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Skills And Post-16 Education Act 2022

Contents

Part 3: Protection for Learners

Chapter 1: Regulation of Post-16 Education or Training Providers

  1. These sections enable the Secretary of State to make regulations to provide for a list of post-16 education or training providers, in particular Independent Training Providers ("ITPs"), to indicate which providers have met conditions that are considered to prevent or mitigate risks associated with the disorderly exit of a provider from the provision of education and training. Education or training is funded by various funding authorities such as the Education and Skills Funding Agency, Department for Education and Mayoral Combined Authorities.  
  2. Regulations made under the sections ensure that the relevant funding authorities may not enter into funding arrangements or allow sub-contracting with a relevant provider who is not on the list and that such funding arrangement and sub-contracts must allow for termination should a provider cease to be on the list. The short notice exit of a provider from the provision of education or training can significantly disrupt the educational experience of many young people and adults.  
  3. The transfer to another provider can take time and can be extremely disruptive and increase the risk of learner disengagement, as complex cases can take over 12 months to find a new provider. These provisions are intended to ensure that there is a consistent set of requirements placed on providers in order to protect learners and public funds, even where the education or training is funded by local commissioning bodies or through subcontracts from directly funded providers.

Funding arrangements with post-16 education or training providers

Section 19: List of relevant providers

  1. This section provides the Secretary of State with a power to make regulations in relation to the keeping of a list of certain post-16 education or training providers which meet specified conditions (see subsection (7) for examples). The Secretary of State can also make provision in connection with the keeping of the list.  
  2. Subsection (2) sets out that providers that will need to be on the list are those which will provide relevant education or training for those over compulsory school age and these subsections list the type of provider which would be excluded from a requirement to be on the list.  
  3. Subsection (3) confirms the types of education and training in scope of the legislation, which includes further education (Adult Education Budget funded provision, 16-19 study programmes and any other further education), apprenticeships, traineeships and provision eligible to be funded through loans for designated further education courses. A certain description of education or training may fall into more than one category.  
  4. Subsection (4) states the Secretary of State may by regulations add, vary or remove a category of education or training in order that new or emerging types of training not covered by the current definitions can be captured, or categories can be removed or changed where they are no longer relevant to the type of training currently funded. The categories which may be specified are limited by the definition of "post-16 education or training provider" in section 19 subsection (2) which sets out that those providers who must be on the list will provide relevant education or training to persons over compulsory school age.  
  5. Subsection (5) states that a condition (for being on the list) may only be specified if the Secretary of State considers that it may assist in preventing or mitigating the adverse effects of a disorderly cessation in the provision of education or training (i.e. a disorderly provider exit).  
  6. Subsection (6) clarifies that regulations may specify different conditions for different types of education or training and provide that a provider can have separate list entries for different types of education or training. It also sets out that regulations can provide that the Secretary of State, or any other person, can be allocated a function such as the exercise of a discretion. For example, this could be used to determine whether certain conditions have been met.
  7. Subsections (7) to (9) set out examples of the conditions that may be specified in regulations in order for a provider to be on the list. They also clarify that different conditions may be specified for being added to or remaining on the list or in relation to different descriptions of relevant provider.
  8. Subsection (10) sets out the conditions that may be introduced in regulations to help maintain or keep the list, such as the imposition of fees for being added to the list, the procedure for applications, provision about removal or restoration to the list, appeals, provision allowing or requiring the disclosure of information and provision about publication of the list. 
  9. Subsection (11) clarifies that information mentioned in subsection (10)(e) may relate to those who receive the education or training, or those with controlling, managerial or legal responsibility for the training providers. 

