Lords Sitting of 7 May 2002

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Guildford.

Convention on the Future of Europe
Lord Howell of Guildfordasked Her Majesty's Government:
When they next expect a report to be made to Parliament on the activities and progress of the current Convention on the Future of Europe; and at what intervals future reports will be made.
The Minister for Trade (Baroness Symons of Vernham Dean): My Lords, the Government will inform Parliament whenever there are significant developments to report regarding the Convention on the Future of Europe. In addition, the parliamentary representatives will keep their respective Houses fully informed of progress by reporting to the appropriate committee, as they did to the Select Committee of this House last week.
My right honourable friend the Minister for Europe also appeared before your Lordships' European Union Select Committee on 30th April and answered questions about the convention. He stands ready to do so again in the future.
Lord Howell of Guildford: My Lords, I am very grateful to the noble Baroness for that reply. I was aware of the European Union Committee's extremely successful and useful meeting the other day, to which I was invited. But, as she indicated, the missing character from that meeting was the Minister for Europe, who is a member of the delegation to the convention. It would be helpful to know how his and the Government's evolving views on the convention will be monitored by the other place and by this House.
Given that there are alternative models for the future of Europe which the convention is looking at, how will those be presented to the parliaments and people of Europe and of this country; or will there be one conclusion from the convention which we will have to take or leave?
Baroness Symons of Vernham Dean: My Lords, we are talking about a long period. We are still very much in the phase of listening to views about how this matter should go forward. As the noble Lord knows, the whole process will finish in about a year's time. There will then he a period for parliaments throughout Europe to consider the matter before we get to the intergovernmental conference. But it is important to remember that my right honourable friend the Minister for Europe gave his evidence separately. It is
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not that our Select Committee has not heard from him. I am sure that he will do so again on future occasions when asked.
In addition, as I have already said, we will be issuing statements both in your Lordships' House and in another place as and when there are significant developments.
If the noble Lord has some further suggestions he would like to put forward about how we might monitor this, I should be very happy to listen to them.
Lord Bruce of Donington: My Lords, is my noble friend aware how reassured we all are in view of the Government's statement that before any conclusions are accepted as suitable for the United Kingdom they must be clear and unambiguous?
Baroness Symons of Vernham Dean: My Lords, I hope that my noble friend listened very carefully—I am sure that he did—to what I said. We are going through what is being called—much as I dislike "jargonistic" phrases—the "listening phase"—listening to what is being put forward for the convention's attention. The proposed end for the convention is between March and June next year. Then there will be an opportunity for national parliaments to debate what has come out of the convention. There will be time for that to be concluded before the IGC starts towards the end of next year—that is towards the end of 2003.
Lord Maclennan of Rogart: My Lords, since the task of the convention is to produce a constitutional document which assists the European Union more effectively to promote the interests of its citizens and to reflect their democratic aspirations—that process will gain momentum during the summer and in the autumn after the national elections in Europe—can the Minister indicate what are the Government's preferences? Do the Government intend to publish a White Paper at some stage in the process; or, better still, to initiate a sequence of parliamentary debates geared to the key topics under consideration in the convention to enable Parliament to give full and timely consideration to those issues before the recommendations of the convention are set in a single frame?
Baroness Symons of Vernham Dean: My Lords, as the noble Lord, Lord Maclennan, who is an alternate member of the convention—and we are delighted that we have two such alternates in your Lordships' House—may know, my right honourable friend the Leader in another place has indicated that thought is being given to how the report back to Parliament should take place from the Government's point of view. It is important that your Lordships remember that there is not only the government report back from my right honourable friend the Minister for Europe but—your Lordships will also be interested to know—the report back from the parliamentary representatives, of which the noble Lord and my noble friend Lord Tomlinson are examples. I would be very grateful if noble Lords with views about how they

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would like to see the report back take place in your Lordships' House would come and see me; let us have a discussion about this. The Government's mind is reasonably open on this point. We would very much like to take advice from those of your Lordships intimately associated with this aspect to see the most appropriate way forward.
Lord Elton: My Lords, will the Minister go a little further and tell us what exactly will be the status of the document when we get it? What will be the effect of any debate which Parliament has upon it? Is it amendable? Is it guidelines? How do we influence the future and not merely express our opinions upon it?
Baroness Symons of Vernham Dean: My Lords, I think that I have gone quite far already in suggesting to your Lordships that there are a number of ways in which we might try to influence this debate. It is important to remember that we will be issuing statements and, as always, the Government will listen carefully to what your Lordships say as we reach various decision points in the convention. Also we shall have the opportunity, subject of course to what the usual channels say, of looking at what our own Select Committee is saying on this matter. Further to that, at the moment I really cannot give any cast-iron undertakings. But, as I have already indicated to the noble Lords, Lord Howell and Lord Elton, and to the noble Lord, Lord Maclennan, I would be very interested to discuss this matter with your Lordships to see what progress we can make which will be satisfactory to your Lordships.
Lord Tomlinson: My Lords, does my noble friend agree that perhaps it is a little premature to get too worried about the conclusions of the convention at this stage? Is it not perhaps very important that the widest range of opinions developed in your Lordships' House should be made available to the convention? Is it not therefore important that reports from the European Union Select Committee, such as the report on the second chamber, the report on common, foreign and security policy and the report on the future of the Court of Auditors should be submitted in the name of the House of Lords to the convention, so that before it reaches its conclusions it has the opportunity of taking into account some of the very valuable deliberation that has taken place in your Lordships House?
Baroness Symons of Vernham Dean: My Lords, I agree with my noble friend. Of course it is premature at the moment, at the very outset of this process, to be discussing conclusions. That said, I understand the natural concern of Members of your Lordships' House not only to have the opportunity to put forward their views to the Government but to have them listened to in Europe, where the decisions will be taken on the outcome of the convention.

Commonwealth Development Corporation
2.44 p.m.
Lord Astor of Heverasked Her Majesty's Government:
Why the Commonwealth Development Corporation has reduced its investments in sub-Saharan Africa and in the agriculture sector of developing countries.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Amos): My Lords, in 2001, almost half of CDC's new investments were in Africa. CDC remains a significant investor in the agribusiness sector both in sub-Saharan Africa and elsewhere.
CDC's reasons for selling investments in the agricultural sector may vary from case to case, as in other sectors. Considerations may include poor rates of return, fluctuating commodity prices or the opportunity to sell a successful investment to a business better placed to take it forward commercially.
Lord Astor of Hever: My Lords, the Minister paints a rosy picture. Why has overall investment in Africa by CDC capital partners dropped by one-third between 1996 and 2000 and agricultural investment collapsed to just five per cent? Why are the Government abandoning the poorest and most needy countries in Africa?
Baroness Amos: My Lords, I do not at all agree with the noble Lord. I made clear in my Answer that we are committed to investment in Africa and we continue to be committed to its agricultural sector. I must make clear that we absolutely support the current process of change in CDC. Noble Lords will recall that we debated legislation in this House under which CDC has been directed to become a provider of equity capital for business in poor countries. A switch has been made from debt to equity in all sectors. We continue to support the agricultural sector in Africa in a number of other ways. Noble Lords will know that sustainable development—a key part of which is agricultural development—remains a key part of our strategy.
I repeat that under the investment policy, 70 per cent of new investment as measured over a rolling five-year average must be in poorer countries. CDC should aim to make 50 per cent of new investments each year in sub-Saharan Africa and South Asia. Those targets have been met.
Lord Hughes of Woodside: My Lords, no policy change meets with universal approval or is without controversy. Having said that, is my noble friend satisfied that the current changes, designed to move the poorer countries of Africa out of the poverty to which they have been condemned for far too long, have the balance about right?
Baroness Amos: My Lords, I entirely agree with my noble friend. We are considering investment and

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development in Africa in a number of ways. Noble Lords will know from previous debates that development assistance is but one aspect of that. The engine and motor for change in African countries will be economic growth and investment. We are committed to ensuring that such investment occurs in the right way.
Baroness Gardner of Parkes: My Lords, is the Minister aware that a similarly worded Question was asked in her absence? There were many press reports at the time about how concerned everyone was about the extreme change of emphasis whereby big, smart offices were being set up and great emphasis was placed on business success without any thought for agriculture or for really poor people. It was said at the time that it was a great pity that the Minister was not here, as she would have been able to answer the Question. Does she appreciate how concerned are those of us who are interested in helping the poorest of the poor and how, frighteningly, the new policy does not appear to be directed in that way?
Baroness Amos: My Lords, I understand that extreme concern has been expressed not only in the House but elsewhere and I have read press reports of the change that has taken place. If I may say so, the concern comes from a lack of understanding of our strategy and policy. We remain committed to the policy set out in the 1997 White Paper, which is to work towards the elimination of world poverty. We are considering how best to achieve that. One aspect of that is to promote economic growth and investment and to create the right conditions within African countries to attract that investment but also to retain the savings within African countries—40 per cent of savings in African countries leaves those countries to he invested elsewhere.
But we have also developed our own rural and sustainable development policies. Since 1998, the Department for International Development has committed more than £580 million to projects that directly support sustainable agriculture. So, although CDC may be moving away from investment in smaller agricultural projects in Africa, the large-scale infrastructure projects to which it is committed match our commitment to ensuring that there is ample investment and growth. That means that the poorest of the poor will benefit.
Lord Oakeshott of Seagrove Bay: My Lords, is the Minister aware that, on their funds of £1 billion, the hotshot investment bankers who now manage CDC produced a negative total return—a loss—of £155 million last year? Does she accept that, given such a performance, there is no chance of its raising and managing private sector capital and that the public/private partnership that the Government have tried to launch for five years is a dead duck?
Baroness Amos: My Lords, I do not agree with that at all. All noble Lords will know that last year was a difficult year in investment generally. Noble Lords
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who have private investments will recognise that. We want to see a public/private partnership, and we are committed to ensuring that it happens. It will lever private sector investment into African countries. I do not accept that that will not happen. We are committed to it and are considering several ways in which we can ensure that it happens.
Baroness Trumpington: My Lords, does the Minister agree that economic growth is not a matter that readily comes to the mind of a woman in a remote village in Tanzania? Sub-Saharan Africa is not exactly rolling in milk and honey. The CDC was doing an excellent job in agriculture. I do not know whether the Minister has seen it at work, but I certainly have. That help is still greatly needed.
Baroness Amos: My Lords, I agree that CDC has done a good job and continues to do an excellent job. I agree that economic growth is not what springs to the mind of a woman in Tanzania who lacks access to water and sanitation. However, if the poor in Africa are to be pulled out of poverty, African countries need an average growth rate of 7 per cent per annum. We must help them to achieve that.

National Museums: Appointment of Trustees
2.52 p.m.
Lord Beaumont of Whitleyasked Her Majesty's Government:
Whether the Department for Culture, Media and Sport has issued a directive advising national museums not to appoint trustees over the age of 50.
The Minister of State, Department for Culture, Media and Sport (Baroness Blackstone): My Lords, no, we have not.
Lord Beaumont of Whitley: My Lords, I am delighted to hear that. I might add that I have no thing to declare, as, although aged, I am neither great nor particularly good.
Many of the people who help most with our museums and galleries are people with vast experience. Some of them are Members of your Lordships' House. Can the Minister confirm that the Government have no intention of dissuading museums and galleries from appointing older people?
Baroness Blackstone: My Lords, if the Government were to issue a directive of the kind to which the noble Lord referred, we would court a certain amount of trouble. I need look only at the Front Benches on this and the opposite side of the House for evidence of that. Were a directive to be issued suggesting that no body over 50 could be on those Benches, they would be rather empty.

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The Government want to have a wide age range represented in our museums and galleries, and we are trying to achieve just that. I shall give the noble Lord a couple of statistics that might interest him. In the past financial year, 72 per cent of all appointments at the DCMS were of people over the age of 50. For museums and galleries, the figure was 81 per cent. So, there is lots of scope for Members of your Lordships' House to take part.
Lord Strabolgi: My Lords, I congratulate my noble friend and the Government on the fact that such a directive has not been issued. Will the Minister assure us that it is not still being considered, as it could be construed as interference with the independence of national museum trustees?
Baroness Blackstone: My Lords, that is the first time that I have been congratulated because a directive has not been issued. The independence of our national museums and galleries and their boards is important. At the same time, they are non-departmental public bodies in receipt of substantial amounts of government money. From time to time, the Government might want to make encouraging noises, in certain respects.
If I may, I shall bore your Lordships' House with some more statistics. Only five per cent of trustees of museums and galleries are under 40; only 20 per cent are aged between 40 and 49. For that reason, we want to see boards recruiting more young people, and we encourage them to do so.
Lord Blaker: My Lords, does not the European Charter of Fundamental Rights ban discrimination on grounds of age, although not necessarily at the age of 50?
Baroness Blackstone: My Lords, I am sure that the European Charter is relevant to this area, as it is to many others.
Viscount Falkland: My Lords, does the Minister agree that the Question is interesting because ageism is as alive and well in this country as it is anywhere in the developed world? In the arts—the fine arts, in particular—there is a great fear that distinguished directors of galleries and museums will not be able to take up a role in which they can use their expertise, once they go beyond early middle age. One example is Sir Timothy Clifford, whose work in Scotland has been of incalculable value to that country. We hope that he will come home to England, but will we lose the scholarship and the eye apparent in his most successful career because he will be just under or over 60?
Baroness Blackstone: My Lords, I shall not comment on an individual case, but I am sure that Sir Timothy Clifford has huge experience and expertise, which, I hope, he will be able to use in various contexts. However, all posts in public life come to an end at some point because we have retirement ages. I assume that
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the noble Viscount is not proposing that people should never retire from such posts or move on and make other contributions to public life, without necessarily fulfilling a full-time executive role.
Baroness Howe of Idlicote: My Lords, I join in the congratulations on the non-directive. However, does the Minister recall the case of Price v. Civil Service Commission? That was an early case of indirect sex discrimination, which resulted in the removal of most—if not all—age limits for entry into the Civil Service. Does the Minister agree that the test for all jobs or appointments should be whether the applicant has the qualifications and experience required? That should also apply to re-appointment.
Baroness Blackstone: My Lords, in discussing appointments to the Civil Service, we are moving a long way from the Question on the Order Paper. I am afraid that I do not recall the case cited by the noble Baroness, but we want to see the best possible use of people with qualifications and expertise. We are achieving that for museums and galleries, and we have many people who give their time freely to support the work of our museums and galleries. It would, however, be an advantage if we could find and encourage rather more younger people to take part as well, given the statistics that I have just given the House.
Lord Mackie of Benshie: My Lords, does the Minister agree that it is the contents of museums that should be old, not the trustees?
Baroness Blackstone: My Lords, the contents of museums can be old and new, and the same ought to apply to their trustees.

Palestine: Civic Infrastructure
3 p.m.
Baroness Williams of Crosbyasked Her Majesty's Government:
What steps are being taken by the European Union Council of Ministers to seek compensation for European Union-financed infrastructure destroyed by military action in the Palestinian territory.
Baroness Amos: My Lords, the damage to EU and other donor-funded projects caused by Israeli military actions was first discussed by EU Foreign Ministers at the General Affairs Council on 28th January. Following that meeting the EU demanded that this practice stop, and reserved the right to demand compensation in the appropriate fora. The European Commission continues to monitor and cost the damage arising from recent IDF operations.
Baroness Williams of Crosby: My Lords, I have no interest whatever in laying blame but, according to the European Union Commission, the total value of the destruction of the civic infrastructure of Palestinian

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territory was of the order of 19 million euros. Approximately two-thirds of that sum was provided by bilateral aid from individual EU member countries. The destruction included Gaza airport, the Palestinian Broadcasting Authority and at least five of the new civil police camps which have been established as a result of EU aid.
Does the Minister agree that, if we are to create a Palestinian state with the kind of infrastructure which will offer young Palestinians some hope that might lead them away from terrorism, it will be vital to replace that infrastructure? At a meeting of the so-called Oslo donors on 25th April, it was estimated that the cost of rebuilding the infrastructure would be at least 2 billion dollars, of which 800 million dollars still has to he found in this year alone. Does she consider it vital that, when the four-part conference meets next month, it considers how donors can be given proper guarantees that neither side will involve itself in the destruction of the infrastructure, which is so vital to the future of the Palestinian territory?
Baroness Amos: My Lords, I entirely agree with the noble Baroness, Lady Williams, that the recent incursions in the West Bank have caused extensive damage not only to the physical infrastructure but also to institutional capacity. A damage assessment is being conducted by the international agencies; a joint World Bank/L NESCO report is due to be circulated by 13th May; and follow-up action will then be discussed at a local aid co-ordination committee meeting later that week .The European Commission has pledged to lend its full support to the reconstruction of the destroyed infrastructure and the rebuilding of the Palestinian Authority. I agree with the noble Baroness that this will be an important part of the peace-building effort.
Lord Wright of Richmond: My Lords, on 23rd April 2002 (Hansard, col. 125) I asked the noble Baroness the Minister whether she would confirm that the British Government still regarded the Palestinian Authority, under its elected President, Yasser Arafat, as the legitimate administrator of the Occupied Territories. By what I fully accept was an oversight, the noble Baroness failed to answer my question. In the light of Prime Minister Sharon's reported attempts to exclude President Arafat from the peace process, and in the light of the regrettable statements reported as having been made by Mr Netanyahu in Trafalgar Square yesterday, comparing President Arafat with Hitler, Saddam Hussein and Osama bin Laden, may I now ask for a reply to my question?
Baroness Amos: My Lords, the answer is, yes, it is for the Palestinian people to chose their leader.
Lord Janner of Braunstone: My Lords, when considering the question of financing the Palestinian Authority, can my noble friend tell the House how much of the finance that has been provided, by the European Union or otherwise, has provably been used for the purposes for which it was provided, and what
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has happened to the rest? Furthermore, can she kindly tell us how much has been paid by the Saudis, the Iraqis and the Iranians to cover the cost of the intifada and the suicide bombing?
Baroness Amos: My Lords, the EC's humanitarian budgetary assistance for the Palestinian Authority is framed firmly within a number of conditions which are designed to ensure financial probity. These include keeping expenditure within a pre-agreed austerity budget, non-accumulation of arrears, consolidation of revenues under the Ministry of Finance and satisfactory proposals for reform. Those arrangements are closely monitored by the IMF and payments are transferred to the Palestinian Authority only after the IMF has verified that the money has been properly spent according to the agreed purpose. We have no reason to believe that there has been any misuse of EC money.
Lord Howell of Guildford: My Lords, of course the civic infrastructure of a future Palestinian state must be rebuilt and we all recognise that. However, will the Minister accept that there have been some concerns in the past that the transfer of moneys from outside, in particular from the European Union, have not always ended up in the right place, and that there is evidence that some of it has gone to weapons rather than infrastructure and to terrorists rather than to the civic order? Will she assure us that for any future moneys to be transferred from the European Union, and I am sure that there should be, proper safeguards will be in place to ensure that the money goes into infrastructure and not into undesirable purposes?
Baroness Amos: My Lords, I think I made it clear in my previous reply when I mentioned the arrangements which have been made to monitor the European Commission's humanitarian budgetary assistance to the Palestinian Authority, that the money is well-monitored by the IMF and is transferred to the Palestinian Authority only after there has been verification that the money has been properly spent.
The IMF is satisfied with the accounts it has seen to date, but there is always room for improvement. The World Bank is planning to undertake a detailed assessment of the Palestinian Authority's financial management processes and systems with a view to designing ways of improving their transparency and their effectiveness. I hope that that review, and the outcome of that review, will reassure noble Lords.

