Nursery Education and Grant-Maintained Schools Bill

HL Deb 20 May 1996 vol 572 cc666-724

3.41 p.m.

The Minister of State, Department for Education and Employment (Lord Henley)

My Lords, I beg to move that this Bill be now read a second time. Before starting, I do not know whether on a Bill of this kind one should declare an interest as a parent. If that is the case, I should declare the interest of inter alia a two-and-a-half year-old who will be a beneficiary of this legislation in January 1998 and, following the example of my noble friend the Chief Whip, another in a few weeks' time.

The Bill introduces two important new policies in the field of education. It provides the basis for a significant expansion of nursery education through the creation of a nursery voucher scheme and it will allow grant-maintained schools to borrow commercially.

The Bill concerns education in England and Wales only. We have had the advantage this afternoon of seeing the conclusion in this House of the parallel proposals for nursery education in Scotland. That Bill now goes on to another place.

Good quality nursery education is important for children's future development. That view is not, I believe, a matter of party-political controversy. There is general agreement that there should be a significant expansion in nursery provision. My right honourable friend the Prime Minister made a commitment that new nursery places would be made available during the lifetime of this Parliament. We have also committed ourselves to providing, over time, a nursery place for every four year-old whose parent wants one. In England and Wales, we are providing in excess of £390 million of new money over three years.

The foundation for this is the Bill now before the House. The central proposal is in Clause 1, which empowers the Secretary of State to make grants for nursery education. The remainder of the clauses and schedules dealing with nursery education lay out the necessary framework and the legal underpinning for the grant.

Some noble Lords will doubtless have noticed that the word "voucher" does not appear on the face of the Bill. There is no need for it to do so, as it will be a mere device used for calculating the level of grant to be paid to nursery providers. There will be a document, a piece of paper, which for convenience we will call a voucher. This voucher has no face value, is not transferable and is not what I understand lawyers might call a means of exchange. Although the voucher is an important part of our proposals, it is strictly an administrative tool and not in any sense a kind of currency.

In putting forward the Bill in its current form, the Government were mindful of the need to ensure that the exercise by Ministers of functions conferred on them by Parliament is subject to proper scrutiny. We were also conscious of the need to avoid cluttering up primary legislation with unnecessary or contingent administrative detail.

The principal purposes of the grant are therefore stated on the face of the Bill. Some of the main features of the grant will be set out in regulations; and the administrative details will be left to arrangements.

With those considerations in mind, we take the view that the regulations should cover the three most fundamental aspects of the arrangements of the nursery voucher scheme. These are: first, the children in respect of whose education grant may be paid; secondly, the descriptions of providers of nursery education to whom grant may be paid; and, thirdly, in the light of the views of the Delegated Powers Scrutiny Committee, whose report we have before us today, the method of calculating the grant that is to be paid. This last aspect will be the subject of an amendment which I shall introduce in due course at a later stage of the Bill.

The remaining administrative arrangements cover the mechanics for issuing and for redeeming vouchers. These are details that may need to be changed at short notice and should not be spelt out in legislation.

Our approach has been commended by the Delegated Powers Scrutiny Committee, to whose report I referred. I quote from its report which says that, if the House agrees to the amendments that the Government propose to bring forward, the delegated powers in the bill will be subject to appropriate parliamentary control; and that there is nothing further in the bill on which we invite the House to act". I turn now to the detail of the voucher scheme. The mechanism of vouchers puts parents in the driving seat. But parents will want to be reassured about the quality of the provision that is available. Our proposals will bear on the quality of the education provided in nursery institutions in three main ways. First, there will be a common inspection framework for all institutions which redeem vouchers. The Office for Standards in Education—Ofsted—and its Welsh equivalent, the noble Lord, Lord Morris, will be pleased to hear, will be responsible for drawing it up, for recruiting and training inspectors and for monitoring them. A number of detailed provisions relating to inspection are set out in Schedule 1 to the Bill.

Secondly, all providers will be required to work towards the desirable learning outcomes formulated by the School Curriculum and Assessment Authority and the Curriculum and Assessment Authority for Wales. The inspection arrangements will ensure that they are doing so.

Thirdly, all the institutions which redeem vouchers will be required to publish details of the education they provide and staffing and admission arrangements. Together with the evidence from inspections, this information will allow parents to make informed decisions about the institution their child will attend.

The voucher funding mechanism is new. But we are not proposing to introduce it untested. The first stage, as many noble Lords will know, is already under way in four volunteer local education authority areas—Wandsworth, Kensington and Chelsea, Westminster and Norfolk. Over 14,000 parents of four year-olds have already received vouchers, and are using them. Early indications are that the scheme is running smoothly, and new places have been created.

Let me now turn to the second part of the Bill. Commercial borrowing will be of great benefit to grant-maintained schools. They are ambitious institutions and many have plans for building work; sports halls, arts centres and a host of other improvements to their facilities. Borrowing will diversify the sources of finance on which grant-maintained governors can call.

We know that many grant-maintained schools are keen to borrow and that lenders will want to lend. But not all schools will be able to offer collateral for loans. But as grant-maintained schools are stable and successful institutions with a reliable income, we believe they will have no difficulty in negotiating suitable loans and terms for those loans.

However, in proposing that grant-maintained schools should have the power to borrow and to charge their premises, we are conscious of the need to safeguard publicly funded assets. That is why the Bill provides for borrowing to be subject to the written consent of the Secretary of State. My right honourable friend proposes to make an order delegating the function of giving consent to the Funding Agency for Schools in England. Because the funding agency already calculates and pays grants to grant-maintained schools, it is well placed to apply safeguards to ensure that borrowing by grant-maintained schools is both prudent and does not put vital assets at risk.

Although the party Opposite opposed these proposals in committee in another place, I was interested to see that—having listened, I suspect, to the arguments of my honourable friends in another place—they are now so impressed that they will allow all schools to borrow. I shall be very interested to hear the views of the noble Lord, Lord Morris, who speaks for the party Opposite, and how he will develop that idea. I look forward to his words in due course.

This Bill recognises the priority the Government intend to give to improved nursery education for all. It provides the basis for an expansion of provision to meet our commitment that all four year-olds, should their parents so wish, benefit from three full terms of nursery education before compulsory school age.

The decisions about exactly where that expansion will happen will be taken, through the voucher mechanism, by those with the most vital and immediate interest in successful nursery education, and that is their parents. Along with the proposals for additional freedom for grant-maintained schools, the nursery scheme builds on themes which have underpinned all the Government's education reforms—choice, diversity and quality. I commend the Bill to the House.

Moved, That the Bill be now read a second time.—(Lord Henley.)

3.52 p.m.

Lord Morris of Castle Morris

My Lords, Charles Lutwidge Dodgson, otherwise known as Lewis Carroll, invented the verb "to chortle", meaning, "to chuckle and snort", and as well as turning in his grave he would doubtless have "chortled in his joy" at the Alice in Wonderland fantasia of the Government's legislative proposals in the field of education this Session.

First, the Prime Minister's bright idea to "extend parental choice" by letting Church schools take a fast track to grant-maintained status without consulting the parents or the Churches, fell on stony ground and, because it had no root, it withered away.

The Education (Student Loans) Bill was the second ignis fatuus of the year and the announcement on the 13th May by Barclays and the NUS shows that despite the Government's best efforts in resisting our proposed amendments, they were unable to prevent the private sector and consumers from agreeing pretty well all the amendments which the Government had either pooh-poohed as irrelevant or rejected as insoluble.

Would that this nursery vouchers scheme were as capable of being redesigned by those people who have a real working grasp of the issues involved. The Labour Party repeatedly offered to sit down with the Government and the putative providers to work out a genuinely effective system, which would provide places for three year-olds as well as four year-olds. Everyone supports the expansion of high quality nursery education, but we believe it would be best delivered by steady development from the existing base, with additional funding going to direct expansion of nursery places. This Bill presents an absurd, wasteful and irrelevant paper-chase with the wretched voucher going through nine or, some say, 10, stages in its progress from the Child Benefit Agency through to the school.

We need look only so far as Europe to see it being done infinitely better. In Belgium attendance at pre-school institutions is optional; free of charge for children from two-and-a-half years of age to six. Ninety-five per cent. of three year-olds and 97 per cent. of four year-olds and 100 per cent. of five year-olds attend. They need no vouchers.

In Denmark, 90 per cent. of five to six year-olds attend pre-school classes and parents do not pay fees in municipal schools. In Spain, pre-school education is available for children up to the age of five and in public institutions it is free. France, of course, is famous for its pre-school provision, and the percentage of French children in the age range from two to six attending pre-school institutions is higher than in any other European country except Belgium. And in public institutions, which represent 85 per cent. of the provision, it is free. Britain has nothing to match the Ecole Maternelles, and yet we ignore the French success. All this, and not a voucher in sight!

From the moment this Bill was published it has been received not with a welcome but with hostility from all sides. The AMA document clearly prefers steady expansion to any form of voucher system. It points out that the proposed funding arrangements will penalise LEAs with high levels of provision; that vouchers are simply an automatic subsidy for parents who now pay for private nursery provision, and that, The scheme makes a mockery of Parliamentary consideration, since no clear results will be available from the pilots". Hardly surprising, since only four local authorities out of more than 100 could be persuaded into Phase I, and three of these are in Inner London and quite unrepresentative of the nation.

The Association of Teachers and Lecturers complained about quality assurance, administrative costs and complexity, inadequate levels of training, and stated that much of the expenditure will be "deadweight funding"—that is, public money will simply replace payments now made by parents to private nursery schools.

Even our old friends the Conservative Education Association stated that it did not feel that a voucher scheme was the most efficient way of expanding pre-school provision, and expressed serious doubts about the non-playgroup private sector being prepared to invest in capital spending to accommodate additional demand for just one year group. And so it goes on.

The Early Childhood Education Forum pointed out that voucher systems have not been found to work elsewhere. They said: There is no evidence that they achieve greater economy, efficiency or quality. Vouchers can only be effective if there is a surplus of provision over demand (which there is not); if they cover the cost of a place; if there is sufficient money for start-up costs, training, etc.; and if there is additional weighting for children with special needs". The Special Education Consortium was totally opposed to the voucher scheme, because it will not lead to the development of good quality provision for children with special educational needs and could threaten existing provision. I challenge the Minister, when he winds up, to produce evidence to rebut those deadly specific assertions.

Not one of the organisations most closely concerned with pre-school education has spoken out in support of the Bill. Even in Norfolk, where the system is being piloted, the leader of the Labour Group has said on TV We'd prefer this legislation to fail and to see it replaced by proper expansion of nursery education. Parents, teachers, headteachers, school governors, parent teacher associations, and teachers' groups are equally hostile. I have never had a postbag even remotely like the one I have had about this Bill. Hundreds of letters have landed on my desk urging that this Bill should be rejected because of the damage it will do.

A deputy headteacher from Calderdale writes: The Bill will reduce quality … staff will not need to be qualified, there will be no need for a minimum amount of space per child, there will be no need for outside play areas, in fact anyone could set up a nursery. The PTA of East Prescot Road Nursery School, Liverpool, asks us to put down an amendment allowing Liverpool and similar authorities to opt out of the scheme. We shall do our best to oblige. The Hampshire Federation of PTAs points out that the voucher will not pay fully for a nursery place, which it estimates as costing at least £2,500 per year.

As might be expected, many schools, parents and governors in Wales drew my attention, and that of my noble friend Lord Williams of Mostyn and others, to the March 1996 report of the Select Committee on Welsh Affairs, which felt that this Bill was a solution only for those areas with no commitment to pre-five year-old education. The Reverend Alan Suter, chairman of governors at St. Peter's School, Rossett, in Clwyd writes, if the voucher scheme is implemented, we anticipate chaos among school governors and staff". In Norfolk, American families resident there were bemused by the whole system, and deeply concerned about having to forward original passports or birth certificates to confirm their eligibility. So let us hear no nonsense from the Government about "teething troubles". There are far too many of them, and they bite far too deep. One correspondent in Norfolk writes: Norfolk [is] ill-prepared for this, but is clearly only adopting the scheme under considerable pressure from central government, and I have not met a single fully qualified provider in first schools or nurseries, whether LEA or private, who is in favour of the scheme. It seems to me that this is another poll-tax situation, and when it hits the whole country in 1997, the marches will start". Those are the words not of a Labour politician but of a principal of a private nursery school, and they may very well be prophetic.

I cannot put it better than Jade Mellor, from Brentford aged seven-and-a-half years who wrote: Dear Lord Morris we don't want Nursery School vouchers. We want our school to be free from vouchers. Can you stop this? I wish I could, Jade, I wish I could.

Nationwide there is nothing but opposition to this Bill. Let there be no doubt, it is going to be deeply disruptive and divisive. And let it be constantly remembered that existing pre-school provision is mostly satisfactory and frequently excellent: 93 per cent. of all four year-olds in England are receiving some kind of pre-school education. Something like 78 per cent. are in infant classes; 10 per cent. are in maintained nursery schools, and 4 per cent. in independent schools. Yet all this has to be turned upside down, £20 million is to be spent on unnecessary bureaucracy, with no guarantee and small likelihood that at the end of it all the education available will be one whit the better.

When the Labour Party is elected to government, we shall honour any existing vouchers, but we shall issue no more of them. We shall develop what we inherit.

For the regrettable but unavoidable present we must deal with this imperfect Bill as best we can. The Bill requires major improvements in at least four specific respects. First, no payment should be made to any establishment which has not received proper approval by an inspector before the first voucher-bearing parents entrust their children to its care. New nurseries, with potentially unqualified staff, could operate for a year without ever being inspected—and could continue to operate for a further year after a poor inspection report before validation would be withdrawn. What damage could be achieved by cowboy operators in two years!

Secondly, adequate funding must be made available for children with special needs being educated outside maintained schools. That is essential. We shall want a great deal of reassurance that the Government are prepared to deal with that and to put it, if necessary, on the face of the Bill.

Thirdly, if the Government are serious about parental choice, they must allow the right to opt-out in cases where parents, teachers and the local education authority demonstrate their desire to be spared from an unnecessary bureaucratic nightmare.

Fourthly, Parliament must be allowed proper scrutiny. Ideally, this should be by means of affirmative instruments. However, any sort of regulation would be an improvement upon the "arrangements" through which the Secretary of State would administer the bulk of the main provisions of the scheme.

The Bill also makes provision for grant-maintained schools to borrow. This is a minor aspect of the Bill, but its poor drafting leaves some dangerous holes. As usual, Ministers in another place waved those concerns aside with airy assurances that everything will be all right and Parliament needn't worry its pretty little head about things like that.

We shall seek to remedy those deficiencies by requiring schools to be able to repay both principal and interest without recourse to additional grant from the Funding Agency for Schools, and by ensuring that borrowing may not be secured against schools' core fixed assets. Assurance from Ministers that core assets will be safeguarded through guidance in the form of a remit letter to the Funding Agency for Schools is, unfortunately, simply not enough.

This legislation would be inequitable in denying the rightful return of assets or the proceeds of their sale to an LEA which originally provided them. Ministers must not pretend that grant-maintained schools are the "goodies" and that education authorities are the rapacious "baddies". Assets provided by an LEA have been provided by all of the parents—and others—resident in the authority's area. If the Minister remains obdurate on this point, I shall seriously consider fencing off a portion of his garden, selling it and pocketing the proceeds. I would expect him to meet my actions with a benevolent smile.

The space in the parliamentary timetable which is being wasted by this Bill should instead have been used to put in place a clear commitment to expanding nursery education for every three or four year-old in England and Wales. Instead, we have this pathetic, bureaucratic nightmare which no one wants, based on a worthless Monopoly banknote.

I speak strongly, because I feel deeply. This Bill will do nothing to improve our children's education, and may well weaken it; and we here bear a heavy responsibility as Peers of the realm whose duty and privilege it is to legislate for those children—and above all, as parents or grandparents ourselves, because I read in the Sermon on the Mount: what man is there of you, whom if his son ask bread, will he give him a stone?

4.7 p.m.

Lord Tope

My Lords, like the Minister earlier, I am not sure whether my interest is declarable, but I wish to declare it anyway. I am today celebrating 10 years as leader of the London Borough of Sutton, which is an LEA and therefore has considerable interest in the proposals.

I have a further interest in that role because one of our priorities when we came into office 10 years ago was to expand nursery provision in our borough. Back in 1986 we had seven nursery classes in our primary schools. Some years later, as a result of the first phase of our programme, we now have a nursery class in every infant or primary school and every four year-old in our borough may have a nursery place if the parents want it. The sadness for us is that that was intended to be only phase 1; phase 2 was to go further and better extend the provision for three year-olds. Sadly, circumstances beyond our control have made phase 2 a little more distant than we would wish.