Section 20: Prohibitions on entering into funding arrangements with providers  

  1. Subsection (1) provides that this section applies if the Secretary of State makes regulations under section 19 subsection (1)(a) and only prospectively. 
  2. Subsection (2) prohibits a funding authority from entering into relevant funding arrangements with a provider not on the list. It also sets out that funding authorities must not enter into such funding arrangements unless those arrangements include provisions enabling the funding authority to terminate the agreement if the provider ceases to be on the list. 
  3. Subsections (3) and (4) makes similar provision in relation to funding arrangements where there is use of sub-contractor(s) and those sub-contractors are not on the list, or cease to be on the list. 
  4. Subsection (4) also sets out that where relevant funding arrangements prohibit sub-contracting, funding authorities must not enter into those funding arrangements unless those arrangements include provisions allowing the funding authority to terminate the agreement if a relevant sub-contract is entered into in breach of that prohibition. 
  5. The provision in subsections (2) to (4) is to ensure that where a provider ceases to be on the list or enters into prohibited sub-contracting arrangements, the funding authority can take action to terminate funding arrangements in an orderly way. For example, this might be through ensuring, if appropriate, that learners are transferred to another provider before the arrangements come to an end.  
  6. Subsection (5) sets out that a provider may not rely on anything in this section as a reason for not carrying out their obligations under a funding agreement. This means that a provider's obligations under a funding agreement would remain valid and a funding authority could continue to enforce those obligations if a provider were not on the list. Subsection (5) also clarifies that this section does not limit a funding authority's ability to set conditions of funding relating to a separate scheme (for example, conditions of funding which require apprenticeships training providers to be on the Register of Apprenticeship Training Providers).   
  7. Subsections (7) to (11) provide interpretation for this section.  
  8. Subsection (7) confirms the funding authorities whose funding arrangements are within the scope of this section. 
  9. Subsections (8), (9) and (10) set out the type of funding arrangements between a provider and funding authority in scope of this section. This includes grant arrangements and contracts for the provision of education or training wholly or mainly in England (which may include public services contracts which fall under the Public Contract Regulations 2015) and advanced learner loan funding routed through the Student Loans Company. The arrangements must relate to the provision of the categories of relevant education or training within the meaning of section 19 subsection (3). The Secretary of State may also specify any other characteristics that the arrangements must have in order to be within scope of the provision in section, which might, for example, include de minimis provision. 
  10. Subsection (11) provides a definition for a relevant sub-contract in scope of this section. The characteristics of the sub-contract can also be further specified in regulations by the Secretary of State.

Section 21: Funding arrangements: interpretation

  1. This section provides interpretation for sections 19, 20 and 21. 
  2. Subsection (2) provides definitions for key terms used in sections 19, 20 and 21. 
  3. Subsection (3) clarifies that references to a provider in relevant places in sections 19 and 20 include references to a person having general control and management of, or legal responsibility and accountability for a provider. This is included to ensure that the correct legal person (and the funding arrangements that they are party to) are caught by the obligations under regulations made under section 19 and by the funding prohibitions in section 20.  

Section 22: Regulations under sections 19 or 20

  1. This section sets out miscellaneous provision relating to the regulations which may be made under sections 19 or 20. 
  2. Subsections (1) and (2) give the power for regulations under sections 19 or 20 to make consequential, supplemental, incidental, transitional or saving amendments, including to primary legislation and including this Act. 
  3. Subsection (3) confirms that before making regulations to set up the list for the first time, the Secretary of State must carry out a consultation. 
  4. Subsection (4) and (5) set out that the regulations are to be made by statutory instrument and which regulations will require the affirmative resolution procedure. These include those under section 19 subsection (1) in relation to specifying conditions and making provision in relation to the keeping of the list, regulations under section 19 subsection (4) which allows the application of the scheme to additional or varied categories of education and training and any regulations which amend an Act of Parliament. 
  5. Subsection (6) provides that any other regulations made under sections 19 or 20 will be by way of a negative resolution procedure. 

