Further Education

HC Deb 06 July 1998 vol 315 cc755-97

[Relevant documents: Sixth Report from the Education and Employment Committee of Session 1997–98, on further education, HC 264-I, and the Department for Education and Employment's departmental report: "The Government's Expenditure Plans 1998–99" (Cm 3910).]

Motion made, and Question proposed,

That a further, revised sum not exceeding £6,019,940,000 be granted to Her Majesty out of the Consolidated Fund to complete or defray the charges which will come in course of payment during the year ending on 31st March 1999 for expenditure by the Department for Education and Employment on voluntary and special schools; the Assisted Places Scheme; the provision of education for under-fives; city colleges and other specialist schools; grant-maintained schools and schools conducted by education associations; music and ballet schools; the school curriculum and its assessment; the youth service and other educational services and initiatives; careers guidance and services; payments for or in connection with teacher training; higher and further education provision and initiatives; loans to students, student awards and other student grants and their administration; the payment of access funds; reimbursement of fees for qualifying European Union students; compensation payments to teachers and staff of certain institutions; expenditure on other central government grants to local authorities; the provision of training and assessment programmes for young people and adults; initiatives to improve training and qualifications arrangements and access to these; the promotion of enterprise and the encouragement of self employment; payments for education, training and employment projects assisted by the European Community and refunds to the European Community; events associated with the UK presidency of the EU; the UK subscription to the ILO; help for unemployed people; the promotion of equal opportunities, disability rights, childcare provision and co-ordination of certain issues of particular importance to women; the payment of certain fees to the Home Office; the Department's own administration and research and that of Capita; the information and publicity services; expenditure via training and enterprise councils and amounts retained by them as surpluses and spent by them on training and other initiatives within their articles and memoranda of association; expenditure in connection with the sale of the student loans debt; and on expenditure in connection with Welfare to Work Programme and Millennium Volunteers.—[Dr. Howells.] 4.31 pm

Ms Margaret Hodge (Barking)

The Government have placed education at the heart of their agenda but, although we have spent much time on lengthy debates on schools and on higher education, rarely does the House devote time to debating further education. Yet the sector is vital to Britain's future.

It is FE which provides two thirds of all post-school education; which educates the majority of full-time students in the 16 to 19-year-old age cohort; which gives adults that crucial second chance to gain qualifications and skills if they failed at school; which creates the opportunities for access to higher education for those who have traditionally been excluded from it; which provides the vital bridge between education and employment, ensures that individuals have access to appropriate vocational qualifications and personal development opportunities and offers specific training courses to meet employers' requirements; and which provides all adults with access to lifelong learning opportunities, whose purpose may be purely to enrich and where the reward is nothing other than sheer pleasure.

FE plays a crucial role, both in enhancing the nation's competitiveness and in promoting our social well-being; yet, for years, the sector has been the Cinderella of education, and the area subject to the fiercest expenditure cuts. Perhaps that is because FE colleges are seen as less glamorous than universities and less emotive than schools; perhaps it is because, traditionally, Members of the House have had few links with the FE sector; or perhaps Governments have simply failed to realise its importance to the United Kingdom economy.

In the first year of this new Labour Government, schools have rightly been at the forefront of the learning revolution. Schools must form the foundation of any culture of lifelong learning. If children learn the basics in school, they have a sound platform from which to move toward higher learning. However, that does not mean that further education should take a back seat. Indeed, in the view of the Select Committee, further education has a vital contribution to make.

Five years on from the incorporation of colleges seemed a good time for the Select Committee to take stock of the sector, to assess its strengths and weaknesses, and to identify what we believe should be its and the Government's priorities for the future. We did not want to duplicate the valuable work done by Helena Kennedy and her committee, nor the study on lifelong learning recently presented to the Secretary of State by Bob Fryer's committee.

We tried to focus on key areas of current concern and on matters that are vital to the Government's education agenda for qualifications, skills and lifelong learning. We were also determined to place on the political agenda specific recommendations for the Government that we believe that they need to address and on which we think that a public debate is needed. Our report contains 50 detailed recommendations that we believe should equip FE to meet the challenges of the new millennium. Some are more controversial than others; all are important to the future health of the sector.

I know that many hon. Members wish to contribute to today's debate, so I shall focus on only some of the key recommendations. I shall first tackle the issue of funding. It is unquestionable that the FE sector was starved of resources by the previous Government. The Tories released the sector from the shackles of local authority control, only to burden it with unacceptable financial cuts. Although some colleges believe that the problem has been the distribution of the FE funding cake among colleges, the Select Committee believes that the real issue is the size of the FE cake itself. There is a funding crisis in the sector and it is left to the Government to confront it.

Further education has had a raw deal, and a much harsher deal than other sectors in education. The figures speak for themselves. From 1993–94 to 1997–98, the real-terms funding of full-time equivalent students in FE was cut by 27 per cent., while the funding of students in universities was cut by 13 per cent. At present, two thirds of the post-school budget is spent on universities, despite the fact that two thirds of those who continue in post-18 education do so in FE colleges. Indeed, if we exclude the controversial student maintenance, Government spending in HE stands at about £4,600 per student, whereas only £2,800 is spent on each full-time equivalent student in FE.

Similarly, Government figures show that unit funding for students in FE has dropped a dramatic 10 times more in that sector since 1993–94 than it has for students in schools. Think what that has done for young people in sixth-form colleges who found themselves, almost by accident, part of the FE sector after incorporation. The position is so acute that the Further Education Funding Council has categorised more than 100 colleges as experiencing financial problems, with the percentage in the weakest category in financial terms having increased from 6 to 27 per cent. in the three years to 1997. I have no doubt that more up-to-date figures would show an even more dire position.

Mr. Barry Sheerman (Huddersfield)

As my hon. Friend knows, I am entirely in sympathy with what she has said up till now, but one matter concerns me, and I hope that she will return to it. When the Public Accounts Committee examined the sector, it found a relationship between efficiency and financial viability, and the way in which the quality of management impacted on those aspects. I am a great champion of further education, but I am worried about bringing the two thirds up to the one-third best practice.

Ms Hodge

We, too, considered the governance and management of the FE sector. I am not sure whether I understand my hon. Friend correctly, but we, too, found that there was not necessarily a direct correlation between financial resources and good management. Be that as it may, the FE sector has not been able to sustain quality, partly because of the financial cuts with which it has had to deal.

If the Government are serious about their lifelong learning agenda, if they want to ensure that the new deal is successful, if they want the university for industry to bring real benefits and if they genuinely intend the individual learning accounts to provide new opportunities for the many, they must, through the comprehensive spending review, inject a considerable sum into the sector.

The Select Committee warmly welcomed the measures that the Government have already taken to bring in extra money but, in our view, they represent only the first small step. I personally believe that the Committee took a pretty moderate view of what resources are needed. We did not attempt to reinstate amounts cut in the past, but we thought it wrong to expect greater efficiency savings from further education in the future than the Government expect from universities. We thought it essential to inject moneys for capital investment in both buildings and information technology. We considered the £10 million set aside by the Further Education Funding Council to widen participation in education and training derisory and grossly inadequate.

We were conscious of the Prime Minister's pledge that an additional 500,000 students would enjoy further or higher education by 2002, which needed to be properly funded. In our view, all this means that, by 2001–02, further education will need at least an extra half a billion pounds each year to provide an efficient, high-quality service. That is a lot of money, but we consider it essential if we are to meet our pledges on education and training.

Britain's problem is not educating our high fliers; we do that as well as any country in the world. Our problem is our long tail of under-achievers—the 7 million British adults who have no qualifications at all. Nearly 30 per cent. of young people fail to reach national vocational qualification level 2 by the age of 19. Whereas 8 per cent. of adults in Sweden, and 14 per cent. in Germany, have no basic literacy skills, more than 20 per cent. of adults in Britain have not progressed past level 1 in basic reading. Investment in schools is obviously vital, but it should not be at the expense of further education. We must put right the failures of the Tory past if we are to equip our adults with the necessary skills and qualifications to ensure the competitive, productive economy that we need for the long-term wealth and stability to which we aspire.

If we are serious about widening participation and improving skills, we must address the issue of student support. While undergraduates are adjusting to paying partial fees, many further education students have been paying full fees for years. While most higher education students are given access to subsidised loans as of right, the system of support for further education students is close to collapse. Most local authorities have cut their funding for student support in recent years. Today, access to such support is entirely a question of geography rather than need. It is simply not acceptable that a student in Cleethorpes can receive a maintenance award for a management course while a student on a similar course in Exeter cannot.

It is further education students who most need that support. In contrast to students in higher education, two thirds of whom come from the top two socio-economic groups, many further education students are unskilled, out of work or, perhaps, taking time out from poorly paid jobs to better themselves. If we are serious about opportunity for the many, we must address that inequitable legacy of disadvantage for those who need it most. If we are serious about improving skills and tackling underachievement, we must provide better incentives to keep people in full-time education.

It is outrageous that only half our young people continue in full-time education up to the age of 18. It is unacceptable that the participation rate has failed to increase over the past five years, and it is shameful that we have fewer people in full-time education after the age of 16 than any of our international competitors. That is why the Select Committee wants the Government to introduce a financial incentive to keep more young people in full-time education; that is why we have recommended that the Government abolish child benefit for those over 16, and use the £600 million thus released to help fund a means-tested allowance that would encourage those from disadvantaged backgrounds, in particular, to stay in full-time education and training.

I know that changes in child benefit are controversial, but child benefit for 16 to 19-year-olds is not universal. It is paid only to those whose children stay in full-time education, and they tend to be the children from better-off families. Surely it is right to target the money better, to encourage those from poorer families to stay in full-time education. Surely that is a better route for the nation to follow to achieve both economic prosperity and social justice. We recommend that the Government consider the proposal seriously. We want them to work towards providing loans covering maintenance and tuition that would be available to all further education students on work-related courses.

Our inquiry poses a number of other important challenges to colleges, the FEFC and the Government. We recommend that the Government give clearer direction in regard to a range of matters. The Government should determine the funding priorities for the sector; failure to do so would, in our view, impede their ability to achieve solid progress in the nation's priority areas. In the immediate future, for example, work-related courses should take priority over leisure-related learning for Government funds. The Government must also take steps to create a level playing field between further education colleges and schools. They must always level up rather than down to maintain educational quality.

The Parliamentary Under-Secretary of State for Education and Employment (Dr. Kim Howells)

I agree with much of what I am hearing, but may I ask a question about what I still call schedule 2 and non-schedule 2 courses? What was the Select Committee's opinion about finance for courses that serve people with special needs, such as disabled people and those with severe learning difficulties? Such people will never be able to work towards some form of accreditation and recognition under schedule 2, but their education is a lifeline and a way of affording them basic skills.

Ms Hodge

Our report contains a whole section dealing with qualifications and progressions. We hope for a more modular approach to qualifications. The instance cited by my hon. Friend would be seen in such a context—not as a leisure-related activity, but as a modular course that could lead to further qualifications, especially for people with specific disadvantages. Of course such activities should be supported.

Mr. Don Foster (Bath)

Does the hon. Lady agree that the Select Committee's aim in referring to "levelling up" to bring about a level playing field for post-16 education was to deal with full-time 16-to-19 education? That would not cover the schedule 2 type of education to which the Minister referred, which, although vitally important—as he rightly said—needs to be treated and funded rather differently.

Ms Hodge

I think that my hon. Friend the Minister was taking advantage of a pause in my speech. I must, however, declare an interest in regard to post-16 full-time education. As two of my children are currently in that sector, I recognise more than others the way in which the quality of both enrichment activities and pastoral support has been threatened by some of the cuts imposed on sixth-form colleges.

We believe that the Government should review the qualifications that they fund. It should not be left to the media to highlight questionable qualifications, and, in so doing, to bring the whole sector into disrepute. Similarly, although the Committee welcomes the steps taken by the FEFC to tighten the rules on franchising, we believe that further action is needed so that franchising really adds value to the nation's education and training. To quote my favourite example, funding courses in ambient display, which is more commonly known as shelf stacking, can hardly be said to add value to anything much.

Done well, franchising can build valuable partnerships between further education, the private sector and the community. It can create training opportunities for some who would not normally get involved further education, but we believe that colleges should not be allowed to franchise courses outside their area, except in exceptional circumstances. The Government should consider time-limiting the subsidy to the private sector so that resources can be recycled and the private sector encouraged to accept responsibility for the funding of training.

Allowing a free market in FE in the name of consumer choice is nonsense. FE should be more actively planned, nationally and locally, to ensure the most effective and efficient use of resources. Our report recommends that local partnerships, led by the FEFC, should be established to bring together all those involved in further education, from local education authorities to training and enterprise councils to employers. The FEFC should set clear criteria for mergers, and encourage them.

