HC Deb 22 July 1986 vol 102 cc220-6

`(1) The Secretary of State may make regulations requiring or authorising payments of amounts determined by or under the regulations to be made by one authority to another where—

  1. (a) the authority receiving the payment makes, in such cases or circumstances as may he specified in the regulations, provision for education in respect of a pupil having such connection with the area of the paying authority as may be so specified; and
  2. (b) one of the authorities is a local education authority and the other an education authority in Scotland.

(2) The basis on which amounts payable under the regulations are to be determined shall be such as the Secretary of State sees fit to specify in the regulations and may, in particular, be similar to that adopted by him in relation to directions given under section 48(1) of this Act.

(3) Any question concerning the connection of any pupil with the area of a particular local education authority or education authority shall be decided in accordance with the provisions of the regulations.

(4) The reference in subsection (1) above to provision for education includes a reference to provision of any benefits or services for which provision is made by or under the enactments relating to education.'.—[Mr. Dunn.]

Brought up, and read the First time.

6 pm

The Parliamentary Under-Secretary of State for Education and Science (Mr. Robert Dunn)

I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker

With this it will be convenient to take the following: New clause 16 — A Survey of Recoupment— `Before implementing the provisions of section 48, the Secretary of State shall set up a survey of the financial and educational consequences of changes to the present system of recoupment.'. Amendment No. 174, in clause 48, page 54, line 7, after 'amount' insert 'reflecting the average cost of provision to the providing authority'. Amendment No. 175, in page 54, line 7, after 'agree', insert 'provided that such an amount does not exceed the total cost of tuition.'. Amendment No. 176, in page 54, line 8, after 'amount', insert 'reflecting the average cost of provision to the providing authority'. Government amendment No. 177.

Mr. Dunn

The new clause provides for the making of regulations dealing with cross-border recoupment between England and Wales and Scotland and vice versa.

Although, generally speaking, clause 48 both covers and extends the provisions for recoupment which appear in section 31 of the Education Act 1980, it does not contain a provision corresponding to that found in section 31(5). The latter provides a regulation-making power to deal with recoupment between education authorities north and south of the border. The purpose of the new clause is to remedy that omission.

The reason why that step was not taken earlier is that there were technical complications arising from the fact that the 1980 Act provision was subsequently re-enacted, for Scotland, in the Education (Scotland) Act 1980. That has given rise to doubts as to the scope of the powers to make one set of regulations binding on authorities on both sides of the border. Discussion between the respective education departments in London, Cardiff and Edinburgh has led to the conclusion that, in order to clarify the position, there should be included in the present Bill provision empowering the Secretary of State at large to make regulations governing cross-border recoupment between English and Welsh local education authorities and Scottish education authorities. To avoid adding more material to the already lengthy clause 48, the required provision has been set out in a new clause with reference as appropriate to relevant parts of clause 48.

Government amendment No. 177 is a drafting amendment designed to protect the freedom of providing authorities to refuse admission to further education students from other authorities when they know that recoupment will not be forthcoming.

Recoupment in schools is already automatic. That is, the providing local education authorities have an automatic entitlement to recoupment in respect of provision made for pupils of other authorities. The clause extends the principle of automatic recoupment to most, but not all, non-advanced further education. The exact scope of automatic recoupment in FE will be prescribed in regulations to be made under subsection (2). The purpose of subsection (5) is to support the free movement of students across local education authority boundaries by providing that it shall not be a ground for refusing admission to a student that he or she lives in the area of another local education authority.

The Government have decided, however, that it is unreasonable to expect authorities to bear the cost of providing for students not falling within the scope of automatic recoupment whose home authorities refuse consent to pay. It seems likely that a refusal to admit on the grounds that the home local education authority would not pay recoupment would be considered by the courts as tantamount to a refusal on the grounds of residence in the area of another authority. The application of subsection (5) therefore needs to be restricted to students to whom automatic recoupment applies, and the amendment to subsection (6) is designed to enable that to be done.

Mr. Mark Fisher (Stoke-on-Trent, Central)

The Under-Secretary asks us to accept new clause 19, which provides yet again for the making of more regulations. It is sad that the hon. Member for Grantham (Mr. Hogg) is not in his place to support us. His spirit may be with us on this matter. We would have welcomed his voice supporting us, because many of the things that he said about new clause 18 apply equally to new clause 19.

When moving new clause 18 the Minister of State wrapped himself in a cloak of generous flexibility—

Mr. Chris Patten

Not for long.

Mr. Fisher

The Minister's attitude was not very generous or flexible for as long as it lasted. The Government were defeated time and again in Committee, often on non-controversial matters, so it is surprising that their response to the debates in Committee is a small matter of only two clauses, to put right the many arguments that they lost resoundingly. Those arguments often came from the Government's own Back Benches, as well as from the Opposition Benches. It is hardly generous or flexible that we have the two new clauses, particularly as everyone on both sides of the House has said, because new clause 18 goes only half way to meet the point. New clause 19 seems to have missed the point altogether.

