Education Bill

HL Deb 14 June 1993 vol 546 cc1222-83

3.13 p.m.

The Minister of State, Department for Education (Baroness Blatch)

My Lords, I beg to move that the Bill be now further considered on Report.

Moved, That the Bill be further considered on Report.—(Baroness Blatch.)

On Question, Motion agreed to.

Clause 79 [Maintenance grants]:

Lord Peston had given notice of his intention to move Amendment No. 160A:

Page 48, line 25, leave out from second ("regulations") to end of line 28 and insert ("shall provide for determination and revisions under this section to be calculated by the addition of the following two amounts only —

1. (a) The amount applicable to the school under the formula for local management of schools in the area approved by the Secretary of State for the financial year concerned; and
2. (b) the amount determined by the local education authority as representing the actual cost to it of the provision to the school of its services, where the cost of such services does not fall to be met within the formula for local management.").

The noble Lord said: My Lords, in speaking to this amendment, I am also speaking to Amendments Nos. 160B to 160E which are grouped with it, and also to Amendments Nos. 160G and 160H. These amendments stand in my name, that of my noble friend Lord Judd and that of the noble Baroness, Lady Williams of Crosby.

Baroness Blatch

My Lords, with the leave of the House, perhaps I may point out to the noble Lord that I have just been given a change to the grouping. I have been told that Amendment No. 160A will not be moved. I do not mind, but I am reorganising my notes and if that amendment is to be moved then I need to go back to base as regards my response.

Lord Peston

My Lords, I beg the noble Baroness's pardon. I am sorry that I misled her. I shall not be moving Amendment No. 160A, but since that amendment is in the grouping it did not seem to me that I was about to change the grouping. I intended to say that Amendment No. 160A would not be moved. However, I am perfectly happy to do so if it will help the noble Baroness and we can then deal with the grouping. We have these difficulties all the time because of the groupings. I shall now sit down and not move Amendment No. 160A. I shall then continue.

[Amendment No. 160A not moved.].

Lord Peston moved Amendment No. 160B:

Page 48, line 25, after second ("regulations") insert:

1. ("(a) shall where not all the schools for pupils of the age range concerned within the local education authority area are grant-maintained provide for determination and revisions under this section to be calculated by the addition of the following two amounts only—
   1. (i) the amount applicable to the school under the formula for local management of schools in the area approved by the Secretary of State for the financial year concerned; and
   2. (ii) the amount determined by the local education authority as representing the actual cost to it of the provision to the school of its services, where the cost of such services does not fall to be met within the formula for local management; or"
2. (b) where all the schools providing relevant education within the meaning of section 10(7) above for pupils within the local education authority area are grant-maintained.").

The noble Lord said: My Lords, noble Lords will have noted that this amendment stands in the name of my noble friend Lord Judd and I am sure that they would prefer that he took over. I certainly would, but it is still me. I am still speaking to the grouping specified but leaving out Amendment No. 160A. I pause to make sure that all noble Lords who intend to take part in the debate now know what we are talking about.

What we are talking about is very simple and straightforward. The amendments standing in my name and that of my noble friend Lord Judd and the noble Baroness, Lady Williams, are all concerned with the equitable or equal funding of GM and LEA schools. Noble Lords will recall that the Government said, when dealing with the Education Reform Act 1988, that the financial position of GM schools would be broadly neutral. I emphasise the word "broadly", although I am not going to push strongly on that. In other words, the Government, which favoured GM schools, and the Opposition, including me, who were against GM schools, were at odds as to whether we favoured them or not.

At no point was the point at issue a matter of finance. I understood the Government to be saying at the time of the 1988 Act that they hoped that parents would choose GM schools on their merits. It certainly did not occur to me at that time that the financing would be restructured so that there would also be financial benefits to voting for a GM school as opposed to any other sort of school. What has emerged increasingly clearly in our current deliberations is that the Government have shifted their position. There is little or no doubt that GM schools are being treated financially very much more generously than LEA schools. I believe that that is wrong as a matter of principle. In so far as we have criteria for the use of taxpayers' resources in education, those resources should be used in ways which respond to needs and efficiency and which essentially help the people who have to take decisions in schools to come to better, as opposed to poorer, decisions.

I say in terms that what should not be the case is that taxpayers' money should be used to "bribe" (I use that word advisedly) parents or voters in the case of GM schools to go for particular outcomes. Given the philosophy of those who favour grant-maintained schools, which I take to mean the Government in particular, I would have thought that if to the extent that those schools are successful—I underline the word "if" —the Government would wish to be able to claim in due course that those schools were successful because they were better schools. The Government have fallen into the trap of my being able to say, "That GM school is doing better and it is getting 50 per cent, more money than the maintained school next door." It would be a disaster, from the Government's point of view, if they were to do that, but that is precisely what they have done.

What is certainly the case is that in August about two years ago the Prime Minister wrote to the general secretary of the National Union of Teachers and said that the Government were looking favourably at GM schools in order to encourage the growth of that sector. Despite that, we were again told that the GM schools would receive only a proper estimate of what LEAs would have spent had they continued to maintain those schools. The difficulty here is the worst difficulty of all; namely, that of fact. The fact is to some extent hypothetical, which makes the difficulty even harder to cope with.

The noble Baroness, Lady Blatch, has said—and no doubt she will say again—that she believes that the financing arrangements for GM schools do not give them any advantage whatever. She has said that, and I look forward to hearing her say it again. My difficulty is two fold. The first is that a great many local authorities say that that is simply not the case and they are the ones who are handing out the money in that sense.

The other is the famous Coopers & Lybrand study, to which my noble friend Lord Judd referred, which has examined the methodology and come to three conclusions. The first is that GM schools are more favourably treated. Secondly, it has come to the conclusion—and last time we did not get a very good answer on this—that GM schools are so well treated that if a sufficient fraction of schools were to become grant-maintained there would be nothing left (on the simple arithmetic) in the LEA budget to finance the remainder of its schools. My noble friend Lord Judd made that point following the Coopers & Lybrand study, but we did not receive an answer to it. Thirdly, we were also told—and again I await hearing more by way of reply from the noble Baroness—that Coopers & Lybrand gave examples of specific funding allocated to grant-maintained schools where those schools were not working on the projects for which the specific funds had been allocated. That matter is not unrelated to a point to which the noble and learned Lord, Lord Brightman, the noble Lord, Lord Peyton, and the noble Baroness, Lady Seear, and I shall return when we come to the audit of grant-maintained schools, which I hope we can reach fairly quickly because it is equally important.

Perhaps I may now hurry through the remaining considerations that we have to bear in mind on these matters. A further difficulty has arisen with the so-called "double funding". Essentially, what appears to have happened during the past two years —and, as I understand it, will happen in 1993–94 —is that GM schools will be funded twice over because the main part of their grant (based on the 1993–94 LEA scheme) will be higher, and the percentage increase in their grant will be larger than it otherwise should be. Local authority associations have complained about the double funding. They have certainly complained to me and I am told that they have written to the noble Baroness's department but I have no knowledge of that.

Tower Hamlets has claimed that the method of funding for grant-maintained schools has been such that it has placed an unacceptable burden on the remainder of the local authority's programmes which are aimed at addressing specific needs to do with economic and social disadvantage. I believe that the education chairman of Tower Hamlets has written to the Secretary of State on this. He has also said — again, I only know what he has said; I have no direct knowledge of it—that the effect of the funding in Tower Hamlets has been discriminatory on racial grounds. I say that with great caution because I know nothing about it directly but I am aware that that has been said. Similar problems of funding have arisen in Birmingham.

Because of the great range of amendments, I am having to cover a whole range of arguments in one speech, but another problem that has arisen is that the schools that have already opted out have their grants protected in cash terms. What is peculiar—again, I should like the noble Baroness's advice to your Lordships on this matter—is that the protection that is given in cash terms to the schools that have already opted out will not apply to schools that opt out from now on. So, we have the further anomaly which, to say the least, is disturbing in that not only does there seem to be discrimination between GM schools and LEA-maintained schools that remain with the LEA, but it looks as if within the same authority some GM schools will be treated more generously than others. To my mind, that has led to the ultimate paradox that the London Borough of Wandsworth—a favourite borough of the noble Baroness—has itself complained that some of its schools are being better financed than others for no good reason that it can think of.

Another point that has been raised before by my noble friend Lord Judd—I do not want to go into detail but I wish to place it on the record for the last time—is that there does not seem to be anything remotely resembling equality of treatment about the use of capital funds. The one thing that is most disturbing about what has happened in schools under this Government following the alleged "economic miracle"—I visit such schools—is that our schools now seem to be in a worse state of repair than when the Labour Party was last in power. The extent to which some of our schools have deteriorated physically is now so patent and so unacceptable that then to discover, as I believe is the case, that grant-maintained schools are getting favoured treatment with respect to capital funding—often sums of a different order of magnitude from what is then left over for the remainder maintained schools—is, to say the least, very unattractive and grossly unfair.

I return to one final point that I think the Government have tried run away from, but which they cannot run away from. If one looks at education as one ought to—in terms of the young people being educated and forgetting everything else; the teachers, us here and all the people pontificating—the one rule that seems to stand out and which goes all the way back to 1944 is that every young person deserves to be treated equally with every other, and in particular according to what that young person requires by way of education.

Having introduced grant-maintained schools, the Government have now introduced a new principle whereby within the maintained sector a pupil attending a certain type of school —a GM school within a particular borough—will be treated better, particularly with regard to physical resources, than a pupil in an LEA-maintained school. I find that so intolerable that I cannot believe that the Government really wish to espouse that as a principle. It seems to me to be wrong.

My final remark is totally cynical. The Government have a £50 billion deficit which they do not seem to have the faintest idea how to deal with. One way in which they could save a little bit of money would be to forget the whole grant-maintained schools programme. I beg to move.

3.30 p.m.

Baroness Williams of Crosby

My Lords, it gives me great pleasure to follow the noble Lord, Lord Peston, in replying to the amendment that he has moved, which stands also in my name. Perhaps I may first return to the main thrust of his argument, which was that the Government's central theme as they have presented it throughout the stages of this Education Bill has been, as I understand it, the right of parental choice and that parents should, in the end, be able to decide which school they wish their children to attend. That choice should be based upon an absolutely level playing field and a fair consideration of all the various factors that parents making a responsible decision should take into account. However, as the noble Lord, Lord Peston, pointed out in speaking to Amendment No. 160B, the Government have already gone a very long way towards changing the nature of that choice by weighting the economic conditions that apply to schools in a way that will favour the grant-maintained schools and particularly those grant-maintained schools that started a couple years ago.

Perhaps I may draw the attention of your Lordships to three factors which the noble Lord, Lord Peston, mentioned but say a little more about each one. I refer, first, to the complex arrangements for maintenance grants which mean that, because the central element of grant is steadily diminishing as powers pass from the local authorities as a result of the creation of grant-maintained schools, the central grant lags behind the allocation made to grant-maintained schools in such a way that grant-maintained schools gain a benefit which is sometimes described as "double funding". I shall pass over the fact that many local authority services are of crucial importance to children with special needs or marked disadvantages because we shall be discussing that under separate amendments. However, one of the purely administrative consequences is that grant-maintained schools benefit as against local authority-maintained schools in a way that simply cannot be justified by looking at objective factors.

A second factor creates a double jeopardy. It is not only that grant-maintained schools benefit because of the way in which the formula has been devised, but also that because the entire cost of the grants made to grant-maintained schools is deducted from the local authorities, any element of favouring the grant-maintained schools is double in its effect because that element is then deducted from local authorities which have to finance those schools that remain within the maintained, local authority-controlled sector. That is the first factor that affects the decision that any parent approaching the matter with an open mind would make. Any such parent is bound to take into consideration the facilities and factors available to schools in making a choice.

The second factor to which the noble Lord, Lord Peston, has pointed is the very sharp discrimination in the degree of capital spending as between grant-maintained schools and local authority-maintained schools. I want to draw attention to just two factors in this respect. The amount of money, as I understand it, allocated to the capital programme over the next three years is —at least this side of whatever decisions the Chancellor may make on expenditure cuts —£501 million. That is not a great deal of money at a time when, as the noble Lord, Lord Peston, pointed out, schools are deteriorating rapidly and need a great deal of capital work done on them.

Let us consider for a moment how that money is distributed. It is distributed to the extent of one-third allocated for grant-maintained schools, where just over 2 per cent, of all children in the nation currently go to school, and two-thirds allocated to the schools to which 98 per cent, of children go. Let me give a precise figure which I hope will be of concern to the right reverend Prelates. In 1993–94, the current annual capital programme year, the amount allocated to grant-maintained schools (with about ½ million children in them) is £86 million. The amount allocated to voluntary, mainly church, schools is £85 million, although those schools have 1.3 million children in them. Anybody who has frequently visited voluntary schools will know that many of them were built a long time ago. They are some of the oldest—in particular the primary schools—that we have in this country. Their needs for repair and additional capital are very great indeed, all the more so because many of them are in rural areas and have not been rebuilt for many years past. These schools will be among the greatest sufferers from the rather biased allocation of capital that the Government have seen fit to make.

There is a third area which this distinction affects quite profoundly. In the decisions to favour grant-maintained schools there will be a substantial effect on the ancillary services available for children: such things as music education, sports, additional language teaching, special remedial help and so forth. Yet again, by and large, it is the children in the inner cities and the older rural schools who have the greatest need for these ancillary services. Therefore the first part of the case of those of us who are moving this amendment rests upon the argument that the decisions parents make should not be biased by favouritism on the part of Her Majesty's Government both in revenue and in capital allocations towards these schools— many of which, incidentally, are in any case relatively favoured.

Let me come to the second part of the argument of those who support this group of amendments, and ask your Lordships to be so kind as to look at Amendment No. 160C, which affects Clause 80. The wording of Clause 80 is quite extraordinarily vague, as your Lordships will see if you turn to page 48 of the Bill. I will refer to the wording in two or three places. It says that: grants … in respect of expenditure, of any class or description specified in the regulations", can be incurred by governing bodies, for or in connection with educational purposes of class or description so specified". It goes on to say that the funding authority can be required to meet any special needs of the population of the area served by the schools in question. It makes it plain that the funding authority can decide on virtually anything it likes and regards as any kind of educational need. That is as it appears from the wording of the Bill as it stands.

I have always been frightened by vague legislation. It is difficult for people to understand their responsibilities and obligations under legislation which is expressed in such extraordinarily broad ways. I ask Her Majesty's Government whether they have considered the possibility that in a democracy the government can change and therefore legislation should be framed in a way that can be utilised without exceptional behaviour or unacceptable extremes by any government that may come to power. The terminology in this clause is unbelievably wide and would make it possible for any government at any time to do virtually anything they wanted, provided the Secretary of State was prepared to authorise it.

The noble Lord, Lord Judd, has proposed very much more precise wording for this clause, wording that would in effect once again put additional grants on the basis of what I might describe as a level playing field, for purposes that I think your Lordships would all regard, whatever your political point of view, as widely acceptable in terms of the needs and welfare of the people of this country and of their children. The amendment suggests that the purposes of these grants should be: to support curriculum, resource and staff development". I think we would all agree that this would be an essential part of strengthening schools. The amendment also proposes to assist schools with costs associated with school premises which cannot reasonably be met from the maintenance grant". That again is a very reasonable proposal that would apply to any school with special capital requirements. The amendment also proposes to insert the words, to assist with staff restructuring during the first year of operation". That is a very helpful amendment from the point of view of schools which are caught up in the difficult business of reorganisation. Finally, the amendment proposes to compensate grant-maintained schools for their liability to value-added tax" — which of course is special to their particular situation.

I do not believe that your Lordships could take exception to any of these proposals. Each one of them is eminently sensible. But in attempting to replace the original wording of the Bill—and it may be that the Minister can assure us that the Bill is not intended to be interpreted as widely as it is expressed—there would be some insistence on educational purposes for this additional money it is proposed to be spent.

This entire Bill gives extraordinary powers to the Secretary of State, and such wide-sweeping powers that one can only describe this process as the nationalisation of education. That is perhaps a strange thing for somebody on this side of the House to say, but that is what it is all about. It is passing education over to a bureaucracy drawn from elected local authority members; and that is profoundly disturbing. If we decide to go down that route, let us at least ensure that the additional money payable, substantially at the discretion of the Secretary of State—a Secretary of State, I repeat, who could come from any party which forms a future government in this country—is used expressly for educational purposes and for no others.

I commend these amendments to the House, first, on the basis that we should not try to change the playing field in such a way as fundamentally to bias the choices that parents need to make and, secondly, that we should try to ensure that money voted by Parliament should be used for educational purposes and not simply at the discretion of any Secretary of State for any purpose that he or she may intend.

Baroness Blatch

My Lords, the noble Baroness has throughout her comments ignored the fact that the system and the formula for funding grant-maintained schools come before both Houses of Parliament on an annual basis and there is no question whatever that a Secretary of State sitting in Sanctuary Buildings somehow or other has absolute licence to do what he wants when he wants and how he wants. He is absolutely subject to the will of Parliament in a very detailed way when he has to come forward in this way each year. The funding system for grant-maintained schools comes before both Houses in regulations on an annual basis.

Earl Russell

My Lords, is the Minister urging us to vote down regulations?

Baroness Blatch

My Lords, no, I am not. I am saying that the House has an opportunity to discuss them. I was responding to the noble Baroness who gave the House the impression that the Secretary of State has a free hand to hand out largesse at a whim. I am merely saying that that is not true. The noble Baroness went on to talk about the nationalisation of education. More has been done through the 1988 Act and this Bill to devolve power to the unit of management that makes most sense; that is, parents, the staff, the head, and governors of respective schools. That too is an argument that has been much overplayed during our deliberations.

The noble Baroness referred to 2 per cent. of the population when speaking of a sum of money that relates to a three-year period: this year and the two subsequent years. Over 900 schools have now voted for grant-maintained status. That is 4 per cent. of schools overall. They are predominantly secondary schools so the number of children will be well in excess of the 2 per cent. that she mentioned and the 4 per cent. of schools which will be grant-maintained when all the submissions are processed, even given that some of them will not become grant-maintained schools. Those figures are rising all the time. So the 2 per cent. figure given by the noble Baroness does not stand up.

