School governors and trustees must declare any business or financial interests that mean they could benefit personally from the decisions they make at the school.
Examples would be owning a business that sells equipment to schools, working for a cleaning agency which provides school cleaners or having a close relative who is a supply teacher.
In both maintained schools and academies the governors or trustees must leave the meeting room when there is a discussion relating to their business interest and are not allowed to vote on the subject.
This page offers a guide to what needs to be declared and a template for recording the interests of all governors. A separate article looks at what schools and academies must publish online.
Business Interests In Maintained Schools
For maintained schools the business interests register is a legal requirement from the School and Early Years Finance (England) Regulations 2013.
These regulations set out what local authorities must have in their school funding schemes. This includes the “keeping of a register of any business interests of the governors and the headteacher”. Statutory guidance states that this register should be published online.
Maintained school governors are also bound by the Roles, Procedures and Allowances (England) 2013 regulations which force governors to withdraw from the meeting if they have a “pecuniary interest”. Pecuniary means “relating to money”.
The principle is that governors must only cast a vote when they are impartial and therefore definitely voting in the best interests of the school.
“Where in relation to any matter a relevant person has a pecuniary interest, that person, if present at a meeting of the school at which the matter is the subject of consideration, must disclose his or her interest, withdraw from the meeting and not vote on the matter in question.”
Roles, Procedures and Allowances (England) Regulations 2013
What is the definition of a business interest in a maintained school?
There is no definition of “business interests” in the 2013 Finance regulations or of “pecuniary interests” in the 2013 Roles, Procedures and Allowances regulations.
There is also no statutory guidance available for either of these laws. DfE departmental advice for the Roles, Procedures and Allowances law simply states that “governors must declare pecuniary interests” without offering any guidance as to what must be declared.
Statutory Guidance to the Constitution (England) Regulations 2012 refers to both business and pecuniary interests, as well as “material interests” that arise from close relationships. It states that the following three items must be recorded in the register of interests.
- Relevant business and pecuniary interests.
- Governance roles in other educational institutions.
- Any material interests arising from relationships between governors or relationships between governors and members of the school staff.
“A governing body should publish on its website relevant business and pecuniary interests (as recorded in the register of interests) including governance roles in other educational institutions [and] any material interests arising from relationships between governors or relationships between governors and school staff (including spouses, partners and close relatives).
“Governing bodies should also publish this information for associate members.”
Constitution of Governing Bodies of Maintained Schools: Statutory Guidance
Note the word “relevant” in the above quote. If a governor has an interest that is never going to cause a conflict, for example if they run a business abroad, they do not need to declare it.
If governors are unsure as to what to declare, a good rule of thumb is the local newspaper test – how would it look if the interest was undeclared and then reported in your local paper? Would it damage the reputation of the school?
How would it look if your local newspaper found out that a governor had voted in favour of giving a £5,000 contract to their brother? Or encouraged the school to buy 100 computers from their husband’s firm? Even in a situation where there has been no impropriety it would still reflect badly on the school if a governor has not revealed their interests.
Some common sense is needed when deciding what to declare. For example, if you own 50 shares in Apple and the school is buying an iMac this is highly unlikely to make you biased. On the other hand, if you are the director of a company that sells iMacs that could well be a conflict of interest.
Here is how my local authority describe a relevant business interest.
“Someone can be said to have a relevant business interest if they are an employee, the owner, a partner or a major shareholder of a business or have appointments of influence within a business or organisation (including the local authority) which might potentially be involved in providing goods or services to the school.”
Southampton City Council
My LA also list some job titles that may need to be declared because they could potentially deal with schools. These include accountant, building worker, cleaner, decorator, ground maintenance worker, insurance broker, solicitor, printer and supplier of books, stationery or electronics.
If you are still unsure about what constitutes a conflict of interest then you should ask your fellow governors for their verdict. The law says that if there is a dispute about whether a governor can vote or not due to a possible conflict of interest then the other governors present at the meeting must decide this among themselves.
“Where there is any dispute as to whether this regulation or Schedule 1 requires a relevant person to withdraw from a meeting of the school and not vote, that question must be determined by the other governors present at the meeting.”
Roles, Procedures and Allowances (England) Regulations 2013
Do associate members need to declare business interests?
Yes. Statutory guidance to the constitution regulations says governors must declare relevant business and pecuniary interests and publish them online. It goes on to say “Governing bodies should also publish this information for associate members.”
Business Interests For Staff Governors
As all governors who are also school employees naturally have a financial “interest” in the school via their salary there is a paragraph in the law for maintained schools that says they only have to withdraw from meetings if their interest is greater than the interest of other staff members.
So if governors were discussing a proposal that would impact the pay packet of every staff member the governor would not have to leave the room. If the proposal would only impact the pay of the staff governor themselves, they would have to leave for that part of the meeting.
“A relevant person will not be treated as having a pecuniary interest in any matter provided that the value of the relevant person’s pecuniary interest is no greater than that of the pecuniary interest commonly held by those paid to work at the school.”
Roles, Procedures and Allowances (England) Regulations 2013
Business Interests In Academies
For academies the requirement to declare business interests comes from the Academy Trust Handbook which all academies must comply with as a condition of their funding agreement.
