Further Education (Hansard, 19 February 1997)

§ Mr. Greg Pope (Hyndburn)
I am grateful for the opportunity to raise this important issue. Most hon. Members probably attended a further education or sixth form college, or a sixth form in a school. As most of us have benefited from further education, it is only right, fair and proper that we should take an interest in the sector when it faces such difficulties.
Further education colleges play a vital role as centres of opportunity and learning. They add social and economic value to their communities. The 357 colleges in England and Wales educate more than 3 million students. I make no apologies for the remarks that I shall make on the situation in east Lancashire. I have received much correspondence, both from the college in my constituency and from those in neighbouring constituencies.
The crisis in further education adversely affects its students, lecturers and institutions. From the point of view of staff, incorporation has been nothing less than a disaster. It has led to worsening conditions of service and many redundancies. My local college, Accrington and Rossendale, is due to have its inspection report published early next month. Early signs are that it will get a good report, with staff awarded the highest praise and marks possible. Their reward will be further undermining, underfunding and redundancies. Across the sector, more than 10,000 jobs have been lost since incorporation in 1993.
There is a damaging dispute at my local college. It centres on the case of Mr. Pat Walsh, the senior union official in the National Association of Teachers in Further and Higher Education. He claims that he was sacked by the college because of his trade union activities. The college governing body claims that he was genuinely made redundant. NATFHE is balloting tomorrow for strike action. If it goes ahead, it will be at a damaging time for students in the run-up to public examinations. All that one can say with certainty about this fiasco is that, whatever the failings of the previous system—and there were failings—such disasters did not happen before the incorporation of colleges.
Some people in my constituency want to blame the governing body for the appalling state of affairs. I reject that. I want to lay the blame fairly and squarely where it belongs: at the door of the Minister, the Government and the Further Education Funding Council, which has created a severely flawed funding mechanism for colleges.

§ Mr. Peter L. Pike (Burnley)
Is it not true that in Lancashire—and, I am sure, in the rest of the country— 840 there was better co-operation between colleges before incorporation? We did not get duplication and competition, and therefore had better use of resources. That has been damaged since incorporation.

§ Mr. Pope
My hon. Friend makes an important point. One problem is the tension between providers. Training and enterprise councils pull in one direction and colleges in another. Where is the co-ordination between education and training? There is very little co-ordination between the two. We now have the spectacle, as my hon. Friend said, of neighbouring colleges with mushrooming marketing budgets competing in the marketplace and offering very similar courses. They are fighting each other for the same students. It is ridiculous that, in our part of the world, Blackburn, Accrington and Rossendale, Burnley, and Nelson and Colne colleges offer similar courses, competing for the same students.
There is a democratic deficit in the sector. The Further Education Funding Council is yet another Government-appointed quango—a tame mouthpiece for the Government. There is a strong case for democratising the Further Education Funding Council's structure. Often, colleges have little or no accountability to the communities that they serve. I am not suggesting that the colleges should be returned to local education authority control—I do not think that anyone is suggesting that. However, there is a strong case for reforming college governing bodies, to increase openness and improve accountability to local communities.

§ Mr. Nigel Spearing (Newham, South)
Does my hon. Friend acknowledge that there are colleges—Newham college of further education is one—where attempts are being made to meet the needs of the community by establishing close connections? Our concern is that there seems to disagreement among the three statutory bodies, perhaps even among the Treasury and the Department for Education and Employment, over the changes in the demand-led element, which have caused enormous problems in colleges that have been integrated into the community and are trying to meet community needs.

§ Mr. Pope
I am grateful to my hon. Friend, and I shall refer later to the fiasco of the demand-led element; catching up with the Government's flip-flops on that policy is quite an art form.

§ Ms Joan Walley (Stoke-on-Trent, North)
My hon. Friend referred to a fiasco. We are also concerned about the problem in Stoke-on-Trent college, where there has been a fiasco. Does he agree that we face a problem in terms of lack of accountability over the way in which the Further Education Funding Council was set up? Does he also agree that the National Audit Office report does not address accountability? When my hon. Friend further considers the problems faced by his college, despite the best efforts of its staff, will he also consider how we may address the problem of deficits across the country, including Stoke-on-Trent?

§ Mr. Pope
My hon. Friend makes an important point. The problems at Accrington and Rossendale college are replicated, almost exactly, at Stoke, Burnley and Nelson and Colne colleges and other colleges throughout the country. Early-day motion 452, which has attracted 841 the signatures of more than 100 hon. Members representing every part of the country, shows that the problem is not specific to my college or my part of east Lancashire, but exists in every part of the country.

§ Mr. Peter Thurnham (Bolton, North-East)
I can confirm that the position in Bolton is extremely serious. The principal, Mr. Hogan, has written to me to say that he feels that the funding cuts are disastrous. The managing director of the focus training group, Mr. Heathcote, who has built up what I believe to be Britain's leading gymnastic training instruction course, says that to have such a sudden cut imposed with so little warning will have a desperate effect on the future of his business.

§ Mr. Pope
The hon. Gentleman also makes an important point, to which I shall refer later. In Bolton and in colleges throughout the country, as a result of Government action over the demand-led element, student numbers will decrease, courses will be cut, and people on continuing courses will be left high and dry without proper support, which is a disgrace.
When the colleges agreed with the Government that they would expand—it was a Government initiative to get the colleges to expand—it was also agreed that, if growth exceeded the FEFC targets, the excess would be funded at demand-led element rates. Under the Further and Higher Education Act 1992, students eligible under schedule 2 were to be funded by either core, marginal or demand-led element rates.
Now, colleges that have expanded at the behest of the Government are being penalised for having done so. Although the Government have belatedly and rather grudgingly accepted that they must pay the £84 million that colleges are owed for the rest of this academic year, the DLE is still to be abolished in the next academic year, 1997–98.
It is even harder for the colleges to accept that there was never any suggestion that the 1996–97 payments from the FEFC were insecure until they received the out-of-the-blue letter from the Minister on 28 January. The Government's hypocrisy is incredible: they have gone back on commitments that they made to the colleges; they have betrayed their own claims to be the party committed to expansion and diversity in further education; and they have disregarded the achievements that colleges have made as they strive to meet the national training and education targets laid down for them.

