Notable updates include those on executive pay and cyber
ransomware demands.
The Department for Education has published the 2025 edition of
the Academy Trust Handbook (the 2025 Handbook), which came into
effect on 1 September 2025. While many of the core expectations
remain unchanged, there are several notable updates that academy
trust leaders should be aware of.
You can access the updated handbook here: Academy trust handbook – GOV.UK.
New and updated guidance
The 2025 Handbook includes new references and links to external
guidance in a number of areas. These include:
Sustainability and climate action planning – including
developing and reporting on trust-level strategies;
Estates management – covering planning, maintenance and
capital projects;
Procurement – with references to the Find a Tender
service and the Buying for Schools initiative; and
Financial support and oversight – now provided directly
by the Department for Education (DfE), following the closure of the
Education and Skills Funding Agency (ESFA).
While not all of this guidance is mandatory, its inclusion
reflects growing expectations in these areas and trust leaders
should ensure they are familiar with the updated materials
available via the links in the 2025 Handbook.
Accounting Officer responsibilities
The Handbook provides further clarification of the role and
responsibilities of the Accounting Officer.
This includes clearer definitions of the principles of
regularity, propriety, feasibility and value for money, mirroring
definitions in HM Treasury’s Managing Public Money
guidance. The duty of the Accounting Officer to raise concerns
where appropriate regarding these principles is also
reiterated.
These updates highlight that the financial compliance principles
governing academy trusts are the same as those in the public sector
more broadly.
Executive pay
There are two key additions in relation to executive pay. First,
there is a clear statement that the DfE may now challenge decisions
on executive pay, and not solely in the context of poor financial
management by the trust. Secondly, trusts must have an agreed and
documented pay policy covering executive pay.
As before, trust boards must ensure that their pay decisions are
transparent, proportionate and justifiable. The 2025 Handbook adds
that such decisions must also be “defensible”.
Audit thresholds
The updated handbook reiterates the mandatory requirements for
academy trusts with an annual revenue income over £50 million
to establish an audit and risk committee and to deliver internal
scrutiny using either an in-house internal auditor or a bought-in
internal audit service. The 2025 Handbook clarifies that this
income threshold is based on the trust’s last audited
accounts.
Repercussive transactions
The 2025 Handbook restates that novel, contentious or
repercussive transactions must always be referred to the DfE for
approval before the transaction is agreed and before it takes
place.
A fuller definition is now provided of transactions that are
considered “repercussive”. These are now defined as
transactions “likely to set a precedent and cause pressure on
other trusts or the broader public sector to take a similar
approach and hence have wider financial implications, including
where a trust’s proposal could cause additional costs to arise
for other parts of government”.
This might apply to transactions which will have a short or
medium term positive financial impact on the academy trust
involved, but will have longer term consequences for the public
purse if other trusts follow suit (for example in relation to pay
and pensions).
Cybersecurity and ransomware
A significant change in the 2025 Handbook is the instruction
that ransomware demands must not be paid under any circumstances.
Previous guidance permitted exceptions with ESFA approval, but this
has now been removed. Trusts should ensure that internal ransomware
response protocols are aligned with this position.
Notices to Improve
The criteria for issuing a Notice to Improve on governance
grounds have been narrowed. The Notice of Improve criterion where
trustees lack “the skills, knowledge and experience to
exercise effective oversight of the trust’s operations and
performance, including educational performance” has been
removed. While this reduces the scope for intervention on
governance capability grounds, boards are still expected to ensure
that oversight remains robust and effective.
Recovery of funds
The DfE’s powers to recover funds where there is evidence of
irregularity or fraud are now explicitly stated in the 2025
Handbook. Trusts should continue to maintain strong financial
controls and appropriate audit trails.
Next steps
While the number of changes introduced in the 2025 Handbook is
relatively modest, academy trust leaders are encouraged to:
Review and update relevant policies, particularly those
relating to executive pay and cyber security;
Ensure trustees and senior leaders are familiar with the 2025
Handbook; and
Revisit risk registers and governance frameworks in light of
the updated expectations.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.