I take the point that the Under-Secretary made about cross-border recoupment for Scotland, but he will appreciate that in Committee other matters were raised that represented important considerations for local government, both financially and legally. It is sad that the Minister has not managed to add to the new clause some way of addressing those problems, which he acknowledged in the debate were serious matters.

The Minister will recall that he said at our 12th sitting that he would undertake to reconsider the matter without any commitment to taking action on Report." —[Official Report, Standing Committee B: 8 July 1986, c. 560.] Much to our disappointment, the hon. Gentleman has failed to do so. The new clause would have commanded greater support on both sides of the House had that happened. The points that we were making on the problems of recoupment were directed not only at the deficiencies in relation to Scotland, but at redistribution in general. They were about the savings that the Minister claimed would be made through recoupment. We wondered whether the recoupment clause included adult education. The problem of further education is at the base of the recoupment problem and, sadly, the new clause does not tackle that at all.

In so far as the Government address the problem of recoupment at all, as the hon. Member for Grantham said, the new clause will do very little. It provides for the making of regulations, which, under the terms of the new clause, will be unspecific. Subsection (1) refers to the eligibility of pupils. It refers to a pupil having such connection with the area of the paying authority as may be so specified". Perhaps when he responds to the debate the Under-Secretary will say how the regulations will address the problem of connection and eligibility. How will he specify that in his regulations? It would be helpful to hon. Members on both sides of the House if he gave us some idea of how the regulations will be addressed.

The most important subsection is subsection (2), which addresses the problem of the basis for determining the amounts. Whether it relates to Scotland or to the whole of the United Kingdom is at the nub of the debate on recoupment. First, the Government are not certain of the basis, because the clause states: as the Secretary of State sees fit to specify in the regulations". The House will be asked to approve the new clause having had to guess what the basis of redistribution will be. Secondly, the argument is turned in on itself by the Government when they refer us back to the original clause 48(1). Either way, it is extremely unsatisfactory that we do not know, and local authorities will be no wiser after today's debate, and after the Bill becomes an Act, about what form redistribution will take and on what basis they must plan their finances.

The new clause is totally deficient and lacking in the information to which local authorities will have to address themselves, particularly in regard to further education. In Committee the Under-Secretary recognised that further education would be a real problem, both in the uncertainty of the sums concerned and in whether they will be anticipated in a further year. We in the Labour party make our position clear in new clause 16 and amendments Nos. 174 to 176. In our new clause, we ask for a survey so that before the Minister rushes into giving those unspecified and unclear directions to local authorities he understands what the financial implications will be. In Committee the hon. Gentleman was not able to tell us what information he had on the financial implications for local authorities, and he did not address himself to that matter today.

If the House is to be asked to do something strange for local government, which is to ask one local authority to allow its neighbouring authority to commit itself and its ratepayers to financial consequences in a following year, the Minister should have a clear idea of the scale of the problem for local authorities. In Committee we gave the Under-Secretary some suggestions of the financial consequences feared by some local authorities such as Northumberland and Staffordshire—perhaps £1 million a year for Staffordshire and even rising to £3 million a year by the 1990s.

It will be difficult to ask the ratepayers affected by recoupment to shoulder such additional expense. The Under-Secretary would be better advised to accept new clause 16, which would give him time to look at the financial consequences. He could go back to the shire counties and other authorities—which often border on metropolitan areas—and get a clear idea of the financial implications of what he expects to be undertaken by other authorities on their behalf. This is a strange and new concept in local government finance.

I commend to the House amendments Nos. 174 to 176. They would improve the new clause enormously. They are addressed, as I hope the regulations will be—perhaps the Under-Secretary will enlighten the House on whether that is so—to the technical method of assessing the cost of one local authority as against another. Amendments Nos. 174 and 176 suggest that the method should be based on the average cost of provision. In amendment No. 175 we state that the cost should not exceed the cost of tuition. Local authorities need to know the basis on which these regulations will be formed, so that they may anticipate the future costs that will fall to them.

I hope that the Under-Secretary will recognise that these are serious considerations and that he will be able to tell the House considerably more about the regulations, for which he is asking the House to give him an open cheque. Unfortunately, the open cheque will have to be cashed by many of the local authorities.

Mr. Dunn

I had hoped that the hon. Member for Stoke-on-Trent, Central (Mr. Fisher) would have been converted to our point of view, which we expressed so eloquently in Committee, regarding the question of recoupment.

We made it plain that the whole thrust of the legislation which we were presenting was to make available, to many more people, a variety of provisions which may exist outside the local education authority area in which they live. I am sorry that the hon. Member for Stoke-on-Trent, Central has not been converted to the idea of the free market of choice—in which I believe—in the few weeks since we last met in Committee.

We have adopted a flexible approach. In earlier exchanges between Opposition Members and my hon. Friend the Member for Grantham (Mr. Hogg)—whose opinion I always respect on so many matters—

Mr. Douglas Hogg

Hear, hear.

Mr. Giles Radice (Durham, North)

Do not overdo it.

6.15 pm
Mr. Dunn

I do not wish to be accused of overdoing anything. If anything, I am accused of being rather laid back on too many occasions for the good of debates in the House.

