§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Clelland.]10.16 pm
§ Mr. Llew Smith (Blaenau Gwent)
My involvement with one of the colleges that makes up Gwent tertiary college goes back some 35 or more years to when I was an evening class student. Anyone who knows the history not only of that college but of colleges throughout Gwent will be filled with sadness, dismay and anger about what has happened to them over the past few years.
Before the appointment of Sue Parker, who until recently was the principal, the colleges were remarkably successful, both financially and academically. I want to mention the college that I attended some 35 years ago, Cross Keys, which is in the constituency of my hon. Friend the Member for Islwyn (Mr. Touhig). In the two years prior to the appointment of Sue Parker as principal of Gwent tertiary college, there was a surplus of £2 million. Some people may say that that is not the proper measuring rod of a good college, and I would agree with them, although an increasing number of people believe that it is. But academically, too, Cross Keys college, which is part of Gwent tertiary college, was a success in the years leading up to the appointment of Sue Parker: it had a 95 per cent. success rate at A-level and was justifiably proud of that achievement.
I may be old-fashioned, but I should have thought that the proper response to such success would be to reward it by building positively upon it. Unfortunately, with the appointment of Sue Parker, and indeed with the support of the governing body of Gwent tertiary college, the response to that academic and financial success was to alter the structure of the college to such an extent that it almost resulted in its destruction. For example, the principals of each of the colleges that make up Gwent tertiary college were removed from those colleges and transferred to a super-management centre miles away from the action. In addition, ineffective and costly management structures were built up.
As a result of those structural changes, the college quickly faced financial chaos. Debts rocketed and, at one stage, it faced a possible debt of £6 million. Redundancies followed, including redundancies among those who had helped to build the college into something of which we were all justifiably proud. In recent weeks and months we have heard allegations about the misuse of European money which could result in Gwent tertiary college having to pay back £1 million to the European Union and possibly losing another £2 million in grant applications that have already gone in.
The governing body's response to that chaos was to appoint Cyril Lewis, who was asked to draw up a report on the running of the college. It also appointed Ernst and Young to draw up a similar report. It is interesting to note that both reports were kept secret. The public, Members of Parliament, the students and the staff, who had devoted their lives to the college, had no right to examine those reports to discover why certain conclusions had been reached.
Not only was that unacceptable, but it reflected the inefficiency of the governing body, which allowed that to happen. Those reports were paid for from public funds— 992 from people who make up one of the poorest communities of Gwent. Given that public funds paid for those reports, the public should be able to say to those who wrote them, "Either we are allowed to decide what to do with your report, or you do not get paid; it is as simple as that." The college, however, allowed those who had drawn up the reports to decide what should be done with them. I cannot understand that.
One or two people have done well out of the chaos that the college faced, and Cyril Lewis is one of them. He has received £650 a day, which is somewhat above the average daily earnings of people who work in Islwyn or Blaenau Gwent. Over the past 10 months, he has earned between £70,000 and £80,000. What has he achieved for that? I suspect that, if one questioned the staff of the college, they would say that he has achieved nothing. He has not come forward with any new ideas—in fact the main result of his report has been redundancies and restructuring. In addition to those two reports, another four reports are being undertaken to examine the running of the college and, once again, as I understand it, those reports will remain secret. That is not acceptable and it cannot be defended.
When Sue Parker resigned—which is putting it politely, as we all know that, in reality, she was dismissed—that provided an ideal opportunity for the college to start again. I believe that my hon. Friend the Minister has the power to sack the governing body, and he should do so. The problem did not lie only with Sue Parker: she was working in conjunction with, and with the support of, the governing body of Gwent tertiary college. I ask my hon. Friend whether he would be willing to use his power to bring about those sackings.
§ Mr. Smith
No, I have only a few minutes.
Will my hon. Friend the Minister also examine whether any of the people who were responsible for the financial chaos now facing the college are still in positions of power and, if so, why? Are any of those who were responsible for the alleged misuse of European funds still in power and still employed and, if so, why? Will he also intervene following last week's announcement, of which all hon. Members were informed, of more redundancies and posts to be left unfilled in the college? Is it not wrong that those who devoted their lives to the college and who helped to make it the sort of college of which each and every one of us in Gwent was justifiably proud should now experience a worsening of their conditions and, in many cases, the loss of their jobs?
§ Mr. Smith
No, I am sorry, but we have only a few minutes.
Is my hon. Friend the Minister satisfied with the appointment of the new principal? As I understand it, the new principal was recently taken to an industrial tribunal by the trade unions for attacking the conditions of part-time lecturers, and he lost the case. I would suggest that he is not the sort of person who can begin to rectify the wrongs of the past few years or who can begin to build better relationships.