On the comparisons for capital funding for grant-maintained schools and voluntary schools, again the grant-maintained capital budget has to cover formula capital allocation for schools joining the self-governing school sector throughout the year. The per-pupil funding comparisons with the voluntary sector are therefore a little misleading. It is not comparing like with like. There is likely to be a significant increase in grant-maintained pupil numbers over the year with a consequent increase in capital expenditure. So the noble Baroness is not in a position to make comparisons in that way now because neither I nor the noble Baroness knows how many grant-maintained schools there will be by the end of this year, by the end of next year, and by the end of the following year for which period the £500 million to which the noble Baroness referred applies.

We have in place funding arrangements which provide for grant-maintained schools to receive the additional funding appropriate to their additional responsibilities as self-governing schools. Those arrangements are fair, and it is right that Clauses 79 to 89 should provide for them to continue. As now, the detailed funding arrangements for any financial year will be the subject of regulations, as I have already said, enabling the Secretary of State to introduce necessary changes, including the introduction of a common funding formula for grant-maintained said, enabling the Secretary of State to introduce necessary changes, including the introduction of a common funding formula for grant-maintained schools.

Amendment No. 160B is clearly about equitable treatment of funding for grant-maintained schools and LEA schools, but as I have said many times, I believe that the arrangements we have in place now for the annual maintenance grant of grant-maintained schools, and the AMG arrangements we have proposed for the future, already achieve such equitable treatment.

The main form of funding for grant-maintained schools, and the only one which is paid for from LEA funds, is AMG. That is currently calculated to include three main elements. The core element is based on the LMS scheme of each school's former maintaining authority. On top of that there is a percentage addition to reflect the LEA's spending record on services it has provided centrally to its remaining maintained schools. The final main element is for school meals, which is again based on the level of the individual LEA's spending. Noble Lords will therefore see that the calculation of AMG is equitable and takes account of the funding in each LEA.

For the future, we have proposed the gradual introduction of a common funding formula for grant-maintained schools. That will provide a new alternative way of calculating AMG. That will be a vitally important option in areas— and there are many already—where a significant number, if not the majority of schools in a particular phase are grant-maintained not LEA-maintained.

The CFF will distribute in each LEA area a total based on the relevant standard spending assessment for the LEA concerned. It will do so using a formula that is as simple and transparent as possible. We shall pilot the CFF in a small number of areas from April 1994. There is no shortage of volunteers to pilot that scheme. Two consultation papers have now been issued about the CFF, the latest last Thursday. Consultation will continue throughout the year.

I believe that Amendment No. 160B is unworkable in either the short or the longer term. Except where all pupils in the relevant age range were in the grant-maintained school, it would require the main element of annual maintenance grant of grant-maintained schools to be an amount applicable under the LMS scheme for the local authority area. That is broadly what happens now, but the amendment does not allow the necessary flexibility to deal with situations where an LMS scheme changes because no LEA school has a particular characteristic, such as a sixth form, while grant-maintained schools continue to do so. It would be unfair to disadvantage a grant-maintained school because the LMS scheme changed in such a way.

The amendment would not allow the introduction of the CFF which it is our intention to introduce in a small number of pilot areas from April next year until every pupil in the relevant age group was in a grant-maintained school. We need a system for funding GM schools when there is no LMS scheme available, and it does not make sense to wait until every pupil is in a GM school. We might then arrive at the absurd position where the funding of a hundred schools was calculated by reference to the LEA's funding of one remaining school, which might be completely untypical.

The amendment is also unworkable in suggesting that the central spending element of AMG could be determined by LEAs according to their actual spending on central services to particular schools. Apart from the difficulties local authorities would have in disaggregating every item of spending to a school level, the amendment appears to forget that some schools have been grant-maintained since 1989. How on earth could a local authority determine an amount representing its actual provision of central services to a school it has not maintained for four years?

I hope that noble Lords will see the fairness in both our current arrangements for AMG, which will continue for many schools for some time, and of the CFF, which will gradually replace them. Both will provide for schools a level of funding that is equitable, and which recognises their particular circumstances and extra responsibilities, compared with LEA schools in the area.

Amendments Nos. 160C and 160G relate to special purpose grants. Special purpose grants are needed merely to ensure that grant-maintained schools continue to benefit from schemes under which LEA-maintained schools receive funding but which are not reflected in a grant-maintained school's maintenance grant. For example, the scheme for grants for educational support and training (GEST) is a DFE specific grant regime for LEAs. That must continue to find a counterpart for grant-maintained schools in the form of a special purpose grant; or is it the wish of the noble Baroness and the noble Lord that grant-maintained schools should not benefit from grants that aid education support and training which is designed in the main to support special educational needs but also the national curriculum and its implementation? Special purpose grants are also needed to ensure that grant-maintained schools are not disadvantaged, bearing in mind their extra responsibilities compared to LEA schools. For example, they must pay VAT whereas LEAs can reclaim the cost.

Amendments Nos. 160C and 160G which would have the same effect in relation to schools in Wales are misguided in seeking to write the detailed purposes for which grant is to be paid into primary legislation. It is appropriate for the Secretary of State to have flexibility to respond to unforeseen and exceptional circumstances. He may, for example, need to mirror for grant-maintained schools a new form of funding for local authorities, as happened when the existing power to pay grant to support special provision for the education of travellers was written into the regulations. Again, would it be the wish of the noble Baroness and the noble Lord that if travellers are to be funded in this way they should be in LEA-maintained schools but not in grant-maintained schools?

Local authorities have flexibility within their budgets for responding to unforeseen circumstances. There are no implications for them in allowing the Secretary of State the same flexibility since these grants are not recovered from authorities, as was mentioned and implied by the noble Lord and the noble Baroness, Lady Williams. In short, the detailed purposes for which the Secretary of State can pay grant are quite properly the subject of regulations which we have brought to Parliament annually since 1989. Therefore, I must resist Amendments Nos. 160C and 160G.

It has been claimed that the current capital grant is unfair to LEA schools. However, as in previous years, each grant-maintained school's entitlement to capital grant continues to depend on the relative merits of its bids and the total sum available for allocation for grant-maintained schools. It would be a mistake to believe that funding for grant-maintained schools is at the expense of schools remaining in the LEA sector. Separate bids are made to the PES from the voluntary sector, from the LEA-maintained sector and for the grant-maintained schools sector. The arithmetic used by the noble Baroness was even as of today misleading. We decide the allocation of public spending looking at competing priorities across all public services. Allocations are made separately to the LEA and grant-maintained schools. Less for grant-maintained schools would not necessarily mean more for LEA schools.

I wonder whether I detect in Amendments Nos. 160D and 160E — and in No. 160H, which would have the same effect in relation to schools in Wales—a misunderstanding of how the capital funding for LEA schools actually works. There is a long-standing system under which we consider LEA bids for borrowing approvals. We assess the bids on the basis of a set of published priority criteria which broadly allocate resources in respect of projects at individual schools. After approved bids in the priority categories have been met, the residual amount remaining is allocated on a formula basis. It is then for local authorities to determine how this should be distributed among schools. But this is only one small part of the arrangements for allocating capital resources to schools and it is difficult to see how the much wider-ranging formula which would be required by the amendment could be devised. Indeed, a formula would have to be devised for the amendments to have any meaning at all. So I do not think that this amendment could work as it stands: the drafting implies that a formula exists by which capital funding can be determined, but that is far from the case.

We have made no secret of our intentions to set up grant-maintained schools on a sound basis. I am afraid that a weakness of noble Lords opposite is to take into account only money spent. First, the efficiency factor is never referred to by noble Lords. I know that the efficiency factor is great in some local authorities which manage their property portfolios extremely well. In other authorities it is very poor. Therefore, the state of school buildings is not always about money spent; it is also the way in which money is spent and the way in which the portfolio is managed.

Secondly, it is for local authorities to use capital receipts, which have been relaxed in recent months. It is also possible for them to use local taxes to fund and to complement and supplement their capital spending which is not available to grant-maintained schools. Many local authorities have had wholly inadequate arrangements for maintaining their capital stock. The Prime Minister made it clear in a letter, which was released to the press last summer and quoted by the noble Lord, Lord Peston, that we do look favourably at grant-maintained schools in allocating grants for capital expenditure. In all the circumstances, I believe that the treatment is fair.

The point which has not been made in this debate but was made in other debates is that some local authority schools now in the grant-maintained sector suffered miserably during the years. That was not because local authorities did not have the money but because of the way in which they managed that portfolio. There has been a great deal of catching up for some schools to do.

The only point which I have not addressed is that made by the noble Lord, Lord Peston, about Tower Hamlets. I believe that he was referring to Section 11 funding, which is a matter for the Home Office. I take the point which the noble Lord made and can inform him that there is a review in train as Section 11 money is adjusted by our colleagues in the Home Office. There is a lot of dialogue between my department and the Home Office as it impacts on schools.

Baroness Seear

My Lords, before the Minister sits down I wish to ask for clarification. She said that all regulations from the Secretary of State will come before Parliament. Will they be of the affirmative and not the negative nature? Secondly, the Minister explained the inaccuracies, as she saw them, in the figures given by my noble friend Lady Williams. It appears to me that the Minister's calculations were made in anticipation of the growth rate of the grant-maintained sector. That appears to be an odd way of allocating money. Surely it is more efficient to discover a way in which the funding can be brought forward when the actual number of grant-maintained schools has been established and not in anticipation of what it might be. Even if the 2 per cent. that my noble friend gave was too low, there is still a yawning gap, which cannot be bridged by the information given by the Minister, between what is going to the grant-maintained sector and to the local authority schools.

Baroness Blatch

My Lords, the regulations will come before the House, as they have for many years, under the negative resolution procedure. That does not prevent the House from discussing the matter and in extremis from voting on it. That point was pre-empted by the noble Earl, Lord Russell.

The noble Baroness, Lady Williams, mentioned the figure of £500 million. That is the figure for three years: the present year and the two subsequent years. It is entirely reasonable that that should be so. As the noble Baronesses, Lady Williams and Lady Seear, know, there is always an annual look at expenditure which can be modified upwards or downwards. When I took this job in April last year there were 217 "Yes" ballots. That figure is now more than 900 and it is fast approaching 1,000. We have no reason to believe that the growth will not continue. If it falls away altogether or comes to a grinding halt, it is inconceivable that the Treasury will not wish to claw back some of the money. We believe that we have an anticipated growth and at this moment that growth is a reality.

Lord Peston

My Lords, before the Minister sits down, did she choose not to answer my question about the Coopers & Lybrand argument, which was a matter of arithmetic and which intrigues me? Do the Government agree with what Coopers & Lybrand estimate; namely, that if half the schools in a local authority become grant-maintained, on current funding the local authority will have zero money left for the remainder? I have always been intrigued by that and wish to know whether the Government say that Coopers & Lybrand cannot do elementary arithmetic.

Baroness Blatch

My Lords, no, I do not agree. The first schools that came into the grant-maintained sector operated on a fixed, central additional sum; that was 16 per cent., which fast became 15 per cent. As of this year the central additional money is related precisely to what the local authorities are holding back centrally. The impact of that is neutral. Therefore, if we continue with the present system—given that direct AMG, which is the bulk of the money, replicates exactly what local authorities are doing and the central AMG is realistically related to what local authorities are holding back—I do not agree. The only area in which there is an argument—it is a decreasing and not an increasing area—is the degree of protection which relates in particular to the early 16 per cent. additional add-ons and the 15 per cent. additional add-ons. But they are cash protections and, therefore, as year goes on year and as the figure is reviewed every year it is reducing because it is discounted by the rate of inflation.

Lord Peston

My Lords, I thank the noble Baroness. I interpret her as saying that it is the Government's view that the position of the schools which remain under local authorities will not deteriorate financially if more schools become grant-maintained. The point made by Coopers & Lybrand was the reverse; it said categorically that the schools remaining would suffer the more schools went grant-maintained. The noble Baroness said—and of course I always accept anything that she says of that kind—that there is no possibility that the remaining schools could lose out as a result of other schools becoming grant-maintained. It is worth having that on the record.

I am totally mystified by the noble Baroness's inability to accept what the noble Baroness, Lady Williams, said about capital expenditure. There is no need to go into the minutiae of this. For the 1993–94 financial year, one-third of all the available capital will be allocated to grant-maintained schools. By no stretch of the imagination will one-third of Britain's schools be grant-maintained. It is neither here nor there whether the figure is 2 per cent. or 3 per cent. The inequity is overwhelming; that is the point.

Secondly, in so far as capital expenditure is allocated according to explicit criteria I have to say in terms—no one currently holds the Minister's department in lower esteem than I do as regards its ability to do anything of an arithmetic nature—that by no strength of the imagination can one believe that one-third of all capital expenditure has been allocated by objective criteria to do with the needs of schools. I am not usually nasty, as the Minister knows, but I simply do not believe that. I do not believe that any objective analysis of the requirements of schools would lead to one-third of all capital expenditure going to grant-maintained schools.

I am totally at a loss as regards what the noble Baroness said about a common funding formulae because the whole point of Amendment No. 16OB is to say that the local authority will have a funding formula which should be the formula that applies in practice. I take it that the noble Baroness is saying that one day there may be a common funding formula for all schools. I am amazed that she says that we are not heading for even more nationalisation of education when that comes about, but that is by the way. Amendment No. 160B merely provides that the local authority shall invent a formula which will contain criteria to be applied to all schools. That seems to me to be quite reasonable. It is my concept of equitable. There is no reason to believe that such a formula would not apply equitably to the needs of GM schools as it would to other schools. Therefore, I am not persuaded by the Minister's view that Amendment No. 160B is defective.

As regards Amendment No. 160C, I have been around your Lordships' House long enough now to be aware that one gets caught either way. If you put down a list, you are always told that something is there which should not be on the list. When the Government provide a list, they say that that should be the list. If we ever had an example of Morton's Fork where you can never win, this is it. I am fully aware that there is a need for flexibility. Equally, as the noble Baroness, Lady Williams, pointed out, I am aware that it is worthwhile in a democracy spelling out specifically how that flexibility will be used. I am sure that the noble Baroness and I would be happy to accommodate the Secretary of State should he wish to add to the list. However, it is important that one should know beforehand on the face of the Bill the matters which the Secretary of State will include in the orders.

As for the notion that we might one day reject a negative instrument, as the noble Earl, Lord Russell, pointed out, I should like to live to see that day. The Secretary of State makes up his mind and wields his power more or less uncontrolled by the legislature. Having said that, I commend the amendment to the House.

4.4 p.m.

On Question, Whether the said amendment (No. 160B) shall be agreed to?

Their Lordships divided: Contents, 87; Not-Contents, 137.

Division No. 1
CONTENTS
Addington, L. I [Teller.]	Jenkins of Hillhead, L.
Airedale, L.	Jenkins of Putney, L.
Annan, L.	Judd, L.
Archer of Sandwell, L.	Llewelyn-Davies of Hastoe, B.
Ardwick, L.	Lovell-Davis, L.
Aylestone, L.	Mclntosh of Haringey, L.
Baldwin of Bewdley, E.	Mallalieu, B.
Banks, L.	Mason of Barnsley, L.
Beaumont of Whitley, L.	Mayhew, L.
Blackstone, B.	Merlyn-Rees, L.
Bonham-Carter, L.	Meston, L.
Boston of Faversham, L.	Milner of Leeds, L.
Bottomley, L.	Mishcon, L.
Bruce of Donington, L.	Molloy, L.
Carmichael of Kelvingrove, L.	Morris of Castle Morris, L.
Carter, L.	Nicol, B.
Cledwyn of Penrhos, L.	Ogmore, L.
Clinton-Davis, L.	Peston, L.
Cocks of Hartcliffe, L.	Ponsonby of Shulbrede, L.
David, B.	Redesdale, L.
Desai, L.	Richard, L.
Dormand of Easington, L.	Rochester, L.
Eatwell, L.	Russell, E.
Elis-Thomas, L.	Sainsbury, L.
Ewing of Kirkford, L.	Seear, B.
Fisher of Rednal, B.	Serota, B.
Fitt, L.	Shepherd, L.
Galpern, L.	Stallard, L.
Geraint, L.	Stedman, B.
Gladwyn, L.	Stoddart of Swindon, L.
Glasgow, E.	Strabolgi, L.
Graham of Edmonton, L. [Teller.]	Taylor of Blackburn, L.
	Taylor of Gryfe, L.
Gregson, L.	Thomson of Monifleth, L.
Grey, E.	Tordoff, L.
Hanworth, V.	Turner of Camden, B.
Hayter, L.	Wallace of Coslany, L.
Hilton of Eggardon, B.	White, B.
Hollis of Heigham, B.	Wigoder, L.
Holme of Cheltenham, L.	Williams of Crosby, B.
Howie of Troon, L.	Williams of Elvel, L.
Jay, L.	Williams of Mostyn, L.
Jay of Paddington, B.	Winchilsea and Nottingham, E.
Jeger, B.	Young of Dartington, L.
NOT-CONTENTS
Aldington, L.	Campbell of Croy, L.
Alexander of Tunis, E.	Carnegy of Lour, B.
Allenby of Megiddo, V.	Carnock, L.
Arran, E.	Cawley, L.
Astor, V.	Chalker of Wallasey, B.
Auckland, L.	Cochrane of Cults, L.
Barber of Tewkesbury, L.	Cockfield, L.
Belhaven and Stenton, L.	Constantine of Stanmore, L.
Bellwin, L.	Cork and Orrery, E.
Beloff, L.	Craigavon, V.
Bessborough, E.	Cranborne, V.
Birdwood, L.	Cumberlege, B.
Blake, L.	Dacre of Glanton, L.
Blatch, B.	Davidson, V.
Blyth, L.	Denton of Wakefield, B.
Boardman, L.	Digby, L.
Boyd-Carpenter, L.	Dudley, B.
Brabazon of Tara, L.	Eccles, V.
Brigstocke, B.	Eccles of Moulton, B.
Brougham and Vaux, L.	Ellenborough, L.
Bruntisfield, L.	Elles, B.
Butterworth, L.	Elliot of Harwood, B.
Cadman, L.	Elliott of Morpeth, L.
Caithness, E.	Elton, L.
Campbell of Alloway, L.	Foley, L.