§ Mr. Stephen Timms (Newham, North-East)
Has my hon. Friend seen the letter from the Secretary of State for Education and Employment to the hon. Member for Ribble Valley (Mr. Evans), dated 10 January, in which she reaffirmed the demand-led element of the funding formula, only for that element to be withdrawn two and a half weeks later?

§ Mr. Pope
It was withdrawn after two and a half weeks, and then there was another flip-flop in early February. It is interesting that the letter was sent to the hon. Member for Ribble Valley (Mr. Evans), many of whose constituents attend my local college who, sadly, is not in his place today.
The Government's behaviour has startled the principals, many of whom are long-serving principals of colleges. Recently, the principal of St. Mary's Roman Catholic sixth 842 form college in Blackburn, an excellent institution with a fine academic record—a point unrelated to the fact that I was educated there—described the problem when he said that colleges that had exceeded the target were now being "savagely penalised". The principal of Accrington and Rossendale college said in a letter to me that the Government's actions were "unforgivable".
The fact that the Government will not be funding the DLE for the FEFC means that budgets of an already economically ruined sector will be thrown into further disrepair. I shall outline the track record of a Government who have been in office for 18 years. One in five colleges are in a weak financial position; one in five full-time teaching posts have been lost since 1993; and the further loss of the DLE funds will mean that more job losses are to come.
I understand that Nelson and Colne college, in the constituency of my hon. Friend the Member for Pendle (Mr. Prentice)—I am sure that he will want to raise the issue if he catches your eye, Mr. Deputy Speaker—has announced that 47 jobs might have to go in the coming year. In real terms, the 1996 budget removes £233.3 million from the sector for the period 1996–97 to 1999–2000.
The absence of DLE funding in the coming academic year means that up to 11 million funding units that it supports will not have funds for that year—that amounts to about 105,000 enrolments. Given that many of those institutions are already in a weak financial position, absorbing those costs will be hard. The only choice open to colleges will be to lower enrolments, which will go against the policy of expansion and diversity that they have been working so hard to succeed in over the past three to four years.
Many principals feel insulted that their institutions have had to present three-year business plans while the Government can make major funding changes and withdraw pension entitlements with practically no notice.

§ Mr. Paddy Tipping (Sherwood)
Did my hon. Friend hear the "Today" programme this morning, on which it was suggested that there might be yet another flip-flop on pensions at 50? If that announcement can be made on "Today", why cannot the Minister tell the House the position now?

§ Mr. Pope
I heard that announcement on Radio 4; Ministers seem happier to announce changes of policy to the BBC than to the House of Commons. What the Government are doing over teachers' pensions is to saddle an incoming Labour Government with the problem rather than face it themselves in the run-up to the election—a squalid arrangement.
Major changes have been announced at very short notice. That means that much of the planning done by colleges is now worthless. Contractual agreements with companies mean that colleges have had to base their calculations on the DLE rates, which will be unavailable from September 1997. My local college, Accrington and Rossendale, has a successful collaboration with British Aerospace, a large employer in Lancashire, but the calculations that the college has made for contracts with, businesses and students are now rendered meaningless by the Government's actions. The nature of those changes in funding means that courses, especially those of a vocational nature, might end up being cut.

Mr. Barry Sheet-man (Huddersfield)
The experience on our side of the Pennines mirrors many of the same 843 characteristics as that on my hon. Friend's side. We are seeing a parallel to what happened in higher education. Once there ceases to be a dynamic in higher education, the ability is lost to plan or even to enter into private finance initiative agreements, and that is now happening in further education, where there is no planning and no future for growth, experiment or innovation, because from now on there will be no growth.

§ Mr. Pope
That is absolutely right. We are witnessing the consequences of Ministers in the Department for Education and Employment having consistently, year on year on year, lost the argument with the Treasury in the spending round. All they are doing is shifting cuts round within their Department's budget. Two or three years ago, cuts were in the schools—teachers were laid off and there was a crisis; now the crisis is in higher and further education.

§ Mr. Robert G. Hughes (Harrow, West)
The hon. Gentleman is describing increased funding and increased activity in the sector as cuts. He is entitled to do so, but only if he tells us how much in his judgment—the shadow Chancellor, the right hon. Member for Dunfermline, East (Mr. Brown), is in America, so he will not hear—a Labour Government should give that sector.

§ Mr. Pope
It really is pathetic that, after 18 years, Conservative Members are unable to take any responsibility for the disaster that they have created. All they want to know is what a Labour Government would do. I am glad that the hon. Gentleman accepts that there will be a Labour Government and, in two months' time, he can ask my hon. Friends at Education and Employment questions. I have no intention of trying to foresee how in the next financial year we shall right the wrongs of the Conservative Government.

§ Mr. Jeff Rooker (Birmingham, Perry Barr)
The stupidity of the question that my hon. Friend has just been asked is explained by the fact that the demand-led element is not cash-limited. It is like asking us: to how many pensioners will a Labour Government pay a pension? The fact is, we shall pay pensions because they are demand-led by the number of pensioners. In this case, the DLE operates on exactly the same basis—it is not cash-limited, contrary to the spin that was put on it in the early days.

§ Mr. Pope
Not only is my hon. Friend right, but the hon. Member for Harrow, West (Mr. Hughes) is showing his ignorance of the system. Next month, the Further Education Funding Council will have to enter into funding arrangements for the next academic year, and it will do so on the basis that the DLE has been scrapped. It is therefore impossible for us to give a commitment on how we shall approach the DLE system in the next financial year, when we shall be in government. I should have thought that even the hon. Gentleman could grasp that.
The changes in funding mean that vocational courses are especially vulnerable and minority subjects, such as languages, may become entirely the preserve of the private sector. Student numbers will undoubtedly fall—an extraordinary U-turn in Government policy—and many of those could-have-been students will join the ranks of the unemployed, where they will be able to meet those who might have been their lecturers.
844 How can colleges make sensible forward planning decisions when the Government seem to be capable of changing funding allocations almost at whim and without any proper consultation with colleges? Given that many further education courses are two years long, should not proper notice have been given to the colleges of changes of such enormity? Alternatively, could not the proposed changes have been phased in, instead of it being announced, first, that funding would simply disappear halfway through this academic year, and then that it would disappear at the end of the academic year? Is the truth that the Government do not care about the consequences of their actions for colleges and students?
This is a sector in crisis. Since 1990, student numbers have more than doubled, yet at the same time funds have decreased by 34 per cent. Thousands of jobs have gone and thousands of lecturers are still in dispute over their contracts of employment. Part-time lecturers are replacing full-time lecturers and, in some colleges—my local college being one example—all the part-time lecturers have been sacked on the last day of the academic year and told that they will be taken back only if they sign up with an agency.
Is that how we want to run a stable further education system? Unsurprisingly, morale is at rock bottom: a recent independent survey showed that 60 per cent. of lecturers are thinking of leaving the profession permanently. The real victims are students, who are trying to learn and better themselves in intolerable circumstances.
Faced with that crisis, the Minister has taken a leaf out of the Prime Minister's book. He has shown no leadership and no vision; he has dithered, and he and his colleagues bear a heavy responsibility for the sorry state of further education today.

