Guidance

Good practice guidance for colleges and academy trusts on novel, contentious and repercussive transactions

Published 26 March 2025

Applies to England

Introduction

The guidance is to help academy trusts and colleges to:

• better understand the concept of novel, contentious and repercussive (NCR) transactions
• ensure that proper factors are considered and approvals gained when an academy trust or college is considering entering into a financial transaction that is (or may be NCR)

It explains:

• the requirements for academy trusts and colleges, which arise from their status as central government bodies
• provides guidance about those requirements

The overall requirements for all central government bodies are set out in HM Treasury’s Managing Public Money. This guidance explains the requirements relating to NCR transactions in the context of the college and academy sectors.

It is not exhaustive or a definitive checklist. It is intended to help you to think about the concepts of NCR transactions. If you have any questions about a particular matter, contact the Department for Education (DfE) using the customer help portal.

Overall requirements on NCR transactions for academy trusts and colleges are set out in the:

• college financial handbook
• academy trust handbook

This guidance provides academy trusts and colleges with further consideration of these requirements, based on a series of fictional illustrative examples. They do not apply to any particular academy trust or college.

Each case must be carefully considered based on its own specific facts. The illustrative examples highlight the types of factors that you will need to consider, rather than to provide definitive advice on the cases you may have to consider.

Who is this publication for

This guidance is for:

• colleges
• academy trusts
• subsidiaries of colleges

Colleges include:

• further education college corporations
• sixth-form college corporations
• institutions designated as being in the further education (FE) sector under section 28 of the Further and Higher Education Act 1992 (as amended), usually referred to as designated institutions

It should be read by:

• college and academy trust principals, accounting officers, chief executives, and finance directors
• college governors
• academy trustees
• college and academy trust governance professionals (sometimes referred to as ’clerks’ or ‘directors of governance’)

College and academy trust auditors may find this guidance helpful in planning and performing their work, particularly in connection with their regularity engagement.

Background to NCR transactions

As academy trusts and colleges are classified to the central government sector by the Office for National Statistics, they are required to follow the overall financial control framework for all central government bodies, Managing Public Money (MPM).

DfE has produced an academy trust handbook and a college financial handbook to help academy trusts and colleges apply MPM’s principles in their respective contexts. MPM and the handbooks provide a framework of financial oversight, whereby most financial decision-making is delegated to operational leadership in academy trusts and colleges. However, there are certain transactions where decision-making is never delegated, and this includes transactions that are NCR.

This restriction does not mean that all such transactions are forbidden, simply that the academy trust or college does not have the authority to enter into them without prior approval from the DfE.

Therefore:

• all such transactions must always be referred to DfE for approval
• the request for approval, and approval obtained, must be made before the transaction occurs

We may need to refer requests to HM Treasury for approval, so academy trust and colleges should allow sufficient time for proposals to be considered.

What are NCR transactions

In general:

• novel transactions are those of which the academy trust or college has no experience or are outside its normal course of business
• contentious transactions are those that might cause debate or criticism by Parliament, the public or the media
• repercussive transactions are those likely to set a precedent or cause pressure for other academy trusts, colleges, or  the wider public sector to take a similar approach and hence have wider financial implications

The concepts will sometimes overlap. For example, a proposition that is novel can also be contentious. Only one of these 3 criteria need to be met for DfE approval to be required. The concepts will be explored in greater detail in the illustrative examples.

All NCR transactions require approval by DfE, regardless of value. Academy trusts and colleges should assess these matters objectively. If a transaction could reasonably be considered to be NCR by someone not involved in the academy trust or college, or even with the sector as a whole, then it must be treated as such.

In most cases academy trusts and colleges should be able to determine themselves whether a proposed transaction is NCR. If a academy trust or college remains in doubt, or if it is reasonable to conclude that the proposed transaction is (or could be) NCR, then the case must be referred to DfE for a determination. If any instances arise where the college or academy and DfE disagree, then DfE’s determination will be final. The process for academy trusts and colleges to follow is therefore 2-fold:

• firstly, determine whether a proposed transaction is in fact NCR, with DfE making that determination if there is any doubt
• secondly, the determination that a proposed transaction is in fact NCR having been made, the seeking of approval from DfE for that transaction

This means that, in any instances where the accounting officer of a academy trust or college, having given the matter full consideration, acting in all good faith and having consulted their board, makes a determination that a proposed transaction could not be deemed NCR, then it can proceed on its own authority (subject to other relevant considerations  such as compliance with other academy trust handbook or college financial handbook requirements). In such instances, the accounting officer should fully document their rationale so that it could be justified if challenged at some point.