Further education in England: intervention

Section 23: Further Education in England: intervention

  1. The Secretary of State has intervention powers under the Further and Higher Education Act 1992, which can be used where there is serious failure including mismanagement, underperformance and failure to discharge a statutory duty. This section strengthens these existing powers so that intervention action can also be taken where the education or training provided by an institution is failing, or has failed, to adequately meet local needs. This section will also enable the Secretary of State to issue a direction to a governing body, requiring it to make a structural change such as a merger. These provisions are needed so that the Government can intervene to secure improvement where that is not possible through other means.  
  2. This section amends the statutory intervention powers in section 56A of the Further and Higher Education Act 1992 that apply to further education colleges, designated institutions and certain other bodies that provide further education (other than institutions within the higher education sector). It also amends the statutory intervention powers that apply to sixth form colleges, in section 56E of the Further and Higher Education Act 1992. The amendments are as follows:
    1. Subsection (2)(a) extends the circumstances in which the Secretary of State may use the powers to include cases where the education or training provided by an institution is failing or has failed to adequately meet local needs. Under subsection (2)(b), new sections 56A(2A) to (2C) provide that for the purposes of new subsection 56A(2)(e), the Secretary of State must take into account any approved local skills improvement plan that applied to the institution when the education or training was provided.  
    2. Where the conditions for the use of the statutory intervention powers are met, subsection (2)(c)(i) amends section 56A(7)(b) of the Further and Higher Education Act 1992, in so far as it applies to a direction requiring the governing body of a designated institution (rather than a further education corporation) to dissolve itself. Subsection (2)(c)(ii) enables the Secretary of State to direct the governing body in respect of the transfer of property, rights or liabilities, for example to effect a merger, when one institution is dissolved and its activities are transferred to another body. 
    3. Subsection (2)(d) applies in cases where the Secretary of State directs the dissolution of the governing body (which is already possible under the existing legislation. It requires the governing body of a further education corporation to transfer property, rights or liabilities on the dissolution date (as permitted under section 27B of the Further and Higher Education Act 1992 in the case of a voluntary dissolution), unless the Secretary of State directs otherwise.   
    4. Subsection (2)(e) requires that where another party – such as a merger partner – is named in a direction under subsection (2)(c), this can only be done with the agreement of that party.  
    5. Subsection (2)(f) sets out that before making a direction for the transfer of property, rights or liabilities, the Secretary of State must consult the Competition and Markets Authority in respect of competition effects. The merger control provisions set out in Part 3 of the Enterprise Act 2002 would not apply in these cases.  The Secretary of State is able to provide financial assistance in connection with a direction. This could include, for example, loans, grants, guarantees or any other form of financial assistance.  
    6. Subsection (3) makes the same amendments as made in subsection (2), but to section 56E of the Further and Higher Education Act 1992. These provisions relate to intervention powers in respect of sixth form college corporations, which closely mirror those for further education college corporations and designated institutions.

Chapter 2: Education Administration and Administration of Further Education Bodies

  1. There is ambiguity in the Technical and Further Education Act 2017 as to whether a Company Voluntary Arrangement (a specific rescue procedure, hereafter referred to as a "CVA"), can be used as a mechanism to exit education administration. Since that legislation came into force, a court decision made during the West Kent and Ashford College education administration confirmed that education administrators have the power to propose a CVA as a mechanism to exit education administration. This chapter proposes amendments that will remove the risk of any case law being overturned. This would therefore allow the Secretary of State, via regulations, to ensure education administrators may explicitly use CVAs, and to clarify that nothing in the Technical and Further Education Act 2017 would prevent an education administrator proposing a CVA. 
  2. This chapter also seeks to remove further ambiguity in the transfer scheme provisions of the Technical and Further Education Act 2017 as to the treatment of secured creditors when compared to their rights in normal administration, per paragraph 71 of Schedule B1 to the Insolvency Act 1986. 

Section 24: Further education bodies in education administration: application of other insolvency procedures 

  1. This section amends section 33 of the Technical and Further Education Act 2017 to extend the Secretary of State’s existing power to make regulations applying insolvency legislation (with modifications) to further education bodies. 
    1. Inserted subsection (2A) makes provision that regulations under section 33(1) may provide for any provision of the Insolvency Act 1986 to apply (with modifications) regarding a further education body in education administration.   
    2. Inserted subsection (2B) makes provision to clarify that nothing in Schedules 3 or 4 to the Technical and Further Education Act 2017 limits the provision that may be made by regulations under subsection (2A). It expressly states the regulations may amend Schedules 3 and 4, which set out the conduct of education administration for statutory corporations and companies respectively. By being able to amend these schedules, the Secretary of State would be able to ensure they explicitly allow the use of CVAs.  

Section 25: Further education bodies in education administration: transfer schemes 

  1. This section amends Schedule 2, 3 and 4 to the Technical and Further Education Act 2017. This clarifies that, where a transfer scheme looks to transfer assets subject to secured creditor’s rights free of that security, a transfer scheme may only be made upon either consent of the secured creditor in relation to the amount attributed to the secured asset over which the lender holds security and payment of that amount, or a court order (i.e. subject to paragraph 71 of Schedule B1 of the Insolvency Act 1986, with modifications). 
  2. This amendment confirms the Government’s response to the technical consultation for the insolvency regime for further education and sixth form colleges and the Technical and Further Education Act 2017 in June 2018: see page 16, question 4 (Insolvency regime for further education and sixth form colleges) (opens in new window) . 

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