I must also declare another interest. My wife is an infant school teacher—for many years, although not currently, in a reception class—so I hear about these matters at home as well as in the council offices.

It is also 18 months to the day, I think, since I made my maiden speech in your Lordships' House. I chose specifically to speak about nursery education and early-years education on that occasion. I did so not only because it is an important priority for me personally, but because it is an important priority for my party. It is well known that my party has a commitment, funded through taxation if necessary, to increase resources for education. The top priority within that additional commitment is the funding of early-years education properly linked to provision for care. At the time of my maiden speech I welcomed the Prime Minister's then recent commitment at his party conference to the provision of pre-school education for all four year-olds whose parents wanted it. I was a little cynical about what that might mean. Indeed, I could not forbear to mention that his predecessor had made the same commitment 22 years earlier.

I readily accept that all noble Lords taking part in the debate today recognise the importance of good quality early-years learning. It is something that all of us want to achieve, and it is a common aim. I suspect that, sometimes against our better judgment, we would probably all accept as an ideal and aim the following quotation from the briefing of the National Union of Teachers: Nursery education should mean high quality teaching from properly trained and qualified teachers, in high standard premises with first-class facilities and equipment. Ideally it should be universally available, free of charge, to all 3 to 4 year olds". I should like to add to that the need to link it to proper care provision. I suspect that that is an ideal shared by all noble Lords.

Therefore, the test of the Bill before us is how well, if at all, it moves us towards that aim. I believe that it fails on a number of grounds: first, it is immensely bureaucratic; secondly, it will do little or nothing to extend provision, and may very well damage existing provision; thirdly, it provides no funding for training; fourthly, it provides no funding for capital costs, equipment, premises and so on; and, fifthly, above all, it is very bad value for money. This view is shared by all organisations involved, be they political, voluntary and so on. It is a view that is also shared by a large number of members of the public. The noble Lord, Lord Morris, referred to a number of letters that he had received. I have a number of letters in my file, and other noble Lords will have a considerable number. It is unusual for your Lordships' House to receive quite so many letters from parents, teachers, heads and organisations who are concerned about the Bill. Some of the letters in the folder before me come from local authority areas which fall within the pilot scheme of phase one; that is, people who now speak from experience of the implementation of the scheme.

If reports are correct—I believe they are—even the Secretary of State herself had considerable reservations as to whether a voucher scheme was the best way to deliver increasingly good quality nursery provision. It appears that it is only the policy unit at No. 10 that still sticks to this ideological view. The noble Lord, Lord Morris, has already quoted the Conservative Education Association. I intended to do the same. That body expressed qualified acceptance of the scheme on the basis that, since the Government were determined to have it, then it had to be made to work. Like the noble Lord, Lord Morris, I remember others who said the same about the poll tax. That was a typical example of how the Government refused to listen to professionals, as well as people in the local authorities who knew about these matters, and insisted on going ahead with what turned out to be an exceptionally expensive disaster. The parallels are so exact that I despair that we are heading down exactly the same road today, although I hope that it will have less expensive and disastrous consequences, particularly for the children involved.

I said that the proposals were unbelievably bureaucratic. I wonder whether your Lordships know exactly the process through which parents in the four pilot areas have to go. First, the Child Benefit Agency sends an application form to the parent, who completes it, assuming it has not been thrown into the bin along with all the other junk mail because the parent already believes that there is adequate provision. The parent then sends it to Capita, which is the commercial organisation that administers the scheme. Capita sends a voucher back to the parent. The parent gives that voucher to the school. The school gives it to the LEA, and the LEA sends it back to Capita. Capita confirms receipt to the DfEE. The DfEE then sends the money to the LEA, which it earlier removed from the LEA's budget, and the LEA passes the money back to the nursery provider. That process comes from a Government that tell us that they are committed to getting rid of red tape. It is small wonder that parents are baffled and do not understand the need for this complex and bureaucratic voucher system to provide for their four year-olds what so many of them already have by way of excellent provision, often in LEA schools. Why do they need this cumbersome procedure to retain what they already have?

In other parts of the country, when parents receive vouchers they will discover that there is nowhere to redeem them. The difficulty is that they will not find that out until after the general election. They will receive the voucher perhaps a few weeks before the general election but a few weeks after it they will find that it is worthless because there is simply no provision. Clearly, the one group who will benefit from this are those who already have private provision. I do not criticise them for it; I believe that it shows a commendable priority on their part. But I question whether that should be a priority for the proper use of scarce public money. Why do we place an extra burden on the Exchequer for no extra benefit?

Other concerns have been mentioned, principal among them being quality and the maintenance of standards. All four LEAs in the pilot scheme—by definition, those which must be most keen on it—have expressed the view that the quality outcomes stated by SCAA set lower standards than those already set by them. That is the view of those who pilot the scheme, not those who are opposed to it. There is no requirement on private providers to employ qualified teachers or provide adequate training, yet high levels of skill are needed here. If we are to maintain, let alone improve, quality no single factor is more important than high level training. I recognise that many voluntary and private providers provide an excellent standard of service. It is clear that they are among those who are most concerned about the effect of this Bill. Private and voluntary providers will not receive rigorous Ofsted-style inspections. As the noble Lord, Lord Moms, has said, they will receive no inspections at all before registration. They will be phased over a period of time and they will be allowed a further period of time to come up to standard.

I understand that the Government intend to train 4,000 new nursery inspectors to augment the present number of qualified nursery inspectors, which I believe to be 27. That is very desirable, but is it achievable? How long will it take to achieve, and what will happen while it is being achieved? There will also be light-touch inspections, which I understand to mean one-day visits, not the usual three or four-day inspections. However well trained the inspectors may eventually be, I question how they can measure quality and standards on the basis of a one-day inspection.

I have already mentioned training for providers. That is extremely important. The value of the voucher will not cover the cost of training; nor will it cover the capital costs. If we are to see an expansion in provision the capital costs must come first: the cost of premises, the cost of equipment and so on.

The other major area of concern is special educational needs. I do not have time to do justice to that subject as I would wish. It is said that the voucher scheme is for all four year-olds. It is self-evident that the costs of providing good quality early-years learning for those with special needs must be greater, yet this is not recognised in the voucher scheme. The Government have made clear that no additional resources will be provided through the voucher scheme for those with special needs. If they are thinking about that again we welcome it, but we will need a good deal more reassurance than we have had so far.

LEA-maintained providers will have to comply with the code of practice, quite rightly, yet as I understand it private and voluntary providers will not. There seems to be no logic in that. It is not a level playing field and, above all, it is a matter of great concern to those whose children have special needs and are on such premises. A similar point can be made about funding that currently comes through Section 11 for those with English as a second language.

I said at the beginning that I believed early-years learning needed to be linked to care. That is a subject to which we will return. We believe that it should be linked to existing Children Act legislation. That is important, and I know that there is a proposal to that effect from the Children's Charities Consortium, which I wholly support.

My next and last point on nursery vouchers relates to evaluation. We have four pilot projects, although I gather they are now to be called "phase one" rather than pilots. There is no purpose in having pilot projects—that is what they are—unless we are to learn from the experience. It is vital, especially if we are in due course to pass a Bill which gives the Secretary of State such wide powers of arrangement, that Parliament should first have an opportunity to see a proper evaluation of the current pilot projects. I accept that it will take some years to have an in-depth, long-term evaluation, but we can have a short-term evaluation of the scheme as it is being implemented in those pilot areas. It is fundamental that that should be before Parliament before we allow the Secretary of State to go ahead and to impose on the rest of the country the mistakes from the pilot schemes and these proposals.

It may well be that we are all wrong: the scheme may work perfectly or be made to work perfectly. We may be wrong; the Minister may be right. That is all the more reason for that to be demonstrated through a proper evaluation of the pilot scheme.

I wish to turn briefly to the other aspect of the Bill: that concerning grant-maintained schools. There is a real danger that with all the attention on nursery vouchers that aspect of the Bill will be overlooked. To some extent it has been overlooked. Although it is an important part of the Bill, it is a less important part.

In some respects it is a difficult issue for Liberal Democrats, because alone of the parties in this Parliament we would return grant-maintained schools to LEAs. All I wish to say at this stage is that it is easy to borrow money; it is much harder to repay money. Not enough attention is being paid in the Bill, or what we have heard about the arrangements, to the ability of schools to repay debts with which they burden themselves. Nor is it clear how surplus or core assets are to be defined. We shall need to return to that point in much more detail at a later stage. Suffice to say at this stage that, if enacted, this part of the Bill will make the present uneven playing field even more uneven than it is at present.

We have already referred to the widespread concern and even opposition that there is to these proposals. What has happened in the pilot areas has done nothing to persuade us to the contrary. The biggest offence of the Bill is that it is an enormous wasted opportunity to provide good quality nursery and early-years education for three and four year-olds—an objective we all share. The Bill fails comprehensively in that.

4.23 p.m.

The Lord Bishop of Ripon

My Lords, the importance of early years learning cannot be overestimated. However, it is sometimes not recognised that the crucial first educators are of course the parents. In continuing education they are crucial. I hope that nothing we say about the significance and importance of nursery education will detract from the key part that parents have to play. The Bill seems to put parents into the category of consumers—quite properly allowing them choice about where to go for their children's early education—but we need to see them also as educators themselves: parents and learning institutions working hand in hand with one another. That does not take away the enormous importance of nursery education. It is right that all children aged four and over, and younger children, should receive it. It is also clear that the present provision is variable and that present expansion is right.

The question is whether this is the right way. Noble Lords have already expressed hostility. I am aware of the many hostilities and hesitations that there are around. I, too, have received the huge amount of correspondence to which other noble Lords have referred. However, I felt it right in this debate not to depend on those letters. I thought that your Lordships might value something from a Church perspective, given that Church schools form such a substantial proportion of the state system.

I felt it right therefore to consult two dioceses which lie in areas where the pilot projects are occurring. One is the diocese of Norwich, in Norfolk, and one the diocese of Southwark in south London—one rural and one urban. Not surprisingly, some of their concerns overlap and some are markedly different.

It may be worth sharing with noble Lords something of the present strength of nursery provision in the rural areas of Norfolk, once again making the point that nearly 60 per cent. of the schools with fewer than 60 pupils in Norfolk are Church schools. I shall give some examples of the good practice that is already taking place. There is one high school cluster which has a nursery school with several locations, each village feeder school having provision which differs from school to school but which ranges from mother and toddler groups to full playgroups and nursery classes. In another school, a nursery trained early years teacher supervises a member of staff with a nursery nurse qualification who works full-time with a nursery class on the premises.

Many aided Church schools would like to do that, but they cannot persuade the DfEE to provide the necessary grant. I shall return to that matter in a moment. One school in Norfolk provides all-day child care for all children. It operates by means of a breakfast and an after-school club. During the school day a playgroup and a nursery operate in the same room. Many rural schools provide educational expertise and secretarial help to playgroups operating in their catchment area. They ensure that the voluntary carers can provide adequate activities and the natural links into the future school.

The chief lesson which the diocese of Norwich draws from that experience is that it is of paramount importance that any village with a school must be able to provide for its children locally. There may be different models by which that can be done, but it must be local provision. The difficulties which are already arising from the pilot scheme are that it is bureaucratic. I do not need to underline the point which has already been powerfully made. I could perhaps add one particular point, that in rural schools where there may be two teachers, the burden placed on the staff, in addition to their teaching responsibilities, is a considerable one. This diocese cannot understand why the money is not paid directly to schools or to the Funding Agency for Schools. The numbers in school are well known. Surely it would be a simple operation to short-circuit the paperchase and to provide the funds direct.

The diocese points out that in rural areas choice is difficult because the travel problems are serious, particularly when a carer is left at home because the one car has already been used. So the provision has to be local. The diocese also makes the point that those LEAs which are already high providers are most at risk, not least because of the difficulty in persuading parents to take up their voucher.

I turn now to the Southwark anxieties. Again, it begins with the same point—that the scheme creates a complicated bureaucracy for parents and schools. It makes the additional point which one would expect from this urban, cosmopolitan area—there are considerable difficulties for bilingual parents, parents with literacy or learning difficulties, and for those who are refugees. There may be a variety of parents who have difficulty in applying for a voucher. Clearly, that is more likely to occur in inner city and disadvantaged areas. It is precisely in those areas that the need for pre-statutory age provision is the greatest.

They make the point that the planned withdrawal of requirements for standards of school premises, in terms of minimum teaching areas, may create a reduction in the quality of educational provision. They also make the point that schools will have no knowledge of exactly how many vouchers will come their way until the beginning of the year. They will not know their budgets in advance, and therefore there is bound to be an element of instability and uncertainty about funding.

Those are initial reflections, but they are specific and arise out of experience of the pilot projects. They underline the strong case for delaying implementation of the scheme until the pilots have been evaluated. I hope that we shall be able to return to that matter.

I wish to make two specific points in relation to Church schools. I drew attention to one of the points earlier, but perhaps I may enlarge upon it. It was the provision for capital grants for Church schools which wished to develop nursery facilities. At present those grants are available under Section 281 of the Education Act 1993. All government grants for aided school building works are paid under that section. They must provide not only for new nursery buildings but for all kinds of minor works, repairs, basic need provision, and so forth, for statutory school-aged pupils. Frequently LEAs are willing to support a nursery unit at an aided school but the school cannot obtain the necessary grant from the DfEE. The Bill provides for the Secretary of State to have broad powers to make arrangements for grants in respect of nursery education. Would it not be possible for those powers to include grants for capital funds for those Church-aided schools which wish to expand into that area?

I wish to make a brief point in relation to inspection, the importance of which has been emphasised. It is concerned with the denominational inspection. Church schools are anxious to ensure that as regards issues covered by Section 13 of the Education (Schools) Act 1992—that is, inspection of what is regarded as denominational, in particular inspection of spiritual, moral, social and cultural development—those inspecting an aided school will be able to include the nursery children in their report. I hope that that will be clarified during debates on the Bill.

I do not wish to say a great deal about grant-maintained borrowing powers. They appear in a much slimmer section of the Bill than we might have expected, and I congratulate the Government on listening to the Churches, dioceses and Church schools, which express their dismay about the fast-track arrangements. We are most grateful to the Government that they do not appear in the Bill.

I wish to make only one point about borrowing powers. The former voluntary schools which have now become grant maintained do not own their property. The school buildings are held by the trustees. Only the playing fields of such schools belong to the governing body. Will such schools be disadvantaged? If schools are to be expected to borrow in some way against their capital assets, will the Minister make it clear that the funding agency will not be taking account of powers to borrow when allocating grant? The Churches believe that if that were the case, those former voluntary schools would be at some disadvantage.

I have expressed my hesitations and anxieties about the Bill and I believe that delay in implementation is the right way forward.

4.34 p.m.

Lord Prys-Davies

My Lords, I fully support the arguments advanced by my noble friend Lord Morris and the noble Lord, Lord Tope. I also support and agree with the anxieties expressed by the right reverend Prelate the Bishop of Ripon. I speak mainly as a result of the avalanche of letters that I have received from parents, governors, teachers and organisations in Wales. They have expressed their strong opposition to the voucher scheme and I believe that those anxieties should be related in your Lordships' House.

The provision of full-time nursery education for four year-olds in Wales has been and continues to be very different from that in England. For many years, in some cases since the beginning of the century, the Welsh LEAs have recognised the crucial importance of pre-school education. In many parts of Wales they have already reached the Prime Minister's aim for nursery education for four year-olds and will soon exceed that aim. We are particularly proud of that record.

All that should have led to a different initiative on the part of the Welsh Office from that of the Department for Education and Employment which is proposed in the Bill. It is self-evident that in the context of nursery education the main need in Wales is to extend nursery provision to three year-olds. But we have been landed with this Bill which we say is unnecessary and inappropriate for our needs.

Moreover, we say that it is a Bill which could, in the longer term, be damaging in many ways to existing provisions. So great is the anxiety in Wales that the Select Committee on Welsh Affairs in another place considered it proper to set up an inquiry to consider the proposed voucher scheme and its likely impact. Its report, No. 186 of the Session 1995–96, was issued on 19th February. I cannot recall whether the Minister referred in his speech to that report but it is essential reading as regards the position in Wales.