Business
3.8 p.m.
Lord Carter: My Lords, at a convenient moment after 3.30 p.m. my noble friend Lady Blackstone will, with the leave of the House, repeat a Statement which is being made in another place on the draft communications Bill. After that, my noble friend

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Lady Blackstone will, with the leave of the House, repeat a reply to a Private Notice Question in another place on Wembley Stadium.

Land at Palace Avenue, Kensington (Acquisition of Freehold) Bill
The Chairman of Committees (Lord Tordoff): My Lords, I beg to move that this Bill be now read a second time. It may be of assistance to noble Lords who wonder what it is about if I say that the Bill is a technical one. It allows the acquisition, subject to the agreement of the Secretary of State, of a small amount of freehold in an area of land adjoining an hotel in Kensington which, I understand, is by way of being a flying freehold, although that is subject to correction if anybody wants to check it. At present the land is leased to the hotel under the Crown Lands Act of 1702, which I believe was designed to stop the king of that time flogging off the Crown lands. The land cannot be disposed of except by way of a lease for a maximum of 31 years. The effect of the Bill is to disapply that Act and allow a leasehold of a longer period. I commend the Motion to the House.
Moved, That the Bill be now read a second time.— (The Chairman of Committees.)
On Question, Bill read a second time, and committed to an Unopposed Bill Committee.

Education Bill
3.10 p.m.
The Parliamentary Under-Secretary of State, Department for Education and Skills (Baroness Ashton of Upholland): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(Baroness Ashton of Upholland.)
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTEES in the Chair.]
Clause 6 [Exemptions available to qualifying schools]:
Lord Pestonmoved Amendment No. 38A:
Page 5, line 10, at end insert "or local education authority"
The noble Lord said: In moving Amendment No. 38A, tabled in my name and that of my noble friend Lady David, I shall speak also to Amendments Nos. 43A and 47A. I had intended to start by making an acerbic remark or two. The exodus from the Chamber helps me enormously in that.
Education and local education authorities used to be dear to the hearts of my noble friends, but given their lack of contribution to the Committee stage of this Bill, clearly times have changed. However, I still live in hope that, apart from my noble friend Lady
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David and myself, one or two other colleagues might occasionally join the debate as it develops over the next 12 hours or so.
Local education authorities and local government in general feel neglected and unloved. Not only is that true generally, as I have said, but it is particularly true in relation to this Bill. My own view is that, apart from their important role in terms of local democracy, the contribution made by LEAs to education has been vital over the past century and, in my judgment, should continue to be so. However, it is difficult to interpret the Bill in any way other than to suggest that LEAs will continue to be neglected and unloved, given the emphasis placed by the legislation on all kinds of other organisations rather than LEAs themselves. The fact is that LEAs still have a leadership role to play in education and, more importantly, I do not believe that the law either has been changed or is proposed to be changed to such a degree that the earlier responsibilities of LEAs will disappear. It is still the case that, when things go wrong, LEAs will at the centre of having to put them right.
Those are my background remarks. The amendments have allowed me to make those observations, but they also reflect my particular concern that, in this part of the Bill, provision is being put in place for successful schools to vary both the national curriculum and matters such as teachers' pay and conditions as part of their earned autonomy. That move was heralded in the education Green and White Papers.
Last Thursday I argued that I was not happy with the part of the Bill enabling schools to vary teachers' pay and conditions from nationally agreed scales. I do not resile from my worries over that matter. However, what appeared to concern most noble Lords was whether schools would bid above nationally agreed scales in order to obtain scarce staff and thus produce adverse local effects. I believe that I was alone in suggesting the reverse danger; that of schools bidding down teachers' pay and conditions. I have to admit that no one agreed with me; nevertheless, I have gone on record in saying that movements in both directions are worrying.
Continuing with pay and conditions under this general rubric, my second-best position is that, if such a freedom is to be granted to certain schools, then it should also be granted to local education authorities confronting problems within the schools for which they remain responsible. As I said, I am not particularly keen on the freedom in the first place, but if it is to be conferred, then I see no logic in denying it to LEAs.
Turning to the national curriculum, I shall refer right back to the 1988 Act which my noble friend Lady David and I dealt with from the Opposition Benches in this House. We then took the view that the curriculum should be small and limited and should not be made too prescriptive. Beyond that, schools should be given a great deal of freedom. I recall an amendment tabled in my name and that of the late lamented Lord Joseph asking for precisely that. There are certain basic elements of education that are so fundamental that they should be made compulsory within the national

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curriculum, but no more than that should be stipulated on a compulsory basis. Guidance and the freedom to choose should obtain beyond that point.
For those noble Lords who are new to your Lordships' House, that Bill was passed in the bad old days when there were vast numbers of Tory hereditary Peers in the House. Although very many of those Tory Peers agreed with our view, in those days the Whips simply said, "No, the Bill must be carried and we do not want to accept amendments of this kind". Such an approach was not unknown at the time. Happily, however, experience gained in the intervening years has shown that the need to have a flexible curriculum built around a core in which there was no flexibility was right and everyone has followed our thinking. I am only sorry that Lord Joseph did not live, as I have, to see that what we argued for then turned out to be correct.
I still believe in flexibility within the curriculum, but I do not see why that flexibility should be restricted to a certain group of schools. Thus the other reason for tabling the amendments is to enable my noble friend on the Front Bench to explain to the Committee why, if such flexibility in the curriculum is a good idea with regard to "earned autonomy"—in future I shall not be using that expression very often—the case made in support of that position should not also apply to local education authorities.
To summarise, my argument is twofold. I wish to express my general support for local education authorities, which I hope will be echoed by my noble friend, and I seek to change the Bill so that what is good enough for a sub-set of schools should also apply to LEAs. Thus the freedom could be applied to all the maintained schools for which an authority is responsible in any one area. I beg to move.
3.15 p.m.
Baroness Blatch: The noble Lord opened with his acerbic comments, which I shall leave for the record to show. He went on to discuss the importance of LEAs maintaining their role and, again, I have no argument with that position. Perhaps I may put one or two questions to the Minister.
I assume from the amendments that an LEA would be free to apply on behalf a single school, a group of schools or, indeed, all the schools in its area. Given that, if a single school and/or a group of schools wished to be considered for earned autonomy, why should they not make the application themselves? One argument that has a certain appeal is that, if a group of schools wishes to exercise the freedom, then what the noble Lord suggests may well provide a means of cutting down on bureaucracy. But if we apply what the Minister has stated so far in the debate with regard to applications being made for earned autonomy, then each school will have to be considered on its own merits as regards whether it is a fit and proper institution to be awarded earned autonomy. I am not sure that much time would be saved.
I wonder whether the Minister will say that a group of schools could be considered and that an overall judgment would be made on whether the group was
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capable of accepting responsibility for exercising such a form of management. When we discussed the clauses covering earned autonomy, we argued that there should be a presumption that all schools could gain earned autonomy unless, for one reason or another, the Government believe that a certain school was not a fit institution to take advantage of it. The Government did not appear to like that suggestion.
Indeed, the papers giving further information on these clauses suggest that only 10 per cent of our schools may be given permission to enjoy earned autonomy. I still have serious reservations about that. I would imagine that 30, 40, 50 or even 60 per cent of our schools would be more than capable of running their own affairs. Indeed, I would suggest that that would be the case for an even higher percentage. Many schools will be upset if the criteria are drawn so tightly that only 10 per cent of all schools are allowed to exercise earned autonomy.
There is an underlying question that I should like to put to the Minister. What would be saved if an LEA made an application on a school's behalf, given that earned autonomy is granted when an institution itself declares that, "We believe that we have sufficient expertise to meet the criteria set by the Government for running our own affairs", and thereby gains exemption from a number of pieces of legislation designed to raise standards in schools? Am I right in saying that, whether it applies in a group or through a whole LEA, each individual school would be subject to a school-by-school critique as to its suitability for earned autonomy?
Baroness David: I do not want to follow the noble Baroness, Lady Blatch, in her arguments; I want to follow what my noble friend Lord Peston said about local education authorities. I said at Second Reading that one of the things I like about the Bill is that it gives greater opportunities for local education authorities, which had been downgraded under the previous government. I hope that during the course of proceedings on the Bill my noble friend the Minister will give more importance to LEAs and their roles. This amendment gives her an opportunity to do that.
Lord Dearing: At the risk of being repetitious—I confess it—I wish to speak again on this clause. I share the concerns of the noble Lord, Lord Peston, in regard to not undermining the position of local education authorities. I declared an interest previously as a vice-president of the LGA and I do so again.
My question concerns the principle of "earned" autonomy as opposed to "needed" autonomy. It is a false idea that you earn autonomy. The issue is what is needed for the best education of young people. We are moving towards that in the Green Paper for those aged 14 to 19—and three cheers, say I—but there is a serious problem in particular areas and in particular schools with regard to those aged between 11 and 14, where we lose too many children from education because they cannot engage with the mandative curriculum.
I have argued previously that there is no need to relieve a duty to apply the curriculum in schools where there are excellent results; it is not a handicap to them

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But I have spent some hours in the past week in a school which has serious problems, and part of those serious problems involves engaging all the young people, particularly from 11 to 14. The curriculum is the problem. I believe that through the good offices of the LEA—okay, the school cannot be trusted entirely—and its judgment that this would help to achieve better results, then there is a case for "needed" as opposed to "earned" autonomy.
As to pay, I have said before that it is the most expensive game I know to engage in unless you are an expert. I fear that the trade associations would be much more expert than schools and it could be a worrying game.
Schools in difficulties are losing teachers in a competitive market in languages and in science, where there are scarcities. Teachers are naturally attracted to the successful schools with good GCSE and A-level results. Perhaps the need for flexibility in the other schools is more significant in the context of good education. Again I would argue for the role of the LEA in taking judgments—certainly in being involved in the decision.
Lord Lucas: I largely support the noble Lord, Lord Peston—there is a role for LEAs. I do not share the noble Lord's views as to precisely what that should be, but it is no good having everything centralised and then the central organ deciding it needs a lot of quangos locally because it does not know what is going on. The LEA is there to provide that kind of function.
I agree entirely with the noble Lord, Lord Dearing. I do not know how long it is since the Minister—or, perhaps more recently, anyone in the Box—has looked at what the 11 to 14 science curriculum looks like, but I suggest that they pick up a copy of GCSE Bitesize, or something like that, look at it and see if there is one fact, method or anything else in there which they have used since they were 11 to 14. It may be used in a trivia quiz but, frankly, there is so much in there that is extremely boring. Anyone who has half an eye turned to the practical world rather than to succeeding in academia will easily be turned off by that kind of thing.
I cannot confess that I have explored other areas of the curriculum. There is probably more fascination in English, history and other areas, but certainly the science—and I am a scientist—at 11 to 14 is extremely dull. I can quite see why schools which are having a difficult time in educating their children may think that there are better areas in which they could contribute. They could contribute much the same kind of skills if they were to look at the rather more practical applications of science than the stuff that has been washed up in the curriculum.
As to whether LEAs should be allowed to apply for exemption in the same way as schools, I share my noble friend's view that where it is a matter for schools, then schools should apply. But there are several areas in which an LEA may well benefit from that kind of exemption—for example, in the area of transport. School transport has been a problem for a long time.
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It is expensive, it is difficult to organise and there have been various cut-backs over the years. In the Bill we are looking at transport for 16 to 18 year-olds, but there is already a three-mile limit. I do not suppose noble Lords know many people who would let their kids walk three miles to school. The whole business has got caught up in the way that legislation is phrased. For instance, you are not allowed to charge people for school transport so you make them pay for other forms of transport. There are all kinds of inflexibilities. At last one or two experiments are taking place and we are looking at new ways of providing transport: for example, yellow bus schemes. Some kind of flexibility for LEAs in this area could well be a benefit.
I should also like to see flexibility for LEAs in the area of special educational needs provision. You can get into a terrible jam in an LEA if you suddenly find that you have more serious autism cases cropping up and you do not have within your patch the provision to cater for them. It can cost anything up to £250,000 per year per child to deal with severe autism, but if you can provide for it in your patch or in conjunction with another neighbouring local authority or two, you may well be able to manage it for £100,000 or £150,000. With 10 or a dozen kids, that would be an enormous saving of money, but you cannot do it under current regulations.
Other problems also flow from the inflexibility of SEN legislation and the other legislation governing the way local authorities work. We should allow local authorities to look at different ways of providing, particularly when dealing with rarer and more complicated special educational needs—for example, by getting together with other providers or cross border and so on—and if they need exemption from the law, certainly the Secretary of State should be prepared to consider that. So I support the words of the amendment of the noble Lord, Lord Peston, but not entirely the spirit behind them.
Baroness Walmsley: I disagree with the noble Lord, Lord Lucas, about the way science is taught in schools these days. I have observed a number of science lessons quite recently and in most of them the children were very interested in the subject. It depends on the way it is taught.
As to the comment of the noble Lord, Lord Peston, in regard to the curriculum, we on these Benches have long promoted the idea of a minimum curriculum entitlement with a certain amount of flexibility around it. That flexibility would give the opportunity to add more relevant science lessons for the kind of children referred to by the noble Lord, Lord Lucas.
My noble friend Lady Sharp of Guildford mentioned last week that we on these Benches are not happy with the concept of the very limited earned autonomy in the Bill. We agree with the noble Baroness, Lady Blatch, and the noble Lord, Lord Dearing, that all schools should have earned autonomy unless there is a good reason why they should not.

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For those reasons, I support the amendment. When making applications for autonomy the local authority must be involved. It has responsibility for all the children in an area and anything that one school does affects all the others. It is absolutely crucial that. the LEAs are central to this issue.
Baroness Perry of Southwark: I intervene simply to remind the Minister that many of the most interesting and important innovations that have taken place in education in the past decade have come from local education authorities—from local management of schools, to school-based teacher training, to innovations in civic responsibility in the curriculum. I could name dozens more very good innovations. I refer, for example, to the way in which new teachers are introduced into the profession and so on.
Local authorities have played a major role in innovation—in terms of new thinking in relation to the curriculum, as well as in the new organisation of schools. It would be an insult to the splendid history that local authorities have, and to their current involvement with schools, if they were not allowed to apply for exemption where they have a sensible plan for innovation and if they were not allowed to coordinate and comment on applications from individual schools within their area.
3.30 p.m.
Baroness Ashton of Upholland: The debate has been an interesting opening to the second day in Committee. I am grateful to everyone who has contributed.
Perhaps I may say immediately to my noble friend Lord Peston that I, too, am a great supporter, as are the Government, of the role and work of local education authorities. Like the noble Baroness, Lady Perry, I pay tribute to the innovation that they have given us in the past, as they no doubt will in the future.
I am not against the principle behind the amendment. I agree that successful LEAs, as well as schools, should be able to earn additional freedoms and flexibility. I am glad that my noble friends Lord Peston and Lady David tabled the amendment. It gives me the opportunity to make it clear that, in practice, LEAs can already do so.
In committing themselves to deliver enhancing, stretching outcomes in local public service agreements, local education authorities already have the opportunity to earn additional freedoms and flexibility. Indeed, some 36 local authorities have signed a local PSA with central government; and nearly all of the remaining upper-tier authorities are scheduled to do so.
There are a number of local authorities—although perhaps I may focus on one—where the PSA has focused specifically on education. There is a local authority that has examined, for example, the attainment of ethnic minority children within its area and set itself a challenging target to ensure that their needs are met.
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Turning to issues raised, the noble Lord, Lord Dearing, referred to the 14 to 19 strategy. I agree that it is an important part of where the Government are trying to move for the future. I understand his comments about schools in challenging circumstances. It is precisely because we want to make sure that schools are able to think of new ideas that we have developed the power to innovate, which I trust the noble Lord will support. That power is available to any school that wishes to apply for it. Indeed, our hope and aspiration are that schools facing difficulties will come forward with ways in which they can develop new ideas. Local education authorities are able to come forward under the power to innovate in just the same way as schools.
I think I agree with the noble Baroness, Lady Walmsley, on the 11 to 14 science curriculum. I have 12 year-old who is in the middle of it. I quite enjoy it at the moment—he will appreciate that remark. It is partly why we are working hard on our key stage three strategy, to ensure that the dip that we see in the achievement of some children when they move from primary to secondary school is dealt with, and that the transition is dealt with better so that they continue to grow. Science is one of the areas on which we shall focus. Our children do exceptionally well at primary school at five; that does not carry through to key stage three in the same way. We should like to see that addressed.
The noble Baroness, Lady Blatch, asked a specific question about schools applying for the criteria. She was right: it will be for individual schools to apply. We want to make application as easy as possible. Therefore, we shall be ensuring that schools know what the criteria are, so that in a sense they are able to see their eligibility and the system is not complex. I fully endorse the points made about special educational needs. Again, we trust that the power to innovate will be used, as will earned autonomy, to support children with special educational needs.
I do not believe that the amendment would provide an appropriate way in which to give LEAs earned autonomy. The flexibilities on offer relate specifically to the curriculum and to teachers' pay and conditions—matters on which we believe schools, not LEAs, are best placed to decide what is appropriate. That is not to say that LEAs should not be consulted and, where appropriate, have an important contribution to make.
On the question of the number of schools able to apply for earned autonomy, I remind the Committee that I have committed the Government to a reexamination of the criteria. We are committed to proceeding with caution in the best interests of the education of our children, while recognising that we want earned autonomy to develop. Therefore, whatever we are looking for in terms of numbers now is where we begin and not where we end. I have made a commitment to re-examine the matter, and I shall bring forward further ideas on Report. I hope that with those reassurances my noble friend will feel able to withdraw his amendment.
Lord Peston: I thank my noble friend for her reply. I also thank Members of the Committee who have taken part. Our short debate has illustrated a point that I made right at the beginning; namely, how difficult it is, certainly for me, to understand the Bill. I found, for example, the contribution of the noble Baroness, Lady Blatch, particularly enlightening. She interpreted this whole area quite differently from the way in which I had interpreted it. I am not saying that the noble Baroness is wrong and I am right; I simply draw the attention of the Committee to the fact that the Bill is not clear.
Equally if not more significant was the distinction made by the noble Lord, Lord Dearing, between "earned" and "needed". I had taken it for granted that any changes were in large part needed and not earned. Again, I may misunderstand the Bill totally.
I had assumed also—a point that emerged, perhaps unintentionally, from my noble friend's remarks—that many problems and needs are frequently not to do with a specific school but with a whole local authority area. I very much follow the remarks of the noble Lord, Lord Dearing, on the subject. My interpretation was that the solution was not to be found within an individual school but within the whole LEA. If the LEA does not have the powers to do that—and I shall reflect on whether it does or not–
Baroness Ashton of Upholland: I am sorry to interrupt my noble friend, but I want to make the point that the power to innovate, which is available to local education authorities, is specifically geared for schools in challenging circumstances. We are looking to schools that are successful and well led to have earned autonomy, which will be permanent. The term "earned autonomy" may not suit everyone but at least it describes what we are trying to do. That is the difference.
Lord Peston: I thank my noble friend.
Baroness Blatch: I thank the noble Lord for giving way. I am sorry if I interpreted the provision wrongly. My understanding was that the clauses related to individual schools receiving earned autonomy. My understanding was that when an LEA was included as an applicant it would apply for the schools in its area.
I agree with the Minister that innovation is there for the schools referred to by the noble Lord, Lord Dearing; namely, those that require more help and want to do more for those young people who are dislocated from mainstream education. The clauses on innovation are more appropriate for that.
Both the noble Lord, Lord Peston, and my noble friend Lord Lucas spoke about freedom for LEAs to be exempt from legislation. That was the question answered by the Minister. She did not appear to answer the question about an LEA acting on behalf of its schools. We know now about an LEA earning autonomy, but I do not know the Minister's response to the idea of an LEA acting for the schools in its area.
Baroness Ashton of Upholland: We are framing autonomy in such a way that it is for schools to apply
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individually, not as a group. We have not yet considered the idea of a group application. The basis on which we wish to go forward is with schools applying individually.
Lord Peston: I thank everyone for their interventions. I have not finished yet! I am not for a moment saying that the interpretation of the noble Baroness, Lady Blatch, is wrong; I am simply pointing out that it is different from mine, and I shall think about it. I am more than willing to think that I am wrong.
I cannot resist a remark or two on the science curriculum, although I shall wait until we reach the part of the Bill dealing with the 14 to 19 science curriculum to comment on that. However, I have a sinking feeling that it will arise at a time when I am unable to be present for the debate. As regards the earlier curriculum, when we debated religious and moral issues late last Thursday the distinction between value judgments and other propositions emerged.
As always, when one goes home from this House, one thinks of infinitely better arguments than one used when on one's feet. Following the noble Baroness, Lady Walmsley, I decided that the argument that I should have used was this. In elementary Newtonian mechanics I was taught how to calculate the range and trajectory of a gun, and that kind of thing. I was quite good at it. But I was not taught that it was a bad thing to point guns at people, let alone fire them. It seems to me that there is that distinction there, but I would not get the one confused with the other.
To go back to my main point, although I have never had the need to calculate the range and trajectory of a cannon or anything else, it is an important part of the syllabus. If I were teaching it and a young person said he was bored, I would say it was good for him to be bored, because that is the nature of teaching elementary Newtonian mechanics. I used to say that about economics generally to anybody.
Having said that, I shall think further, as my noble friend the Minister has said that she will, too, but for the moment I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 39 not moved.]
Lord Lucasmoved Amendment No. 40:
Page 5, line 27, at end insert—
"( ) The Secretary of State or the National Assembly for Wales may from time to time publish statistics to inform the public of the effects of the application of this Chapter."
The noble Lord said: Returning briefly to the previous amendment, if the noble Lord, Lord Peston, wants a modern illustration that will fascinate people, how Beckham bends a football is a rather more interesting and topical way of looking at Newtonian mechanics than firing cannon shells. Sadly, the curriculum has not caught up.
I apologise for not having been here yesterday, which is when I should have been here in order to make sure that Amendment No. 40 was grouped with Amendment No. 363, which sets out the main reason

