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Moves to stop 'grab and run' of funds

THE Government is seeking unprecedented powers over the assets and reserves of training and enterprise councils.

With the demise of the TECs next April, when they will be replaced by learning and skills councils, ministers are concerned that huge reserves might be at risk.

TECs are hybrid companies, funded both by the Government and private sources. They currently hold assets with a gross value of more than pound;600 million.

The Government is currently negotiating with them about what will happen to the money once they cease to exist.

Most of the discussions were "civilised" but ministers had a few concerns.

They wanted to ensure that no TEC resources were used to support any proposals that could be linked to individual shareholders or profits.

As Malcolm Wicks, the lifelong learning minister, put it in the Commons this week, "Faced with the situation in which some people are forming new companies and setting themselves up as the only shareholders, there is a rel risk that they will take the public's money and run. We will not let them run away with the public's money."

The proposed powers will give the Government the right to sequester TEC funds.

Some TECs were proposing to wind up the company and return all remaining funds to the Government. But in a number of cases ministers have had to take firm action to prevent TECs taking steps which they did not consider to be in the public interest. In one case there had been a proposal to move a freehold property out of the control of the department's debenture, to move a large sum of reserves into a trust and to establish a separate company with two TEC employees as the only shareholders. "Stern" discussions had taken place.

But Tim Boswell, Conservative further and higher spokesman, said the Government was using "nuclear deterrent powers" to intervene. While they were not proposing to "steal" private assets, they were putting themselves at risk of legal challenge, he said.

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