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Education e-briefing: The Technical and Further Education Act 2017

  • United Kingdom
  • Education - Briefings

23-05-2017

Introduction

The Technical and Further Education Act (“the Act”) received Royal Assent on 27 April 2017 as one of the last pieces of legislation to be passed by the Government prior to the dissolution of Parliament on 3 May 2017.

The Act contains the following provisions:

  • the forthcoming introduction of an insolvency regime applicable to further education and sixth form colleges (see below for more detail);
  • the Institute of Apprenticeships will be renamed as the Institute for Apprenticeships and Technical Education and its remit extended to cover technical  education;
  • following an amendment introduced by Lord Baker in the House of Lords, a new section two of the Act will require schools (defined as academies; alternative provision academies; community, foundation or voluntary schools; community or foundation special schools; and pupil referral units) providing secondary education, to ensure that there is an opportunity for a range of education and training providers to access pupils for the purpose of informing them about approved technical educational qualifications or apprenticeships.
  • the proprietor of such a school must prepare a policy statement setting out the circumstances in which education and training providers will be given access to pupils for these purposes. Section two also contains power for the Secretary of State, by way of regulations, to make provisions setting out who is to be given access to pupils, to which pupils, how and when.
  • a further amendment to the original Bill sets out an obligation for Ofsted to comment, in its inspection report for further education institutions, on the careers guidance provided to relevant students at the institution. Careers guidance is defined as including “guidance about undertaking any training, education, employment or occupation” and a relevant student is a student who is aged under 19 or, alternatively, is aged 19 or over and is someone for whom an Education, Health and Care (EHC) plan is maintained.

Although the Act has received Royal Assent it is important to note that the provisions have not yet come into force as there will need to be separate regulations to do that. The Act is also clear that regulations may provide for different parts of the Act to be brought into force on different dates. Clearly there will be no further development on this until after the general election.

Insolvency regime

In our briefing of 31 October 2016 we set out details of the Government’s response to the consultation exercise on its proposals to introduce procedures for further education and sixth form colleges which become insolvent.

The importance of the Act in relation to the insolvency procedures is it confirms, as was expected, that the normal insolvency procedures of voluntary arrangements, administration, creditors voluntary winding up and winding up by the court will be available in relation to further education bodies in England and Wales. A “further education body” in England is defined as a further education corporation or sixth form college corporation and in Wales as a further education corporation or a company conducting a designated further education institution.

In addition to the normal insolvency procedures, the Act introduces the special administration regime which would allow a court to appoint an education administrator to manage the institution’s affairs, business and property with a view to avoiding or minimising disruption to the studies of existing students. The application for the appointment of an education administrator can only be made by the Secretary of State (in relation to institutions in England) or a Welsh Minister (in relation to institutions in Wales).

If an education administrator is appointed their objective is to avoid or minimise disruption to the studies of the existing students of the institution as a whole and to ensure that it becomes unnecessary for the institution to remain in education administration for that purpose. The means by which this objective can be achieved includes rescuing the institution as a going concern, transferring some or all of its undertaking to another body, keeping it going until existing students have completed their studies or making arrangements for existing students to complete their studies at another institution.

For further information on the special administration regime see our briefings of 31 October 2016 and 21 July 2016.

When will the insolvency provisions come into force?

As mentioned, although the Act has received Royal Assent the insolvency provisions are not yet in force nor is there any specific date for this to take place. In its response to the consultation, published on 27 October 2016, the Government stated that it was its intention that the new regime should be in place around the start of the 2018/19 academic year and that much of the process underpinning the new regime would be set out in rules and regulations which the Government would issue and consult on in due course once the Act had come into force.

Governors’ liabilities

Governors will understandably be concerned about what the introduction of the insolvency regime could mean for them in relation to personal liability. While section 39 of the Act states that the Company Directors Disqualification Act 1986 will apply to further education bodies as it applies to companies, the question as to the full extent of governors’ liabilities will be a matter for secondary legislation to be published and brought into force in due course.

In its October response to the consultation the Government stated that it would ensure that the regulations would be clear on whom the duties would fall but the intention was that any governor or member of college staff who was knowingly party to activity intended to defraud creditors could be subject to a charge of fraudulent trading and liable for any penalty the court could impose.

The Government said it further intended that governors should be liable for wrongful trading and that principals should fall within the scope of this liability even in the unusual case that they were not a governor. The Government also envisaged that, in unusual circumstances, liability could also extend to shadow governors and de facto governors (which could include the Chief Financial Officer if he/she acted if they were a governor).

The Government stated that it would consult on the details of its proposals in due course and that it was important for governors to have clear guidance on their duties and liabilities under insolvency law and this would be provided ahead of the insolvency regime coming into force.

Details of the regulations, the consultation exercise and the promised guidance is now awaited and we will be providing further guidance to governors and institutions on the Government’s proposals in relation to governors’ liabilities once the Government has provided any further clarification on this.

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