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for it—to deal with the general question of the Government's statistics. In the circumstances, perhaps we should leave Amendment No. 363 to another day and concentrate on Amendment No. 40. I shall say merely that if we have a lot of experimentation and variation in the system, it is important that we should be given a good range of information from which the public can draw conclusions and that that information should be presented regularly and, most of all, consistently. I do not have any particular views on the form in which it is presented. In the past, developments such as education action zones have been characterised by a lack of information rather than by a presence of it. I hope that these reforms will be different. I beg to move.
Baroness Walmsley: I support Amendment No. 40. If the Bill results in a lot of experimentation, the general public will be very interested and I am sure that they will want good quality factual information on which to base their judgments on these measures.
Amendment No. 50, which is also in this group, returns to the subject of parliamentary scrutiny, specifically the need for an annual report to Parliament about the earned autonomy provisions. The aim of the amendment is to ensure that the Secretary of State's decisions on allowing certain schools to be exempt from education legislation are subject to parliamentary scrutiny at least once a year. Subsection (2) of the amendment specifies that the annual report shall include details about the level of negotiations in schools that have opted out of the pay and conditions document. Rather than seeking to provide for teacher negotiations on the face of the Bill, as did an amendment to Clause 6 that we debated last week, this amendment offers a less prescriptive compromise. The aim is only to ensure some account ability for all opted-out schools in relation to teachers' pay and conditions.
What accountability would be in place without the clause for schools that opted out of the teachers' pay and conditions legislation? Last week, the Minister suggested that the Secretary of State will lay orders and that that puts matters on the public record. The Secretary of State laying orders for regulations is not the level of accountability that we seek. I wonder whether the Minister can make any comment about that.
3.45 p.m.
Baroness Blatch: There is a question that the Government have to answer here. We understand that there is a great deal left to consultation and a great deal left for detail to follow in regulations. In responding to the previous amendment, the Minister said that the Government have been advised to proceed with caution on their proposals for earned autonomy. They are apparently envisaging about 10 per cent of schools earning autonomy. The Minister will know that a number of us on all Benches believe that a much larger number of schools will qualify for earned autonomy by any criteria. The Government have two choices: either they draw the criteria so tightly that no more than 10
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per cent of schools would get through and qualify for earned autonomy; or they draw them in the normal way, as they would want to draw them, but then award autonomy to only 10 per cent, either on a first come, first served basis or by selection. The schools which will be most affected by the proposal should understand how that 10 per cent will be selected—whether the criteria will be drawn artificially to keep the numbers down or whether the criteria will be general, but only 10 per cent of schools will be selected.
The question is pertinent to the point raised by my noble friend Lord Lucas about evaluation. Either this is a pilot or it is not. This is a Bill for the future. Schools will earn autonomy or not, as the case may he. If it is a pilot, the parameters within which it will operate must be written on the face of the Bill, or at least known at this stage of our discussions so that we understand with what we are dealing.
Lord Peston: I have one question for my noble friend the Minister. The Government are fully entitled to say that their thinking is going in this direction and that they require support from your Lordships to go ahead and try it. One aspect that has troubled me— the noble Baroness, Lady Blatch, put her finger on it by using the word "experiment"—is that this is not an experiment. This may be a misinterpretation, but schools that get such autonomy will have it once and for all. We have all wondered what happens once those who earned the autonomy are no longer there and those who have replaced them could not conceivably have got it if they had applied. That is my definition of an experiment. We would then have to think about the issue again. I thought that the Government's position was that autonomy could be earned once and for all. Could we have some clarity on that? The issue is not unrelated to the views expressed by the noble Lord, Lord Lucas, and the noble Baroness, Lady Walmsley, about reports. If autonomy is earned once and for all, there is no point in reporting, because it is done. The report would simply lead to a standard response of, "I told you so", which is not much use. Will my noble friend clarify whether the use of the word "experiment" is right? I have a strong feeling that it is not, because earned autonomy will be given and then that is it.
Lord Alton of Liverpool: I support the general tenor of the remarks that have been made thus far about the need for some accountability in the working of the system in the future. We do not necessarily want to place a burdensome responsibility on a new body or an existing body for annual reports. Does the Minister consider that if Ofsted or Her Majesty's Inspectors are going into schools in any event and reporting to the department, they could also look at the way in which the system operates? In that way, some information might flow back to the department and, through the department, to Members of both Houses.
Baroness Walmsley: The noble Lord, Lord Peston, asked about whether it is worth publishing statistics, public information or an annual report, on the grounds that once it is done it is done. We are looking

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at the aggregate of all schools. Such information would certainly inform future decisions by the schools, the LEA or the Secretary of State as to whether similar changes were desirable and in the interests of children. It would certainly be worth publishing such information for the sake of future application.
Lord Peston: I must confess that I have already made a bit of trouble in that part of my contribution. My only comment is that if the reports showed that the idea had been a mistake and we learnt that we should not let other schools do it, that would not solve the problem of the schools that had been allowed to do it.
Lord Roberts of Conwy: I rise very briefly to support Amendment No. 50 and draw attention to the specific reference there to the National Assembly for Wales. The amendment provides that,
"the Cabinet Minister for Education and Lifelong Learning in Wales shall lay … an annual report as to the operation",
of these provisions. It is very important indeed that that should happen, particularly as the Bill provides for a great deal of secondary legislation and legislation yet to be provided by the Assembly to make the Bill work. It is very much in the interests of parents, teachers and all interested authorities in Wales that they should see the effect of all that secondary legislation which is still to come, and the effects of the Bill in Wales as well as in England.
Baroness Ashton of Upholland: Perhaps I may begin by saying to the noble Lord, Lord Lucas, that I am indeed glad that he is leaving Amendment No. 363 to another day. I look forward very much to discussing it with him.
It is clearly important for the public to know the impact of a school's use of any freedom, and we already publish statistics and quantitative data on school performance through Ofsted reports and performance tables. This framework ensures that schools remain accountable for their performance. In particular, it informs the public about the school's performance. This framework will continue to be in place for all schools, including those with earned autonomy.
I say to my noble friend Lord Peston that this is not a "once and for all" matter. I remind noble Lords that, as the documents we have placed in the Library state, and as I have previously said, earned autonomy may be withdrawn or restricted if a school's performance,
"falls significantly below the top 15 per cent mark in their free school meal band for 3 years running; or … falls below the median performance level in that free school meal band in any one year; or … is judged by Ofsted to fall below excellent or very good in two of the three aspects above".
Furthermore, when any school exercises any right to earned autonomy, the exemptions will be brought into force by statutory instrument. Consequently, there will be a complete record of all exemptions whether relating to the national curriculum or to teachers' pay and conditions which are being applied. We are keen that monitoring arrangements should be
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proportionate and do not burden schools unnecessarily and do not duplicate information. With this caveat, I am pleased to reassure noble Lords that, in line with departmental guidelines, we shall of course monitor the use of earned autonomy. We also certainly expect to make public that monitoring.
The noble Baroness, Lady Walmsley, asked specifically about accountability on pay. That is a matter of earned autonomy, and in a sense we have to let go of it. General employment law will of course apply, just as it does in thousands of other small and medium-sized enterprises, if I may term schools as such in this context. We do not think it appropriate to make the unnecessary burden of requiring every school to report every year on how they have settled their teachers' pay. The statutory instrument will record the fact that the school has earned autonomy. Obviously, however, the local machinery for determining pay will be local and relevant to that school.
I believe that Amendment No. 50 might have the unfortunate effect of discouraging schools from applying. The amendment also does not make clear the underlying purpose of an annual report. As I said, however, exemptions will be brought into force by statutory instrument in the case of any school exercising this right, and there will be a record. Consequently, I cannot accept that part of the amendment.
Baroness Walmsley: The amendment asks for the Secretary of State, not individual schools, to lay an annual report before Parliament. The Secretary of State should have an overview of the situation and should be able to do that. Therefore, I do not think that the amendment would discourage schools from applying by imposing an additional burden of bureaucracy. Far be it from us on these Benches to suggest that schools should have any further paperwork at all. Perhaps the Minister will comment on that.
Baroness Ashton of Upholland: Indeed I shall. The amendment would in fact require us to collect information from each school in order to make that annual report. That of itself would require schools to provide us with that information at all times.
Baroness Walmsley: Surely in actually making the application the schools are providing the Department for Education and Skills with the information they are applying and the basis on which they are applying. The department would already have that information and would not need to go back to schools to ask for it.
Baroness Ashton of Upholland: I shall give an example. A school may be in discussion with its staff about changing the way in which the school operates. The staff may, for example, be prepared to agree to run breakfast clubs as part of the school day, to provide opportunities and an example for children who do not have new technology at home. At the time of applying for earned autonomy, however, the school and the

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teachers may not yet have decided all the details. Moreover, the details may change over time. We believe that the amendment as currently drafted would require schools to provide us with that information on an on-going basis.
If the noble Baroness, Lady Walmsley, is asking whether we would be prepared to provide information during the course of our monitoring arrangements, as I said, we would be happy with such an arrangement. I am simply saying that the amendment would not work because it asks schools for so much information. We want schools to use the autonomy to get on with educating at a local level and to make the system work for them and—most importantly—for the children whom they are educating. We are perfectly content with providing information as a part of our normal monitoring. Moreover, Ofsted will be examining the relationship between earned autonomy and the results, particularly in schools for which autonomy has not worked. Al though we hope that there will be no such schools, that information will be available.
Lord Lucas: I am not sure that the principle of not knowing what is going on is a good one; it is certainly not the way in which the noble Lord, Lord Peston, would manage the economy. I also do not think that it is the way in which the Department for Education and Skills should be operating. The department should have learned a little from education action zones, where none of us know what is going on, and from individual learning accounts, where only the crooks knew what was going on. It is a very good idea to have a bit of information available.
The Government promised that we will have fully electronic government by 2005. It would not take me long to write something that schools could use to keep themselves up to date, on the government web, about the exemptions for which they had applied. It really is not complicated. It would take just a few tens of thousands of pounds to do a Rolls-Royce job on it, using commonly available techniques. It should not be beyond a web-aware government to put in place this sort of arrangement. Nevertheless, as this Government still cannot answer my Written Questions by e-mail, I am not surprised. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Sharp of Guildfordmoved Amendment No. 41:
Page 5, line 30, at end insert—
"( ) In so far as regulations made under this section relate to a curriculum provision, they shall, in addition to providing for an exemption or modification, require persons responsible for the delivery of the curriculum in any school to have regard to the need to deliver a broad and balanced curriculum in that school."
The noble Baroness said: The purpose of this amendment is to ensure that pupils in a school which is allowed an exemption from or a modification to some provision of the national curriculum retain an entitlement to curricular breadth and balance. The
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amendment probes the Government's intentions in this regard. In the policy statement accompanying this part of the Bill, the Government state:
"Without removing the fundamental entitlement of all pupils to a broad and balanced curriculum, the Government wants to give successful and well-led schools greater flexibility in recognition of their success, their professionalism and their strong leadership".
Under previous legislation, this right to a "broad and balanced curriculum" was extended to every registered pupil of compulsory school age attending a maintained or grant maintained school. This amendment would place on the face of the Bill a similar guarantee for pupils in those schools able to "opt out".
In January 1998, David Blunkett, the then Secretary of State for Education, announced his intention to introduce "new, more flexible arrangements" for the curriculum in primary schools, to ensure that they focused efforts and attention on the national literacy and numeracy strategies. Initially, many welcomed, the prospect of reduced prescription afforded by this new and more flexible arrangement. Nevertheless, the implications of the announcement were of concern to those who had always believed that a broad and balanced curriculum was a fundamental criterion for good primary education.
The foreword to the national curriculum handbooks signed by David Blunkett and Sir William Stubbs in 1999 states:
"An entitlement to learning must be an entitlement for all pupils. This National Curriculum includes for the first time a detailed, overarching statement on inclusion which makes clear the principles schools must follow in their teaching right across the curriculum, to ensure that all pupils have the chance to succeed, whatever their individual needs and the potential barriers to their learning may be".
The first line of that inclusion statement states:
"Schools have a responsibility to provide a broad and balanced curriculum for all pupils".
These "opt-out" powers for successful schools contradict the Government's stated commitment to inclusion and raise fundamental questions about the concept of a national curriculum. It is true that the current curriculum remains overcrowded with content and that a rigid system of testing and assessment allows little room for dynamic adaptability. As my noble friend Lady Walmsley argued recently, in that sense we support the concept of a core curriculum. There is a strong argument therefore in favour of greater flexibility within the national curriculum. The need for adaptability is emphasised in the current national curriculum document. However, this should apply to all schools and not just to successful ones.
At the same time there must remain a national framework which secures a balanced and broadly based curriculum entitlement for all pupils. In both the Green and the White Papers there was welcome recognition of the importance of sports, arts, drama and music. It is vital that the place of such activities is considered within the framework of a curriculum entitlement, not just as optional extra curriculum activities. I beg to move.
4 p.m.
Baroness Blatch: We do not know how these clauses will turn out in practice when schools receive autonomy. I agree with the noble Lord Peston, who is no longer present, that one of the problems with the Bill is that it is low on detail. However, the noble Baroness, Lady Sharp, is right to pose the question that she did. In their responses the Government have constantly said that they believe in a broad and balanced curriculum and that it is inconceivable that an application would be accepted if it did not offer a broad and balanced curriculum. If that is what the Government are saying, it ought to be on the face of the Bill. As the Bill is written, it is an "anything goes" clause, unless, that is, a particular Secretary of State takes a particular view of education at any particular time.
I believe that we are all trying to say that the framework within which schools are expected to operate and the framework within which schools are expected to apply earned autonomy should be well understood. At the moment that is not the case. As the Bill is written, any part of the legislation can be exempted from the national curriculum and pay and conditions provisions. It seems to me that in this area at least there should be some codification on the face of the Bill as regards the nature of the curriculum offered to each child.
There is another question which I believe pertains to the individual in a school. Under the law as it stands, each child in this country has an entitlement. If, under earned autonomy, that entitlement is infringed in some way, where are we? It will be infringed. Some schools will enjoy exemption. If the response is that no child's right to entitlement will be infringed, earned autonomy is a very narrow issue indeed and will not be consistent with what is written on the face of the Bill. It is time for the Government to tell us what they mean. How open-ended is earned autonomy? If it is not open-ended and if the Government believe in a broad and balanced curriculum, in what way will they define that? What about the status of the child's entitlement to a broad and balanced curriculum as regards all the aspects of it which are written into other statutes? How will that be protected?
Baroness Ashton of Upholland: Last Thursday and in another place there was much discussion of schools' requirement to deliver a balanced and broadly based curriculum in relation to earned autonomy and the powers covered in Chapter 1. I hope that I can assure the Committee that protections are in place, particularly with regard to the earned autonomy provisions where the curriculum flexibilities available include only the national curriculum. This is set out in subsection (3) of Clause 5. Duties which are not a legislative part of the national curriculum cannot be disturbed by that provision.
The basic curriculum as set out in the Education Act 1996, and as re-enacted by Clause 74, is required to be balanced and broadly based. As the noble Baroness, Lady Blatch, will know, there are two broad aims: to promote the spiritual, moral, cultural, mental and
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physical development of pupils at school and in society and to prepare pupils for the opportunities, responsibilities and experiences of life. I am sure that the Committee is aware that Clause 75 re-enacts the Secretary of State's, local education authorities', governing bodies' and head teachers' duties to ensure that maintained schools satisfy the requirements to deliver a balanced and broad curriculum. Those duties are unaffected by the provisions of Chapter i as they are not part of the national curriculum and therefore not subject to exemption or modification. It follows that the legislation will still require the Secretary of State, local education authorities, governing bodies and head teachers to ensure that the school curriculum is balanced and broad based.
I recognise what the noble Baroness, Lady Blatch, is saying about the Bill. However, it is worth reminding the Committee that the policy statements set out our detailed intentions. As regards considering flexibilities within the curriculum, I draw attention to our strategy on 14 to 19 year-olds which addresses issues of developing the curriculum while ensuring that students are able to follow a curriculum appropriate to their needs. We are also clear that the Delegated Powers Committee was content with our use of regulations here. I hope that on that basis the noble Baroness, Lady Sharp, will feel able to withdraw her amendment.
Baroness Sharp of Guildford: Will the Minister spell out a little more whose responsibility it is to make sure that schools that take advantage of the earned autonomy provisions in the Bill nevertheless still adhere to a broad and balanced curriculum? As she explained on the previous amendment, those who apply for earned autonomy can do so without spelling out precisely what they intend to do when they apply for it. At least, that was the implication of her remarks. If that is the case, it applies also in relation to the curriculum. Therefore, until they have chosen to go the earned autonomy route and are pursuing that route, we do not know whether they will still maintain a broad and balanced curriculum. Whose responsibility is it to make sure that the school concerned is adhering to the overall provisions of an entitlement to a broad and balanced curriculum? Is it the responsibility of the local education authority or that of Ofsted? Whose responsibility is it?
Baroness Ashton of Upholland: The responsibility lies with the governing body, the local education authority and, indeed, the department. In considering this matter we are trying to ensure that schools operate within the broad and balanced curriculum. Last week I said that the areas we are looking at, particularly as regards key stage 3, focus not so much on getting rid of any subjects within the national curriculum but on ensuring that flexibility can be applied within programmes of study. We have moved on in our debate as regards the 14 to 19 strategy. However, we would expect schools to be clear about what we are trying to do as regards earned autonomy and to report