993 Is my hon. Friend willing to allow further education in communities such as Gwent to be run by an unelected and unaccountable quango, consisting largely of business people who failed dismally in their task as governors? If we are going to leave education to such people, the college certainly faces disaster. If matters are left to the quango, the message that goes out from the Government is that they are abdicating responsibility for further education in Gwent. I am convinced that that is not a message that the Government want to send. I remember my right hon. Friend the Secretary of State, who has just entered the Chamber, saying a couple of years ago that we should make a bonfire of all the quangos in Wales. I agreed with him then and I agree with him now. The governing body of Gwent tertiary college is one quango that should be thrown on that bonfire.
My hon. Friend the Minister should also draft and introduce legislation to rid Gwent tertiary college of that quango. The running of the college should be returned to the hands of elected and accountable local authorities. If we fail to do that, the future for Gwent tertiary college is indeed dismal. Ministers have both formal and informal powers and the people who make up the college—students, staff and parents—are demanding that they use both forms of power to begin to rectify the wrongs of the past few years and to help to ensure that, once again, Gwent tertiary college is the jewel in the crown of further education in Gwent.
§ Mr. Don Touhig (Islwyn)
I am grateful to my hon. Friend the Member for Blaenau Gwent (Mr. Smith) for giving some of his time to allow me to take part in the debate.
All Gwent Members of Parliament are concerned about the scale of the problems at Gwent tertiary college. Just two weeks ago, it was announced that the number of non-teaching staff would be reduced by 88; that is in addition to the teaching staff who have already left. Inevitably, that has led to cuts in teaching hours, which must affect the ability of the college to deliver the quality of education of which my hon. Friend the Member for Blaenau Gwent spoke.
However, the underlying problem facing the college has existed for two years or more, and the problem stems from the failure of the governing body to do the job for which it was appointed. Indeed, its record of mismanagement beggars belief.
On 13 February 1996—two years ago—the governors approved a new management structure, telling the then principal that implementation should be monitored by various committees of the governors. It has now become apparent that little, if any, monitoring took place. As a result, five campus principals were unilaterally removed and replaced by five site managers, actually increasing the number of managers. A new cross-college team of functional directors was appointed, and no account was taken of how that would be funded. A substantial number of new middle management posts was created, going well beyond the original proposals.
In the end, the number of managers at the college increased from about 50 to 118. That had two effects. First, it raised managers' salary levels well beyond the 994 budget's ability to meet those demands; secondly, it led to the removal of so many teaching staff that a raft of new part-time lecturers had to be appointed to fill the gap.
Seemingly without realising it, the governing body increased the staff costs at the college by £4.5 million, at a time when student numbers there were static. Those who were promoted were placed on a range of salary increments that only stored up further financial problems.
Within a year—on 25 February 1997—the governors finally woke up to what had happened, and dismantled the whole structure. At that time, together with fellow Gwent Members of Parliament, I met senior members of the governing body in the House, and asked how management had increased in such numbers without anyone noticing. I was told: "It was not part of the culture to notice the rise in management numbers." We were further told that one of the college's failings was its lack of management skills in negotiating with the trade unions. "Trade unions were too successful in negotiating with us," we were told. Some of the governing body were of the view that they had been "ripped off'.
The whole sorry tale began to unfold when the principal was suspended and then resigned, but she agreed to resign only if the governors signed a gagging clause promising not to release any details of why she was leaving the employment of the college. At that time, Gwent Members of Parliament asked the National Audit Office to carry out an investigation, and, as a consequence, as my hon. Friend the Member for Blaenau Gwent said, the governors commissioned two reports.
However, when Members of Parliament asked to see those reports, we were told that we could see them only by sitting in the room with the governing body, reading the reports and handing them back—rather as the present Foreign Secretary had to do with the Scott report. As my hon. Friend the Member for Blaenau Gwent also said, neither of those reports has ever been published, although the governors have taken decisions based on information in them, and we are now told that the reports cannot be published because they contain so many potentially libellous statements that the governing body risks endless litigation.
As I have said, four separate reports are being prepared on the running of the college, by the National Audit Office, the Department for Education and Employment, the Further Education Funding Council for Wales and the accountants Ernst and Young. I am given to understand that, as my hon. Friend the Member for Blaenau Gwent has said, probably only one—the National Audit Office report—will ever be made public.
§ Mr. Touhig
I am sorry; normally I would give way, but I have very little time.
