabilities for staff at the school who are members of the Local Government Pension Scheme. This can often be several thousand pounds. Some schools use consultants as project managers to help with the conversion process. Whether or not a school needs this type of service will depend on a variety of factors.

Michelmores offers fixed fees for our academy conversion services. We understand that schools want certainty when setting their conversion budgets, and we are confident that we can deal with complex conversions for a set price. In most cases, we would expect our legal fees to be around a third of your total conversion spend but this depends on your school's particular need on conversion.

The only times we would discuss increasing fee quotes are in the very rare cases where unexpected, very difficult and resource-dependent legal issues arise, and we will never incur additional costs without your agreement.

For an informal discussion on what your school's options are and the likely costs involved with converting to academy status, please contact our education law specialist Antony Power on 01392 688688 or antony.power@michelmores.com.