Fraser of Carmyllie, L.	Nelson, E.
Fraser of Kilmorack, L.	Norrie, L.
Gainford, L.	Northbourne, L.
Gainsborough, E.	O'Brien of Lothbury, L.
Goschen, V.	Oppenheim-Barnes, B.
Greenhill of Harrow, L.	Orkney, E.
Greenway, L.	Oxfuird, V.
Grey of Codnor, L.	Pearson of Rannoch, L.
Gridley, L.	Pender, L.
Grimston of Westbury, L.	Porritt, L.
Grimthorpe, L.	Rankeillour, L.
Harding of Petherton, L.	Renton, L.
Harmar-Nicholls, L.	Richardson, L.
Harrowby, E.	Rippon of Hexham, L.
Harvington, L.	Rodger of Earlsferry, L.
Hayhoe, L.	Rodney, L.
Henley, L.	Romney, E.
Hesketh, L. [Teller.]	St. Davids, V.
Hives, L.	Salisbury, M.
HolmPatrick, L.	Saltoun of Abernethy, Ly.
Hood, V.	Seccombe, B.
Howe, E.	Selborne, E.
Hunt of Tanworth, L.	Sharp of Grimsdyke, L.
Kitchener, E.	Sharples, B.
Lauderdale, E.	Simon of Glaisdale, L.
Liverpool, E.	Skelmersdale, L.
Lloyd-George of Dwyfor, E.	Soulsby of Swaflham Prior, L.
Long, V.	Strange, B.
Lucas, L.	Strathclyde, L.
Mackay of Clashfern, L.[Lord Chancellor.]	Strathmore and Kinghorne, E.[Teller.]
Macleod of Borve, B.	Sudeley, L.
Manchester, D.	Swinfen, L.
Manton, L.	Teviot, L.
Marlesford, L.	Thomas of Gwydir, L.
Marsh, L.	Thorneycroft, L.
Merrivale, L.	Trefgarne, L.
Mersey, V.	Trumpington, B.
Monteagle of Brandon, L.	Ullswater, V.
Morris, L.	Vivian, L.
Mountevans, L.	Wade of Chorlton, L.
Mowbray and Stourton, L.	Wakeham, L.[Lord Privy Seal]
Moyne, L.
Munster, E.	Westbury, L.
Murton of Lindisfarne, L.	Whitelaw, V.

Resolved in the negative, and amendment disagreed to accordingly.

4.13 p.m.

Clause 80 [Special purpose grants]:

[Amendment No. 160C not moved.]

Clause 81 [Capital grants]:

[Amendments Nos. 160D and 160E not moved.]

Clause 83 [Grants: further provisions]:

Lord Judd moved Amendment No. 160F:

Page 51, line 11, at end insert: ("and in particular so as to enable the governing body of each such school to satisfy the requirements of regulations made by the Secretary of State under section 10 of the Education Act 1944.").

The noble Lord said: My Lords, I beg to move Amendment No. 160F and I should also like to speak to Amendment No. 286A. I regret that the noble Lord, Lord Peston, is not with us at the moment but I should like to thank him most warmly for his very cogent trailer for the amendments. They follow logically from the powerful case that was made by the noble Baroness, Lady Williams of Crosby, in her welcome début to the proceedings on the Bill.

The Government have postponed the full implementation of the 1981 School Premises Regulations by exempting schools that were built before 1981 from those regulations until 1996. It is even more disturbing that it is being held in some quarters that the Government may decide to exempt those schools altogether.

The 1981 Education (School Premises) Regulations replace the earlier 1972 Standards for School Premises Regulations. With a few exceptions, at the time of their introduction in 1981 the regulations applied only to new buildings. They were to apply to existing buildings from September 1991.

The Government's decision to delay implementation until 1st September 1996 followed the announcement in October 1990 of a review of the regulations. Those regulations could potentially make a very significant contribution to ensuring decent classroom conditions and proper safety requirements for teachers and pupils. However, a great deal remains to be done before 1996. The current climate of uncertainty surrounding the regulations, and the Government's intentions surrounding those regulations, are not encouraging local authorities to take the necessary steps to ensure compliance.

It is relevant to note that meanwhile the 1992 European Community Workplace Health, Safety and Welfare Regulations, although not targeted specifically at schools, nevertheless apply to schools in the same way as they apply to other workplaces. They do not deal with teaching area requirements and recreation areas for pupils, but in most other areas (for example, in relation to cleanliness, conditions of doors and windows, provision of sanitary and washing facilities and rest facilities) they are more detailed and more comprehensive than the School Premises Regulations. Can the Minister confirm that existing schools have only until 1st January 1996 to comply with the regulations? The regulations were required to implement an EC directive; therefore, the Government will not be able to abolish them in the same way as they could abolish the School Premises Regulations.

I hope that the Minister will not take offence when I state that my mind was very much on the implications of the amendments when I went to visit her recently in her department. What a building it is. It reminds me of a five-star Philippino hotel, with fountains and indoor greenery. I felt humble in those tremendous surroundings; in my recent life with Oxfam it is a context I am not used to. I made some inquiries. Perhaps I have been ignorant and should have known about it earlier, but I understand that the Government spent nearly £14 million on adapting the building for their computer system alone. They are paying the staggering sum of £12 million a year in rent for that building. By my rough reckoning, more than 300 of Britain's crumbling schools could be made fit enough for our children to learn in for that kind of sum.

To compound that experience, this past weekend in the course of my other activities I have been driving widely across the United Kingdom. I have taken the opportunity to look at schools while travelling up and down the country. It was not a reassuring prospect. Looking casually at that kind of setting, in these days when we talk so much of the environment, there was nothing to make me come home and say what a fine environment it was for our children to grow up and undertake their education in order to prepare for the 21st century. By the time I got home I felt ashamed to think that many of our youngsters were condemned to follow education in that kind of environment.

Those who read the same periodicals as I do will have had their attention focused on Parkhurst Road School in Haringey, where the classrooms have been boarded up. That was the situation in May when I last checked. They were boarded up because of rotting frames. Roofs are leaking so badly that staff have to put out buckets to catch the rainwater. Paint is peeling, ugly stains are spreading; PE lessons for the school's 310 five to seven year-olds are constantly cancelled after heavy cloudbursts because of waterlogged floors. It could all be put right for £35,000. However, the Government's cash squeeze on local authorities has made it impossible for the local authority concerned to find that cash. The headmaster is recorded as having said in despair, "It looks as though we will have to put up with it all for at least another 12 months". What a record!

I now turn to more authoritative comment than newspaper accounts on this situation. The National Audit Office has estimated that half of England's 7 million school children study in schools that need urgent repair and refurbishment. The inspectorate has said in the past that one-third of secondary school children study in such bad accommodation that it is adversely affecting their education. I am amazed that against that kind of background Ministers who pride themselves on decisiveness have, instead of facing up to it and determining that something must be done, begun to claim —we have had indications of this already this afternoon—that LEAs have spent their capital allocations unwisely and on the wrong activities. But let us consider what happened in the Education Select Committee in 1991. One of the Members of that Committee asked quite specifically: As far as I am aware the majority of local education authorities apply for capital allocation and in the main spend that capital allocation on what they have actually asked for it for. Is there any evidence to show they are not doing this?". Mr. Nicholas Sanders, the accountant general at the then DES, a responsible public servant and not a politician, replied: There is no evidence in particular to show they are not doing it in the case of education. I think there is evidence to show they have vired funds into education as it happens". I believe that this is, distressingly, one area where it is conspicuous that the Secretary of State does not appear to feel any responsibility whatever for putting things right. It appears that the regulation of school buildings is just about the only issue on which, he has declined to take draconian powers.

I wish to put some specific questions to the Minister before I sit down. Does she consider the regulations are too generous? Does she believe that a primary school of 80 pupils should have less than 144 square metres of teaching accommodation? That is in Schedule 4 of the 1981 school regulations. Does the Minister believe that the regulation which ensures that there is one toilet for every 20 pupils is too generous? That is contained in Regulation 10(1b). Does she believe that the regulation which ensures that every primary school with between 200 and 300 pupils has two hectares of playing field is too generous? Does she believe that the regulation which ensures that every school for children over eight years has a readily accessible changing room is too generous? That is contained in Regulation 10(5b). Does she believe that the regulation which ensures that there is separate provision of accommodation for the storage of fuel is too generous? That is Regulation 7d. Does she believe that the regulation which provides 0.2 square metres for sixth formers' private study use is too generous? That is Regulation 9(2).

I know the Minister felt I had been a little unfair on her last week. I want to place it on record that she does write to me, and I appreciate that. My argument is that the letters arrive at the last moment. I am sorry that she took offence at my remarks as I did not intend to criticise her personally in that way. While I appreciate her correspondence, I have three questions to ask with regard to the 1981 regulations which I believe the Minister needs to answer categorically in this House this afternoon. Which of the regulations does she regard as too generous? When exactly will the review of the 1981 school regulations report? Will the review lead to the abolition of the regulations?

In the meantime, these amendments seek to ensure that the action that is necessary is undertaken. I argue that it is bizarre and insensitive to lay down the law on educational practice in so much detail, as the Government do, while the buildings in which that education takes place crumble around children and teachers. I beg to move.

Earl Russell

My Lords, anyone who has experience of university buildings, just like anyone who has been on a local authority housing committee, knows that the 1960s are not the period of greatest glory in the history of building in this country. A great many buildings were put up which have begun to decay extremely rapidly. Those of us who are householders know perfectly well that if one defers repairing a building which is letting in water the costs are likely to increase in geometrical progression. That means that if one does nothing the costs rapidly escalate until they become out of reach. I do not know what will happen when we reach that point. It would be good housekeeping and a prudent use of public money for the Government to accept this amendment. I am happy to support it.

4.30 p.m.

Lord Dormand of Easington

My Lords, it is difficult to add anything to the comprehensive contribution made by my noble friend Lord Judd on this important topic, but I shall say a few words on the amendment. I hope it is not necessary to remind the Government, and the Minister in particular, that school buildings are the basic tool in education. I am tempted to say they are the only tool but as a fervent supporter of the teaching profession I must add that both buildings and teachers are essential.

It appears to me that the Government simply have not grasped the importance of the need to provide adequate, and indeed more than adequate, buildings. We tend to draw on our own experiences on these matters and perhaps that is proper in some circumstances. I well remember that when I was an education officer I was at my most popular when I mended roofs, provided additional lavatories or repaired broken lavatories and that kind of thing. This matter is very important. It must be stated over and over again that these matters have to be attended to.

I hesitate to say this, but my noble friend may have misjudged the EC regulations on this matter. What he said was absolutely right but I should add that I believe the EC regulations will affect schools. My noble friend may have hesitated to mention that matter but, having looked at the regulations, I have no doubt in my own mind that we will be subjected to them. When I spoke in the debate on the Maastricht Bill last week one of my grumbles was that we are to be subject to too much detailed control from Brussels and Luxembourg. However, I am certainly in favour of the EC regulations on school buildings. I hope that at the end of the day action will be taken on this important matter.

My noble friend referred to the National Audit Office. I presume that most noble Lords who have participated in these debates have received a document today which is a summary of the Audit Commission's report. I underline everything that my noble friend said, but I hope that the House will forgive me if I quote two or three of the astonishing points made in that report which are relevant to repairs, crumbling schools and everything we are discussing today.

The first point was critical. It concerned, the allocation of repairs work to the husband of a member of staff, even though his quotation was £2,500 higher than the lowest with the reasons for this not apparently being reported to the school governors". In the second and third examples, three teachers formed a consortium to undertake repairs and maintenance on a commercial basis for the school at which they were employed as teachers and were awarded a contract by the school, undertaking the work in the evenings and at weekends and a head teacher awarded over £3,000 worth of work to her husband without getting competitive quotations or discussing this with the governors". In the final case, a school awarded one of its teachers a contract for £1,600 of electrical work, without other quotations being sought or the health and safety implications being fully covered". I find those examples breathtaking.

I know that the Minister will say, and rightly so, that those are matters which need to be tightened up as we make progress with grant-maintained schools. However, the picture, which was painted by my noble friend, and those examples, highlighted by the much respected Audit Commission, must surely cause great concern, not only to everybody in this House but in the education world and to the taxpayer at large.

Perhaps I may ask the Minister a question relating to a point which she made in the early part of her contribution concerning the previous amendment. How are we to judge the progress of grant-maintained status? Perhaps the best way is not to consider the number of schools opting out, which is what we have been doing. The noble Baroness said that many of them are secondary schools with larger numbers of pupils. That is correct. However, if that is the case it is a change from saying that GM status is a success or otherwise. I hope the noble Baroness or her civil servants will be able to provide that information. If we are to count numbers of pupils in grant-maintained schools we ought to know the total number of pupils in the 26,000 schools. Figures of 2 per cent. and 4 per cent. have been bandied about. I have mentioned them myself because I happen to believe that the exercise has not been particularly successful so far. We have to remember that the scheme has been in operation for four years. I should like the point clarified. We should know what the percentage is. If it is to be based on the number of pupils we want to know the specific number rather than deal, as we have in the past, with the number of schools involved. So far 900 schools have applied for grant-maintained status. Perhaps the Minister can say whether those 900 schools have been approved or whether the figure includes applications in the pipeline so that there may be 100 or 200 fewer.

Every week we hear horror stories about crumbling schools. We heard them last week and again this week, largely because of the heavy rain. I should have thought that most schools would be able to cope with heavy rain without having to put pails in all the classrooms or the cloakrooms. We have been hearing about such problems for years and years. We should not be hearing about such a situation these days. In 1993 we really ought to know what the situation is throughout the country. There should be a national inventory, prepared by the Department for Education, of all kinds of repairs which are needed—structural, leaking roofs, and so on. Until we have that story this type of debate will continue for a very long time.

I remind the House that the Government have now been in power for 14 years. By any stretch of the imagination, and certainly by any political measurement, that is a long time. Many of the most important matters, not only in education but also in other fields, ought to have been corrected by now. Some of us in the Chamber today think that there is nothing more important than education; that is why I am on my feet today. If the Government cannot get something like this right after 14 years, then heaven help us for the future!

Earl Baldwin of Bewdley

My Lords, I should like to underline one or two of the points made by the noble Lord, Lord Dormand. I well remember, as an education officer, the heartache among schools with regard to their buildings. In particular two schools come to mind. One had been soldiering on for I do not know how many years, with about half of its accommodation in temporary classrooms. Again and again the work had to be put back because there simply was not the money to get the school out of those temporary classrooms. Another school had been without a decent library, and for all I know it still is. Again, I remember in the capital budget, when there were government cutbacks, having to defer the matter yet again so that that school still could not have a proper library. I do not believe that that was a matter of a local authority not being able to manage its finances.

Baroness Blatch

My Lords, perhaps I may deal with the final points first. If we accept that money is finite—and here it does not matter which political party is in power—then the issue of how that money is managed and how priorities are determined becomes acute. That will always be the case. Indeed, I was for a long time chairman of the governors of a school. The school had a large number of portable classrooms. Year on year we were disappointed when the school came to the top of the list but was displaced by schools with greater needs. However, eventually the needs were met. The amendment is not concerned with the sum of money available to schools, but with something very different.

I agree absolutely with one phrase which the noble Lord, Lord Dormand of Easington, used. Indeed, I believe that it unites the whole of the House. There is nothing more important than education. I do not say that simply because I am an education Minister at this time. I believe that the Department for Education is the most important department in Whitehall. Education is the key and underpins almost everything else, both inside and outside Government.

The noble Lord referred to the Audit Commission and singled out some appalling cases. One of the strengths of our system, now that it is more exposed, is that such cases come to light and therefore something can be done about them. The noble Lord referred to local education authority schools, not grant-maintained schools. The same Audit Commission report says of schools which volunteered to be part of the survey that grant-maintained schools have robust systems of accountability. We shall all be able to see the report fairly soon. I met with Mr. Cooksey (who was knighted in the recent Honours List but I cannot remember his Christian name) only last week and saw the report.

The noble Lord also referred in his examples to mismanagement of funds at local authority level. I am waiting with bated breath to see what will come out of Lambeth, a local authority in which mismanagement seems to have been a serious feature of the way in which its affairs were conducted for a long time. In my view the grievance is that that was not uncovered a long time ago.

Lord Dormand of Easington

My Lords, I am grateful to the Minister for giving way. She is disagreeing with me on a fundamental point. The document is headed "Schools' Management of Their Finances". I know that that does not preclude local education authority control or supervision, but the whole tenor of the document —which I am sure she has seen—concerns what has been happening under grant-maintained schools. That is mentioned several times. I do not say that I am right, but the document suggests that what the Minister said is not relevant. I hope that at some time later in this debate, or at some other time, the position can be clarified.

Baroness Blatch

My Lords, with the leave of the House, perhaps I may say to the noble Lord that the examples given concern LEA schools. The reference to accountability and systems in grant-maintained schools in that report shows them to be robust. I shall read the report from cover to cover between now and the next time we meet on the Bill. If I am wrong I shall stand corrected and come before the House and say so.

The noble Lord asked how we would count the progress of grant-maintained schools. First, the progress of grant-maintained schools is in the public domain. Questions are being asked almost weekly by Members in another place. There is no secret: there have been over 900 "yes" ballots. Some of those schools are up and running; some have been approved and are simply waiting to start; and some are waiting to be processed. Indeed, when I spoke in response to the noble Baroness, Lady Williams of Crosby, I made no secret of the position: I stated that not all those schools would be approved. Some will not. That is the whole point of their coming before my right honourable friend the Secretary of State. However, the number goes inexorably upwards.

I can confirm to the noble Lord, Lord Judd, that the schools have until the 1st January 1996 to comply with new European Community regulations on health and safety.

Lord Judd

My Lords, I am grateful to the Minister for that clarification. Will she also confirm that schools must take action by then?

