The Education Bill received the Royal Assent on 15 November. We described in our previous briefing on the Bill issued in April the main provisions of the Bill. To see the previous briefing click here. This briefing describes the main changes to the Bill affecting English colleges which were made at a late stage of the Parliamentary process. While they were foreshadowed in the BIS consultation paper on FE reform, New Challenges, New Choices, and reflect the coalition government’s policy of removing unnecessary barriers to innovation and diversity of provision to increase learner choice, the immediate pressure for change came from the need to reduce top-down governmental controls over FE. This was to enable the government to respond to the ONS reclassification of colleges as part of the public sector and the resulting decision of the National Audit Office to qualify the SFA’s accounts. The government felt all the more able to do this because of the issue by AoC of the English Colleges’ Foundation Code of Governance which all college corporations will be encouraged to adopt.
None of the changes described below come into force immediately, but only on the making of orders by the Secretary of State.
Powers of college corporations
The Act does not change the principal powers of FE and sixth form college corporations. These are essentially to provide further, higher and, within some limits, secondary education. Questions will therefore continue to arise on occasion whether a college can participate in an initiative which is only partly educational in scope and eg mainly concerned with regeneration. However, the Act does change the provisions in the Further and Higher Education Act 1992 (FHEA) regarding supplementary powers to do things necessarily incidental to the exercise of the principal powers (section 19 FHEA in respect of FE colleges and sections 33F and 33G in respect of sixth form colleges). The changes are:
- removal of the need for consent of the Secretary of State (in practice exercised via the funding body) for colleges to borrow;
- removal of the need for consent of the SFA (for FE colleges) and of the local authority (in the case of sixth form colleges) to the running of a publicly funded college through a company.
Instrument and articles of government
The initial instrument and articles of a further education or sixth form college corporation will remain those specified by the Secretary of State. However, the process of making changes to English colleges’ instruments and articles will cease to be the responsibility of the Secretary of State in the case of FE colleges and of the YPLA in the case of sixth form colleges and will become a matter for corporations. A similar power will also be given to designated institutions in England. Voluntary sixth form colleges will also have the power to conduct their institution so as to retain their existing educational character and to comply with any trust deed they may have. Corporations will therefore want to consider how they may want to change their corporations composition and ways of working. However, the Act sets out basic minimum requirements for all instruments and articles which must set out matters such as the numbers of members and how they are appointed, the need for a chief executive and clerk, the responsibilities of the corporation, chief executive and clerk and so on. A last minute change to the Bill led to the requirement for governing bodies to have to include staff, student and in the case of sixth form colleges, parent governors, being retained. The requirements leave the potential for greatly increased flexibility eg in relation to the extent of delegation of power which the corporation can grant, and the way in which corporation decisions are taken – eg meetings may not be required, written resolutions will become possible.
Generally, colleges’ existing instruments and articles will satisfy the new requirements, but there are a number of matters which will need to be addressed for existing documents to comply with the new requirements. These include the need for provision for the corporation to dissolve itself (see below) and for no changes to be made which would lead to the loss of the corporation’s charitable status. It remains to be seen how DBIS will deal with the transition to the new requirements. For example, will modification orders be made to bring all colleges up to the same starting point of compliance with the new requirements, leaving corporations then free to modify their governing documents if they wish, within the new parameters set by the Act?
Dissolution and mergers of corporations
A key change is the removal of the power of the Secretary of State to dissolve an English FE corporation or of the local authority to dissolve a sixth form college corporation. This power is the means by which BIS and local authorities respectively exert leverage over a proposal to merge FE colleges and sixth form colleges. In place of this power will come the ability of the corporation to dissolve itself, having followed a procedure to be set out in regulations. This is to ensure appropriate consultation with stakeholders. In addition, DBIS is to publish guidance on good practice which will remind colleges of the types of matters they will need to consider when deciding whether to dissolve, eg in order to merge with another college. DBIS produced “merger criteria” will this become a thing of the past. Although the publication we expect DBIS to issue shortly will encourage colleges to consider a wide variety of possible structures and models it will be facilitative and not prescriptive in any way. In future DBIS will expect colleges to be increasingly accountable horizontally to their local communities and to learners and less vertically to government (save in respect of accountability for public funds.)
One vital power over colleges will continue to be held centrally, namely the power of intervention if a college is in serious difficulties. The power in future will be held by the relevant Secretary of State rather than the Chief Executive of Skills Funding in the case of FE colleges and the local authority in the case of sixth form colleges. In extremis the Secretary of State will be able to direct that a corporation dissolve itself even though he will not be able to dissolve it himself. The Secretary of State will have to consult with trustees and any other body able to appoint foundation governors before making such an order in respect of voluntary sixth form colleges. Finally, the power of the Chief Executive of Skills Funding and of local authorities to appoint members to governing bodies of FE corporations and sixth form college corporations respectively, other than in an intervention situation, will also be repealed. This power has often been used where a college gets into difficulties but is not in such a state as to need intervention. The onus will thus be on corporations to seek help by bringing in people with the necessary skills to help them turn round a difficult situation.
Promotion of well-being of inhabitants of local area
This duty was brought in by the Apprenticeships, Skills, Children and Learning Act 2009 but no guidance on what the duty would mean in practice was ever issued. The Act will repeal it.
We expect that corporations will have a range of reactions to the new freedoms. Some will wish to consider far reaching changes, which might even extend to a desire to move away from the form of a statutory corporation to say, a company or a mutual form. Others will see opportunities to modernise their processes to simplify their structures and introduce more efficient processes such as decisions by written resolutions or “e-governance”. Others may feel that existing rules do not prevent them achieving their objectives. We would suggest however that all corporations should consider the new freedoms when the guidance on possible structures promised by DBIS is issued.