Mrs. Anne Campbell (Cambridge)

Are not many opportunities missed by training and enterprise councils, which do not always take into account the fact that further education colleges are capable of delivering the training required by businesses? Does she also agree that it is important to encourage that kind of relationship, along with local authorities, to ensure that there is a coherent strategy for further education in a particular area?

Ms Hodge

I agree entirely with my hon. Friend, which is why we have suggested a planning framework and a level playing field between not only FE colleges and schools, but FE colleges and private providers.

I have talked about some of the most important recommendations in the Select Committee's report. We have laid down a strong challenge to the Government, and if my right hon. Friends are serious about lifelong learning, as I believe that they are, they must meet that challenge. After years of neglect, it is time for further education to emerge from the shadows: it has a vital role to play in the Government's central purpose of raising education standards; extending opportunity to the many, not the few; and creating a strong, competitive economy.

Out there in the colleges—among the staff and among the students—people are waiting to play their part in turning the Government's vision into reality. That will require money, commitment and effort. I hope that our inquiry and our report will set that ball rolling, and that FE will gain its rightful place in the educational landscape.

4.52 pm

Mr. Damian Green (Ashford)

I congratulate the hon. Member for Barking (Ms Hodge) on her Committee's report, which has raised many thought-provoking issues. I merely regret that, although this is exactly the right debate to have about the future of an important part of our education system, we are, unfortunately, condemned to have it at exactly the wrong time: we are all waiting with bated breath for the results of the comprehensive spending review. To an extent, that will prevent the Minister from giving us as much information as he would wish to. Indeed, the luxury of making his speech before the comprehensive spending review is announced will allow him to play the sort of dead bat that would be extremely in order today in other parts of the nation, such as Old Trafford.

The Select Committee raised many issues in its interesting and important report—funding, expansion of numbers, franchising, governance and standards—but the greatest is money, as the hon. Member for Barking made clear. The distribution of money is a subject of infinite fascination in the FE sector. In the relatively few weeks in which I have been covering this brief, I have already discovered that discussions about the methodology of funding could, if we wanted, keep the debate going all evening, to the extent that we would squeeze out the debate on freedom of information. I shall resist the temptation to go down that route, and merely touch on some of the wider issues raised by the Select Committee report and by other important, recently published documents such as the Kennedy report.

Mrs. Anne Campbell

Does the hon. Gentleman agree that one of the reasons why FE colleges are fairly obsessed with money at the moment is that the unit of resources fell so dramatically in the 18 years of Tory government, and that that is causing the stress?

Mr. Green

I was about to come to the wider issue of funding and address the rather unbalanced presentation by the hon. Member for Barking of what happened to FE under the previous Government.

All our arguments about FE are based on what has happened since incorporation. Incorporation and the reforms introduced by the previous Government have, broadly speaking, been hugely welcomed by the FE sector. Indeed, the FEFC memorandum to the Select Committee states: Further education colleges have responded magnificently to the challenges of incorporation". They have obviously been placed under an obligation to produce efficiency gains, but the fact that they have done so year after year suggests that those gains were capable of being achieved. The result is that many more students have been able to gain the benefits of FE courses. Labour Members should welcome that.

The Select Committee report states: The number of colleges and their structure has changed only marginally, but there has been a rapid expansion in the number of student enrolments—up by nearly one-third since incorporation. If such an enormous expansion of numbers had taken place in a non-compulsory education sector under a Labour Government, the hon. Members for Barking and for Cambridge (Mrs. Campbell) would have been the first to get to their feet to ask the Under-Secretary or the Prime Minister to agree with them that the Government should be congratulated on that performance.

Mr. Phil Willis (Harrogate and Knaresborough)

The hon. Gentleman is making an important point. Will he comment on the fact that the number of students at Harrogate college, which is in severe financial difficulties, increased from 7,899 in 1994–95 to 15,087 in 1996–97, although funding went up by less than £100,000 on a £7.1 million budget? That is the real issue, which his Government failed to address—more students, but less money.

Mr. Green

There are more students and more money. Clearly the unit cost has gone down—no one can argue with the facts. I invite Liberal Democrat Members and Labour Members to acknowledge that the massive expansion in the FE sector over the past five years is a matter for congratulation, not only for the FE colleges, which have done good work, but for the previous Government, who enabled it to happen.

Mr. Sheerman

Perhaps I can help the hon. Gentleman. My hon. Friend the Member for Barking (Ms Hodge) had to make a couple of political points—one expects that in this place—but she more or less kept to the Select Committee report and the long-term challenge. I urge the hon. Gentleman to do that. He was absolutely right to say that no party can claim any real bonus over the years; after the passing of the Education Act 1944, Labour failed to introduce the crucial aspects of community colleges recommended in it. Labour has not been good: this area has been the Cinderella, and it has been neglected by all parties. We should take that as read and stop making party political points: let us get down to discussing the future of FE and what the hon. Gentleman intends to do about it.

Mr. Green

I should be more than happy to do so; I mentioned that matter only because the hon. Member for Barking introduced it in her speech. Indeed, I have been making a point that has been interrupted by constant interventions from hon. Members on both sides of the House. Of course, I am always more than happy to take interventions. However, I am more than happy to do what the hon. Gentleman suggests, because the bulk of what I want to say is precisely to do with the future—where we are now, how we can go forward and the challenges and problems that face the Government as they attempt to improve the FE sector.

The Select Committee makes some important long-term points, not least that FE colleges are now the main provider of education for 16 to 19-year-olds. The hon. Member for Barking was possibly right to refer to the sector as a Cinderella. One of the least-known facts outside the FE sector is that more 16 to 19-year-olds undergo education in FE colleges than in schools or higher education. That is a key point. The FE sector provides many students extremely cost-effectively—not just 16 to 19-year-olds, but those in other age groups—with a vital bridge between education and employment.

That is where we are now and the future is likely to bring another huge expansion of the FE sector. The Select Committee calculates that, of the 500,000 students whom the Government wish to see going into further and higher education over the next few years, 430,000 will go into the FE sector, which provides 140,000 full-time equivalent places. That is where the main message of the debate arises: where will the money come from?

If the Government are going to meet the aspirations of the sector itself, of the many students who want to go into it and indeed of the Select Committee, the central issue is whether the Government will be able to will the means as well as the ends, otherwise FE will continue to be a troubled sector. The issue of funding will continue to be the ghost at this evening's intellectual feast. If the Minister seeks to reassure, simply with warm words, hon. Members on both sides of the House, particularly his hon. Friends and the Chairman of the Select Committee, one will be entitled to be a little suspicious, because we have reached the stage, given the number of commitments that the Government have made to FE, when warm words will not be enough.

I agree with the hon. Member for Barking: it would be foolish to deny that there are difficulties in the FE sector. A number of colleges are experiencing financial difficulties. Indeed, the evidence that was given to the Select Committee suggests that the financial pressures on the sector are such that the achievements over the past five years are at risk, as well as any future improvements to the sector.

Mr. Derek Twigg (Halton)

On that point about the financial health of colleges, will the hon. Gentleman comment on this matter? Between 1994 and 1997, the percentage of colleges that were deemed reasonably robust went from 70 to 43 per cent. and, in category C, the percentage of colleges that were deemed financially weak went from 6 to 27 per cent. Why did that happen?

Mr. Green

I should be grateful if Labour Members could get their act together. Those who have the brief to read out constantly try to push me backwards. Others who want the debate to go forward constantly urge me not to make party political points. I wish that Labour Members could decide what type of debate they want this to be. Do they want a sensible and constructive debate, or constantly to look backwards? I am happy to bandy figures about with the hon. Gentleman until the end of the debate, but I do not think that the more sensible Labour Members think that that is a useful way to spend our time.

As I and, indeed, the Select Committee have observed, it is the quantum of money that will be available to the FE sector that is the key to the Government's meeting the ambitions that they have set themselves. The amount that they have given it so far simply does not meet the aspirations. If the Government are to meet their targets, there needs to be a balance between the various education sectors. Clearly, the main need is to balance the resources available among the three education sectors.

Since the sector was set up many decades ago, FE has at times been the least regarded sector. The severe danger is that, with the Government's many commitments to schools and with the commitment that they like to make to higher education as well, FE will again fall into the hole. That will hugely disadvantage not just the sector itself, but the many types of students who find FE education much more congenial than other types of education, and the country as a whole. Clearly, we need a balanced education system which allows a range of people to reach their potential and to provide and enjoy the skills that this country needs if it is to continue the economic progress of the past 18 years or so.

That is the key area with which I hope the Minister will deal in his speech. Are the Government going to move beyond mere rhetoric? If they are, will there be any losers in other educational sectors? It would be naive for anyone speaking in the debate to assume that simply more money will be available across the board in education. The Minister would make a serious contribution if he explained the priorities that the Government will take into the comprehensive spending review. Without that, we will be back to mere warm words.

The concept of the level playing field for funding is clearly important, but the TEC National Council Ltd. has made an important point: Whilst we want equity across post 16 funding we think equity is about treating everyone differently, not treating everyone the same. One theme which I should like to impress on the Minister is that the idea that a level playing field means simply applying the same formula to different types of people in education is likely to prove both short-sighted and destructive. Whatever comes out of the comprehensive spending review, the Government's attitude to further education should be more subtle than that.

To that degree, I agree with the Select Committee. It does not think it is sensible to create a common currency for the funding of post-16 education. That would be an unrealistic ambition. It is one of those areas where tidiness is the enemy of common sense, and I hope that the Government will not go down that route.

The other great funding issue is convergence. Again, I hope that, when the Government move towards convergence, as I am sure they will, they do not do so in a way that is too mechanical. There have been arguments—I have heard them from South Kent college, the FE college in my constituency—that convergence inevitably creates losers as well as winners and that trying to move too far, too fast will mean that the losers outweigh the winners. This is an important issue when discussing other important issues such as access. In particular, one of the sectors that would be damaged by too quick a move towards convergence would be inner-city colleges, especially those in London. Indeed, as the Minister will be aware, the Inner London Colleges Group said: If convergence continues at the current rate, then a sizeable portion of the FE infrastructure that will be necessary to deliver the Government's aims in the most deprived areas of the country will be dismantled". I am sure that he is aware of that evidence to the Select Committee and that he is conscious of the fact that he will need to be fairly nimble and light on his feet to avoid that type of, I am sure, unintentional damage to the sector.

On the wider issue of the expansion of numbers, which is, to some extent, the central thrust of the Government's hope in this area, I should be interested to hear whether the Minister agrees with the Select Committee's figure—whether he thinks that 430,000 of the extra 500,000 will indeed be educated in the FE sector. If so, does he agree with the Select Committee's views on money? The hon. Member for Barking has made it clear that her bid is for £0.5 billion. She described that as modest, and I dare say that many people in the FE sector could come up with much bigger numbers fairly easily. She will know as well as I do that the Minister has to juggle with the various demands of the education brief. Battles are being fought across Whitehall, from which only the occasional strangled cry emerges through leaks to the outside world.

The FE sector will be doing very well if it obtains the money that the Select Committee recommends. People in the sector would find it illuminating if the Minister could bring himself to give us any clues about whether the Select Committee is in the right ball park.

Mrs. Anne Campbell

Is the hon. Gentleman not a little embarrassed by the almost total lack of interest in this subject shown by Conservative Members? Apart from the hon. Gentleman and his hon. Friend the Member for South-West Bedfordshire (Sir D. Madel) on the Front Bench, only one Conservative, the hon. Member for Guildford (Mr. St. Aubyn), who is a member of the Select Committee, is present on the Back Benches. [Interruption.]

Mr. Green

There are now two, and others have attended the debate. I hope that the hon. Lady will recognise the difference between quality and quantity.

Support for students in the FE sector, especially if it is expanded, is an issue worth addressing. I must part company with the Select Committee on this matter. The hon. Lady seemed to elide the Select Committee's recommendation. She referred to loans as the recommended way of proceeding, whereas the Committee's report clearly refers to grants.

Ms Hodge

Both are required.

Mr. Green

The hon. Lady says that she is in favour of both. This is an extremely interesting area for the Minister to address, as the Government have already gone against the Dearing recommendation that maintenance grants for students in higher education should be continued. If the Minister has no intention of responding positively to the Select Committee's recommendation for FE students to have maintenance grants, he should say so this evening so that we know where we stand.

The Opposition support the Dearing report. We believe that maintenance grants for students in higher education should be maintained. However, I part company with the Select Committee on the issue of converting child benefit money into grants. Wider aspects of the use of child benefit to hold families together are possibly not relevant to this debate.

