§ Baroness Blatchasked Her Majesty's Government:
Further to the Written Answer by Baroness Ashton of Upholland on 25 March (WA 26) which stated that the financial liabilities of school companies which failed would not rest with governors or the head teacher, who will settle any outstanding liabilities. [HL3830]
§ Baroness Ashton of UphollandIf a school company were to fail, the delegated budget of individual member schools would not be at risk. In the case of a purchasing company, the company would be spending member schools' delegated budgets and therefore deemed to be acting as agent of the LEA. The LEA would be liable for the company's debts in the event of company failure, in the same way that the LEA would 79WA be liable for an individual school's debt when the school was acting as the LEA's agent. This would not be the case for service delivery companies, because such a company will not be acting as the LEA's agent. If a service delivery company becomes insolvent, its liabilities will not pass to its members as it will be a limited liability company. If a school company is unable to pay its debts there will be the normal routes which apply to all companies open to it and its creditors of placing the company in administration or winding the company up.