The House will recall that clause 48 is not just about the introduction of automatic recoupment in non-advanced further education. One of its main purposes is to update the existing legislation relating to recoupment in primary and secondary schools, as well as further education, the better to reflect the realities of current administrative practice in this complex area, and it goes a long way in clarifying the Secretary of State's powers to determine disputes. The Government would not wish the implementation of these general provisions to be delayed while the proposed survey was put in hand and the new clause, as drafted, is unacceptable for that reason.

Beyond that, we do not believe that such a survey is necessary, or practicable. The Government have always acknowledged that the introduction of automatic recoupment—sometimes called "free trade"—in NAFE would cause some short-term redistribution of costs between LEAs as the real pattern of demand asserts itself. While it would be sensible for local authorities to try to assess the local effects of the introduction of free trade, it would not be practicable to attempt to measure the extent of these short-term gains and losses on a national basis. The hon. Member for Stoke-on-Trent, Central, to his credit, referred in Committee to some work done by Staffordshire LEA based on the number of out-county permits refused each year, but even were we to go to the expense of collecting this kind of information from all, or at least a representative sample of authorities—many authorities' records would be far from adequate for this purpose—this would tell us nothing about the number of students who seek advice informally and are persuaded not to apply, or who assume it is not worth applying for out-of-county places. Neither would such an imperfect "snapshot" indicate how patterns of demand are likely to alter as a result of demographic change, reorganisation of 16 to 19-year-old provision — we debated this in Committee — and the development of YTS and other new kinds of provision. It would, in short, be a time-consuming and expensive exercise which would produce little if anything in the way of meaningful results.

Mr. Fisher

Will the Minister confirm that his scepticism of the survey means that he believes the figures that would be produced would be greatly in excess of the figures that Staffordshire and other authorities have already produced—the figure of between £1 million and £3 million a year? If that is so, the financial problems we anticipate for the local authorities will be horrendous.

Mr. Dunn

I am sure the hon. Member for Stoke-on-Trent, Central will accept that I have acknowledged that there will be short-term gains and losses depending on the popularity and the availability of certain courses, especially where a number of local authorities meet.

In the long term I do not believe that these manifestations will be a problem. There will be a settling, rather like the settling of sediment at the bottom of a wine decanter. Local authorities can meet informally to discuss how best to rationalise provision. In Committee we spent a great deal of time discussing problems faced by my own constituency of Dartford, but I will not repeat them as it would be too long and tedious for Opposition Members. Committee members were persuaded of the upset and concern of many of my constituents—it may also affect the constituents of Opposition Members—when people find that they have been denied access to institutions of their choice simply because it is in a local authority other than that in which they live. The institution may have been in the local authority in which they work—indeed, the provisions and cases vary.

The House must accept that, under the present voluntary arrangements, LEAs which are so inclined can protect their own colleges at the expense of the freedom of the individual to choose. That is the key to the Government's attitude on the matter.

Protectionism allows the providers to avoid the need to satisfy the real needs of their customers, and probably means that the overall system costs more as a result of this distortion of the market. Of course the adjustment will be painful in some cases: LEAs which suffer a net loss of students to their neighbours will have to bear increased recoupment costs and it will take some time for them to rationalise their provision to the real level of demand and realise offsetting savings. Conversely, those LEAs whose colleges attract more students will be able to make efficiency gains as well as receive more recoupment income.

The Government believe not only that, over time, these movements will balance out but that, in the long term, the creation of a free market in NAFE will prompt the system to become more flexible and more responsive to the needs of its clients, providing better value for money throughout the service. The Government do not believe that this important reform should be delayed pending the outcome of a survey, a study which can only be based on speculation and guesswork, leading to conclusions of dubious validity.

Amendments Nos. 174 and 176 would change the basis on which costs are recouped so that the amounts concerned, instead of reflecting the national average cost of provision, would reflect the average cost of provision within each providing authority, which could be significantly higher than the national average.

As for the level of such charges, the Government would like the existing system to continue—local authorities to decide for themselves, in the Inter-Authority Payments Committee, the basis of the standard rates which are used for the calculation of the great majority of the sums which local education authorities can recover under the recoupment arrangements. There are, of course, several rates which apply to different types of provision —primary, secondary under school leaving age, secondary over school leaving age, for example—and variants of them apply depending on whether the providing authority has to pay London weighting allowance. In all cases, however, the rates and the variants of them are based on the average cost of such provision, within the totality of the authorities to which the variant applies.

The proposed amendments would deprive such a system of any support in law. Under section 31 of the Education Act 1980, local education authorities are enabled to recoup such amounts as they may agree between themselves. Clause 48 of the present Bill re-enacts this, but under the proposed amendments, instead of local education authorities being entitled collectively to agree to recoup on the basis of standard rates based on the national average cost of provision, providing authorities would be entitled to make claims which reflected only the average cost of provision within the authority concerned.

If local education authorities are, as now, willing to agree collectively to use the national average cost of provision as the basis for recoupment, and if the law now enables then to do so, the Government do not think that it would be sensible, in administrative terms to take the legal basis for that away, and will therefore resist the amendments.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

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