Ms Hodge

I am interested that the hon. Gentleman parts company with the Select Committee. He said that he recognises the pressures on public expenditure and the battle that the Minister will have to find the extra £0.5 billion by 2001–02. If he does not want maintenance grants for 16 to 19-year-old FE students to be funded through child benefit, how does he propose they should be funded?

Mr. Green

I do not have to take that decision for a few years.

Dr. Howells

That is convenient.

Mr. Green

The Minister has to take that decision, and it would be extremely interesting to hear what he has to say about this matter. It will be a few years before we have to make that decision, and we shall do so. We take the use of child benefit to support the family and family values extremely seriously. We would consider carefully whether the hon. Lady's suggestion would be the best use of that money, even for 16 to 19-year-olds. I am at best dubious about her proposal. I would be fascinated to hear the Minister on the matter.

Funding affects the wider issue of access. The Kennedy report, which is seminal in this area, is an interesting and radical document. What it boils down to is that there should be access for all, and that, if necessary, there should be discriminatory funding to achieve that. That is a radical idea, and, to be candid, the Government's response was pretty thin. They are slightly worried and embarrassed about how to approach this issue, and they have not said anything concrete about what is required.

There are dangers in the Kennedy approach, some of which were identified in the Select Committee report. Identifying favoured students from different areas in certain towns—the right postcodes—would give rise to discriminatory funding that may not, in individual cases, either be fair or be seen to be fair.

Dr. Howells

It is interesting that the hon. Gentleman seizes on that aspect of the Kennedy report. I shall leap to the Baroness's defence. She was referring to partnerships with training and enterprise councils. Focus can be placed on specific postcodes and addresses where there are great difficulties. The previous Government looked into some of those projects carefully. I know of TECs that have fostered successful partnerships between education and business, and that has raised attainment in the area. The hon. Gentleman would surely acknowledge that such an approach has value.

Mr. Green

It may have value if it is done sensibly. The crudity of the measures gives rise to concern. The term "Kennedy student" is already in the public domain. The Further Education Funding Council uses that term, and the Select Committee sensibly said that it did not want to go down that route. If students are identified as "Kennedy students", they may be stigmatised. The next phase will be "Kennedy estates". Such an approach has dangers.

Dr. Howells

Sink estates.

Mr. Green

The Minister uses the term "sink estates". I hope that he does not propose to introduce a method of funding that stigmatises individuals or people who come from a particular area. The danger implied by the Minister's well-meaning intervention is that he will go down that route.

There are other dangers. It is interesting that the new deal, which should, broadly speaking, be welcomed by the FE sector, has already created a degree of danger. FE colleges have pointed out the disadvantages of the new deal for their funding. The Times Educational Supplement on 20 March ran a story under the headline "New Deal strains college coffers". I hope that the Minister will reassure colleges that that will not continue. That claim was based on the early pilot projects under the new deal. The article states: Some inner-city colleges are looking at cuts in excess of £300,000, while having to increase significantly the time spent teaching trainees. Many people are taking courses under the new deal similar to those that they were previously taking, but they are doing more hours, so they cost more and are funded from a different pot, which pays the college less.

The principal of Stoke-on-Trent college told the Select Committee: the sum of money we will get through the New Deal will be somewhat smaller than what we are getting through the current 16 hour rule…It is not clear that the sum of money to deliver this will necessarily he totally adequate". The Select Committee report says that the director of FE development at the Association of Colleges has stated: the New Deal is a major area of uncertainty". Does the Minister have any concrete proposals to compensate colleges for the losses that they may incur as a result of the new deal?

The Select Committee addressed some other important areas, including franchising, to which the hon. Member for Barking referred. The key point is not to be over-prescriptive. It is extremely dangerous to try to produce an all-embracing set of rules in which all good franchise courses fall inside and all bad ones fall outside. The danger is that, by trying to drive out all of the bad, some of the good will go as well. I am sure that the Select Committee would recognise that there are dangers, and that some courses may not bear much scrutiny—the hon. Member for Barking pointed out one. The danger of driving out the good with the bad is one that I hope the Minister will bear in mind.

I take the Select Committee's point about the danger of confusion about the Government's criteria for funding the training of those in employment. That is another difficult technical matter which I hope the Minister will address.

I wish to refer to an area that the Select Committee thought was important—the role of regional development agencies. Frankly, those are the potential fifth wheel on the coach. I am happy to agree with the noble Baroness Blackstone that RDAs will be too big to carry out the role of co-ordinating FEs. I think that RDAs will be too big to carry out the role of co-ordinating anything and will be dangerous in almost all areas, so I am happy that—in at least one area—the Government have recognised that the role of RDAs should be minimised rather than maximised.

If the Government and the Liberal Democrats are—as they seem—so besotted with regionalisation, and if the Government are to move towards convergence in funding, perhaps regional convergence would be better than national convergence. At least then the Government would be following the logic of their own argument, false though it is on the issue.

Mr. Derek Foster (Bishop Auckland)

Before the hon. Gentleman leaves regionalisation and training and enterprise councils, is he aware that the British Chambers of Commerce recently produced a powerful document which wholly endorsed the wish of the Education and Employment Select Committee to have all the funding for TECs routed through the RDAs? That is not the same as having the RDAs co-ordinating further education, I grant him, but let him not dismiss regionalisation, or even more of his erstwhile friends may desert him.

Mr. Green

I commend the latest report of the British Chambers of Commerce, on the British economy, to the right hon. Gentleman. The friendship of chambers of commerce with the Government is about to disappear, given that their overriding view is that the Government are making a supreme mess of the economy on which all of their members depend. I will not dwell on regionalisation; I merely point out that it is inappropriate in this area, and I am happy that the Government have noticed that.

On the standards, terms and conditions which the Select Committee thought were very important for those working in the sector, I urge the Minister again not to be over-prescriptive. A degree of local freedom for the colleges to negotiate terms and conditions is extremely important. I hope that the Minister and the Government recognise that as time goes on.

In summary, the Minister clearly has a number of balls to juggle, and the severe danger for him is inflated expectations. I am fully aware that the FE sector was one of those which welcomed the advent of a new Government who were going to cheer the sector up and provide everything that it needed. Already, those expectations are moving away from the Minister. Professor John Field of the university of Warwick is a professor of lifelong learning. There cannot be anyone who is more interested in the Government's project. He has said: Imaginative and innovative proposals…will help if properly resourced. Nothing I see convinces me that the Government has got to grips with the task.

Dr. Howells

He is a good bloke.

Mr. Green

The Minister may say that, from a sedentary position. Unfortunately, we can see from that quotation that that is not reciprocated. The Minister will have to reassure Professor Field as well as everyone else.

FE colleges will be vital in any lifelong learning prospectus. The hon. Member for Barking said that she had taken a modest view that £500 million would be required. These are the last few days when the Minister will get away with warm words. When we see the comprehensive spending review, we will know whether he will put his money where his mouth is. My great fear—which I hope is wrong—is that, after all the Government's words and rhetoric over the past few months, Cinderella will still not get to the ball.

5.24 pm

Charlotte Atkins (Staffordshire, Moorlands)

I hope that the Select Committee report will mark the beginning of the end of the Cinderella status of further education. A recent survey in my local area found that nearly a quarter of employers with more than 100 staff have identified gaps in skills in their work force, yet the percentage of school leavers in Staffordshire who are to remain in full-time education has fallen since 1994.

Blame cannot be laid at the door of further education lecturers. Efficiency gains made by the sector since incorporation have been greater than in any other part of the education service. Over the past five years, student numbers have increased by a third, but costs per student have been cut by a quarter. That is not a matter for congratulation—the impact has been damaging.

Staff have faced growing job insecurity and new so-called flexible contracts which mean teaching more hours but spending less time supporting students. The increasing numbers of part-time staff—and, worse still, agency staff—have meant that staff have been parachuted in just to lecture. Students inevitably suffer. Staff cannot get involved in curriculum issues, and student pastoral care flies out of the window.

Some colleges have tried to make ends meet by franchising. While, at best, franchising can widen participation in further education, at worst it just pays the employer to provide the training needed to keep the employee on the payroll—he or she would have done that anyway. Franchising can be a real money-spinner, particularly for those 20 colleges which carry out nearly 60 per cent. of all franchising.

For other institutions, such as my local college in Leek—which chose not to franchise because it is a small college and felt that it might overstretch itself—the effects have been damaging. Effectively, colleges have been penalised by the distortion of the funding process by franchising. That has led to my local college having to close its creche—an important part of increasing participation—and its refectory. I strongly support the Select Committee recommendations on the funding and operation of franchising; it should grow from the college's primary task—helping students to learn—and should not be merely a way of maximising income.

Ten miles from Leek, the college at Stoke-on-Trent demonstrates yet another weakness in the FE sector—college governance and accountability. There, the unhealthy control exercised by the previous principal and the chairman of the governors led to the college having to repay large sums of money to the funding council. That led to big cuts in courses and staff posts, devastating the college. What shocked me most about the whole episode was the hands-off approach of the funding council. Even when it was alerted to the problems several times by staff at the college, the funding council refused to intervene.

One recommendation is that the funding council must have a duty to intervene at the first danger signal. That is vital. Colleges must be more open, and allow information from governors' meetings to be revealed and easily accessible to staff and students. Transparency is vital. Otherwise, we will have more colleges such as Stoke-on-Trent to worry about.

FE students are very often those whom the school system has failed. Further education is not their second chance—it is their only chance to get back on track. No investment gives a better return than education, especially if it is focused on the most disadvantaged. Without it, we make potential design engineers into assembly workers, potential nurses into supermarket shelf stackers and potential retail staff into benefit liabilities. The under-realisation of potential is, in human terms, catastrophic; it condemns millions to unemployment or to boring jobs well below their potential. It is also catastrophic economically. The undereducated students whom we are currently turning out will be underperforming in the economy for the next 40 years.

Underfunding FE is a bit like progressive arsenic poisoning; if one waits for the symptoms to show, it is too late. Additional financial support for FE students and additional funding for the FE sector are an essential investment in the future.

5.29 pm

Mr. Phil Willis (Harrogate and Knaresborough)

The Liberal Democrats welcome the Select Committee's report on further education—indeed, we warmly congratulate the hon. Member for Barking (Ms Hodge) and the Select Committee on producing what we believe is a powerful report; it has considerable cross-party support, broadly reflecting, as it does, the views of Liberal Democrats and, I hope, of the Labour party. I am sure that the hon. Lady and the Minister will accept that Liberal Democrats offer a different perspective on some matters, reflecting our policies, but I trust that we shall be more positive than the hon. Member for Ashford (Mr. Green). It was distinctly disappointing to hear a Conservative Front-Bench spokesperson speak in such a negative and carping way when there is the will for us to move forward.

The report reflects the strong recognition that the further education sector is in a state of crisis; it is good that that has not been hidden. That crisis was born not of a lack of commitment by the vast majority of college staff, principals and governors but of a lack of policy direction and, above all, of financial support.

The Select Committee acknowledged the huge task that the FE sector faces if it is to help to solve the problem of underachievement, which was identified in the Green Paper on lifelong learning and which has been mentioned by all hon. Members who have spoken in the debate. The fact that 30 per cent. of young people fail to reach national vocational qualification level 3 by the age of 19 is depressing; the fact that 21 million adults do not have level 3 qualifications is even more depressing.

What hit home hardest was the 1994 national literacy survey, which calculated that 8.4 million people aged between 16 and 65 had a level of literacy so low that they would be unable to compare and contrast simple pieces of information or to fill out a simple standard form. That is a terrible indictment of an education system that has failed so many people. In the words of the song, things can only get better.

Mr. Sheerman

Never heard of it.

Mr. Willis

My daughter's boyfriend sang it, so I have to plug it.

The Select Committee's report must be judged against its vision of the size of the problem to be tackled. There is a recognition that, although incorporation in 1993 brought many benefits, strategic planning has been a problem. We fully support both Baroness Kennedy and the Select Committee in their view that central Government should not interfere in the detailed operation of the sector. We should not go back to those days, or, indeed, to the days when local education authorities were in control. Central Government's role is to make clear what they expect the sector to deliver and to set clear targets for evaluating performance.

We welcome the Select Committee's proposals on regional and local planning, but we do not think that they go far enough. The reliance on planning through funding control alone has severe limitations. Although the Further Education Funding Council should have a greater role in strategic planning, we believe that the regional development agencies—and the regional assemblies that we hope will be their parent bodies—should also have a significant role.

