Written statement to Parliament

Proposals for a principal regulator for governing bodies

Lord Hill and the Minister for Civil Society propose appointing a principal regulator for governing bodies of schools and sixth-form college corporations as exempt educational charities.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

The Rt Hon Lord Hill of Oareford CBE

The role of a principal regulator is to promote compliance by the trustees of exempt charities with their responsibilities under charity law.

Subject to the parliamentary process, further information will be made available to governing bodies, academy proprietors and sixth-form college corporations on implementation arrangements and compliance.

The Parliamentary Under-Secretary of State for Schools, my noble friend Lord Hill of Oareford, and I are today announcing proposals for the oversight as charities, of academies, sixth-form colleges and foundation and voluntary schools. In my capacity as Minister for Civil Society, I have day-to-day responsibility for the legal framework for charities in England and Wales. I believe that the measures I set out here will continue to ensure the appropriate and effective regulation of charities and therefore help maintain public trust and confidence in the charitable sector. The Department for Education, the Welsh Assembly government and the Cabinet Office have worked closely with the Charity Commission to agree these proposals and the commission is content for the Secretary of State for Education to fulfil the principal regulator role in England, and the Welsh Assembly government to fulfil the principal regulator role in Wales.

Under the Academies Act 2010, academy proprietors will be ‘exempt’ charities. Exempt charities are not registered with, or directly regulated by, the Charity Commission. Instead, the aim is (wherever possible) to appoint an existing regulator to be their principal regulator, with the additional duty of promoting charity law compliance. The objective of this approach is to ensure that there is oversight of exempt charities as charities, whilst shielding them from unnecessary or duplicative regulation.

It is proposed that the Secretary of State for Education is appointed to be the principal regulator of academy proprietors under the Charities Act 2006. It was originally proposed that the YPLA be appointed as the principal regulator as it currently undertakes much of the day-to-day work of funding and regulating academies on behalf of the Secretary of State. However, following the review of public bodies, the YPLA will, subject to the will of Parliament, be succeeded next year by an Education Funding Agency, an executive agency of the Department for Education. Therefore, it is now considered more appropriate to appoint the Secretary of State for Education as principal regulator, because he has the existing roles of funding and regulating academies. In practice, the YPLA (and its proposed successor, the Education Funding Agency (EFA)) would carry out much of the necessary information gathering which would then be used to report to and advise the Secretary of State. This arrangement will not impose any additional burden on academies or on the YPLA, and academies will no longer be required to register with the Charity Commission.

Sixth-form colleges which are charities (there are 94 in England) had their exempt status removed by the Apprenticeships, Skills, Children and Learning Act 2009. We propose to re-confer exempt status on them and appoint the Secretary of State for Education as their principal regulator. As the YPLA already regulates the funding of sixth-form colleges by the Secretary of State, this is considered to be a more appropriate and proportionate approach to promoting their charity law compliance than requiring them in addition to register with and report to the Charity Commission. This arrangement will not impose any additional burden on sixth-form colleges or the YPLA.

Foundation and voluntary schools (there are over 8,100 in England and 175 in Wales) were, until April 2009, exempt charities. They are currently treated as if they are exempt charities under transitional provisions which expired on 31 August 2011. The proposal is to re-confer exempt status on these governing bodies and appoint the Secretary of State for Education to be their principal regulator in England and the Welsh Assembly government to be principal regulator in Wales. This was the preferred option on consultation in 2010, and is also considered to be more appropriate and proportionate than requiring them to register with and report to the Charity Commission in addition to the Department for Education or Welsh Assembly government. Again, the arrangement will not impose any additional burden on foundation and voluntary schools.

There are safeguards which we will put in place to avoid any potential conflicts of interest and ensure that, as principal regulators, the Secretary of State and the Welsh Assembly government will be able to maintain the integrity of charitable status. There will be memoranda of understanding between the principal regulators and the Charity Commission setting out their respective roles, how they will work together and the circumstances in which the principal regulator would refer issues to the commission. The appointment of a principal regulator does not diminish the commission’s role in preserving public confidence in charities. If a principal regulator felt that there was a potential conflict of interest, it could seek the commission’s advice on handling it. In addition, if the commission felt that a regulator had a conflict of interest, it would raise the issue with the regulator concerned and/or with the Cabinet Office.

Draft secondary legislation to make these changes will be laid before Parliament in due course.

Published 30 March 2011