§ Lady Olga Maitland (Sutton and Cheam)
I welcome the opportunity to respond to the remarks of the hon. Member for Hyndburn (Mr. Pope). His language is, to put it mildly, intemperate—he uses words such as "sector in crisis" and "fiasco", refers to no planning and no future and says that people are insulted. We should be asking whether he is making a spending pledge—if he is, the taxpayer should be told. It is all very well for him to criticise, but he has not come up with any answers.
I do not believe that we have anything of which to be ashamed—in fact, we have a record of which we can be proud. We have changed the landscape in offering opportunities to young people, and the climate has changed dramatically for young men and women. It is not only those from educated middle-class homes who have benefited, but those from deprived or impoverished backgrounds who have been given opportunities that are second to none to lift themselves up. The social pattern across Britain has changed entirely as a result of the new educational opportunities that we have created.
I recall the remarks made by the right hon. Member for Dunfermline, East (Mr. Brown). He is factually wrong when he claims that 80 per cent. of children of unskilled parents leave school at 16 and make no further progress in education. The truth is that more than half the children of unskilled parents stay on in further education, becoming in the process professional people such as doctors, lawyers or accountants—even entering the House of Commons. That figure is changing all the time.
845 We have created a culture in which aspirations to acquiring more skills, qualifications and training are the norm; where opportunities are available to all those who seek them; and where parents are more supportive than ever in encouraging their children to develop. That is the picture of further education today.
The net result is that our further education programme is bursting with activity. It is the normal right and expectation of young people to continue their education after school. One in three go on to further and higher education, compared with one in eight in 1979, when we had a Labour Government. To put it a different way, the number of students has risen to more than 1.3 million—an increase of over 320 per cent. in 25 years—and we now have the highest graduation rate of any country in the European Union except Denmark. All that is in great contrast to the picture painted by the hon. Member for Hyndburn.

§ Mr. Rooker
Does the hon. Lady realise that the figures that she is quoting relate not to further education but to higher education? There are more than 2 million students in higher education in addition to the million-plus in further education. Her lack of knowledge shows that she is simply reading from a central office brief.

§ Lady Olga Maitland
That was a good attempt. The truth is that we are looking at the breadth of education—it is hair splitting to claim that we are examining only further education. Young people today participate in all sorts of education—they do not stop at further education.

§ Mr. Spearing
rose—

§ Lady Olga Maitland
I am sorry, but I must make some progress as many hon. Members wish to speak in the debate.
It is interesting to study a breakdown of student performance. Some 75 per cent. of 16 to 18-year-olds are in structured education and training. That is an increase on 1985, when the figure was only 56 per cent. In 1995, 69 per cent. of students gained qualifications at level 2 of GNVQ by age 19, compared with 46 per cent. in 1985. There have been record passes at GCSE and A-level. Last year, 44 per cent. of 15-year-olds achieved five or more good GCSE passes, compared with 23 per cent. who did not achieve any grades in 1979. Some 29 per cent. of students achieved two or more A-levels, compared with just 14 per cent. in 1979. Those figures tell us that further education is alive and well.

§ Mr. Spearing
Further to the comments of my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker), whatever the correctness of the hon. Lady's figures and her general view, does she agree that the conditions of funding for further education—as distinct from higher education—have changed in the past few days and have thrown the education funding pattern into organisational and financial chaos? That is what we are worried about. Will the hon. Lady admit that that is true?

§ Lady Olga Maitland
No, I will not. The truth is that further education funding is secure, and we are going great guns. We must judge the success of further education by the pupils' results. We must consider not 846 just students' performance in further education, but what the next phase will be. Young people spend probably 15 years preparing for their first job, and our task is to ensure that the economic climate remains robust and strong enough to provide employment opportunities.
In an increasingly educated and competitive world, we must have a highly skilled and educated work force. It would be a cheap and mean trick to let students down and dash their great hopes and expectations by systematically ruining their chances of staying on at school. The Labour party's proposals would do just that. For a start, Labour would make it increasingly difficult for young people to stay on at school. The right hon. Member for Dunfermline, East has announced plans to withdraw child benefit for 16 to 18-year-olds. That £560 per year, or £1,120 over two years of essential learning, assists the poorest parents in particular. The proposal would crucify young people's chances of staying on in education, and they would be forced to work in menial or unskilled fields. It would be a tax on learning.

§ Mr. Sheerman
I am listening carefully to the hon. Lady, and much of her argument is extremely interesting. However, she has had no experience of publicly funded education. Many young people seek further and higher education opportunities. The Government have denied them those opportunities in the past few days, and have said, "We've got enough university graduates." What sort of opportunity growth is that?

§ Lady Olga Maitland
The biggest threat to children's educational opportunities is the imposition of a teenage tax, which would prevent them from staying on at school and taking advantage of further education. The row within the Labour party about the teenage tax has created a split between the right hon. Member for Dunfermline, East, who believes that it is a good idea to tax the teenagers, and the hon. Member for Islington, South and Finsbury (Mr. Smith), who says the opposite. The Child Poverty Action Group is totally opposed to the measure.
The proposed windfall tax on utilities would do nothing to assist young people: first, it is likely to be illegal; and, secondly, if it were introduced, it is doubtful that it would raise the anticipated £3 billion. For example, the decision by British Gas to reduce prices in order to benefit the consumer would wipe out the alleged "excess profits". There would be no honeypot. On 15 May last year, the right hon. Member for Dunfermline, East admitted that the windfall tax would raise only "hundreds of millions of pounds", and not the multi-billion figure that would be needed to fund Labour's spending plans.
In any case, that is a one-off measure that would not create new, real jobs for young people. It would be a stop-gap measure, designed to induce employers to take on new staff at a reduced rate for one year—and then what? People would be forced on to the dole. It is an example of Labour short-termism. I doubt that young people would see a penny of the proceeds of the windfall tax, as the Labour party has a list of IOUs and spending pledges totalling about £30 billion. The windfall tax would be rather like a rubber band: stretching three times around the world in order to support alleged Labour causes.
What about jobs, which are crucial when we consider further education? Centrally run, Government-sponsored schemes do not create work, as jobs cannot be sustained 847 when the schemes have ended. Young people would be back where they started. Labour's Target 2000 is a sham: it would impose an extra tax on businesses, which they can ill afford to pay, with compulsory contributions to training. We should focus on creating a vibrant economy that provides the means and the wealth for employers to take on new staff, especially educated and highly skilled young people. Young people's employment chances would be destroyed by Labour's plans to sign up to the social chapter and the minimum wage.