Not surprisingly, the committee reported that there was consensus among all the groups and bodies involved that the Welsh local education authorities already provided an exemplary service for four year-olds. That emerges also from the evidence of the Welsh Office Minister, Mr. Rod Richards, who readily acknowledged that: There has been an important and indeed a significant public sector investment in nursery education in Wales in the past and indeed more than in the rest of the United Kingdom. We have an excellent record". Those words are to be found on page 3 of the report. At page 6 the Minister stated that nursery education, actually is very, very high indeed". I emphasise those words and believe that it is as clear a statement of approval of current provision as one could ask.

All the bodies which gave evidence to the Select Committee and all the Welsh voluntary organisations with a special interest in nursery education, apart from the Wales Pre-school Playgroups Association, are firmly opposed to the voucher scheme.

For informed and reliable guidance on children's issues in Wales I have learnt to look to the advice of Children in Wales. It is a body of high standing and is core funded by the Welsh Office. It is the equivalent of the English National Children's Bureau and Children in Scotland. That body expressed its general response to the Government's proposals in the following terms: Whilst we welcome additional money being put in to the vital area of pre-school education and acknowledge that the scheme may lead to an expansion of provision for some four year-olds, we are dismayed at the choice of a voucher mechanism as a means of expanding pre-school education". Those words are on page 72 of the report. It recommended that the Government should disapply the voucher scheme in Wales or, failing that, that they should postpone phase two until the evaluation of phase one could provide answers to the anxieties expressed.

Therefore, it is sufficient for me now to read the two principal conclusions of the Select Committee which are to be found in paragraphs 39 and 40. The first conclusion reads: We regret that arrangements have not been made for a pilot scheme in Wales". The second conclusion reads: It is hard to believe that, if acting alone, the Welsh Office would have seen a voucher scheme as the most effective means of improving educational provision for four year-olds in Wales". There is no reason at all for the voucher scheme to apply in Wales, except the one advanced by the Welsh Office Minister, Mr. Richards, and touched upon by the noble Lord, Lord Henley, this afternoon; namely, that it extends choice. But how relevant in the context of nursery education is the Minister's reasoning? The picture conjured up of Welsh parents desperately seeking choice of nursery education facilities for their four year-olds to avoid a reliance on the very good LEA services which are freely available strikes one as being quite unreal.

There are four other specific concerns that I should mention. I shall be brief. They are touched upon in the report of the Select Committee. First, there is deep regret that the new money, which is to be spent on nursery education, is not being spent in Wales on extending nursery provision to include three year-olds as the existing service for them is underdeveloped. Moreover, there is also the risk that the existing LEA facilities for three year-olds could be weakened in the longer term if there is a significant shift of four year-olds out of the maintained sector.

Secondly, the potential damage to small, rural primary schools is great. Because fewer four year-olds may henceforth go to the local school for their nursery education, the school itself may no longer be viable. The school may have to close. It is idle to think that closure does not matter. The whole rural community is worried about that prospect. The Welsh Office was closely questioned on that aspect by the Select Committee which produced a supplementary memorandum. After considering the evidence, the committee concluded in paragraph 22: We remain concerned that the viability of small schools may be threatened by the voucher scheme". Thirdly, the overall effect of a voucher scheme could be a grave threat to the continued expansion of Welsh-medium education in the voluntary sector and, in the longer term, to Welsh-medium primary schools. I should mention that about one in five of the population of Wales speaks Welsh. That is the fear of Mudiad Ysgolion Meithrin, the voluntary body which has for just over a quarter of a century played a very successful role in the promotion and provision of Welsh-medium nursery education. Its evidence to the Select Committee has the enormous corroborative support of the statutory Welsh Language Board which is, inter alia, the Secretary of State's advisory body on the Welsh language and which maintains a strategic overview of the provision of Welsh-medium education. The board advised the committee: It is a cause of concern to the Board that the vouchers scheme could have a ruinous effect on services currently provided by Mudiad Ysgolion Meithrin". That extract can be found on page 69 of the report.

Fourthly, and finally, nowhere is there any evidence that the Welsh Office has undertaken, commissioned or sponsored any research into the likely impact of the voucher scheme upon the existing provision of nursery education in Wales. The Welsh Office seems to have shirked that task, which is extraordinary behaviour on its part. It is also worrying. But if that is not true, and if the Welsh Office has undertaken such studies, I should be grateful if a copy thereof could be deposited in the Library of the House before we come to the Committee stage.

I have sought to set out some valid reasons why the Welsh Office should opt out of the scheme. Of course, I appreciate that the noble Lord, Lord Henley, who is to reply to the debate, is not a Welsh Office Minister, but I should be grateful—as, indeed, would many people in Wales—if he would convey to the Secretary of State for Wales the message that the voucher scheme should not apply in Wales until it has been preceded by a pilot scheme in Wales as urged by the Welsh Language Board, Children in Wales, Mudiad Ysgolion Meithrin and the Select Committee on Welsh Affairs in another place; and until the pilot scheme has established that the consequences of the proposed voucher scheme are not likely to weaken or damage existing provisions. Can we expect that small but reasonable concession from Ministers?

4.45 p.m.

Lord Walton of Detchant

My Lords, even though the debate has begun earlier than anticipated, perhaps I may at the outset apologise to the Minister and to the House for the fact that, because of a longstanding evening engagement, I may have to leave before the end of this afternoon's debate. While doing so, perhaps I may also record the sincere apologies of my noble friend Lord Baldwin who had very much hoped to be able to contribute to our debate today.

As many of your Lordships will be aware, I have had the privilege for some time of chairing the Hamlyn Foundation National Commission on Education. In 1993 we produced a comprehensive report entitled Learning to Succeed, based upon more than two years of detailed study and analysis of Britain's education system. We made a series of recommendations upon what we saw as being necessary to bring education and training in the UK up to a proper international standard. Subsequently, upon assessing developments occurring after the publication of our full report, we followed up our original recommendations by publishing in 1995 a booklet entitled Learning to Succeed: The Way Ahead.

Although the commission is no longer formally in existence, we nevertheless continue to keep a watching brief on developments in education through the work of a small steering group. I can, I believe, speak with authority on behalf of my former colleagues on the commission and on behalf of those in the steering group in saying that one of the principal recommendations that we made in 1993, and which we reiterated last year, related to the crucial importance of nursery education, and that is the part of the Bill upon which I wish to comment today.

The investigations that we carried out confirmed, as the Minister agreed in his lucid introduction, that research carried out in the USA and in the UK has shown that good quality nursery education has long-lasting educational and social benefits. The Headstart and High Scope programmes in the United States showed that, when this was provided to an adequate standard, children learnt and developed more quickly once they entered primary school; that they also demonstrated much less in the way of behaviour disorders and criminal behaviour in later life; and they also achieved much higher educational standards than those who had not experienced such education. As the National Campaign for Nursery Education has commented, one group of American workers concluded that for every dollar spent on early learning programmes, seven dollars would be saved later through the reduction of educational and social difficulties.

Research carried out in my former university of Newcastle-upon-Tyne compared children receiving high quality nursery education with those attending playgroups and those attending neither. This showed that the first group forged ahead in primary school. Those attending playgroups did a little better than the controls but not nearly as well as those receiving good nursery education. Hence money spent on early pre-school education can be seen to be an excellent investment in any nation's future. We on the national commission were therefore much encouraged to read that in December 1993 the Prime Minister, John Major, stated that ultimately he wished to see every three and four year-old child have access to a nursery education place.

However, it has been unclear since that date as to what perception many members of the public, and indeed some of those in government, hold about its nature and content. While such education clearly involves a component of childcare, and while it is clear that for three year-olds certainly, and usually for four year-olds, trained nursery teachers should he supported in appropriate nursery schools by a nursery nurse, childcare facilities alone do not necessarily provide the educational experience required for the best nursery education. Equally, the teaching of children in these early years is a specialised task which not all teachers trained for primary education possess, and which requires appropriate skills and experience.

It is equally important to stress that early admission to primary schools or to reception classes for four year-olds, while of some benefit can never be an adequate substitute for properly planned nursery education. This needs to be provided in separate buildings, or at least in self-contained premises within primary schools—premises which are available for the sole use of nursery children. The curriculum requires knowledge and understanding of the developmental needs of children, including the factors and interactions which foster and inhibit development.

The Pre-School Learning Alliance, Professors Christine Pascal, Kathy Sylva and others, have done much excellent work in defining early learning curriculum content which lays the foundation for the more formal curriculum of compulsory education which follows. I have also been much impressed by the features of high quality nursery education described in the leaflet provided by the national campaign.

It follows that the essential features of good nursery education are, first, dedicated premises which may, as I have said, be in nursery classes in primary schools—but these must be properly housed and defined—and well trained staff. Much has been achieved over the past 10 years and some local authorities have produced an admirable programme of good quality nursery education not just for four year-olds but in some cases for three year-olds as well. However, the provision has been remarkably uneven across the United Kingdom. Some local authorities provide such education for not more than 20 per cent., and some for almost 90 per cent. of four year-old children, and a much lower percentage of three year-olds. There is of course some excellent provision, as well as some which is mediocre, in the independent sector.

The case therefore for nursery education is now incontrovertible. I urge your Lordships, as the noble Lord, Lord Morris, has said, to note the present position in France, as discussed in a Franco-British Council symposium in April this year. Some 10 per cent. of the French budget for education in schools—compared with 4 per cent. in the UK—is spent on this sector and whole-time provision for four and three year-olds is virtually universal. I commend to your Lordships the article by Patricia Rowan in the Times Educational Supplement of 26th April.

But will the Government's voucher scheme produce the results we would all hope to see? Frankly, I must say with regret that I doubt it. What, then, are my principal concerns? The first must surely relate to the take-up of the vouchers. Is there not a strong probability that middle-class parents will apply for them avidly, including even some who may already be paying for private nursery education? Is it likely that in inner city areas in particular, but also in rural areas, less affluent and underprivileged families will seek these vouchers? In other words, will they really benefit families and children most in need? Plainly there is little chance that voucher funding will be enough to refurbish old buildings or to build new. Indeed many authorities have calculated that the vouchers could provide much less per child than they at present spend on publicly-funded high quality nursery education. Why have regulations relating to basic standards of space, light, hygiene and safety been withdrawn with the consequential risk that some may attempt to offer such education in totally inappropriate premises in the hope of attracting voucher support?

While the principle of parental choice is one that I am sure we must all commend, I cannot help but feel that targeted funding provided through local authorities and through the grant-maintained schools system, directed to the areas of greatest need, and especially where existing provision is poor, would have been a much more sensible way of funding the developments that we would all wish to see spread evenly across the United Kingdom. Of course the specific problem of young children with special educational needs must not be overlooked. I must also express serious concern about the availability of properly qualified teachers and the proposals relating to inspection. One cannot but suspect that some of the vouchers will be used to purchase places in childcare facilities which may be satisfactory in a caring sense but which will provide no significant educational experience upon which primary education can subsequently build. The proposals relating to inspection and accreditation of institutions do not at present persuade me either that inspectors with appropriate training and expertise will be available, or indeed that the frequency and quality of the inspections will be adequate to ensure that appropriate education is provided.

I could elaborate much further but my purpose in contributing to this debate is not, I hope, to be hypercritical but to express some of the concerns which have been brought to my attention by many of those working in education and especially in the nursery sector. There are real fears that those local authorities which already provide excellent nursery education will find their provision lessened or impaired as a consequence of the voucher scheme. Indeed, existing funding which they devote to four year-olds is being withdrawn and put into vouchers. The Government assure us—as the Minister has done this afternoon—that there will be substantial new money; that existing expenditure on three year-olds will be unaffected; and that vouchers will restore to local authorities the money they are losing. But will this prove to be the case in practice? Such evidence as has emerged to date about the take-up of the pilot or phase one scheme in four boroughs is not, I fear, encouraging. The Minister may well, of course, have more up-to-date figures, but I have been informed that the take-up so far is only around 60 per cent. in the four phase one local education authorities.

If parents do not produce a voucher, they are unable to find a place for their child or children, and existing institutions receiving few vouchers will suffer. As others have said already this afternoon, it is surely crucial that a full and detailed evaluation of the pilot scheme in phase one should be undertaken before vouchers are extended more widely across the country next year. The Government must tell us what has been the take-up of the vouchers. What effect has the scheme had upon existing nursery education? What evidence has emerged to indicate that such provision of high quality has been extended in the areas under study? What form of inspection of new establishments has been undertaken and what have been the results? What evidence, if any, has been obtained relating to the take-up of vouchers by those families patently most in need? Finally, we shall wish to know what has been the feedback from parents on the value of the scheme to date. Many other questions could be posed but those are some which I trust the Minister will be able to answer at the end of this debate. If I am compelled to leave early, I shall read carefully his response.

5 p.m.

Lord Dormand of Easington

My Lords, it is of considerable significance that in the half a dozen speeches in the debate so far there has been considerable repetition. I shall repeat some facts; and I have no doubt that some of my noble friends will do so. There is nothing wrong with that for two reasons. First, it serves to emphasise the points made; and, perhaps more importantly, it serves to emphasise a fact that the Government should realise: that there are glaring gaps and mistakes in the Bill.

Speaking on the Bill in another place on 19th March, the Secretary of State for Education and Employment said that the Bill, will … deliver choice to parents who want to give their four year-olds the best possible start in life".—[Official Report, Commons, 19/3/96; col. 264.] That sentence had a familiar ring. It required only a few moments' thought to remember that a previous Secretary of State, the noble Baroness, Lady Thatcher, said much the same thing in stronger terms. However, it is about 17 years since that was first said.

Baroness David

It is more than that.

Lord Dormand of Easington

My Lords, my noble friend is correct. It was before the noble Baroness, Lady Thatcher, became Prime Minister. But after 17 years we are having the first possible intimation of public nursery education. On the whole noble Lords opposite have sent their children to private nurseries. I do not complain about that. However, it is time that there was an expansion of first-class public nursery education which is free.

The Bill before us is not quite the same proposal. We on these Benches will show that the Bill may reduce the number of nursery school places. Moreover, the scheme is being proposed against a background of a steady expansion of nursery education provided largely, but not entirely, by Labour local authorities.

The pathetic proposals in this Bill are set against the overwhelming case for nursery education—evidence seen not only in this country but in every nation where nursery school education is established. Its value is not in doubt. My noble friend on the Front Bench spent some time on that issue. I hope that in a debate of this kind we need not spend time on it. We are concerned about how nursery education can be delivered. We believe that the proposals are inadequate. Perhaps we should be kind and say that at long last the Government have been converted to seeing the value of education for the under-fives. I only hope that the proposals in the Bill will produce that education.

The basis of the Government's case is that by providing vouchers worth £1,100 for parents, there will be an expansion of the provision of high class nursery education—indeed, they would argue a massive expansion of such provision. On the quantity of that increase, we shall have to wait and see. But I suspect that it will be parallel to the forecasts made by the Government in relation to grant-maintained schools. There was to be a tremendous rush for grant-maintained status. Noble Lords will remember that being said many times. It has turned out that some 1,100 out of 25,000 have chosen to opt out. However, the quality of the increase, if it should come about, gives rise to considerable doubt. What about the buildings and related facilities? What about the number of qualified teachers? That factor is crucial in the development of nursery education. What about proper supervision and inspection? These are vital matters, and if the standards required are not met, great damage will have been done.

Even more important is the fact that the issuing of vouchers in many cases simply will not produce nursery school places. Is not this already being seen by parents in the pilot areas? My noble friend Lord Morris produced a formidable list of opponents to the Bill. I hope that your Lordships will forgive me if I produce one instance more. I cannot forget that in 1994 when a voucher scheme was first suggested, the Secretary of State described such a proposal as "unwieldy", and as recently as 1995 she had not changed her mind because she said that it is "not the favoured option". In the fullness of time it will be interesting to know why there was such a fundamental change of mind—although some of us can probably have a good guess as to why that came about.

I press the point about provision under the proposed scheme. The DfEE said in a briefing note that there is, no cast-iron guarantee of a place, at least in the first instance, until new places are introduced in response to parent demand". Demand, apparently, is the answer and the key to it all. I pose the question: how long will the "first instance" last? Will it be weeks, months or years? What happens in the meantime? Nothing, presumably.

