2007 Chapter 25

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These notes refer to the Further Education and Training Act 2007 (c.25) which received Royal Assent on 23 October 2007

FURTHER EDUCATION AND TRAINING ACT 2007

EXPLANATORY NOTES

INTRODUCTION

1.     These explanatory notes relate to the Further Education and Training Act 2007 which received Royal Assent on 23 October 2007. They have been prepared by the Department for Innovation, Universities and Skills in order to assist the reader in understanding the Act. They do not form part of the Act and have not been endorsed by Parliament.

2.     The notes need to be read in conjunction with the Act. They are not, and are not meant to be, a comprehensive description of the Act. So where a section or part of a section does not seem to require any explanation or comment, none is given.

BACKGROUND

3.     The Act implements proposals contained in the White Paper 'Further Education: Raising Skills, Improving Life Chances' (Cm 6768: published on 27 March 2006).

SUMMARY

Part 1 - The Learning and Skills Council for England

4.     The Act makes provision to restructure the Learning and Skills Council for England (LSC). The LSC is the principal public body charged with planning and funding further education provision.

5.     The Act also places new duties on the LSC in relation to encouraging diversity and increasing choice in education and training, consulting employers and learners and carrying out specified functions in accordance with strategies formulated by (i) bodies specified by the Secretary of State, and (ii) a body chaired by the Mayor of London the establishment of which the Secretary of State will be under a duty to provide for by making regulations.

6.     Proposals in the Act extend the powers of the LSC to design, develop and operate support services for persons and bodies involved in education or training and for educational institutions.

7.     The Act also clarifies the power of the LSC to form and invest in companies.

Part 2 - Further education institutions

8.     The Act transfers the power to incorporate further education institutions and to dissolve further education corporations from the Secretary of State to the LSC. It also transfers to the LSC the Secretary of State's existing powers of intervention (with some modifications), thereby enabling it to intervene in certain prescribed circumstances, including where a college is identified as underperforming or mismanaged.

9.     The Act enables the Secretary of State to make regulations requiring all college principals to achieve a stipulated leadership qualification before taking up a new post. At the moment, the Secretary of State can regulate only in relation to principals first appointed as such after commencement of section 137 of the Education Act 2002.

10.     The Act places a duty on further education institutions to have regard to guidance about consulting employers and learners.

11.     The Act clarifies the power of further education corporations to form or invest in companies and enables them to form or become members of charitable incorporated organisations. They may also use either power for the purpose of conducting an educational institution, with the consent of the LSC in relation to England and the Welsh Ministers in relation to Wales. This is currently not possible.

12.     The Act enables the Privy Council to grant further education institutions in England powers to award their own foundation degrees subject to certain restrictions. The Secretary of State is required, within a specified time, to lay a report before Parliament about the effect of the changes relating to foundation degrees.

Part 3 - Industrial training levies

13.     The Act amends the Industrial Training Act 1982 to make it easier for an industrial training board to demonstrate support for a levy proposal among employers in the relevant industry. It also requires that proposals for levy orders cover a three-year period, subject to certain exceptions.

Part 4 - Miscellaneous and general

14.     The power of higher education institutions to form and invest in companies is clarified and there is a new power to form or become a member of a charitable incorporated organisation.

15.     The Act gives measure-making powers to the National Assembly for Wales in the field of education and training.

16.     The Act contains general provisions relating to regulations, commencement, extent, short title and other matters.

TERRITORIAL EXTENT

17.     The Act extends to England and Wales only with the following exceptions:

• sections 11 and 12, which extend to Scotland;

• sections 11 and 13, which extend to Northern Ireland;

• sections 24 and 25 and certain provisions in Schedules 1 and 2 which amend enactments extending to Scotland;

• certain general provisions, which extend to the whole of the United Kingdom.

TERRITORIAL APPLICATION: WALES

18.     The Act contains provision amending the Government of Wales Act 2006 to confer legislative competence on the National Assembly for Wales. The amendment will allow the National Assembly for Wales to pass Measures containing any provision that could be made by Act of Parliament, subject to the restrictions in the 2006 Act, in respect of certain matters in the field of education and training.

