My Lords, the amendments we have tabled are to replace the original Clause 37 with a new version, with the intention of fully applying, rather than replicating, the CDDA to FE bodies in England and Wales. Amendment 65 to Clause 43 adds an additional clause—Clause 5, in so far as it relates to Section 426 of the Insolvency Act—to the parts of the Bill which extend to all parts of the UK.
The amendment to Clause 37 removes the delegated power to replicate the CDDA and instead applies that Act in full to FE bodies in England and Wales. This allows the court to disqualify any governors whom it finds liable to wrongdoing, not only from being governors but also from being company directors. In so doing, it fully prevents them from being able to repeat, in a different way, the mistakes they have made potentially at the expense of another FE body. This was not possible with the original drafting of the clause, which allowed us to replicate the CDDA but not fully apply it. The amendment closes a potential loophole in the legislation and more fully protects learners at FE bodies from the actions of any governor who chose to act recklessly.
Wrongful and fraudulent trading are important elements of the corporate insolvency regime, which protects creditors against wrongful conduct by directors. We are looking to achieve the same protection in our own regime for creditors of FE bodies. The responsibilities we propose for those bodies’ governors are very similar to their existing responsibilities as charity trustees. Part of that protection is the deterrent effect enshrined in and created by the CDDA regime, which goes hand in hand with the corporate insolvency regime and has done so for the past 30 years. The Charity Commission is wholly supportive of the approach we are taking and sees it as in line with the approach taken for the trustees of charitable companies and charitable incorporated organisations.
The amendment to Clause 43 provides that the provisions of the Bill which extend in their application to all the different parts of the UK include Clause 5, in so far as it relates to Section 426 of the Insolvency Act. Let me be clear: this does not mean that the FE insolvency regime would apply to FE bodies incorporated in Scotland and Northern Ireland. It would apply, as set out in Clauses 5 and 6 when read together with the definitions in Clause 3, only to those FE bodies in England and Wales established under the Further and Higher Education Act 1992.
The amendment would provide that Section 426 of the Insolvency Act extends to the whole of the UK, which would ensure co-operation between the courts of the different parts of the UK. This means that courts in different jurisdictions might be asked to co-operate on a particular case, for example over the enforcement of a charge where assets are located in a different part of the UK to the location of the insolvent FE body; or, in the case of governor disqualification, preventing a governor disqualified in England or Wales becoming a governor in another part of the UK. In view of what I have said, I hope noble Lords will agree to accept the amendments to Clauses 37 and 43.