The School Companies (Private Finance Initiative Companies) Regulations 2002

PART 1 Preliminary

Citation and commencement

1.  These Regulations may be cited as the School Companies Regulations (Private Finance Initiative Companies) Regulations 2002 and shall come into force on 20th January 2003.

Interpretation

2.—(1) In these Regulations—

“the 2002 Act” means the Education Act 2002;

“a further education institution” means

(a)

an institution which has been designated by order of the Secretary of State under section 28 of the Further and Higher Education Act 1992(1); or

(b)

an institution conducted by a further education corporation as defined by section 17(1) of the Further and Higher Education Act 1992;

“a higher education institution” means

(a)

an institution conducted by a higher education corporation as defined by section 90(1) of the Further and Higher Education Act 1992;

(b)

a university; or

(c)

an institution which has been designated by order of the Secretary of State as eligible to receive funding from a higher education council under section 129 of the Education Reform Act 1988(2)

“a relevant local education authority” means a local education authority which maintains any schools whose governing bodies are members of the school PFI company;

“a school PFI company” means a company to which these Regulations apply in accordance with Regulation 4;

“supervising authority” means the local education authority designated in accordance with Part 4 of these Regulations to supervise a school PFI company.

(2) For the purpose of these Regulations a school is “subject to special measures” if—

(a) a report of an inspection of the school has been made under either Part 1 of the School Inspections Act 1996(3) or section 65 of the Learning and Skills Act 2000 (4) in which the person making it stated that in his opinion special measures were required to be taken in relation to the school;

(b) either that person was a member of the Inspectorate or the report stated that the Chief Inspector agreed with his opinion; and

(c) the report has not been superseded by any subsequent report in which the person making it stated that in his view special measures were not required to be taken in relation to the school.

(3) For the purposes of these regulations a school “has serious weaknesses” if—

(a) a report of an inspection of the school has been made under Part 1 of the School Inspections Act 1996 in which the person making it stated that in his opinion the school had serious weaknesses; and

(b) that report has not been superseded by a subsequent report stating that, in the opinion of the person writing the report, the school either no longer has serious weaknesses, or stating that special measures are required to be taken in relation to the school.

Definition of “an agreement under the private finance initiative”

3.—(1) For the purposes of these Regulations “an agreement under the private finance initiative” means an agreement to which paragraph (3) or (4) of this regulation applies.

(2) In this regulation—

• “asset” means—

  (a)

  any tangible asset, including any land, building or equipment; or

  (b)

  any computer software;

• “works” means the construction, enhancement, replacement or installation of an asset.

(3) This paragraph applies to an agreement where—

(a) consideration is received by the governing body of a maintained school under the agreement and that consideration includes—

(i) the provision or making available of an asset or the carrying out of works for the purposes of, or in connection with, the discharge of a function of the governing body; and

(ii) the provision of services for the purposes of, or in connection with, the discharge of the same function;

(b) the governing body do not give to any other person any indemnity or guarantee in respect of any liabilities of the person with whom they enter into the transaction (whether those liabilities are incurred in respect of the transaction or otherwise);

(c) the consideration given by the governing body under the transaction includes the payment of fees by instalments at annual or more frequent intervals;

(d) the fees are determined in accordance with factors which in every case include—

(i) standards attained in the performance of the services; or

(ii) the extent, rate or intensity of use of the asset, or as the case may be of the asset which is constructed, enhanced, replaced or installed under the transaction; and

(e) the first instalment of fees falls to be paid after the services have started to be provided.

(4) This paragraph applies to an agreement where private finance initiative credits are given to a local authority in respect of that agreement.

Companies governed by these Regulations

4.  These Regulations apply in relation to any company—

(a) whose members include the governing body of a maintained school which has exercised its powers under section 11 of the 2002 Act to become a member of the company;

(b) where the main purpose of the members in forming the company is to enter into or facilitate agreements under the private finance initiative; and

(c) one of the company’s objects is to enter into or facilitate agreements under the private finance initiative.

PART 2 Restrictions on School PFI Companies

Persons who may be admitted to membership of a school PFI company

5.—(1) The constitution of a school PFI company must provide that the company must not admit to its membership any person who is not listed in paragraph (2) below.

(2) The following persons may be members of a school PFI company—

(a) the governing body of a maintained school;

(b) a local authority in England;

(c) a company which has as a significant proportion of its business the provision of education or educational or ancillary services or goods;

(d) a company which provides services or facilities under private finance agreements;

(e) the governing body of a further or higher education institution (within the meaning of section 90(1) of the Further and Higher Education Act 1992) if it has legal personality;

(f) the proprietor of an independent school or the governing body of an independent school (if the governing body has legal personality), which provides full-time education for five or more pupils of compulsory school age;

(g) any individual not excluded by the Schedule.

Restriction on school funding of school PFI companies

6.  Where a governing body of a maintained school, which is a member of a school company, is spending money as agent of its local education authority by virtue of section 49(5) of the School Standards and Framework Act 1998(5), it must only make payments to that company in the following circumstances—

(a) as consideration for services or facilities that the company has supplied or procured for the school; for

(b) where such payment is necessary or expedient to enable the company to pursue its objects.

