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Rethink on governor risks

The Government has reassured governors that they will not be bankrupted if ther college fails. Warwick Mansell reports.

THE GOVERNMENT has said it may take action to remove the 'risk of college governors being made bankrupt if their institu- tion fails.

The Association of Colleges has long expressed concern that a governor could be held personally liable when a college fails, despite having acted reasonably and in good faith. Individual governors could be bankrupted by, for exam- pIe, claims against them follow- ing an unsuccessful college expan- sion plan.

Now ministers are to consider using the Learning and Skills Bill u which will restructure the entire FE sector - to oreassurei governors in this area.

The move was one of the few concessions to Opposition peers during the committee stage of the Bill in the House of Lords, which concluded last Thursday.

Liberal Democrat education The Government has reassured governors thattheywill not be bankrupted if their college fails. Warwick Mansell reports spokesman Lord Tope moved an amendment which would stipu- late that no governor could incur personal liability "in respect of anything done reasonably and in good faith".

Governments, he said, had always argued that, in practice, governors acting honestly and without ulterior motives Would be protected by existing law against any risk to their own assets resulting from a governing body's decision.

However, independent legal advice had cast doubt on this inter- pretation and the Department for Education and Employment had acknowledged that there might be oexceptional circumstancesi in which a question of personal lia- bility could arise.

As the law stood, college gover- nors had significantly less legal protection than school governors, company directors and charitable trustees in such situations.

The Neill report on standards in public life had confirmed the "pressing" need or legislation to increase the protection available to governors two years ago, said Lord Tope, whose amendment was backed by the Conservatives.

He added: "It is becoming increasingly evident that the ques- tion of personal liability being raised in the courts is rather less remote than the DFEE has imag- med. This is an issue of considera- ble importance to college gover- nors up and down the country."

Labour's Lord Bach said that he believed the current law afforded much protection to honourable governors u but acknowl- edged that governors'

"percep- tion" of a risk should not be dis- counted.

He said: "If individual gover- nors act ... honestly and without ulterior motive, showing reasona- ble care and common sense within the scope of their functions and procedures, as they invaria- bly do, they will be protected.

"We do not believe that the real risk is anything more than mini- mal. We do not know of a case where a further education gover- nor has been affected.

However, we are aware that the issue of ha- bility is ... of concern to many gov- ernors in the FE sector.

"We should not wish such a perception to affect the valuable work of the governors or to serve as a disincentive to new governors entering the sector.i He said the Government could not accept the amendment, which was withdrawn, because it would oexclude many governors from the protection it seeks to give".

But he added: "We are certainly prepared to reconsider this issue, how best we can give some reas- surance to FE governors, and to come forward with our proposals at a later stage."

John Hall, of education law firm Eversheds, commented:

'This is a very encouraging signal from the Government that it is prepared to listen to the concerns of governors and provide some long-awaited reassurance."

The Bill now moves to the report stage in the Lords, a date for which has yet to be set.

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