TRANSFERS: ENGLAND (Hansard, 27 June 2000)

§ Mr. Wicks
I beg to move amendment No. 36, in page 40, line 23, leave out subsection (11).

Mr. Deputy Speaker
With this it will be convenient to discuss the following: Government amendments Nos. 37, 38 and 124.
Government new clause 8—Transfers: Wales.
Government new clause 18—Training programmes: cessation of funding.
Government new clause 21—Pensions.
Government new clause 22—Pensions: interpretation.
Government new clause 23—Pensions: delegation.

§ Mr. Wicks
When we discussed the important matter of the transfer of assets in Committee, I promised to update the House on Report on the work that we are doing with TECs to agree the future use of assets. That work has led us to conclude that we need additional safeguards through the Bill to ensure that such assets continue to be used to meet national priorities and for the benefit of local communities.
TECs currently hold assets with a gross value of more than £600 million and a net value of nearly £280 million once current liabilities are taken into account.
It has become increasingly clear from our discussions with TECs that their future plans vary widely. Some are proposing to wind up the company and return all remaining funds to Government. Others have plans to keep the company going in one form or another. In a small number of cases—I emphasise that it is a small number—proposals are beginning to emerge which move away from one of the fundamental principles which has underpinned the work of TECs.
We believe that we must ensure that no TEC resources are used in support of any proposals that could be linked to individual shareholders or profits and take money away from public control. I emphasise that, in the vast majority of cases, we are having useful, civilised discussions with TECs on a TEC-by-TEC basis on the use of assets in a way that is consistent with national priorities and the needs of local communities. Only in a very few cases do we have concerns, and my right hon. Friend the Secretary of State feels strongly that we need the amendment in order to protect public money. Parliament would expect no less of us.

§ Ms Linda Perham (Ilford, North)
I am most concerned by what my hon. Friend is saying. I have received representations from the East London TEC. I hope that my hon. Friend will reassure those involved that the East London TEC and a number of other TECs are not included in the small number at whom the amendment is directed. Some people involved in the TEC feel that the Government already have enough powers. I hope that my hon. Friend can offer some reassurance.

§ Mr. Wicks
If the Government already had enough powers we would not have tabled the amendment. We did so after much consideration, but there was a very real risk that we could not safeguard public money. We have to 853 reassure the public and Parliament that we have taken the necessary powers. I emphasise that the provision will affect only one or two TECs and, even in those cases, we hope through negotiation not to have to use the powers. However, significant amounts of public money are at stake and it is important that we make the amendments.

§ Mr. Willis
Can the Minister explain why he has not tabled an amendment that would deal with the contingent liabilities of directors of TECs, during and after the transition period? Many directors fear that, although they will have acted in good faith and dealt properly with current assets, they could be held responsible for contingent liabilities.

§ Mr. Wicks
We are considering that matter. We realise that most TEC directors have done a good job for their local communities and we are aware of their anxieties as they wind up their business. If we can provide reassurances for them, we will. We are working hard in that regard.
Some concerns have been raised by TECs about the new powers. In taking the powers, it is not our intention to override the TECs' existing commitments which we have agreed in their business plans; nor do we intend to exert a perpetual power over future arrangements. Nor do we wish to interfere with those assets brought to the merger by chambers or legitimately accrued since merger in the membership fund. Such assets should and will be available to chamber members to establish a new chamber. We will do nothing to change that. I hope that those reassurances are helpful.

§ Mr. Christopher Gill (Ludlow)
My intervention follows those made earlier, because concern has arisen in Shropshire that the assets of the local TEC were provided for the specific use of the area. We should like some assurance that those assets will continue to be available for the successor bodies. What specific assurance can the Minister give us that Shropshire will not lose those assets?

§ Mr. Wicks
Some assets properly have to return to the Secretary of State, and that is widely understood. Some assets will be used to help to fund individual learning accounts, and that is understood. Where those requirements have been satisfied and local assets remain, we have given an absolute assurance that they will be used for local purposes. I hope that that reassures the hon. Gentleman.

§ Mr. Rowlands
Do the powers apply to Welsh TECs? Do the worries and concerns that the Minister has mentioned apply to the situation of Welsh TECs?

§ Mr. Wicks
The same principle must apply—that we have to safeguard public money. In the case of England, we hope to do that by negotiation. I am sure that that will be achieved, but we felt that we should also take on additional powers.

§ Mr. Boswell
The Minister earlier gave a welcome assurance to the House on this important matter, to the effect that there was no intention on the part of Ministers to seek to alienate what might be termed privately 854 generated assets. What assurance is there that the powers of direction for the future of assets that the Secretary of State will take could not be applied to private assets? No specific safeguard is apparent in the new clauses.