§ Ms Walley
On a point of order, Mr. Deputy Speaker. Many Labour Members wish to speak about the issue of further education, and I wonder whether the hon. Lady's remarks are in order.

§ Mr. Deputy Speaker (Sir Geoffrey Lofthouse)
It is a wide subject and, if I thought that the hon. Member for Sutton and Cheam (Lady Olga Maitland) was out of order, I would rule accordingly. However, I take the point that many hon. Members wish to speak in the debate.

§ Lady Olga Maitland
As I was saying, in a sober moment many Labour Members recognise that signing the social chapter would be a disaster for young people. The right hon. Member for Kingston upon Hull, East (Mr. Prescott) has admitted that such measures would cause a shakeout of jobs. Any fool can see that". If we have any doubts, we should cast an eye on the countries of mainland Europe. Punitive taxation and burdens on employers mean that they cannot afford to employ young people.

§ Mr. Deputy Speaker
Order. The hon. Lady is ranging rather wide of the subject. Let us return to further education.

§ Lady Olga Maitland
With the greatest respect, Mr. Deputy Speaker, I am speaking about further education.
First, we must ensure that young people are able to take advantage of further education; and, secondly, graduates must be able to secure jobs. This country's economy must be structured in such a way as to ensure that their education is not wasted. The two points are related, and we cannot examine them in isolation. I think that the experiences of other European countries are very applicable when we talk about young people. For instance, youth unemployment in Spain is 42 per cent.—those young people are in despair.

§ Dr. John Marek (Wrexham)
On a point of order, Mr. Deputy Speaker. The hon. Lady is reading from a central office brief. I can see it: it is typed out, and the hon. Lady is simply reading it.

§ Mr. Deputy Speaker
The hon. Member for Wrexham (Dr. Marek) knows full well that it is quite in order to refer to speaking notes. However, I remind the hon. Member for Sutton and Cheam that she is getting rather wide of the subject.

§ Lady Olga Maitland
I want to emphasise how important it is that young people's further education is not dashed by what happens to them afterwards. We do not 848 want them to suffer the plight of their brothers and sisters in Italy, where 33 per cent. of young people are idle, in France, where 29 per cent. are desperate and unemployed, or in Germany, where unemployment overall is now 4.5 million—more than twice the level in the United Kingdom and increasing every day, further dashing young people's chances.
Job creation comes not from artificially induced, centrally created Government schemes, but from healthy, innovative economies free to operate in a climate that actively encourages development. It is hardly surprising that we are known as the enterprise centre of Europe.
Further education is a laudable aim. We must continue to invest in education, training and skills, but alone that cannot provide jobs. It merely allows young people to compete effectively in an increasingly tough market. We must ensure that young people get the rich rewards for which they have worked so hard throughout their schooling, their days at further education college and then at university. We have an obligation to ensure that they enter a financially sound world that can create and sustain real jobs, so that young people will be able to achieve their true potential on the basis of their earlier education.

§ Mr. Gordon Prentice (Pendle)
The speech that we have just heard scores one out of 10 for content. It was pathetic and ill informed. I shall address the subject on the Order Paper: the crisis in further education.
In my constituency, Nelson and Colne college is consulting on making 37 lecturers redundant and not filling 10 vacancies. There is a deep crisis in my local college, which is not some hick institution—it has a marvellous reputation. It achieved Investors in People status, and was the first in Lancashire to do so. In 1993, it was one of only three further education colleges to achieve the charter mark; the Prime Minister recognised that Nelson and Colne college was a fine institution.
The college was inspected by the Further Education Funding Council five months ago, in August 1996. The inspectors stated: Nelson and Colne College is a successful tertiary college in East Lancashire.… Governance and management are strong. Staff are well qualified. … Standards of teaching are generally high. Students work hard and make sound progress. Examination results are good. In governance and management, the college rated grade 2, which is defined as provision in which the strengths clearly outweigh the weaknesses". That is the background—a successful college whose board decided on 20 January to plunge it and the wider community into turmoil by announcing all those redundancies. I immediately contacted the college principal, Kath Belton, and had a meeting with her and her senior management. I asked why the decision had been taken. She replied that the college had to save £400,000. It had been operating a deficit, but that is no different from other colleges.
I consulted the annual report of the Further Education Funding Council, which was published only last month. It stated: The annual deficit incurred by the sector rose from £10m in 1993/4 to £101m in 1994/5 and stood at an estimated £119m in 1995/6. The FEFC went on to say: A deficit of this order cannot be sustained for more than a few years. 849 I want the Minister to comment on that when he winds up.
When I saw the principal at the end of January, I asked whether the FEFC had been consulted about the redundancies. To my astonishment, she said that it had not, and that the decision had been taken by the board. I am not entirely sure whether all members of the board knew the reasons behind the decision that they were invited to take on 20 January.
I suggested to Kath Belton and her senior managers, from a layperson's perspective, that getting rid of 37 lecturers and not filling 10 vacancies would have a devastating impact on the scope and quality of the education on offer. I could have been knocked down with a feather when she said that she did not think that the quality and scope of education provision would suffer.
I do not believe that, and people in my constituency and further afield do not believe it. The principal is making the best of a bad job. She has been put in an impossible position by the board's decision of 20 January, but it is incredible that a college could lose so many talented staff and continue to provide a high-quality education for the young people of my area. I do not believe it.
I raised the matter with the Under-Secretary of State for Education and Employment, the hon. Member for South-East Cambridgeshire (Mr. Paice), who told me at the beginning of this month, in typical Pontius Pilate fashion: It is for colleges in the further education sector such as Nelson and Coln college to manage their resources, including staff, as they see fit in the light of changing needs and circumstances. I wrote to Professor Melville, the chief executive of the FEFC, expecting that he would have something to say about the matter. He replied: Individual college corporations must consider how they will best meet required efficiency gains. … The Council— the FEFC— does not have a specific role in advising colleges on their management processes. The Minister has no responsibility, the FEFC has no responsibility, so my college is left twisting in the wind.
I have read all the relevant documents from cover to cover—the National Audit Office report and the purple report from the FEFC. On page 94 of its annual report, the FEFC states that, as a priority, it monitors the financial health of the sector and of individual colleges and advises colleges on their financial planning and financial control systems". It did not advise Nelson and Colne college. There has been no contact at all.
I shall be brief, as I know that many of my colleagues want to speak in this important debate. I asked the Minister what steps the Department would take to assist further education colleges running operating deficits"— there are well over 200 such colleges around the country— to restore their financial health without jeopardising the quality and scope of the education offered". 850 Only yesterday the Minister replied: Colleges are independent, autonomous bodies and are responsible for managing their own financial affairs. The Further Education Funding Council has effective arrangements in place for identifying colleges in financial difficulty and for working with them to recover their financial health."—[Official Report, 18 February 1997; Vol. 290, c. 455.] That is what the Minister told me yesterday; it is moonshine.
This is not an academic debate—[Interruption]—nor is it a matter for levity. Nelson and Colne college is an excellent college. It has a charter mark and is central to the local community. All those who should be able to help my college have washed their hands of it. Unless something happens, and happens soon, my college will be devastated by the loss of all those skilled lecturers. I hope that, even at the eleventh hour, the Minister will be persuaded to intervene and save education in my constituency.

