Question

Can a council set-up a trust with council money to award grants to students?

Answer 1

I believe there is no specific power to do that.  However, it could be done under "Section 137".  Charles Arnold Baker in his welll known book "Local Council Administration" specifically mentions "Further education grant" in his list of educational spending that has actually been made under section 137.

There is a limit on how much a council can spend each year under this provision, and you'd need to check that your scheme would fit within it.

(Section 137 of the Local Government Act 1972 allows a local council to spend a certain amount "for any purpose which in its opinion is in the interests of or will directly benefit the area or its inhabitants, or of some part of it, or of some of them".  The benefit must be commensurate with the expenditure.)