School companies
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Under the Education Act 2002, groups of schools can form companies to purchase collectively their normal goods and services or sell their expertise to other schools. This power is optional, and schools need only use it if they feel that a joint identity with other schools will facilitate collective activity.
The legal identity will enable schools to enter contracts as a group, to pool resources effectively and will provide members with some institutional and financial stability. Schools will be able to follow a well-established procedure to form a company and will have considerable flexibility in how the company is run.
The governing body will remain responsible for the running of the school — a school and a company remain entirely separate bodies: so if the company gets into financial trouble the school will not suffer; and teachers will not be expected to transfer to the company. Governing bodies will need the consent of their LEA to join, but this can only be refused where there is good reason. Each company will have an LEA supervising authority.
Joint purchasing is intended to help schools save money from economies of scale. Schools will also benefit from a division of labour, sharing the burden of purchasing between members.
Schools with particular strengths and capacity will be able to share their experience and expertise with other schools. As well as enabling the sharing of school improvement and other expertise, staff will benefit from the development opportunities gained by supporting other schools. Member schools of service delivery companies will be able to make a profit to give them incentive to form such companies. The articles of the company will determine that profits must be used for the benefits of the members and to further the aims of the company.
Contracting Out Order
Through the Contracting Out Order, LEAs may contract the performance of many functions, e.g., school improvement support, with external providers, including school companies. The functions are performed on behalf of the LEA, who will retain ultimate responsibility.
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Legislation
Key documents
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