“The academy trust’s register of interests must capture relevant business and pecuniary interests of members, trustees, local governors and senior employees, including:
– directorships, partnerships and employments with businesses
– trusteeships and governorships at other educational institutions and charities
– for each interest: the name and nature of the business, the nature of the interest and the date the interest began.
“The register must identify relevant material interests from close family relationships between the academy trust’s members, trustees or local governors. It must also identify relevant material interests arising from close family relationships between those individuals and employees.
“Trusts should consider whether other interests should be registered, and if in doubt should do so. Boards of trustees must keep their register of interests up-to-date at all times.”
Academy Trust Handbook (2021)
The Handbook states that for every member, trustee, local governor and accounting officer, details must be published online of “relevant business and pecuniary interests including governance roles in other educational institutions”.
“The trust must also publish on its website up-to-date details of its governance arrangements in a readily accessible format, including:
– for each member serving at any point over the past 12 months, their full names, date of appointment, date they stepped down (where applicable), and relevant business and pecuniary interests including governance roles in other educational institutions
– for each trustee and local governor serving at any point over the past 12 months, their full names, date of appointment, term of office, date they stepped down (where applicable), who appointed them, and relevant business and pecuniary interests including governance roles in other educational institutions. If the accounting officer is not a trustee their business and pecuniary interests must still be published.”
Academy Trust Handbook (2021)
In academies there is a minor difference between what must be shown online and what must be included in the register of interests itself. The Handbook states that the register must include the interests of “members, trustees, local governors and senior employees”. However, the accounting officer is the only employee who must have their interests online.
“Trusts must publish on their websites relevant business and pecuniary interests of members, trustees, local governors and accounting officers. Trusts have discretion over the publication of interests of other individuals named on the register.”
Academy Trust Handbook (2021)
Also in the Academy Trust Handbook is a succinct description of the principle being observed here: “Academy trusts must ensure that no member, trustee, local governor, employee or related individual or organisation uses their connection to the trust for personal gain.”
An academy’s articles of association will explain what to do when someone has a conflict of interest. The model articles of association (June 2021) say that trustees must leave the meeting while the subject is discussed.
“Any trustee who has or can have any direct or indirect duty or personal interest (including but not limited to any personal financial interest) which conflicts or may conflict with their duties as a trustee shall disclose that fact to the trustees as soon as they become aware of it.
“A trustee must be absent from any discussions of the trustees in which it is possible that a conflict will arise between their duty to act solely in the interests of the academy trust and any duty or personal interest (including but not limited to any personal financial interest).”
Model Articles of Association (June 2021)
What if a governor is unsure whether to declare a specific interest?
They should declare it anyway. It is always safer to err on the side of caution and the Academy Trust Handbook says that “if in doubt” the interest should be declared. This is sensible advice for maintained schools too.
A governor is never going to get into hot water for being too transparent about their interests, but they could cause real problems for the governing body if they have an interest that has not been declared.
Can the school buy from a company if a governor has declared an interest?
Yes. In both maintained schools and academies the governor with an interest must leave the room and not vote on the decision, but the remaining governors can still decide to buy goods or services from a company listed on the register of interests if they believe it would be best for the school.
The clerk should record the interest clearly in the minutes and state that the governor withdrew from the room during the discussion.
This is the advice given by my local authority for governing bodies which are considering doing business with a company included on the register of interests.
“It is possible for schools to let contracts with or make purchases from businesses listed on the register of interests provided they represent the best possible value for money for the school.
“However, in these circumstances, the governing body should ensure that:
– the usual rules should apply to the letting of high value contracts, eg: at least three quotes should be obtained for purchases over £10,000
– governors or the headteacher should not be involved in opening or evaluation of tenders or letting of contracts for which a business in which they have an interest has tendered
– if a purchase is made from a business included on the register the usual safeguards should be obtained to ensure that the goods and services will be of the required quality, eg: guarantees, insurance, maintenance agreements.”
Southampton City Council Guidance on Declarations of Interest
In academies, buying goods or services from someone close to the governor is known as a “related-party transaction” and has got a number of academies into serious hot water in the past because members or directors/trustees were paying out public money to companies connected to close relatives.
Because of this, any related-party transaction must now be reported to the Education and Skills Funding Agency (ESFA) before it is agreed with the supplier. Any transactions over £20,000 must also be approved in advance by the ESFA; detailed advice is available here.
Business Interests Declaration Template
An editable business interests template is available on my templates and letters page. This form is sometimes called the ROBI, for Register of Business Interests. Governors with no business interests should write “None” or “Nil” in the first column and date and sign their entry.
There should also be an item at the start of every meeting agenda where governors are asked to declare any interests in the subjects under discussion that day. They will be asked to leave the room when that item is reached.
What happens if a governor does not complete the declaration?
All schools must keep a register of interests and publish it online. If a governor refuses to complete the register there is a danger that they may have a conflict of interest that will compromise the integrity of the board.
The board should make this clear to the governor. If they still refuse to complete the declaration the board should consider suspending or removing the governor. Failing to declare interests would also be a breach of your code of conduct (if you have one).