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in the normal way to parents through governing bodies, to the local education authority and, of course, through Ofsted.
Baroness Blatch: I follow up the question of the noble Baroness, Lady Sharp. I noted what the noble Baroness said in the initial response to the amendment. I say at the outset that it is difficult to divide innovation from earned autonomy in this matter as some schools are already innovating; that is, they may well have modified the national curriculum before they qualify for earned autonomy. However, I go back to the words in the Bill. Clause 2(1)(a) states:
"conferring on the applicant exemption from any requirement imposed by education legislation".
That is a total free for all.
We should also consider Clause 6, to which the amendment relates. It states:
"Regulations may for the purposes of this section … designate any curriculum provision or pay and conditions provision as attracting exemption as of right … designate any curriculum provision or pay and conditions provision as attracting discretionary exemption … designate modifications of any curriculum provision or pay and conditions provision as being available as of right, and … designate modifications of any curriculum provision or pay and conditions provision as being available on a discretionary basis".
There is no protection there whatever—for the entitlement of the individual child, for a broad and balanced curriculum or for any national curriculum requirement. It would be helpful to know where in the Bill those protections are. There is no qualification of Clause 6(1).
Lord Northbourne: May the exemptions to the curriculum—the legal requirements—include exemptions to what I believe are the very extensive guidance notes issued by the department? My impression is that it is often those detailed directions as to exactly how a subject should be taught that are burdensome to teachers and unsatisfactory in terms of pupils of varying abilities.
Lord Alton of Liverpool: Further to the question of my noble friend, the noble Baroness, Lady Blatch, put her finger on the problem earlier when she asked about the conflict that might arise if a child's entitlements were not being met by the need to provide a properly balanced and broad curriculum. If the school were to fail in delivering such a target, what would happen? What sanctions could be used against the school, and how would one go about rectifying the failure to provide what the noble Baroness described as the proper entitlement?
Baroness Ashton of Upholland: I shall reiterate what I said about the broad and balanced curriculum so that noble Lords can understand what I am trying to say. Clause 74 re-enacts the Education Act 1996. We have two broad aims, which I have described in detail—a broad and balanced curriculum. The phrase "curriculum provision", as the noble Baroness said, is
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defined in Clause 5(3). As the noble Baroness, Lady Blatch, said, the power to innovate is a separate provision in that regard.
It is clear that we need to protect the entitlement of young people to receive a broad and balanced curriculum. It will be for schools to notify us at the time of applying that they are indeed looking at the curriculum. We would expect governing bodies and schools, as part of their work, to be absolutely clear in that regard. It is the responsibility of all education organisations—local education authorities, governing bodies and Ofsted—to ensure that that is the case. If schools acted outside the provisions or regulations on earned autonomy, we should act to ensure that that was brought to an end. That is clear.
I understand the desire of Members of the Committee to be as categorical as possible. I assure them that it is our desire, too, to ensure that within the framework we are clear about what students are entitled to receive.
We have already said that our thinking moves on in the context of the strategy for 14 to 19 year-olds. We want to ensure that we do not end up in the position in which students in one school learn a set of subjects that we all recognise and consider to be appropriate within the curriculum but that those in another school do not. That is what I should call the basis for an entitlement for students to continue to receive education.
Baroness Blatch: The Minister keeps invoking Clause 74. There is no reference in Clause 6 that states that, subject to Clause 74, schools may modify, relax, deviate from and so on. Moreover, there is no reference to Clause 6 in Clause 74. In what way does Clause 74 override Clause 6? If the Government do not do so, we shall table an amendment that states, "Subject to the requirements of Clause 74, the following can be done". That would get close to what the noble Baroness, Lady Sharp, is trying to achieve in the amendment. That would at least—it takes on board the point made by the noble Lord, Lord Alton—protect those young people in relation to a subject that I suspect is very vulnerable in this regard; that is, religious education for all children.
Baroness Ashton of Upholland: We believe that religious education is protected and that the Bill is correctly worded. However, in the interests of moving on, I am happy to go back and ensure that that is the case. My understanding is that we are absolutely clear that we are re-enacting, through Clause 74., the Education Act 1996, as it refers to a balanced and broadly based curriculum. I shall report back to the House at a later stage if that is appropriate.
Baroness Sharp of Guildford: I thank the Minister for her promises. I believe that the clause to which she refers is Clause 76, which is entitled,
"Basic curriculum for every maintained school in England",
rather than Clause 74.
We have had a good debate, which has shown that there is concern about this matter on all sides of the Committee. I am glad that the Minister has taken our

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concerns to heart. We look forward to any proposals that she may bring forward at the next stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Davies of Oldham: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Draft Communications Bill
4.16 p.m.
Baroness Blackstone: My Lords, with the leave of the House, I shall now repeat a Statement made in another place today by my right honourable friend the Secretary of State for Culture, Media and Sport. The Statement is as follows:
"With permission, Mr Speaker, I should like to make a Statement on behalf of my right honourable friend the Secretary of State for Trade and Industry and myself on the draft Communications Bill, produced jointly by our departments and published today. Copies have been placed in the Library and are available from the Vote Office, along with a policy document and Explanatory Notes. It is also available on the world wide web.
"The White Paper in December 2000, A New Future for Communications, set out the Government's objectives: creating a dynamic market; universal access to a choice of diverse services of the highest quality; safeguarding consumers and citizens; and minimising regulation. Everything we announce today flows from those principles.
"The communications industry is of immense importance to this country, so we are determined to proceed wherever possible with the fullest consultation and consensus. That is why we consulted further on media ownership. That is why the Bill published today is in draft and subject to scrutiny by a Joint Committee of both Houses.
"That degree of consultation on major legislation is perhaps unprecedented, but it is important that the legislation has the confidence of the industry and the public.
"There is general agreement that the existing regulatory framework has become outdated by the rapid changes in technology, markets and consumer behaviour over the past six years. The communications industries are regulated in different ways by separate regulators, yet they are coming increasingly closer together in their ownership and their operation.
"The evidence is all around us. TV and radio companies are linked to newspapers, traditional media are developing web sites and cable companies deliver television, radio, telephony, interactive services and broadband Internet.
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"This converging industry needs a converged regulator, providing industry-specific regulation with a light touch—a framework which protects the citizen while setting business free and a regulatory framework which offers certainty where it is needed for business plans and investment, and flexibility where it is needed in a fast-moving environment.
"Previous legislation in 1984, 1990 and 1996 has left us with clumsy regulation that inhibits investment and reduces efficiency. The ownership rules send the signal that the UK is not open for investment in our communications industries. The rules on newspaper ownership are opaque, discriminatory and still retain criminal sanctions. The rules on news on ITV have seen investment in ITN fall.
"Furthermore, technology is changing, throwing up new challenges and new opportunities. The case for change is compelling. The twin ideals of regulation are to be light in touch yet effective. The current rules are neither.
"The communications industries are vital to the health of the British economy and to our democracy. Every week we watch over 1 billion hours of television, listen to over 1 billion hours of radio and buy 100 million national, regional and local newspapers. The BBC licence fee costs each viewing household £112 a year and raises £2.5 billion. We send billions of text messages a year. Three-quarters of adults use mobile phones, and 24 million people have Internet access in their homes.
"Crucially, our democratic debate could not take place without the newspapers, television channels, radio stations and Internet sites that tell what is happening. These sources can be biased, sometimes wrong and occasionally strident. But there are many of them, and people can hear many voices. This plurality must be protected at all costs.
"The White Paper proposed one regulator—Ofcom—to replace the ITC, the Radio Authority, the Radiocommunications Agency, the Broadcasting Standards Commission and Oftel. It also suggested the following: Ofcom to have sector-specific powers to promote competition; quality public service broadcasting to be protected; measures to ensure universal access to public service broadcasting channels over all main platforms; the consolidation of ITV, subject to competition rules; the simplification of regulation for commercial radio; BBC regulation to be brought within Ofcom for basic standards and for specific PSB requirements, while retaining the regulatory role of the BBC governors; and the promotion of broadband. Since then, policy has been developed and you see the detail in this draft Bill, supplemented by the policy document.
"I turn now to the structure of Ofcom. Its top board will operate at the highest strategic level. It must be able to move quickly and with agility to address issues in a fast-moving sector. At the heart of its operations will be its sector-specific

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responsibility to promote competition to curb abuses of dominant market positions and to ensure fair access to dominant network systems and platforms. In addition, all broadcasters, including the BBC for its commercial services, will continue to be subject to the Competition Act.
"Ofcom will have a number of other duties to promote certain interests, especially those of the nations and regions. That is why we are providing for Ofcom to establish a content board as an integral part of its structure. It will be a significant body, bringing together diverse interests, including those of the different nations of the United Kingdom. There will also be a consumers panel, able to articulate the needs and views of consumers—again, with strong representation from Scotland, Wales and Northern Ireland.
"The draft Bill proposes a regulatory regime which will be lighter in touch, with greater reliance on self-regulation by all broadcasters. Ofcom will be taken out of day-to-day regulation and will use its backstop powers only if licensed broadcasters fail to deliver.
"Ofcom's responsibilities will extend to the BBC for the basic broadcast standards and for agreed quotas for such things as regional production, while also setting the general standards across the industry. It will be responsible for general reviews of public service broadcasting.
"However, the quality of BBC output under its public service remit will remain fully regulated by the governors. This regime, with its detailed scrutiny by governors, is a measure of the special role the BBC fulfils. This system has developed because the BBC's obligations are the greatest, not the least.
"But we recognise that the media of the future must provide the high-quality public service broadcasting that people have enjoyed in the past. Competition alone cannot guarantee this. Public service broadcasting nurtures creativity. It is vital to independent producers. It provides training grounds which sustain the whole sector. It meets the particular needs of local and regional communities, both in programming and in production. And, in the case of the BBC, the £2.5 billion raised annually by the licence fee is venture capital for the whole of British broadcasting.
"Most importantly, public service broadcasting works for the public. The draft Bill therefore proposes for the first time to define 'public service broadcasting' and to consolidate in statute the hierarchy of public service broadcasting that viewers and listeners will readily recognise.
"The draft Bill is much more than a new system for regulating the content of TV and radio broadcasting. Telecommunications become ever more important to our economy and to our society. By bringing together the functions of Oftel and the Radiocommunications Agency with those of the Independent Television Commission, the Radio Authority and the Broadcasting Standards
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Commission, we will ensure that content, economics and technology are viewed as a piece, not as fragments.
"The competition responsibilities for Ofcom are intended to deliver dynamic competitive markets in networks and infrastructure as well as in content. Our economy needs access to networks to be opened up. That needs a regulator that is light in touch where possible but powerful where necessary.
"The new regime for telecommunications will enable Ofcom to operate within a harmonised European framework, providing greater certainty so that UK companies are better able to sell their services abroad. The new regime will be lighter in touch, removing the requirement for licensing of telecommunications systems, thereby removing about 400 licences, and replacing it with a much simpler regime for electronic communications. The new regulator will have the right responsibilities and powers to promote competition, tackle abuses and make sure that consumers' interests are protected.
"We will also extend the principles of deregulation and market competition to the allocation of the radio spectrum by introducing spectrum trading. Spectrum is to the modern age what iron and steel were to the first Industrial Revolution. It must be used efficiently.
"Companies need to know that they can gain access to spectrum so that they can bring their ideas to the market. In future, as well as being able to apply for a licence, firms will also be able to buy spectrum from an existing user. This should prevent the hoarding of spectrum, increase the number and range of users, deliver significant benefits to businesses and consumers, and promote the innovation on which future UK competitiveness depends.
"These proposals are broadly in line with the recommendations of Professor Cave's independent review of spectrum management, published in March. We intend to respond to this review by the summer and I would therefore emphasise that all the spectrum management provisions are subject to revision.
"The draft Bill will continue our policy of not imposing regulation on the operation of the Internet, although we will continue to work with the industry to improve the standards of protection available through self-regulation.
"Lastly, I come to media ownership. Competition, and competition rules to regulate undue economic power, are increasingly recognised here and abroad as the best means of delivering innovation, investment and employment. It is our intention to apply the same principles to the communications industry.
"But the media are different from other industries in one crucial respect—They are uniquely import ant to the debate that underpins our democracy. Citizens need access to a range of different media

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voices if they are to take informed decisions. We need a system that delivers a plurality of owners, none dominant, and a diversity of output.
"Our approach is simple and proprietor-neutral. We will deregulate' where it is possible to rely on competition law to maintain a wide range of voices. Where it is not, we will establish clear, predictable rules. The changes we are proposing today will remove barriers to investment, will encourage innovation and will allow companies to consolidate and expand.
"Ofcom will combine the important twin roles of promoting competition while protecting plurality and diversity. Within TV, radio and newspaper markets, competition law will tend to encourage dispersed ownership and new entry. We will therefore remove most ownership rules within those markets, retaining only those we need as minimum guarantees of plurality.
"Overall we intend to remove or relax most rules concerning media ownership while keeping those necessary to protect the public interest. We will strengthen safeguards for news and other broadcast content. The rules we will scrap include those which prevent single ownership of ITV; those which prevent large newspaper groups from acquiring Channel 5, and those which prevent ownership of more than one national commercial radio licence. We will ease the complex rules preventing consolidation of ownership of local commercial radio. We will scrap the criminal sanctions that apply in the newspaper merger regime.
"We also intend to scrap the inconsistent rules that prevent the non-European ownership of some broadcasters. It makes no sense that French, Italian or German companies can own TV and radio licences but Canadian, Australian or US companies cannot. The resultant inward investment should allow the UK to benefit rapidly from new ideas and technological developments. New blood, new competition, will help give our industry the edge.
"The recent CMS Select Committee report on communications, for which I thank my right honourable friend and his colleagues, made a case for relying on competition law. But we do not believe that this alone will guarantee the plurality of ownership that democracy demands. We will therefore retain three key limits on cross-media ownership to safeguard debate at every level: national, regional and local.
"First, recognising that most people get their news and information from national newspapers and from terrestrial television, we will keep a simple rule that any newspaper group with over 20 per cent of the national market will not be able to own a significant stake in ITV, the only commercial public service broadcaster with universal access to a mass audience, currently 25 per cent of all TV viewing. Secondly, a parallel 20 per cent rule will prevent anyone with a dominant position in local newspapers owning the regional ITV licence in the same area. Thirdly, there
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will be a scheme to ensure that at least three commercial, local or regional media voices exist—in newspapers, TV and radio—in addition to the BBC in almost every local community.
"Where necessary we will retain and strengthen content regulation to ensure the quality, impartiality and diversity of broadcasting services. Ofcom will have the power to investigate the news and current affairs programming of any local radio service if it has concerns about accuracy or impartiality. It will have a new duty to protect and promote the local content of local radio services. It can vary any licence on change of control to ensure the character of the service is maintained. For ITV, this will protect regional production and programming requirements. It will oversee the nominated news provider system for ITV to ensure high-quality and independent news on freeto-air public service television.
"In sum, these changes will be deregulatory. We will depend more on competition, and on competition law exercised by a sector-specific regulator. Ownership regulations will disappear or be reduced. Self-regulation will be extended wherever possible. Complex schemes for licensing networks and access to them will be scrapped and replaced with a streamlined system. All regulations will be reviewed regularly.
"The rules that will remain will be simple and purposeful: a streamlined system for newspaper mergers; simple limits on cross-ownership of ITV and the largest newspaper groups; minimum levels of ownership for local radio, and for cross-ownership by local newspapers; content rules in broadcasting to ensure UK production, regional production, local and regional programmes and accurate, impartial news and information; and public service broadcasting protected in the digital future as it has been in the analogue past.
"Reform of the regulation of this vital sector is a major task. The draft Bill will exceed 250 clauses. The accompanying documents also indicate areas of policy not yet fully reflected in the draft clauses, notably those giving effect to the policies on media ownership which I have announced today. Like the changes to the BBC agreement, these will be published shortly so that they can be considered alongside the draft Bill.
"Our proposals are subject to a three-month consultation period and I am delighted that both Houses have agreed also to subject the draft Bill to pre-legislative scrutiny. We shall bring forward the Communications Bill itself as soon as parliamentary time allows.
"My right honourable friend and I want Britain to have the most dynamic communications industry in the world. We want Britain to continue to have the best quality TV and radio in the world. This Bill is the route map to making these ambitions a reality. We look forward to hearing the views of honourable Members, and we commend the draft Communications Bill to the House".
My Lords, that concludes the Statement.
4.36 p.m.
Baroness Anelay of St Johns: My Lords, I thank the Minister for repeating the Statement made by the Secretary of State in another place. There is much to welcome within it, as far as we can appreciate from the lack of detail. Certainly, its length—I do not complain about the length at which it had to be made—reflects the sheer complexity of the Bill and the wide array of issues it covers.
I welcome the commitment to the promotion of competition and the fact that there will be an attempt to define public service broadcasting within the Bill, welcome the relaxation of onerous regulation, which is no longer justified. However, when we see the detail the acid test will be whether the Government can deliver. When I entered the Chamber I was not able to get hold of a copy of the Bill or of the Explanatory Notes, which I understand are contained in a volume that is as large as most Bills, if not larger. Indeed, the policy statement is another lengthy government publication. There is much for us to consider before we come to decision on the detail. However, overall the acid test will be whether the Government are able to achieve light-touch regulation, ensuring that Ofcom is powerful where necessary—I welcome that commitment by the Government—or whether we end up with a heavy-handed regulator which deals with micro-management rather than stepping back from detailed regulation.
The lengthy Statement today seems to slide by the fact that as long ago as 1997 the Government promised in their manifesto that this Bill would be upon us. At that stage we did not expect that it would be only a draft Bill. However, here we are. After all those years of gestation the broadcast and telecoms industries have moved on rapidly yet we have a Bill that is defective, in the Government's own admission, because it omits significant sections on cross-media ownership and spectrum.
The question we have to consider is how the Joint Committee will be able properly to scrutinise the Government's proposals on those matters alongside the draft Bill clauses. The Minister states that there should he efficient use of spectrum. I welcome that commitment. We all agree with that. The question is how she will achieve that. The noble Baroness said that the Government intend to respond to Professor Cave's independent: review of spectrum management by the summer and that all spectrum management provisions are therefore subject to revisions.
The Minister went on to say that the changes to the BBC agreement and to cross-media ownership will be published shortly so that they can be considered alongside the Bill. However, she then stated that all the proposals are subject to a three-month consultation period. That means that the working period of the Joint Committee will be parallel to the period of consultation on those significant proposals which should he in the main Bill. The question is how the Joint Committee will be able properly to organise its work to take into account the responses which must
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necessarily be sent to the Government on the Bill unless it is in a position to hear evidence from all those organisations which will respond to the Government.
The Joint Committee has a tough task ahead. The telecom and broadcast industries have had to wait a long time for the Bill. It is important that we look at the issues in detail. However, I should like to ask a few general questions today.
The Minister referred to the relationship between Ofcom and competition law. How will the Government resolve the relationship between Ofcom and the Competition Commission? Who will have primacy in decision making when decisions relate to both? Can the Minister explain what protection consumers will have by virtue of the special treatment being accorded to the BBC which still leaves it partly outside the remit of Ofcom? Does the Minister agree that it is important for Ofcom to deal fairly with all the broadcast and telecom providers with regard to the specific aspect of the electronic guide?
I welcome the Minister's comment that the Government want to be neutral when dealing with cross-media ownership issues. I direct her to the Government's approach to people who are platform providers in broadcast and telecoms. How do the Government intend to ensure that there is fair access to the electronic programming guide? A similar question arises in relation to fair access to platforms.
The failure of ITV Digital casts a long shadow over the digital broadcast business. I hope that we shall all be able to work together to force that shadow back as rapidly as possible for the health of our broadcast industries. Do the Government still set their target date for the switching off of analogue as 2006 to 2010? Does the Minister accept that a viable digital terrestrial platform system is essential to the digital future of telecoms and broadcast industries and that the DTT platform should give their customers access to pay-TV as well as to free-to-air channels to avoid their being treated as second-class consumers?
I believe that the Joint Committee's members have a difficult task ahead. I pay tribute to all members but noble Lords will appreciate that I have to say a particular thank you to my own Bacic-Benchers who have agreed to serve on the committee: the noble Lords, Lord Crickhowell and Lord Pilkington, in this House, and my honourable friend Mr Andrew Lansley in another place.
Before concluding today, I think it appropriate better to acquaint the press with what may or may not happen behind the scenes in your Lordships' House. I was disappointed to read the press stories about who may or may not be chairman of the Joint Committee. When the issue was raised in this House, there was a cross-party agreement that pressure should be put on the Government for the establishment of a Joint Committee. The Government agreed to that. It was a case of the House working together.
The stories have been, first, that a Conservative Peer would chair the committee. I do not know of that. It was not a decision taken. There were stories also that the Government had put pressure on the