I hope that your Lordships will forgive me if I turn to a specific case because I believe that it is important to understand how the scheme will work. The proposals in the Bill are causing great concern in County Durham. The county has an excellent record in the provision of nursery education. However, the details that I shall give will apply equally to other local education authorities which have taken such provision seriously over the years, and which have the same excellent record as County Durham. They take the view, correctly, that the essential difficulty with the voucher scheme is that most of the funding for it is not new money from the Government but clawed back from LEAs on the grossly unfair basis that only money provided by the Government for four year-olds which is actually spent on four year-olds is clawed back by the Government. In other words, local education authorities which receive the same grant but do not value nursery education highly and spend that money on other things, keep their money; and those authorities which have the best record of providing nursery education will lose the most money.

County Durham has 24 nursery schools, 87 nursery units and one children's centre, which provide 7,654 three and four year-olds with free part-time nursery education. Therefore, is it not strange that with that kind of dedication and enthusiasm under proposals purporting to increase nursery provision money allocated by Government to LEAs but not spent in that way is left intact and thus lost to nursery education, but other funding actually spent on nursery education is withdrawn? That seems to be a ludicrous situation.

It is necessary, too, to remind your Lordships that the Government's scheme is for four year-olds only, with an unspecified intention to provide for three year-olds at some time in the future. For those LEAs like Durham which have extensive provision for three year-olds as well as for four year-olds, the three year-olds could well be left high and dry if nursery provision collapses as a result of the voucher proposals.

The figures for Durham County Council are dramatic and should be put on record. The council spends £21.5 million each year providing education for three and four year-olds. In 1995–96 government funding to support this was £10.66 million, only half of the cost involved. To fund nursery vouchers, the Government will take away over £8 million from the £10.66 million.

Have the Government really thought through what might happen to what might be called "good" authorities? If what I have described happens, does it not mean that poor providers of nursery places will keep the government grant which they receive but do not spend on the under-fives and will, in addition, receive the "new money" too?

I want the Government to make this central point clear, so I pose the question in another way. Four year-olds who attend a maintained nursery school or unit will be able to exchange their voucher, worth £1,100, for the same education they receive now, and the LEA will make up any difference in the cost. Is that the position? We bear in mind that it is generally recognised that an LEA nursery education place costs more than £2,000 a year. That figure varies—it is set somewhere between £1,500 and £2,000. For every four year-old who does not take up a maintained place, the LEA will lose £1,100 which could mean that nursery places would have to be reduced.

I turn briefly to the working of the scheme in the pilot areas. Three of the local authority associations sent all or most of us, I presume, a brief which contains disturbing figures. They are that 40 per cent. of initial application forms sent by Capita were not returned by mid-March 1996. Parents had then to apply to local providers from a list supplied by the voucher agency. The associations say that nearly one-fifth of those eligible in the four pilot areas failed to return their application forms. When he winds up, will the Minister say whether the figures are correct? If not, what are the figures? On such a basic aspect of the scheme, we need to know.

It is said, too, that all four of the pilot areas—or should we now call them phase one?—have expressed concern that vulnerable parents may fall through the net. That causes me great concern. Having regard to the bureaucracy of the whole scheme, it would not be in the least surprising but it will be tragic—and that is not too strong a word—if the children of such families were not to receive the benefit of nursery education. They are the ones with most to gain from nursery education.

Applying the principles of the market for an increase in the provision of nursery education could not be more misguided. A golden opportunity has been missed, not least because there is so much good practice throughout the country. A new untried scheme involving so much bureaucracy is completely unnecessary, open to abuse and, we ought to remember, expensive. An assessment of phase one of the scheme is essential, but I find it impossible to accept that the Government will be objective in their examination. The Minister will know that in another place a number of his honourable friends pressed the Government closely on that. I realise that the Secretary of State said that a deep assessment would be made. However, this is the last Government to say that they were wrong on anything, so why do they not have an independent body or person to examine what has happened in the pilot areas? A Ron Dearing—though not necessarily Ron, he has plenty on his plate at the moment—would produce a report which would be broadly acceptable to everyone interested in the scheme and could be carried out with a minimum of expense and time. Unless that is done, there will be as little faith in the assessment of phase one as there is in the Bill as it now stands. Parents will see the measure as the completely inadequate proposal that it is.

5.13 p.m.

Lord Skidelsky

My Lords, I apologise to the House for not being here at the start of the debate; I did my best but I could not make it. I regret in particular not hearing my noble friend's opening speech and that of the noble Lord, Lord Morris of Castle Morris.

I wish to comment on both parts of the Bill and I start with Clause 6 which allows grant-maintained schools to borrow money commercially on the security of their land and property. Apparently they will only be allowed to pledge surplus property as collateral, property not necessary for their core functions. That does not seem to me to be well defined, but I pass that by.

The question I wish to ask is this: if grant-maintained schools can borrow on their property from the private sector, why not local authority schools as well? The answer seems to be that local authority loans are guaranteed by the Treasury. Local authorities have not been allowed to borrow against their assets since the late 1980s. Their borrowings count as part of the PSBR which the Government are trying to reduce. So local authorities can keep part of their receipts from sales, but the rest has to go to debt redemption. Grant-maintained schools are not obliged to return to LAs the property they took over when they opted out, even if it is surplus to their needs.

My first question and worry about the Bill is this: does it not redistribute assets from the local authorities to the GM schools? Is it not unfair that that accounting convention enables GM schools to borrow to improve their facilities but it prevents local authorities borrowing to do the same because their borrowing is included in the PSBR? I see the attractions of the position from the Government's view. The Bill gives more reason for local authority schools to opt into grant-maintained status. But I am against the method adopted. It is ad hoc and highlights the absurdity of the accounting convention, without doing anything to remove it. If private money needs to come into the state sector—as I think it does—it should be available to all schools on the same terms. That requires all schools be put on the same legal basis as far as their borrowing rights are concerned. In the end, we will have to get rid of the anomaly because it is unsustainable.

I turn to the voucher part of the Bill. In principle, I am all in favour of steps to increase parental choice. I also understand that a choice system is easier to introduce when there is a deficit of places, as exists in pre-school education. I have no worries about the take up of the voucher. Noble Lords quoted the figure of 60 per cent. take up; my information is that to date 13,650 eligible parents—that is 84 per cent.—have applied for the voucher, not 60 per cent. So phase one has been much more successful than was stated at the outset. We know from experience that the take up always expands for every entitlement when information about it spreads, so I believe that take-up is a red herring.

The question I have for my noble friend is rather different. Is a universal entitlement to pre-school education for four year-olds and eventually three year-olds the best way of using scarce resources? I have to point out that despite almost unanimous support for the principle of pre-school education, the empirical basis for believing that it will more than pay for itself in the long run is shaky.

I have to tell the noble Lord, Lord Dormand of Easington, that I shall spend time on this. Whenever an opinion is completely unanimous, there must be something wrong with it. It is remarkable how credulous some noble Lords are about evidence which justifies large increases in public spending. Scepticism is a more appropriate Conservative attitude and I intend to apply it to the evidence.

The only systematic research into the long-term effects of pre-schooling—and the long-term effects are the most important—comes from the United States. Major studies in 1985 and 1991 of Head Start, begun by Lyndon Johnson to break the cycle of poverty, as noble Lords know, showed a modest initial improvement which disappeared after two or three years. I quote from the 1991 report: the programmes had "little lasting effect" on scholastic attainment or social behaviour.

A research-focused programme known as High Scope, to which the noble Lord, Lord Walton, referred, tracked two groups of heavily deprived children from the ages of three to 27. The first group which received pre-schooling has caused less criminal damage, incurred lower costs to the criminal justice system, paid more taxes and required less remedial schooling than the second group. That programme has been successful.

What conclusions can we draw from it? The per capita costs of the programme are 12,500 dollars per pupil. That is much higher than anything that has been contemplated here, either through vouchers or current per capita provision. Only 60 children were involved and a high level of parental support was secured. The conclusion is that costly, well-targeted programmes may yield beneficial long-term effects. But that is very different from creating a universal entitlement to four-and three-year education.

The Government have budgeted £390 million of new money for three years. But we know that it will not end there. All experience tells us that the costs will escalate. Already, there are loud cries—we heard many this afternoon—that the entitlement is being under-financed. We are told that £1,100 will not be enough to cover the extra training for teachers, helpers, advisers, inspectors and start-up costs. The noble Lord, Lord Tope, referred to that.

We hear in all this the loud drip of special interest pleading. It is amazing to me that so many noble Lords take these briefings at face value and do not apply an appropriate discount to them. The special pleading cannot be ignored. The Government are creating a predictable and formidable new source of upward pressure on public spending—and that is before three year-olds enter the picture. How does that square with their policy of driving down public spending in the long run—a policy I support?

Nor does the damage end there. It is true that parents will be able to spend their vouchers in private schools. But instead of relying on market competition to force up standards, the Government have decided instead to extend their regulatory powers to all providers of pre-schooling.

We are told that it is meant to be a "light touch" system. It does not seem that way to me. Schools will be expected to work towards desirable learning outcomes, specified by the SCAA. They will be expected to adopt good practice—whatever that means. They will be regularly inspected by Ofsted; will be required to publish annual reports covering a large range of topics; will have to satisfy rules about staff qualifications and class sizes; will be subject to health and safety regulations; and will have to teach for a specified number of hours each year. Is that a light regulatory regime? No, I do not think so.

But all the special interests say that it is not enough regulation; we must have much more. It is not parental choice that emerges victorious, but bureaucratic politics. At the first instance of an accident in a private nursery school, all of them will be yelling for more regulation. Is that what the Government want?

It must be wrong in principle to create a universal entitlement to deal with a limited problem. If I wanted to spend the money, I should deliberately direct scarce resources towards deprived children—they are the ones who may need them, both pre-school and at school age—through well-funded, High Scope-type experiments; perhaps by reducing primary school class sizes since there is evidence that smaller classes help learning; and perhaps by extra reading practice in school holidays. Those are the kinds of areas to which this money should go.

There are some good points in the Bill. It allows private money into the system; it extends the important principle of parental choice; it introduces the language of the voucher into our education system. However, I find it unfair in one part and misguided in the other. And I am far from sure what useful amendments can be made without wrecking the Bill.

I conclude, with regret, that I cannot give more support to my noble friend.

5.24 p.m.

Lord Merlyn-Rees

My Lords, I intend to argue on the basis of my own personal regard for nursery education. I wanted it for my own children and tried to get it for those whom I represented in the North of England. This Bill is not the way to set about improving the situation.

I have long believed in the value of nursery education. I started school, 70-plus years ago, in a pit village at an early age. That led me later to understand the great value accorded to education in the Welsh mining areas. It is far superior to the attitude I came across in the leafy suburbs—and for good reasons. I saw the value of pre-school education for my children, who now have children of their own. Whatever the noble Lord, Lord Skildelsky, thinks as to the value of nursery education, they will want it for their children. Whatever the researchers say, I stand by my children. They pay for it; they want it; and I want it for a wider group of children. I also saw the value of pre-school education in my north of England constituency, south Leeds. The right reverend Prelate will know that very well. It falls within his area. The Government are not setting about the matter in the right way.

I had wanted to say a word about the value of pre-school education, but it was dealt with far better than I could deal with it by the noble Lord, Lord Walton, who explained why he had to leave. I therefore take that as read. In his remarks, the noble Lord made the distinction between childcare, playgroups and nursery education. This Bill relates to nursery education, not playgroups. I am glad that playgroups exist. My daughters-in-law have played a part in setting up playgroups. Such groups are excellent. I refer, however, to nursery education. The research referred to by the noble Lord, Lord Walton, showed the great advantage of nursery education for young children.

Among the many letters that we have all received, I cite one addressed to me from the headmaster, Mr. Jones, of Croeserw primary school in Port Talbot, South Wales. The point he raises is relevant to the remarks of the noble Lord, Lord Skidelsky. His letter states: Some of the children in our school enter with no oral skills at all". These are not children who are mentally ill; they are children who have never been spoken to and are unable to speak. They can only make noises and a great deal of time and energy is devoted to remedy this situation". It is no good leaving it to primary schools. The sooner we have access to such children, the better. Mr. Jones continues: Our parents do not have the articulation and influence that more prosperous areas enjoy and so we ask you to defend the defenceless". I have come across that syndrome myself.

I say to the Minister that it is no good thinking that someone who comes along and says that he is going to set up a private institution can invite such parents down for tea and scones in the afternoon, or for cocktails and olives later in the evening. The parents are a problem. I do not say that in any snooty way; I grew up among, and represented, such people. They need the state to step in and do something about the situation. The private institutions will not do it because it costs extra money. I am not against private institutions setting up if that is what they want to do. But I believe that the concept and approach of the Bill are wrong.

To turn to existing provision, the Bill presently relates to four areas. The Audit Commission points out that the provision of pre-school places for three and four year-olds depends on where the family lives. Education has always been better organised in the great northern cities and the Welsh mining areas, and by the old LCC at the turn of the century, long before the Labour Party came into prominence. The education authority in my city, Leeds, started higher grade schools which pre-dated the setting up of secondary education. Indeed, it broke the law, which forced the Government of the day, in 1902, to set up secondary schools on a basis of higher education. Sheffield is another city in point which had higher grade schools. Those cities have a proud record. They do not lag behind the southern counties or the rural areas. Metropolitan authorities have the highest levels of all in terms of nursery education.

As for the existing provision, the different types of schools and the different types of classes depend on where one lives. But the provisions in the Bill will cost money. I believe that the Government would do better to top up the existing provision rather than provide vouchers. My sons are very grateful for what the Government are doing. They already pay for their children to have nursery school education. The Government will now give them a voucher. But vouchers will not help the people whom I tried to represent for 35 years.

I have obtained some evidence from a part of the city of Leeds which I represented. As I said, it has always been a leader. By their nature, the metropolitan boroughs—the old county boroughs—were superior. That is spelt out in a number of letters that I have received from parents. Let me quote from a letter written to me by a school that I did not know as a primary school. I knew it as a secondary school and a Catholic school and after reorganisation the school became vacant. The letter says that in South Leeds, which is the poorer part of Leeds that I represented: The total amount being deducted from the Education Budget in Leeds is £10,508m representing 72% of the under 5's SSA allocation. The remaining £3.254m will be insufficient to fund the nursery education of 3 year olds and supplement funding of 4 year olds to the current level". I put to the Minister that it is believed in Leeds that the scheme will reduce the provision that is already there. We need answers to that. Are those people wrong? Is it wrong that Leeds has nothing to fear and this scheme will maintain the excellent provision that is already there? Leeds is being penalised because of the excellent provision that it currently makes for three and four year-olds.

I have similar letters from up and down the country—for example from Solihull, all parts of south Wales, Neath and Port Talbot. I have quoted from one letter. Let me quote from another letter from Ystalyfera, which is one of the new local authority areas. The lady points out: Wales has a long history of providing excellent nursery provision for its three and four year-olds". What are the Government worrying about? They are doing it for three and four year-olds. If there is a gap at the top, let us do something about it. She points out that Neath, Port Talbot and the city and County of Swansea provide part-time nursery education for all their three year-olds. It is superior and good. The Government ought to cheer, not try to make the situation worse for them. The letter goes on to say: The Nursery Voucher scheme may be of benefit to some areas of England"— where the provision is low— but it is totally inappropriate for the children of Wales". There are a number of questions to put. I had a delightful letter today from a lady from Shropshire, who writes: We have a daughter who is currently in a Nursery Class … and a son … We have opted to send our children to school in Wales". She says that what they do in Wales is superior to what they do in that part of Shropshire. So that lady has parental choice and has chosen to go into an area where the nursery education is superior. As regards Wales—I was born there but have no representational interest there—when one sees what is being done there, let alone in the City of Leeds, why not praise it and not look at it through the rosy eyes of the south of England?

Nevertheless, a number of questions must be put. There is the question asked earlier by my noble friend about Durham and the quality of the existing provision. The value of vouchers covers half the cost. Where is the rest of the money to come from? All the letters that I received raised that point. What shall I tell the parents at Sharp Lane Primary School, the one to which I have just referred. I have had many letters from there. There is good provision. They are afraid that the situation in that school will get worse. What can we offer to assure them that it will not get worse? How should the City of Leeds operate in general to maintain the fine education that it provides at nursery level?

What about the quality of teachers? I fully understand that it is good to put a clever chap who gets a first at university into the sixth form in a good school, without any educational training. It helps the sixth form and works perfectly. But at a lower level that is not the case. I started teaching years ago in an attempt to get into university, which I did. I needed money and there were no grants. I was advised to go into Norfolk, Suffolk or Cambridgeshire. "They'll take anybody there," I was told, "all you need is matriculation. You need no qualifications of any sort. It is run by the squarsons." I beg pardon of the right reverend Prelate, whom I called in aid.