§ Mr. Robert G. Hughes (Harrow, West)
I apologise for the fact that I shall not be able to stay for the winding-up speeches. I am serving on not one Committee but two, at 10.30 am. I shall have to read the golden words of my hon. Friend the Minister in Hansard. I shall try to be brief, as many other hon. Members wish to speak.
Further education is very important to my constituents, as it is the only source of sixth-form education in Harrow. Harrow has three tertiary colleges and a sixth-form college, which is part of the FE sector.
I want to draw attention to the problems of St. Dominic's sixth-form college in Harrow-on-the-Hill, a remarkable college with a fine reputation. I am not exaggerating when I say that an enormous number of parents, whether they are Catholic or not—whether, indeed, they are Christian or not—want to send their children to St. Dominic's because they want them to receive sixth-form education rather than the education provided by the tertiary colleges in the rest of Harrow. St. Dominic's is very popular, and so it should be, given the quality of its teaching and pastoral care and the results that it achieves.
The college is uniquely placed. Being in Harrow-on-the-Hill, it is at the junction of the boroughs of Harrow, Ealing and Brent, and therefore draws people from quite a wide area. It is on a restricted site and needs to expand, but it is difficult for it to extend its existing buildings and increase student numbers, because local residents are worried about what that would mean in traffic terms, and about the domination of the expanded buildings. All that is understandable. The college had the option of buying an adjacent building on the main road, which would have enabled it to expand while taking traffic away from residential areas but, regrettably, that is no longer possible.
Along with the principal of St. Dominic's, Mr. John Lipscomb, I have corresponded with my hon. Friend the Minister, and we are grateful for the careful and concerned way in which he has examined the problems of the college. I feel, however, that there is a flaw in the legislation that established the otherwise tremendously successful FE sector.
When St. Dominic's and one or two other voluntary-aided colleges—of which there are a relatively small number—sought to expand, they were unable to borrow money on the strength of their existing buildings 851 because it was not entirely clear who owned them. St. Dominic's did not own its buildings, they had never been owned by the local authority, and it turned out that the Catholic Education Service did not own them either. Getting together the money for expansion proved to be a real problem.
The Further Education Funding Council, at least in the London region, was not as helpful as it might have been. I think that it could have sorted the matter out, but suggesting that, if the present site is too restricted, the college should find another site makes no sense in north-west London. [Interruption.] The hon. Member for Newham, South (Mr. Spearing) laughs, but he knows how restricted space is in east London, and the situation is just as bad in north-west London. It simply was not possible to find another suitable site.
Catholic sixth-form education is highly prized in my constituency, and in surrounding constituencies. The present site is terrific for St. Dominic's, and I hope that my hon. Friend the Minister will look re-examine the legislation and the activities of the Further Education Funding Council in order to ensure that that college, and the small number of other voluntary-aided colleges elsewhere in the country, can continue to be successful. Catholic sixth-form education would be gravely missed by many people.
One of the reasons Labour will lose the next general election is that Labour Members always describe any set of problems—and of course there are problems, some of which were mentioned by the hon. Member for Pendle (Mr. Prentice)—as a crisis. They hope that, by doing so, they will gain some kudos among those who care about these matters, including those in the FE sector. They hope that people will say, "Whatever the present Government may be doing, at least we could rely on the Labour party."
It is not surprising that the hon. Member for Hyndburn (Mr. Pope) got so ratty when I merely asked him how much money an incoming Labour Government would give the FE sector. That is the point: as the hon. Gentleman was saying that more money was needed, mine was not an unreasonable question—or, as he put it, a stupid question. It was all laid out by the FE sector in its submission to the public expenditure survey in April 1996. It stated how much money it wanted. The question is simple: how much would an incoming Labour Government provide?
I think that the answer is this: either a Labour Government would provide money, which would mean that, once again, Labour was being financially imprudent and its much-vaunted views on taxation would be proved to be so much moonshine; or it would not provide the money, in which case the rest of the speech of the hon. Member for Hyndburn goes down the drain. If Labour is not going to provide that extra money, there is plainly no point in the hon. Gentleman's making the complaints that he has made.
The further education sector is tremendously successful. Hon. Members scoffed at my hon. Friend the Member for Sutton and Cheam (Lady Olga Maitland) when she spoke of the number of people in further education. I am getting nasty looks from the Whip, so I shall be as brief as I can be—rather briefer than one or two Opposition Members.
As I was saying, Opposition Members scoffed at my hon. Friend, and said that she must have obtained her figures from a Conservative central office brief. I do not 852 know whether that is true, but the figures are confirmed in the submission from the further education colleges. Whether it was a central office brief or not, my hon. Friend was right, and those who scoffed were plainly wrong.
We are talking about a £3 billion operation which is highly successful, and has expanded tremendously since it was freed from the shackles of local government. All that we hear from Opposition Members are complaints. Of course there will be problems: that is inevitable when we are making massive changes in the sector, and trying to adapt it not just to increased pupil numbers but to a changing society and a new role. The Government are coping with those problems, however, and only this Government will keep those colleges free.
The hon. Member for Hyndburn made one prophetic observation. He spoke of the democratisation of the FE sector. That can mean only one thing. A Labour Government would return the colleges to the shackles of local authorities; they would bring in the councillors and the bureaucracy, exclude the business men and take the colleges out of the real world. As my hon. Friend the Member for Sutton and Cheam pointed out, the Labour party must deal with one point before the election. If it has the opportunity to impose a teenage tax, it knows, we know and our constituents know that many people will not be able to go to further education colleges.
FE colleges are a success story. They are expanding, improving and doing terrific work—but all the Labour party can do is sneer at the people who are doing that work.