PART 3 Seeking Consent to Become a Member of a School PFI Company

Grounds on which a local education authority may refuse consent to a school governing body to become a member of a school company

7.  Where the governing body of a maintained school seek the consent of the local education authority to form or become a member of a school PFI company in exercise of their powers under section 11 of the 2002 Act, the local education authority must give that consent unless—

(a) the school has a deficit budget;

(b) the governing body of the school has been a member of a school PFI company which failed to act in accordance with these Regulations whilst the governing body was a member, within the last 3 years;

(c) the school is subject to special measures; or

(d) the school has serious weaknesses.

Duty to provide written reasons for refusal

8.  Where the local education authority does not consent to a governing body becoming a member of a school PFI company, it must provide written reasons for its refusal.

PART 4 The Supervising Authority for a School PFI Company

Designation of a supervising authority by a school PFI company

9.—(1) Each school PFI company must have a local education authority designated as its supervising authority.

(2) Where the governing bodies of maintained schools who are members of a school PFI company are all governing bodies of schools which are maintained by one local education authority, then that local education authority is the supervising authority for that school PFI company and the company shall designate it as such.

(3) Where the membership of a school PFI company includes governing bodies of maintained schools maintained by more than one local education authority and there is only one relevant local education authority that is not a member of the school PFI company, then that local education authority is the supervising authority for that school PFI company and the company shall designate it as such.

(4) A school PFI company shall designate its supervising authority in accordance with this regulation by serving written notice of the designation on the supervising authority and all relevant local education authorities within 28 days of these Regulations applying to the Company.

Designation of a supervising authority by the relevant local education authorities

10.—(1) This regulation applies to any school PFI company where neither regulation 9(2) nor 9(3) applies.

(2) Where this regulation applies the relevant local education authorities must—

(a) agree which of them to designate as the supervising authority within 28 days of this regulation applying to the company; or, in the absence of such agreement,

(b) notify the Secretary of State, in writing, that they cannot agree, within 28 days of this regulation applying to the company and request that he designate a supervising authority for the school PFI company.

Designation of a supervising authority by the Secretary of State

11.—(1) Where the Secretary of State designates a local education authority as the supervising authority for a school PFI company he shall serve written notice of the designation on the supervising authority, the company and all the relevant local education authorities specifying the date on which the designation takes effect.

(2) The Secretary of State may, where he has designated a local education authority as the supervising authority, revoke that designation and may designate another relevant local education authority as the school PFI company’s supervising authority.

Written notice required when Secretary of State revokes the designation of a supervising authority

12.—(1) The Secretary of State may revoke the designation of a supervising authority and designate a new supervising authority under regulation 11(2) by serving written notice of the revocation and designation on the school company, the supervising authority and all relevant local education authorities.

(2) Any such notice must specify the date on which the local education authority designated as the supervising authority ceases to be the supervising authority and either—

(a) the new supervising authority and the date on which it becomes the supervising authority; or

(b) the date by which the relevant local education authorities must notify the Secretary of State either—

(i) of the authority which they have agreed to designate as the supervising authority; or

(ii) that they cannot agree and request that he designate a supervising authority for the company.

Supervising authority may resign

13.  Where a local education authority has been designated as the supervising authority for a school PFI company by agreement under regulation 10(2)(a), 12(2)(b)(i) or 15(a), that authority may, after it has been the supervising authority for two years, resign from its role as supervising authority by serving 56 days' notice on the company and all relevant local education authorities.

Circumstances in which the supervising authority must resign

14.  If all the governing bodies of schools maintained by the supervising authority cease to be members of the school PFI company, the supervising authority must resign from its role as supervising authority by serving 56 days' notice on the company and all the relevant local education authorities.

Procedure where a supervising authority resigns

15.  Where a supervising authority resigns under regulation 13 or 14 the relevant local education authorities must within 28 days of the notice, either—

(a) agree which authority to designate as the supervising authority; or, in the absence of such agreement,

(b) notify the Secretary of State that they cannot agree and request that he designate a supervising authority for the school company.

Notification required if a company ceases to be a school PFI company

16.  If a company ceases to be a school PFI company it shall notify its supervising authority in writing of that fact within 7 days and specify the date on which it ceased to be a school PFI company. The supervising authority shall notify any other relevant local education authorities and the Secretary of State that the company has ceased to be a school PFI company within 28 days of receipt of notice from the company.

Functions of a supervising authority

17.—(1) When a local education authority becomes the supervising authority for a school PFI company it must provide the Secretary of State with the following information, in writing, within 28 days of becoming the supervising authority—

(a) the members of the company;

(b) the name and registered number of the company; and

(c) the fact that it is the supervising authority for the company.

(2) A supervising authority must notify the Secretary of State, in writing within 28 days, of the following events—

(a) changes to the company’s membership, name and registered number; and

(b) if it ceases to be a relevant local education authority.

Duty of company to provide accounts to its supervising authority

18.  A school company must provide a copy of its annual audited accounts to its supervising authority within 28 days of the audited accounts being approved or qualified by its auditors.