One needs qualified teachers in nursery education. I understand that that is not the case for playgroups. But in nursery education someone is needed who has thought a little about the psychology of what they are doing, for example. Nursery education is not childcare.

Then there is the quality of the buildings. I wonder, from my own experience in Leeds, where the buildings are to come from. Heaven only knows! The schools about which I am talking have been slum cleared and rebuilt as very good corporation housing. But where are the school buildings to come from? Where will they build them? Where will the money for them be found, let alone anything else? I do not see private institutions coming into my old area. For family reasons, the area that concerns me most is that of special needs. The point was put to me by the head teacher of the Gnoll Primary School in Neath, which is right alongside the rugby ground. He writes: Children with special educational needs have not been properly catered for in this scheme. This school provides places for partially sighted and blind children from four counties from the age of three". Will the new scheme provide places for partially sighted and blind children? The letter continues: The staffing costs would not be catered for by the voucher scheme". There are other questions to ask as well with regard to special needs. The Special Educational Consortium notes that currently there are: home teaching schemes; early access to nursery education; informal access to the additional expertise in support services". Will the voucher scheme provide those things? I doubt it. The voucher scheme is south of England stuff. It has been devised by people who know only one form of education. It is not the overall scheme for dealing with the problems of nursery education.

There is a problem in nursery education and, unlike other noble Lords who have spoken, I believe that it is vitally important to solve. In the kind of area that I know, it is not sufficient to say, "Pick it up in the primary school and do some reading classes in the holidays." It is much more serious than that. The problem goes much deeper and is more ingrained. This Bill shows the weakness of dogma in policy. It is dominated educationally by those who do not understand the problem areas. It will help my own grandchildren. But all we can do is try to improve the Bill. Time and the general election might do it for us.

5.38 p.m.

Lord Rix

My Lords, like the noble Lord, Lord Skidelsky, I must apologise for not being in my place when the Minister made his opening statement or indeed at the beginning of the speech made by the noble Lord, Lord Morris of Castle Morris. I can only plead that I was delayed receiving treatment for a frozen shoulder, which seems highly appropriate as I listened to a number of your Lordships' remarks on this Bill this afternoon.

As chairman of MENCAP, my concern—it is not my concern alone—is that children with learning disabilities should get the best possible start in their educational life and continue to learn throughout their life. The House's Library staff has done its usual excellent job in helping me (and others too, I am sure) to explore the basis for believing, or not believing, that the Bill does indeed ensure that such children do get the best possible start.

The Bill itself does not give me a great deal of information. Thanks to a government amendment at Report stage in another place, LEA's will be able to give some help to providers catering for children with special needs. Providers will have to explain what they are doing for children with special needs, though there is no general requirement on them to do anything. That means that their policy for such children might be, legally, not to admit them.

For further information, I have to turn to government statements. Speaking on the parallel Education (Scotland) Bill last week (Official Report, 13/5/96; col. 356), the noble Earl, Lord Lindsay, said that it was the Government's intention that the introduction of the voucher scheme should in no way disadvantage children with special needs; and, specifically, that they should not be financially disadvantaged. The Minister, Mr. Squire, said much the same thing in another place some three months earlier, during the Committee stage of this Bill on 30th February, which can be found in the Official Report, at col. 243.

In the Next Steps document the Government said explicitly that they expected children with special needs, whether statemented or not, to receive appropriate provision. However, just as the high-wire artist remarked that he would have had more faith in what lay ahead had he been able to see that the end of the wire was fixed to something, so I have to remark that I would have more faith in nursery vouchers as a means of securing the educational interests of children with severe learning disabilities if I saw their interests specifically protected in this legislation.

The concerns of those who seek to speak for the interests of disabled children will be familiar to the Minister, and will be reiterated by many of your Lordships at this Second Reading. They are, in brief, that resources will be lost to children under four with special needs; that the essential co-ordination between education, health and social services will become more difficult; that potential providers will be put off by vouchers which fall short of special needs costs and will lack the skills necessary to teach disabled children; that larger reception classes will mean a poorer service for that group; and that LEAs may find themselves with less special needs resources to allocate because of the diversion of resources to the generality of four year-olds. I hope the Minister will be able to say that my fears are groundless and, on the other hand, that the situation will be carefully monitored. If monitoring shows that my fears were less groundless than the Minister believed, I hope that steps will be taken urgently to make good the loss.

I have two other requests. The first concerns the code of practice on special educational needs. I invite the Minister, in replying, to be a little more forthcoming about introducing a firm requirement on all providers to have regard to the code. I accept that some of it may not be relevant to some providers, but the phrase "have regard to" is deliberately designed to secure the application of only those parts of the code which are, in a specific setting, relevant.

Secondly, if I correctly understood the Government's proposals regarding the Disability Discrimination Act, they are that the services provisions of the Act should not bite on places which provide voucher services, but should bite on similar places which do not take vouchers. That seems to me to lack a certain logic and I welcome the assurance that young children will have such protection as the discrimination Act affords.

In conclusion, as the Minister will recognise, I am at present a little like the Israelites in the wilderness when they first encountered manna—anxious to believe that good is intended, but not yet convinced of the value of what is on offer.

5.43 p.m.

Baroness Hayman

My Lords, in speaking in today's debate I should declare an interest as a governor over many years of a primary school which provides nursery education for three and four year-olds, both full and part-time, with around 50 per cent. of its reception class children as four year-olds. I view with some trepidation the bureaucracy and the administrative implications of what will happen following the passage of this Bill.

Earlier in the debate, in a rash moment, I began to feel a degree of sympathy with the Minister. He seemed extremely exposed and unsupported. When I joined these Benches I was told that at least until the election our work would be about winning the argument and losing the vote—or, as today, not even having a vote. But that seemed to be taking the issue to extremes. Then I saw that the noble Lord, Lord Skidelsky, was to speak and in my innocence thought that at least there would be some support for the Minister. The criticisms of the noble Lord, Lord Skidelsky, were different in some respects from the criticisms from this side of the House. But I cannot say that they were an overwhelming endorsement of the Government's policy.

It must be said that it takes this administration's unerring ability to misunderstand what is needed in the public sector to turn the provision and the allocation of £390 million of new money in nursery education into the chorus of criticism that we have heard from all the organisations which ought to be praising the Secretary of State. But perhaps the Minister will not be surprised not to have received support in the Chamber today. Reading the debates in another place, I should have thought that they would understand that, if Solihull is in revolt, they really are in trouble.

My concerns about the Bill and its proposals are concentrated in two areas. The first is that mentioned by the noble Lord, Lord Skidelsky, when he was talking about targeting. My experience in the public sector in housing, social services, in education and in health was in looking at limited resources and agonising where best to direct them. When one looks at the way in which it is proposed to spend this new money, one realises that it is a shameful disgrace. There are areas of great need in nursery education. We know that provision is patchy across the country. We know that some areas are well provided for and some are not. We know that circumstances vary in different areas. One has to look at the right sort of development and not be doctrinaire about the only development being in local authority schools. We must look at grant aiding of playgroups and voluntary nursery schools; we must look at the specific circumstances and how we can address the deficits.

We know too that many three year-olds are in desperate need of support. My support for the value of nursery education comes not only from the evidence adduced by the noble Lord, Lord Walton of Detchant, but also from experience and observation; from seeing how often the children who cause difficulties in the reception class for their fellow pupils as well as for themselves are the very children who missed out on nursery education. That is an experience which those involved in the primary sector see time and again.

Faced with those kinds of priorities and the need for developing nursery education, what do we get in terms of priorities of expenditure from the Government? We get the dead weight of subsidising those who already pay for nursery education rather than providing a single extra place. One would need to be something of an old-style "tax and spend" socialist to consider that that is the best use of public money in straitened circumstances.

The other waste of money is in the bureaucracy involved in the system. I come to the aspect relating to the introduction of the pseudo-market into a public service battle-scarred from five years' experience in the National Health Service and seeing exactly what market mechanisms have done to both planning and provision. The noble Lord, Lord Skidelsky, said that it was easier for choice to be implemented in a deficit situation, if I heard him correctly. But that has not been our experience in the National Health Service. Money following patients or money following children is a mechanism that works only if there is enough money and enough provision in the system to start with.

Looking at what the Minister called a "mere device", we see a hugely expensive paperchase—as the noble Lord, Lord Tope, mentioned in his contribution—which is based on the belief that the only way to improve public services is by bringing into play purchasing power. I knew that there was something wrong with the system when I went into the local supermarket in Norfolk and saw big posters up advertising the nursery voucher scheme. I knew that somehow we were back into the supermarket mentality where education is a commodity to be traded, where somehow a market would provide the answers—they are answers we have to find—to deciding priorities with limited public spending. The market provides none of those answers. The next thing we shall be doing is calling the four year-olds customers of the pre-school education service as if somehow we had given them power.

The challenges in public services are about improving quality, improving access and targeting on need. The challenges in public services are for us to run efficient and effective public services. I believe that the Bill will be no help whatever in meeting those challenges.

5.51 p.m.

The Earl of Northesk

My Lords, as so eloquently expounded by the noble Lord, Lord Walton of Detchant, there is a very considerable body of evidence to support the premise that pre-school provision confers great benefits, both to the individuals concerned and to society as a whole. However—and in this I come close to echoing the "appropriate" scepticism of my noble friend Lord Skidelsky—our enthusiasm for this presumption may serve to disguise some of its subsidiary complexities.

Whatever the scheme's other failings may or may not be, I have two primary areas of concern with respect to the nursery voucher proposals as so far advanced; namely, the level of proactive parental involvement that will or will not be engendered by the scheme, and the effect of the application of the concept of "desirable learning outcomes" upon it.

In discussing the subject of pre-school provision, we should not lose sight of the fact that there is a growing body of evidence, over and above that which already exists to demonstrate the merits of nursery education, to support the contention that its value and benefit are considerably enhanced if parents are actively involved in the process. This is not their empowerment to choose the provision to which to send their children or the ability to contribute to its administration. Rather, it is a case of them being involved on a daily basis within the curriculum, actually playing with and teaching their children. By inference, it is principles of self help that should guide much of our thinking on this matter. My worry about the proposals as they stand is that, while I appreciate that there is no element of compulsion within them, they could act as an unwitting but positive incentive to parents to "dump and run", to take advantage of the availability of the provision as a substitute rather than a crutch for their own parental responsibilities.

I concede—of course I concede—that many parents of under-fives are in the invidious position of having to choose between going out to work to sustain their children or staying at home to look after them. That is a stark choice. We can reasonably expect that the proposals will afford such families some relief from this dilemma. But, notwithstanding this worthy objective, do we not also run the risk of devaluing the role to be played by parents in the upbringing of their children at the most formative stage of their development?

I am bound to say that I find it ironic that, in a Session where we have agonised long and hard about the family in the context of divorce, it may be that this comparatively small Bill has within it the capacity to do much more to undermine that institution than the Family Law Bill of my noble and learned friend the Lord Chancellor. Why? Because it has the potential of further promoting a culture of dependency in respect of a range of duties which, if they are not more properly those of parents, should be undertaken by them in tandem with whatever pre-school establishment they choose to send their children to. Needless to say, it would be highly regrettable if the nett effect of the Bill's good intentions were further to erode and undermine the principle of parental responsibility and the concept of the family.

I am sure my noble friend the Minister will give me every assurance that this is not an intended effect of the Bill. However, I very much hope that he will perhaps be able to go a little further than this. Certainly, I should be most grateful if, when he comes to wind up, he could advise me of current policy towards proactive parental involvement within pre-school provision and the impact that the voucher system is expected to have upon it.

My concern with respect to the concept of "desirable learning outcomes" follows on from this. My own feeling is that, in every respect, pre-school provision should be precisely that; a halfway house between the informal and relatively unstructured environment of play at home and the much more formal and structured environment of education at school. The "learning" element within pre-school provision should be developmental rather than educational.

Set targets of attainment as so far proposed—be they for reading skills, for numeracy or for whatever—fly in the face of this because they weight our expectations for the child too far towards the purely educational at the expense of the developmental and, it has to be said, the familial.

More than this, children should be permitted adequate time to develop their own identities. However worthy they may be, "desirable learning outcomes" imply a form of syllabus which would have to be adhered to if the relevant targets were to be attained. And this could have the effect of stifling the development of the individual within our children during the most formative period of their lives.

Naturally, I concur with the desire of the Government to ensure that adequate safeguards are in place to ensure that each and every pre-school establishment is of high quality. As I understand it, the criteria to be applied as a measure of sustained and sustainable quality are these "desirable learning outcomes". In a sense, they are as good as any and probably better than some. However, bearing in mind the concerns that I have expressed, I wonder whether my noble friend the Minister might feel that some other criteria may be more appropriate for this purpose—something based more intimately upon actual parental involvement perhaps.

There are a number of other issues—pre-school provision for three year-olds, the teaching of parenting skills, the starting age for compulsory schooling, and so on—that the Bill could have been drafted to address. I therefore have it in mind that it is but a small step down a long road and, despite the caveats that I have advanced today, I welcome that small step.

5.57 p.m.

Baroness David

My Lords, this debate has seen a damning indictment of the Bill. Even the two Members who turned up to speak from the Conservative Benches have been much less than enthusiastic about it. I thought that we probably would all agree that the expansion of nursery education is a good thing. But the noble Lord, Lord Skidelsky, even threw some doubts on that. I think the rest of us do believe at least that an expansion is what we want. What we are not at all sure about is that this Bill will provide it. In fact, I think we are pretty sure that it will not.

Lord Henley

My Lords, the noble Baroness said "the two Members who turned up" in such a manner as to imply considerable criticism of my noble friend Lady Young. I assure the noble Baroness that my noble friend Lady Young sent me a note to say that she deeply apologises for the fact that she was unable to be here this afternoon. She was expecting to be here but other commitments went on longer than she was expecting and she was originally expecting, as many of us were, that this debate would take place considerably later—probably at an hour not dissimilar to this. For that reason she put down her name to speak but unforeseen circumstances—the shortness of the proceedings on the Education (Scotland) Bill—prevented her coming.

Baroness David

My Lords, I thank the noble Lord for that explanation. I have no doubt that he missed the noble Baroness, Lady Young, a great deal.

Like most noble Lords, I have been overwhelmed by the number of letters I have received on the Bill, all strongly opposed to it. But still we hear Ministers declaring that they are extending choice, that parents are the prime consideration and that it is their requirements that must be met.

In a response in another place to a proposal that an expansion of places should build on the good practice developed in many local authorities in partnership with voluntary and private sectors, Robin Squire replied, These proposals were at odds with our desire to put parents in the driving seat. It is parents who, through their demand for the type of places that they want for their children, will be the driving force behind the expansion of services in any given area. Parents may or may not want that expansion to occur in the maintained sector".— [Official Report, Commons, 13/2/96; col. 256.] In the light of that, I propose to quote from a recently received letter from a parent: I am a parent of young children and am extremely concerned about the proposed voucher scheme. John Major said in 1994 that parents and practitioners should be consulted. I have seen little evidence of this. I live in Solihull—and we presented a petition with 11,500 names expressing our concern … I have not heard one practitioner speak in favour of this scheme. How can the Government speak of 'high quality education' for four year olds when it proposes having such a mixture of 'providers' (from qualified teachers with appropriate support in maintained nurseries and reception classes and nursery schools to playgroups—the DFEE in its 'Next Steps' document even suggests that childminders can get together to open a nursery!)…research points to qualified teachers with appropriate support being able to provide an appropriate curriculum (High Scope—and the Newcastle research)". That was referred to by the noble Lord, Lord Walton.

The letter continues: Quality is meant to come under the control of OFSTED. The requirements for the new Inspectors are again as variable as the proposed providers. There is the possibility that a person with an NVQ in childcare could be assessing a teacher of degree level. And 'Desirable Outcomes' are not the same as educational processes… The parents in Solihull do not want these vouchers. The 'Solihull Amendment' was voted against at the Third Reading. If parents are to have 'choice' I see no reason why parents cannot vote on this issue—similar to that of Grant Maintained status—allowing the LEA to 'opt out' if that is the majority wish. This letter puts the arguments I would wish to put against the Bill better than I could, and I endorse them all. She goes on to say, There is to be no extra resources for Special Educational Needs". It is on that subject that I would like to address my remarks. The Special Education Consortium was set up at the time of the Education Act 1993. It is a group of 140 organisations that came together to protect and promote the interests of children with special educational needs. It has been a most effective body. But it is very critical of the Bill. It welcomes the injection of £185 million of new money into the system. However, it believes that proposals will not lead to the development of good quality provision for children with special needs. Indeed, it fears significant harm may be done to the provision for them. They are particularly concerned for those children who do not have a statement (perhaps 18 per cent.). Many of these children now receive additional support through home-teaching schemes, early access to nursery education (often at three years of age), and informal access to the additional expertise in support services.