Baroness Blatch

My Lords, there are regulations; and we are absolutely committed to abide by the law, whether it is European or domestic law.

The noble Lord made reference to his visit to my office. I have no difficulty in identifying with his feelings when he came into that building. However, I wonder whether he would like to suggest to the staff associations and unions representing the people who work for the Department for Education and Science that they might like to return to Elizabeth House, which I believe was almost unfit for human habitation. I certainly am not defending opulence. I believe that we shall come under public scrutiny either through the Public Accounts Committee or some other body if we are misusing or abusing public funds. I believe that that is absolutely right; we have to be publicly accountable. However, I believe that Elizabeth House was beyond redemption.

Baroness Williams of Crosby

My Lords, if the noble Baroness will allow me to intervene, perhaps I may ask her whether her experience is similar to mine as a denizen of Elizabeth House for three years: that it is not the most agreeable place in the world, but certainly a great deal nicer than many primary schools.

Baroness Blatch

My Lords, I do not spend my life looking at the negative in the world. I spend my life seeing the enormous change made to schools—the schools that are now carpeted, well furnished and well built. I see local authorities battling, as they always will do, with finite sums of money, making excellent use of resources in doing what they can to maintain schools, to provide for new schools, and indeed facing the very difficult task of closing schools to rationalise provision where that money can be recycled to improve schools.

I do not say that there are not some poor schools. We have heard them described today. However, my whole world is not coloured by those poor schools. I think positively and, where I can, encourage the best use of those resources that are available to schools.

Mention was made of a school in Haringey. I would be surprised if the long catalogue of items wrong with that school, named by the noble Lord, Lord Judd, could be put right with £25,000. Either the noble Lord exaggerates his case or underestimates the cost of repair. However, before I make judgments about that school I should wish to examine carefully the whole budget of Haringey, how it determines priorities, and how it manages its portfolio.

It is typical of noble Lords opposite to be negative. They are delighted to spend unspecified, unbounded amounts of taxpayers' money. But we all wish to see school buildings repaired. We want to see them in better shape—the best shape possible. However, there is no point in setting artificial time limits which often cannot be met, or indeed to prescribe expenditure for local authorities when they would rather spend the resources on something else. We shall do our best. The taxpayer will always do his best. But it will take time. As I have said already, it will also mean closing unpopular schools. That is why the Secretary of State is keen to use the new powers in the Bill to take tough decisions—decisions which at times we all know will be unpopular with parents. However, we have to live in the real world. Resources are finite. We shall spend whatever is available for education as best we can, but artificial time limits are no way forward.

I was asked whether I saw the regulations as generous. I shall not answer the noble Lord's question in detail because I need to wait for advice. My right honourable friend will come before the House if there is to be any modification because it will be in the form of regulations. However, as someone who was involved in a local authority when the 1981 regulations were brought in, I found myself seriously at odds with the requirements. We were required to spend precious resources on what might be important—changing rooms for teachers, for example, an item which is part of those regulations—when there were more important issues such as leaking windows or a leaking roof. We found the money pre-empted simply because regulations stated that those issues had to be met by a particular date. Therefore there is the effect and impact of specific dates by which work must be done. If it is a health and safety matter, of course it must always take priority.

The school premises regulations—the most recent version of which was promulgated in 1981 —of course applied to grant-maintained as well as LEA maintained schools. That does not seem to be a point picked up in the amendments. In Amendment No. 286A the noble Lord proposes a time limit on the application of any regulations on school premises made under Section 10 of the 1944 Act. Setting a time limit in that way would be undesirable. Where a period of grace is necessary to enable schools of a specified description to come up to the newly promulgated standards, it would be preferable to leave the matter to be decided on the specific circumstances of the requirement. Under Section 10 of the 1944 Act the Secretary of State is already able to set a time limit on compliance for particular requirements.

Clause 83, with which Amendment No. 160F is concerned, deals with the times and the manner in which payments are to be made by the funding authority. It deals with their administration of the system of paying grant. It is important to know that the provision is not concerned with the amount of grant payable. In our view, the way in which the funding authority administers payments of grant will have little effect on the ability of the governing bodies of grant-maintained schools to comply with their duties in relation to school premises. To the limited extent that it does, the funding authority will in any event have to take account of those duties in administering the grant system. Amendment No. 160F is therefore in our view unnecessary and I ask the House to reject it.

4.45 p.m.

Lord Judd

My Lords, I am grateful to the noble Baroness for her reply. Perhaps I may pick up several of the points that have been made in the debate.

First, may I respond to the point made by my noble friend Lord Dormand. I am sure he will agree with me that it is not a happy prospect that, when we have been dithering over whether or not we can implement our own regulations as to what makes a decent school in which education should be carried out, we should in the end have to fall back on European Community regulations to ensure that action is taken. It seems yet again to demonstrate that we are the slow coach of Europe. I can think of a number of countries on the mainland of Europe where far higher priority would be given; hence the regulations. It seems to me a very unfortunate reflection on our own priorities that we are put into that rather shameful predicament.

We still have not had convincing replies from the Minister to the questions that I put. I believe that this underlines how timely and important those amendments are. We do not want a lot of talk about what might or might not happen; we wish to be certain that action is taken.

The Minister spoke about her headquarters building. I do not wish to turn the matter into a debate on the headquarters building. However, I believe that there is far more significance in that situation than she may have recognised in her reply. What underlies all our considerations in the debate is that there is an insulated, increasingly arrogant, centralised administration in education. Perhaps it is not intentional; that is what makes the matter so difficult. It lays down the law in every possible detail as to what should happen up and down the country. The question asked by teachers in inner city areas, struggling with appalling conditions, is often, "How can those people in that building, working in those conditions, begin to relate to the reality, the priorities, the everyday difficulties with which we and our children are confronted?". That is the problem. The situation is not good enough.

Of course no one would want to put hard-working and committed (I do not dispute that) public servants back into the previous building. Good luck to the rail tunnel if it has to base its headquarters in that particular building. All I say is that, surrounding this chemistry of the building, the facilities and the rest, there is a very real psychology which suggests an over-centralised administration which is not in touch with the everyday realities for those who make up the real life of education.

For those kind of reasons, these amendments are very important. I would have thought that the Minister might have welcomed them as a way of demonstrating her commitment —and indeed demonstrating how wrong I am to have the kind of doubts that I am expressing. But my anxieties are underlined. The National Audit Office revealed in 1991 that Ministers were planning to consider: any recommendations arising from the review for bringing the regulations up to date or abolishing them". Sir Rhodes Boyson, who was himself an education Minister from 1979 to 1983, went on record as saying —and I would be glad if anything the Minister had said this afternoon seemed convincingly to repudiate these remarks: I have always seen these regulations as a bureaucratic monstrosity. I'd do away with them and put the schools under basic local authority standards."— that is an interesting contradiction in terms of centralisation— That decision would be in line with the instincts of the Prime Minister to cut back on useless regulation.

Baroness Carnegy of Lour

My Lords, I am grateful to the noble Lord for giving way. His amendment is endorsing the 1944 regulations, not undermining them. I do not understand why he is decrying them in this way on this particular amendment.

Lord Judd

My Lords, the amendments are insisting that the action is taken in line with the regulations and that they are implemented.

In concluding my observations, I wonder whether I might share with the House the realities of what is happening in terms of the bids for capital allocation from the Government. We have to remember that LEAs bid for capital allocations for their county schools as a whole; they are then allocated capital and allowed to borrow that amount for school buildings and repairs. They also bid for specific grants (rather than allocations) to borrow for voluntary aided and controlled schools.

When one looks at what is happening across the country—and I cannot possibly take up time to give all the detail—it underlines why there is anxiety about commitment to building regulations. Let us look at the county councils in several regions. Avon bid for just over £13 million, and was allowed £4 million—in other words, 37 per cent. of its bid was granted; Berkshire was allowed 19 per cent. of its bid; Durham was allowed 13 per cent.; Oxfordshire, a county which I know well because I live there, was allowed 13 per cent. of its bid; Warwickshire was allowed 17 per cent. Those figures are taken at random.

If we look at the figures for London, Brent was allowed 6 per cent. of its bid; Hillingdon 9 per cent.; Richmond 5 per cent. If one looks at Inner London, Camden was allowed 9 per cent.; Islington 5 per cent.; and Lewisham 6 per cent.

If we look at the North West, Rochdale was allowed 5 per cent. In the West Midlands, Wolverhampton was allowed 14 per cent. If we move to the Yorkshire local education authorities, Doncaster was allowed 9 per cent. of its bid; Sheffield 9 per cent. Newcastle, among the Northern education authorities, was allowed 8 per cent.

With that kind of response from Government no wonder there is anxiety about any real commitment to the implementation of the regulations. The Government pride themselves on being a businesslike government. But their vocabulary and the reality become increasingly difficult to reconcile in any quarter whatsoever. For a Government who pride themselves on a businesslike, hard-headed approach, I cannot think of anything more short-sighted than to be allowing our school buildings, school capital equipment, and so on, to run down in this way. God knows what costs are building up for the future and what the bills will be.

This is short-termism at its worst. The short-termism which we are assured is not operative in government is here again, at the heart of education. Therefore, without any hesitation, so that we can reassure teachers, children and all those involved that not only are we telling them what they should do in the syllabus and the curriculum, but we are also serious in ensuring that they have the accommodation which is basic to a civilised approach to education, I shall pursue these amendments tonight. I beg to move.

4.55 p.m.

On Question, Whether the said amendment (No. 160F) shall be agreed to?

Their Lordships divided: Contents, 86; Not-Contents, 145.

Division No. 2
CONTENTS
Addington, L. [Teller.]	Dormand of Easington, L.
Archer of Sandwell, L.	Eatwell, L.
Ardwick, L.	Elis-Thomas, L.
Aylestone, L.	Ewing of Kirkford, L.
Baldwin of Bewdley, E.	Fisher of Rednal, B.
Beaumont of Whitley, L.	Galpern, L.
Blackstone, B.	Geraint, L.
Bonham-Carter, L.	Gladwyn, L.
Boston of Faversham, L.	Glasgow, E.
Bottomley, L.	Graham of Edmonton, L. [Teller.]
Broadbridge, L.
Brooks of Tremorfa, L.	Grey, E.
Bruce of Donington, L.	Hanworth, V.
Carmichael of Kelvingrove, L.	Hilton of Eggardon, B.
Carter, L.	Hollis of Heigham, B.
Cledwyn of Penrhos, L.	Holme of Cheltenham, L.
Clinton-Davis, L.	Howie of Troon, L.
Cocks of Hartcliffe, L.	Hughes, L.
David, B.	Jay, L.
Dean of Beswick, L.	Jay of Paddington, B.
Desai, L.	Jeger, B.

Jenkins of Hillhead, L.	Rochester, L.
Jenkins of Putney, L.	Russell, E.
Judd, L.	Sainsbury, L.
Kennet, L.	Seear, B.
Llewelyn-Davies of Hastoe, B.	Serota, B.
McIntosh of Haringey, L.	Shepherd, L.
Mallalieu, B.	Stedman, B.
Mason of Barnsley, L.	Stoddart of Swindon, L.
Mayhew, L.	Strabolgi, L.
Merlyn-Rees, L.	Taylor of Blackburn, L.
Meston, L.	Taylor of Gryfe, L.
Milner of Leeds, L.	Templeman, L.
Mishcon, L.	Thomson of Monifieth, L.
Molloy, L.	Tordoff, L.
Morris of Castle Morris, L.	Turner of Camden, B.
Mulley, L.	Wallace of Coslany, L.
Nicol, B.	White, B.
Ogmore, L.	Wigoder, L.
Peston, L.	Williams of Crosby, B.
Ponsonby of Shulbrede, L.	Williams of Elvel, L.
Prys-Davies, L.	Winchilsea and Nottingham, E.
Redesdale, L.	Young of Dartington, L.
Richard, L.
NOT-CONTENTS
Aldington, L.	Goschen, V.
Alexander of Tunis, E.	Gray of Contin, L.
Allenby of Megiddo, V.	Greenway, L.
Annan, L.	Gridley, L.
Arran, E.	Grimston of Westbury, L.
Astor, V.	Halsbury, E.
Auckland, L.	Harding of Petherton, L.
Barber, L.	Harrowby, E.
Barber of Tewkesbury, L.	Harvington, L.
Bellwin, L.	Hayhoe, L.
Beloff, L.	Henley, L.
Bessborough, E.	Hesketh, L. [Teller.]
Blake, L.	Hives, L.
Blatch, B.	HolmPatrick, L.
Blyth, L.	Hood, V.
Boardman, L.	Howe, E.
Boyd-Carpenter, L.	Hylton-Foster, B.
Brabazon of Tara, L.	Killearn, L.
Brigstocke, B.	Kitchener, E.
Brougham and Vaux, L.	Knollys, V.
Bruntisfield, L.	Lauderdale, E.
Butterworth, L.	Lindsey and Abingdon, E.
Cadman, L.	Liverpool, E.
Caithness, E.	Long, V.
Campbell of Alloway, L.	Lucas, L.
Campbell of Croy, L.	Lucas of Chilworth, L.
Carnegy of Lour, B.	Lyell, L.
Carnock, L.	Mackay of Clashfern, L. [Lord Chancellor.]
Chalker of Wallasey, B.
Cochrane of Cults, L.	Macleod of Borve, B.
Cockfield, L.	Manchester, D.
Constantine of Stanmore, L.	Manton, L.
Cork and Orrery, E.	Marlesford, L.
Cox, B.	Marsh, L.
Craigavon, V.	Merrivale, L.
Cranborne, V.	Mersey, V.
Cumberlege, B.	Monk Bretton, L.
Dacre of Glanton, L.	Monteagle of Brandon, L.
Davidson, V.	Morris, L.
Denham, L.	Mottistone, L.
Denton of Wakefield, B.	Mountevans, L.
Eccles, V.	Mowbray and Stourton, L.
Eccles of Moulton, B.	Moyne, L.
Ellenborough, L.	Munster, E.
Elles, B.	Murton of Lindisfarne, L.
Elliot of Harwood, B.	Nelson, E.
Elliott of Morpeth, L.	Norrie, L.
Elphinstone, L.	Oppenheim-Barnes, B.
Elton, L.	Orr-Ewing, L.
Flather, B.	Oxfuird, V.
Foley, L.	Pearson of Rannoch, L.
Fraser of Carmyllie, L.	Pender, L.
Fraser of Kilmorack, L.	Peyton of Yeovil, L.
Gainford, L.	Plummer of St. Marylebone, L.
Gainsborough, E.	Rankeillour, L.

Reay. L.	Soulsby of Swaffham Prior, L
Renton, L.	Stanley of Alderley, L.
Rippon of Hexham, L.	Strange, B.
Rodger of Earlsferry, L.	Strathclyde, L.
Rodney, L.	Strathmore and Kinghorne, E [Teller.]
Romney, E.
St. Davids, V.	Sudeley, L.
Salisbury, M.	Swinfen, L.
Saltoun of Abernethy, Ly.	Thomas of Gwydir, L.
Seccombe, B.	Thorneycroft, L.
Selborne, E.	Trumpington, B.
Selkirk, E.	Ullswater, V.
Shannon, E.	Vaux of Harrowden, L.
Sharp of Grimsdyke, L.	Vivian, L.
Sharples, B.	Wade of Chorlton, L.
Shrewsbury, E.	Wakeham, L.
Simon of Glaisdale, L. [Lord Privy Seal.]
Skelmersdale, L.	Westbury, L.
Skidelsky, L.	Whitelaw, V.

Resolved in the negative, and amendment disagreed to accordingly.

5.4 p.m.

Clause 86 [Special purpose grants]:

[Amendment No. 160G not moved.]

Clause 87 [Capital grants]:

[Amendment No. 160H not moved.]

Lord Brightman moved Amendment No. 161:

After Clause 93, insert the following new clause:

("Audits The governing body of a grant-maintained school who are under an obligation to appoint a person to audit their accounts shall appoint an auditor approved for that purpose by the Audit Commission.").

The noble and learned Lord said: My Lords, this is a short amendment but a very important one. It provides that when the accounts of a grant-maintained school are audited the auditor appointed by the governors of the school shall be a person approved by the Audit Commission. I am not concerned with local authority schools. The auditing of their accounts comes under a different regime and, as your Lordships will know, the accounts of a local authority must be audited by an auditor appointed by the Audit Commission.

The efficiency of the audit of a government-funded concern is obviously a matter of prime importance. As regards a grant-maintained school, the governors appoint their own auditor. As the Bill stands, they are entitled to appoint any accountant who is eligible under the Companies Act to audit the accounts of an ordinary company. There is no check on the suitability of the auditor chosen by the governors. However, that is not quite the end of the matter.

The Department for Education has issued a code of practice, dated February of this year, called the External Audit Code for the Grant-Maintained Sector. The code is not statutory, but it will be binding on a grant-maintained school because observance of the code is a condition of the funding of the school. So it is necessary to examine the code and see exactly how far it goes to ensure that only suitably qualified auditors are appointed. It does not go very far.

Section 3 of the code deals with the appointment of auditors. Paragraph 3.6 specifies the qualification of auditors. An auditor can be, but need not be, an employee of the Audit Commission. An auditor can be, but need not be, a person specially approved by the Department for Education to audit the accounts of a grant-maintained school. But—and this is the point—an auditor can be any ordinary accountant eligible under the Companies Act to audit the accounts of an ordinary company.

Reading on in the code, there is a paragraph headed "Criteria for Appointment". The code of practice requires the governors, before they choose an auditor, to decide the standards for which they are looking in their chosen auditor. As the code puts it, they must determine: the criteria for appointment before inviting firms to tender". Those criteria must include what the code calls "the relevant experience" of the auditor. But the code does not specify any particular level of experience being required. That is left to the governing body to decide.

So at the end of the day, reading the Bill and the code of practice together, we find that the governing body is given an entirely free hand in assessing a prospective auditor's suitability, provided only that he is eligible to audit the accounts of any tuppenny-ha'penny company.