§ Mr. Chris Davies (Littleborough and Saddleworth)
I congratulate the hon. Member for Hyndburn (Mr. Pope) on securing this debate.
The Government's ability to shoot themselves in the foot really does beggar belief. They have a success story for which they should be able to claim some credit. In practice, however, in the past few weeks alone they seem to have managed to alienate the principals of almost every further education college in the country. There was the announcement from the Further Education Funding Council, following receipt of communication from the Department for Education and Employment, that, from the beginning of 1997, funding for demand-led student enrolments was to be withdrawn just over a third of the way through the academic year. Just a couple of weeks later, that decision was turned around and the cut will not be made; the pain is simply being transferred to next year.
Colleges were left uncertain, and, naturally, all the people involved in their administration now feel mistrustful. They feel that the Government have not only broken their trust with them but proved themselves to be incompetent. In many ways that is a shame, because the Government's record is good. Even the hon. Member for Hyndburn said that the number of students at further education colleges had increased by 100 per cent. since 1990.
Although credit should be given where it is due, the Labour party has nothing to offer on this subject. As the hon. Member for Harrow, West (Mr. Hughes) said, the Labour party is pledging nothing for increased funding. Labour Members bleat about the crisis in further 853 education. They wear their bleeding hearts and shed their crocodile tears, but Labour is not promising any additional finance to support further education in years to come.
The increase in student numbers has been achieved not simply through additional funding over the past years but through efficiency improvements made by the colleges themselves—11 per cent. only last year. In the academic year 1997–98, funding is expected to be some £40 million less than that expected two years ago. Less and less money is being provided per further education student.
I hope that the Government will recognise that all hon. Members want efficiency and the most efficient and effective use of money, but there is a danger that, far from following the philosophy of getting a quart out of a pint pot, the Government may risk spoiling the ship for a ha'p'orth of tar. The growth in student numbers over the past few years, although commendable, is still a great deal less than colleges want, and less than they have sought in their strategic plans.

§ Mr. Sheerman
In my constituency, we have three excellent FE colleges with a first-class reputation. The problem, as the hon. Gentleman and the Minister know, is that efficiency savings can be achieved for a certain period, but there is a critical point at which those savings affect quality. That is happening in higher education. It will now happen in further education. The crucial point is that efficiency savings can be made only for so long, and then quality starts to decline fast.

§ Mr. Davies
I entirely agree with the hon. Gentleman.
The Liberal Democrats have made it clear that we want more investment in education. I shall not go into the details at length today, but they involve the need to fund education out of general taxation. We seek a new levy on companies—a remissible training levy—to ensure that more money is put back into higher and further education. We also want to change the funding of students, particularly degree students in higher education, to make more money available to enable an expansion of student numbers.

§ Mr. Pope
The hon. Gentleman mentioned that the Liberal Democrats would increase taxation. That must be the fabled 1 p on income tax to fund education, which is supposed to provide a nursery place for every three and four-year-old, to reduce class sizes, and to clear up the backlog in school repairs. He now suggests that it will fund further education as well. It must be the biggest penny in the world.

§ Mr. Davies
When I voted last year and the year before against the cut in income tax, the hon. Member for Hyndburn was out in the Corridor having a smoke. I recognise the point that he makes. It is quite true that our pledge to increase taxation by 1p in the pound to invest in education is geared primarily towards education at the lower end, but some £600 million of the money that we would seek to raise would go into further higher education. I hope that that answers the hon. Gentleman's point—and rather more effectively than he dealt with a point raised by the hon. Member for Harrow, West.
Oldham sixth form college, which was established just a few years ago, has proved itself a great success in raising the staying-on rate of students and pupils 854 throughout the borough. The half dozen or so representatives of my party who were on the council when the college was established had doubts about whether it was advisable to set it up and abolish all the school sixth forms at the same time.
Oldham sixth form college's success over the years has shown that those doubts were unfounded. The greater staying-on rates that have been achieved have been worth the sacrifice of school sixth forms. Raising the standard of education in boroughs such as Oldham—a borough that traditionally had low educational achievement—is crucial to the regeneration of industrial towns such as the one I represent.
According to the principal, Oldham sixth form college turned away 150 applicants last year, although they were quite capable of taking on the courses—and the number who will be turned away will probably increase because of the cuts that are likely to be made next year. It is likely that 200 or more people will be turned away next year. There is a great demand for places, but there is a danger that young people will miss out because opportunities will no longer be available to them. There is also a danger that they will not be able to take advantage of the education opportunities that should be available to every citizen.

§ Mr. Tipping
Does the hon. Gentleman agree that disadvantage and staying-on rates should be included as parameters for a new funding mechanism, which we must have next year, for places such as Oldham and for coalfield communities? Places that have an education deficit should get priority.

§ Mr. Davies
I agree. One of the priorities—I hope that the Minister will address this—should be targeting in college funding. There must be a difference between northern boroughs, coalfield communities and the like, where educational achievement has traditionally been low, and counties such as Surrey and Sussex, where the state of affairs is very different.
What colleges need above all is stability. They need clear plans for the medium and long term so that they can prepare their strategies for the future. If they are to achieve efficiency savings, it is necessary for them to have a clear idea of what funding they will have so that they can plan. I am tired of principals telling me, "We simply don't know where we are."
Secondly, the level of funding needs to be addressed. I have already touched on that. Thirdly, there is a need for targeting funding on colleges in less affluent parts of the country. Fourthly, there is a need for urgency in the process, especially as colleges are trying to plan for next year. At the moment, the FEFC is examining options for next year. That examination must be completed quickly so that principals can make their plans for next year as soon as possible.
Further education has been a success over the past few years. It is a success now. It is very important that steps are taken to ensure that it continue to be a success in the years to come.