19.     The following paragraphs set out all the provisions that apply to Wales in the Act or which affect Wales and England differently.

20.     The Bill amends provision about the creation and dissolution of, and intervention in, further education institutions. Welsh Ministers (to whom functions of the National Assembly for Wales constituted under the Government of Wales Act 1998 are transferred under Schedule 11 to the Government of Wales Act 2006) will continue to act under these provisions in relation to Wales, but the LSC will act in relation to England. The amendments as to intervention include provision for the Welsh Ministers to publish intervention policies.

21.     Consent for colleges in Wales to form or acquire an interest in companies or charitable incorporated organisations for the purpose of conducting an educational institution would be obtained from the Welsh Ministers (in England it would be from the LSC).

22.     Further education colleges in Wales will be required to have regard to guidance from the Welsh Ministers about consulting learners and employers.

23.     Provision amending the requirement that industrial training boards demonstrate consensus for their levy proposals solely by reference to "relevant organisations" would apply in Wales.

24.     Provision requiring industrial training boards usually to submit levy proposals covering three years, rather than one, would also apply in Wales.

25.     Provision enabling the LSC to operate shared services and take part in arrangements giving assistance as regards employment and training, for example by operating loans, would operate in Wales only with the consent of the Welsh Ministers.

COMMENTARY

PART 1: THE LEARNING AND SKILLS COUNCIL FOR ENGLAND

Sections 1, 2, 3, 4 and 5: the LSC

Restructuring the LSC

26.     The LSC was established by the Learning and Skills Act 2000 ("the 2000 Act") as a body corporate. The 2000 Act placed the LSC under a duty to establish a committee of the LSC (to be called a local learning and skills council) for each area of England specified by the Secretary of State. The Act contained provisions about the members and staff of local councils, delegation of local council functions and the preparation of local council plans. The Secretary of State specified 47 such areas of England in relation to which the LSC established 47 local councils.

27.     The 2000 Act also placed the LSC under a duty to establish a young people's learning committee and an adult learning committee.

28.     The commitment to restructure the LSC was set out in the March 2006 White Paper 'Further Education: Raising Skills, Improving Life Chances'.

29.     Section 1 reduces the minimum size of the LSC National Council from twelve to ten.

30.     Section 2 places the LSC under a duty to establish a committee, to be called a regional learning and skills council, for each area of England specified by the Secretary of State. The section requires a regional council to perform in relation to its area such of the LSC's duties as the LSC specifies as well as allowing a regional council to exercise in relation to its area such of the LSC's powers as the LSC specifies. The section also provides for the LSC to be able to specify functions that regional councils must, or may, exercise outside their area.

31.     The section gives the Secretary of State the power to make provision about regional councils in regulations. Regulations may make provision about matters including the membership of regional councils, the appointment of the members, chairman and staff of a regional council, the delegation of functions by a regional council, the payment of salaries and allowances of members and chairmen and the regulation by a regional council of its own procedure.

32.     Paragraph 15 of Schedule 1 to the Act provides that the first set of regulations made under section 18A(2) of the 2000 Act (inserted by section 2), is subject to the affirmative resolution procedure.

33.     Under section 18C of the 2000 Act, inserted by section 2 of the Act, the LSC is required to prepare guidance in relation to each financial year for each regional council, including the objectives which a regional council should achieve in seeking to carry out its functions, and the budget for the regional council in that financial year. The first set of guidance must be prepared as soon as reasonably practicable after section 2 comes into force.

34.     Section 3 abolishes the local learning and skill councils and, as a consequence, current statutory provision in relation to them.

Strategy-making bodies

35.     Section 24A of the 2000 Act, as inserted by section 4, allows the Secretary of State by order to specify a body to formulate a strategy in relation to specified functions of the LSC for either the whole of England or a part of it, but not exclusively either Greater London or a part of Greater London, and to keep the strategy under review. This will enable strategies to be set either for a specified area in England in relation to specified functions of the LSC or in relation to a particular education and training theme for the whole of England, where a theme relates to a function of the LSC. The LSC will be under a statutory duty to carry out any function or functions to which a strategy relates in accordance with that strategy (see inserted section 24C of the 2000 Act).