It is not satisfactory. We are dealing with a great deal of public money. I am told that the estimated expenditure in support of grant-maintained schools for 1992–93 is £279 million. If, as the Government hope, all schools eligible for grant-maintained status become in due course grant maintained, the amount involved in present money terms is estimated at £15,000 million. That is one-third of the cost of the National Health Service.

The Minister recognised how important it is that the accounts of a grant-maintained school should be audited by a truly experienced auditor. In Committee, at col. 159 on 27th April, she said, I take particularly seriously the importance of having a rigorous and extremely robust system of accountability for those individual establishments within the state sector of education". Is the absence of any independent check on the suitability of a prospective auditor a proper part of a, rigorous and extremely robust system of accountability"? Let me refer to, and heartily endorse, what was said by the noble Lord, Lord Boyd-Carpenter, on 20th April, at col. 1409, when he stated, The development of the grant-aided system, which I welcome, makes it increasingly important that schools' accounts should be audited not by local amateurs but by professionals of high standing". I could not agree more.

The noble Lord, Lord Dormand of Easington, gave three horror stories unearthed by the Audit Commission. Perhaps I may be forgiven for repeating them and adding a fourth, because they are so important to my argument. His first example was of the head teacher who awarded a contract for £3,000 of work to her husband. No competitive quotation was obtained and the governors were not informed. Example No. 2 concerns a contract for repairs awarded by a school to the husband of a member of staff, although his quotation was £2,500 above that of a competitor. No superior quality of work was identified and your Lordships will not be surprised to hear that again the governors were not consulted.

The third example concerned three teachers who set up a cosy consortium which contracted to undertake maintenance work at the school in their spare time. Finally, there was the head teacher who employed her daughter to help with the school administration during the vacation, the pay being, at a much higher rate", than the normal administrative staff rate. Again, the governors were not consulted. Surely, those examples illustrate the need for a robust system of auditing.

Amendment No. 161 does not remove from the governors of a grant-maintained school the right to choose their own auditors—a point on which the Minister laid great stress at Committee stage. The amendment leaves the choice of auditor to the governors. All it does is provide that the choice shall be a suitable one, a choice approved by the Audit Commission.

There is nothing new in the concept that auditors shall, in appropriate circumstances, be approved by the Audit Commission. The Transport Act 1985 provides that a public transport company shall appoint only auditors who, in addition to being qualified under the Companies Act, shall be, approved for appointment as auditors of that company by the Audit Commission". Again, the Airports Act 1986 provides that a public airport company shall only appoint auditors who, in addition to being qualified under the Companies Act, shall be, approved for appointment as such auditors by the Audit Commission". I am told that there is at this moment in draft a statutory instrument called the local authorities companies order of 1993, which requires certain companiesc and in particular waste disposal companies— to have their accounts, audited by an auditor approved by the Audit Commission". Amendment No. 161 is a simple one. Perhaps I shall be forgiven if I read the few lines to your Lordships. It states: The governing body of a grant-maintained school who are under an obligation to appoint a person to audit their accounts shall appoint an auditor approved for that purpose by the Audit Commission". I submit that the amendment is necessary. The machinery is in place. There are two statutory precedents and there is about to be a third. There are huge sums of money involved. Surely, the finances of grant-maintained schools deserve as much care and attention as those of a waste disposal company.

Grouped with Amendment No. 161 are Amendments Nos. 200 and 277 which are merely interpretation amendments about which I need not say anything.

5.15 p.m.

Lord Elton

My Lords, before he sits down perhaps the noble and learned Lord can complete his case by telling us whether the four examples he quoted were revealed to him, directly or indirectly, by auditors appointed by the schools or by some other means. Without that information the argument does not help.

Lord Brightman

My Lords, I am not able to answer the noble Lord's question. My point is that there are practices which go on in some schools— I hope very few—which need to be unearthed. If they are to be successfully unearthed we need auditors who are efficient, well trained and experienced. The specific examples were unearthed by the Audit Commission, I do not know in what circumstances. I beg to move.

Lord Peyton of Yeovil

My Lords, in approaching the amendment I fear that my noble friend on the Front Bench will probably start with reference to the fact that we have discussed the matter twice before. Those fears were given an altogether new substance by an accident which happened just now to my noble friend—to whom I was listening with rapt attention, as I always do—when she had the misfortune (I wonder she does not do it more often in this sort of legislation) to turn over two pages at the same time. The words therefore intervened, "this is the third time". I suspect that that is how she is likely to start her speech, which I would not wish to spoil for her.

I would not have come back for a third bite at this cherry had it not been for two matters; first, my conviction that it is a very important issue, and, secondly, the skills and wisdom of the noble and learned Lord, who moved the amendment, which have made it possible for me to avoid the pitfalls into which I erred at earlier stages. First, because of the unwelcome cuckoo in the nest, as one might call it, of Clause 1, I was in danger of getting universities entangled in my amendment. That was not my intention. The amendment, which the noble and learned Lord has moved, is free of any objection of that kind. The second problem that I had was described by my noble friend on the Front Bench as my "flawed amendments". She made it very clear—she hurt my feelings deeply—when she said: I do not wish to respond to the invitation to take these flawed amendments away".—[Official Report, 27/4/93; col. 158.] Noble Lords can imagine how cast down I was by that.

The noble and learned Lord, Lord Brightman, referred to the huge amount of public money which could be at stake here if, as the Government hope, local education authority schools take this course. There is no need for me to echo at any length the plea which the noble and learned Lord has made for an efficient and effective audit. I should like just to say a word or two about the idea of a code of practice. When we are involved in legislation—voluminous legislation which it is not always easy to follow—I find it very hard indeed to accept the notion of tagging on a code of practice. Even supposing that the code of practice is wholly satisfactory in its present content, and even supposing that it would be rigidly adhered to by all concerned, codes of practice are subject to change. Secretaries of State change. I do not find at all acceptable the notion that the points expressed by your Lordships can easily, conveniently and effectively be met by their inclusion in a code of practice.

With the change of status which local education authority schools will have when they become grant aided, there seems to be no accompanying reason why the audit arrangements should be changed. Indeed, the reverse is very much the case. I feel that there is much to be said for continuing existing auditing arrangements. It will make the change of status easier and not more difficult to follow. My noble friend seemed greatly wedded to the idea that the National Audit Office should do it all. Nothing in this amendment implies even the least criticism of the National Audit Office. It is a very different organisation though to the Audit Commission. The National Audit Office, under the guidance of the Comptroller and Auditor General, conducts a kind of gladiatorial inquisition in front of the Public Accounts Committee into the conduct of the affairs of government departments. The National Audit Office will, it is true, be auditing the accounts of the two funding councils. But I do not believe that that is any reason for removing from the audit of schools the experience and knowledge which has been acquired over the years by the Audit Commission.

The report of April 1993 of the National Audit Office lists in appendix 1 some 15 grant-maintained schools which have been visited by the National Audit Office. I am not aware whether the experience of the National Audit Office covers a greater number of schools than that. It may do. But the experience of the Audit Commission is far wider. The numbers of grant-maintained schools are limited —only some 45 schools have been visited by the Audit Commission —but the number of local education authority schools which have been visited since September 1989, which is the period referred to in the National Audit Office report, is between 6,000 and 6,500. So, on the basis of the experience of the affairs of schools, I do not believe that there is very much to be gained by transferring audit duties to the National Audit Office. In fact, there is a danger that a great deal will be lost.

There is widespread unease—and I choose the mildest word available—that somehow or other and for one reason or another our education system is leaving too many people who are at the end of their school careers unfit to cope either with the opportunities or the hazards of modern life. It is our habit in this country I find it lamentable—that when things go amiss our immediate reaction is to seek not how we put things right but whom we should blame. There are lots of potential scapegoats available, but hanging them from the nearest lamp-post would not be any great help.

The other alternative to which we resort only too readily is some tremendously extensive, complicated and usually incomprehensible bureaucratic exercise. Talking, as I have done recently, to teachers of all persuasions, teachers who are not known for their militancy or for their opposition or hostility to the present administration, they complain that authority has failed to understand how uncomfortable they feel with this wholly complex burden which they have been called upon to shoulder.

1 come back to this amendment and conclude by saying that I found it depressing on the previous occasion that my noble friend should resist the proposals with such vigour. Reflecting on the many things which she said in the course of those two earlier debates, I do not believe that the Department for Education can escape all blame for the deficiencies in our present educational system. That being the case, I am at least suspicious that the resistance of the department is based on a fear that if the Audit Commission is given even so much as a toe hold in its affairs the department would be faced with a whole host of questions that it would find very difficult to answer and which it would rather not have to try.

5.30 p.m.

Lord Peston

My Lords, in speaking to this amendment, to which my name is attached, I do not have to draw noble Lords' attention to the fact that the four signatures to it are drawn from all sides of your Lordships' House and represent a considerable variety of opinion. As I have pointed out to the noble Baroness, I certainly do not wish the grant-maintained schools well. Equally, her noble friend Lord Peyton of Yeovil certainly does. I have no idea where the noble and learned Lord, Lord Brightman, stands as regards grant-maintained schools, but I cannot believe that he does not wish them well. So it is not a question about grant-maintained schools. We are debating an amendment concerning auditing.

I disagree with my good friend Lord Peyton of Yeovil. I do not believe for one moment that the noble Baroness, Lady Blatch, can possibly complain about our returning to this subject because it is solely as a result of her interventions, causing us to think this matter through to a much greater depth and length, that leads us at last to a satisfactory amendment. We are indebted to, and have to thank, the noble Baroness because without her criticisms of what the noble Lord, Lord Peyton of Yeovil, referred to as his "flawed" amendments, we would not have got to the present excellent position as regards this amendment. It does a job which I wish we had done earlier. Without the expert views of the noble and learned Lord, Lord Brightman, on how to approach these matters we would have got it wrong and we did get it wrong. Therefore, I do not apologise for coming back to this amendment and I do not expect to be criticised by the noble Baroness, Lady Blatch, for returning to it because without her help we would not have got to this position.

The central problem is that there is no check on auditors under the legislation as presently drafted. As the noble and learned Lord said, there is no new principle involved in saying that there should be a list of auditors which will enable us to have a check on the kind of people doing the work. I have drawn before an analogy in that in earlier legislation schools were going to be able to choose their own inspectors. We changed the law so that there would be a list of inspectors chosen by Ofsted. It now chooses a list and the schools can select their inspectors from that list. The present situation is exactly analogous.

The central point here is clearly that there is an enormous amount of public money involved. In the interests of the taxpayers a proper independent audit is the one safeguard for public money that we can rely on. I can only underline the exact words of the noble and learned Lord, Lord Brightman. He referred to rigorous auditing, by which I assume one means auditing to the highest intellectual standard. Robust auditing means that the audit will stand up and will make sense. Accountability is central to auditing. Then almost as a throwaway line in response to the noble Lord, Lord Elton, the noble and learned Lord also referred to the importance of experience.

In my view, nothing can make up for experience when one investigates what goes on in a company. In my younger days when I needed to earn money as a consultant the great problem was that many of the people who acted as consultants had little experience of what was going on and therefore they did not understand that underneath what they were being told there was a good deal more to be found out. I gradually gained experience and I became useful as a consultant. The same applies here; experience is tremendously important.

Perhaps I may add two other factors at this point in my remarks. I am convinced that first-class auditing is in the interests of the school. It has been implied by the noble Baroness the Minister that the kind of auditing we have in mind might be threatening to a school. I cannot believe for one moment that that is so. I believe that independent auditing would be much more helpful to the school and that precisely this kind of amendment would be attractive to grant-maintained schools rather than the other possibility. In particular, I believe that the school would not like to be open to the accusation "You chose any old auditor and we cannot take your accounts seriously". I believe that the school would welcome this kind of amendment.

We are indebted to the noble Baroness, Lady Blatch, for getting us this far. The amendment put forward is balanced and is not bureaucratic. I believe that is a point which the noble Lord, Lord Peyton of Yeovil, brought out. It is possible that his earlier flawed amendment was potentially bureaucratic, but this amendment certainly is not. It involves the Audit Commission in setting up a list and then the school chooses.

From start to finish I have not understood what is the department's objection to the flavour of this matter. I have never understood why the noble Baroness would not take the amendments away or return with equivalent amendments. I feel that there must be something underlying all this which the noble Baroness has not told us. Is there some hidden agenda?

Quite rightly, when the noble Baroness hears me speaking in favour of a certain amendment she must be suspicious of it because, as I have been at pains to tell her for some time, I do not favour grant-maintained schools. I believe that they are a serious waste of public money. She is right to be suspicious of me. But I cannot understand how she can be suspicious of the noble Lord, Lord Peyton, who always speaks in the interests of the Government and certainly of those of her own department. He would not dream of undermining grant-maintained schools. I am not sure that I can go that far with the noble and learned Lord, Lord Brightman, but I have no reason to feel that his motives are not of the highest order in this regard; namely, the correct use of public money.

I am strongly in favour of this amendment and I support it. I also beg the noble Baroness to think of the amendment with me as a small part of it and the noble Lord, Lord Peyton, and the noble and learned Lord, Lord Bridgeman, as major figures—

A Noble Lord

Lord Brightman.

Lord Peston

My Lords, I beg the noble and learned Lord's pardon. Alzheimer's disease does hit every so often, and just like that. I apologise to the noble and learned Lord, Lord Brightman. I ask the noble Baroness to think of him and the noble Lord, Lord Peyton, as the great figures putting forward this amendment and of me just tagging on as best I can.

Baroness Seear

My Lords, this is one of many long nights ahead of us and I am sure that it is totally unnecessary for everyone who has their name attached to an amendment to make a long speech about it. I do not intend to repeat what has already been said with great effect by previous speakers, but I wish to make one point. We all know that school governors today are finding themselves somewhat overwhelmed, if not threatened, by the responsibilities which they have undertaken, particularly in the financial area. I am sure that it is very alarming to find oneself ultimately responsible for hundreds of thousands of pounds of expenditure when all one has done in the past is to manage or mismanage the housekeeping money.

I understand that quite a few of those who have taken on these responsibilities doubt very much whether they can continue because of the weight of the responsibility. Nothing can be more reassuring than to be able to brandish a report from a highly reputable body of accountants, which has audited the accounts, saying that the school is financially as pure as the driven snow. If only in the interests of the governors, it is highly desirable that this amendment be accepted.

Lord Skidelsky

My Lords, I wish to speak against this amendment. I do not support it for one or two quite important reasons. The first is that it is a restraint on trade, for which I see no sufficient justification whatever. Chartered accountants are chartered to audit accounts with integrity and competence. If they cannot do that they should be struck off.

I have no evidence at all that the universities have to choose their accountants from accountants approved by the Audit Commission. If the universities are to be allowed and trusted to choose their own accountants, why should grant-maintained schools not be allowed to do so? I note that some of those who have spoken in favour of the amendment are university people. It seems that they will not trust schools to be audited in the way that they themselves are audited. That point needs to be stressed.

The second point is that I have not heard what the criteria are for firms of chartered accountants to be approved by the Audit Commission for this purpose. It seems to me that it would be a slur on the professional integrity and competence of a firm of chartered accountants if its application for approved status were refused. What are the criteria by which a firm is approved to audit schools? How can they be different from the criteria which allow that firm to practise in the ordinary world of business in the first place?

The final point that I should like to make is this: the analogy with schools choosing their own inspectors does not seem to me to be at all correct. The inspection of education is a much wider affair than the auditing of accounts since many more subjective elements are involved. That is why many of us felt that schools should not be allowed to choose their own inspectors, but that those inspectors should be appointed from a list of approved inspectors. Auditing is a very narrow, highly professional, expert business. Therefore, the analogy between auditing accounts and inspecting schools is not correct. For those reasons, I would not support the amendment but would support the Government in resisting it.

Lord Elton

My Lords, it will be for my noble friend the Minister to adduce the main reasons for resisting the amendment, but I hope that in doing so she will bear one or two features of the noble and learned Lord's argument in mind. It is always with diffidence that I take the risk of crossing swords with noble and learned Lords, having been punctured so often by them in the past.

I should like first to draw my noble friend's attention to the fact that the four examples which were quoted were examples of what appear to be misdemeanours and would have been arguments in favour of the amendment were it also adduced that they had taken place without the knowledge of the auditors or that the auditors, knowing of them, had not drawn attention to them in their annual report and accounts. But the fact that there are strange practices in any branch of human activity is not a surprise, and it is the function of the auditor to discover them in these cases.

The case therefore to be made is that the auditors at present to be empowered to perform this task are not suitable. However, for the reasons which my noble friend Lord Skidelsky has advanced, I find it odd that auditors as a genus, all of whom have to be registered with their collective authority which is empowered under the Financial Services Act to maintain their standards, shall not be able to do this job.

The noble and learned Lord opened his speech by pointing out that the sector to which the amendment would apply is responsible for some £279 million of expenditure per annum, which could be expected to rise to an absolute maximum of £15.6 billion. I was not aware that the aggregate volume of business in a sector was the basis on which to choose the auditor for any particular bit of that sector, no matter how small the school might be or, indeed, how big. The aggregate figure does not seem relevant to the argument.

The noble and learned Lord finally referred to three examples of legislation—two in force and one to come. One deals with transport, one with airports and the third with rubbish disposal. He did not cite the volume of turnover in those cases, but I should have thought that, attractive as the argument is—and I see its appeal; our schools are surely more important than rubbish disposal—nevertheless, if the argument is about the volume of the money, the logic of the thing is that the volume of the money is very much less in that case than it will be in education.

I return to the principal theme advanced by my noble friend Lord Skidelsky—that auditors are subject to the regulation of the appropriate authority under the Financial Services Act. To say that they can undertake this particular class of work only if they are authorised by some other regulatory authority is to declare a lack of confidence not only in auditors as a class but also in their regulators. That might well be something to do, but it has not been debated and I do not think that it ought to be the basis for moving the amendment.

5.45 p.m.

Lord Lucas

My Lords, I should like to rise briefly on behalf of the auditing profession, of which I am a member, and to say how disturbed I am to learn from the noble and learned Lord, Lord Brightman, of the emergence of a two-tier profession—part just chartered accountants and part chartered accountants approved of by the Audit Commission. I am not sure at all that my institute knows that this is happening and I am certainly sure that if that sort of concept were to be introduced into a sector as large and diverse as schools it would wish to have its opinions sought and taken into account before that was made part of the law.