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committee to elect a Labour Peer as chairman. That is not for me to know. I am of the opinion, as I am sure are my noble friends, that it is for the committee to decide who the chairman will be. As a personal matter, I fully support whatever decision the committee makes. I know that my colleagues would also say happily now that we respect the integrity and ability of both Labour Peers, with whom this House has worked for some time, who are to serve on the committee. We would accept with equanimity the nomination and election of either of those Labour Peers. Indeed, we would welcome either as chairman of the committee. Their abilities would be respected and we would work happily with them. I hope to knock on the head some of the somewhat ridiculous stories in the press. Ministers are unable to serve on the committee. In wishing to follow the spirit of the rules, shadow Ministers therefore did not press their suit to become members of the committee.
I shall follow the proceedings very carefully indeed. I was pleased to learn that the BBC will help me. If I cannot be there in person looking over the shoulders of the committee, the BBC has stated that it has made careful—I think rather clever—arrangements to ensure that the proceedings will be available either on broadcast channels or via the Internet, thereby performing its public broadcast remit.
Finally, I have one basic question with regard to the operation of the committee. If the Joint Committee makes a recommendation that the Government do not wish to accept, will the Government publish the reasons why they refuse to accept the committee's recommendation?
4.47 p.m.
Lord McNally: My Lords, the noble Baroness, Lady Anelay, having referred to the press gossip, I was rather disappointed when she announced that the Conservatives are willing to accept a Labour nominee for chairmanship of the Joint Select Committee. My ears pricked up. I had thought that we might have a total deadlock between the Government and Opposition Front Benches whereby some humble Liberal Democrat might emerge as likely candidate. However, hopes were dashed again.
As the noble Baroness said, we have been awaiting the Bill for some time. Although there is a welcome, it is a "better late than never" welcome. On the other hand, it is important not to feel pressed to make snap decisions. Various crises and emergencies will always arise in the communications industry as in any other industry. I hope that we are legislating for the long term and will not be subject to premature "bounces". For that reason, like the noble Baroness, we welcome the decision to set up the pre-legislative Select Committee.
We also welcome the approach that the Government have taken to the BBC. In previous decisions, they have given the leadership and funding
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to prepare for the digital age. The noble Baroness recognised the special role of the BBC. Whoever thought of the phrase that the fee is,
"venture capital for the whole of British broadcasting",
has my admiration. It is a better and more accurate description than that of a poll tax when describing the good that it does for all broadcasting.
It is important that the period ahead should be one of transparency and access for all who want to express their views. I welcome the Minister's statement that the Bill and its documents are on the world-wide web. I hope that the new technologies will be used to broaden consultation. It is also good that underlying the Statement was a rejection of the view of the Select Committee in another place that these matters could be left solely to market forces—something that we on these Benches do not accept.
For many reasons the Minister emphasised the democratic factors at work—the underpinning of the communications industry of our democracy. However, it is equally important that we have a communications industry which underpins and helps to strengthen the values of our culture and our regional differences.
The noble Baroness, Lady Anelay, raised the question that will be in many minds given previous experiences of turf wars between regulators. If Ofcom is to have responsibility for competition, will it have the final say; or will we get into long-drawn out tussles between the views of Ofcom and the competition authority? That point needs to be clarified. We welcome the content board, the consumer panel and the promise of regional representation. Will such regional representation be determined by the regional assemblies and the Scottish Parliament?
The devil will be in the detail. However, we welcome the Government's general gist that they envisage the restriction of cross-media ownership as essential for quality, diversity and choice in the media.
While giving the idea of a single ITV company a broad welcome, we need to ensure that the regional and public services commitments of the existing ITV companies are carried over into a single ITV company. Like the noble Baroness, Lady Anelay, I should like further clarification of the Government's thinking on the digital/terrestrial platform vacated by ITV Digital. We see this as an opportunity to introduce some real lateral thinking. It certainly should be used as a launch pad for the free-to-air offer. There again, if the Government really mean to keep to the 2006–10 framework, they must put muscle behind a campaign about the free-to-air offer. Far too many people still associate digital television with subscription television. We shall not reach the targets required unless we ensure that people understand that there is now a very high-quality, free-to-air service available to them.
I turn to one of our main concerns regarding some of the phrases used in the Statement; for example—a "streamlined system", "simple limits on cross ownership", and "minimum levels". It does not seem so very long ago that we were talking about the

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communications revolution in terms of it providing cheaper and wider access to communities, individuals, and small interest groups. We were told that it would be the "great liberator", but now legislation seems to emphasise making it easier for the big boys to get bigger, to get consolidation, with its concentration on all those words like "profitability", "cost efficiency", "shareholder value", "market share", and so on. Such phraseology may make sense to big, international conglomerates, but it may not be in the interests of local communities, local interest groups, and, indeed, our civic well-being in general.
Can the Minister tell us what will happen now to Channel 5? Is it really up for grabs? Perhaps I may leave the following thought in the Minister's mind. When the Sun newspaper was bought it was an almost defunct, former TUC newspaper; in other words, the nature of its influence depends on who owns it and what is done with it.
This Bill could be one of the defining pieces of legislation of the 21st century, provided that a framework for communications recognises the unique contribution that the communications industry makes not only to our democracy, but also to our culture and regional and national identities. Communications do not represent just another product like a tin of beans. Public service broadcasting is not simply a euphemism for market failure. If the Government demonstrate a belief in those maxims, they will have our support in creating a piece of legislation of which we can all be proud.
4.53 p.m.
Baroness Blackstone: My Lords, I am most grateful to both speakers from the Opposition Front Benches for their very thoughtful comments about this big and complex piece of legislation; and, indeed, for the questions that they have raised. Due to the length of the initial Statement—about which I apologise—and the detailed questions that followed, I hope that noble Lords will forgive me if I take a little longer to respond than would normally be the case.
I am grateful for the broad welcome for the Statement expressed by both the noble Baroness, Lady Anelay, and the noble Lord, Lord McNally. I accept that the acid test will be light-touch regulation, the avoidance of micro-management, as mentioned by the noble Baroness, and, at the same time, as the noble Lord, Lord McNally, said, protection for the interests of local listeners and viewers so that it does not become simply a matter of deregulating for big business.
I shall try to deal with some of the specific questions raised thus far. The noble Baroness, Lady Anelay, raised a point on the BBC and consumers. As I am sure the noble Baroness will agree, viewers and listeners should make their views known principally to the broadcasters. The BBC's significant responsibilities are set out in its Charter and Agreement. The BBC governors are best able to ensure that the corporation does deliver; and, indeed, other public sector broadcasters are being put into a similar position, which is something I believe the noble Baroness will welcome.
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The noble Baroness asked what the Government's response might be to the Joint Committee's report. We shall publish a reasoned response as soon as we are able to do so after the completion of the report. The noble Baroness also made some general comments about timing. She seems to regret the fact that we have not travelled further down the road in this respect. I believe that she is being a little hard on the Government. We have said that Ofcom will he up and running by the end of 2003; and we are still on track to achieve that aim. We issued a White Paper, which obviously took some time to prepare. This was followed by a consultation period and, subsequently, a further consultation period on cross-media ownership.
While I am on the subject of consultation, I should tell the House that we are consulting separately on the Cave review. We can ensure that responses are available to the Joint Committee. It is important for us to consider such issues both properly and thoroughly. Parliament will have plenty of opportunity to debate any resulting changes when the Bill is eventually introduced.
Both the noble Baroness and the noble Lord, Lord McNally, asked about the relationship between Ofcom and the Competition Commission. I can confirm that Ofcom will have concurrent powers with the commission. It will normally be clear which is in the lead, but there will, of course, be some boundary issues—indeed, I shall not pretend that there will not—which will have to be agreed between the two bodies, so that industry knows early on which one will be in the lead. Clearly, they will have to work extremely closely together.
The noble Baroness also asked about electronic programme guides. I believe that our proposals add both clarity and certainty to a system that is already regulated by the ITC and Oftel through a joint working group. As I am sure the noble Baroness is aware, EPGs could become more important in the future; and, therefore, we need a statutory scheme. As for the issue regarding the switch from analogue to digital, I can confirm that our target is still to achieve this by the year 2010. That deadline has not changed as a result of the demise of one commercial company in the area.
I believe that I have answered most of the questions raised. However, in the light of one of the noble Baroness's comments, there is one important point that I should make clear with regard to the legislation; namely, the issue of late clauses and the Joint Committee. Where it has not been possible to provide draft clauses in the Bill published today, we shall make them available as soon as possible. We shall certainly do so while the Joint Committee is undertaking its work.
Finally, on the membership of the committee and its chairmanship, I just think that one should never believe anything that people write in newspapers. But I am extremely pleased to hear that the noble Baroness would be very happy with either of the nominated Labour members chairing the committee.
5 p.m.
Lord Borrie: My Lords, perhaps I may ask my noble friend the Minister a question on cross-media ownership. I very much welcomed the points made in the early part of the Statement; that matters such as plurality and diversity are important and that mere economic matters should not be the only ones considered when deciding whether or not cross-media ownership is to be allowed.
The latter part of the Statement mentioned that although a number of perhaps tiresome and detailed regulations on cross-media ownership are to go, three limits—I cannot remember each one—are to remain. But I hope that I do not do the Statement an injustice by saying that they seemed to preserve into the indefinite future what one might call the "20 per cent rule".
Since the obviously approved criteria in the Statement of the need to have diversity of views throughout our media and diversity and plurality of ownership—which are for newspaper mergers at the present time, but only for such mergers enshrined in the Fair Trading Act—why could we not do away with all inflexible rigid rules, such as the 20 per cent rule? These matters could be determined in the first instance by Ofcom but then the Competition Commission and, if necessary, the competition appeal tribunal, which is set up in the Enterprise Bill.
The trouble with the 20 per cent rule is that it is inflexible and rigid. It may have been appropriate at the time of the Broadcasting Act 1996; it may be appropriate in 2002; but who knows whether it will be appropriate in 2010 or subsequently? Why not allow the appropriate authorities—I may not have mentioned them in their correct form—to determine in the circumstances in 2005–2010, whenever it is, whether, in considering the criteria of the need for diversity and plurality, the proposal for cross-media ownership should or should not be permitted?
Baroness Blackstone: My Lords, perhaps it will be helpful to my noble friend Lord Borrie if I run through the regulations we are removing and those we will keep. My noble friend said that it was not completely clear from the Statement. Foreign ownership rules will be scrapped. Regulatory barriers to a single ITV are removed, apart from the competition authority's scrutiny. That means that there can be a merger between Carlton and Granada. Joint ownership of TV and radio stations is allowed. Large newspaper companies can now buy Channel 5 and an increased range of radio stations. Significant consolidation will be permitted in radio markets. The regulatory burdens on newspaper owners of the special merger scheme are scaled down. That is a substantial change in the direction that the noble Lord wants to see happening.
The 20 per cent rule will remain in relation to newspapers purchasing television companies because we believe that newspapers and TV are the most influential media in terms of news and opinions. But
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Ofcom will review these rules at least every three years. That will provide the flexibility that I think that my noble friend is asking for.
Lord Lipsey: My Lords, I start by welcoming the bipartisan spirit in which my noble friend's Statement today has been approached and which will carry on into the Joint Committee. Perhaps I may also—in danger of breaching that—say that it is good that this Bill has been produced now—albeit with gaps and albeit that some people would have liked to see it earlier rather than the Government giving way to the endless temptations to delay, to consult in private and to negotiate with powerful vested interests.
In the light of the fact that some clauses are not in the Bill and others, the Government have made clear, are even greener than the Bill as a whole, does my noble friend see virtue in the Joint Committee following the example set by the committee on the Financial Services and Markets Act in producing its report in two stages—one on the first set of proposals that are fully articulated, and, if necessary, another one later on the clauses that are not at present in the Bill.
Finally, in recognising that this is a communications Bill and not just a broadcasting bill, does my noble friend agree that the issue of the precise relationship between the BBC and Ofcom, although important, is not all-important? Does she hope with me that our debates and the Joint Committee's debates do not get bogged down on that one terribly tempting subject—on which many of us have opined at great length—but instead cover the whole waterfront of the commercial as well as the contents implications for this vital legislation?
Baroness Blackstone: My Lords, I am grateful to my noble friend Lord Lipsey for his welcome of the greater transparency and openness of the whole process with respect to the Bill. He asks whether there is any virtue in following what happened with the Financial Markets and Services Act by having two staged reports, with the second stage on the clauses that are not in the Bill as published today. I shall certainly take that matter back to my right honourable friend the Secretary of State. However, I would hope that if we can get these additional clauses drafted quickly the committee will be able to complete its report in one go, thus avoiding a second stage. If we have a second stage, it delays the Government's response to the committee's report, which could in turn delay the introduction of the Bill whenever parliamentary time is available.
I share my noble friend's view that it would be a great pity if the Joint Committee spent a huge amount of time debating the relationship between the BBC and Ofcom. There is so much else in the Bill of enormous importance. If the committee were to do that, it would be a real abrogation of its responsibility to undertake a proper perusal of the whole of the Bill and all its complexities.
Lord Skelmersdale: My Lords, that is the whole point, is it not? I must confess that I arrived in the

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middle of the Statement, but I have read it. This is an enormously wide subject. It is absolutely right that it should be given what I can only describe—and as my noble friend on the Front Bench almost described it—as an elephantine gestation period. Whether she was commenting or complaining was not entirely clear to me and possibly was not entirely clear to other Members of your Lordships' House.
Be that as it may, I also think that it is right that this should be one of the first Bills—if not the first— to go through the novel experience of having a pre-legislative scrutiny stage. But there are ideas circulating in your Lordships' House that where a Bill has a pre-legislative scrutiny stage it may also be subject to a carry-over Motion. Clearly, I cannot ask to bind anyone else, so can I have the Minister's personal assurance that she will not encourage moves in that direction in this case or, indeed, in any other?
Baroness Blackstone: My Lords, perhaps I should say to the noble Lord that elephantine pregnancies sometimes produce good results and I hope that that will be the case here—that the amount of time, work and thin king that will have gone into the Bill will in the end produce a better Bill and a better regulatory system. The issue of carry-over is really a matter not for me but for the business managers to decide. All that I can say is that the Government's hope and intention is that the Bill will be on the statute book by the end of July 2003.
Lord Dubs: My Lords, I give the Statement a warm welcome. I shall resist the temptation to make a Second Reading debate speech today and leave it for the appropriate time. Instead, I shall ask my noble friend one specific question. I welcome the brave effort to define public service broadcasting. I cannot wait to get out of here and get my hands on the Bill to read what it says. Whose responsibility will it be to define public service broadcasting as regards the BBC-on the assumption that it will be for Ofcom to define it for other broadcasters?
Baroness Blackstone: My Lords, public service broadcasting will be defined in the Bill and will apply to all broadcasters, whoever they may be, including the BBC. It will be up to the BBC to ensure that it lives up to that definition and up to the governors to ensure impartiality and the qualitative aspects of content.
Baroness Howe of Idlicote: My Lords, while welcoming the news that there is to be a content board and various representation of consumer interests, will there be a parallel carriage board—otherwise, it may be thought that content is on a different level from communications and competition? Can the Minister explain why there should be a special board as part of Ofcom for that side of its deliberations? In view of the importance that she has rightly attached to the power of the media to influence us all, has she given further thought to individual human rights concerning
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unfairness or infringement of privacy? Will those questions be taken more seriously by a more independent—and transparently independent—body?
Baroness Blackstone: My Lords, I am not sure that I heard what the noble Baroness asked about an additional board—it sounded like a parish board.
Baroness Howe of Idlicote: My Lords, to clarify, I said carriage—content and carriage—because originally there was an idea that there should be two separate boards. My point is that just setting up a content board may appear to make it something of a second-class citizen that will receive less consideration underneath the all-embracing Ofcom board.
Baroness Blackstone: My Lords, the thinking behind the need to establish a separate content board was that the range and responsibilities of Ofcom across a huge range of tier one and tier two issues, as well as some tier three issues, will make its task difficult, as noble Lords have implied. Many responses in the consultation considered it desirable to have a content board to represent the wide public interest in what broadcasters put out—in content. Having a separate board will allow greater scrutiny of content aspects of the regulation of broadcasting.
On the issue of human rights, as I understand it, the infringement of privacy is currently the responsibility of the Broadcasting Standards Commission, which is independent of the broadcasters, and that that will be retained in Ofcom—it will play that role.
Lord Brooke of Sutton Mandeville: My Lords, I congratulate the Minister warmly on the clarity and comprehensiveness of the Statement, especially as its scale meant that it took 19 minutes to deliver. Better right than wrong, whatever the timetable, is the best guide of all. When the Minister said concerning Ofcom versus the Competition Commission that it would generally be clear which was in the lead, did she mean that the clarity would be a priori or that it would derive from the new legislation?
Baroness Blackstone: My Lords, I am not sure how to answer that question. The new legislation will provide a substantial amount of clarity about their respective roles, but as I said in response to the noble Baroness, Lady Anelay, and the noble Lord, Lord McNally, there are clearly some boundary issues where there may be some blurring and where both sides will need to agree exactly who does what.
Baroness Jay of Paddington: My Lords, perhaps I may say how much I welcome the fact that the Statement—and therefore, presumably, the Bill—puts such emphasis on the need for continuing regulation in this complex field, even in the 21st century, when the technology is so complicated and the global ownership of media so extensive. In that regard, and perhaps contrary to my noble friend Lord Borrie, I welcome the continuation of what he described as the 20 per cent rule.