36.     Section 24B of the 2000 Act, as inserted by section 4, requires the Secretary of State to provide, by regulations, for the establishment of a body to formulate a strategy setting out how the functions of the LSC as specified by order are to be carried out in Greater London. The regulations must provide for the body to consist of the Mayor of London and other members appointed by the Mayor in accordance with the regulations. They must also provide for the Mayor of London to be chairman of the body.

37.     The section also makes provision (in inserted sections 24A and 24B) for the Secretary of State to give directions and guidance in relation to the formulation and review of strategies, including such matters as: the form and content of the strategy; the updating of the strategy; the steps to be taken by a strategy-making body, and matters to which the body is to have regard, when formulating or reviewing its strategy; and the consultation to be carried out when the body formulates or reviews its strategy.

38.     In formulating and reviewing its strategy, a specified body, or the body chaired by the Mayor of London, must have regard to any guidance, and act in accordance with any directions, given by the Secretary of State. The LSC can disregard the strategy of a specified body, or that of the body chaired by the Mayor, if that strategy has not been prepared in accordance with the requirements set out in the guidance and directions concerning formulation or review. If provision in a strategy of a specified body or the body chaired by the Mayor conflicts with the LSC's strategy made in accordance with section 16 of the 2000 Act, the Council may disregard that provision in the body's strategy. Where there is a conflict between provisions in the strategies of different specified bodies, including the body chaired by the Mayor of London, the LSC may disregard relevant provision in one or both of the strategies. The LSC is not required to carry out its functions in accordance with a strategy in a manner that it is satisfied might involve disproportionate expenditure or in a manner that is considered by the LSC to be unreasonable.

39.     The LSC may not carry out a function in accordance with a strategy if in doing so it would fail to comply with a duty imposed on it by or under any enactment. Examples of such statutory duties include: the duty of the LSC in section 16(2) of the 2000 Act to have regard to its own strategy in exercising its functions; the LSC's duty in section 25(8) of the 2000 Act to comply with any directions given to it by the Secretary of State; and the duty of the LSC to comply with a condition of grant made under section 27(1) of the 2000 Act.

40.     Where the LSC proposes not to, or does not, carry out a function to which a strategy relates, the LSC must refer the matter to the Secretary of State and the body whose strategy it is may do so. Upon such a reference the Secretary of State may give such direction to the LSC as he thinks fit, including a direction that a strategy be complied with to the extent specified in the direction.

Young people's learning committee and adult learning committee

41.     Section 5 removes the duty on the LSC to establish a young people's learning committee and an adult learning committee, but the LSC retains its general power under paragraph 1(1)(b) of Schedule 3 to the 2000 Act to establish such committees as it thinks fit. This will give the LSC flexibility to establish committees to consider different issues as and when needed. For example, the LSC may establish a single group advising it on the needs of young learners, adults and the workforce as a whole.

Sections 6, 7, 8, 9, 10, 11, 12 and 13: functions of the LSC

Duty on the LSC in relation to diversity and choice

42.     Section 2 of the 2000 Act imposes a duty on the LSC to secure the provision of facilities for education and training suitable to the requirements of 16 to 19 year olds and section 3 imposes a similar duty in relation to persons aged 19 or more. Section 6 of this Act provides that in performing those duties the LSC must act with a view to encouraging diversity in education and training and to increasing opportunities for individuals to exercise choice. This reflects commitments in the White Paper 'Further Education: Raising Skills, Improving Life Chances'.

43.     The LSC will be expected to make whatever changes are necessary in order to effect an increase in the type and number of providers in the post-16 education and training market and in the opportunities available to individuals.

Consultation with learners and employers

44.     Section 7 inserts a new section into the 2000 Act. New section 14A requires the LSC to have regard to guidance from the Secretary of State about consulting with learners, with people likely to become learners, with employers and with other persons specified in such guidance on the funding and provision of learning. New section 14A does not define consultation nor does it specify how or when consultation is to be delivered. These issues will be included in the guidance. New section 14A specifies that guidance must provide for the views of a learner or a prospective learner to be considered in the light of his age and understanding.

