10 SCHOOL PREMISES AND CAPITAL INVESTMENT KEY POINTS School land and buildings are important public assets. Governors have a range of legal and other responsibilities, depending on the category of school, for: capital investment building projects maintaining buildings and land. VA There are particular provisions which apply to investment at voluntary aided schools as a consequence of the Education Act 1944, as subsequently amended. These are discussed separately below. LAND AND BUILDINGS 1. The land of community schools is owned by the Local Authority (LA). The land at VA foundation schools is owned by the governing body or trustees. Land at voluntary VC schools is usually owned by trustees, although the LA will often own the playing field F land. 2. School land is usually in freehold ownership, but leasehold interests are possible. 3. In the majority of schools procured through private finance initiatives (PFI), the construction of the buildings are funded by a private-sector contractor and their funders and are then operated and maintained by that private-sector contractor for an agreed period, typically 25 years. In these cases, it is usual for the contractor to be granted a licence to both construct and maintain the buildings for the duration of the contract; the buildings then revert to the LA at the end of the term. The LA, the governing body or the trustees, as the case may be, retain the freehold interest throughout. 4. These contracts will remain in force even if the LA transfers its interest in the school land to the governing body where it changes status. The LA‟s interest in such a case is the freehold and the provision for the buildings to revert at the end of the contract term. 5. Governing bodies will acquire the ownership of their school land where they change category to foundation status if there are no trustees. It is the duty of the LA to F transfer its interest in the land to the trustees of the school (or if the school has no 1 trustees, the governing body) where it changes category. Where a foundation school acquires a foundation (“a Trust”) and becomes a Trust school, the interest in the land will transfer to the trustees. Where there is disagreement on what land will transfer, the Schools Adjudicator will determine. Disposal and protection of publicly funded school land 6. From 25 May 2007 the governing body of a foundation or voluntary school no longer required the Secretary of State‟s consent to dispose of surplus non-playing field land VA or school buildings which had been acquired or enhanced in value by public funding. VC F The governing body is required to notify the LA of its proposals and seek local agreement on them. Where there is no local agreement, the matter can be referred to 1 See Schedule 6 to the School Organisation (Prescribed Alterations to Maintained Schools) Regulations 2007: SI 2007/1289 (as amended). the Schools Adjudicator to determine. (Details of the new procedure can be found in the Department for Education (DfE) published guidance available on the DfE website.) Playing field land 7. Particular protection has been given to school playing field land. Where the VA governing body of any maintained school2 or trustees of a foundation, voluntary or VC foundation special school wishes to dispose or change the use of any surplus school F playing field land which has been acquired and/or enhanced at public expense, it will require the Secretary of State‟s prior consent, under Section 77 of the School Standards and Framework Act 1998. (Further information can be found in the Department‟s published guidance on the protection of playing fields.) Key changes introduced by Section 63 (Schedule 14) of the Education Act 2011 8. Schedule 14 makes a number of changes to the arrangements governing disposal of publicly funded land, and the transfer of such land to Academies (including Free Schools). 9. Part 1 of the new Schedule 1 to the Academies Act 2010 deals with LA land and continues the long-standing arrangements requiring the consent of the Secretary of State before land may be disposed of, and that the Secretary of State may instead make a scheme to transfer the land to an Academy. The provisions of Schedule 35A to the Education Act 1996 are incorporated into the new Schedule 1 (and Schedule 35A is repealed). 10. Part 2 of the new Schedule 1 deals with land held by a governing body or trustees, and in conjunction with amendments to Schedule 22 to the SSFA, introduces new provision that the land may not be disposed of without the consent of the Secretary of State, and that he may instead direct that the land should be transferred to an Academy. Part 3 of the new Schedule 1 deals with Academy land, and again provides that publicly funded land may not be disposed of without the consent of the Secretary of State, and that he may make directions concerning the transfer of the land, including that it should be transferred to another Academy. Schedule 14 also amends Schedule 22 to the SSFA to provide that trustees are free to transfer publicly funded land to an Academy, and that governing bodies and trustees must inform the Secretary of State of the proposed disposal of publicly funded land, and may not dispose of it without his consent (under Part 2 of the new Schedule 1 to the AA he may instead direct that the land is transferred to an Academy). Section 77 of the SSFA is amended to provide that the consent of the Secretary of State is required before a local authority or school may change the use of publicly funded playing fields, even where this is connected with educational or recreational facilities. In line with other changes noted above, it is also amended to provide that where an application for disposal or change of use of playing fields is made to the Secretary of State, he may instead direct that the land should be transferred to an Academy. It is hoped that any use of these powers will be rare and that most transfers of land to Academies and Free Schools will take place by mutual agreement, as at present. 11. There are some limited circumstances in which approval has been delegated: these are specified in the Schedule to the School Playing Fields General Disposal and Change of Use Consent (No.3) 2004 Order. The governing body, or trustees disposing or changing use of the land, can award a general consent and then provide the Department with specific information. A governing body, foundation body or trustees must first notify the LA before providing the Department with the required 2 Section 77(7) has been amended by the Education and Inspections Act 2006, so as that “maintained school” now includes “maintained nursery school”. information. Discontinuance of a foundation or voluntary school 12. When a foundation or voluntary school is to be discontinued, the governing body, VA foundation body or trustees are required, under Part 2 of Schedule 22 to the School VC Standards and Framework Act 1998, to apply to the Secretary of State to exercise F his or her powers in relation to any land held by them for the purposes of the school which was acquired or enhanced at public expense. The Secretary of State may make a direction as to what should happen to such land when the school is discontinued. CAPITAL FUNDING 13. Capital is allocated to LAs and to schools. It can be used to build and improve school premises and for other capital purposes, including the provision of information and communication technologies (ICT). It is allocated to schools and LAs by formulae, and expenditure priorities are determined locally. LAs and schools can also use funding from other sources, including revenue funding and prudential borrowing, to maintain and invest in their buildings and assets. 14. The major government funding streams for LAs are for maintenance and the provision of new pupil places (Basic Need). Devolved Formula Capital is allocated via LAs for schools‟ own use. 15. Maintained schools of any category may not enter into contracts which involve borrowing without the consent of the Secretary of State for Education (the Education Act 2002). In practice, because borrowing scores directly against the Department's budget and is rarely good value for money, usually permission to borrow is not given. Where there is doubt on the nature of a contract, particularly regarding leasing plans, advice should be sought from the LA. 16. The DfE relies upon LAs to prioritise how their formulaic funding is spent. Similarly, schools prioritise how they spend their Devolved Formula Capital. The normal spending rules apply: that is, capital allocations can be used only for a capital purpose; allocations for specific projects must be spent on those projects; and there are time limits within which allocations must be spent depending on the type of funding provided. Other conditions of funding may apply. 17. More detailed guidance on each type of allocation, how it is determined and how it must be spent, is available on the DfE website. Value added tax (VAT) 18. The DfE cannot give guidance on matters relating to liability for value added tax (VAT) on investment or building projects. LAs cannot reclaim VAT on capital VA expenditure for voluntary aided schools: this is because the LA has no statutory responsibility for capital expenditure for voluntary aided schools. INVESTING IN SCHOOL BUILDINGS 19. The Building Regulations 2010, which set standards for the design and construction of buildings, apply to most buildings in England and Wales including schools and are given legal status under the Building Act 1984.