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Will my noble friend expand a little on the phrase that she used about opening up market trading in spectrum? I think that the Statement referred to that as being something equivalent to iron and steel in the first Industrial Revolution, which in itself is an interesting concept. Will my noble friend expand a little on that notion?
Baroness Blackstone: My Lords, I am grateful to my noble friend for her welcome for the retention of the 20 per cent rule. On spectrum, as I said, we shall respond in some detail in the summer to the Cave review and may then be able to provide a clear answer to that question. A wide range of recommendations were made to try to maximise the economic and social benefits from what is of course a finite resource. Rather than raising some of those issues now, perhaps it would be better if I could respond later. Ofcom will certainly have a separate duty of spectrum management and ministerial powers of intervention should be limited. I gather that the response to the consultation will be published soon. That will set out a number of detailed options.

Wembley Stadium
5.19 p.m.
Baroness Blackstone: My Lords, with the leave of the House, I shall now repeat in the form of a Statement the Answer given by my right honourable friend the Secretary of State for Culture, Media and Sport to a Private Notice Question in another place on Wembley Stadium.
"I explained to the House on 19th December that the Government were willing to support the Football Association's National Stadium project provided that the Football Association and Wembley National Stadium Ltd came forward with fully detailed and funded proposals within a reasonable timescale.
"In the light of the David James-Berwin Leighton Paisner report, I asked that they should address four points: first, to commission an independent valuefor-money assessment of the proposed contracts with Multiplex; secondly, to make papers relating to the project available to the Comptroller and Auditor General; thirdly, to make corporate governance changes to produce a management structure capable of delivering a complex project with procedures acceptable to the public sector; and finally to confirm that financial support is adequate and fully committed. I also explained to the House that I had asked Sport England to commission a detailed technical evaluation of new proposals for athletics in the stadium.
"Since 19th December, the Football Association and Wembley National Stadium Limited have been working closely with stakeholders and banks to develop the stadium project at their preferred location—Wembley—and address the issues I have
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outlined. Significant progress has been made. Wembley National Stadium Limited carried out my request to make available to the Comptroller and Auditor General papers relating to the project.
"WNSL also commissioned Cyril Sweett Ltd—a company with no previous or known likely future involvement in the national stadium project—to undertake a value for money study. Cyril Sweett Ltd concludes that the Multiplex contracts do represent value for money. I have considered the report carefully and accept the conclusions. The full report necessarily contains much commercially sensitive information and cannot therefore be published. I have asked WNSL to commission a publishable summary, which I shall place in the Library of the House.
"WNSL has committed itself to meeting the required standards of corporate governance, and I am pleased to be able to say that significant improvements have been made. The WNSL board has been strengthened with experience in construction, finance and marketing. The new chairman, Michael Jeffries, has construction and project management experience. The Government remain in discussion with the FA, WNSL and the other stakeholders about these important issues. WNSL also invited the Office of Government Commerce to undertake a gateway review of the project which recommended that the project should proceed to contractual completion and that it was well managed and viable.
"Sport England has completed its athletics study, which has been prepared in close co-operation with UK Athletics, the British Olympic Association, UK Sport and the International Association of Athletics Federations. My predecessor rightly drew attention to the extremely long timescale and the exorbitant cost for the installation and removal of the original platform and the fact that there was no legacy for the sport from the project. I am pleased to report that the new design conforms to the standards required by the IAAF, is considerably quicker to install and remove and the costs associated with it have substantially reduced. I have asked Sport England to publish its study.
"The matter of a legacy for athletics is the subject of separate discussions involving my department, Sport England and UK Athletics. I hope that they will be concluded in the next two weeks.
"Finally, while much of the necessary work to secure the financing of the stadium project has been completed, the Football Association has requested more time to enable its current discussions to come to a conclusion. In the light of the progress the FA and WNSL have made in meeting the conditions I set out on 19th December, I have agreed to refrain from reaching my final decision on Government support for the national stadium project at Wembley at this point.
"I understand that that decision will be a disappointment to many people in the West Midlands and honourable Members for that region,

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but it would he quite wrong for the Government to withdraw their support at this crucial stage. The FA is closer than it has ever been to making Wembley the home of English football again. I do not believe that it would be right or reasonable to pull the plug on that project when the prospects of success look better than ever.
"Subject to the successful conclusion of the continuing discussions with FA and WNSL, to final confirmation that the financing is adequate and fully committed and to the terms of Patrick Carter's final report, the Government will be content to support the national stadium project at Wembley. My final decision will be taken only after full consultation with Sport England and in the light of Patrick Carter's final report.
"I fully recognise the public and parliamentary pressure to see an end to the process and to see the start of the construction of a world-class stadium. I will make a further statement to the House before the Whitsun Recess".
5.25 p.m.
Baroness Anelay of St Johns: My Lords, I thank the Minister for repeating the Statement that was made in another place a short while ago.
It is nearly six years since Wembley closed its doors to sport and after £120 million of our lottery players' money was dedicated to building a national stadium there: we still do not have a decision. The Government told us, first, that the deadline would be 30th April, if all the conditions were met and that, if the conditions were not met, Birmingham would be given its chance. Today, the Minister has given the Government's excuses or reasons—whatever one wants to call them—for why that deadline should be abandoned. It is only right that the people of Birmingham should now be able to say whether they think those excuses are acceptable.
We must know the real deadline. The Minister concluded by saying that there would be a Statement before the Whit Recess. I note that another place goes off on holiday on 23rd May, somewhat earlier than your Lordships—I might say, "as ever", but I shall not. It will not have escaped the Minister's notice that my noble friend Lord Glentoran has a Question down for Oral Answer for 20th May. Can we expect a Statement by that date—or on it?
The Minister referred to the fact that the Government set four tests last December. She said that the requirement for the value for money assessment had been met satisfactorily. I welcome that. She said that a summary would be placed in the Library. When will it hit the Library's shelves?
Secondly, she referred to the fact that WNSL was to make its papers available to the Comptroller and Auditor General and said that that had been done. However, the Minister did not refer to the second part of that condition. In the Statement, it was said that the Comptroller and Auditor General would decide whether he wished to examine the matter further. What happened about that? Has any such decision
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been taken by the Comptroller and Auditor General? The third issue is financial support. We are told that there is still much to do and that much of it is commercially confidential. That makes it difficult for Parliament properly to scrutinise the appropriateness of the process.
There were two parts to the requirements that the Government laid down with regard to athletics. First, there was to be a technical evaluation of the proposals for the facilities at Wembley. Secondly, a cost benefit analysis had to be prepared, comparing the new proposals with those made in 1999. We need more detail than the Minister gave us about the response on those matters. In December, I asked what the Government meant by saying that the new stadium should be athletics-compliant or athletics-capable, the two rather odd descriptions that the Government used. Again, I ask what level of competitive sport will the new stadium be capable of supporting. The Minister said that the new plans met IAAF standards. For what? The world championships? The Olympics? What are we getting for our money?
There are stories in the press that, despite the Government's worst efforts to exclude the Olympics from the stadium—or, after the Pickett's Lock fiasco, any kind of stadium—the plans may well accommodate an Olympics bid. Can the Minister confirm or deny those reports? If the Government support an Olympics bid, does that mean that they have been able to resolve the problem of the lack of warm-up tracks? That would be a great problem if any championship of any standing were to take place there.
Secondly, does it mean that the Government have resolved the problems surrounding the seating capacity and the sight lines? The Minister referred to problems about the platform being resolved, saying that new plans may enable the platform to be raised for athletics and then taken down. Do we know what time-scale is now appropriate for that? How long will it take to erect and dismantle the new platform as opposed to the previous one.
Finally, one must ask about transport to the site. That matter was raised by those people who supported Birmingham's bid. Will the transport links be in place in time for the opening of the new stadium and will they be good enough to cope with the safe and speedy evacuation of a full-capacity crowd? Sadly, in this day and age and after last year's problems, we must be aware of the health and safety needs of spectators and the need for them to be evacuated. When will the Government publish plans for the redevelopment of Wembley Park Underground Station?
The Government have delayed too long on this project. Our sporting reputation has been irreparably damaged. It is now time, in the interests of all our sportsmen and women throughout the country, to get on with it and get a result.
5.31 p.m.
Viscount Falkland: My Lords, we on these Benches thank the noble Baroness for repeating the Statement. The Statement must come as a disappointment to the

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press and media, which must have expected a definitive Statement, and an even greater disappointment to those who supported a stadium in the West Midlands. They, too, were expecting a definitive Statement sooner than today and had the criteria not been met would have galvanised themselves into action to make an alternative bid.
There is, however, a great deal of value in the Statement. The Government have made it today because it is a serious matter to extend such a deadline when so many problems and criticisms have been made of the project. The noble Baroness previously told us that her right honourable friend required four criteria to be met and that Sport England had been asked to provide a detailed evaluation of the new proposals for athletics in the stadium. The Statement makes it clear that, thankfully, those criteria have been satisfactorily met.
On the previous occasion I spoke of the contract with Multiplex and did so on the basis of newspaper reports. I agree with the Minister that one should not believe everything one reads in newspapers and I may well have overstepped the mark. Since the Government are now satisfied with the proposed contracts, that is all well and good.
The Comptroller and Auditor General has the information made available to him together with the vital matter of whether the financial support for the project is adequate and fully committed. We do not know whether it is. The Government would not have extended the deadline and made the Statement were they not very confident that the project was going to go ahead. Having made such extensions, if the project does not go ahead difficult questions will be asked in this House and in another place.
As regards the athletics stadium, speaking on behalf of these Benches I have never made any bones about my view that Wembley is not a "national" stadium in the accepted sense of the word. It is a football stadium with various attachments which may well qualify it to be a national stadium. The fact is that the Government are not fully committed to a national stadium. On Sunday, the Secretary of State said on David Frost's programme that the Government were involved in the project only because of the public funds; in other words, the lottery moneys of £120 million which were invested in it. She said that otherwise it was a commercial project subject to a contract between various parties. But of course the Government are involved for many other reasons.
In the light of that, perhaps the Minister would enlighten me on three points. What is the nature of the significant improvements to the standards of corporate governance which the Government sought? They say that the changes are substantial, but that in itself is worrying. What were the standards like before they were considerably improved? Does that give us confidence in the project?
Secondly, how much quicker and cheaper than the original proposal is the new athletics adjunct to the project? I understand and accept that Sport England
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has approved the project in consultation with various interested parties. That in itself is encouraging. How long will it take to erect the athletics part of the stadium and how much will it save on the original proposals, which were deemed by the Secretary of State's predecessor not to be viable?
Thirdly, having had in my business experience an interest in projects of various kinds—none as big or as difficult as this, I am pleased to say—I should like to know what is expected in terms of the usage of the completed stadium. A figure of 20 days is being bandied around. To anyone making a few sums on the back of a cigarette packet—that is always what one does on these occasions—it does not seem that such a project would be viable, bearing in mind the investment that is being made in connection with it. Will the Minister say whether the stadium will be used for more than 20 days or fewer? How will the 20 days or more be shared between football and athletics and will the stadium have other uses that will, importantly, be bearers of revenue and income to the project? Otherwise, it is difficult for us to see how the investment, which has not yet been put in place and for which the deadline has been extended, can look forward to a clear and profitable future.
5.38 p.m.
Baroness Blackstone: My Lords, I am grateful to the noble Baroness and to the noble Viscount for their comments on the Statement. Perhaps I may say at the outset that I am extremely sympathetic to the people of Birmingham and those who have supported its bid and I understand the disappointment that they will obviously feel. The key point is that the Football Association has made substantial progress in satisfying the conditions laid down on 19th December. However, it has not been able to complete the final agreement and has asked for a little more time to conclude the last stage of its negotiations with the lead bank with which it is negotiating. It would therefore be wrong for the Government to withdraw support at this late stage and force the Football Association to pull the plug on what have been very long and complex negotiations.
As I said earlier in my remarks, a further Statement to update the House on progress will be made before the Whitsun Recess. However, I cannot give an assurance to the noble Baroness, Lady Anelay, that it will be made in time for the Question tabled by her noble friend Lord Glentoran which is to be answered on 20th May. We shall have a few more sitting days after that date before both this House and another place rise.
The noble Baroness asked about the National Audit Office. The office is independent of government and it is up to the NAO itself to decide what it wishes to do. She also asked about transport arrangements and whether the improvements that are to be made to Wembley Park station will be completed in time. I can tell the noble Baroness that both the Department for Transport, Local Government and the Regions and the Greater London Authority have already committed a further £7 million towards the

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improvements to be made to the station. Substantial funds are now available over and above the £20 million already committed to general, non-stadium infrastructure improvements.
Both the noble Baroness, Lady Anelay, and the noble Viscount, Lord Falkland, asked a number of questions relating to athletics. I am not sure that I can give precise answers to all the questions that were put to me with regard to exactly how long it will take to put in place all the athletics facilities or, indeed, exactly how long it will take to put them all back. Furthermore, I cannot give a precise figure on what the savings will be. However, I can say that all the parties agree that the original platform proposals were far from optimum. In December, Sport England indicated that it thought that a platform could be developed more cheaply and could avoid all the disruption associated with the original proposals. Its latest report demonstrates that the new platform proposals do meet UK Athletics and IAAF technical standards for major championships, which answers a question put by the noble Baroness to which she particularly requested a response.
The noble Baroness also asked about warm-up facilities. We are convinced that there are now sufficient warm-up track facilities available but, again, that will be covered in the report from Sport England. It will be published very soon. To that end, the noble Baroness asked about the timing of publication of the Cyril Sweets report. That will depend on our receiving a summary from WNSL. As soon as we receive it, we shall publish. I should say that the report was in fact commissioned by WNSL, a wholly-owned subsidiary of the Football Association. Therefore it is not for the Government to decide the exact timing. We shall publish it as soon as we receive it. I hope that those remarks answer most of the questions that have been put to me.
I think that I have covered the main points, but perhaps I may say to the noble Viscount, Lord Falkland, that the Government's proposals are a big improvement on what was originally set out, but that we are also continuing to hold discussions with WNSL about them.
5.44 p.m.
Lord Corbett of Castle Vale: My Lords, will my noble friend confirm that the reason why this Statement does not address the Birmingham and Solihull bid is that that would acknowledge a clear breach of an unqualified promise given by this Government; namely, that unless the Wembley proposals were finalised by the end of April, then the Birmingham and Solihull bid would be considered? Does she understand that not only the people of Birmingham and the West Midlands, but also seven out of every 10 football fans and 53 out of 56 club chairmen will regard this Government as having behaved in a duplicitous manner?
On 19th December, the Government claimed that they were neutral as regards the siting of the stadium, whereas in the other place today the Secretary of State
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made absolutely clear what a number of people have suspected all along; that is, that the Government were in fact committed to Wembley and Birmingham and Solihull had been wasting their time.
Baroness Blackstone: My Lords, I should remind the House and my noble friend, who I know feels very strongly about this matter, that the deadline of 30th April was set by the Football Association and not by the Government. It is only reasonable to allow the association more time, for the reasons that I believe were set out quite clearly both in the Statement and in my response to the Opposition Front Bench spokesmen.
I can only repeat what I said: I understand my noble friend's disappointment, but the Football Association has made it clear from the outset that it believes that Wembley would be a more commercial proposition than Birmingham.
Lord Fowler: My Lords, I agree entirely with the views just expressed by the noble Lord, Lord Corbett. This is a totally unsatisfactory situation, not only for the West Midlands but also for many people throughout the whole country. Public money is involved and therefore the Government have a responsibility here.
So far as concerns the assurance, it seemed to me—as I believe it seemed to most other people—that an assurance was given, endorsed and underlined by the Government to the effect that this long process of consideration, which has been going on for year after year, would come to an end on 30th April 2002. That was the clear impression given. I do not think that the noble Baroness can move away from that.
We are now told that further consideration will be given and a further deadline set. Surely the noble Baroness recognises that that cannot be the right way to do business in this country. Furthermore, surely a widespread impression will he given around the country that the Government have gone back on their word with regard to this project.
Above all, in my view and, I believe, in the view of many others, frankly this is the wrong decision and the wrong direction. As my noble friend remarked, at this stage Birmingham should be given a chance. The sensible site for the national stadium, with its superior communications and infrastructure already in place, always has been at the National Exhibition Centre in Birmingham.
I shall say this to the noble Baroness: this decision will be widely condemned in the West Midlands. In the region it will be perceived as, frankly, a kick in the face. That is not a happy situation to have reached as a result of this Statement.
Baroness Blackstone: My Lords, I am well aware of the noble Lord's connections with the West Midlands. Of course he takes that position; I understand it completely. However, although the decision might be condemned in the West Midlands, I am sure that that this Statement will be widely welcomed in

1039
London. On a difficult question of location such as this one always has two sides. I know for a fact that many people in London greatly welcome the fact that the national football stadium is to be sited in London. They believe that the capital city is the right place for it. Indeed, I have heard people who have no connection either with London or the West Midlands—they can thus be said to be reasonably objective—also take the position that the stadium should be sited in London. Of course different views are going to be expressed on a matter of this kind.
However, it is for the Football Association to reach a final decision, which is the position the Government have maintained and made absolutely clear all along. This is not a decision to be reached by my department or, indeed, by the Government. I can only say again that it would be entirely wrong at this late stage in the negotiations being conducted between the Football Association and those involved in providing the finance and, indeed, in building the stadium to drop all that work and move on to a totally different proposal.
Baroness Thomas of Walliswood: My Lords, the Minister has not answered the questions of the noble Baroness, Lady Anelay, about an Olympic stadium. An Olympic stadium has certain characteristics. It has a 400 metres race track; it has space in the middle for all the field sports; it has a huge amount of parking and is accessible by all forms of transport; it has a village which can be reached reasonably quickly from the stadium, to and fro; and it has access to, and is not too far away from, a swimming stadium, and so on. Can anyone honestly believe that such a project could be constructed in London? I am a Londoner born and bred and it would be wonderful to have a football stadium at Wembley, but an Olympic stadium is quite different. Is this or is this not to be an Olympic stadium? If it is not, we are talking at cross purposes to a certain extent.
It is not so much the sporting reputation of this country that is in doubt—that is rather high at the present moment in a wide variety of sports. What is in doubt is the capacity of this country, through the Government and the various institutions, to take a sensible decision in reasonable time, with some eye on when we might make an Olympic bid.
Baroness Blackstone: My Lords, I am sorry that I did not respond to the noble Baroness's earlier question about whether Wembley would be used for the Olympics. I can clarify straightaway that there is no intention of the stadium to be built at Wembley being used for the Olympic Games. It would not be suitable. That has been absolutely clear from the beginning and I am somewhat surprised by the tenor of the question of the noble Baroness, Lady Thomas. If there were to be a bid from London for the Olympic Games, the British Olympic Association would have to consider with the mayor and other London bodies where a main stadium for the Olympic Games might be placed. I believe that the mayor has expressed a view that it should be in east London.
1040
That does not mean that the national football stadium would not be used if London made a successful bid for the Olympic Games. It would be used, for example, for the football tournament. There would be some use for it, but it is not designed or meant to be a stadium for an Olympic bid.
I also failed to answer the question of the noble Viscount, Lord Falkland, about the number of events that will take place at Wembley. WNSL plan to hold around 30 events. The main events will be flagship sports events such as the FA Cup Final and some concerts will be held there. It is a little difficult to anticipate at this stage exactly how many concerts will be held in the stadium. That will obviously depend on the demand at the time. The important point is that WNSL believes that the income from the premium seats it will sell will be sufficient to sustain the project.
Lord Tomlinson: My Lords, is my noble friend aware that my thanks to her for repeating the Statement made in another place are almost in exact inverse proportion to my appreciation of its contents? Does she appreciate how uncomfortable it is for me to find myself being much more in agreement with the Opposition Front Benches in relation to this matter than I am with my own Front Bench? It is the first time in a long life in politics that I have found myself publicly having to state that as my position.
Does she further appreciate that the Statement represents not only a betrayal of the legitimate interests of the West Midlands but flouts the assurances that she gave on behalf of the Government in a previous Statement in this House when she said that the deadline for the end of April was set for Wembley? To pretend otherwise, as she did in the answer she gave to my noble friend Lord Corbett, is an act of inadequate sophistry.
Perhaps she will remind the House of the precise phrase that she used at the end of her previous Statement, when she said quite clearly that the end of April was a deadline and that if at that time the FA had not become clear about its intentions, then the West Midlands would have its chance.
Finally, will my noble friend reflect on the last answer that she gave and tell the House how she can be so sure of the merits of the London case when she cannot answer a simple question about the number of events? On what basis is the business plan drawn up so that she can justify the capital costs without having any idea whatever of the revenue which will be generated from that capital expenditure?
Baroness Blackstone: My Lords, I understand my noble friend's lack of appreciation for the content of the Statement but I have nothing to add to what I have said already to my noble friend Lord Corbett and to the noble Lord, Lord Fowler. I know that they all speak for the West Midlands. Their views are perfectly valid from a West Midlands point of view but not from the point of view of the Football Association, which has ownership of the project. Nor are they consistent with the views of many Londoners who believe that the national football stadium should be in London.