Submitting cases for approval

You should submit any applications for approval using the:

• Department for Education approvals form for colleges
• customer help portal for academies

Frame your requests for approval as a business case, setting out:

• why you think that the proposal may be NCR
• what your proposal is in detail
• the business case for your proposal with particular reference to your value for money assessment of the proposal (supported with numbers) and alternative options you have considered.
• if there are precedents elsewhere in central government to support your business case
• the pros and cons
• risks and opportunities

If further information is required, we will contact you. Providing the fullest possible information will reduce the risk of delay.

Where our approval is sought, the proposed transaction must not be entered into until you receive documented approval from DfE.

We will consider each application for approval on its own merits, balancing the potential upside of any proposal, especially the interests of learners and the financial sustainability of the academy trust or college, against the downside factors such as:

• the perception of misuse of public funds
• high financial risk
• impropriety
• poor value for money
• the reputational risk to the sector as a whole
• the overall impact on public finances if a precedent is established

As such, academy trusts and colleges seeking approval will need to consider not just the impact on their own academy trust or college but also the wider implications for the public sector as a whole.

It is not a practical proposition to define those matters where approval will always be given and those where approval would always not be given, given there may be circumstances that could not have been reasonably anticipated. This means that whether an application for approval can proceed must be determined by principles as opposed to a rigid checklist. The application of the concepts can change over time as the education landscape and society in general develop. What was novel in the past may not be considered such in the future.

These considerations apply to all types of transaction, not just those involving expenditure. The generation of income through a new type of operation could be considered novel, or the disposal of a certain type of building could be considered contentious.

Novel transactions

Novel transactions are those where the academy trust or college has no experience or are outside its normal course of business.

Novel in this context, should not be considered to mean novel for the public sector as a whole, but for the academy trust or college in question. What is common practice in one part of government may be novel in another.

The fact that another academy trust or college is seen to have undertaken a transaction which seems novel must not be taken as proof that such a transaction would be allowed without approval.

Consideration of some of the factors in relation to potentially novel transactions is set out in the illustrative examples for Ashchester College and Beechwood College in illustrative examples: novel transactions.

Contentious transactions

Contentious transactions are those that might cause debate or criticism of the academy trust or college:

• in Parliament
• by the public or the media

You should therefore consider:

• the probable views of Parliament
• if the action conflicts with overall government policy

In these instances, the academy trust or college will need to take seriously not just the substance of what is being proposed but also how it is perceived. This is not to say that the prospect of any criticism at all need stop any project that otherwise makes good business sense. For instance, some negative coverage in local media may be acceptable, if there is a demonstrable benefit to learners.

However, there should be careful consideration as to whether a potential project, that is likely to result in widespread or national criticism, is NCR.

Academy trust and college leaders should consider their likely levels of discomfort, if a critical story in relation to the matter under consideration were to appear in national media. If you consider that, even in the light of such negative coverage, the project should still proceed, you can apply to DfE for approval.

Consideration of some of the factors in relation to potentially contentious transactions is set out in the illustrative examples for Chestnut Institute and The Dogwood Institute in illustrative examples: contentious transactions.

Repercussive transactions

Repercussive transactions are those which may:

• have wider financial implications for other academy trusts, colleges, or the public sector more widely
• appear to create a precedent

Consideration of some of the factors in relation to potentially repercussive transactions is set out in the illustrative  examples for Elmthorpe Academy and Fircastle Academy in the illustrative examples: repercussive transactions.

Compliance and audit considerations

Occasionally you may come to the view that you have, perhaps inadvertently, entered into an NCR transaction without having first obtained approval from DfE. This could come to light during the year-end audit process when the academy trust or college auditor, in their role of reporting accountant, is performing their review of regularity.

Should this happen, you should approach DfE to seek retrospective approval. Approval should not be assumed.