This support is threatened, first, by the reduced ability of LEAs to plan services, with a predictable budget made available to them at the beginning of the financial year; secondly, the focus on four year-olds which will mean that, in areas where the provision for four year-olds is not universal, places for three year-olds with special needs will go to four year-olds.

The effect of this is likely to be that more parents of children under five will seek a statutory assessment and a statement, to make sure to gain access to appropriate resources. Any increase in early statements will have some undesirable consequences: first, a higher percentage of LEA budgets will be tied up in fixed commitments to individual children; secondly, a reduction in the ability of LEAs to deploy resources for preventive work; and, thirdly, the likelihood of increased use of appeals to the SEN tribunal.

Most of your Lordships here today will remember the care and hard work of Ministers (particularly the noble Baroness, Lady Blatch) and of noble Lords (particularly Lady Faithfull, whom we so sadly miss today—she did not approve of this Bill) in creating in 1993 the code of practice for coping with children with special needs.

The code of practice has been working well and is seen to be effective because of the requirement in the Act to have regard to the code as a condition of grant. Much was made in another place of the fact that the code was developed on the basis of existing good practice in the maintained sector. The Government have argued that it is not necessarily possible to apply the code, as it stands, to the voluntary and private sectors. The special consortium believes that it is possible for all providers of early years education to work with the code from the start of this scheme and it is important that they should. The noble Lord, Lord Rix, made that point.

In the current proposals, all providers will be required to publish their policy. This will cover the admissions policy, the facilities that exist for children with special needs, knowledge and skills in special needs and the links with agencies. However, the consortium argues that unless policies are developed in the light of the code, they may merely become a description of inappropriate or unacceptable practices.

There is anxiety about what will happen in reception classes. There will be incentives to increase the number of four year-olds in them. The consortium is concerned that an enlarged reception class may not be the best setting for four year-olds with special needs, particularly for the youngest of them. In a nursery class or school, class size has been limited in two ways: by the pupil/adult ratio, by a recommendation that half the adults should be teachers; and by the 1981 regulations on teaching accommodation and recreational space. Reception classes, however, are not limited in these ways. There is cause for anxiety here, particularly as the 1981 regulations are to be replaced in September. Anxiety is also expressed on the inspection arrangements. But we shall follow up all these points in Committee. With the noble Lord, Lord Rix, I hope very much that we shall get the provisions for children with these special needs made much clearer in the Bill.

I want to turn to one other matter in which I have had an interest for a very long time, and that is corporal punishment. The noble Lord, Lord Henderson, and I have been in correspondence with the Department for Education and Employment over the question of corporal punishment in early years care and education and in private education generally. We are very concerned at what we understand to be the Government's position.

It is our understanding that instead of making a clear requirement that institutions providing early years care and education, including those involved in the voucher scheme, must not use corporal punishment, the current proposal is only to require that institutions in the scheme do not use corporal punishment on "voucher-bearing" children. This would leave a range of institutions free if they wish to use corporal punishment on other young children. This flies in the face of two formal recommendations which the Government have received from the highest relevant authorities on human rights. The UN Committee on the Rights of the Child in January last year and the UN Human Rights Committee in July, formally recommended that the Government should extend prohibition of corporal punishment to cover all pupils in the private sector. We tell other countries they must respect international human rights and the decisions of monitoring bodies. Surely this demands that we should respect them ourselves.

The Government's approach to the issue represents a depressing U-turn from their own policy expressed so clearly last year in the initial report to the UN Committee on the Rights of the Child, which states, The Government's policy on the physical punishment of children is that it has no place in the child care environment, and this has been implemented in England and Wales through the Children Act Regulations and Guidance". If it has no place in the child care environment, why are the Government not legislating to prohibit it? It is true that the guidance issued under the Children Act on "Family Support, Day Care and Educational Provision for Young Children" does state that corporal punishment should not be used in Children Act institutions, but, as the Government say, that is merely guidance.

We do not want to hear any more bogus arguments about parents' rights to pay to have their children beaten in private institutions. The rights that parents have derive from their responsibilities for their child's welfare. As the Minister will know, all the organisations concerned with early years care and education are strongly against all corporal punishment. The NSPCC is most concerned about this issue. And in the private schools sector, both the HMC and the Incorporated Association of Preparatory Schools favour extending abolition to cover all pupils.

We would like an assurance from the Minister that this matter will be urgently reconsidered; that the Government will accept their international obligations and take this opportunity to at least protect all children in early years care and education wherever there may be institutional corporal punishment.

My final word is to remind your Lordships that the home is also a nursery for young children and that training and support should be available to parents as a child's first and most important educator. I believe that the noble Earl, Lord Northesk, referred to that. Although good professional nursery education provides many benefits that children cannot get at home, we also need to support parents as educators in their own right. There is considerable evidence that parental support and encouragement at home have more influence on educational attainment than school factors, regardless of social class. The other side of the equation is the evidence that lack of parental support and poor parenting are major factors in criminal behaviour, mental illness, child abuse and family breakdown. We also have to remember that there are over 30,000 children on the child protection register.

The message that I want to give to the House is that parents are educators and they are entitled to training and support. We intend to bring forward amendments in Committee to make grants available for parenting education programmes. I hope that they will have your Lordships' support.

6.10 p.m.

Lord Northbourne

My Lords, all noble Lords who have spoken have supported the Government's enthusiasm for nursery education for four year-olds. I endorse that enthusiasm, but with the qualifications which the noble Lord, Lord Skidelsky, made. The advantages of nursery education are very much more marked in the case of children who are deprived of the support that they need from their families and are very much more marked when the quality of the nursery education is very high.

I am afraid that I shall infuriate my friends on the Opposition Benches by saying that I strongly welcome and support the voucher experiment—

Lord Morris of Castle Morris

Wow!

Lord Northbourne

My Lords, I base that opinion on experience. I accept that there is an enormously wide variation in the provision by local authorities and that some local authorities are doing an excellent job. However, I have to say that I have had two experiences with my own local authority which make me support the voucher scheme.

I refer first to the enormous energy and enthusiasm among teachers that has been released by Local Management of Schools. There is a whole new spirit in the schools that I visit in our county. I believe that that has resulted from the removal of the dead hand of bureaucracy.

I refer secondly to the care of old people in our county. About half of our old people's homes have been taken over by a voluntary organisation and the provision is now much better and less expensive. That is why I feel that the removal of the dead hand of centralisation and bureaucracy is probably a good thing. Whether or not your Lordships agree with me, I must point out that there are two unavoidable alternatives. Either there must be competition or local authorities will have to accept more central control to ensure that those which are performing badly bring their standard of performance up to that of the best.

Having said that, of course the Bill needs improvement. I should like guidance and help from the Minister on one or two areas when he replies—or later if necessary. First, I have a simple question: will the Bill offer nursery education for three full terms for every child? If it will not, we should look at why not, and consider whether we cannot change it to ensure that it does.

Secondly, are the ground rules the same for all providers? From the briefings that I have received, I have reason to believe that they are not the same. If that is the case, that is a grave defect in the Bill because, if there is to be competition, there must be the same ground rules for all, otherwise there will be a drift towards the cheap and the nasty. People will cut costs to save money. There must also be a level playing field between different kinds of providers.

The areas in which we must consider whether there is a level playing field relate to the quality of the premises, class sizes, the pupil:teacher ratio, staff qualifications and inspections. The noble Lord, Lord Walton, and the noble Baroness, Lady David, referred to the problem of reception classes. If local authorities can provide a reception class for 25 pupils and get the same money per head as if they provided a nursery class for 12 pupils, it is easy to see which they will choose.

Although I believe in having vouchers, my third question is: why are there to be vouchers for parents who are willing and able to pay and who do so at present? The Government's general policy seems to be to target money where it is most needed, but here we have a complete contradiction of that policy.

I am not sure whether it is intended that the vouchers should be taxable as a benefit in the hands of wealthy people who pay tax. Free state education is not a taxable benefit, but if we made the vouchers subject to tax, could we do a deal with the Treasury whereby that tax could be fed back into the system to give more help to children with special needs?

A parent is a child's first educator. The noble Baroness, Lady David, the right reverend Prelate the Bishop of Ripon and the noble Earl, Lord Northesk, have drawn attention to the importance of parents in that regard. We must explore that further in Committee to try to ensure that, so far as possible, parents are not excluded from the scheme but are encouraged to be involved. Parents can help in a number of ways. As the noble Baroness, Lady David, said, parents need help in preparing their children for nursery school. Parents need help in teaching their children to read and so that they can learn with, and join in the enthusiasm of, those children. A parent's involvement in nursery education means that the child takes it seriously, enjoys it more and thinks of it as being worth while. That is tremendously important.

In that context, I cannot stress too much the importance of home-school links. The noble Lord, Lord Skidelsky, rightly drew attention to their importance. The success of the Highscope Project, as the evaluation report states, was due to the fact that a teacher visited every child at home once a week. They were very deprived children, but that scheme was very successful. We have to do the job properly if we want to be successful.

Finally, I should like to draw attention to a particular group of children for whom provision is not made under the scheme as at present envisaged. I had expected a number of noble Lords to refer to special educational needs and to physical and mental disabilities, so I have not prepared anything on the subject. My main concern is about children with social and emotional disabilities. That small group of children most desperately needs help in the pre-school years so that they can cope with school when they get there. A child's emotional and behavioural problems often arise from the parents' inability to offer the support, love, security and stimulation that it needs. There must also be some outlining of the boundaries of acceptable behaviour. That group of children will need special help in nursery schools and they will not be able to get it on £1,100 a year. In my view, there must be special provision for those children. For that small group in our society, nursery education can fill the socialisation gap left by inexperienced and unhappy families. To fail to take the opportunity of this Bill to ensure that such children are helped to become useful and happy citizens would be an opportunity which it would be disastrous to miss. I very much hope to hear from the Minister that that group of children will not be forgotten.

6.18 p.m.

Lord Ponsonby of Shulbrede

My Lords, the noble Lord, Lord Northbourne, began his speech with the unique statement that he supported the Bill. However, having listened to his speech, I must say that with friends like that, the Government do not need enemies like us.

The Bill has been debated now for many months in public forums. We debated it initially at the time of the gracious Speech. A pilot scheme has been under way in four local authorities. Like, I should imagine, every noble Lord, I have received a huge amount of mail and briefing material from various interested groups, concerned parents and sceptical teachers.

This Bill starts its passage through our House while the national debate is already well advanced. I believe that it is the role of this House to try to shoehorn a workable system into the voucher framework upon which the Government appear to be set. Nevertheless, it is right to pause to consider the principles and motivations of the party opposite in introducing the Bill. As we have heard from the Minister himself, the word "voucher" does not appear on the face of the Bill. However, that word has a political significance that goes well beyond the provisions of the Bill.

Those who advocate vouchers see two main virtues. The first is that a subsidy is given to those who have already opted out of state provision, thereby blurring the difference between the private and state sectors. Purchasing power is put into the hands of the consumer, and theory predicts that the market will respond to provide the consumer with what he or she requires. The second virtue is that LEAs will be undermined. Planning, quality control and inspection are seen as necessary evils to be minimised wherever possible. I believe that the gist of that argument emerged from the noble Lord, Lord Skidelsky. Those principles provide no basis on which to expand nursery education. In educational terms they are no more than theory. There are many good examples up and down the country of LEA provision that is good in practice, and it is upon that that we should build.

The Government have accepted the need to expand nursery education for four year-olds and have provided some money to initiate that process. Many times the question that is asked is: who will make up the difference? I believe that in the long term the Government intend that parents should pay for the further expansion of this provision. This Bill paves the way for parents like myself, who currently pay nothing for the nursery education of their children, to pay something. I live in the London Borough of Wandsworth, one of the four authorities in phase one of the implementation of this scheme. My daughter is in the reception class of the local primary school. She is too old to receive a voucher, but her younger classmates do. There is no guarantee that when my younger son attends the same school I shall not have to pay something towards the difference between the value of the voucher and the costs of his nursery education. In the case of Wandsworth that is a rather strange argument. That authority already had universal nursery education for all four year-olds. Nevertheless, the system will be in place to encourage parents like me to pay something. I believe that that is where the extra funding will come from to expand nursery education, in which we all believe.

The Government should declare whether they see nursery vouchers as a trial for expanding the voucher system up through the education system. Once a cohort of voucher children (as they are already known) is established, the voucher system itself can follow them up through their education. If that is a possibility the Government should come clean, and we should hold a proper debate about the relationship between private and state education.

There are a number of amendments which are key to making the scheme workable. Many of them have been mentioned this evening. I mention just two. First, there should be a thorough and fully disinterested evaluation of the pilot schemes before the main schemes proceed. My understanding of the position in Wandsworth is that the bureaucratic obstacles can be overcome. I understand that 87 per cent. of vouchers have been redeemed in Wandsworth, but only with a great deal of support from senior educational officers, school secretaries, the voucher agency and the local authority working hand in glove with the DfEE. Wandsworth already had universal provision of nursery education for four year-olds. Further, there is the enthusiastic support of the ruling Conservative group. One has to ask how successful a nationwide scheme will be with agnostic or hostile parents, schools and LEAs. I urge the Government to look at the true cost of implementing these dual-funding sources for nursery schools. Some of the preliminary figures that I have seen indicate that the cost is far higher than originally foreseen.

The second area of amendment, which has already been referred to by my noble friend Lady David and the noble Lord, Lord Rix, relates to special educational needs. The Special Education Consortium has expressed particular concern about young children with special educational needs who do not have a statement. The additional support that many of these children receive is threatened by LEAs' reduced ability to plan services within a predictable budget and with greater focus on four year-olds. This means that in the area where provision for four year-olds is not universal, places for three year-olds with special educational needs will go to the four year-olds. The likely effect is that more parents of children under five will need to seek a statutory assessment and statement to secure access to appropriate resources for their children.

The code of practice on the identification and assessment of special educational needs is rightly seen to be effective, because under the 1993 Act there is a statutory requirement to have regard to it. I believe that nursery education providers outside the maintained sector should also be required to have regard to the code of practice. This is one example where the expression "level playing field"—about which we hear so much in so many different contexts—comes to mind. There are many others in this Bill.

This Bill is an example of doing the right thing the wrong way. With the exception of the noble Lord, Lord Skidelsky, there appears to be universal agreement that nursery education is needed and is desirable. But vouchers are no more than a political gimmick and the Bill should be considered with that in mind.

6.26 p.m.

Baroness Thomas of Walliswood

My Lords, in winding up on behalf of the Liberal Democrats, I will not rehash all the arguments against the Bill that have already been made by my noble friend and other speakers. Instead, I propose to make a number of points based on those comments and ask the Minister some questions in the hope that he will be able to provide an accurate response when he comes to speak.

First, it should be noted that I am not Lord Thomas of Walliswood but a Peer of the female sex. Secondly, I declare an interest, in that I am now chairman of a county council, and for many years have been a member of a county council, which is an education authority. About seven years have elapsed since I sat on the education committee, so I hope that noble Lords will accept that I try to speak in a disinterested way.

I start with the part of the Bill which refers to the grant-maintained sector and the possibility of those schools borrowing. Rather to my surprise, I entirely agree with all that the noble Lord, Lord Skidelsky, said on that subject. It is ridiculous that one set of schools funded publicly can behave differently from another set of schools funded publicly simply because they fall on different sides of an imaginary line laid down by the Treasury some time in the past. I agree that there should be equal opportunities for all. More importantly, I am disturbed that this aspect of the Bill accompanies the decision that on disposal of property a grant-maintained school will not have to yield 50 per cent. of the product of that sale to the local authority. That is of concern because the property was not created out of space, but by the input of tax and probably rate or council tax-payers. I do not see why the whole benefit of it should go simply to parents whose children attend the school at that particular time. I should like the Minister to respond to that point.

