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The law |
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Refer to an accountant |
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1. Introduction |
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The Education Act 1996 consolidated various statutes concerned with educational provision, amongst them the Education Act 1973. Section 2 of the 1973 Act contained the provisions concerning reverter in relation to educational properties. Sections 554-556 of the Education Act 1996 are the direct replacements for s.2 of the 1973 Act (see table), and came into force on 1 November 1996. |
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We do not automatically get involved in school site cases as the Secretary of State for Education has powers under the 1996 Act to determine the rights of reverter and the future use of the proceeds of sale from certain school properties. Where the Secretary of State and the Commission have concurrent jurisdiction we have jointly agreed that to avoid confusion, the first option will be for the Secretary of State to consider exercising his jurisdiction under s.554 of the 1996 Act. If he chooses not to, then the Commission can consider the issue. |
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New provision (1996 Act) |
Old provision (1973 Act) |
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s.554 |
s.2(1) |
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s.555 |
s.2(2) |
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s.556 |
s.2(3)-(7) |
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These paragraphs have themselves been amended by paragraphs 168 and 169 of Schedule 30 of the School Standards and Framework Act 1998, to take account of the restructuring of schools in the maintained sector for which that Act made provision. |
 
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2. Orders made by the Secretary of State under Section 554 |
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It may be that the premises of a voluntary, foundation, or a grant-maintained school connected with a particular religious denomination have ceased to be, or are likely to cease to be used as such. If this is the case, under s.554 of the Education Act 1996, the Secretary of State for Education, may, in certain circumstances, by Order, make new provisions concerning the school. These will relate to the use of certain endowments held or used in connection with the provision at the school or religious education in accordance with the tenets of a particular religious denomination. |
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Such an Order may require or authorise the disposal of land previously liable to revert under s.2 of the School Sites Act 1841. |
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The 1987 Act empowers the Secretary of State, by an Order made under s.554 of the Education Act 1996: |
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- To extinguish any rights to which a person is or may become entitled as a beneficiary under the new trust of land arising instead of reverter, provided:
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- he is satisfied that all reasonably practicable steps to trace those persons have been taken; and
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- there is no valid or outstanding claim by a beneficiary, or, where there is such a claim, the person has consented to the Order (s.5).
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We should not use our jurisdiction until we have confirmation that the Secretary of State will not be making an Order under s.554 of the Education Act 1996. |
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Trustees may apply to both the Secretary of State under s.554 of the Education Act 1996, and to us under the 1987 Act for the extinguishment of the rights of any beneficiary with respect to the same trust property. If so, we may not proceed with our consideration of the application of for a Scheme unless the Secretary of State: |
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- consents to the application made to us being considered before the application made to him/her; or
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- disposes of the application without extinguishing the rights of one or more beneficiaries (s.5(3)).
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3. Possible Order under Section 554 |
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3.1 Reapplication of endowments held for religious education
3.2 The requirement to make enquiries
3.3 No obligation on trustees to apply |
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3.1 Reapplication of endowments held for religious education |
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Normally, when a cy-près occasion arises, we make a Scheme to reapply the endowments for suitable and practical purposes as near as possible to those originally intended. So far as educational trusts associated with voluntary schools are concerned, a failure is usually brought about by the closure of the voluntary, foundation or grant-maintained school to which they relate (but Scheme action may be necessary if the school is moved to a new site). |
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In certain circumstances, s.554 enables the Secretary of State to make fresh provision for the endowments of trusts, held or used for the provision of religious education at the closed school, in such a way that they remain for the benefit of the maintained educational sector. Since 1988 this provision has applied equally to the endowments of closed grant-maintained schools, and since 1999 also to foundation schools. The object of a s.554 Order is to enable the denomination concerned to participate more effectively in the administration of state education. |
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An application for an Order under s.554 may be made by the appropriate authority of any religious denomination or religion. Since the vast majority of applications relate to Church of England schools, this guidance assumes that an application is to be made by a Church of England Diocese (usually the Diocesan Board of Education). However, it applies equally to an application by the appropriate authority of another denomination or religion. |
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3.2 The requirement to make enquiries |
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In all cases where there is a reverter under the School Sites Act 1841, enquiries should be made to check whether the relevant diocese intends to apply for an Order to be made under s.554. |
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Once the diocese has applied for such an Order (and they will usually do so), the Department for Education and Skills will decide whether the land is suitable for inclusion in an Order. |
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We would need to take further action only if all or some of the land is not included. |
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3.3 No obligation on trustees to apply |
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Under ss.554-556 of the Education Act 1996 there is no statutory obligation on trustees to apply for an Order, nor is there a power granted to the Secretary of State to make Orders of his own motion. In the relatively unlikely event of the trustees refusing to apply for an Order under the 1996 Act, we cannot make a Scheme of our own motion. See OG 27 B2, section 1.1. |
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