We accept that, under current legislation, RDAs have no direct educational responsibilities, but there is no reason why, as we move forward to the next millennium, they should not have. The RDAs should have a statutory responsibility to produce a lifelong learning development plan for the region, following detailed consultation with all relevant employers, organisations, FE colleges, private sector providers, the local education authority and the training and enterprise councils—indeed, the right hon.

Member for Bishop Auckland (Mr. Foster), who has now left the Chamber, made a powerful point about the recent report by the British Chambers of Commerce.

If FE colleges are to have an enhanced role in the provision of lifelong learning, they must become more open and publicly accountable. The governance of many FE colleges since incorporation has given rise to grave concern, and the Select Committee's proposals on that are excellent. It is right to allow wider participation for staff, students, community groups and the local authority and to maintain a strong business community presence; that is a proper balance. Liberal Democrats also whole-heartedly support the proposals to appoint independent clerks, to open meetings to the public, to register the interest of governors and, in particular, to introduce a further education ombudsman.

As well as changes in governance, there must be a change in attitude to teaching and support staff in further education. Frankly, the Select Committee report does not do justice to the significant achievements of the vast majority of FE lecturers and their support colleagues. Few sectors would have tolerated the changes to conditions of service and to career and salary structures which have been imposed on the majority of FE lecturers over the past four years.

The report recognises the need to raise morale and to improve professional standards. The development of a national training organisation is a positive proposal, but greater emphasis must be placed on postgraduate training before entry to FE teaching. We believe that the General Teaching Council has an important role to play and that it should not be disregarded.

Nothing will do more to improve the morale and status of FE lecturers than dealing with the basic conditions of employment. Liberal Democrats do not support a return to silver-book conditions of service. We recognise the need of colleges to be able to vary contracts and to meet changing needs but such changes must be achieved by negotiation, not by threat and imposition. The Select Committee's proposal for a model contract represents a way forward, but a minimum national entitlement, backed by regulation, is required. We hope that the Minister will confirm that that is what the Government intend. FE lecturers, both full time and part time, are waiting for him to give a strong signal, and I have no doubt that he will give one when he responds to the debate.

Liberal Democrats welcome the Government's promise to investigate the casualisation of college lecturers. A strong signal must be sent to colleges immediately to start reversing the trend to casualisation. Flexibility is one thing; exploitation is another. If we want a dynamic and energetic work force in FE colleges, we must stop treating staff as expendable commodities as budgets come and go.

We are pleased that the Select Committee did not lay the blame for casualisation entirely at the door of the colleges, the Education Lecturing Services or even Roger Ward. The root cause is the previous Government's gross underfunding of FE and their almost complete disregard for the sector's well-being. How else can the huge disparity of treatment between the different educational sectors be explained?

There are many ways in which to present what has happened to FE college funding. The hon. Member for Barking did it in one way and, last week, the Select Committee heard another set of figures. However, let us accept that school funding has been largely neutral since 1993, that higher education funding has declined to 86 per cent. of its 1993 level but that FE funding has dropped to 81 per cent. of its 1993 level, which is a significant reduction. It is no wonder that 60 per cent. of our colleges are operating with deficit budgets and that the number classified as weak by the FEFC has trebled since 1994.

My college in Harrogate has been technically bankrupt for the past three year—indeed, it has been since incorporation. This year, it was unable to meet debts to the FEFC totalling £500,000 and I must thank the Minister and the Government for agreeing to the merger of Harrogate FE college with Leeds Metropolitan university, which was announced last week.

Mr. Sheerman

May I say, merely in passing, that I think the Harrogate college needed an infusion from Huddersfield to help it over its crisis? Like the hon. Gentleman, I have three excellent further education colleges in my constituency: Greenhead, New college and Huddersfield technical college. We should not underrate the role of principals as managers, but does the hon. Gentleman agree that they are saying that they have been distracted from getting on with the job of delivering good teaching and learning by the constant barrage of bureaucracy, whether from the FEFC or as a result of worry about how they will carry on next year? That distracts them from their job, which is all about good learning and teaching.

Mr. Willis

I am grateful for that intervention because of the hon. Gentleman's knowledge of the subject and because Huddersfield lent us Dr. Rossiter, who has been an excellent principal. The hon. Gentleman has a good point, but I think he would agree that many of our FE colleges have had to deal with another fundamental problem, which is managing debt. In 1993, many of the colleges began incorporation with significant debts, which they have retained—they have not been able to trade out of them. Judging from the FEFC report on colleges, some of those with the most severe debts are not criticised for poor management. The historic funding issue is a major problem. I want far more of the time of our college principals—their planning and structuring time—to be spent on dealing with moving their college forward rather than simply managing debt restructuring and reorganisation, as would the hon. Gentleman, I am sure.

The Select Committee has recognised the problems of FE funding and the new resources that it proposes are welcome. However, the Treasury has seduced the Select Committee— [HON. MEMBERS: "Seduced?"]—although not the hon. Member for Barking, obviously. I would never accuse anyone of seducing her. [Interruption.] I think at this point I had better move on.

Mr. Deputy Speaker (Sir Alan Haselhurst)

Perhaps it would be helpful if the hon. Gentleman found another metaphor.

Mr. Willis

I believe that the hand of the Treasury has been on Labour Members in the Select Committee. The hon. Member for Barking was honest enough to say that she did not feel that the Select Committee had gone far enough to give the FE sector what it needed, and I agree.

Even if the proposed efficiency savings of a further 1 per cent. bring us into line with higher education funding reductions, they are unrealistic for a significant number of colleges. The 1 per cent. saving will in fact mean further loss of provision in many colleges that are already facing major financial difficulties.

The sector sought about £250 million to halt the decline and to meet the needs of existing students. There were variations on the figure, but it was roughly that total. The Select Committee has asked for somewhere in the region of £84 million, with a further £60 million for capital works. The widely quoted £500 million figure would come into play only when the additional students announced by the Prime Minister at the Labour party conference had been recruited—that is where that figure comes from. The £350 million extra suggested by the Committee would be on top of the money already requested.

My hon. Friend the Member for Bath (Mr. Foster) last week questioned Michael Bishard, the permanent secretary at the Department for Education and Employment, and revealed that the Department does not know not only what proportion of those students will be full or part time, but what proportion will be FE or HE. What is more, until the comprehensive spending review has been concluded, targets for FE will not be clear. It has now emerged that the amount of money that the spending review allocates to FE will equate directly to the number of students that it can recruit, which is a different tale from the one that we have been told so far.

The Select Committee may have worked on the basis of about 430,000 extra students, but as was revealed last week, only the Prime Minister knows where the original 500,000 extra students came from. The Minister may well be able to explain that figure in more detail—I am pretty sure that the Prime Minister will have brought him into his confidence.

The Committee has suggested a further £350 million by the year 2000–02. Frankly, until we have the results of the review, that figure merely clouds the present crisis. It would be wrong to bandy about the figure of an extra £500 million when that is not really what the Select Committee report asks for.

For those reasons, we ask the Government seriously to consider the future role and funding of training and enterprise councils. While they have never reached the £3 billion of expenditure that was first envisaged, their annual grant last year was around £1.46 billion compared with the FEFC budget of £3.1 billion. The huge bureaucracy of the TEC empire, with the lavish office complexes and even more lavish publicity materials, and the TECs' complex audit and monitoring proceedings mean that for every pound of Treasury funding less than 20p actually gets down to the person that needs it. That is a direct quotation from the House of Commons Employment Committee report of 1995–96. Surely the Minister and his colleagues need to consider that funding and how it can be reallocated.

Dr. Howells

I am sure that the hon. Gentleman will have noticed that four weeks ago, we announced the first ever review of training and enterprise councils. That subject will certainly be one of our major areas of focus.

Mr. Willis

I am grateful, as always, for the Minister's intervention. Indeed, I would hurry that process along. The transfer of a mere 20 per cent. of resources from bureaucracy to front-end delivery would meet the present FE shortfall. That is where a simple transfer could take place.

Mr. Nick St. Aubyn (Guildford)

Perhaps the hon. Gentleman could help us by telling us how much, as a ratio of their own funding, the TECs receive from the private sector for spending on training?

Mr. Willis

If the hon. Gentleman wants an answer, he should read research paper 97/48, "Training and Enterprise Councils", which contains much of the detail. We are talking about Government money and where FE will get its funding in the future. We Liberal Democrats propose that TEC funding should be studied carefully. If only 20p of every £1 is being used, a simple transfer of some of that money would solve many of the problems.

However, it is not simply TEC funding that must be reappraised. The whole basis for funding post-16 courses must be examined. A level playing field needs to be created, as the Select Committee recognised. It cannot be right to fund a student taking three A-levels in a school sixth form differently from a student on an equivalent course at an FE college, although we understand that exact parity will never be possible.

We do not want a levelling down of provision. I heard my hon. Friend the Member for Bath shout a stout "Hear, hear" when the hon. Member for Barking mentioned that, because it is at the root of the problem. There must be not a levelling down, with money taken from school sixth forms to fund something else, but a levelling up.

We believe that the time may well have come to examine whether school sixth forms should be funded via the FEFC, rather than the LEA. We would like schools to be liberated to bid for more traditional areas of work in the FE sector. Schools are often ideally placed to offer aspects of FE provision to students of all ages, and should be given the freedom to do so, but only on an equal footing with FE colleges and other private sector providers.

The Select Committee rightly recognised that, without an improved package of student financial support, the expansion that we urgently need is unlikely to take place. The damning conclusion of the Policy Studies Institute was: Access to financial support for students is a lottery". The previous Government may have devastated the financial stability of the FE sector with their draconian cuts, but worthy of even greater condemnation was their almost total withdrawal of financial support for students, and especially part-time students. Let us not talk about widening participation unless we are prepared to offer greater support for students, and especially those who choose to study part time.

It was a pity that the Select Committee did not have access to the Lane report, "New Arrangements for Effective Student Support in Further Education". That report estimates student support costs at £400 million a year— significantly more than was recommended by the Select Committee. I hope that the Minister will accept that students must be given support in the crucial areas of transport, fees, child care and maintenance, and that such support must be universally available.

Further education is at last receiving the attention that many of us have long wanted it to receive. Cinderella is preparing for the ball; a golden coach awaits; charming Prince Blunkett is already at the palace; and it only remains to be seen whether Baroness Tessa is a fairy godmother or a wicked witch. When the clock strikes midnight, and the results of the comprehensive spending review are announced, we will know whether further education can stay at the ball or whether, like Cinderella, it must return to its present lowly status.

5.51 pm

Mr. Michael J. Foster (Worcester)

It is a pleasure to follow the hon. Member for Harrogate and Knaresborough (Mr. Willis). I remember his heartfelt contribution to a debate on corporal punishment; as I spent the six years before I became a Member of Parliament as a further education lecturer, my contribution today will be similarly heartfelt.

I and all my former colleagues in further education are a little tired of the sector being called the Cinderella sector, and we should try to move away from that classification. We owe it to all our students and would-be students no longer to use that term; we should value more highly that crucial part of our education system. I had intended to make some comments about the Minister and Prince Charming, but as allegations have been made about Labour Members toadying, I am glad that the hon. Member for Harrogate and Knaresborough got there first.

Much of what hon. Members say will allude to the comprehensive spending review. That will always be the case with further education, because it has been so poorly funded for so many years. In the review, the Government must deal not only with revenue funding but with the increased capital investment for which further education is crying out.

The university for industry and universal access to all the information on the internet are very well-meaning ideas, but I remember that, in my old college, my department—the department of management and professional studies—had one computer for 26 staff. The ideas are fine, but we need the capital investment if they are not to become totally meaningless.

When we talk about widening participation and encouraging the so-called "Kennedy students" into our colleges, we must consider the extra capital costs of, for example, increasing the number of creches that are available. The creche at my local further education college is booked out the year before people embark on their courses, such is the demand. If we are to encourage people back into education, we must consider the capital investment that is needed.

The hon. Member for Harrogate and Knaresborough mentioned the bitter and prolonged dispute between lecturers and employers. I do not think that the previous Government did all they could to bring that to an end. They left it to local colleges to go their own way, but those colleges were more often than not encouraged by the then College Employers Forum to consider the most "productive" use of the lecturers' time.

Lecturers such as myself bitterly resisted the attempt to force us to sign new contracts. No lecturer thinks that the silver book is there for ever, but we were faced with the decision of signing a new contract, and getting a pay rise for doing so, but knowing that that would lead to a deterioration in the quality of teaching that we could provide.

That dilemma has not yet been fully resolved. I hope that the Select Committee's proposal of an agreed standard contract will help. It will certainly be warmly welcomed by all concerned. I am glad that the Association of Colleges and the National Association of Teachers in Further and Higher Education are now talking to each other. That has been a long, long time coming, and it is most welcome.