How much longer will this farce continue? How much longer will the college be run by a group of people who meet behind closed doors, spend millions of pounds of taxpayers' money, and are seemingly unaccountable for anything that they do? I believe that an option is available to my right hon. Friend the Secretary of State for Wales, and that is to use the powers conferred on him by the Further and Higher Education Act 1992. Those powers give him the opportunity to direct the funding council to report on the management of the college.
995 If, as a result of that report, the Secretary of State feels that the college has been mismanaged, and on the recommendation of the funding council, he can sack the governing body. Its members deserve to be sacked and replaced by a new team, and if we are to restore confidence in the college, that must be done.
The mismanagement that is at the root of the college's problems resulted from the fundamentally flawed 1992 Act, whereby Gwent tertiary college, like all colleges in Wales, was taken out of the control of local education authorities and handed over to the new governing bodies, which acted as corporate bodies. I have no doubt that, if the college were still being run in partnership with the LEAs, we would not have the awful problems we now face.
I have always held the view that students, staff and representatives of the local authorities, among others, should sit on the governing bodies of colleges. That structure best serves those who use the colleges and those who run them. Without a proper balance, effective accountability is not possible.
That idea is not new. My hon. Friend the Member for Newport, West (Mr. Flynn) served on the Committee on the Further and Higher Education Bill, as it then was, in 1992, and he urged that course of action then. It is the lack of accountability that led to the mismanagement of Gwent tertiary college.
That mismanagement has been damaging throughout Gwent, but especially in my constituency, because all post-16 education in Islwyn is carried out at the Cross Keys campus of the tertiary college. Cross Keys has an enviable reputation, but it is now at risk as a result of the mismanagement. If we want to build on the success that the college has had the past, we cannot allow the present governing body to continue.
I hope that the Minister will agree that decisive action needs to be taken, so that my constituents and others throughout Gwent believe that we are doing something positive to restore confidence in the running of the college.
I also hope that, in the long term, the Secretary of State will decide that we should change the whole management structure of FE colleges throughout Wales. That could be done in one of two ways. The colleges could again be run in partnership with the LEAs, or the Welsh assembly, when it is set up, could take responsibility for running them.
The best way forward is to make the running of further education in Wales open and accountable. If it were, the fiasco that we have seen at Gwent tertiary college would never have happened. I hope that the Minister will tonight take the first steps towards showing that we intend to do that.
§ The Parliamentary Under-Secretary of State for Wales (Mr. Peter Hain)
I congratulate my hon. Friend the Member for Blaenau Gwent (Mr. Smith) on raising this subject, and my hon. Friend the Member for lslwyn (Mr. Touhig) on joining him. The debate gives me the opportunity to say a few words about our further education colleges in Wales, before I come to the specific matters that my hon. Friends have raised in connection with Gwent tertiary college.
996 The 26 further education colleges in Wales do an excellent job, often in difficult circumstances. They are the mainstay of our drive to increase and widen participation in education and training throughout Wales, including the up-skilling of our labour force. In our forthcoming Green Paper on lifelong learning, further education will be highlighted as a key agency in delivering our commitment to transform Wales into a learning country, as the foundation of building a world-class economy.
Gwent tertiary college, as my hon. Friend the Member for Blaenau Gwent said, was launched on 1 April 1993, amid high hopes. With such exciting developments as the LG investment, its role is crucial in helping to provide the high-quality skills base that Gwent needs. It is therefore tragic that the college stumbled into a catastrophic crisis, which produced such a serious deficit last year. Poor management meant that tough action was needed.
I agree with my hon. Friend the Member for Islwyn about the gravity of the problem. In two short years between 1994–95 and 1996–97, staff costs rose by a staggering 30 per cent. Staff numbers went up by 120—most of those were managers—while student enrolments stayed constant. That sort of gross imbalance and inefficiency was unsustainable.
A recovery plan was drawn up by the governing body, based on advice from the Further Education Funding Council for Wales, Mr. Cyril Lewis and the college's internal auditors Ernst and Young, and is now being implemented. The college is now forecasting a small—£0.5 million—operating surplus, as against a projected loss of £6.7 million for the year ending 31 July 1998. Provided that the recovery plan is followed, the future position of the college is much more secure, financially at least.
I appreciate the difficulties that staff and management have experienced over the past few months. I met the college's representative from the National Association of Teachers in Further and Higher Education at a meeting last year arranged by my hon. Friends. However, there is no alternative within the current regime but for Gwent tertiary college to live within its means.
I understand the frustration of hon. Members about the reports and the fact that they cannot scrutinise them closely. I asked through the funding council for the reports to be made available to my hon. Friends, and some of them took the opportunity to look at them. That course should be pursued.
