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Further Education Act 1985

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2 Powers of [F1local authorities].E+W

(1)A [F1local authority] shall have power—

(a)to enter into an agreement for the supply of goods or services or both through [F2an institution which is maintained by them and provides higher education or further education (or both)];

(b)to lend money for the purposes of such an agreement to a body corporate in which they have a holding such as is mentioned in subsection (8) below.

(2)A [F1local authority] shall also have power to lend money—

F3 [( a ) to a higher education corporation [F4, further education corporation or sixth form college corporation] (within the meaning of the Further and Higher Education Act 1992);

(b)in the case of the following institutions—

(i)an institution within the higher education sector which is not conducted by a higher education corporation;

(ii)an institution within the further education sector which is not conducted by a further education corporation [F5or a sixth form college corporation]; or

(iii)an institution which provides higher education or further education and is assisted by a [F1local authority],

to the governing body of the institution or, if it is conducted by a company, to the company; or

(c)to a body corporate in which such a corporation or company as is mentioned in paragraph (a) or (b) above has a holding such as is mentioned in subsection (8) below],

if the loan is for the purposes of an agreement for the supply of goods or services or both through the [F6institution conducted by the corporation, company or governing body].

(3)Subject to the following provisions of this section, a [F1local authority] shall not under an agreement under subsection (1)(a) above supply goods or services for less than their open market value.

(4)Subsection (3) above does not apply to the supply of goods or services where the goods are produced, or the goods or services are supplied, in the normal course of any of the educational activities mentioned in section 1(3)(a) above, or where the supply is—

(a)for a body which is a Research Council for the purposes of the M1Science and Technology Act 1965 [F7or for the Arts and Humanities Research Council (as defined by section 1 of the Higher Education Act 2004) ]; or

(b)for a body specified in an order under subsection (5) below.

(5)The Secretary of State may by order made by statutory instrument provide that any person who is specified in the order or is of a description so specified, being a person or description of persons appearing to the Secretary of State to be exercising functions of a public nature, shall be a public body for the purposes of this Act; and any statutory instrument made by virtue of this subsection shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(6)An order under subsection (5) above may contain such provisions as the Secretary of State considers appropriate—

(a)for restricting the application of subsection (4)(b) above to agreements of a description specified in the order;

(b)without prejudice to paragraph (a) above, for securing the inclusion of terms imposing restrictions in any agreement to which subsection (4)(b) above applies and which is made by a body to which the order applies.

(7)For the purposes of this Act the open market value of goods or services shall be taken to be the amount of the consideration in money that would be payable for the supply by a person standing in no such relationship with any person as would affect that consideration.

(8)The holding referred to in subsections (1)(b) [F8and [F9( 2)(c)]] above is a holding of not less than 20 per cent. of the issued shares comprised in the share capital of the body corporate and carrying rights to vote in all circumstances at general meetings of the body corporate.

(9)Money may be lent under this section for the purposes of an agreement either before the agreement is made or during its currency.

(10)Nothing in this section shall be construed as derogating from any powers exercisable by a [F1local authority] apart from this section.

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Amendments (Textual)

F7Words in s. 2(4)(a) inserted (16.12.2004) by Higher Education Act 2004 (c. 8), s. 52(2), Sch. 6 para. 6; S.I. 2004/3255, art. 2

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