The previous Government washed their hands of their responsibilities for the governance of further education colleges. We were promised many things from incorporation. As a further education lecturer, I listened to the candidates in the 1992 general election campaign talking about what they thought would happen post-incorporation.

In my college, the two staff governors suddenly found that their places were gone; we never had a student governor; and the LEA representatives disappeared from the governing body. A search and nomination committee was set up with the deliberate intention of recruiting "like-minded individuals" to run the corporation. I warmly welcome the idea of not only allowing but forcing corporations to have staff governors. A community facility cannot be run without stakeholder representatives. Student representation is also vital if we are to have a truly representative board to run a college.

I have been lobbied by the chair and principal of my local college, who seem to think that there is something wrong with having democratically accountable representatives on the board, and prefer the idea of continuing to seek and nominate. They have two staff governors, whom they selected, and two LEA representatives, whom they also interviewed and selected. That is not in the spirit of democratic accountability in which I believe colleges should operate.

On part-time and full-time students and the casualisation of labour, I speak as someone who has managed courses, and I know that it is great to have the flexibility of being able to bring in experts part-time, to do the hours that full-time lecturers may not be able to do, given the increased hours for which they are expected to teach. It is not possible to get all the people together at the same time and in the same place to discuss important quality issues about a course. With the comprehensive spending review in mind, I must say that the rate paid to part-time lecturers sometimes leaves a little to be desired, particularly if we expect them to do preparation and to contribute towards the assessment of students.

I promised to keep my speech short, but there is a lot to be done in further education. Please let us not keep referring to it as a Cinderella; it is not.

5.59 pm

Mr. Nick St. Aubyn (Guildford)

I am delighted to speak tonight, just as I was to participate in the Select Committee on Education and Employment. I must apologise to the House because I shall have to leave before the debate ends for a service at Guildford cathedral to celebrate 50 years of the national health service. My speech will be somewhat shorter, therefore, than it would otherwise have been, and I know how much that will disappoint other hon. Members.

I do not want to sound a note of controversy, but the previous Government's decision in 1993 to give further education colleges their freedom may, with greater hindsight, come to be seen as almost as significant as the changes to our health system 50 years ago. Colleges of further education are to be the prime avenue for lifelong learning, and all of us share the belief that the development of lifelong learning lies at the heart of any modern society's efforts to improve itself.

The hon. Member for Huddersfield (Mr. Sheerman) has told us that there were no prizes in further education until now. I am not here to claim prizes for the previous Government, but our debate must remain rooted in reality. We must examine objectively, as the Select Committee did, three vital events. The previous Government's 1993 act of independence for colleges changed their funding, changed their governance and promoted franchising. I am pleased that the Committee's sixth report treats objectively the way in which the subsequent five years treated the colleges in those three areas.

Paragraph 88 of the report states: while the sector has achieved much in the five years since incorporation, it will not be possible…if it continues to have to find the same levels of efficiency savings as in recent years. The critical point is that a significant one-off efficiency gain has been achieved by that sector, which is a great credit to the sector and to the policy that underpinned the saving. Many more people have gone into further education, and the resulting economies allow the Government to plan for hundreds of thousands more to have the benefit of further education.

It is a measure of the current financial situation that the report proposes an additional £54 million to fund the service provided by the colleges. That is in the context of a budget of £.1 billion, so it means an increase on current provision of less than 1.5 per cent. There is a further proposal for £60 million—another 1.5 per cent. —for expenditure on capital improvements. We should use those terms to judge whether the service has been overfunded or underfunded.

Ms Hodge

The hon. Gentleman quotes selectively from the report. I am sure that he would share the Select Committee's concern that more than 100 colleges are experiencing severe financial difficulties as a result of previous cuts. Does he agree with the point that he himself made during the Select Committee, that it is easier to find efficiency savings during a period of growth than during a period of standstill? It is the total quantum of £500,000 that will count if we are to see the institutions return to financial health.

Mr. St. Aubyn

I am grateful to the hon. Lady for offering to help me to write my speech. There is no dispute between us that a critical juncture has been reached. The process of one-off efficiency gains and convergence has been highly successful, but, as the report suggests, there is a need to change tack. The question is how we do so.

On the question of governance, we were all aware of one or two horror stories when the Committee began to look into the matter. However, the more we looked into it, the more we found that those were isolated cases. Paragraph 160 of the report quotes from the second report of the Committee on Standards in Public Life—the Nolan committee—as follows: we are dealing with isolated cases…that indicate no deep-seated trend. In the circumstances of challenge and change…the 'failure rate' has been creditably small. It is worth bearing in mind the evidence of the Further Education Funding Council that the total losses so far accumulated out of a budget of £3 billion a year for five years are about £9 million to £13 million, which is less than 0.1 per cent. of total expenditure. That is a great credit to the discipline and control that the FEFC has developed.

My final point relates to franchising. There was proper concern at some of the stories that we heard before the Committee got under way. We were worried that qualifications in shelf stacking in supermarkets would be the genre of activity represented by franchising, but that has not happened. Paragraph 129 of the report states: We believe that high quality franchising can play a valuable role in the FE system. That is an important finding. The report also discusses time limiting, and the amount of support that should be given to the development of new franchising schemes. On balance, that development was a successful initiative under the previous Government.

Let me look ahead to the future funding of colleges. As with our earlier debate on child support, there is a balance to be struck between fairness and clarity. The FEFC has developed a formula that is complex, but which the colleges understand. It has achieved a high level of convergence. We hear of £2 billion being taken out of the sector, but let us remember that there has been a levelling down of those colleges that overspent or used resources inefficiently, and a levelling up of those colleges that had the lowest level of funding under the previous, local education authority-run system. That progressive change is why many colleges on low levels of funding look forward to further convergence.

I endorse the Committee's finding that convergence is a process in which it is better to travel than to arrive. Working towards convergence has created greater fairness. However, absolute convergence would make the system more complex so that it could deal with individual anomalies at each college. That process would become self-defeating at some point. Convergence within a band is surely the right approach, rather than the reductio ad absurdum of what the FEFC was heading towards previously.

It is instructive to consider convergence in the context of sixth-form colleges and provision in FE colleges. We condone the idea of convergence within a band of plus or minus 2.5 per cent. It is worth putting on the record the fact that table 5 on page xxiv of the report shows clearly that there is convergence of A level funding within a band of 5 per cent regardless of whether a pupil attends a school sixth form, a sixth-form college or a general FE college. While the differences remain significant—I agree that there should be some levelling up—they are not so great as to imply that those who have attended an FE college have been particularly disadvantaged compared with those who have attended a sixth-form college.

One might go even further. It is in the nature of different types of provision for different children that there may be some funding variation. An even more significant factor is whether the quality and nature of the course is relevant and helpful to a particular pupil. That is a much more important criterion when considering narrow band differences in funding.

That brings me to my next point: whether we should develop a single qualification for those aged 16 to 19. I urge the House to reject that option, as I believe that there is a vocational path. While undertaking the report, the Committee also examined the plight of disaffected children over the age of 14. We found strong evidence for developing a vocational path for those for whom that is suitable not just from 16 but from 14. That would imply a different, but equal, route to qualification that is not inferior to the gold A-level standard, but more vocationally oriented and distinct.

If we are prepared to be rooted in reality and to make those distinctions, we can credibly say that that is the right route for certain children in that age group to follow. They need not feel disadvantaged at the end of that path. In fact, someone who follows a vocational route from 14 or 16 may be far better off economically for at least the next 10 years than those who follow the classic academic university route, given the burden placed on them in the form of the cut in the maintenance grant and the loading of tuition fees.

Dr. Howells

I will not take a natch out of the bait offered to me, but I will ask the hon. Gentleman a question. If young people follow the vocational route—it is an interesting idea about which there has been much talk—should universities recognise the equality of that qualification and allow those young people to take up degree courses? Does the hon. Gentleman believe that all universities should now recognise the validity of advanced GNVQs as a route to university?

Mr. St. Aubyn

The fine university of Surrey, which is located in my constituency, does a great deal of work with the corporate sector in devising and assisting with courses that may lead to HND qualifications. There is also much growing co-operation between the college of further education in Guildford and the university at Kingston regarding which body offers the most appropriate courses for individual students. Rather than getting hung up on equality of accreditation, we should be concerned about ensuring that those who choose the vocational route can develop their skills and enter fields of higher education.

To answer the Minister directly, it is misguided to suggest that someone who achieves a vocational qualification at 18 would have any complaint because a specific university preferred to take for a specifically tailored course a student with an A-level qualification. It is important that, having followed the correct route, such individuals can develop their skills at sound and able institutions for the rest of their careers.

Mr. Vernon Coaker (Gedling)

In line with the Minister's comments, equality of accreditation is absolutely fundamental to the debate about vocational and academic education. Without that equality, we get first and second-rate courses based on whether pupils follow the academic or vocational route. The only way of overcoming that divide, with which we have been beset over the years, is by ensuring equality of accreditation and parity of esteem.

Mr. St. Aubyn

I fear that the House is in danger of confusing equality of opportunity with equal opportunity. Equal opportunity means that everyone must follow the same type of course, which is completely detrimental to the achievement of a diverse education system. Equality of opportunity means that there is no brick wall at the end of any route that the individual chooses to follow. Having followed the vocational route, nothing should prevent people from switching to a more academic course if they are late developers, develop a different interest, or discover a new educational aptitude.

We must be flexible in this area, and I am worried about the Minister's comments. I shall read his speech carefully in Hansard, as, unfortunately, I cannot be present to hear it tonight. We must not have a dogmatic accreditation system that, in trying to achieve equality of outcome, destroys equality of opportunity. Genuine opportunity meets the needs of the individual, and is not the same for everyone.

I think that I have spoken long enough on this diverse subject, but I conclude by urging the House to disregard the suggestion by the hon. Member for—

Mr. Willis

Harrogate and Knaresborough.

Mr. St. Aubyn

I shall one day remember both parts of the hon. Gentleman's constituency.

We must disregard the hon. Gentleman's suggestion to abolish the TECs. In Surrey—evidence was presented from Manchester and other areas also—there are some excellent local partnerships between further education colleges and TECs. Through such partnerships, we shall develop the courses that the local economy needs.

It is moonshine to suggest that a regional development agency covering the whole of the south-east could devote sufficient time to the needs of Surrey as distinct from those of Kent, East Sussex, West Sussex or any other area in that region. For us, that idea carries no weight. I commend the report on its excellent conclusion that the RDAs should be limited to a strategic role. In some ways, the report is more balanced than the debate that we have heard this afternoon.

6.17 pm

Valerie Davey (Bristol, West)

At this stage in the debate, I shall use the experience of one college to underline the importance of just two of the recommendations in the report of the Education and Employment Committee. The City of Bristol college is crucial both to the city and to younger students, and it announced last week its exciting plans to make provision in the city centre. That provision would be located next to the central library and adjacent to the harbourside, where developments for new centres in science, natural history and the performing arts are proposed. It is an obvious location for a college.

We know that the majority of colleges are situated in the suburbs, in dilapidated buildings, with equipment that is long out of date. Therefore, by making plans to look to the future, the college is doing exactly what the report asks of the further education sector. However, those plans will not be realised without capital support. Therefore, I underpin the report's claim for further investment of £60 million per year. That capital investment must be allocated, year on year, to this crucial sector. These demands are made on behalf of students going into industry, who need to use updated equipment and to be attracted to the college by modern buildings.

The college's principal highlighted the fact that, with all the new equipment and the college's accessibility, it is not possible to deliver all that the Government ask without supporting the students. That is why the Committee asks for resources even greater than the £500 million for the institutions and the £400 million mentioned by the hon. Member for Harrogate and Knaresborough (Mr. Willis). The Committee seeks more than £1 billion to go into support for students. I believe that that is the balance needed in the further education sector. We must support the students.

At a recent awards ceremony at the college, more than 80 students aged 20 to nearly 70 completed a year's course that gave them the qualifications to enter higher education. Not one of those students had a contribution from grants or loans to fees, books, child care or transport. They all completed the course on their own account, yet the principal knows that many more people would have had the qualifications, determination and enthusiasm to do the course and go on to higher education had they had the minimal support necessary to get them through that year.

The House has been united in all our debates on getting more students from a more diverse background into higher education. Already, 30 per cent. of students going into higher education come through the further education route. Many more could do so, as the House wishes, if there were greater support.