As for Mr. Cyril Lewis, he was employed by the governors of the college in June 1997 to examine its management affairs, diagnose the root problems and make recommendations on a recovery plan for the college. That is a difficult task, given the size and complexity of the college, and the huge deficit that was projected.
The financial forecasts for the year ending July 1998, as I said, projected a deficit of £6.7 million. On the basis of the management and financial reports, the governing body is taking action that will result in the college incurring an estimated surplus of £500,000 at the end of the current academic year. Of course, that is not certain, but without the action that has been taken to recover the college's financial position, it would have been facing bankruptcy by now.
It was and is for the governors of Gwent tertiary college to consider the value of Mr. Lewis's remuneration, which I understand is just over £77,000 from the public purse.
997 I understand the strong feelings about the size of that fee among staff who have been made redundant or had their income cut as part of the recovery plan. Those feelings have rightly been echoed in the Chamber tonight. The governors and the funding council take the view that they have turned around the college's finances by £7.2 million by paying out the £77,000 fee—just 1 per cent. of that total saving—to resolve a complex and intensive emergency.
I hope that no one will wish to defend the top-heavy management structure of 118 posts that was so clearly inefficient, and which has been replaced with one of just 35 posts.
The situation has been extremely difficult, and I sympathise with the staff, the governors—many of whom have acted with honour—and the local community, including local Members of Parliament and the local authorities.
May I respond specifically to the issues raised, first, by my hon. Friend the Member for Blaenau Gwent on the European social fund? I am aware of the discussions taking place between the ESF auditors and the college over its use of ESF grants. The audit has not been completed yet, and it would therefore be inappropriate to speculate on whether any ESF grants will need to be repaid. I understand the seriousness of the situation, and my hon. Friend's concern about it.
Let me deal with my hon. Friend's call for me to sack the governors, and explain the circumstances in which that power might be implemented. I do not have the power to sack the governors. However, the Secretary of State has powers under section 56 of the 1992 Act to direct the Further Education Funding Council for Wales by order, but he would not be able to exercise such powers unless he was satisfied, following legal advice, that the funding council was acting unreasonably.
The Secretary of State also has power under section 57 of the same Act to intervene in the event of mismanagement or breach of duty by an FE institution on the recommendation of the funding council—I stress, on the recommendation of the funding council, not otherwise. The same test of reasonableness would apply to the actions of the institution and the council. Both powers are safeguards, to be used as a last resort after the most careful consideration and expert legal advice. To date, neither power has been exercised in Wales.
My hon. Friends called for immediate ministerial action—"decisive action", I think, was the phrase used. I understand their frustration, but the way in which the legislation is drafted does not allow that. The situation has been difficult, and I well understand the points that have legitimately been raised this evening.
998 I trust that the college governors and the new principal, Mr. David Mason, who takes up his post in April, will make it their priority to rebuild the confidence of the college's staff, the local community and Gwent Members of Parliament.
§ Mr. Llew Smith
Does my hon. Friend appreciate that, even before Mr. Mason takes up his post, he has lost the confidence of many of the staff because of his background experiences, including the court case in which he is involved in the college that—I believe—now employs him?
§ Mr. Hain
I hear what my hon. Friend has said, but the fact is that Mr. Mason is taking up his post in April.
We must all recognise that Gwent tertiary college is too important an institution, in too strategically important a part of Wales, to be either under-performing or failing more badly. I assure my hon. Friends that I shall monitor the situation very carefully, and invite them to keep in close touch with the funding council, the college and, indeed, me.
§ Mr. Hain
There is much truth in what the hon. Gentleman says. My hon. Friend the Member for Blaenau Gwent has made the same point. I hope never to see this situation repeated.
My hon. Friend spoke of the unelected, unaccountable quango, and the state that the Tory Government left. I simply remind him that the National Assembly for Wales will have power to deal with that quango state, to reform it and to address the relationship between the funding council and democratic accountability—and, indeed, the status of further education colleges. My right hon. Friend the Secretary of State for Wales has specifically given the assembly that power, and it will be free to exercise it. My hon. Friend the Member for Islwyn was right to remind us of that.
Our manifesto gave a commitment to reforming the governance of FE colleges to increase local accountability. It is vital that we secure increased local accountability—in general terms, to bind FE colleges much more closely to the community they represent and serve, and also to ensure that we do not see a repeat of the tragic episode from which Gwent is seeking to recover.
I am now considering how to implement the manifesto commitment. The Welsh Office will make an announcement in due course.
§ Question put and agreed to.
§ Adjourned accordingly at fourteen minutes to Eleven o'clock.