Education Act 2011 – FE corporations

The government’s Education bill received royal assent on Tuesday.  The Education Act will introduce several notable changes that will effect FE corporations considering re-organisation. The changes are likely to simplify re-organisation and open the path to charities and commercial providers to the sector.

Re-constitution of FE corporations - Secretary of State consent will no longer be required before dissolving a FE corporation. Instead, the corporation must publish details of a proposal to dissolve the FE corporation and hold a consultation process.    On dissolution FE corporations will be able to transfer their assets to a new body or person as prescribed by regulations.   If the body or person receiving the assets is not a charitable body established for charitable purposes which are exclusively educational (e.g. a charity with other charitable objectives or a commercial provider of education services) then such assets will have to be held on trust to be used for charitable purposes which are exclusively educational purposes.

‘Subsidiary’ corporations - FE corporations in England will similarly no longer require Secretary of State consent to establish corporate vehicles for conducting educational institutions. The change will make it easier for a FE institution to establish ‘subsidiary’ style companies dedicated to providing educational services under the control of a FE corporation.

Constitutions - The process for amending constitutions will also be simplified, no longer requiring the consent of the Secretary of State and FE corporations will no longer have to use a prescribed form of constitution. Instead there will be greater freedom to modify constitutions though amended constitutions will be required to cover certain prescribed points.

The changes to FE corporations are to be implemented by order of the Secretary of State on an as yet unspecified date.