45.      The background to this section is a Government commitment in the March 2006 White Paper 'Further Education: Raising Skills, Improving Life Chances' to create a demand-led system of further education provision, whereby funding follows the choices of employers and learners.

Plans for academic years

46.     Section 8 amends section 15 of the 2000 Act so as to provide that the LSC must make and publish a plan for each academic year, rather than for each of its financial years. An academic year runs from 1 August to the following 31 July. This brings the LSC planning year in line with the planning and delivery arrangements of key partners such as further education colleges.

Power to form or be involved in certain bodies corporate

47.     Section 9 amends the LSC's current power to form or invest in companies, as set out in section 18 of the 2000 Act, to make it clear that the LSC can form any type of company, including companies limited by guarantee as well as companies limited by shares, with the consent of the Secretary of State.

48.     Subsection (4) contains retrospective provision that ensures that companies limited by guarantee that have already been formed between 1 September 2000 and the date on which this section comes into force were formed lawfully.

49.     Section 18, as amended by this section, provides that the LSC's power to form charitable incorporated organisations (a new form of body corporate created by the Charities Act 2006) is subject to the consent of the Secretary of State.

Directions

50.     Section 10 amends subsection (6) of section 25 of the 2000 Act (the Secretary of State's power to direct the LSC) so that the Secretary of State may exercise the power to direct the LSC in relation to the establishment and dissolution of further education corporations. (Section 10 is linked to sections 14 to 16 which transfer the powers to establish and dissolve further education corporations, and associated order-making powers, from the Secretary of State to the LSC.)

51.     Section 25 of that Act enables the Secretary of State to give directions to the LSC where he is satisfied that it has either failed to discharge a duty, or has acted or is proposing to act unreasonably. An amendment to the 2000 Act is required because section 25(6), without the amendment made by this Act, would provide that directions may not concern the provision of financial resources. Because a direction to establish or dissolve a further education corporation might be considered to contravene such a prohibition, section 10 amends section 25(6) so that its scope is limited to powers and duties under that Act. The powers to establish or dissolve further education corporations are conferred by the Further and Higher Education Act 1992, so this means that the Secretary of State will be able to issue directions with regard to these matters where he is satisfied that the LSC had acted or was proposing to act unreasonably.

Provision of services

52.     Section 11 extends the powers of the LSC to design, develop and operate support services for persons and bodies exercising education and training functions, in relation to those functions. The LSC's current powers are in the 2000 Act. This provides that the LSC has powers and duties mainly in respect of post-16 education and training and in relation to England only. The powers are largely exclusive of higher education. This section enables the LSC to provide support in respect of higher education and learners under 16, throughout the United Kingdom.

53.     The provisions enable the LSC to offer support services such as software management systems, management information systems, payroll administration, human resources functions, finance services and procurement services.

54.     The LSC may provide these services to: publicly-funded education and training providers (including schools and universities); publicly-funded institutions that have functions relating to the provision of education and training; and persons or bodies specified by order (who may or may not be publicly funded).

55.     The orders specifying additional persons or bodies may be made by the Secretary of State or, where a person or body has education and training functions only in Wales, Scotland or Northern Ireland, by the relevant devolved administration (see subsection (8)).

56.     In Wales, Scotland and Northern Ireland, these services will be supplied only with the consent of the respective devolved administrations. Separate consent will be required from each administration for each type of service.

57.     The LSC will need to obtain the consent of the Secretary of State before making arrangements to provide support services to a person or body operating in Wales, Scotland or Northern Ireland.

58.     The LSC will not need the consent of the Secretary of State before making arrangements to provide support services as regards education and training provided in England, because this process will be regulated via accountability mechanisms that were already in place and by which the LSC was already reporting to the Department for Innovation, Universities and Skills at the time of Royal Assent.

