In what could be her last public appearance as education secretary, Nicky Morgan told an audience of county councillors that the government would not allow town halls to set up academy chains.
The role of local authorities in schools is in sharp focus after the government spelt out plans to force every school in the country to become an academy by 2022.
Ministers have partially rowed back on the plans, insisting instead that they will only force schools to become academies in councils that are no longer "viable" or are "underperforming”.
But despite the changes, councillors are still concerned that local authorities’ role in schools will be dramatically reduced.
Responding to a question as to whether councils could establish multi-academy trusts (MATs), at a committee hearing of the County Councils Network in Westminster today, Ms Morgan said: “That is something that we are not intending to do.
“At the moment, local authorities will not be able to set up MATs. They will only be able to have an interest [as trustees or as members on the board of a MAT] up to 19.9 per cent. That at the moment is the rule, and that is how we are expecting to stay."
Her comments come after the Education Policy Institute, a thinktank chaired by the former Liberal Democrat schools minister David Laws, issued a report calling for local authorities to be granted the power to establish academy trusts.
Ms Morgan said it was possible for local authorities to have a role by setting up trading companies that could sell services to academy chains in their borough and beyond.
Pressure from councils
The Conservative-dominated County Councils Network, along with a number of Tory MPs, opposed the plan to convert every school into an academy back in April, which led to the government's partial U-turn.
The education secretary also launched a new review looking into the role of local authorities in schools and social services.
The Local Education Excellence Everywhere review, which was outlined in the White Paper, will be chaired by Alan Wood, former president of the Association of Directors of Children's Services.
The incoming prime minister, Theresa May, has yet to announce her Cabinet. International development secretary Justine Greening has been strongly linked with the top job at the Department for Education, although Nicky Morgan could stay in post.