The audit of a school is extremely simple. I find it very difficult to think of any company of any sort of size which is an easier entity to audit than a school. Most of a school's expenditure is wages—one of the easiest elements of expenditure to control. The difficulties which were described by the noble and learned Lord as having come to light in the latest report are the sort of difficulties which I would expect to encounter in any company, and any competent chartered accountant ought to be capable of rooting out that sort of malpractice. We are not talking about consultancy. We are not talking about advice. We are talking about audit, about taking a very simple look at the figures. Are they accurate? Have they been properly compiled? It is nothing to do with the more complex areas which my noble friend Lord Peyton talked about. This is something which every chartered accountant ought to be capable of, and no chartered accountant ought to be ruled incapable of by a body which has nothing to do with his profession and which is merely, presumably, going to choose firms which are big and expensive rather than those which are perhaps run by a small number of people.

It would be very interesting to see this principle of the Audit Commission having a say in who is a good auditor and who is not applied to companies. Would any of my noble friends who run companies allow the Audit Commission to say whom they should choose as auditors? I am sure that they would not. Really, there is nothing harder than auditing a company—a school is simplicity itself by comparison.

Baroness Blatch

My Lords, I shall not disappoint my noble friend Lord Peyton of Yeovil by saying, "Yes, we have indeed discussed this issue twice before", but I shall disappoint him on another aspect in that I shall, with some vigour, defend the system that is in place. In addition, I stood accused on two previous occasions of being in the hands of my officials in the department. I can promise not only my noble friend Lord Peyton but all Members of the House that I have expended a great deal of time and energy on this because I was constantly impressed by the force and energy with which these amendments have been pursued, believing that there must be something in them.

I fall back on a fairly simple view about the amendment. It adds bureaucracy. There is no mention of who will pay. It is double-banking in anybody's language. What we have now are professional bodies which oversee the quality of those who are selected to audit schools. The amendment wishes to put another professional body in place not only to oversee the professional quality of the institutions but to select from those institutions those whom the Audit Commission would deem to be suitable to audit school accounts. As my noble friend Lord Skidelsky asked, what of those auditors who are not selected by the Audit Commission? Where does it leave them within their institutions? Are we from an external body, through the Audit Commission, to play the role of selecting for professional reasons people qualified as suitable or unsuitable? And if they are deemed unsuitable, what recourse do they have? How is that judgment to be made? These are very important questions raised by my noble friend Lord Skidelsky.

Reference was made to the number of schools visited. The grant-maintained schools system is a relatively new one. It was very small in 1989, 1990 and 1991. It is growing. The National Audit Office has already visited 15 schools. That was the number visited for one particular report and all visits were in a six-month period. Dates in appendix 1 of the report from September 1989 are the dates of incorporation of the schools visited.

The Audit Commission visits very few LEA schools, and most of them do not have external auditors. The examples given by the noble Lord, Lord Dormand of Easington, who, I notice, is not now in his place, and also by the noble and learned Lord, Lord Brightman, were concerned with local-authority maintained schools, not grant-maintained schools. It is interesting that those particularly graphic illustrations of poor management were not picked up by the district auditor, who is in fact responsible to the Audit Commission. So it is not a question of putting the Audit Commission in place and somehow everything will come right. The report picked up glaring anomalies in the system that really do need to be exposed and dealt with. But it is true to say that the Audit Commission and district auditors, who are under the aegis of the Audit Commission, were in place at that time.

The noble Baroness, Lady Seear, referred to the workload of governing bodies. I do not demur at that. The noble Baroness makes an important point. However, nothing in this amendment alleviates the burden or otherwise of governors. What the noble Baroness implied was that these auditors, selected from professional institutions responsible for monitoring the quality of their members, are somehow disreputable, but if approved by the Audit Commission will somehow become reputable. It is incumbent upon those who make that point to evidence it too.

The Audit Commission report, which again was mentioned by the noble and learned Lord, Lord Brightman, and the noble Lord, Lord Dormand of Easington, was based on a study of 100 schools—88 local authority and 12 grant maintained—all of which were volunteers to the system. The general conclusions of the report on financial accountability, which is actually what we are talking about, were that 60 per cent. of schools had satisfactory systems while 40 per cent. were found to have unsatisfactory systems. Grant-maintained schools, and here I quote the report, "generally had robust systems" and therefore must have been included in the 60 per cent. of satisfactory systems.

Very few LEA schools are subject to external audit. The position of grant-maintained schools is quite different. With a very rigorous annual audit as a firm requirement, the Audit Commission clearly will have its work cut out sorting out the problems of financial accountability in LEA schools which to date have been found wanting. It was only when a special study was done of those schools that the particular problems were picked up.

I have listened carefully to the arguments advanced by all noble Lords who have spoken in this debate and I am pleased to find that there is very little, if anything, between us on the basic principles. I repeat that I support a rigorous system, as rigorous as it possibly can be, for grant-maintained schools as they become freed from local authority control. The Government are committed to that so as to provide the necessary assurances about the proper use of taxpayers' money. We are equally committed to the need for value-for-money studies which can help to improve the cost-effectiveness of grant-maintained schools. I shall have more to say about that when we come to Amendment No. 199, which, to my regret, has been disaggregated from this group of amendments, because I was minded to accept it. However, I shall leave that until a later point in the proceedings.

The differences between us are about means rather than ends. Amendment No. 161 seeks to extend the role of the Audit Commission in the audits of grant-maintained schools. We do not believe that that is necessary. On the contrary, we believe that the present audit regime is adequate and rigorous. It is more rigorous than that required for public companies, and significantly more rigorous than the usual audit regime for local authority schools.

I noted what was said about schools choosing their own auditors. Yes, we do believe that that is an important freedom for self-governing schools. But let us be clear that it is not an unfettered freedom. Grant-maintained schools may only select external auditors from limited categories which we regard as suitable for this work. These include the Audit Commission's district audit service, and those accountants who are supervised and monitored by the main professional institutes and who are registered to audit limited companies.

Let us also be clear that the governors of a grant-maintained school cannot arrange whatever sort of audit they want. The department prescribes an audit code, which has already been referred to, and I have it now in my hand. It sets out in considerable detail what each year's audit must cover. This goes significantly beyond the usual concerns about propriety and end-of-year balance. The point has been made that governors must have regard to it because that is part of being allowed to exist as grant-maintained schools.

In particular, auditors are required to certify both that the grants received by the schools have been used for the correct purposes and that the school has complied with the department's requirements about financial controls, accounting practices and so forth. In addition, arising from each annual audit, auditors are required to report to governing bodies on the adequacy and effectiveness of a school's financial management system. Copies of the annual accounts and of these management letters have to be submitted to the department and of course to the FAS, when it is in place. I can assure your Lordships that any weaknesses that are found are followed up promptly and pointedly with those schools.

The whole process is overseen by the National Audit Office and the Comptroller and Auditor General reported on it to Parliament in April. I have the report in my hand. This afternoon, probably at this very moment, the department's permanent secretary is being grilled—perhaps I should use a more colloquial word and say "roasted"—about the report by the Public Accounts Committee in another place. The conventions are that I should not comment on the report before the Public Accounts Committee has completed its review, but if I quote three extracts your Lordships will be able to draw your own conclusions.

One of the main conclusions was that, the department and individual schools had approached the change of status and the new financial regime positively and with a large measure of success, and both were developing sound financial procedures". Secondly, the National Audit Office found that, the schools visited had … responded positively and vigorously to their new responsibilities under grant-maintained status and had developed or acquired the necessary expertise and procedures". Thirdly, the National Audit Office nevertheless pointed to, some areas where improvements were required in particular cases, including, internal control, financial reporting, documentation of procedure and responsibilities, the custody and control of assets and purchasing and contracting procedures". Those quotations have a clear message in relation to the amendments. Generally sound procedures are being developed, and the NAO already provides a mechanism to encourage improvements where they are needed.

I reiterate that the Government have no problem with many of the arguments advanced by noble Lords. However, we already have a very rigorous regime for the audit of grant-maintained schools, and in our view it is unnecessary to add the Audit Commission—at what cost, who knows?—to the present phalanx of supervising bodies. I trust therefore that your Lordships will not press these amendments. If my noble friend Lord Peyton and others have any doubts, they may find it helpful to know that they are likely to consider what I have to say later on Amendment No. 199 satisfactory, because in principle I am prepared to accept it.

I said earlier that we had already a rigorous audit regime for grant-maintained schools. Let me elaborate: it is an important point. First, let us look at the comparison with audits of public companies. Our requirements on grant-maintained schools are significantly more rigorous, as I have said. The audit must follow the detailed provisions of the department's code. The audited accounts must—I emphasise "must"—be submitted within five months of the end of the financial year. The auditors have to confirm that the grant has been used for proper purposes and that the school has fulfilled the requirements of the department's financial regulations. The auditors must review the school's management systems and report on any weaknesses needing attention. Indeed, all moneys that are in the hands of grant-maintained schools come under the remit of the audit but not so in LEA-maintained schools. Any moneys raised informally outside of the LEA financing system arc not part of the auditing system.

Secondly, let us take the comparison with audits of local authority schools. This is rather more difficult because very few such schools are subject to external audit. Most are covered only by local authorities' internal audit arrangements and their accounts may be examined only once every few years.

The noble Lord made much of the Audit Commission's expertise and how we should take advantage of it. I do not want to challenge his assessment, but we need to remember that most of that expertise relates to audits of local authorities. Audits of individual schools are a new and in the local authority sector rather slowly developing departure.

I can assure noble Lords that the Government have no intention of relaxing their existing rigorous audit regime. Indeed, we shall keep it under review to ensure that it keeps abreast of best auditing practice. Nor will we allow any diminution in the quality of the audit regime when some of those responsibilities transfer to the new funding authorities. I can give noble Lords a categoric assurance that the Secretaries of State will require the FAS and the Welsh equivalent to continue our rigorous audit arrangements.

It was said that the Secretary of State may be changed at a whim. Of course, Secretaries of State come and go, but the regime is well established. The National Audit Office, whose powers are statutory, does not change. It is a constant watchdog on government. It is my view that it will continue to be so. I believe that the Audit Commission is looking for a monopoly of business, and I believe, as my noble friend Lord Skidelsky said, that that is not good for trade.

6 p.m.

Lord Peston

My Lords, before the Minister sits down and the noble and learned Lord, Lord Brightman, replies, I may have missed what the Minister said about Amendment No. 199, as she was replying at such admirable length. Did she say she would accept Amendment No. 199, or did I mishear what she said?

Baroness Blatch

My Lords, with the leave of the House, I said that) would accept the principle of Amendment No. 199. I should prefer to come back on Third Reading with a suitable amendment, but it is my intention to accept the principle.

Lord Brightman

My Lords, before the Minister sits down, perhaps I may ask her a question upon which I seek clarification. Am I right or wrong in saying that any chartered or certified accountant who is eligible to audit the accounts of any company is equally eligible to audit the accounts of a grant-maintained school? The code of practice (towards the bottom of page 7) says that the external audit of a grant-maintained school may be undertaken by the Audit Commission, or those accountants who are, first, members of one of the professional accountancy bodies and who are also registered to audit limited companies in accordance with the companies legislation. That is a perfectly ordinary provision: an accountant who wishes to audit companies must be on the companies list. There is then a wholly separate paragraph which deals with organisations under what is called the UKFA scheme, although it should possibly he the CIPFA scheme, of audit regulation.

As I understand it, any auditor who is eligible to audit the accounts of a limited liability company is equally eligible to audit the accounts of a grant-maintained school.

Baroness Blatch

My Lords, the short answer is yes, but I should make a qualification; members of professional accountancy bodies and recognised supervisory bodies include all the chartered institutes of England, Wales, Scotland and Ireland, the Association of Certified Accountants and the Association of Authorised Public Accountants. The noble and learned Lord referred also to those registered to audit limited companies in accordance with the companies legislation. That too is qualified by Part II of the Companies Act 1985, as amended by the 1989 Act. So the answer is yes.

Lord Brightman

My Lords, I am obliged to the Minister. We have been an hour discussing the amendment, and I shall be brief. The first thing that puzzles me is how a rigorous and robust system of accountability will be achieved if the auditor does not need to be vetted in any way by any responsible body. Those words were kindly attributed to me by the noble Lord, Lord Peston, but in fact they were invented and have been repeated by the noble Baroness. I am indebted to her for those words. They are described on the banner under which I am seeking to crusade for the amendment.

The second point which puzzles me is how any member of the accountancy profession can think that the amendment creates two tiers of accountants, a sort of superior tier and an inferior tier. There are already two statutory provisions which provide that the auditor must be someone approved by the Audit Commission; that is, the Transport Act 1985 and the Airports Act 1986. So far as I am aware, the accountancy profession did not rise up in arms and say, "We are grossly offended by those provisions". It accepted them. Whether they are campaigning against the statutory instrument dealing with waste disposal that I mentioned, I do not know, but it does not seem to me that there is anything derogatory in a provision which provides that the accountant shall be someone who has been approved by the Audit Commission.

Another possible misunderstanding is that I am in some way campaigning in favour of the National Audit Office, as distinct from the Audit Commission. I am not. The amendment has nothing to do with the National Audit Office. It merely provides a check, through the Audit Commission, on those auditors who are approved for the auditing of the accounts of a grant-maintained school.

I do not understand what vast sums of money will be spent by the Audit Commission merely through having a list of auditors who are approved for the auditing of the accounts of a school. It does not seem to me that we are embarking upon a monstrously expensive process.

The relevance of the amount of money concerned in the financing of grant-maintained schools is surely that, if we are to have £270 million of government funds going into grant-maintained schools, and possiblys1.5 billion in a few years' time, surely we should have something in place so that we are certain that the expenditure of our money is being properly monitored. I ask your Lordships to back the amendment. It is sensible. There is precedent for it. It will cost nothing worth talking about. It may save millions.

6.8 p.m.

On Question, Whether the said amendment (No. 161) shall be agreed to?

Their Lordships divided: Contents, 106; Not-Contents, 138.

Division No. 3
CONTENTS
Ackner, L.	Craigavon, V.
Addington, L.	Darcy (de Knayth), B.
Airedale, L.	David, B.
Allenby of Megiddo, V.	Donoughue, L.
Archer of Sandwell, L.	Dormand of Easington, L
Attlee, E.	Eatwell, L.
Beaumont of Whitley, L.	Ewing of Kirkford, L.
Blackstone, B.	Faithfull, B.
Bonham-Carter, L.	Falkland, V.
Boston of Faversham, L.	Fisher of Rednal, B.
Brightman, L. [Teller.]	Gainsborough, E.
Broadbridge, L.	Galpern, L.
Brooks of Tremorfa, L.	Geraint, L.
Carmichael of Kelvingrove, L.	Glasgow, E.
Carter, L.	Graham of Edmonton, L.
Castle of Blackburn, B.	Greenway, L.
Cledwyn of Penrhos, L.	Grey, E.
Clinton-Davis, L.	Grimston of Westbury, L.
Cocks of Hartcliffe, L.	Guildford, Bp.

Halsbury, E.	Peyton of Yeovil, L.[Teller.]
Hamwee, B.	Ponsonby of Shulbrede, L.
Hayter, L.	Prys-Davies, L.
Henderson of Brompton, L.	Redesdale, L.
Hilton of Eggardon, B.	Richard, L.
Hollis of Heigham, B.	Rochester, L.
Holme of Cheltenham, L.	St. Edmundsbury and Ipswich,
Houghton of Sowerby, L.	Bp.
Hughes, L.	Salisbury, M.
Hylton-Foster, B.	Saltoun of Abernethy, Ly.
Jay, L.	Seear, B.
Jay of Paddington, B.	Sefton of Garston, L.
Jeger, B.	Serota, B.
Jenkins of Putney, L.	Shannon, E.
Judd, L.	Sharp of Grimsdyke, L.
Lauderdale, E.	Shaughnessy, L.
Lawrence, L.	Shepherd, L.
Llewelyn-Davies of Hastoe, B.	Simon of Glaisdale, L.
Lockwood, B.	Stedman, B.
Longford, E.	Stoddart of Swindon, L.
Macaulay of Bragar, L.	Strabolgi, L.
McIntosh of Hanngey, L.	Taylor of Blackburn, L.
Masham of Ilton, B.	Taylor of Gryfe, L.
Mason of Barnsley, L.	Thomson of Monifieth, L.
Mayhew, L.	Tordoff, L.
Merlyn-Rees, L.	Turner of Camden, B.
Meston, L.	Warnock, B.
Molloy, L.	Whaddon, L.
Monson, L.	Wharton, B.
Morris of Castle Morris, L.	Wilberforce, L.
Nicol, B.	Williams of Crosby, L.
Ogmore, L.	Williams of Elvel, L.
Park of Monmouth, B.	Williams of Mostyn, L.
Parry, L.	Young of Dartington, L.
Peston, L.
NOT-CONTENTS
Ailesbury, M.	Davidson, V.
Aldington, L.	Denham, L.
Alexander of Tunis, E.	Denton of Wakefield, B.
Archer of Weston-Super-Mare, L.	Derwent, L.
	Eccles, V.
Arran, E.	Eccles of Moulton, B.
Astor, V.	Eiles, B.
Auckland, L.	Elliot of Harwood, B.
Barber, L.	Elliott of Morpeth, L.
Barber of Tewkesbury, L.	Elphinstone, L.
Belhaven and Stenton, L.	Elton, L.
Blake, L.	Flather, B.
Blatch, B.	Fraser of Carmyllie, L.
Blyth, L.	Fraser of Kilmorack, L.
Boardman, L.	Gainford, L.
Boyd-Carpenter, L.	Gardner of Parkes, B.
Brabazon of Tara, L.	Goschen, V.
Bridgeman, V.	Gray of Contin, L.
Brigstocke, B.	Harding of Petherton, L.
Brookeborough, V.	Hardwicke, E.
Brougham and Vaux, L.	Harmar-Nicholls, L.
Bruntisfield, L.	Harvington, L.
Butterworth, L.	Hayhoe, L.
Cadman, L.	Henley, L.
Caithness, E.	Hesketh, L. [Teller.]
Campbell of Alloway, L.	Hives, L.
Campbell of Croy, L.	HolmPatrick, L.
Carnegy of Lour, B.	Hood, V.
Carnock, L.	Howe, E.
Carr of Hadley, L.	Inglewood, L.
Cawley, L.	Johnston of Rockport, L.
Chalker of Wallasey, B.	Kilmarnock, L.
Clark of Kempston, L	Kinnoull, E.
Cochrane of Cults, L.	Kitchener, E.
Cockfield, L.	Layton, L.
Colwyn, L.	Leigh, L.
Cox, B.	Lindsey and Abingdon, E.
Craigmyle, L.	Long, V.
Cranborne, V.	Lucas, L.
Crathorne, L.	Lucas of Chilworth, L.
Cullen of Ashbourne, L.	Lyell, L.
Cumberlege, B.	McColl of Dulwich, L.
Dacre of Glanton, L.	Mackay of Clashfern, L.

