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Leeds College of Music ‘dissolved’

August 31, 2011

Leeds College of Music was ‘dissolved’ on 1 August 2011 by a statutory instrument ‘made’ on 7 July 2011.  Its assets, liabilities and undertakings were transferred to Leeds College of Music Limited – a company limited by guarantee formed in April.   This company is wholly owned by Leeds City College, a further education college.

More details available here. A news item for Research Fortnight Today.

This represents creeping privatisation as LCM was a ‘higher education corporation’ (like the majority of post-92 higher education institutions) and hence was quasi-public compared to a company limited by guarantee.

Is this the first such dissolution of a higher education corporation?

And will it start a trend?

The ease with which the change became legislation offers a challenge to democratic oversight.  Nor does it appear that staff or students had much input into this decision.

More later, once I get some more expert opinions of its significance.

ps It does seem as if this is the first such dissolution.

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9 Comments
  1. If this is creeping privatisation, it is creeping very slowly indeed, given that Leeds City College is every bit as public sector as Leeds College of Music ever was.

    HECs are dissolved using this process quite routinely. See http://www.legislation.gov.uk/uksi/2005/1708/contents/made or http://www.legislation.gov.uk/uksi/2001/1340/contents/made. Staff and student representation on the Board of the HEC seeking its own dissolution would be the only unavoidable source of staff/student input, and of course there is no sense in which the governance of any HEC has ever been ‘democratic’.

    The unusual feature here is the creation of a wholly-owned company. It is more normal (as in both the other examples I cited) for the assets and liabilities of the dissolved HEC to be transferred wholesale to the merger partner. I would have thought that the existence of a separate company gives reassurance to staff and students at LCM rather than the reverse. Many of the staff at least probably remember what happened to Bretton Hall in the end.

  2. Thanks, Andrew. This is very useful.

    The difference here is precisely the ‘full-blown’ use of 1988 ERA to dissolve LCM and pass to a ‘successor company’ – Leeds College of Music Limited – rather than transferring assets to already established HEI.

    My judgment or guess is that this model is going to become more common as it is a way to change corporate form to company limited by guarantee – the board of the HEI could set up the company rather than having it wholly-owned by another college as is the case here. It sets a precedent for the government’s consultation on making it easier for universities to seek a ‘legal form of their choosing’. The legislation here around assets is crucial to stop the second step – changing to company limited by share etc.

    I’m not sure why reassurance for staff is ensured by the separate company – it may be a way to avoid TUPE. I’m waiting for UCU to get back to me regarding this.

  3. Thanks for the clarification Andrew.

    It will be interesting to hear if you can report aything on the TUPE angle. That would obviously be a big deal, and change my view of what is going on here completely.

    I wasn’t meaning to say that the separate company ‘ensures’ anything for staff – clearly not – but the sector has a lot of experience with these companies limited by guarantee now – UCAS, QAA, HESA to name only three – and the normal experience is that they are virtually impossible for their alleged ‘owners’ to control. Certainly if I were Finance Director at LCC and bent on asset-stripping my new acquisition (and if I were FD at LCC I certainly would be bent on asset stripping – why merge at all otherwise?) I would view this corporate form as a royal pain.

    Asset-stripping by public sector merger partners is a clear and present danger and happens to small institutions like LCM all the time; privatisation seems to me a pretty distant prospect by comparison so if I were on the staff at LCM I would be more reassured than not (subject to what you dig up re TUPE, of course…).

  4. Thanks again, Andrew. For further clarification, I don’t fear asset-stripping in this instance. Forming a company limited by guarantee and transferring LCM into it, may have been the only way to ‘merge’ given the different statuses of the two institutions involved.

    What interests me from the privatisation angle, is how easy it is to become a company limited by guarantee from a higher education corporation. Other HE corporations could use this as the first step to privatisation. Ie, the BoG of an HECorp set up the new company and then transfer from one to the other. It needn’t be only a survival strategy.

    LCM to LCM ltd is then the precedent. (rather than the takeover by an FE college)

  5. have you seen that the College of Law is explicitly considering privatisation?

    I’ve blogged comparing the two cases here http://heplanningblog.blogspot.com/2011/09/college-of-law.html and would value your views.

  6. peter parker permalink

    As a music production student at LCM it would be fair to say that level of education has decreased in my second (11/12) year. Valued tutors have left because of the changes and technical support to the production courses has been of a generally poor standard. Whether this is a transitional period or if it indicates the future of the establishment remains to be seen.

    • Dear Peter

      Thank you for your comment. The dissolution of LCM and the creation of LCM ltd as a subsidiary of Leeds City College has received very little coverage. Largely because it happened over the summer and because so much else is happening. If you know of anyone who would like to write about their experiences over the last year, I would be very happy to host it or pass it on to a more prominent outlet.

      Andrew

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  1. Meanings of private and privatisation « Critical Education
  2. UCLan – changing corporate form « Critical Education

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