§ Mr. Wicks
TECs were set up by Parliament on behalf of the public and the assets exist because of that public nature. I have given an absolute assurance that when assets have been properly generated locally and belong to the local community, they will be preserved for the local community. I have also given assurances about the future of chambers. We are trying to advance on the basis of agreement and negotiation, and we are using accountants and auditors who satisfy both parties.
It is only in the rarest of circumstances that we may have to use the new powers. However, if we had not provided for these powers, we might have had to come to the House in a few months' time and admit that millions of pounds' worth of public money had been used for profit-making purposes by new companies with shareholders. In that situation, the House would have been appalled and we would have had to appear before every Select Committee under the sun. The Secretary of State is right to put the amendment before the House to safeguard public money.

§ Mr. Boswell
I am somewhat shocked and disturbed by the Government's provisions. I have no wish to overreact, but, given the sensitivity of the situation in which TECs now find themselves, one would not expect them to express themselves with undue robustness.

§ Mr. Blunkett
We are talking about public money.

§ Mr. Boswell
I shall come to that point. The TEC National Council has stated that it is concerned to safeguard the reputation and integrity of TECs and chambers of commerce, training and enterprise, and feels that it would be unfortunate, at this late stage, if the proposals were to undermine the good will that has existed between TECs, CCTEs and the Government. I entirely share that sentiment and I hope that Minister does, too.
The new clause creates an entirely different dynamic to the negotiations. Some months ago, I jocularly characterised the Minister as the mad axeman. Now, I think that he has cast himself in a new role; that of playground bully. In effect, he is saying to TECs, "Please negotiate with me. If we do not get the outcome that I want, I will have your assets anyway and take them somewhere else." That is our concern.

§ Mr. Blunkett
There are assets.

§ Mr. Boswell
That is a very interesting point. I remind the Secretary of State of my question to his Department concerning any action taken to prevent forestalling action by the TECs, in effect, to sequester public assets. In doing that, I was criticised by the chief executive of one of the TECs for any implication that there was in some way an attempt to stash away assets into the private sector. We accept that publicly derived assets should be either returnable to the Secretary of State or applied by the Secretary of State to public purposes.
855 In many of the things that Ministers have said—including tonight's welcome reassurance that they seek agreement and earlier assurances that any locally derived assets would be applied locally—they have sought to be helpful. However, the problem arises where there is a genuine disagreement on either the origin or the nature of the particular assets in question. I have been at some pains to distance myself from the argument—which I did not think would be helpful to the general consideration—but I am aware of the circumstances involving the Northamptonshire chamber of commerce, training and enterprise, where there is a serious disagreement of principle as to the nature of the assets and their future control.
It is right that, in principle, publicly derived funds should be under the control of the Secretary of State. However, to take forestalling action, the Secretary of State's proposal is that, from the passing of the Act, he may, in effect, sequester any assets. The Minister was not able to assure me that those assets would be necessarily and absolutely certainly publicly derived assets. That is still a concern for the TEC National Council.
I am not suggesting for a moment that the Minister or the Secretary of State is setting out to steal private assets, or the assets of my local chamber of commerce. However, the Minister has not given the safeguards tonight that we might reasonably expect. That is a concern. In any case, where there is a dispute, one party should not be able to resolve the matter in its favour and a matter should not be resolved under the threat of one party resolving it in its favour. It should be resolved, if necessary, by some independent procedure.
In Committee, I offered in good faith the possibility of considering arbitration in suitable cases as a way of overcoming the problem. I do not question the good faith of Ministers in dealing with the matter, but several aspects worry me.
First, in proposing these nuclear deterrent powers to intervene in what the Minister called extreme cases, the Government run the risk that TECs might take anticipatory action while the Bill waits to be enacted. That action could not then be reversed, and setting out the powers at this stage might encourage people who want to take action before the Bill becomes an Act. I do not canvass that approach, nor would I welcome it, but it is something that needs to be considered.
Secondly, although I hope that the negotiations in which the TECs are involved will be satisfactorily concluded, the Minister should consider whether it is fair for them to face the potential threat that Ministers may direct the fate of their assets without having to specify whether those assets are publicly derived. The problem is that it is arguable that, in some cases, those assets could have been derived from the membership of the relevant chamber of commerce.
My third point is a matter of some concern. The proposed powers amount to powers to alienate property in the private sector that belongs to another, regardless of whether that property derived from public funds. Ministers are thereby putting themselves at risk of legal challenge. For example, the imminent legislation to implement the European convention on human rights would prevent the alienation of private assets.
I am worried that, in seeking to overcome a potential or theoretical problem, the Minister may have used a blunderbuss that could trigger legal challenges. The result 856 may well be more difficult than would have been the case if the Government had proceeded by a more consensual route.
Of course I accept the case for a proper disposition of public funds. Equally, however, there is an argument that private funds, or funds whose ownership or derivation could be subject to argument, should be properly disposed—ideally by agreement or, if necessary, by independent resolution. With respect, it should not be done on the fiat of the Secretary of State.
I have gone on about this, despite the lateness of the hour, because I feel that it is of great importance. I do not want to press the matter to a Division in the House. However, when I have listened to the Minister's reply, I should be happy to defer to the greater legal wit and wisdom in another place, where the new clause will have to be considered and where the proposals may be viewed even less favourably.
I have not manufactured the concerns that I have described: they are seriously held by Conservative Members and members of the TEC movement.

