New college freedoms - not as free as previously thought?

Joanna Forbes

Anyone involved in the FE sector will be aware of the forthcoming implementation of the Education Act 2011 which makes a number of changes intended to free FE and Sixth Form colleges from government control.

One of the more significant changes is the removal of the Secretary of State's power to dissolve a college and transfer its assets/liabilities to another body, a power most commonly used on merger.  Instead, this power will rest with individual college governing bodies, with regulations setting out the procedure which must be followed.

BIS has recently issued draft regulations for consultation, with comments due by 29 March.  The regulations setting out the 'prescribed bodies' to which a college may transfer its assets/liabilities on dissolution are slightly surprising, because they do not include the option of transferring the college's assets/liabilities to a company limited by guarantee.  This is currently permitted, and has been used on a number of occasions to allow colleges to enter into novel collaboration arrangements, such as that between the University of Glamorgan and Merthyr Tydfil College, where the College is a wholly-owned subsidiary company of the University. 

Many commentators, including me, had assumed that the new freedoms would give colleges greater flexibility to enter into innovative collaborative arrangements, which are often most simply done through the vehicle of a company.   However, the option of converting the college into a company does not appear to be one that will be available on the basis of the current draft regulations. 

I have raised this issue directly with BIS, but as yet have had no response.

Joanna Forbes
Senior Associate Solicitor
Education Team
For and on behalf of SGH Martineau LLP
DD: 0800 763 1310
M: 07725 241552
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International DD: +44 870 763 1310

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