I turn now to the part of the Bill which has taken the most time and attracted the most interest. With the exception of the noble Lord, Lord Skidelsky, there has been a general welcome for the idea of expanding nursery education. My noble friend laid out our party's priorities in that respect. I am grateful to the noble Lord, Lord Walton of Detchant, who gave the debate an academic thrust. What concerns me about this way of approaching increased provision of nursery education is, once again, the waste of money. If we want—I refer again to what the noble Lord, Lord Skidelsky, said so compellingly—to increase the amount of nursery education available and ensure that those children who might best benefit from it receive that expanded provision, surely we have to use the £400 million in such a way that the extra services are directed towards those children and that they receive the full benefit of that extended provision instead of scattering money in such a way that the most obvious beneficiaries are those people who are already paying for nursery education.

These provisions have been attacked by a number of speakers. The right reverend Prelate the Bishop of Ripon, made a plea for small rural primary schools. Another speaker whose name escapes me made the same plea but from a slightly different point of view. Both speakers suggested that the creation of competition might have an effect which was the reverse of what was intended; namely, it might withdraw children from borderline schools and reduce their viability.

The bureaucracy has been referred to. The scheme's many damaging effects have been referred to. Will the Government assure us that the Bill will not have those undesirable effects? Will they explain how they will ensure that nursery education will be provided where it is most needed? In addition, how will they be able to measure that achievement? How will we know whether the Bill has succeeded or has not succeeded? I have not seen much in the way of standards, measurements or numbers to justify the Bill.

The second matter to which almost everyone has referred is quality. I shall not repeat what was said. We have been talking about inspectors, the requirement for well-educated inspectors, for good provision of buildings, for good and well-qualified teachers, if only to enable the outcomes to be translated into some sort of programme for education. A whole mass of similar points have been raised. The quality of the education provided is crucial to the success of nursery education. Yet the Government appear, if anything, to be relaxing standards. There is a relaxation in the requirement for minimum space and recreation space, for example. There is an apparent relaxation of the teacher-pupil ratios. There is no insistence on a qualified nursery teacher in every institution which provides nursery education. How can the Government justify anything which endangers the quality of education when it is clearly that quality, and not just the child's presence in an institution, which creates the added value for the child? It is after all the child's, not the parents', interests that we should have at heart.

The third matter which I wish to raise with regard to this part of the Bill is the whole question of SEN provision. We have heard noble Lords, including the noble Lord, Lord Rix, and the noble Baroness, Lady David, with experience and expertise in the subject. Again, I shall not repeat the points that they made. It is clearly of the utmost importance that all providers be required to do what LEAs are now obliged to do, which is to seek out and pay particular attention to those children in institutions who require that attention. Again, I support what the noble Lord, Lord Northbourne, said about the importance of unstatemented pupils and pupils with social and behavioural problems.

I know from my own experience that even in leafy Surrey there is an enormous increase in the number of children with such difficulties. As a chairman of governors, I have been in the incredible situation of having to exclude from school a seven year-old because he was striking his teacher so hard that the most experienced teacher in the school refused to teach the child and could not be persuaded to have him in her class. We wept about it. What can we do when we exclude a seven year-old? What are we doing to that child's progress? On the other hand, what benefit can we give if we begin to respond to such children's needs at a very much earlier stage? I hope that the Minister will be able to respond on that matter. I am sure that from these Benches we will support amendments relating to special needs provision.

Finally, I shall refer to the Government's need to learn and to be seen to learn from the pilot or stage one element of the introduction of the voucher scheme. I am not sure whether the take up has been 60 per cent. or 80 per cent. No doubt the Minister will be able to enlighten us on that point. First, what research have the Government undertaken, or will they undertake, in those pilot areas as to the effect of the bureaucratic nature of the scheme, the outputs of the scheme, or all the matters that noble Lords have raised in the debate? How, when and by what means will the Government measure the success of their scheme? If it is done, will it be done by an independent authority?

Even if after such a measurement everything is 100 per cent. right, members of this House and of the other place have a right and a duty to know what has happened; in other words, when can we see, and under what circumstances can we see, whatever information the Government learn from the pilot stage? As I said, it is our right and duty to do that. Will the Minister tell us what he will do with any information yielded by the pilot? When will it be published? If there are deficiencies, how does he propose to remedy them?

In the debate on the Scottish Bill, my noble friend Lord Addington made the point that it seemed idiotic to go ahead with a full scheme until we had learned from the pilot. I am merely emphasising that view. We need to learn from what has gone before. If things have not gone well, we need to know during the Bill's progress or at some later stage whether it will be possible to remedy whatever has gone wrong. With that, I conclude.

6.39 p.m.

Baroness Farrington of Ribbleton

My Lords, the Bill deals with nursery education and capital-raising powers for GM schools. Contributions to this debate have indicated that there are some key areas to which Members from all sides of the House will wish to return at later stages. There is a strong view that a thorough evaluation of the nursery pilot projects should be reported to Parliament before the main scheme proceeds. That is even more true with regard to the Government's proposals for England and Wales than for Scotland because it is proposed that the scheme for England and Wales should be brought into effect in April, whereas the scheme for Scotland will not be brought into effect until August.

There is also the issue of real parental choice and how costly bureaucratic procedures can be justified when parents wish to continue to benefit from the provision that is available in their local nursery or nursery unit attached to a primary school. Why cannot the Government allow parents the ultimate choice of opting out of the voucher system in order to continue using the current provision? The answer to that question will be eagerly read by those who provide nursery education in units, nursery schools, and classes attached to voluntary-aided schools and local authority-maintained schools throughout the country. There is great anxiety about the need to strengthen the inspection regime and to monitor the quality of nursery education that is paid for under the Government's proposals. There is also a need to improve parliamentary scrutiny of the arrangements.

Questions have been raised about grant-maintained schools, although the issue has concentrated largely on nursery vouchers. Surely it is doubly unfair to the schools which remain in the local authority sector and those in the voluntary-aided sector for which special capital allocations are provided if grant-maintained schools which may have benefited from capital projects are allowed to keep all their resources while local authority schools still have to pay that particular debt. It is important that such provisions in the Bill are scrutinised.

My noble friend Lord Morris of Castle Moms analysed in great detail the way in which we fail our children in terms of the provision of early childhood education as compared with almost all our partners in the EU. The right reverend Prelate the Bishop of Ripon identified the areas of concern which were highlighted during the pilot schemes in Southwark and Norfolk. He mentioned the important issues relating to rural schools. Perhaps I may say to my noble friend Lord Merlyn-Rees that I too have come across children attending school who are unable to speak as a result of their isolation. The cases that I have known have been in rural areas where parents did not understand the problem of how to provide an environment for children.

The issue of cost effectiveness and the problems which face the proposals have been mentioned repeatedly during the debate. Perhaps I may congratulate the noble Lord, Lord Tope, on his 10 years and two years. I ask my noble friend Lord Dormand of Easington to note that occasionally there are exceptions to the Labour Party's commitment in LEAs towards the provisions of nursery education. "Sutton" seems to be important in that not only the noble Lord's own authority of Sutton but the Conservative administration of Sutton Coldfield made superb provision for nursery education. There is clear evidence that the people in those areas remain unconvinced by the new proposals which will affect their longstanding commitment.

Speaker after speaker has underlined the point made by my noble friend Lord Morris of Castle Morris that there is lack of support for the Bill. I too have received a letter from the Manchester Diocesan Board of Education which is critical of and concerned about the proposals. It concludes by stating that the Manchester Diocesan Board of Education is concerned that moving from the pilot scheme to the introduction of the scheme to all areas after one year would not give time to evaluate the pilot scheme adequately. In the light of those concerns, the board would urge the Government to withdraw the proposals and introduce new ones that will achieve the objectives we all desire.

Surely the Government have learnt that there are many cases in which they do not know best. The voices of parents and teachers and the providers in the public and private sectors are being raised in unison to express anxiety about the Government's proposals. Evaluation time is of particular importance. The problem which voluntary-aided schools have in raising capital was highlighted by the right reverend Prelate. I well remember when during the 1980s the Government wrote to diocesan authorities asking them not to seek capital allocation for nursery unit projects. We do not want to see a situation in which the primary school that a child attends is determined by commercial bartering. That matter must be dealt with during the course of the Bill.

My noble friend Lord Prys-Davies referred to the avalanche of letters that he received about the problems of people in Wales. It is critically important that we heed his words of wisdom about the danger of disturbing and spoiling a system which is universally accepted in Wales to be excellent in many areas. More than 95 years ago my grandfather attended school in Wales from the age of three-and-a-half. It would be a tragedy if after all that time one of the Government's legacies was to damage that provision for three year-old children in Wales. I await with interest the answers to the detailed questions asked by my noble friend.

In introducing the debate, the Minister said that the vouchers are not named in the Bill; that they have no face value and that they are a convenience and an administrative tool. What kind of administrative tool can be justified when it achieves the following? In order to continue in a nursery unit attached to a primary school which has a reception class, and in addition to what I have heard your Lordships describe as the complicated system of standard spending assessments, of the amount of grant allowed by central government, of capping levels and of total standard spending we are now inserting a paperchase. I refer to a costly bureaucratic procedure to reclaim part of the money in order to continue to provide what parents are accepting, paying for, using and supporting. How, apart from dogma, can the Government justify refusing to allow parents to say, "We will accept the existing provisions. We do not wish to take up a voucher. We do not wish to see millions of pounds of public money being spent on bureaucratic red tape. We merely wish to say that we will register and sign a form stating that we do not wish to be part of the voucher scheme."? The local authority would then be able to continue to provide a service. That would allow for parents' choice.

The issue of bureaucracy has been raised as well as that of the importance of high quality nursery education. The noble Lord, Lord Walton of Detchant, made his usual high quality contribution on the issue of nursery education. He referred to research. In response to the remarks made by the noble Lord, Lord Skidelsky, I should point out that it is very difficult with human beings to make a categorical and 100 per cent. proof argument that if you do "a" with a small child then "b" will result, and that if you do "c" then "d" will result. Indeed, it is almost impossible to achieve those aims.

However, as other noble Lords have said, I should draw the attention of the noble Lord, Lord Skidelsky, to the fact that there is clear evidence to show that a greater proportion of children from broken homes, or living in poverty, in bad housing or in situations of alcohol or substance abuse and, indeed, those experiencing all-round difficulties, end up with particular needs. I see that the noble Lord wishes to intervene. I give way.

Lord Skidelsky

My Lords, I thank the noble Baroness for giving way. I must not be understood to have opposed the expansion of nursery education, where appropriate. My point is that I am opposed to creating a universal entitlement when the requirement is to target scarce resources on those most in need.

Baroness Farrington of Ribbleton

My Lords, I thank the noble Lord for his intervention.

My noble friend Lord Dormand of Easington referred to the value and importance of qualified teachers. He pointed out how essential that is, and how the people of Durham, the people of Sutton and, indeed, those in Solihull resent the Government proposing to remove from them money which they provided disproportionately through their own council tax contributions.

It is important for us to support the call for proper research into the results of the Government's proposals within the scheme. As my noble friend Lord Merlyn-Rees said, the importance of nursery education cannot be underestimated. Indeed, it is particularly important that we recognise that fact. In my experience, very few parents will opt for a playgroup as an alternative for nursery education. It is often used alongside as a supplement to nursery education.

The noble Lord, Lord Rix, and my noble friend Lady David referred in particular to children with special needs and learning disabilities. That is a critically important area and one that we must address in detail. The important area of emotional and behavioural disturbance is, again, something which cannot be overestimated. As the noble Baroness, Lady Thomas of Walliswood, said, it is an important area and one, sadly, of growth. The importance of dealing with and meeting the needs of children with such deep behavioural problems must be recognised.

We have had a very detailed debate. It is one which is being watched by an unusually large number of people. The details of our debate will be read, perhaps, by an exceptionally large number of people who are interested in the matter and who have taken the trouble to write to noble Lords. When the Minister replies, I hope that he will be able to tell your Lordships that he will respond to the parental wishes that have been expressed in correspondence to Members of this House.

6.55 p.m.

Lord Henley

My Lords, as I believe the noble Baroness, Lady Farrington, said, there are many key areas to which we shall wish to return at later stages. I certainly look forward to what I shall describe loosely as a most interesting Committee and Report stage and, indeed, Third Reading debate. Some time ago my noble friend Lord Skidelsky made the interesting point—and one with which I have often agreed—that universal agreement on one view is not necessarily proof that that view is right.

I believe that the noble Lord, Lord Morris of Castle Morris, suggested, in support of the universal agreement to his views, that virtually all the correspondence he had received had been very much of one mind on the subject of the Bill. That may be true. Like the noble Lord, and many others, I have received a great deal of correspondence on the Bill much of which, I have to say, seems to have come from very similar sources. Most of it has expressed similar views and, as the noble Lord, Lord Morris, will be pleased to hear, has supported his views as well as opposed some aspects of the legislation.

However, I must tell the noble Lord, Lord Morris, that those views are by no means universal. Indeed, perhaps I may quote the words of a head-teacher in Wandsworth who was reported as saying on the voucher scheme: This arrangement pushes me to raise standards. We cannot afford to be lax or complacent. Anything that forces me to give my utmost should be welcomed". That extract was reported in the Daily Telegraph in December of last year. Similarly, perhaps I may also quote the National Private Day Nurseries' Association which said that the voucher scheme, will stimulate the market to provide more places. It will give parents improved choices and drive up standards through healthy competition". There are many who see virtues in the Bill, as indeed do the Government. As I said earlier, I hope that that is something about which we can argue in Committee.

I should say that I found the somewhat hysterical reaction from the party opposite to the whole concept of vouchers to be rather odd in the light of its changing policies in so many areas. I ask the noble Lord—and perhaps this is something that he would wish to take up with me on a later occasion, although I do not ask him to intervene now—what is different about vouchers compared to the proposed training credits that the party opposite is now suggesting for 16 to 18 year-olds? Surely they are vouchers but by another name.

Having said that, I accept that there are a number of points that noble Lords would like me to address this evening. However, I am afraid that I shall not be able to cover the wide range of points that have been put to me. Nevertheless, we have considerable time between now and the Committee stage. I shall have time to write in some detail before the Whitsun Recess, or soon after we adjourn, on some of the specific points that other speakers have raised.

However, in effect, I should like to cover six principal points on vouchers. First, phase one and evaluation; secondly, bureaucracy, administration costs and parliamentary scrutiny; thirdly, the allegation that there will be lack of provision in some areas; fourthly, quality guarantees; fifthly—this is obviously something of great importance in this House and a subject which I consider to be of considerable importance in the light of the responsibilities that I have in the new merged department—the special educational needs provision; and sixthly, I should like to say a few words about the points raised by the noble Lord, Lord Prys-Davies, regarding Wales, the voucher scheme and the need for a pilot scheme. Finally, I shall say a word or two before I finish about the second part of the Bill; namely, grant-maintained borrowing and various aspects of it.

When talking about phase one, I should like to make it absolutely clear that we invited all local authorities to put their areas forward. Every authority had the opportunity to join in the scheme at the formative stage and to contribute to its development. If they had specific concerns about how the scheme would affect their areas, then the way to address them was through taking part in phase one and not criticising it from afar. But I have to say that it is simply their loss. Their communities have lost out too and a whole cohort of children have been denied access to a scheme designed—as I put it earlier—to increase parental choice and expand the availability of provision. Obviously I accept that there are only four areas in the scheme but they all genuinely want to take part in the scheme and make it work. I believe they have a wealth of experience and expertise and their close co-operation will prove invaluable. I am convinced that that can only benefit the development of the scheme.

I believe the close proximity of the three London boroughs will enable parents in one volunteer area to exchange their vouchers at another. That will provide considerable information about such cross-border activity. Obviously Norfolk's participation in phase one will allow the voucher scheme to be tested in a rural community. That is important to the noble Baroness, Lady Farrington, who has served on Lancashire County Council, which is an area I know well, and as regards the concerns expressed by the right reverend Prelate. I believe that there are enough areas to test fully important operational issues such as publicity, information and the arrangements for issuing, exchanging and redeeming vouchers.

Evaluation is an important matter. I believe there is no disagreement over whether the new scheme should be properly evaluated. I can give an assurance that it will be properly evaluated. First, in the short term we shall have to consider the operational arrangements during phase one. Any difficulties in practical matters such as publicity, information and so on will need to be ironed out before phase two. We shall work closely with the phase one authorities and providers and the voucher agency. We shall, of course, pay attention to the views of parents and other interests. But given that practical focus, we do not need at that stage some grand external evaluation of the kind that some noble Lords seem to envisage.