[Lord Chancellor.]	Robertson of Oakridge, L.
Macleod of Borve, B.	Rodger of Earlsferry, L.
Manchester, D.	Rodney, L.
Marlesford, L.	Romney, E.
Marsh, L.	St. Davids, V.
Merrivale, L.	Seccombe, B.
Mersey, V.	Selkirk, E.
Monk Bretton, L.	Sharples, B.
Monteagle of Brandon, L.	Shrewsbury, E.
Morris, L.	Skelmersdale, L.
Mottistone, L.	Skidelsky, L.
Mowbray and Stourton, L.	Stanley of Alderley, L.
Munster, E.	Strathclyde, L.
Murton of Lindisfarne, L.	Strathmore and Kinghorne, [Teller]
Norrie, L.
Northbourne, L.	Sudeley, L.
Onslow, E.	Swinfen, L.
Oppenheim-Barnes, B.	Teviot, L.
Orr-Ewing, L.	Thomas of Gwydir, L.
Oxfuird, V.	Thorneycroft, L.
Pearson of Rannoch, L.	Trumpington, B.
Pender, L.	Ullswater, V.
Pike, B.	Vaux of Harrowden, L.
Plummer of St. Marylebone, L.	Vivian, L.
Rankeillour, L.	Wade of Chorlton, L.
Reay, L.	Wakeham. L. [Lord Privy Seal.]
Rees, L.
Renton, L.	Waverley, V.

Resolved in the negative, and amendment disagreed to accordingly.

6.17 p.m.

Lord Young of Dartington moved Amendment No. 162:

After Clause 93, insert the following new clause:

("Establishment of grant-maintained hospital schools

—.(1) This section has effect in respect of the area of a local education authority if an order under section 10(1) of this Act applies to the area.

(2) Where the promoters of a school for sick and invalid children propose to establish a school on hospital premises which will have home tutors on its staff they shall—

1. (a) publish proposals for that purpose in such manner as may be prescribed, and
2. (b) submit a copy of the published proposals to the Secretary of State.

(3) Before publishing any proposals under this section the promoters shall consult—

1. (a) the funding authority, and
2. (b) such other persons as appear to them to be appropriate;

and in discharging their duty under this subsection the promoters shall have regard to any guidance from time to time by the Secretary of State.").

The noble Lord said: My Lords, I hope, not unavailingly, that the amendment will prove to be a non-party matter and that it will have support from all sides of the House. I thank the Minister for the consideration that she has given to what I recognise is a difficult matter. I also thank her advisers in the Department for Education and the many hospital teachers who have given advice and have supported the recently established National Association for the Education of Sick Children.

I begin by saying the conventional words to the Minister; that if the wording of the amendment is not acceptable, but its general intent is, I shall be happy if she agrees to take back the amendment, reconsider the drafting and return with an amended version at the final stage. Thinking that perhaps the wording of the amendment might not be exactly what the Minister would like to see I also tabled Amendment No. 199ZA, which expresses the same point but in a different way. If those words are more acceptable to the Minister I shall be extremely pleased.

In the light of my particular interest one of the sad aspects of the Bill is that no mention is made of hospital schools and hospital education in specific terms. It is sad, but it also reflects what has happened over a very long time in our educational history. Hospital education and the education of sick children has not been—perhaps never has been—prominent on the educational agenda of the country.

Earlier I was delighted to hear the noble Baroness, Lady Williams, intervening in our debates. I remember what an excellent job she did when she was at Queen Elizabeth House, even though the accommodation was not all that people might have liked. As far as I can remember, even when the noble Baroness, Lady Williams, was Secretary of State for Education and Science, and before that Minister of State, I cannot remember her speaking about the importance of the education of sick children.

Earlier the Minister said that nothing is more important than education. Many of us, partly because of the special interest that we have, agree with her about that. If that is so and we accept that, it follows that nothing is more important than the education of sick children. If they do not receive a decent education, they will suffer a double blow. Not only will they have their illness, which sometimes can be long lasting, but they will also be deprived of education which could keep them at the same level as their peers in school and, if all goes well, give them the opportunity to obtain employment when they leave school.

The fact is —and this may partly explain why the issue has not been prominent on the educational agenda—that the numbers of chronically ill children, who are just the kind of children who need hospital education and good home tutoring, has increased steadily. That is because of the advances in general and paediatric medicine, which have kept more children alive and given them the chance to mature into adults who will not be handicapped by diseases that would have handicapped them in the past.

Of the 600,000 or so children who are admitted to hospital every year, most stay for only short periods. Indeed, the length of time spent in hospital is decreasing while the period of convalescence is increasing. However, among that very large number there are larger numbers of chronically ill children who are in special need of the education service. That must be a special educational service because of their specific and particular needs.

This amendment, and a later amendment to Clause 274, seeks to ensure that proper attention is given—and, we would say, at long last—to an issue which is becoming increasingly important because the numbers are growing.

Not everyone knows the basic facts about the situation. There are some 44 hospital schools which are already special schools. Under the Bill, those schools can apply for grant-maintained status if they so wish. There are also some 160 educational units, many of which are not hospital schools but which do the same job. That can arise from an accident of history; for example, because of the person who happened to chair the education committee at a given time. Those units would not be able to go the way of the special schools and become grant maintained.

This amendment seeks to enable educational units to cluster together, because that would be the most sensible approach, and apply to become grant-maintained schools in certain circumstances. It should not apply in all circumstances. We are merely asking that it should be an available option. Heaven forbid that it should be compulsory. Some local education authorities do not need that option because the present position is perfectly satisfactory. For example, Leicestershire County Council has a good hospital school, which I visited recently, with outreach tutors based at the hospital school who visit homes of convalescent and other children. I do not believe that that service could be improved further beyond the state which it is in at present.

At the other extreme there are some, perhaps many, local education authorities which have done very little or nothing. They have no hospital school and perhaps no educational unit in a hospital. In some cases there is only one teacher to deal with hundreds of children. That means that not many of the children receive anything like decent attention. The question which has agitated me and others thinking along the same lines is what difference the Bill will make to those local education authorities whose priorities have not included sick children.

I admit—and I am glad to be able to admit—that the Bill will make one advance because it places a duty on local education authorities to provide that form of education along with education for children excluded from school generally. But what will that be a duty to do? The present practice which varies enormously shows that that is an extremely important issue. Generous authorities like Leicestershire and Oxfordshire, and some others, provide decent education for sick children. That is not provided while they are too ill to be able to pay attention to teachers but it is provided as soon as they are capable of learning.

Other local education authorities have all kinds of different rules; for example, only after a child has been in hospital for four weeks will he be entitled to education and, even then, it will perhaps be for only one hour each day. Some require written authorisation for each individual child before the child can receive anything in the way of education. Some education authorities provide that it is all right to teach French, but not history. They go into most extraordinary and absurd detail. I should have thought, that that absurd kind of provision would appeal particularly to our present Secretary of State.

There is an even worse situation. If an LEA is doing very little or nothing, under the Bill a complaint can be made by a parent to the Secretary of State, but the Secretary of State has rendered himself powerless to do anything about it. There is no sanction which he could impose on an authority that is not living up to and performing its duty.

I am a strong supporter of local government in general, which has made it difficult for me to see my way properly and clearly through this complicated set of issues. I deplore most heartily what has happened to local government since 1979. I support subsidiarity within the United Kingdom more firmly than I do within the European Community. Not all education authorities are perfect. They have many pressures upon them. They may decide that they cannot do much for sick children, even though that means that a child with a chronic illness may receive no education and then be doubly handicapped for life. They may have other priorities. They may decide that any money that is available should go to the growing numbers of disruptive children who will now be lumped together with sick children, in accordance with the new duty imposed on LEAs. The option of GM status could be very useful in those circumstances.

When the 1944 Act held greater sway, one could have talked about the direct grant list or voluntary aided schools and suggested that hospital schools might be added to the Church of England, Catholic and Jewish schools etc. However, those days have somewhat passed. In the context of the Bill it makes sense that there should be an option whereby GM status could be sought by an LEA.

My case is that the new status should apply to educational units in hospitals and, following from what is stated in Clause 47 of the Bill, promoters should be allowed to establish grant-maintained schools for hospital education units and to cluster them together for that purpose. It is inconsistent in relation to a Bill, the main purpose of which is to foster grant-maintained schools, to baulk at including hospital education, when a special case can be made for doing so.

I should like to say a few words in conclusion to my colleagues on these Benches. There are not enough of them here to form a lynching party, but perhaps there are supporters waiting in the Bar and Tea Room. An outside observer who did not know about our political stance might expect that I would have a harder job to persuade my colleagues than those on the opposite Benches, but over the past few weks I have not been sure which is the harder task to accomplish.

I am as strongly opposed to grant-maintained schools in general as many other noble Lords. I should like to see community schools that are responsible to the community. I, like the noble Lord, Lord Peston, wish to see that children are treated in the same way, irrespective of what school they attend. I do not wish to see centralisation of educational policy set out in great detail. I can only say that to all rules there should surely be exceptions. I hope that I have gone some way to persuade noble Lords that hospital education should constitute a national exception.

Many hospital schools and units have national and not local catchment areas. To the Woodlands Hospital School, a famous school in a famous hospital in Birmingham, come children from Scotland, Northern Ireland and many LEAs all over the country. To Guy's Hospital school come children from Wales and Yorkshire and all over the country. To an educational unit at Newcastle-upon-Tyne come children from Wales, Scotland, London and Jersey. They are placed according to medical needs and where the children will receive the best possible medical attention, which are factors that should always go with proper educational support. Unfortunately, that is not the case at the moment.

The education of sick children is in many ways a national service and should be treated as such. It is fine when LEAs regard themselves as having that national responsibility, but when they do not and when they have no resources, there should be another option. Many thousands of hospital teachers and home tutors are doing a great job under difficult circumstances for children who are more in need of a good education than other children. They need support and noble Lords can give that support. I beg to move.

6.30 p.m.

Baroness Masham of Ilton

My Lords, you will by now be aware that there is a need to safeguard hospital schools. Unless one has had an ill child who has needed hospital treatment and who has benefited from receiving education while in hospital, or unless one has had a lot to do with hospitals, no member of the general public knows much about hospital schools. When local authorities are scratching about, trying to make savings, hospital schools would be an easy way to make cuts.

Many children who attend hospital schools come from a long distance and will come from other local authorities than the one providing the education at the hospital school. Collecting the fees from the many different local authorities for each child's education is an administrative headache.

We are trying to find a way of safeguarding that vital part of education of sick children. In some hospital schools the numbers of teachers have already been cut by 50 per cent. Some teachers have become worried about speaking out about what is happening in case they lose their jobs. I have had the pleasure of meeting some of the teachers, children and parents who are involved in hospital schools. I find that the teachers are dedicated, motivated and united in the need for safeguards. I find the children who have benefited from hospital education to be some of the most worthwhile deserving children, who have picked up the strands of their lives even after very horrendous injuries or serious ongoing illnesses. I find the parents to be concerned that there might be more cuts. They are worried about the changes that have taken place in the National Health Service and in education.

Why do the Government think that grant-maintained schools are important? Her Majesty's Government are making so many changes and approve of grant-maintained status; therefore, I do not understand why they cannot give those advantages to hospital schools.

One boy who is doing his GCSEs had a terrible accident when he was burnt by petrol. Along with serious disfigurement, he had one hand put out of action. The teacher helped him to adapt and use his other hand, and he continues his exam work even though he has suffered great physical and psychological pain. The parents of a girl who lost both legs and some fingers as a result of septicaemia told me that it was the teacher more than any other member of the hospital staff who had helped in the rehabilitation of their child. She had been brought back to normal life and been given the impetus to carry on and fight back.

If those ill children miss out on education when they are in hospital, they will be behind when they return to their school and may never be able to catch up. Why are we having to fight so hard on behalf of young patients who, by right, should have continuity of education? There are children with special needs, psychological problems and eating disorders. All those educational needs require safeguarding. It should be in the interests of a hospital trust to have a good, thriving school, but managers often do not put paediatric services very high on the list of priorities.

Recently we heard that there are not enough paediatric intensive care beds throughout the country. Is that not an example of what can happen to children's services? I should like the Minister to tell us what priority she puts on the education of those children who have to go into hospital or convalesce at home. Education is a very important part of rehabilitation. It needs full co-operation from medical, nursing and teaching staff and, of course, from the parents. I hope that your Lordships will appreciate how important and how vulnerable is the subject that is before us tonight.

Baroness Cox

My Lords, I should like to speak briefly in support of the amendment moved so comprehensively by the noble Lord, Lord Young of Dartington. He made so many relevant points that I should just like to highlight two aspects. First, I want to support the possibility that the new hospital schools should be able to opt in to grant-maintained status and, if they are too small to do so on an individual basis, to consider the possibility of doing so in clusters. As the Government are committed to the concept of grant-maintained schools—I believe, rightly so—I should like to ask my noble friend the Minister whether she could consider very sympathetically the particular concept of a new kind of grant-maintained school.

Secondly, as a nurse, I must support the general concern expressed by the noble Lord, Lord Young of Dartington, and by the noble Baroness, Lady Masham. I refer to the enormous importance of maintaining a good education for children who are in hospital or who are ill at home. It is crucial that their education is not jeopardised in any way by financial cutbacks or allowed to fall between the interstices of provision by local education authorities or by hospitals. The possibility of new grant-maintained hospital schools may provide an additional source for the repertoire of available possibilities.

Over all, the psychological benefits of education for sick children are of paramount importance. Here, if I may, I should like to speak as a nurse. I have seen and experienced the difficulty of maintaining adequate mental stimulus and constructive, worthwhile activities, especially for long-stay children, in hospital. Good education can provide the appropriate mental stimulus, can structure time —which can be a very important aspect of long-stay care in hospital—and help promote the psychological well-being which is so important to physical recovery. It is also crucial as preparation for discharge and/or recovery.

I once spent six months as a patient in hospital. I know as an adult how difficult it was to adjust to the outside world upon discharge from hospital. It is much more difficult for children who have to re-enter school. If they have fallen behind with their education, they not only have the difficulty of catching up on lost learning; they also risk the loss of self-esteem as they try to re-establish relationships with their peers. That can lead to extra stress and can inhibit the process of rehabilitation into the everyday world of normal healthy children.

Before I conclude, my noble friend Lord McColl of Dulwich has indicated to me his great regret at not being able to be here this evening to speak to the amendment. He wanted to express his support and to quote especially from his experience at Guy's Hospital. Unfortunately, he has had to attend another meeting which has clashed with this Sitting. However, I told him that I would affirm his support.

In conclusion, I should like to reaffirm my support for the amendment, which is designed to protect an especially vulnerable group of children. If they are allowed to fall through the interstices of educational provision, they may suffer long-term educational and psychological disadvantage in addition to the trauma of their physical injury or ill-health. I hope that my noble friend the Minister will be able to offer encouragement to the amendment. It should be compatible with the Government's philosophy with regard to grant-maintained schools and their commitment to providing the best possible education for all children.

6.45 p.m.

Lord Kilmarnock

My Lords, I was attracted to a previous version of the amendment on the general grounds that I, and others, wish to see the grant-maintained mechanism used to increase the variety of schools within the state system. The plan of the noble Lord, Lord Young, for a cluster of hospital units, seemed to fulfil that aim. However, since that time, further consideration of the plight of children excluded from school by illness and the Government's, in my view, rather inadequate plans for them, has reinforced in my mind the importance of the amendment, or something like it, in its own right.

Although I am aware that we are not debating Clause 274 and Schedule 17, which set out the Government's proposals, and that the noble Lord, Lord Young, and his friends have a later amendment after Clause 274, I do not think that the matter can really be discussed properly without a brief look at that clause. Subsection (4) empowers a local authority, to make arrangements for the provision of suitable full-time or part-time education otherwise than at school for those young persons who, by reason of illness, exclusion from school or otherwise, may not for any period receive suitable education unless such arrangements are made for them". Therefore, in that subsection, sick children are bundled in with children excluded from school for totally different reasons.

Subsection (7) of the same clause, goes on to define "suitable education"—

Noble Lords

Order!

Baroness Blatch

My Lords, with the leave of the House and if the noble Lord will forgive me, I must point out to him that there has been a positive decision to disaggregate the amendments. I was very happy to discuss them as a group, but they have been positively disaggregated for that purpose, and for the sake of time in the House, I should be grateful if we could stick to the amendment on the Marshalled List and deal with the other amendment when we reach the appropriate stage. I would have agreed to discuss it at this point, but the noble Lord, Lord Young, asked that it should be disaggregated.

Lord Kilmarnock

My Lords, I only strayed from the straight and narrow path in order to raise the question of "suitable education" which is referred to in the clause. I am not at all convinced that the rather menacingly-named "pupil referral units" set up by Schedule 17 will be able to provide suitable education both for excluded children and for those with needs which must be closely associated with their health status and the health service.