It has already been said that the Lane report was not available to the Committee, which is a pity. That report emphasises that the funding of transport should be a top priority. I talked to a small group in a country area not far from Bristol. A key demand of parents and lecturers was that their 16 to 19-year-olds should be able to get to whatever provision was available, whether a sixth form in their school, a sixth-form college or a further education college. To get there, they need transport to be available, and they need to have its cost funded. The Committee would have taken more account of that if we had had the Lane report to hand.

Mrs. Anne Campbell

I am interested in my hon. Friend's remarks on transport. I agree that it is vital that young people are given opportunities through good transport. Is she aware that my constituency's further education college runs its own transport, giving people in rural areas the opportunity to travel into the city to take advantage of further education opportunities?

Valerie Davey

I thank my hon. Friend for that contribution. I am delighted that her college is able to do that. Most colleges that I know have had to cut such provision, as have local education authorities. The Lane report notes that, in 1992–93, local education authorities were giving students £187 million a year in discretionary awards that included travel costs. That figure has fallen to well below £100 million. The injustice is that the ability to claim a discretionary award depends on where people live. The whole system must be considered carefully, and something like the Committee's proposals introduced.

Unlike the Opposition, I think that this debate is timely, coming before the final statement of the comprehensive spending review. I urge the Government to realise that this crucial area of education must be very high on their agenda. For the hon. Member for Ashford (Mr. Green) to describe the report as inflated expectation was very rich. His Government expected further education to go on increasing the number of students and continue producing quality education while reducing its funding. Theirs was the inflated expectation. The Committee's report is realistic, and I recommend it to the House and to the Government.

6.25 pm

Mr. Vernon Coaker (Gedling)

I shall be brief because many hon. Members wish to speak. My hon. Friend the Member for Worcester (Mr. Foster) rightly said that it was important to pay tribute to the work of the further education sector over the past few years, given the number of changes and challenges that have been presented to the people who work in it.

From talking to the principal of my excellent local FE college, Arnold and Carlton college, I know the challenges that face it and many of the other colleges in and around Nottingham. In facing them, they have had a poor deal. Hon. Members agree that the funding of further education has been inadequate. The message to the Minister from the Select Committee report, from his experience and from the experience of all hon. Members is that we must address funding. We have started to do that, and we should recognise that the Government have already made some additional money available. We must continue with that and, in so doing, we shall address another issue: poor morale. We must reinvigorate the FE sector's work force so that they can start to deliver many of the things that we want.

I forget which philosopher said that there is nothing as practical as a good theory, but if we want the FE sector to deliver what we want we must be clear what we want it to deliver. A multiplicity of demands is being made of it. Of course we want improved funding and to widen participation but to do that more money is needed. We must also address some of the other issues that my hon. Friends have raised, especially student support. Such issues are crucial in respect of the people whom we want to go back to education, such as women returners.

For many of those people, alongside funding lies the issue of child care provision. The concept of lifelong learning is important, as is delivering training to support our economic needs. We must recognise that FE colleges often deliver courses in the most difficult circumstances and in remote areas. When the pits in my area shut, it was the FE college that moved in to try to retrain miners who had lost their jobs. We still have people out of work or in need of retraining and the FE colleges are trying to reskill them. We should pay tribute to the FE sector; we often fail to recognise the valuable work it does. It is not the grandiose, fantastic, multi-million-pound research that many universities proclaim—important though that is—but the small-scale individual courses delivered in a village hall or community centre that are vital if we are to provide opportunity to all our people.

I am sorry that the hon. Member for Guildford (Mr. St. Aubyn) has gone, because I suspect that our views are not as far apart as he thinks. As deputy head teacher of a city comprehensive for a number of years I was involved in ensuring that further education colleges and the 14-to-16 school sector worked together to raise achievement and increase the participation and staying-on rates of 16-year-olds. I am not saying that FE colleges are institutions solely for problem pupils, but they offer the sort of opportunity that schools often find it difficult to offer, in a different environment, which can often help disaffected young people to stay in the education system.

We talk about social exclusion and about offering opportunity, so I ask my hon. Friend the Minister to consider ways in which FE colleges can work with the key stage 4 curriculum, which is the 14-to-16 curriculum, to increase participation rates and to encourage young people to stay on in education. I can see numerous ways in which colleges in Nottingham and the schools sector can work together, but that is extremely difficult to organise because of lack of flexibility in funding arrangements. It is to colleges' great credit that, in many cases, they offer courses at or far below cost to ensure that opportunities remain open.

When talking about widening participation and trying to get more young people into colleges, we have to recognise that the colleges need support. Many city and inner-city colleges are trying to persuade among the most disaffected and difficult young people in society to stay on in or to return to education. Colleges need support to deal with those young people, but too often—this is not a party political point—they are left out on their own when there is a problem as though it is the colleges' fault that the problem has arisen. We need to work with colleges and to recognise that difficulties are likely to arise when we try to re-engage in education disaffected young people who have failed at school, who may have been in trouble with the police or out of work, and who have been left on the shelf.

If we support colleges and avoid apportioning blame when the odd problem arises—I think all hon. Members know what I am talking aboutwe shall start to address some of the issues of social exclusion in our cities and of disadvantaged young people. I want to emphasise the role of the FE sector in helping schools to deal with disaffection and in dealing with some of the disaffected members of the post-16 age group. FE colleges have a fundamental role to play and we should support them in that role because they offer opportunities to enrich and extend the curriculum that schools cannot offer on their own.

In my view we have to speak more of the 14-to-19 curriculum and less of the 16-to-19 curriculum. To my hon. Friend the Member for Barking (Ms Hodge), I say that I thought that the Select Committee report was excellent. It offers an opportunity and a way forward, but we have to grasp the nettle and recognise the way in which FE colleges can contribute to raising achievement in schools and tackling social exclusion and disaffection across the age range.

6.34 pm

Caroline Flint (Don Valley)

One of my proudest moments this year came when I attended an awards ceremony at which my constituent, Mrs. Sheila Gravel, won the national vocational student of the year award. My hon. Friend the Minister met her afterwards.

Sheila left school at 16 and went to work as a machinist in a garment factory. After decades of work, she found herself redundant. Despite having a family and a dependent father to look after, she decided to take the opportunity, which had not been open to her at 16, to go into further education. In doing so, she embarked on a course that not only provided her with skills for the future, but enriched her life. Having completed her first course, she went on to take a higher education course, which she started at Doncaster college and is continuing at Leeds university.

Sheila's achievement is one testimony among the many of mature students in Britain who have taken advantage of our further education system even though education and training have not played a role for large periods of their life. That is good and, as far as I am aware, the number of mature students returning to further education is increasing. However, our problem is the number of Sheilas who continue to leave school at 16 and wait decades before taking up education and training once more. We in Doncaster, where almost 50 per cent. of school leavers do not go on to further education, whether at school or at a further education college, recognise what a huge challenge faces us.

It is important to consider the reasons why young people do not choose to continue their education. As has eloquently been said by my hon. Friends, the key is to treat 16-year-old school leavers as young people rather than as children—and therein lies the importance of financial support. I should like to point out to the hon. Member for Ashford (Mr. Green) that child benefit is taken up only by families whose child is in full-time further education; it is not available to families whose children have left school, perhaps to take up a low-pay, low-skill job, or to families whose children are unemployed. I agree that there are issues relating to support for family life and to recognition of parents' contribution toward their child's upkeep, but we have to look at the motivation and incentives for young people to continue their education. In its report, the Select Committee tried to highlight that as an issue for the Government to consider when determining different funding priorities. Child benefit has to be considered in that respect.

Mr. Green

If the hon. Lady feels so strongly about maintenance grants for 16 to 19-year-olds, may I ask which way she voted on the issue of maintenance grants for students at university? Did she vote for them to be taken away, or is she consistent in her views?

Caroline Flint

In the first place, students in higher education get loans. Let me make it clear: having in the past year dealt with several constituents in further education who pay for their courses, who combine that with work and who are on low incomes, I have no hesitation in supporting a fairer and more equitable system whereby people in further education, whether young or mature students, get a better share of taxes and more support for continuing their education, such as currently benefits those in higher education. I want a fairer and more equitable system and, for that reason, I had no hesitation in supporting the Government's recommendations.

Many graduates understand that their future level of income is enhanced by undertaking a degree course. We have to get across to young people the message that undertaking further education can enhance their future employability and standard of living. A person with a level 3 qualification earns, on average, 25 per cent. more than someone with no qualifications. A person with a degree earns, on average, twice as much as somebody without any qualifications. The unemployment rate among people with level 3 qualifications is half that of those with no qualifications. We must impress on young people that investment in their education and training at 16 will really make a difference to their prospects and those of their future families.

Child care has been commented upon during the debate. Only 0.1 per cent. of Further Education Funding Council funding to colleges is devoted to child care. I am pleased that this year the Government granted an additional £5 million, but I hope that that is only the start.

I shall give an example of how child care is important. I visited in my constituency a unit that is for young parents under 16—girls who find themselves pregnant and are able to continue their education with the support of a young parents unit working in harmony with schools. Child care and support is offered. However, once they reach the age of 16 and leave the school system, the project breaks down. The local FE college has a creche, but it is only for children aged two and above. That creates a vacuum. In the most difficult circumstances, young women are supported in continuing their school education, but they can find themselves at a loss when they have to leave the establishment.

When I asked the person in charge of the young parents unit what happened in the vacuum that I have described, she said that young girls often seek to assume more parental responsibilities, thinking, "I might as well have more of my family now than delay for the future."

We know from the evidence that nine out of 10 lone parents would like to go to work. The two major barriers to their succeeding are child care and access to education and training qualifications. I impress on my hon. Friend the Minister that this is an area that is regarded as important to the life chances of young people and their children.

The hon. Member for Guildford (Mr. St. Aubyn), who had to leave the debate early, for which he apologised, mentioned that in the evidence given to the Education and Employment Committee on the governance and accountability of further education colleges it appeared that on the whole there were few examples of governance and accountability breaking down. The hon. Gentleman was right. It is testimony to the sector that it has successfully made the transition from incorporation, but it was made clear to the Committee that where governance and accountability had broken down it had been to the detriment of the entire sector. The scale of the difficulties caused by that breakdown was such that it left a slur on the whole sector. In addressing that, various suggestions have been made, including the appointment of an ombudsman.

Mr. Ben Chapman (Wirral, South)

My hon. Friend makes an important point about governance. There are calls for more funding for further education, but unless governance and accountability are right, more money will not of itself serve the purpose. In my constituency, the board and management of the Wirral metropolitan college managed to create considerable debt by over-grandiose ideas, by straight mismanagement and by creating over-dependence on European funding that did not continue. In those circumstances extra funding would not help, yet the very same board and management comprise people who are closing facilities to address a problem of their causing. They are entirely undemocratically unaccountable. That cannot continue. We need to address the issue of governance and management, which cannot be done separately from funding.

Caroline Flint

I endorse my hon. Friend's comments. It is important, as in other sectors of public life, that governance and accountability in the FE sector are transparent and that people can put trust in our national further education service.

As for model agreements in terms of staff, I do not think that anyone on the Select Committee felt that there was no need for flexibility. What was interesting was the evidence we received from the National Association of Schoolmasters/Union of Women Teachers on sixth-form colleges. When asked why there had been little publicity about rancour and disputes in its colleges, it said that flexible models based on a national framework had helped it to succeed, whereas in FE colleges the absence of national models had led to disputes.

We have had a timely debate that has enabled us to draw attention to the importance of the FE sector. I know that under the Labour Government it will have a healthy future.

6.44 pm

Mr. Derek Twigg (Halton)

I shall be as brief as possible because I know that other hon. Members wish to speak.

My local college is an interesting case for examination, given the investigations that are taking place, but I welcome the debate, the Education and Employment Committee report and the Kennedy report that preceded it. Those reports have highlighted the important issues in the further education sector.

As my hon. Friend the Member for Gedling (Mr. Coaker) said, it is important that we use the debate to highlight the tremendous work that goes on in FE and sixth-form colleges throughout the country, which involves both staff and students. They should be congratulated. Often the work goes unnoticed.

The contribution to the country's economy, never mind local economies, and to cultural and social developments in communities, is outstanding. It would not be possible to take away a FE college or a sixth-form college without that being noticed. The removal of a college would be a massive blow to any community and to the economy of the country as a whole.

Funding is crucial—I know that my hon. Friend the Minister has heard the argument about that. It is important that we fund the FE sector well. There are, of course, priorities to be determined and decisions to be made by the Government—and they have made a start. The previous Government incorporated colleges and established certain formulae. Many colleges have suffered as a result.