1041
As to my noble friend's final question, he is being extraordinarily unfair in the tone of his question and, indeed, in the nature of his question. I made it perfectly clear that there will be around 30 events in the national stadium including a minimum of five concerts. It is ridiculous to suggest that I or anyone else can predict exactly how many concerts over and above the minimum of five WNSL believes it will be able to commit to. It may well be there will be more in which case its financial position will be even better.
I have made it clear to my noble friend and to the House that the amount of revenue that will be available as a result of the number of projected events for the new stadium will be adequate for it to operate effectively.
Lord Monro of Langholm: My Lords, the Government seem to be in a muddle over athletics and we are all concerned about the £120 million provided by Sport England. As the noble Baroness said, if we are not having the Olympics, the World Championships or the European Championships, why on earth do we want a 100,000 seater stadium for athletics?
Can the Minister give some details of the cost of converting the stadium from football to athletics, bearing in mind that an eight-lane running track will to a large extent encroach on to the seating capacity of the stadium. How long will it take and who will pay for it each time? You cannot expect athletics to pay for the changeover after it gets its £120 million benefit. It seems that athletics has been put on a shelf and promised that it will get something, but the noble Baroness has given us no details of how this will be achieved.
As to the use of the stadium, the rugby league people are very happy going to Edinburgh or to Cardiff. Is there any guarantee that they will always come to Wembley?
Baroness Blackstone: My Lords, as to the noble Lord's question about athletics, I thought that I had given some indication of Sport England's report on this matter. It demonstrates that the new platform proposals meet UK athletics and IAAF technical standards for major championships, as I have indicated, and there is no reason why major championships of that kind should not take place at Wembley. It also concludes that there are sufficient options for warm-up facilities. The details will emerge when the report is published, as I have promised that it will be.
The noble Lord asked about what has become known as the athletics legacy. The Statement in no way affects that. Discussions between UK Athletics, Sport England and the Government are making good progress. Again, we shall make an announcement about the matter shortly.
Lord Bruce of Donington: My Lords, is my noble friend aware that this is a project of some significance, to be accomplished at some cost? Will she give the House an assurance that this important matter, which
1042
has clearly evoked wide interest, went before the Cabinet? Did the Cabinet have art opportunity to consider the question—and if not, why not?
In the course of the investigation that unknown quarters of the Government have arrived at, what reliance did they place on what is oddly called "commercially confident information"? Breaches of commercial confidence are of no con sequence when a project of this kind comes to be considered. More importantly, is my noble friend further aware that a question of honour is involved?
Baroness Blackstone: My Lords, it is not normal practice for Ministers to reveal what is or is not discussed in Cabinet. However, I can assure my noble friend that widespread consideration across government has been given to this project.
With regard to my noble friend's question about commercially confident information, I am sure that he is as aware as I and other Members of the House are that where an organisation—in this case the Football Association—is negotiating the details of a major contract involving contractors, architects and the banks that will support the project, it would be wholly wrong for a Minister to stand up and give this House the details of that commercially confident information.
Lord Jacobs: My Lords, I believe I heard the Minister say that it was not possible at this stage to forecast the level of revenue to be obtained from the 30 events that are projected. Notwithstanding that, surely British banks—which are generally recognised as being somewhat generous—will require, first, to have a detailed business plan and, secondly, to know exactly what revenue is forecast before lending several hundred million pounds. At this stage, they must therefore expect to be given the information in advance of any commitment on their part. So why cannot this kind of information be made available to the House?
Baroness Blackstone: My Lords, I have already made clear that what I can say to the House is that the level of revenue that will be produced by the current proposals for the usage of the new stadium will be adequate for it to operate successfully. What I cannot do is reveal to the House, prior to the publication of reports which are not government reports but which have been commissioned by the Football Association, those kinds of details; nor do I think it would be right for me to do so.
Lord Faulkner of Worcester: My Lords, does my noble friend agree that the fury of my noble friends Lord Corbett and Lord Tomlinson, and indeed of the noble Lord, Lord Fowler, opposite on behalf of the West Midlands would be much better directed to the Football Association rather than to the Government bearing in mind that the Football Association decided a considerable time ago that Wembley was its preferred choice and the Government, very properly, in December, insisted that

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various changes in corporate governance should be made, that the stadium should be proved to be capable of accepting athletics and that the involvement of Multiplex in the contract should be properly sorted out? It seems to me from the Statement that those conditions have been met, that it is not unreasonable for the Football Association to ask for a little more time; and if people do not like the idea of the stadium being at Wembley, they should direct their anger at the Football Association.
Baroness Blackstone: My Lords, at last a little support! I am extremely grateful to my noble friend. Yes, he is absolutely right. As I have been trying to say for the past 20 minutes or more, this is a matter for the Football Association. It would be wrong, however, for the Government at this late stage to tell the Football Association that it cannot pursue the last stage of its detailed negotiations on siting the national stadium at Wembley.

Education Bill
6.5 p.m.
House again in Committee on Clause 6.
Baroness Walmsleymoved Amendment No. 42:
Page 5, line 30, at end insert—
"( ) The Secretary of State or the National Assembly for Wales may not make an order under this section unless the following have been consulted, as appropriate, having regard to the content of the order—

(a) associations of local education authorities;

(b) local education authorities;

(c) bodies representing the interests of governing bodies of schools; and

(d) bodies representing the interests of teachers."

The noble Baroness said: In moving this amendment, I shall speak also to Amendments Nos. 44, 46 and 47, which are about requiring consultation with appropriate groups before Clauses 6 and 7 are allowed to be put into operation.
The clauses exempt qualifying schools from pay and conditions and curriculum requirements, some of which are by right and some of which are at the discretion of the Secretary of State. Amendment No. 42 requires consultation with associations of education authorities, with LEAs and with bodies representing school governors and teachers, as well as with the Secretary of State or the National Assembly for Wales, before any order under Clause 6 is made.
Amendment No. 44 to Clause 7 requires the governing body to consult with parents, teachers, the LEA and bodies representing teachers before making changes to the pay and conditions of staff and curriculum changes. It is important that the governing body consults with relevant people before deciding whether and how to apply for these exemptions.
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We on these Benches are concerned at the wide-ranging discretion that these clauses make available to schools. There is little evidence to date of schools wishing to have more flexibility in these areas. Indeed, it is one of the many matters in the Bill in regard to which my noble friend Lady Sharp might ask: is the Bill really necessary?
Provisions in the School Teachers' Pay and Conditions Act 1991 allowed grant-maintained schools to apply to the Secretary of State to be exempt from the statutory pay and conditions arrangements. The School Standards and Framework Act 1998 amended these provisions. However, only a very small number of schools took advantage of the flexibility provided by these statutory provisions. I cannot believe that schools are now crying out to be able to do more of this. However, if they do, we believe that it is appropriate for associations of local education authorities to be consulted. The detailed arrangements may well raise other concerns. In terms of the consultation arrangements for Clause 7, it is vital that, in addition to LEAs, teachers and parents should be consulted about variations to the curriculum.
Reliance on the discretionary provision set out in Clause 7(2)(c) is inadequate. The actions of individual schools will clearly have an impact on other schools within the local authority area. Therefore, changes to the curriculum and to pay and conditions should not be facilitated on an isolated case-by-case basis.
Amendment No. 46 specifies that the parents of disabled children and children with special needs should be consulted too in regard to how any curriculum changes might affect them. That is in the spirit of what was achieved by the Special Educational Needs and Disability Act last year. We and the Special Education Consortium are concerned that, unless this amendment is included in the Bill, it would be possible for a school to earn autonomy even though it might not be addressing adequately the educational needs of disabled children and those with special educational needs. As the Bill stands, such children might be further disadvantaged by the exemptions that the school earns—for example, a narrowing of the curriculum or reliance on classroom assistants to teach them, with the qualified teacher there only to consult.
It might also be possible for a school to proceed with exemptions even though parents of such children were very unhappy about the development. These provisions are for successful schools. Their success will qualify them for the exemptions. We therefore want to ensure that schools seeking earned autonomy should be expected to demonstrate that they have been successful in promoting the education of children with disabilities and special educational needs. They should also be required to show how the impact of any exemption or innovation on such pupils will be evaluated and to demonstrate that they have achieved the support of the parents of those children for the changes they propose. That is to ensure that the changes do not affect those children disproportionately.

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Amendment No. 47 would require bodies representing teachers to be consulted on applications referring to pay and conditions. In the context of severe difficulties for recruitment and retention, the Government should exercise extreme caution before moving to deregulate pay and conditions and to introduce even more flexibility. Many schools are of the view that they already have quite enough flexibility, so it would be preferable to remove that provision completely from the Bill. In the event of the Government remaining committed to the provision, it is vital that full consultation takes place, given the implications for teachers. That should be done not just for teachers, but for all those who have the detailed knowledge and expertise to understand the implications of what is proposed. There is also doubt in some quarters as to whether the omission of the right to negotiate complies with the ILO convention. I beg to move.
Baroness Blatch: Amendment No. 45, which is in this group, would include the parents of children with special educational needs. There are only two kinds of children: those with special educational needs and those without. That covers all children in our schools. Clause 7(2)(a) says that,
"where the application relates to a curriculum provision",
the governing body shall,
"consult the parents of registered pupils at the school".
However, that could exclude parents representing the interests of children with special educational needs. That is why the amendment is important.
Any exemption from national pay and conditions arrangements would be best introduced with as much consensus at local level as possible, and certainly not against a hostile reception. Without going into the detail of every proposal included in the amendments tabled by the noble Baroness, Lady Walmsley, consultation with certain bodies is crucial as a matter of courtesy and of very real information, as well as in an attempt to achieve a basis of consensus at local level. The local education authority and parents should be informed. In particular, parents of children with special educational needs should be informed so that their specific needs can be taken into account in any arrangements subject to the exemption.
Lord Rix: As the father of a daughter with a learning disability who was denied any schooling because she was born in 1951, many years before the Education (Handicapped Children) Act 1970, and as the grandfather of a one year-old boy with Down's syndrome, I am obviously extremely interested in the future of special educational needs provision. It is vital that parents are linked with the special educational needs process whenever it has consequences for their child. I hope that the Minister is minded to support the amendments, particularly Amendment No. 45, tabled by the noble Baroness, Lady Blatch, and Amendment No. 46, tabled by the noble Baroness, Lady Walmsley, because they underline the basic need for common
1046
sense and understanding in dealing effectively with many a distraught parent's hopes and wishes for their disabled son or daughter.
6.15 p.m.
Lord Alton of Liverpool: I support what my noble friend Lord Rix and the noble Baroness, Lady Blatch, have said about children with special needs. I worked with children with special needs for several years nearly 30 years ago, and my wife is a speech therapist in the National Health Service who 'works in schools with children with special needs.
I particularly endorse what my noble friend Lord Rix said about parents feeling dispirited if they do not consider that proper provision is being made for their children. There is already a patchwork quilt of provision in the UK. Anything that exacerbated the problem would be a retrograde step.
The general thrust of the Government's attempts to create diversity, flexibility and autonomy in schools as far as possible is extremely worthy and I support it, but the noble Lord, Lord Rix, has put his finger on an important issue. If children with special needs are involved, there must be uniformity of provision. We must not go back to the days when the chances of someone with special needs receiving a proper education were extremely remote. Many of us have heard from parents over the years about how their children have been stigmatised or removed from the normal ambit of educational provision because of a disability. During my days as a constituency Member of Parliament, I often listened to agonised stories of people who not only suffered grievously as a result of being rejected by friends, neighbours and relatives because of someone being different and having some special need or requirement, but who also hit the same set of buffers when they had to deal with authority, which should have known better.
Great progress has been made over the past 20 years under successive governments. We should be pleased that we have been able to take enlightened action and we should not put the clock back in any way. I Earn sure that the Minister will be able to give the Committee those reassurances.
Baroness Ashton of Upholland: I thank noble Lords for their contributions. I shall deal first with Amendments Nos. 42, 44 and 47. I said earlier that we want the process by which schools earn autonomy to be as simple, effective and unbureaucratic as possible. Amendment No. 42 would require a wide range of representative bodies to be consulted in addition to those bodies and individuals who will have to be consulted by governing bodies under Clause 7. A requirement to consult with those representative bodies on the content of even a selected number of orders relating to exemptions from the national curriculum or the pay and conditions provisions is unnecessary and would be difficult to operate. First, it presumes that the bodies outlined in the amendment have a direct interest in all such orders and will both want and have the time and resources to comment on them. Secondly, provision is made for the key

1047
stakeholders who may be directly affected by the application to be consulted by the governing body before an application is made.
For example, Clause 7 makes it clear that before making an application, the governing body will need to consult with the appropriate parties, including every teacher employed in the school, in relation to pay and conditions, and parents, in relation to curriculum matters, as well as other appropriate persons. Similarly, the Secretary of State or the National Assembly for Wales will not be able to make orders unless proper consultation has taken place.
The amendments do not appear to take account of the key point that under employment law, any changes to teachers' contracts that could follow on from pay and conditions exemptions orders cannot be imposed unilaterally on teachers but can take effect only following appropriate negotiation, which may, of course, involve teaching unions. At the final stage, when changes are applied to contracts in respect of pay and conditions orders, negotiating machinery would not be needed in every case. Of course, if a school secured extensive exemptions from national pay and conditions, to the extent that the annual national pay award did not apply, some local determination machinery, which could well involve unions, if appropriate, would be needed to replace the national machinery. But these earned autonomy provisions allow the possibility of quite minor modification and exemptions to suit local circumstances.
I therefore do not believe that it is necessary to require consultation on every change, no matter how small, to involve all teacher unions. If teachers at the school were in favour of the application and the unions at local or national level were not, it is hard to know what the governing body would be expected to do with responses. Surely what matters is what teachers at the school concerned think of the application. Any teacher in such a position would be fully entitled to seek advice from his or her union. I should reiterate that no governing body will seek to disadvantage any of its teachers through the terms of an earned autonomy application.
An additional point is that adding such consultees adds to the bureaucracy and burden on schools. Even if the application were to enable a small change—for example, to pay bonuses to staff—the unions would need to be consulted directly. This is not good use of time or resources. Governing bodies have a relationship with and a responsibility to the teachers at their school, and the teachers are therefore the ones to be consulted. I should add that the Government have never had any formal indication from the International Labour Organisation that we are in breach of regulations.
I therefore believe that the wording of the Bill as it stands is quite appropriate. This wording requires governing bodies to take account of any guidance, which the Secretary of State or the National Assembly for Wales may issue, when they are considering whom to consult, but the final decision is with the governing
1048
body. This gives the appropriate level of flexibility for the school and, we believe, confidence for everyone involved.
Amendment No. 44 would effectively require a school to consult all parents on what may be a minor modification relating to teachers' pay and conditions, which would restrict the working of the clause as it stands at present.
It would also require governing bodies to consult teacher unions before making any application for national curriculum as well as pay and conditions exemption or modification. They would need to take account of any guidance, but the amendment is worded so as to ensure that the guidance does not allow for any exceptions. I do not agree that any requirement for consultation with unions, prior to every single application, is a helpful way forward.
I should further point out that the amendment would replace the existing paragraph (c) in Clause 7. This paragraph is of wide effect and will require the governing body to take account of any guidance which the Secretary of State or the National Assembly for Wales may issue when considering whom it is appropriate to consult. This guidance might, for example, cover the diocese, in the case of church schools, if changes proposed are very significant, or local or national teacher unions, perhaps in cases where major exemptions from or modifications to pay and conditions provisions are being proposed.
It will still be for the governing body to determine whom it is appropriate to consult, but the guidance will be helpful in that process of consideration, and they will need to take it into account. Amendment No. 44, however, would entirely remove subsection(2) and require consultation with parents, teachers, LEAs and teacher unions in all circumstances, while at the same time removing all discretion from the governing body in terms of the consultation process and potentially limiting the range of consultees.
My view, therefore, is that we should not accept Amendment No. 44. Governing bodies need discretion to make their own decisions, taking account of guidance. I do not believe that they should be required in all cases, irrespective of the nature of the application, to do so. I therefore hope that the noble Baronesses, Lady Sharp and Lady Walmsley, will not press the amendment.
I turn to Amendments Nos. 45 and 46. I take this opportunity to reaffirm to the Committee the Government's commitment to ensure that all schools provide for their children with special educational needs and children with disabilities. These proposals on earned autonomy do not alter that commitment in any way. I entirely agree with other noble Lords who have spoken that it is important that parents of children with special educational needs have a voice in the decision-making process.
In Clause 7, we make it clear that the governing body must consult the parents of pupils at the school where that governing body is applying for earned autonomy in respect of any curriculum provision. It is absolutely clear that this will include, and must