We will assess the:

• reasons why approval was not sought in advance
• merits of the case

The refusal of an application will result in the transaction being classed as a regularity exception that will need to be:

• reported in the accounting officer’s statement of regularity, propriety and compliance within the annual report and accounts
• considered by DfE in line with the relevant intervention framework

Your auditors, when undertaking their regularity review in the role of reporting accountant, may seek confirmation that approval has been requested if their work reveals that a transaction has occurred, which may be considered to be NCR. If prior approval was not obtained, they may conclude that formal reporting of a regularity exception is required, even if retrospective approval was obtained.

Illustrative examples: novel transactions

Example 1: Ashchester College

Scenario

The board of Ashchester College is seeking to support its hard-to-reach learners while enhancing its commitment to environmental sustainability. It plans to purchase 100 rechargeable electric bikes at a cost of £50,000 and to rent them out to learners at a nominal cost.

Analysis

The college has no previous experience of running such a scheme and there is limited evidence of such a scheme being run elsewhere in the college sector or in the wider public sector. The proposed transaction is therefore likely to be considered novel. The college will need to apply to DfE for approval.

DfE is likely to consider whether such a scheme is good use of public money compared to the alternatives and whether the college has thoroughly risk-assessed the proposition in terms of what liabilities the college may be incurring and how sustainable the scheme is in terms of issues such as:

• losses
• repairs
• maintenance
• insurance
• theft
• any administrative burden
• any other relevant factors

Since Ashchester is the first college in England to consider such a scheme, DfE would also need to consider whether allowing the scheme to proceed could be presented as setting a precedent. So, the proposal may also be repercussive.

Consequently, the college must refer the case to DfE for consideration with a full business case setting out the:

• pros and cons
• option appraisal undertaken
• risk assessment
• value for money analysis
• any other relevant factors

Example 2: Beechwood College

Scenario

Beechwood College has a football field that is used by learners and is also rented out to local sports clubs on weekends. Market research indicates that there would be further demand for such facilities that could be available on evenings if the facility was floodlit and could be extended to other customer groups (for example netball, basketball, cricket nets) if an all-weather surface could be installed.

The academy trust is in good financial health. It has the £100,000 funds required and its business case indicates that the proposal shows:

• good value for money
• that the investment will produce an acceptable rate of return
• that relevant advice has been taken in respect of any tax implications
• planning consent has been obtained from the local authority

Analysis

Although the academy trust has no direct experience of running a floodlit and all-weather sports facility on a commercial basis, it does have experience of other commercial ventures. What is being proposed is really no more than an extension or upgrade to a facility that the academy trust is already running successfully.

The academy trust has established that similar semi-commercial sports and fitness schemes are common across the sector.

As such the proposal would not be considered novel.

The scheme may also be considered contentious as it involves the provision of a community amenity, but the attitude of local residents to potential nuisance and light pollution ought to be considered and weighed against the benefits to the academy trust and the wider community. However, the planning application took these factors into account, so the proposal would not be considered contentious.

Consequently, the academy would not need to seek approval from DfE.

Illustrative examples: contentious transactions

Example 3: Chestnut Institute

Scenario

Chestnut Institute runs a level 3 course in events management. It intends to allow learners to showcase their talents by running a weekend music and drama festival in college grounds.

The college has run similar events in the past, but indoors and on a smaller scale.

The aim of the project is to see if the festival can cover its own costs. The project plan indicates that a small financial surplus should be generated, but the college is underwriting the festival by contracting for security, lighting, stewarding and publicity at a total cost of £15,000. It has also obtained a licence from the local authority for the event to proceed.

However, the proposal has been opposed by some local residents who object to the potential noise. There have been 2 letters in the Chestnut Chronicle representing the concerns of local residents that the event could give rise to security issues.

Analysis

The project is to further the learning aims of the learners in question and so is appropriate use of the college’s funds. The project is also expected to at least break even, so there should be no net loss to the public purse.

The college has risk assessed the proposal and has mitigations in place for all significant risks. Media criticism is limited and unlikely to escalate to national headlines.

The substance of the criticism is security and excessive noise. However, the college has assessed these risks. Noise abatement has been a condition of local authority licencing for the festival and the event will be ticketed and stewarded.

Given that these licencing requirements have been addressed, the case for the proposal being classed as contentious seems minimal.

Example 4: The Dogwood Institute

Scenario

The Dogwood Institute has an international reputation for its courses in game design and sees an opportunity to expand its expertise overseas. It plans for its principal, vice-principal, head of design and chair of governors to attend the World Gaming Symposium Trade Event in Singapore to make contacts and generally network.