I shall give a brief example. Widnes sixth-form college in my constituency is successful and has achieved tremendous educational attainment. It is used by many of my constituents. However, the college is about 25 per cent. worse off now than it was under previous local authority funding. The principal is in no doubt who is to blame. He says: This is a direct consequence of the horrendous funding cuts imposed by the last Government. Demand-led funding has been mentioned briefly. The way in which the previous Government cut off funding was abominable. They did not just stop it; they stopped it overnight without warning. That created massive panic throughout the FE sector and in colleges throughout the country—I remember receiving a call from my local college. The Opposition will not respond to this issue. Similarly, they will not respond to the fact that more colleges are now in financial trouble. Why are more colleges now facing financial risk? The Opposition have sidestepped these issues. Earlier, the hon. Member for Ashford (Mr. Green) suggested that I was quoting from a party brief. Actually, the facts are in the Select Committee report. They also appear in the Library figures.

The Government recognise the importance of further education. They have started to make that clear with their commitment to lifelong learning and the learning age. It is important that there is specific help for people on low incomes or with low educational attainment. We can help them improve their education.

In Halton, there are major problems as a result of structural unemployment. Learning difficulties and low educational attainment are also important to my constituents and Halton college has a fundamental, pivotal role to play. There are special needs and young people with learning difficulties. What happens to them when they leave school, whether it be a special school or a school integrated within a normal comprehensive school? What happens to their education? What role can FE colleges play? It is clearly crucial.

In terms of national and multinational companies and the economy as a whole, support for FE colleges and the courses that they put on should be recognised as important.

Halton college is under investigation. The principal and deputy principal have been suspended. A number of allegations have been made. For obvious reasons, I shall not go into them, but the college will be an interesting study, given the current system, especially in terms of franchising. I shall say a little about the college because the investigation may have clouded the good work that goes on there.

Halton college was formerly Widnes technical college and has existed for more than 100 years, so it is not a new innovation; it has been part of the community for a long time. In 1993 it was incorporated with other colleges. It has 38,000 students, but I bet that it is not the largest college. The students' programmes of study are at the college, in the local community or at their place of work, so they can choose how the courses are delivered, which has a massive impact.

The college has not only a local impact—it has students from all over the country. A number of issues are under investigation at the moment, along with the franchise. Many colleges have students from all over the country, so they make an important contribution to the economy. The age profile of students is interesting; 12 per cent. are aged 16 to 19 and 88 per cent. are 20 or over. Forty-four per cent. are male and 56 per cent. are female. The college provides work for about 800 people, of whom about 50 per cent. live in the Halton area.

Crucially for the success of the economy and our future, colleges such as Halton offer a range of courses. Halton offers courses in hotel and catering studies, health and community care and humanities. It also teaches computing and information technology, multimedia and science and engineering, which are four of the most crucial areas for our economy in terms of reskilling and re-educating people.

Halton college has recently won a number of beacon awards and been commended for its work. It does a tremendous amount of work on links with the local community. There has been specific investment and improvements in links with local schools, such as video conferences, computer link-ups and distance learning in schools. Those innovations will be very important in the next century.

Several hon. Members have referred to better governance. I met the staff of Halton college last week. What was interesting was the clear split between those on the franchising side and those who delivered local courses. They seemed to be two separate bodies and I wonder whether that is linked to management and how the college has developed. It is important for the way in which the college is managed and assessed that there is wide community representation on the board of governors, including staff, students and members of the local authority. I welcome the Government's proposals on better governance, which will improve the situation tremendously.

The Further Education Funding Council, which controls the further education sector, has been conducting the investigation at Halton college. We must examine the funding council's role in providing financial controls and checks and balances for the whole sector to ensure that colleges are correctly run, that we get the best value for money from our investment in the FE sector and that we can rely on the work carried out in that sector.

The FE sector is vital to our economy and our local communities and it deserves the support that the Government can give it.

6.52 pm

Mr. David Chaytor (Bury, North)

I welcome the debate and the Select Committee report. The points that have been made about the timing of the debate are worth dwelling on because, if it had taken place earlier in the year, it might have set the context for the debate on maintenance grants and tuition fees in the proceedings on the Teaching and Higher Education Bill. That would have strengthened people's awareness of the fact that the overwhelming majority of students aged 19 and over in further education have no maintenance grants and pay their tuition fees.

The problem for FE is that it has a different meaning in different parts of the country. In my constituency, every 16-year-old in the state sector is in further education because we benefit from a highly coherent system of education whereby there are eight schools for 11 to 16-year-olds and two colleges—one Catholic sixth-form college and one general tertiary college. Both are of the highest reputation, and one has received an inspection report that was recently described as the best ever written of any similar college. Further education is particularly important for my constituents.

As the years go on, we might need to think of a different term for further education. The boundary between further education and adult education is increasingly irrelevant because the majority of students in further education colleges are now adults. The growth of tertiary colleges and the incorporation of sixth-form colleges into the sector mean that the old Cinderella image of FE is increasingly inappropriate. I congratulate the Government on getting lifelong learning firmly on the agenda and I hope that, in future, the House will have an annual debate on lifelong learning.

I do not want to go over the previous Government's failures, but they bequeathed to the new Government a legacy of a chaotic and fragmented internal market and a chronic funding crisis leading to intense demoralisation in colleges throughout the country, which in turn led to disastrous industrial relations in many colleges. That is a sad and tragic bequest. I congratulate the new Government on the work that has been done in the past 12 months to remedy the deficiencies of the internal market that we inherited. I particularly welcome not only the Select Committee report but the Kennedy, Fryer and Lane reports, which have all contributed to an important debate on lifelong learning in the past 12 months. I welcome the Government's commitment to increasing by 500,000 the places in further and higher education.

I want to dwell on three issues arising from the Select Committee's report and then comment on more detailed points. First, I cannot entirely agree that the problem of funding is merely one of the quantum. The funding methodology itself has created a bureaucratic nightmare. Although it does not, perhaps, rival that of the Child Support Agency, on which we had a statement earlier, it is not far short of it.

I shall quote one example. Several hon. Members have referred to the problems of franchising and the fact that their colleges have experienced severe financial crises because of the vagaries and instabilities of franchising. That is because the funding methodology specifically encourages franchising without there being a full understanding of the consequences of that. I hope that my hon. Friend the Minister will take on board the fact that the specifics of the funding methodology have to be changed. We must bring about, exactly as we have done for the Child Support Agency and its formula, a simpler and more stable system. I am not entirely convinced that the changes that have been made to this year's funding methodology, particularly on franchising, will bring about that stability as quickly as is necessary.

On funding, I also add my support for the proposed changes for maintenance for 16 to 19-year-old students via the reform of child benefit. That is a cause that I have long supported. It is self-evident that the reform proposed in the Select Committee report is the only way forward, and I hope that the Government take that on board.

My second point on the report relates to planning. I welcome the acceptance that there has been a chronic lack of strategic planning in the sector. I also welcome the improved and enhanced role for the Further Education Funding Council regional committees and the voice that is given to the regional development agencies. Again, I am not sure that the report fully spells out exactly how strategic planning should be done. I agree with the hon. Member for Harrogate and Knaresborough (Mr. Willis) that we cannot plan through the funding mechanism alone. If we do that, we shall simply reproduce the mistakes of the previous Government. The Government should spell out, in the near future, exactly what powers the FEFC regional committees and RDAs will have.

I shall quote one brief example of the chaos that exists, particularly in the 16 to 19-year-old sector, in the constituency in which I live, which is not the constituency that I represent. I live in one of the smallest metropolitan districts in the country, in which education for 16 to 19-year-olds is provided by two private schools, two grant-maintained selective schools and five grant-maintained notionally comprehensive schools, which are becoming increasingly selective because of the inevitable dynamics of opting out. There are also four local authority comprehensive schools and a general further education college that has an associateship with a sixth-form college outside the district. In addition, many young people at one end of the district go to the Catholic school for 11 to 18-year-olds across the border and many at the other end of the district go to one of the two sixth-form colleges in the adjacent district.

The result is chaos, fragmentation and a massive amount of unnecessary travelling by young people. There is inefficiency, duplication of courses and no concept of economies of scale. A generation of young people has lost out because of the failure of the previous Government—I hope that this Government will not do the same—to get to grips with the planning of provision for 16 to 19-year-olds.

The third major issue in the report on which I shall comment is that of widening participation. I found the appendix to the Green Paper extremely valuable in giving us the figures of those who participate in HE and FE, in adult education, and of those who do not.

This year, the Government, to their credit, have introduced a widening participation factor in the funding methodology to the tune of £10 million, but that is a drop in the ocean. If we are serious about implementing the Kennedy agenda, we should ensure that the widening participation factor—however calculated—is much greater.

Most people working in the sector would acknowledge that one reason why it is difficult to encourage those who have been alienated by their school experience to return to continuing education is that they need a great deal of personal support, because they lack confidence and communication skills. I question whether the big policies emerging from the Green Paper—the university for industry, and individual learning accounts—will, in themselves, succeed in widening participation, because the very people whom we need to encourage to become more involved in lifelong learning are the ones who will find it most difficult to handle the new technology that is implicit in the concept of the UFI, and to put some money into an individual learning account. We need to rethink how we might widen participation for people who have not been involved in any education or training since school.

Finally, I shall raise some specific points, to which I hope that my hon. Friend the Minister will respond in his reply, or take back to the Department. The first concerns schedule 2—specifically, the changes that have been made to the accreditation of courses under schedule 2(a). I understand that that is the subject of lively debate. Many colleges fear that the changes to schedule 2(a) will have a severe financial effect on them because they have been introduced too quickly, after prospectuses for next year have been produced and students recruited.

I hope that my hon. Friend the Minister will consider, and take a personal interest in, that issue, together with the issue of schedule 2(a) and the new deal. I understand that new regulations limit new deal over-25 participants to courses under schedule 2(a), whereas many of them will need to follow courses under schedule 2(c), 2(d), 2(e), 2(f) or 2(g). That point needs to be reviewed.

I shall be brief, as other hon. Members wish to speak. On schedule 2, my hon. Friend the Member for Barking (Ms Hodge) raised a point about drawing the distinction between education for work and education for leisure. That point is strongly made in the report. I am not sure that it is easy to draw such a distinction. I do not believe that we can draw a line between that which prepares people for work and that which prepares them for leisure. I ask the Government to think carefully before making any changes to funding regimes on the basis of such a hard and fast division. Increasingly, as we move into the next century, as work patterns change completely and as people's working lives change, educating people for leisure time will be as important as educating and training them for work.

The development of a credit accumulation and transfer scheme was also flagged up in the report. The difficulty is that, at the moment, there is no incentive for colleges to become involved in such schemes because the funding methodology works against it. That leads me to the important point that the funding methodology needs to be changed so that a fully flexible unitised curriculum can be developed.

The national grid for learning is a crucial development, widely welcomed in the school sector. No reference has been made to how that might be extended to the further education sector. I hope that my hon. Friend the Minister will mention that in his reply.

I welcome the work that the Minister and his colleagues have done in the past 12 months. There has been more discussion of lifelong learning than at any time in the past 30 years. All we need is for the Government to put their money where their mouth is.

7.4 pm

Mrs. Anne Campbell (Cambridge)

I welcome tonight's debate and congratulate my hon. Friends serving on the Select Committee on Education and Employment, who were responsible for the report. It highlights the importance of further education and permits us to support it and to give it the recognition that it deserves.

My hon. Friend the Member for Worcester (Mr. Foster) admonished us, telling us not to treat further education as a Cinderella service. He was right to do so; but when I look at those empty green Conservative Benches—on which one Back Bencher has just appeared—I can easily see why further education has been a Cinderella service. It is easy to see why, over the past 18 years, further education has been treated with appalling disrespect, funding has fallen and very few debates in the House have emphasised the importance of that crucial sector of the education system.

Like many Labour Members, I have been a lecturer in both further and higher education. I have also been a member of the governing body of Cambridge regional college, and chair of governors for three of the years that I was a governor. I was determined, in the years that I was a governor, to achieve a new building for Cambridge regional college. It was a matter of symbolic importance because, when I became a governor, Cambridge regional college existed in six ex-primary schools. It was run down; people did not identify with the place, and had great difficulty in finding it.

Now we have a magnificent new building in the King Hedges area of Cambridge, which the Minister has visited. He will agree that it gives the college the status and importance that it deserves, and sends a very important message to the students, because it makes them realise that they are important to the people who fund the service.

Recently, I had a meeting with the principals and chairs of governors of the three further education colleges that serve my constituency. I am very fortunate, in that my constituency has three excellent further education institutes, one of which, Hill's Road sixth-form college, is almost always the highest in the list of those state schools that achieve Oxbridge entrance. The other colleges are no less excellent, and produce a very high standard of education indeed. Nevertheless, funding is an issue, and one that must be addressed.

