Legal

Maximising the use of your school's assets

Your facilities offer potentially good lettings income, but beware, writes Chloe Brunton

This article, which is aimed at governing bodies of maintained schools and academies, considers how to make best use of your school site to:
• further your duty to promote community cohesion; and
• tap into additional revenue streams from commercial users: without diverting attention from your school's primary purpose of educating the young people you are responsible for and ensuring that the position of the school is protected.

Such activities could include:
• local community group meetings; and
• commercial lettings of conference and sports facilities.

There are a number of traps and pitfalls to be avoided, which are considered in further detail below.

Community use and commercial lettings
The Education and Inspections Act 2006 placed a duty on the governing bodies of maintained schools to promote community cohesion. This duty also applies to academies by virtue of their funding agreements. Ofsted will assess what the school is doing to meet this duty when carrying out inspections. It is recommended that any school carries out an audit of the activities it currently carries out and considers what else it could be doing to meet the duty.

It might be that the governing body decides to make its premises available at a non-commercial rate for activities that promote community cohesion, such as letting the school facilities to community groups. The rates charged should at least cover costs.

A further reason to make your site available to third parties is, of course, to generate additional revenue. This could be by making the premises available for community use or to other users to which you make the premises available on commercial terms.

Powers of the governing body
The governors' first responsibility and duty is to run the school for the benefit of its pupils. However, governors of maintained schools also have powers to:
• provide, or enter into contracts to provide, any facilities or services to further any charitable purposes for the benefit of pupils at the school, or their families, or people who live and work in the local community; and
• to let out the facilities to other users or for other purposes provided that a charge is made and the income is used for the benefit of the school.

The powers of the governors of an academy will be those set out in its memorandum and articles of association. These will broadly be to:
• provide facilities to advance for the public benefit education in the UK, in particular by establishing and carrying on schools (the objects of the academy trust); and
• let out the facilities to other users or for other purposes provided that this is on commercial terms and the income is applied towards the objects of the academy trust.

Control and use of the site
Legislation gives control of the occupation and use of the premises of any maintained school (during and outside school hours) to the governing body. However, this is subject to:
• transfer of control agreements which the governing body has entered into;
• PFI/BSF contracts in place which may allow the contractor use of the site for third-party income generation;
• directions from the local authority (if the school is a community or voluntary controlled school); and/or
• trust deeds which provide for a third party to be entitled to the control the occupation and use of the school premises.

In exercising such control, the governing body will need to have regard to the desirability of the site being made available for community use.

The control and use of the site of an academy is typically set out under the terms of a long-term lease from the local authority and any PFI/BSF arrangements which might be in place under the terms of a school agreement or a development agreement. Again, this is likely to allow the contractor use of the site for third-party income generation at specified times.

Allowing third parties onto the premises
Where arrangements are made for anyone other than staff or pupils to use the school facilities or otherwise have access to the site (irrespective of whether they are paying or not), the governing body has a responsibility to ensure that the use or access is subject to suitable terms and conditions in order to protect the school's position. This might be by way of a transfer of control agreement (TOCA) (in the case of a maintained school) or otherwise by written agreement.

A TOCA is an agreement entered into by a maintained school to transfer control of the premises (or part of the premises) to a third party in order to promote community use. If the agreement relates to use of the premises during school hours, then the local authority's consent will be required in the case of a community and a voluntary school, and the secretary of state for a foundation school.

For maintained schools that make their premises available to third parties otherwise than under a TOCA and for academies, it is recommended that a written agreement is put in place. Whether this is under the terms of a licence or a lease (and the consents required to enter into such arrangements) will depend on the type of school.

Issues to cover in your written arrangements
To protect the school, you should include:
• the times during which the premises are available;
• the areas (including thoroughfares) that are available;
• the fee (or a nominal fee), including service charges that will be charged;
• a requirement that the user does not cause damage to the premises, that the premises are handed back in a cleared and good condition and that any cost of making good any damage is paid for;
• a requirement that the user does not interfere with the running of the school;
• termination;
• health and safety; and
• child protection.

The governing body will also need to ensure that they have adequate insurance arrangements in place.

Child protection
It is vital that the school takes all necessary steps to comply with the DCSF guidance Safeguarding Children and Safer Recruitment. The school should have a written child protection policy in place and should reconsider it, particularly if the school is considering a change in the use of the premises by third parties.

PFI/Building Schools for the Future
Schools that have PFI or BSF arrangements in place will need to ensure that any proposed use of the premises by third parties does not interfere with these arrangements or that consent to proposals is received from the relevant party. For example, the relevant project agreement will often provide that the contractor has the use of the school site outside of the school day and in holidays for a specified number of days to generate third-party income for themselves.

Non-charitable trading
A further aspect that academies (as registered charities) and voluntary and foundation schools (as exempt charities) will need to be aware of is the charity law restrictions on non-charitable trading. Non-charitable trading is trading outside of the objects of your charity (which for maintained schools will be any charitable purposes for the benefit of pupils at the school, or their families, or people who live and work in the local community, and for academies will be those set out in its memorandum).

The maximum level of non-charitable trading that a charity can carry out within the charity (without exposing the governors to breaches of trust and potential personal liabilities) depends on its income. For a school, the maximum level of annual non-charitable trading income is likely to be £50,000. If a charity is carrying out non-charitable trading with an annual income over this level (or thinks it might do) then you should seek advice about the possibility of establishing a separate trading company through which to carry out this trading.

Chloe Brunton is a senior staff solicitor for Veale Wasbrough Lawyers. Chloe can be contacted on cbrunton@vwl.co.uk or on 0117 314 5301.

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