§ Mr. Bryan Davies (Oldham, Central and Royton)
We have had a most interesting debate, and I congratulate my hon. Friend the Member for Hyndburn (Mr. Pope) on initiating it, and on speaking so incisively about the issues facing the education sector.
855 The hon. Members for Sutton and Cheam (Lady Olga Maitland) and for Harrow, West (Mr. Hughes) seemed to deny that there has been a crisis in further education, but this debate is taking place precisely because of the crisis for which the Minister is significantly responsible and which has occasioned deep demoralisation across further education. That is why I—exceptionally for a Front Bencher—tabled an early-day motion, which was signed by 100 hon. Members and which sought to call attention to the problems facing colleges in their constituencies. My hon. Friends the Members for Pendle (Mr. Prentice) and for Hyndburn reflected on the particular problems of colleges in their constituencies. Reference was also made to acute problems in Stoke-on-Trent and in a number of other colleges.
We should dispense with the absurdity of Conservative Members who say that we should account for how we would pay for the crisis. The Government said last November that it was time Labour identified how it would fund certain parts of the education budget, but at that time we knew nothing about the funding shortfall that has led to the recent crisis. As late as January, the Secretary of State said that all was well.
The further education sector told the Minister that there was a shortfall of £80 million on previous years, and that a bill of £80 million was building up for students taking courses in the current year. The simple fact is that the Department should put its own house in order, and the Minister should get a grip on the crisis that has developed in colleges. The further education sector is crucial to education and training for the nation.
Let us get the figures clear. The hon. Member for Sutton and Cheam has great difficulty differentiating between universities and further education colleges: the subject of the debate is further education. Her figures are incorrect, because there are 3.5 million students in further education, which is more than there are in school sixth forms and universities combined. That is why the sector is so important. It deals with the skills, competences and educational opportunities of which the country is most in need. It provides the platform from which people can move on to higher education, and can equip themselves for jobs in a world in which additional skills are required.
The naivety of the hon. Member for Littleborough and Saddleworth (Mr. Davies) is at times matched only by his honesty. His party had reservations about the hugely successful Oldham sixth form college in my constituency, to which I pay tribute for its successes in recent years. His naivety was adequately exposed by my hon. Friend the Member for Hyndburn. We are told that the 1p on income tax for education will cover every element of the education budget, which runs into billions of pounds, thus producing a penny that magnifies into astronomical figures. We do not expect the Liberal Democrats to be particularly strong on mathematics. However, we expect the Minister to answer the charge that we have made today.

§ Mr. Chris Davies
Did the hon. Gentleman not hear my response to the hon. Member for Hyndburn (Mr. Pope)? I pointed out that £600 million of that money would be geared to further and higher education.

§ Mr. Davies
The hon. Gentleman will have great difficulty making his sums add up. Every time the Liberal 856 Democrats speak on education, the sector on which they speak attracts resources based on the 1 p increase in income tax.
I want the Minister to deal with the obvious point that is being made in the House today, which has been made in the many letters that we have all received from across the country, about the crisis facing individual colleges because of the Government's original indication that they were not prepared to fund the demand-led element. That crisis sent alarm bells ringing. It demoralised the sector, and its implications and consequences for colleges are profound.
I suppose that the Minister at least deserves congratulations, because he has succeeded in putting further education on the map. The silent service has suddenly become an extremely noisy advocate of the role it plays, and not before time. What a pity that it has had to do that because of the crisis that has emerged. We welcome the fact that, after pressure was put on the Government, a rapid U-turn took place. It was decided that it was scarcely reasonable to tell colleges that they could not be funded for students who were already enrolled and were taking courses.
I always think that it is best to move away from discussing areas of public service if I want to engage the full sympathies of Conservative Members. I emphasise, therefore, that many private providers of training that are linked to colleges would have faced bankruptcy and worse if the Government had seen through the original absurd proposition not to fund the demand-led element. However, that crisis persists. The Government have announced that they do not intend to make those funds available next year.
The Minister must surely realise that colleges are already committed to a certain number of students who are taking courses. He should also realise that colleges have been thrust into this position. They were told in February this year that the crucial engine of expansion on which they have been dependent for the past three years will not obtain next year. Significant areas of expansion have led to increased opportunities for students in their communities. Colleges already have commitments and plans for next year, which they are expected to honour until this extraordinary act by the Government intervened. The Minister has pulled the rug from under them at this late stage, which has created chaos.

§ Mr. Timms
I am pleased that my hon. Friend has drawn attention to this important matter. In Newham and similar areas, college expansions have been funded by regeneration grants from Europe, city challenge and elsewhere, and have been tied to funding for increased student places. If funding is no longer available for such expansion, the danger is that they will have to repay those regeneration grants.

§ Mr. Davies
I am grateful to my hon. Friend for pointing out that issue, which seriously affects a number of colleges. I hope that the Minister will also deal with that matter.

§ The Parliamentary Under-Secretary of State for Education and Employment (Mr. James Paice)
I shall, if the hon. Gentleman sits down.

§ Mr. Davies
Indeed. I recognise the constraints on time, and I shall give the Minister the chance to respond to these points.
857 The Labour party emphasises the significance of the further education sector. Two specific aspects of our policy will be of enormous support to the sector. First, our new deal sets out how we intend to fund, from windfall taxation of the utilities, jobs and training places for 250,000 unemployed people. Secondly, contrary to the mistaken impression that the hon. Member for Sutton and Cheam sought to create, our proposals for education attendance allowances—transferring child benefit to education attendance—will support students at the place where they enjoy their education. That is our priority. I expect the Minister to tell us that the Government have learnt some lessons from this sorry affair.