Secondly, in the medium term, the published initial inspection reports will also add to the picture on the crucial issue of educational quality. Inspection findings will be monitored by Ofsted as they become available. Thirdly, in the longer term we need to evaluate the benefits to children's later educational performance. That can only take place when the scheme has bedded down. The effects of subsequent development will not begin to be evident until children progress towards key stage one, and baseline assessment, if developed in a consistent way in response to work now being undertaken by SCAA, could well have a part to play. I can give an assurance that there will be appropriate evaluation. We shall make what information is available available to the House at appropriate times.

There have also been claims that the scheme itself creates excessive bureaucracy; that the costs are excessive; that the money is merely being recycled; and that new burdens are being placed on schools. I give an assurance that the voucher scheme will have small administration costs. We believe that is a small price to pay to give parents the real choice that we are offering. When fully up and running—with costs of some £730 million—the administration costs will be some £20 million, which represents some 2.7 per cent. Most of that will be spent not on administration but on inspection. I am sure that all noble Lords would accept that inspection is important and is valuable. As I have said, the vast majority of administration costs will be spent on the new inspection regime which would be necessary whatever scheme was set up.

As regards the scrutiny that the noble Lord, Lord Morris, sought over the arrangements, the Bill sets out the broad framework and the necessary legal underpinning for the grant; namely, what it can be used for, and allows for the use of the child benefit database, the funding of the inspection regime and so on. The arrangements will include all the bureaucratic administrative detail. I do not believe it is sensible to make that the subject of legislation. As I think I made clear in my opening remarks, the Bill also proposes that the definition of eligible children and providers will be set out in regulations.

As I have said, the arrangements themselves will cover the eligible providers, fixing the amount of grant, the administrative arrangements for assessing how much grant to pay to whom, by what means, and when, and possibly the employment of a contractor to operate the scheme. It is important that we get that right. I can give an assurance that the framework—a careful definition of what activities will be involved—will be set out in the Bill. As I said, I do not think it will be necessary for the House to get bogged down in the detailed administrative arrangements. But no doubt they are matters which we could discuss in some other way at some other point.

The noble Lord, Lord Tope, complained about lack of provision in certain areas. I wish to make it quite clear that when my right honourable friend the Prime Minister made his original remarks, he made it quite clear that although ultimately places could be needed for all children, we were never guaranteeing that places would spring up over night. However, over time we are confident that new places will come on stream. It is interesting to note that in one phase one area, Norfolk—or for that matter any of the other phase one areas—there are no parents complaining about being unable to find a place. As regards take-up in those areas, the noble Lord, Lord Walton, referred to a figure of not much more than 60 per cent. I do not know whether that figure applied to Norfolk or to all areas. I can assure the noble Lord that the latest figure for all four areas is some 87 per cent. In Norfolk the figure is some 95 per cent. of parents who have taken up the voucher scheme. That does not imply the voucher is too difficult to cope with or that the systems are too bureaucratic. That is encouraging.

Baroness Farrington of Ribbleton

My Lords, is the Minister prepared to give an undertaking that the amount of money available both for capital expenditure and per pupil in this age group that has been available in Norfolk and the other pilot areas would be the absolute minimum that would be available at any time for pupils were the Government to extend the scheme across the whole of England and Wales?

Lord Henley

My Lords, I take it that the noble Baroness is looking for identical sums of administration money available in the four areas to be made available when the scheme goes nationwide. I think that is what she was asking for. Obviously I cannot give that guarantee. Obviously in the first year the administration costs are likely to be higher; that is the point of a pilot. We hope to save money in the second and subsequent years as we go nationwide. The administration costs in this first year—which will cover a wider area than administration—are proportionately greater. However, long term, we are looking at administration costs of some 2.7 per cent., with most of that going on inspection. I believe that even the noble Baroness would accept that that is a cost which it is quite right to expend. We believe inspection is important, and I suspect that the noble Baroness does too.

Lord Ponsonby of Shulbrede

My Lords, the Minister gave the figure of 87 per cent. take-up, which is the figure I also was given by the London Borough of Wandsworth. Does he accept that the London Borough of Wandsworth has no idea what has happened to the other 13 per cent.? It does not know why those people have not applied or whether the take-up was fully 100 per cent. before. Does the Minister really think that this figure is as good as he is suggesting?

Lord Henley

My Lords, we would hope to hear more from the London Borough of Wandsworth in due course. As I said, the figure in Norfolk is 95 per cent. I think that is a pretty good figure. This is not a compulsory scheme and we are not talking about compulsory education which starts at the age of five; we are talking about a voucher scheme for those who want to make use of it. It might be worth finding out why some parents did not wish to take up the scheme, or whether they did not know of it, in which case there might be other approaches that need to be taken.

The noble Lord, Lord Dormand, in referring to Durham and the noble Lord, Lord Merlyn-Rees, in referring to Leeds, were worried—this has been a concern expressed on many occasions—that many LEAs, and particularly the high providing LEAs, would lose money. I give an assurance that that is not the case. So long as each LEA continues to recruit as many four year-olds as they do now, they will not lose any money at all. As it is there is an extra £165 million per year of new money to give vouchers to those children not currently receiving nursery education. It is available to many LEAs to increase the provision they have available. Similarly, as regards all those parents who the noble Baroness, Lady Farrington, says would like to opt out of this scheme, if they feel that the provision they are getting at the moment is good provision, then they are in effect opting out of the provision by staying where they are. Parents can make use of their vouchers for children to stay where they are. That is perfectly fair. It allows parents to put their money where their mouth is, and it allows other parents to make a similar choice: to send children to the schools or the nurseries of their choice.

The noble Lord, Lord Dormand, asked how LEAs will find the cost replacement if the cost exceeds the £1,100 value of the voucher. I can give an assurance that, so long as the parents continue to choose those schools, they will still receive the £1,100; the LEA retains the difference and will therefore be no better off and no worse off than it was. If a great many children leave the LEA schools, the LEAs will lose out. But my belief is that many LEAs will find that, if they provide good places, they have little to fear.

Baroness Hayman

My Lords, I am grateful to the noble Lord for giving way. Will he deal with the position of schools in LEAs which already provide education for four year-olds whose parents, whether through moving address, language, or other problems, do not claim their voucher? I understand that in the pilot schemes the schools are being funded for those children. Will the noble Lord give an assurance that that will continue? If it continues, why does he not fund the provision in the first place and not have the nonsense of the vouchers?

Lord Henley

My Lords, obviously protection of the appropriate source was needed in the pilot areas. If we found that that problem was likely to continue, it is a matter that we could address. I could, I hope, offer a degree of comfort to the noble Baroness on that matter.

I now turn to guarantees of quality in nursery education. That is very important. We believe that the scheme must be of a high standard. There will be four main elements for assuring quality. Providers of nursery education will have to be either an institution registered or exempt from registration under, I think it is, Part X of the Children Act, or registered as an independent school with the Department for Education and Employment, or a locally maintained school, day nursery or grant-maintained school. They have to confirm that they will work towards the desirable learning outcomes. I do not think that it is necessary for me to go into detail as to what SCAA has put forward on that basis, but I think that those are learning outcomes which most would accept as appropriate at that age. They have, further, to agree to be inspected regularly by Ofsted inspectors to maintain standards. I take the rather detailed point made by the right reverend Prelate relating to the nursery sections of voluntary aided schools. If the right reverend Prelate will accept it, I should prefer to write to him on that point. Finally, providers will have to undertake to publish information for parents giving details of staffing, admission arrangements, educational programmes and other important matters.

The noble Lord, Lord Merlyn-Rees, in asking about not insisting on qualified teachers, told us of his interesting experience, I think as an unqualified teacher in the county of Norfolk.

Lord Merlyn-Rees

My Lords, I should hate to upset anyone in Norfolk. It was said to me, "That's where you ought to go if you have no qualifications". That is a different point.

Lord Henley

My Lords, I take the noble Lord's point. I was speculating whether he had had the honour to teach my right honourable friend the Secretary of State for Education and Employment, and, if so, to offer him my congratulations on a thoroughly good job. However, I do not know how the ages fit in; we will leave that matter.

As regards not insisting on qualified teachers, it is important to recognise that many four year-olds are already in settings in the private and voluntary sector where there is no qualified teacher. Excluding such settings from the voucher scheme would do nothing for the quality of educational experience for those children. However, by allowing such settings to take part in the voucher scheme, new money would be injected, education inspections would begin and, over time, the quality levered up, should that be necessary. The quality could be high even without qualified teachers. It is vital that we acknowledge where we start from in this field rather than starting from some other point.

My noble friend Lord Skidelsky made the point that there was too much regulation and that we should not seek excessive regulation and inspection. We believe that it is right to seek to strike a balance between allowing parents a free choice and giving both parents and taxpayers the assurance that the places exchanged for vouchers are of good quality. I also believe, as I have made clear on other occasions, that inspection throughout the system can do a great deal to lever up standards. I realise that my noble friend may not accept my point. However, I believe that we must seek an appropriate balance.

I move to special educational needs. As I said, this is a matter of considerable importance to this House, and one on which this House always provides a wealth of expertise and knowledge which is a refreshing change from possibly other institutions.

The voucher scheme will, for the first time, enable all four year-olds to experience three terms of good quality education. For some children, that means, I hope, early identification of their learning difficulties. Further, I can assure the noble Lord, Lord Rix, that a firm commitment has been made to consult interested parties during Phase 1 about making it a requirement that all providers have regard to the SEN code of practice—a code which emerged as a result of the Bill going through this House, and one of which we can all be proud.

Further, all nursery voucher redeeming institutions of whatever status will be expected to include in published information for parents details of their SEN policy. That will state the admissions policy and what consideration is given to children with SEN, the facilities available to assist and allow access for children with disabilities, details of staff with knowledge and skills in SEN, and a named member of staff with responsibility for SEN, and links with outside bodies—the LEA and other schools.

As I said, I believe that there will be time for debate on SEN matters at a later stage. I do not wish to delay the House unduly this evening. But, in response to one remark from the noble Lord, Lord Morris of Castle Moms, and others, perhaps I may add this. The special educational needs consortium, from which I believe the noble Lord quoted, has accepted that an enhanced value for vouchers with special needs is neither necessary nor practical. No doubt, again, that is a matter that we can pursue. I do not believe that this is simply a question of pouring more money into the proposal but of making sure that the right practices are adopted in the institutions which are allowed to be voucher redeeming.

I turn briefly to Wales and the concerns raised by the noble Lord, Lord Prys-Davies, touched upon by the noble Lord, Lord Merlyn-Rees, and no doubt of concern to the noble Lord, Lord Morris of Castle Morris. I take those concerns on board. They are matters of a more detailed kind that I should like to put to my right honourable and honourable friends in the Welsh Office. However, I wish to address one point. The noble Lord called for a separate pilot scheme in Wales before we proceed. I do not believe that there is a case for such a separate pilot scheme for Wales. We made it clear that pilots were asked for throughout England and Wales. The simple fact is that there was no volunteer. In any event, it was made clear that any pilot would concern not the principle of the voucher scheme but only the operational aspect.

Baroness Farrington of Ribbleton

My Lords, will the Minister place on record that during the time that pilots were being sought, the Government, against the wishes of virtually everyone in Wales, imposed local government reorganisation, which affected the structure and make-up of almost every local education authority? Whether or not people would have wished to take part in a pilot scheme, it was a singularly inappropriate time for them to do so.

Lord Henley

My Lords, that might have been so, but I do not believe that it ruled out the possibility of a bid from Wales. There was no bid for a pilot scheme; and, as I made clear, the fact is that the arrangements for the pilot are not about the principle but about operational arrangements.

Baroness Thomas of Walliswood

My Lords, the point that has just been made is important. Which Welsh authority would have made the bid when the authorities were in the middle of changing over?

Lord Henley

My Lords, it would have been open to one of the emerging new authorities to make a bid. The shadow arrangements were in place and it was open to them. There was no bid and there is an end to it.

As I made clear, the arrangements for the pilot are not about the principle, they are about the practical mechanics of distribution, and so on. I believe that what we learnt from the pilots in Norfolk and the three London boroughs can be applied to Wales.

Baroness White

My Lords, the noble Lord has no true grasp of the difficulties in Wales which we suffer through the reorganisation of local authorities. I shall not detain the House by going into details, but Wales has more difficulties than most places in England.

Lord Henley

My Lords, I do not think that I can take the House much further than what I said. We do not believe that it is about principle but about the mechanical arrangements. Much can be learnt from the arrangements in England; and, as I said earlier, there was no bid from Wales.

Before I touch on the grant-maintained aspect, perhaps I may say a word to the noble Baroness, Lady David, about corporal punishment, on which she feels strongly. I believe that I answered a Written Question on it not long ago. As she knows, we will ensure that all four year-old children where the voucher is used in any institution are not subject to corporal punishment. I accept that the noble Baroness says that it does not go far enough, why do we not just forbid corporal punishment absolutely? That is another question for another Bill and another day. However, in a voucher-redeeming institution it is unlikely that some children would come along with vouchers and a mark on their backs saying: "Do not beat", while some without vouchers—I am not sure who they would be—had a mark saying: "Beat, if necessary". Perhaps we may leave the matter with an assurance to the noble Baroness that an institution will not be able to make the children bearing vouchers subject to corporal punishment. I believe that that goes so far as is necessary. I also feel that there is no question but that we comply with our international obligations in that area.

Lastly, I wish to say a few words about anxieties raised on grant-maintained borrowing. My noble friend Lord Skidelsky asked why we could not let local authority schools borrow. I am sure that my noble friend is aware that the responsibility for capital spending in local authority schools already lies in the LEAs. They can already borrow from the markets, and that is how they finance most of their capital expenditure on schools. However, it has a knock-on effect for the PSBR, and therefore Treasury permission is necessary on occasion. The fact that it affects PSBR is something over which we have no control; and, as my noble friend is aware, it is purely a matter for the rules laid out by the OECD.

Lord Skidelsky

My Lords, I thank the Minister for giving way. Will he confirm that under the present rules they cannot borrow on the security of their own property?

Lord Henley

My Lords, the individual school would not be able to borrow on its own property, it would be a matter for the local education authority to borrow in the usual way.

Lord Skidelsky

My Lords, I mean the LEAs.

Lord Henley

My Lords, I am not sure that I can confirm on what basis the LEA can borrow. It would have to seek permission in the usual way, and it has an effect on the PSBR. It would not be open to the school.

The noble Baroness, Lady Thomas, asked about the proceeds of grant-maintained school asset disposal and suggested that they should go to the LEA rather than to the grant-maintained school. We believe that grant-maintained schools, like local authorities, serve their own community. We believe it is right that they and the children and parents who make use of the schools should benefit from the assets that the schools no longer need.

Baroness Farrington of Ribbleton

My Lords, would the Minister at least be prepared to concede that where the entire community still has a debt to repay, the individual grant-maintained school ought only to have those capital receipts that accrue above the debt outstanding?

Lord Henley

No, my Lords, I do not accept that at all. It should be a matter for the LEA. However, no doubt we can discuss it on later occasions.

Earlier this afternoon, I mentioned the three important themes which have underpinned all our reforms over recent years and which underpin this legislation. They are the themes of choice, diversity and quality. Our reforms have given parents a say in the education of their children that would have been unimaginable 20 years ago. Not only do they now have more choice than ever before about the school their children attend, but through the appointment of parent governors they have a say about the way in which schools are run. This Bill takes that principle further, by giving parents the power to choose the kind of nursery setting—maintained, voluntary or independent—in which their children will be educated.

Because that decision will be made by parents, the Bill also supports diversity. Parents should be able to decide for themselves what is right for their child from the great diversity of provision available for the education of the under-fives. Some will want to choose maintained or independent nursery schools or reception classes in primary schools. Others will be keener on playgroups or Montessori schools. That should be up to them, provided that the setting in question is of sufficient quality.

Another aspect of government policy has been to give individual schools the freedom to take important decisions for themselves and to choose the direction in which they want to develop. The Bill takes those reforms further by giving grant-maintained schools the power to borrow from the market to finance capital expenditure.

Finally, the Bill complements the Government's commitment to raising standards in education quality, while parents will make decisions about the kind of nursery education that is right for their child. They need to know that what is being offered is of sufficient quality. Our proposals provide for that through the mechanisms I have spoken about.

Among the many speakers today we have heard some interesting contributions. With the possible exception of parts of the speech of my noble friend Lord Skidelsky, virtually all have spoken of the benefits of expanding nursery education. This Bill will provide for just that—for expansion to the advantage of all four year-olds in England and Wales. I commend the Bill to the Whole House.

On Question, Bill read a second time, and committed to a Committee of the Whole House.

House adjourned at twenty-eight minutes past seven o'clock.