The party of 4 will fly business class and will stay for 3 nights in a 5-star hotel, with all incidental expenses (for example meals, drinks and, taxis) being reimbursed on production of receipts. The college has set aside £20,000 to cover the costs. The college has reserves of £3m.

However, staff at the college are discussing the trip and there has been some critical comment on social media, highlighting that the money being spent on the trip could be used to give college staff a pay rise.

In the previous year all colleges in the sector received a request under the Freedom of Information Act to detail all expenditure on foreign travel, which in turn resulted in a critical report in the sector press. It may reasonably be anticipated that further stories will appear in time.

Analysis

The business objectives are vague and not susceptible to objective analysis of their success.

The party of 4 seems too large and, while a long-haul flight may be reasonably arduous, the purchase of business class tickets and the stay at a 5-star hotel does need to be justified.

In short, the trip could very easily be seen as an unnecessary extravagance and poor use of public funds.

The currently low-level social media criticism might blow up into something more serious, though this is not necessarily the deciding factor as dissenting commentary on social media is not uncommon. However, it seems highly likely that the story will at some point be picked up by the sector press.

The project looks extravagant by most objective measures. As such, the proposal is highly likely to be viewed as contentious. The college should also have considered whether a business trip of this nature and cost could be seen by others in the sector as seeming to set some kind of precedent for its acceptability. So, as well as being contentious, the transaction could be considered to be repercussive.

If the college wishes to proceed then it will need to demonstrate that the:

• business case for the proposed trip is sound
• college can demonstrate that any suggestion of extravagance is unjustified

As things stand, the prospects of approval being obtained seem unlikely.

Illustrative examples: repercussive transactions

Example 5: Elmthorpe Academy

Scenario

Elmthorpe Academy has been in a long running dispute with its teaching staff. It has involved industrial action that has disrupted learning.

The academy trust has sought to mitigate the impact through the use of agency staff, but this has been expensive, and the feedback from leaners is that many of them are not making the progress in their studies that is required.

The academy trust’s reputation is suffering, and indications are that recruitment and retention of learners are declining.

The academy trust and the trade union negotiators have agreed to mediation and a settlement has almost been reached. The sticking point is regarding the latest one-day strike which took place immediately before the latest round of mediation.  No deduction from pay has yet been made.

As a gesture of goodwill, the academy trust management team is considering waiving this deduction, getting staff back to work before the open day for the next academic year.

The total cost of such a waiver would be £10,000.

Analysis

It is a well-established precedent that staff will not be paid for any days where they have absented themselves from work because of industrial action.

Academy trusts are run on public funding which, ultimately, is voted for by Parliament and Parliament’s intent can be reasonably inferred as being that the funding provided for academy trusts is for the teaching of learners, not for staff to have paid time off so that learning is disrupted.

Clearly the academy trust is acting in the interest of its own learners as the gesture it is making is a well-intentioned attempt to end the dispute. However, that is too narrow a perspective.

The impact could be felt throughout the academy sector if other academy trusts felt pressurised to take the same line. As such, the payment of strike pay by the academy trust would be repercussive and could not take place on the academy trust’s own authority.

For these reasons it seems highly unlikely that DfE could approve the waiver. The academy trust should look for other ways to end the dispute.

Example 6: Fircastle College

Scenario

Fircastle College was established in the 1950s and was gifted a statue by a leading British sculptor, now located outside its main entrance. The statue is 3 metres high and is an abstract representation of a local fisherman.

It has been valued at £10 million. The £10 million is needed for building repairs. The college intends to sell the statue to fund those repairs.

Analysis

Colleges may be expected to divest themselves of redundant assets from time-to-time to:

• reinvest in the estate
• better serve the needs of current learners

As such, selling a valuable asset cannot be considered as either setting a precedent or putting pressure on other colleges to do the same.

In this case the asset in question requires special consideration. It could seem unlikely that there would be other colleges in a similar position. Even if there were, the question of whether or not they wished to sell a piece of valuable artwork would likely be determined by their own circumstances.

On the other hand, the proposed sale may be considered contentious as the loss of the statue could be presented as a loss of prestige for the community of Fircastle. This should be taken into account.

Given that there remains an element of doubt, the college should approach DfE for Education for further advice.