For schools that form part of a closed PFI contract, becoming an academy trust requires additional documentation to be put in place, and amendments made to the department’s standard form funding agreement and articles of association to take account of the underlying PFI structure and the terms of the PFI project agreement.
The school agreement is entered into between the local authority (LA) and academy trust, and sets out the obligations of the 2 parties for the continued fulfilment of the PFI project agreement by the LA, including an agreement in relation to the academy trust’s contribution to the unitary charge. The school agreement will replace any existing governing body agreement. The LA leads on production of this document.
The principal agreement is entered into by the LA, academy trust and the Secretary of State, and is produced by the department’s legal advisors when the school agreement is in an advanced form. One of the main functions of the principal agreement is to provide a level of underwriting protection to the LA in relation to certain liabilities that may be owed by the academy trust to the LA in connection with the PFI project agreement.
The PFI amendments to the funding agreement insert clauses to allow the Secretary of State to recoup money from an academy trust that has been paid to the LA on the academy trust’s behalf. The amendments to the articles of association and funding agreement give the Secretary of State additional intervention powers, should the academy trust act in a way that threatens the continuance and steady operation of the PFI project and potential termination of the PFI project agreement. The academy trust leads on producing these documents.