The School Companies (Private Finance Initiative Companies) Regulations 2002

Explanatory Note

(This note is not part of the Regulations)

These regulations govern the operation of companies whose members include governing bodies of maintained schools, where the main purpose of forming the company is for it to enter into or facilitate agreements made under the private finance initiative. Where a governing body of a maintained school uses its powers under section 11 of the Education Act 2002 to become a member of a company which is formed for any other purpose, these regulations do not apply and the company will be governed by The School Companies Regulations 2002 instead.

Regulation 4 sets out which companies are governed by these regulations (“school PFI companies”) and regulation 3 defines “an agreement under the private finance initiative”.

There are restrictions on who may be a member of a school PFI company. Those who may be members are set out in regulation 5. Schedule 1 lists the individuals who are prohibited from being members.

Regulation 6 limits the ability of maintained school governing bodies to make payments to school PFI companies when the school is spending its delegated budget as agent of the local education authority by virtue of section 49(5) of the School Standards and Framework Act 1998. They may only make such payments when they are either necessary or expedient to enable the company to pursue its objects or when the payment is due for services or facilities provided by the company.

Any governing body of a maintained school seeking to become a member of a school PFI company needs the consent of its local education authority. Regulation 7 sets out the circumstances in which the local education authority may refuse permission and regulation 8 requires it to provide written reasons if it does refuse permission.

Regulations 9 to 11 set out which local education authority will be the supervising authority for a school PFI company and the procedure by which the supervising authority is designated as such.

Regulations 13 and 14 deal with when a supervising authority may and must resign and how a replacement supervising authority is to be designated.

A school PFI company must notify its supervising authority if it ceases to be a school PFI company and the supervising authority must likewise notify the Secretary of State and any othere relevant local education authorities (regulation 16).

Regulation 17 sets out the functions of a supervising authority for a school PFI company and regulation 18 requires a school PFI company to provide a copy of its annual audited accounts to its supervising authority.