59.     An example of such a support service is the Managing Information Across Partners (MIAP) programme, under which the LSC will manage the sharing of learner and learning data between learning and skills organisations, including higher education institutions and schools. This data, which includes information on participation and achievement, is held by a diverse range of owners. The LSC will manage the MIAP system on behalf of participating partners.

Assistance with respect to employment and training

60.     Section 12 widens the powers of the LSC so as to allow it to take part in arrangements for assisting persons to select, train for, obtain and retain employment. Consent of the devolved administrations will be required for arrangements made by the Secretary of State in relation to Wales and Scotland and the consent of the Secretary of State will be required for arrangements made by those devolved administrations. The arrangements that may be made include arrangements for a loans scheme which would be available to learners undertaking either further or higher education. An example of this type of scheme is Career Development Loans (CDLs). The CDL programme operates across England, Wales and Scotland. It is delivered through high street banks, who offer loans on a commercial basis to learners undertaking vocational learning, including some higher education courses. The interest on loans is paid by Government funds during the period of learning.

61.     Section 13 enables the LSC to take part in similar arrangements, including provision for loans to be made available to individuals who are undertaking further or higher education, made by the Department for Employment and Learning in Northern Ireland. Consent of the Secretary of State is required for any such arrangements.

PART 2: FURTHER EDUCATION INSTITUTIONS

Sections 14, 15 and 16: Transferring powers to the LSC to establish and dissolve further education corporations

62.     The Government's White Paper entitled 'Further Education: Raising Skills, Improving Life Chances' contained a commitment to eliminate inadequate provision across the learning and skills sector by 2008. The Government also undertook to bring about significant improvements in those providers perceived to be coasting.

63.     The policy intention in England is to enable the LSC to intervene quickly where a college is underperforming, mismanaged or inadequate. As part of a package of measures, the power to incorporate and dissolve colleges will be transferred from the Secretary of State to the LSC. As far as Wales is concerned, these powers will continue to be exercised by the Welsh Ministers.

64.     Section 16 of the Further and Higher Education Act 1992 ("the 1992 Act") enables the Secretary of State by order to establish a body corporate to conduct a new or existing educational institution in England. Such a body is known as a further education corporation. Section 27 of the 1992 Act enables the Secretary of State to provide by order for the dissolution of further education corporations in England and the transfer of their assets and liabilities. In Wales these powers are exercised by Welsh Ministers.

65.     The provisions for the publication of proposals for the establishment and dissolution of further education corporations under sections 16 and 27 of the 1992 Act are set out in section 51 of the 1992 Act and in regulations made under that section, i.e. the Education (Publication of Draft Proposals and Orders) (Further Education Corporations) (England) Regulations (SI 2001/782) and the Further Education Corporations (Publication of Draft Orders) (Wales) Regulations 2007 (SI 2007/854).

66.     Section 14 transfers the power to incorporate further education institutions in England under section 16 of the 1992 Act to the LSC. In Wales the powers will continue to be exercised by the Welsh Ministers.

67.     Section 15 transfers the Secretary of State's power to dissolve further education corporations in England under section 27 of the 1992 Act to the LSC. In Wales the powers will continue to be exercised by the Welsh Ministers.

68.     Where it is proposed to dissolve a further education corporation, it may be necessary to transfer the property, rights and liabilities of a corporation to the LSC to achieve the best outcome for an area. In such a case the LSC will need to seek the agreement of the Secretary of State before making such provision.

69.     Section 16 amends section 51 of the 1992 Act which requires the LSC, when making a proposal to the Secretary of State to establish or dissolve a further education corporation under section 16 or section 27, to publish the proposal in a prescribed form and consider any representations made on it. The amendment makes appropriate modifications to reflect the transfer of power to establish and dissolve further education corporations from the Secretary of State to the LSC and the fact that for institutions in Wales, this power will remain exercisable by the Welsh Ministers. It will be necessary to make consequential amendments to the regulations for England made under section 51 (see paragraph 65).

70.     The provision made by section 10 is relevant to the operation of sections 16, 27 and 51 as amended by sections 14 to 16 (see paragraphs 50 and 51).