I have a further point to make which I hope the noble Baroness will agree is of some relevance. The problem is exacerbated by the surge of exclusions with violence being the main offence. The proposal in the Bill that sick children should be consigned along with violent and disruptive children to the same kind of management seems to me to be totally inappropriate. The number of permanent expulsions rose from 2,910 in the 1990–91 academic year to 3,833 in the 1991–92 academic year. If one builds in all the shorter suspensions—

Baroness Blatch

My Lords, I think that I am probably becoming rather tiresome but, with the leave of the House, the noble Lord is not discussing the amendment on the Marshalled List. That amendment has nothing to do with exclusions and nothing to do with policy on exclusions; it has to do with creating a new route into the grant-maintained sector by third-party sponsors.

Lord Kilmarnock

My Lords, with the leave of the House, and with the permission of the noble Baroness, I take a different view. It is quite clear that the whole of the series of amendments springs from the desire to separate the provision for sick children from that for those with whom they should not properly be associated and who have mainly been excluded on the grounds of violence, bullying, fighting, assault on their peers, disruptive conduct, unacceptable behaviour and so on. I have here a league table in that respect.

My only aim is to reinforce the need for something to be done. I am open to suggestion or to whatever the House decides on the question of which is the most suitable of the amendments tabled by the noble Lord, Lord Young. All I am saying is that there is here an additional ground for them. If we do not change the Bill, those sick children will be associated, under the same system of management, with the children to whom I referred. That is incontestable. In my mind, it is simply an additional ground for support of the noble Lord's amendment.

Baroness Carnegy of Lour

My Lords, I know that we are trying to move on, but it seems to me that the arguments so ably put forward by the noble Lord, Lord Young, and others, are really justifying something which does not actually need to be justified; namely, that local authorities have an obligation to retain the ability to arrange for education of children in hospitals. Parents, teachers and hospitals perceive there is a danger that local authorities will not fund these arrangements adequately. Therefore it is suggested in this amendment that new schools in the units we are discussing should be eligible to apply for grant-maintained status.

There is no question in your Lordships' minds that hospital based education is not terribly important for children, especially for children who are in hospital for a considerable period of time. The noble Lord, Lord Young, mentioned that point. It is also important for children who are in hospital for more than a very short time. Some local authorities are much better than others at making this provision. The question is whether the route to grant-maintained status is possible in these circumstances.

I have been contacted, as have many noble Lords, by hospital schools. They have put their case very well. However, I am not clear that a school in a single unit, or a collection of schools—I am not sure that that is what the amendment states but the noble Lord, Lord Young, referred to a collection of units coming together to apply for grant-maintained status—can make a viable case in financial terms for grant-maintained status. It is important that grant-maintained schools are viable economically. We have spent an hour discussing the financial implications of grant-maintained status.

One must try to picture a single unit or a collection of units where the children are coming and going. Many of them spend quite short periods in hospital while others spend longer periods of time there. The teachers will probably change fairly frequently. One must then picture an application for grant-maintained status. The Secretary of State will have to assess whether the unit concerned is eligible for grant-maintained status.

It is interesting that some noble Lords are now in favour of grant-maintained status for certain schools when so many noble Lords have tried to move amendments to prevent schools from becoming grant-maintained. It is nice that we are approaching this matter in a constructive manner. However, as regards the units we are discussing, I wonder whether in economic terms it is viable for them to become grant-maintained as such units may be on the small side and the pupils chop and change all the time. There are already some 40 hospital schools which are eligible for grant-maintained status. We are talking about new units for sick children which promoters are seeking to establish. Presumably new, large schools would be eligible for grant-maintained status, but I am not sure that that would be the case with the smaller units we are discussing.

Baroness David

My Lords, I have the greatest admiration for my noble friend Lord Young of Dartington. I am sure that a good many of us who have received briefing from him know a great deal more about hospital schools, hospital education and what sick children need than we did before. I am grateful for that. This area certainly needs attention and sick children need better treatment. Their education deserves proper support. I am not talking just about children in hospital but also those who are convalescing at home who would be taught by home tutors.

However, despite my noble friend's pleas to his colleagues on these Benches, I am afraid I cannot go along with this amendment. I prefer Amendment No. 271 which comes after Clause 274. I shall avoid the pitfalls of which the noble Baroness has warned us, as regards talking too much about another amendment. However, that clause would give responsibility in this area to local authorities. It states, Each local authority shall make arrangements". We have spoken of local authorities, some of which make good provision in this area and some of which make poor provision. Amendment No. 271 would place an obligation on a local authority to provide education for sick children. My noble friend has mentioned a figure of 44 hospital schools which can apply for grant-maintained status. However Amendment No. 162 is concerned with the situation where promoters propose to establish a school on hospital premises. I should have thought it would be difficult to apply for grant-maintained status in those circumstances, particularly if a great many hospitals were involved. I doubt whether that process would be possible.

I shall argue later for a local authority to maintain the overall strategic planning for children in its area with special educational needs. I believe sick children in hospital, and those who are convalescing outside, are children with special educational needs. I believe that a local authority should have the overall obligation to look after the needs of those children. I have every sympathy with the aim of this amendment but I cannot agree with this way of solving the problem.

Lord Hayhoe

My Lords, I wish to say a few brief words in support of the general thrust of this amendment. I am the newly appointed chairman of the Guy's and St. Thomas's NHS Trust and I have seen for myself something of the absolutely splendid work that is being done in terms of education, particularly in Guy's Hospital. I know that those concerned with it are worried about their future. The present arrangements are not working in an entirely satisfactory fashion and the suggestion of the noble Lord, Lord Young, that a route through to grant-maintained status should be made available for hospital education may be the route which will resolve these problems and give greater assurance for those involved in and receiving education in hospitals. Therefore I urge my noble friend the Minister to give sympathetic consideration to this matter. I am in no position to judge whether the administrative arrangements can properly be made, but I am absolutely convinced that something should be done to improve the present security and status of hospital education. I hope that my noble friend the Minister will be equally convinced of that and will be able to give the reassurances that are requested from all parts of the House.

Baroness Fisher of Rednal

My Lords, the first chairmanship that I held on Birmingham City Council was that of chairman of special schools. At that time there were hospital schools in what were known as the fever hospitals and there were hospital schools in the tuberculosis hospitals. There was the Woodlands Hospital, the Fourlands Hospital, the Children's Hospital and the Accident Hospital. As certain illnesses have been cured, a number of those hospitals have been closed. For example, the tuberculosis hospitals have been closed.

I am concerned that the amendment cannot possibly work unless health authorities co-operate. I am familiar with the Woodlands Hospital. I can reach it from my home in five minutes by car. Children used to attend the Fourlands Hospital. However, that has been closed for a considerable time now. The Woodlands Hospital is in a dodgy position and the people of Birmingham are fighting to keep it open. The regional hospital board, however, has other ideas as it could be a good site on which to build a Sainsbury's supermarket.

We must ensure that before we go any further we ascertain whether the hospital authorities themselves will support hospital schools. At the present time many of these schools are being forced into smaller rooms, perhaps because a ward has closed. Lessons are being conducted in accommodation that is perhaps not the most desirable for educational purposes. Regional hospital authorities must be clear as regards what they are going to do in a particular hospital.

Perhaps I may make a special plea for the very small group of children who are born without eyes. Nobody has had to deal with that serious complaint before. At present we have schools for the blind all over the country. It is important that hospital authorities should draw to the attention of the parents of children with that serious defect the excellent facilities which are provided in schools for the blind. Local authorities already send children to such schools, which at present serve blind children only. In the main they are residential, but there are facilities for children with that particular complaint to be educated in those schools. It is important that hospitals are aware of the facilities that can be provided for the parents of those children.

7 p.m.

Baroness Elliot of Harwood

My Lords, I support the noble Baroness, Lady Masham. I agree entirely with everything she said. For many years I was chairman of an education committee and I have also had experience with handicapped people. I am certain that all that has been said today on the subject is important. I urge the Government strongly to accept what has been said and to add this provision to the Bill.

Lord Parry

My Lords, I enthusiastically support the amendment. I do so because I believe that there are people in this country who receive all of their education in hospital schools. I cite the case of Jenny Thomas, a child who was very badly burned at two years of age and lost her hands and feet and a large part of her face. She has undergone in the burns unit at Chepstow 40 operations in the past 18 years. She has received her entire education in the hospital school. The burns unit is now moving to another location.

I had no idea that there was any division on this issue. I work on the principle that every Member of this House, regardless of the politics at issue, supports the idea that children in hospital should be educated and that it is vital to their rehabilitation. I do not understand any division that might have occurred on these Benches, but I support the amendment totally. I also support the later amendment.

Lord Swinfen

My Lords, I hope that my noble friend will be able to give a helpful reply to the amendment. The skills required for teaching sick children in hospital, and at home, are not the same as those required for teaching children who are completely fit and able to run around and make complete nuisances of themselves. The skills built up by such special teachers in hospitals should be maintained and used. As the noble Lord, Lord Parry, said, some unfortunate children receive the whole of their education in hospital. Others are educated there for a large part of their school lives. It is important that they do not lose the habit of learning because learning itself is a skill which, if not practised, can very easily be lost.

Lord Judd

My Lords, from this Front Bench I want to put on record our unqualified admiration for my noble friend Lord Young for having put forward his case with such fervour, knowledge and expertise. Many of us feel that it is disgraceful that the situation regarding education for many young patients in hospital is deteriorating. We feel strongly that something should be done about it rapidly. My noble friend will find, when we move to later amendments, which the Minister was right to say we should not debate now, that he receives a positive response from this Bench.

It would have been dishonourable for me to have sat here and said nothing, because I have so much admiration for what my noble friend is doing. However, I want to say to him that because we believe so deeply that education belongs to the community in which people are involved we feel that a time of crisis, when a child is sick, is the very time when the community should exercise its responsibility responsibly and not contract it out to some special arrangement. That would be a failure of the principle. Therefore, however paradoxical and hurtful it may be to my noble friend, while we do not support this particular amendment or the route he has chosen we applaud what he is doing and saying. We feel that the matter must be put right and we hope to be positive in relation to his other amendment.

Baroness Faithfull

My Lords, I must apologise for having been out of the Chamber for some of the discussion. Therefore, I hope that I shall be forgiven if I repeat what others have said. I have had to deal with children who have been in hospital for some time. Children who have been in hospital and who have not received education are very difficult to reintegrate into their families, schools and communities. I remember two children who refused to go to school because they said that when they returned they would be two classes below all their friends. If we want to reintegrate children back into their communities, families and schools, it is essential that they receive a good education while they are ill in hospital.

Baroness Blatch

My Lords, my noble friend concluded on a note with which I wish to begin. There is a great deal in the Bill which will enhance provision and make sure that the loopholes which have existed hitherto are closed. Many noble Lords have not spoken to the amendment. They have made cases for more money for special education, for more resources to be applied to sick children, for better co-ordination between local authorities and hospitals. However, the amendment is not concerned with those issues.

It is also true, and it is clear from the way in which many noble Lords have spoken, that they do not understand that local hospital schools are suitable candidates for grant-maintained status. If they wish to become grant-maintained they are entitled to apply and my right honourable friend the Secretary of State is obliged to consider those applications.

The House knows of the deep and understandable concern of noble Lords who have spoken for the welfare and education of sick children in hospital. I share those concerns. They are fully appreciated by the Government; hence the provisions in the Bill. As I informed your Lordships when hospital education was debated in Committee, the Government are committed to securing better co-ordinated and more coherent educational provision for sick children. That must remain our objective. However, the amendment will do nothing to achieve that end.

A route to self-governing status will exist for those schools which are established as special schools in hospitals. Indeed, the Guy's school, which was mentioned, is an eligible candidate. Clause 178 in Part III of the Bill makes careful provision for all maintained special schools to become grant-maintained special schools. Hospital special schools will not be excluded. However, we do not believe that promoters of hospital schools, or indeed any special school, should be allowed to apply directly for grant-maintained status given the present useful diversity of the system—LEA, non-maintained, independent and, in future, grant-maintained special schools.

We considered these questions in Committee, but at a very late hour, and your Lordships will forgive me if I go over the core argument as briefly as possible. The position of the noble Lord, Lord Young, is that the focus of a sick child's education should be the hospital school or teaching service and that those forms of provision should have the opportunity to be grant maintained. That, the Government believe, would—perhaps paradoxically—prove inflexible. Indeed, the point was made very well by the noble Baroness, Lady David, but I suspect from a rather different standpoint to mine.

The responsibility for making effective arrangements for the education of sick children must rest with the local education authority. It will have a new general duty to secure the education of children otherwise than at school, and the arrangements which LEAs make must be tailored to the possible circumstances of each hospital and pupil. It will not always be appropriate to establish schools in hospitals. Efficient and appropriate education can be delivered in a number of ways, according to local circumstances. We shall be issuing guidance, framed after wide consultation, as soon as practicable.

Moreover, the amendment would not work in the way the noble Lord suggested. It would not create grant-maintained hospital special schools but would create a new procedure for establishing non-maintained hospital schools. Moreover, this would only occur if a Section 10 order applied to the area and if there were teachers providing home tuition on the staff of the school.

I believe that the Bill makes good provision. However, the noble Lord, Lord Young, said that he was disappointed that there was no mention of hospital schools in the Bill. What I believe is the great strength of the Bill is that it addresses the needs of all children, wherever they are and whatever their needs may be. Provision is made within the Bill to see that there is no lacuna: that children are, indeed, provided for.

Therefore, whatever the motive underlying the amendment, I cannot believe that it is to enhance the grant-maintained sector. Most of the people who have spoken are not supporters of the grant-maintained sector. Opening up a new route to grant-maintained status does not bring more money to the system. Therefore, it is an irony that the many who oppose, and vigorously so, the establishment of grant-maintained schools (I make an exception of the noble Baroness, Lady David) are not prepared to leave the local education authority and hospitals to administer in a flexible way—which is all important for children who may be in hospital, in or out of hospital, at home, partly at school, or partly at hospital and partly at home—the less formally structured provision. Indeed, much of the discussion on the Bill has been anti-grant-maintained status. Noble Lords have appealed to the House on so many occasions for greater trust in LEAs. I have no difficulty in placing my trust in that way.

The noble Lord, Lord Young of Dartington, stated that he was disappointed that we were lumping together sick children with truanting children or children with other behavioural problems. I believe that we shall discuss that issue with another amendment. It is not that I do not wish to discuss the other amendment. I had intended to discuss the group of amendments together because, as the noble Lord, Lord Kilmarnock, said, that made sense. It was not my choice to disaggregate but, having agreed to do so, I believe that we should shelve that debate.

We do not allow special units in mainstream campuses to become grant-maintained schools as entities. Therefore, it is very much a level playing field between the maintained and special school sectors.

The noble Baroness, Lady Masham, uncharacteristically referred to all the cuts in health and education. That overstates the case. Of course, if there were more money we all know how to spend it, and the priorities are clear; they have been made clear during the course of the debate. But it is almost inconceivable that one can consider the hike up in spending on health year on year and refer to cuts in health. Therefore, it is a matter of priorities both within the health service and for education within local education authorities.

Baroness Masham of Ilton

My Lords, with the leave of the House, perhaps I may correct the Minister. I referred to the paediatric services.

Baroness Blatch

My Lords, yes, but there have not been cuts in health provision. There may have been changes in priorities within the health service. That is the point that I made.

I was asked why we cannot give the hospital schools the advantage of grant-maintained status. I have made clear that we have given the advantage of grant-maintained status to hospital-maintained schools. I was also asked what priority I put on the education of those vulnerable children. It is the very highest priority. We want a system that is sufficiently flexible to meet the needs of all children wherever they are. It is this Government who, in the Bill, for the first time have placed a statutory obligation on local education authorities to provide education other than in schools.

I make no apology. The only possible connection between truanting children and children in hospital is that obligation to provide for children other than in school. Once the children are in hospital, or wherever, the local education authority must provide.

The noble Baroness, Lady Fisher, again referred to schools for the blind. However, those are not the schools about which we speak. They provide a very valuable service and local authorities use them.

My noble friend Lord Swinfen referred to the importance of teachers of sick children, both in hospital and at home. My noble friend makes my point. We wish to be certain that the system is sufficiently flexible to provide for children both in hospital and at home. I believe that the Bill goes a long way to meet the needs of all children, and in particular sick children. I hope therefore that the amendment will not be pressed.

7.15 p.m.

Lord Young of Dartington

My Lords, I thank all those who have taken part in the debate, most especially those who have spoken warmly, if not about the amendment in particular, about the cause that is espoused by it.

Before the debate I made a note to "express disappointment". I was expressing a belief in some kind of contrary magic: that that would not be a relevant note when the time came. However, I fear that it is and that I must express some disappointment about the reaction of the noble Baroness, Lady Blatch. In view of the time I do not believe that I should reply in detail to what has been said. I hope that those who have made good points which should have been answered will forgive me.

I wish to make only one comment. I refer to what the Minister said. She stated that people do not appear to understand that hospital schools, which are special schools, can apply under the Bill for grant-maintained status. Unless my memory is as bad as it sometimes is, I believe that I said the same in opening the debate on the amendment. That is, of course, true. Our case is that, among the 160 educational units, the suitable units should also be able to go along the same route. Some educational units are as large and have as long a tradition as some of the hospital schools. It is an arbitrary distinction and definition, between one and the other. Since hospital schools that are special schools are being allowed grant-maintained status, why should not hospital schools which are not special schools—they are only sometimes called schools—go along that same road?

In view of what has been said by my noble friend on the Front Bench and by other noble Lords it does not seem wise to press the amendment. We shall reserve our fire—if "fire" is the right word for such a gentle subject as education for sick children. We shall return to the subject with hopes renewed. I shall not even write, "express disappointment" at the head of my next preparatory note. I shall hope for the best. I hope that noble Lords who have spoken warmly in support of the amendment today will be able to be present —although I fear that it will be late at night—in support of the other amendment to which reference has been made. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Viscount Astor

My Lords, I beg to move that further consideration on Report be now adjourned. In moving the Motion, perhaps I may suggest that Report stage begin again at twenty minutes past eight o'clock.

Moved accordingly, and, on Question, Motion agreed to.