§ Mr. Ian Bruce
It is rare for me to think that my hon. Friend the Member for Daventry (Mr. Boswell) is taking any matter to an extreme, but I think that the Minister is aware of a case in my constituency that is especially apposite to this debate about the proposed powers to transfer assets that have been given to a TEC for a particular purpose.
Weymouth college is based at two sites. One of them was passed to the college by a local estate, with the not unusual proviso that the asset should be used only for educational purposes. [Interruption.] Does the Secretary of State wish to intervene?

§ Mr. Blunkett
I think that the hon. Gentleman is out of order.

§ Mr. Bruce
It seems that the right hon. Gentleman wants to do your job, Mr. Deputy Speaker.
The college wants to sell one site and to use the funds from the sale on rebuilding at the second site, but it has been told that those funds may revert to the state. I have had legal opinion from the Treasury Solicitor and the Attorney-General to the effect that this matter has to be tested in the courts. The college cannot simply sell one site and transfer the proceeds into educational spending.
That is exactly what is happening with TECs. They have been given assets for particular purposes; the money has been voted by Parliament. However, those assets will now be taken away from the TECs and used for other purposes. I hope that the Minister will address that point in relation to the Government's amendments.

§ Mr. Brooke
I rise in support of my hon. Friend the Member for Daventry (Mr. Boswell). I apologise for the lateness of the hour, although that is not wholly of the Opposition's making. I commend the Government Back Benchers, who are being remarkably patient—rather more patient than Front Benchers.
The Government have a tough timetable in terms of implementing everything in the Bill for the deadline of 1 April next year. There must be a degree of anxiety about whether these matters will be concluded before the 857 Bill becomes an Act and while it is still before Parliament. In view of the Minister's observations about contingent liabilities and the discussions about them, it would seem eminently desirable that those discussions should be concluded before the Bill is finally enacted.
I am conscious that the issue hangs on one or two cases, and that is why the Secretary of State is seeking these powers. The problem is that one or two cases could be a moving target unless there is some process of identifying them to the official Opposition. That has to be a concern, although naturally there is a sense of trust towards the Government. However, the Government have said that the problems arising in one or two cases have prompted this measure.
The greatest hazard in what has, in principle, been an orderly and amicable process up to now, is the law of human nature that makes people behave according to the way in which they are treated. If they are treated as though a blunderbuss will be held to their head in the final analysis, that alters the climate in which the negotiations take place.
I think that the Minister must give greater assurances on how the Government will bring this matter to a conclusion while the Bill is still in front of the two Houses of Parliament.

§ Mr. Wicks
I genuinely regret the stance of the hon. Member for Daventry (Mr. Boswell). I pay tribute to the majority of TECs, and those associated with them, for their excellent work. We all know that there has been variation in quality, but I do not want to dwell on that. We want to build on good practice. We fully expect large numbers of excellent staff and many directors of TECs to be part of the new infrastructure of learning and skills councils.
It is important to emphasise again that, in the vast majority of cases, we are having sensible and calm discussions with TECs, helped by a firm of auditors and accountants, to look at complex issues about assets. They are complex because there is no such thing as a typical TEC. They vary a great deal—some, for example, are in partnership with chambers of commerce. We are looking at that in great detail. The process is being pursued in an orderly way. We may never need to make use of the amendment, but some cases concern us.
The hon. Gentleman adopted a rather belligerent tone, calling me the school bully. My job, and that of the Secretary of State, is to be vigilant on behalf of the public about the public's purse. I will give some instances, but I will not name names—unless I am tempted. In a number of instances, we have had to take firm action to prevent a TEC from taking steps that we do not consider to be in the public interest. These include a proposal to move a freehold property outside the control of the Department's debenture, the movement of a large sum of reserves into a trust and a proposal to establish a separate company with two TEC employees as the only shareholders. We have managed to head off those proposals, in part through existing powers in the contract and in part through stern discussions with some of those involved. However—and this is the rub—we are not confident that the contract can cover all the situations that may arise.
I emphasise that, faced with the situation in which some people are forming new companies and setting themselves up as the only shareholders, there is a real risk that they 858 will take the public's money and run. We will not let them run away with the public's money. That is why—yes, with a heavy heart and much consideration—we have tabled the amendment.
12 midnight
The TECs have money that is generated from the public, but I have already made it clear that where, for example, chambers are involved and they wish to re-establish themselves as sole chambers, we will be helpful in terms of the assets that we require. Where there is local money, which does not properly need to be transferred to the Secretary of State, it will be used for proper local purposes. We have to be vigilant on behalf of the public. That is what this Parliament is about; it is what the Government are about; and it is what the amendment is about.