Before I discuss funding, I shall mention the collaboration that exists between those three further education colleges; it is probably unique to Cambridge, and might be emulated elsewhere. There exists in Cambridge a collegiate board, consisting of all post-16 organisations in the area. The board's mission is to provide informed access for all students to a coherent, flexible and comprehensive programme of high-quality post-16 education and training. The collegiate board is the forum where the heads of the pre and post-16 establishments meet, and in their meetings they are always joined by representatives of the training and enterprise council, of the local education authority and of the schools that have access to, or send their students to, the further education sector.

The areas of co-operation and collaboration include: common application procedures; guidance to students pre and post 16; strategic planning—which is important, and about which my hon. Friends have spoken a great deal tonight; curriculum development and curriculum mapping; staff development; personnel practices; marketing and promotional activities; and a host of other areas. That amply proves that a group of institutions, some of which are vastly different in character, can collaborate in a way that the previous Government did not think possible. The previous Government set one college against another, creating a competitive environment that was entirely destructive to the ethos of further education. The collaboration that we are now achieving is good for students, for lecturers, for further education and for the local economy.

On the issue of funding, there are considerable concerns among my colleges. The three colleges this year are delivering 1.2 million Further Education Funding Council units, equivalent to more than 25,000 individual student enrolments. However, FEFC funding is available for only 1.1 million units, so not only are the units of funding smaller than in higher education, but they are not being properly funded.

All three colleges have been granted funding for about one third of the growth in the current financial year, which means that two thirds of the current shortfall will remain unfunded for next year, unless there can be some great influx into FE funding. I hope that my hon. Friend the Minister will have some good news for us later this year when the results of the comprehensive spending review are announced.

Another important factor is the serious adverse gap that is beginning to emerge between salary levels for teachers in secondary schools and teachers in sixth-form colleges. One of my FE colleges, Hill's Road sixth-form college, must find substantial capital investment from within a greatly reduced funding allocation. Unlike general further education colleges, many of which have a long history of private income and investment, which often leads to commercial and vocational opportunities, sixth-form colleges are largely dependent on FEFC income. As a result, they are paying their staff less and the funding gap is growing ever wider.

I hope that my hon. Friend the Minister will address those issues. I welcome the debate, and am grateful for my opportunity to participate in it.

7.11 pm

Mr. Ben Chapman (Wirral, South)

Incorporation has brought some benefits to the further education sector, but more needs to be done about the issue of governance. In my constituency, the board of the local college is cutting its costs by attempting to close facilities. That is presented as a move to a sort of education without walls or buildings, a virtual reality new and exciting world of education. There may be something in that, but to me, buildings, campuses and social interaction among students have been, are and will be a massive component of our further education. We cannot do away with that.

The pity of what is happening in my constituency is that, although it is presented as educationally driven, in fact it is debt driven. College principals may well be good educationists, but they are not necessarily good managers. Sometimes an inverse ratio is in play. Those who are the best educationists may be the worst managers. Those who talk the best game are often the worst players.

In simple terms, it is the principal who appoints the board, and the board that effectively supports the principal. That brings a false collateral and respectability to the business of governance. All appears to be well, but it is not. The proposed closure of a campus in my constituency comes on top of an earlier site closure, and presages the closure of a third. It follows the removal of creche facilities and of a theatre. It is a catalogue of disasters.

There are 7,000 signatures to a petition protesting against the board's actions, there have been dozens of letters, and people have written to newspapers and spoken to me. Not one has supported the action of the governors of the college, but the board presses on none the less. It takes no account of the views of the people. We must find a mechanism to deal with that. Notices go up on a site announcing that it is available for other uses, students are thereby put off the courses, and a self-fulfilling prophecy is at work. It is not good for further education in general or for my constituents in particular.

I commend the Select Committee's report and the Government's consultation paper, and I look forward to hearing the Minister's reply.

7.14 pm

The Parliamentary Under-Secretary of State for Education and Employment (Dr. Kim Howells)

I thank hon. Members on both sides of the House, although Opposition Members are in short supply, for an excellent and well-informed debate, which arose from an excellent and challenging report. I thank my hon. Friend the Member for Barking (Ms Hodge) for chairing the Committee and introducing the report. It is an extremely important report. There have been many contributions; and I shall try to deal with them, but I hope that hon. Members will excuse me if I miss some.

We in the Department are pleased to welcome the report, which is wide-ranging, comprehensive and perceptive. We are pleased that the Select Committee chose the further education sector as one of its first areas for scrutiny.

The Government will respond in the next few weeks. That will provide the opportunity for a detailed assessment of the report and its recommendations, but I can say now that we welcome the general thrust of the Select Committee's report and its emphasis on the critical importance of FE. The sector requires all the encouragement that it can get.

The previous growth-at-any price strategy had run aground earlier in the year, with the abrupt cancellation of the demand-led element—DLE—sby the previous Government, as my hon. Friend the Member for Halton (Mr. Twigg) made clear. They had promised to fund DLE payments due in the 1997–98 financial year, and we had to make good that promise. We had to find the money—£65 million—to fill the black hole in FE finances left behind by our predecessors, before we even started to work out what additional sums the sector required.

The sector has been in bad shape. It has undergone continuing and swingeing efficiency gains. There is nothing wrong with efficiency gains, of course, as long as they are sensible and measured, and take full account of the sector's opportunities and needs, but when they become a constant factor in FE financing, they cease to be efficiency gains and become efficiency losses—not only a loss of good teaching staff, as many hon. Members have pointed out, but more seriously, a loss of morale, shared purpose, respect and, most important, a loss of direction. For far too many of our colleges, that has been the case.

I have travelled around the country visiting FE colleges, and some of them have been the best educational institutions that I have set foot in, including all the universities that I have visited, if one takes into account the task with which those colleges are charged, the use that they make of their limited resources and the brilliance of some of the teaching and practice that go on there. However, some FE colleges are pretty dreadful. Many hon. Members have emphasised that management requires careful consideration. My hon. Friend the Member for Wirral, South (Mr. Chapman) made the point that being a brilliant teacher does not make one a brilliant accountant or manager. I know that college principals are giving close attention to that.

Our first priority, having sorted out the financial mess for 1997–98, was to assess the position for 1998–99. Within the rigorous approach to public expenditure to which we had committed ourselves, we have none the less, since last November, managed to make available more than £100 million for the sector, over and above our predecessors' plans. Further education occupies such a key place in our education and training system that the money must be well spent, and I have no doubt that it must be added to year on year. I entirely agree with what has been said about the need for adequate funds.

Mr. Sheerman

Does that not depend on how many colleges my hon. Friend has visited, and on what percentage he considers truly excellent—the best ever? If the proportion is only 5 per cent., or only 10 per cent., whatever resources we can put in will not be well used. What are we doing to ensure that we bring the remainder up to the best standards?

Dr. Howells

I will not hector college principals or managers about what they should or should not do. I think that Governments have been all too handy at telling other people how they should manage their businesses. I will say, however, that I think we are very bad at identifying and disseminating best practice in this country. All too often, we do not give credit where it is due. It is easy to use soundbites to criticise colleges, but colleges—some of the worst as well as some of the best—have been in dire financial straits. I will not appropriate blame in that way, and I do not think that there is a blanket method of doing so.

My hon. Friend the Member for Bury, North (Mr. Chaytor) described the "bureaucratic nightmare" of the funding methodology. He is right: it is a bureaucratic nightmare—almost as bad a nightmare as the method of funding training and education councils, which we are reviewing. In many respects, we have inherited an awful bureaucratic mess, which we must help colleges to clear up—but through a partnership approach, rather than a "top down from Whitehall" approach.

The Select Committee set out its view of the mission of further education, which I consider worth quoting. It said: The further education sector supports the nation's economic competitiveness and social well-being by improving the skills of the existing and potential workforce and by creating opportunities for achievement for all members of the community. I do not think that the position could be summed up better; what worries me is that not everyone may share that view. I am not sure that many employers share it, and I am very sorry if they do not.

There was a strong link between further education and polytechnics—in a different respect, but we saw the resulting service as being more seamless. I regret very much that, even now, many of our leading firms do not see the further education sector as a natural ally that could make it more competitive. It is vital that that trust and partnership are rebuilt, whatever we do with further education.

It is not just a question of funds, although funds are important. More employers should realise that, if they invest money in education and training—work-based training provided by colleges or other forms of training, perhaps campus-based—they, and we, will ultimately benefit.

Mr. Eric Insley (Barnsley, Central)

Does my hon. Friend agree that restricting collaborative provision to local collaboration could damage relations between colleges and employers even further?

Dr. Howells

I know that my hon. Friend is concerned about the excellent further education college in Barnsley, which has emerged at the top of the spectrum in the examination of colleges. It is a superb institution.

We must look carefully at franchising arrangements, and I am glad that the Select Committee flagged them up. There is a variety of such arrangements, and there is no doubt that, even if they are at a distance, those that work must be encouraged. We must not be too prescriptive, and we must not barge in when we need to be sensitive.

The hon. Member for Harrogate and Knaresborough (Mr. Willis) raised some important points. Most important, he told us that—I think—4.5 million people had great difficulty with literacy and numeracy and with simply expressing themselves to their peers. There can be no greater condemnation of an education system. Indeed, I have heard that the figure may be as high as 7 million. If further education is to widen access, and to engage people to whom education means nothing, it clearly faces a huge task. There can be no more important task. It has been called the Kennedy agenda, after Lady Kennedy. There is, however, another task for further education, which has not been talked about much tonight.

Mr. Dennis Turner (Wolverhampton, South-East)

I know that all Labour Members appreciate my hon. Friend's work for further education colleges. Before the debate finishes, however, may I raise a question about basic education? What is the position on new deal 25-plus? I am thinking especially of those—literally hundreds—who need basic education before they can proceed to courses that will give them the jobs that our Government want them to have. I hope that my hon. Friend will say that that is being addressed.

Dr. Howells

It is being addressed. We are in constant contact with my right hon. Friend the Secretary of State, who is currently running the great new deal project.

The Kennedy agenda must be one of the most important before the country. Its aim is to widen access to education, and to re-engage what is almost a lost generation. The hon. Member for Harrogate and Knaresborough is right to stress the importance of that.

My hon. Friend the Member for Gedling (Mr. Coaker) spoke of the need for further education to deal with problems of social exclusion and disaffection. That is hugely important. Another issue was hardly discussed tonight—

Mr. Gerald Howarth (Aldershot)

Will the Minister give way?

Dr. Howells

I am sorry, but I will not. The hon. Gentleman has only just entered the Chamber, and I must finish my speech.

There is another agenda: the agenda of training expert technicians. It could be described as the other end of the further education spectrum. In this country, we have not been very good at teaching intermediate skills. We were good at it once, but we stopped somewhere along the line.

The hon. Member for Ashford (Mr. Green) spoke of the benefits of incorporation, and there is no doubt that that has brought benefits, but it has also caused terrible disruption to the relationship between companies and further education colleges. I hope that the bridges can be rebuilt. If we can rebuild them, and use imagination in returning to further education its automatic sense of dignity and self-esteem, I think that we shall succeed.

7.28 pm

Ms Hodge

With the leave of the House, Mr. Deputy Speaker.

We ought to congratulate all who work in further education—not just on surviving, but on prospering over the past 18 difficult years, particularly the most recent. They have provided extended opportunity and improved training and qualifications for the many, and have begun to provide access for more people.

I also congratulate the hon. Member for Ashford (Mr. Green), the only Conservative Member who has been present throughout the debate. I do not suggest that that is because he is on the Opposition payroll, but one Conservative Back Bencher and nine Labour Back Benchers have been present throughout. That says it all: that is why further education has been ignored for too long by Members of Parliament.

The challenges facing the Minister are immense, and I have full confidence that he will rise to the occasion. FE is rich in its diversity, and it faces many difficult problems in the future. We have raised capital and revenue funding, and the funding of institutions and people. We have also made some controversial and challenging recommendations—we wanted deliberately to put them on the political agenda.

I thank the members of my Committee—we all worked extremely hard to put together a comprehensive report. I also thank our advisers, those who gave written and verbal evidence to the Committee, and those who work and study in further education for ensuring that it is a sector in which we can have confidence. The matter passes over to the Minister. We wish him luck, and think that we have timed the debate appropriately. We look forward to a welcome outcome from the comprehensive spending review.

Question deferred, pursuant to paragraph (4) of Standing Order No. 54 (Consideration of estimates).