§ The Parliamentary Under-Secretary of State for Education and Employment (Mr. James Paice)
As always, the hon. Member for Oldham, Central and Royton (Mr. Davies) omitted the crucial points. First, he omitted to tell us whether a Labour Government would reintroduce the non-cash-limited element of demand-led funding, which has been the centrepiece of this debate. The matter is about not cost but the principle of whether Labour would reintroduce it. Secondly, he reiterated the absurdity of the windfall tax apparently abolishing youth unemployment—a one-off measure paid for by a one-off tax.
It is nearly four years since further education and sixth form colleges left local authority control and were freed to become incorporated organisations. Their achievements have been formidable. Several hon. Members have described the exceptional growth, of which there is no doubt. Student numbers have grown by more than 30 per cent.
In opening the debate, the hon. Member for Hyndburn (Mr. Pope) referred to staff contracts and issues relating to the employment of staff, demonstrating that he seems more concerned about the numbers of staff than the students who are being taught. The staff "silver book" contract under which virtually all staff were employed at the time of incorporation—too many are still employed under it—stipulates a maximum of 21 hours a week teaching and 38 weeks' total work a year. I do not think that, in the last part of this century, such contracts can ensure that colleges efficiently use the staff they need.

§ Mr. Pope
rose—

§ Mr. Paice
I cannot give way. I do not have time, because so many hon. Members spoke in the debate.
Since incorporation, the Government have increased resources to the further education sector, which now receives well over £3 billion a year. The sector will have noticed that, despite all their huffing and puffing today, the Opposition said nothing about providing any further direct funding.
The House may be aware that yesterday the Further Education Funding Council published a comprehensive set of performance indicators for the 1994–95 academic year, which has been placed in the Library. It contains a vast amount of information of both local and national application. It shows that the average achievement rate for students who completed their programmes was 71 per cent., which I am sure most colleagues would agree is not too bad.
858 If one unpacks that figure, however, one finds a massive variation in colleges. Although part of the variation can be explained by circumstances, colleges with the lowest rates of achievement should at least be giving as much attention to raising them as they are to securing further increases in student numbers. To put that into perspective, the worst achievement rates in the general FE sector are considerably below 30 per cent., whereas the best are over 90 per cent.
I turn to the issue of demand-led expansion funding and the events of recent weeks. It is correct that, in the 1991 White Paper the Government undertook to meet the additional costs of colleges' expansion above agreed targets, which became known as "super-DLE" payments. No Opposition Member has said that, until the current financial year, those payments have never been called on because the costs of the demand-led element have been met by the shortfall in performance of other colleges, such that the overall FEFC budget has been sufficient to meet the total costs.
The unforeseen and unprecedented expansion in student numbers in the 1995–96 academic year changed that. Student numbers in full-time equivalents rose by 11 per cent. and, in that total, the number of FEFC-funded part-time students rose by no less than 37 per cent. Although the rate of full-time equivalent student growth has slowed a little, it is still forecast to be about 8 per cent.
The Further Education Funding Council wrote to the Government on 30 November, after the conclusion of the public expenditure round, to say that its demand for DLE payments would be £82 million in the current financial year. A few weeks later, we were advised that the additional costs in the next financial year to meet the growth above target in the spring and summer terms of this academic year would be another £84 million. So, in the space of six or seven weeks, we were told that DLE would require over two years at least £166 million—excluding the rest of the next academic year. Those are substantial sums to find, but, according to our undertaking, we found the £82 million shortfall for the current financial year from other departmental spending.
A Government decision not to pay the £84 million for the first two terms of the next financial year—the last two terms of the current academic year—was never made. It was extremely unfortunate that the colleges were led to believe by a letter from the Further Education Funding Council that that might be so. The Government never took such a decision, and have therefore not changed their position. When we were able to look more carefully at the figures and examine the matter, I was able to announce, as hon. Members have said, that we shall ensure that that £84 million is met. It is due to colleges, it is being incurred with students in place, it will be met, and the Government will meet the greater part of it.
I know that a number of colleges are concerned about what can be described as borderline cases—precisely, whether a contract was in existence and arrangements were made. I know that the FEFC is consulting colleges on the issues, and I understand that it is sending a letter today to all colleges to try to ensure that the precise details are clear. I should make it absolutely clear that students who are already engaged on a course should have nothing whatever to worry about. There is no question, as has been suggested, of stopping students who are engaged in courses.
859 On a reasonable basis, we have met our obligations under the White Paper commitment. In the space of six weeks, we found an extra £150 million or so to honour our undertaking. That is a lot of money to find. I must tell Opposition Members that, even if funds are not cash limited, as those were not, they still have to be provided for in public expenditure plans within reasonable parameters of expectation. The sums that I have described could not by any means have been considered a reasonable expectation. We acted promptly to deal with the immediate issues, but rightly must also look at the future.
We are examining urgently with the FEFC measures to improve forecasting to ensure that such a problem does not arise again. Clearly, we did not have sufficient timely and precise signals. I said in my announcement on 5 February that we look to the council to meet all its future expenditure for the next academic year from its voted provision, which is in itself intended to provide for continued growth. I have also asked the FEFC to review the options open to it for the 1997–98 academic year in the light of my announcement and in consultation with colleges. I understand that it will be sending out a document shortly.
One particular issue that my right hon. Friend the Secretary of State and I have identified for urgent review is the practice of franchising by some FE colleges. The facts are quite striking. About a tenth of FE full-time equivalent students are in off-site franchised provision, and nearly three quarters of last year's unprecedented growth was due to franchising. I want to make it clear that I am not opposed in principle to franchising; it covers a wide range of courses and activities. Indeed, in my constituency, some excellent work is done where schools franchise from the local FE college. Franchising is, however, a matter of some controversy in the sector.
In its report on the FEFC a fortnight ago, the National Audit Office acknowledged the merits of franchising, but pointed out risks to the quality of provision and of the substitution of public funds for existing expenditure and training. The House will know that I have asked a working party to look into franchising urgently.
Two other issues have been raised, which I shall try to deal with quickly. The first is overall funding. As I have said, the Government have increased funding for the further education sector year on year. We have built in efficiency savings, but I remind the House that the National Audit Office report identified management as a key factor in financial health. The report makes it clear that poor financial health does not appear to depend on any sector-wide factors.
The other issue that has been raised is teachers' retirement. My right hon. Friend the Secretary of State will lay regulations before the House in one minute. There was no announcement on the radio this morning. I understand that there was a union representative. The regulations will defer the implementation of the proposals until 1 September, and will defer the reduction in the employer's contribution rate to 1 July.