1049
include, parents of children with special educational needs. It is a requirement that the parents of those children—statemented or not, wherever they are on the spectrum of special educational needs—are consulted. Where parents are opposed to the change being proposed, they will make their views known. The governing body will consider those views, and I do not believe that the governing body of a successful school would disregard the views of the parent population. Successful schools are schools that address the needs of all their pupils. That must include children who have special educational needs and children with disabilities.
Furthermore, Ofsted will of course continue to inspect schools exercising their earned autonomy" and will continue to be concerned with the education that the school provides for all of its children, including those with special needs. I hope that that assures the noble Baronesses, Lady Blatch, Lady Sharp and Lady Walmsley, and that they will not press their amendments.
Baroness Blatch: Before the Minister sits down, and before the noble Baroness, Lady Walmsley, replies on Amendment No. 42, I should like to pose two questions. Where in the Bill is this obligation to consult with the various bodies specified in the amendments? Where in the Bill, for example, is the obligation to consult with the parents of children with special educational needs? I cannot find it.
Secondly, in speaking to Amendment No. 1, which is pertinent to this point, I pointed out a tension between the Bill and Section 5 of the School Standards and Framework Act 1998, which places on LEAs a legal obligation to raise standards in their schools. As I said, in this legislation, LEAs are not even statutory consultees. The Minister has not made it clear which part of the Bill imposes a legal obligation to consult with LEAs.
Baroness Ashton of Upholland: Clause 7 imposes the duty to consult with all parents, which includes parents of children with special educational needs. Those parents are encompassed within "all parents". We expect schools to consult with all their parents, and that includes the parents of children with special educational needs. I am very concerned that we ensure that the pa rents of those children are involved right across the spectrum in the decisions that schools make. It is very important that that is done. We believe that we have covered the point by saying that all parents must be consulted. As for the issue of LEAs, we intend to specify in guidance that LEAs should be consulted before any application is made.
Baroness Blatch: Guidance is not enough. As LEAs have a legal obligation under Section 5 of the School Standards and Framework Act 1998, they should have a legal obligation to consult in this Bill.
Baroness Ashton of Upholland: I am very happy to tell the noble Baroness that I shall take away the matter and come back.
Baroness Walmsley: The Minister said that the Government intended to avoid unnecessary
1050
complexity in the legislation. However, what is more important is that we get it right. If that requires a little more bureaucracy, we should support such a proposal. The Minister's comments simply emphasised that the noble Lord, Lord Dearing, was right 'when he said that the last thing that schools want is to become involved in pay negotiations, and that there is therefore no need to extend schools' powers in that sphere.
As for who should be consulted on variations to teachers' pay and conditions, although every teacher may be consulted, not every teacher has the expertise of the teachers unions, for example. Neither do individual teachers represent the whole body of teachers; each teacher represents only herself and perhaps the teachers in her own school. There is therefore still a need for statutory consultation of the bodies representing teachers.
I thank the Minister for her reassurances on the parents of children with special educational needs. It is quite clear from our debate that we shall return to the issue on Report. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 43 not moved.]
Clause 6 agreed to.
Clause 7 [Applications for orders under section 6(2)]:
[Amendments Nos. 43A and 44 not moved.]
Baroness Blatchmoved Amendment No. 45:
Page 5, line 37, at end insert "and, in particular, the parents of pupils with special educational needs"
The noble Baroness said: In the light of the dogged determination not to put the interests of special needs on the face of the Bill, I beg to move.
The Deputy Chairman of Committees (Lord Ampthill): The Question is that Amendment No. 45 be agreed to. As many as are of that opinion will say "Content", the contrary "Not Content". I think that the "Not Contents" have it. Clear the Bar.
6.29 p.m.
On Question, Whether the said amendment (No. 45) shall be agreed to?
Their Lordships divided: Contents, 96; Not-Contents, 106.

Division No. 1

CONTENTS

Aberdare, L.

Byford, B.

Addington, L.

Caithness, E.

Alton of Liverpool, L.

Campbell of Alloway, L.

Astor of Hever, L.

Carlile of Berriew, L.

Baker of Dorking, L.

Carnegy of Lour, B.

Barker, B.

Clark of Kempston, L.

Blackburn, Bp.

Clement-Jones, L.

Blatch, B.

Cope of Berkeley, L. [Teller]

Boardman, L.

Craigavon, V.

Brooke of Sutton Mandeville, L.

Crickhowell, L.

Burnham, L.

Dahrendorf, L.

Buscombe, B.

Darcy de Knayth, B.

1051

Denham, L.

Marlesford, L.

Dixon-Smith, L.

Montrose, D.

Falkland, V.

Moynihan, L.

Ferrers, E.

Newby, L.

Flather, B.

Noakes, B.

Freeman, L.

Northbrook, L.

Gardner of Parkes, B.

O'Cathain, B.

Glentoran, L.

Perry of Walton, L.

Goschen, V.

Phillips of Sudbury, L.

Gray of Contin, L.

Plumb, L.

Guildford, Bp.

Powell of Bayswater, L.

Hamwee, B.

Prior, L.

Hanham, B.

Rennard, L.

Harris of Richmond, B.

Renton, L.

Haslam, L.

Rix, L.

Henley, L.

Roberts of Conwy, L.

Holderness, L.

Rodgers of Quarry Bank, L.

Hooper, B.

Roper, L.

Howe, E.

Rotherwick, L.

Howe of Aberavon, L.

Scott of Needham Market, B.

Howell of Guildford, L.

Seccombe, B.[Teller]

Hunt of Wirral, L.

Selborne, E.

Hurd of Westwell, L.

Sharp of Guildford, B.

Hylton, L.

Shrewsbury, E.

Jenkin of Roding, L.

Skelmersdale, L.

Jopling, L.

Smith of Clifton, L.

Kimball, L.

Stewartby, L.

Laird, L.

Strange, B.

Listowel, E.

Strathclyde, L.

Liverpool, E.

Tebbit, L.

Luke, L.

Thomas of Walliswood, B.

Lyell, L.

Vivian, L.

Mackie of Benshie, L.

Waddington, L.

Maclennan of Rogart, L.

Wallace of Saltaire, L.

McNally, L.

Walmsley, B.

Maddock, B.

Williams of Crosby, B.

NOT-CONTENTS

Acton, L.

Evans of Temple Guiting, L.

Ahmed, L.

Falconer of Thoroton, L.

Alli, L.

Farrington of Ribbleton, B.

Amos, B.

Faulkner of Worcester, L.

Andrews, B.

Filkin, L.

Archer of Sandwell, L.

Fyfe of Fairfield, L.

Ashton of Upholland, B.

Gale, B.

Bach, L.

Gibson of Market Rasen, B.

Barnett, L.

Gilbert, L.

Bassam of Brighton, L.

Goldsmith, L.

Berkeley, L.

Gordon of Strathblane, L.

Bernstein of Craigweil, L.

Graham of Edmonton, L.

Blackstone, B.

Grenfell, L.

Boothroyd, B.

Grocott, L.

Borrie, L.

Hardy of Wath, L.

Bragg, L.

Harrison, L.

Brennan, L.

Haskel, L.

Brett, L.

Hilton of Eggardon, B.

Brooke of Alverthorpe, L.

Hogg of Cumbernauld, L.

Brookman, L.

Hollis of Heigham, B.

Campbell-Savours, L.

Howells of St. Davids, B.

Carter, L.[Teller]

Hoyle, L.

Christopher, L.

Hughes of Woodside, L.

Clarke of Hampstead, L.

Irvine of Lairg, L. (Lord Chancellor)

Cohen of Pimlico, B.

Corbett of Castle Vale, L.

Jeger, B.

Craig of Radley, L.

Jones, L.

Crawley, B.

Layard, L.

Currie of Marylebone, L.

Lea of Crondall, L.

David, B.

Lipsey, L.

Davies of Coity, L.

Lockwood, B.

Davies of Oldham, L.

Lofthouse of Pontefract, L.

Dixon, L.

McCarthy, L.

Dormand of Easington, L.

Macdonald of Tradeston, L.

Dubs, L.

McIntosh of Haringey, L. [Teller]

Elder, L.

Evans of Parkside, L.

MacKenzie of Culkein, L.

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Mackenzie of Framwellgate, L.

Sainsbury of Turville, L.

Massey of Darwen, B.

Sawyer, L.

Merlyn-Rees, L.

Sheldon, L.

Milner of Leeds, L.

Simon, V.

Mitchell, L.

Symons of Vernham Dean, B

Morris of Manchester, L.

Taylor of Blackburn, L.

Nicol, B.

Temple-Morris, L.

Northbourne, L.

Tomlinson, L.

Patel of Blackburn, L.

Turner of Camden, B.

Varley, L.

Pendry, L.

Wedderburn of Charlton, L.

Peston, L.

Whitaker, B.

Pitkeathley, B.

Whitty, L.

Puttnam, L.

Wilkins, B.

Radice, L.

Williams of Elvel, L.

Ramsay of Cartvale, B.

Williams of Mostyn, L. (Lord Privy Seal)

Randall of St. Budeaux, L.

Rendell of Babergh, B.

Woolmer of Leeds, L.

Resolved in the negative, and amendment disagreed to accordingly.
6.40 p.m.
[Amendments Nos. 46 and 47 not moved.]
Clause 7 agreed to.
Clause 8 [Removal of exemptions]:
[Amendment No. 47A not moved.]
Clause 8 agreed to.
Clause 9 [Determination of pay and conditions during and after exemption]:
[Amendments Nos. 48 and 49 not moved.]
Clause 9 agreed to.
[Amendment No. 50 not moved.]
Clause 10 [Powers of governing bodies to form or invest in companies to provide services etc]:
Baroness Sharp of Guildfordmoved Amendment No. 51:
Page 6, line 33, leave out "companies" and insert "bodies corporate"
The noble Baroness said: In moving this amendment, I shall speak also to the other amendments that are grouped with it.
All of the amendments seek to leave out the word "company" or "companies" and insert the words "bodies corporate" or "body corporate" into the Bill. The amendment is intended to probe the Government on their proposals regarding companies. We on these Benches believe that it would be better to keep company law out of the education system in order to avoid placing additional bureaucratic burdens and responsibilities on head teachers and governing bodies.
School governing bodies already have a statutory status: they have been bodies corporate since 1998 under the School Standards and Framework Act, and even—perhaps—under the Education Act 1993. That status protects an individual governor's personal wealth and property from liabilities but it does not involve onerous levels of administration and other responsibilities, as company status does under the Companies Act 1985. Companies Act companies are legal entities in their own right and limited liability limits the liability of those setting up the company to

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their initial stake provided that they do not, by their own misconduct—whether fraud or malpractice—cause the immunities to he lifted by a court.
Those "benefits", so to speak, also involve responsibilities. There are a considerable number of checks written into the process of setting up and running a company, which help to filter out those vulnerable to malpractice. In addition, the requirements of the annual audit and report are considerable.
Governors, as last year's survey by the National Association of Governors and Managers indicated, already find their responsibilities as governors somewhat onerous. We on these Benches do not understand why any governing body should seek to add significantly to its burdens by agreeing to set up and run a company. What benefits are to be gained from doing so? Is not the existing legal status of the governing body as a body corporate sufficient to meet the needs of Clauses 25 and 26, which are about the provision of community facilities, and of Clause 29, which relates to the joint discharge of functions? Can the Minister please tell us why the Government believe that it is necessary for such enterprises to be undertaken by Companies Act companies, rather than under the powers that governing bodies already have as bodies corporate? I beg to move.
Lord Alton of Liverpool: I want to give some support to what the Government are seeking to do in this part of the Bill. Although I understand why the noble Baroness, Lady Sharp, properly probed the Government on the details, we should not detach ourselves from the spirit of what this part of the Bill seeks to achieve. It is erroneous to suggest that there is currently no link between education and companies law. In higher education—certainly, within the universities system—many universities have spun off their own companies very successfully. Those companies have gone on to create job opportunities and to enhance the value of the local economy in their area. I refer the noble Baroness to the example of Merseyside in that respect. At the universities there, significant new enterprises have been created and spun off from universities. They have gone on to make a significant impact locally in terms of the numbers of people employed and the creation of material, via those departments, which has been recycled in the education system and the economy generally.
Although this proposal would not be done on the same scale, the precedent is clearly there. There has been no difficulty in operating those companies in terms of safeguarding the governors of the universities and the staff who get involved. I add that some of the staff have gone on to lead the universities. They have gone out into the wide world, having created those companies, and created some extremely viable and interesting new companies and endeavours. We can be encouraged by such efforts.
The noble Baroness said that the responsibilities may be onerous on governing bodies, which are already over-stretched and which may not feel the need to take on additional responsibilities. As I understand
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the clause—perhaps the Minister will confirm this—there is no requirement on governing bodies to create such companies. That is done when they feel that that would be useful to them. For example, a school may have developed software for computer programmes or come up with an innovative way of dealing with a history programme or a science project in the national curriculum, and it could offer that to other schools. If that school in turn receives some remuneration for doing so and is able to redirect that back into its school budget, that is clearly advantageous to the school.
6.45 p.m.
Baroness Sharp of Guildford: I point out to the noble Lord that in such cases there is nothing stopping individuals from setting up companies. With universities, in most cases it is individuals who set up companies. Sometimes that is done with capital from the universities, which have become, in that regard, shareholders. They are set up outside the framework of the university. In this regard, we are concerned with governors who set up a company as a group of governors. That is a slightly different issue.
Lord Alton of Liverpool: Again, I refer the noble Baroness to the example of Merseyside, in which the universities collaborated to set up what was called the "hothouse" from which various new companies were initiated using ideas that were then in circulation around the faculties. It was possible to create enterprises that have gone on to be supported externally—for example, with European Union funding, as part of the objective 1 programme for the regeneration of the area. They have become a catalyst for the growth of the economy and the creation of jobs.
Schools will not be in a position to take on major initiatives of that kind. However, it is not impossible to foresee circumstances in which, as I suggested, a good idea that a school has developed could be used in an innovative way. That will not be a regular pattern in our schools. The Government are not suggesting that. This is surely an enabling measure that will allow schools to do that if they so wish. That is in line with the spirit of the legislation, which is about freeing schools to try imaginative initiatives and to be innovative and enterprising. We should not place unnecessary constraints in their way. For example, a few months ago, my nine year-old was doing a project on the Aztecs. I was intrigued to look on the Internet to see what the best sites were. I thought that the best site was offered by a primary school that had developed its own programme, which was linked to the national curriculum. That is precisely the sort of software package that could be sold to other schools that will do the project in future. Similarly, where other intellectual capita] has been created by a school, why should there not be a way of drawing back some sort of benefit to the school from which the idea originated?
My only concern is about safeguarding the governors, who become involved in authorising such a project. I want to hear a word from the Minister on that. My understanding of company law—his is much

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greater—is that the appropriate safeguards are in the legislation but that one would always be concerned about the liabilities that governors would enter into and the safeguarding of the individuals concerned.
Lord Dearing: I want to offer comment in the form of a question. I support enlarging rather than constricting the opportunities that are open to schools. If a body corporate comprehends also a company, I have no problem because that enlarges the specificity of a company. But if it does not, I should regret not opening up the possibility of a company—perhaps one limited by guarantee—because that is the type of instrument with which a commercial partner, which is a company, might feel comfortable in entering into a joint venture.
I can envisage such a situation, for example, in the provision of leisure. A school may have the land and a developer may be interested in providing the buildings and equipment. They could conceivably form a joint venture which would have to be a legal entity, and I suspect that that legal entity would be a company. In order to become involved in that, the school might need to set up a company limited by guarantee. Therefore, my concern is not with A or B being right but with avoiding confining the possibilities open to schools, especially as we are encouraging them to reach out into communities and to be centres of community.
Lord Baker of Dorking: I also express support for the sentiment echoed by the noble Lord, Lord Alton, and, to some extent, for that expressed by the noble Lord, Lord Dearing. I welcome these clauses in the Bill. Under the pre-1988 position in the education system, the only body to which schools could turn was the local education authority. That, apparently, was the fount of all wisdom and knowledge, not only in curricular development but in the whole organisation and running of schools.
The big breakthrough came with the introduction of delegated budgets. They had been experimented with in the early 1980s and were put into effect by the time of the Education Reform Act 1988. That legislation gave to schools a much greater degree of freedom and independence, and schools quickly realised that they could run a large part of their organisation which had previously been run by the LEA. That was a tremendous breakthrough. I believe that, in virtually all cases, schools which have had delegated budgets have welcomed them. More and more schools have received them.
Of course, this power will be extended only to schools with delegated budgets. Therefore, one is talking about schools which have had some experience of carrying out their own repairs and of moving into the provision of their own catering arrangements and going well beyond that. As I understand it, these clauses envisage that they will be able to form companies, if the governing body so recommends, and provide other services. I welcome that very strongly.
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Some of the schools with delegated budgets have developed considerable expertise, perhaps in technical, legal and financial areas. I believe that it is absolutely right to allow them to capitalise upon that knowledge. As the noble Lord said, that is already happening. He quoted the example of software development. A great deal of very good software development is now taking place at school level throughout our education system. There is no reason why a school should not try to sell that to other schools not only in this country but in other countries as well.
Such developments are taking place because there is a great freeing-up of the old, monolithic education system. In one area, not only has the Telford City Technology College become one of the most, if not the most, successful school in the country, but it is now sponsoring another school with the help of a nurses' company. The setting up of another school—a state-maintained school at that—is, as it were, the extreme element of this proposal. Again, Telford and other city technology colleges have developed packages of one type or another which they make available to other schools.
Therefore, I look upon this as a very welcome development and a way in which an enterprising school can increase its financial resources in a sensible, measured way. I am sure that many questions about detail will be raised but, in general, I want to express my support for these clauses in the Bill.
Baroness Blatch: It may come as a surprise to the noble Lord that, in principle, I, too, welcome more commercial freedom for schools. I agree with the noble Lord, Lord Alton, that these clauses need to be seen as enabling clauses. No one will be required to set up a company; they are simply enabling clauses. But there my concern starts rather than ends.
My concern is in relation to the detail. I say to my noble friend Lord Baker that the detail is worrying. My noble friend spoke in the context of Telford college, which is almost fully autonomous, and in the context of what were grant-maintained schools, which enjoyed a great deal of autonomy. We still have the Thomas Telfords of this world, the city technology colleges and, indeed, the city academies. But we have lost the wholesale autonomy enjoyed by the grant-maintained schools. Those schools are now back with their local authorities.
I am concerned about the detail of the way in which these companies are to be set up. They will be companies under the full panoply of company law, and that is very different from what I believe is being described. The noble Lord, Lord Alton, gave the university sector as a very good example. Of course, the universities are autonomous in that sense, and they are masters in their own house. But, as I said, schools are not.
Even so, if the noble Lord looks at the words in the Bill, he will see that schools must work in concert with the LEA and not, as my noble friend Lord Baker believes, separate from it. Schools cannot even take this step without the LEA being involved. The LEA

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forms the supervisory body. Therefore, another tier is involved, and the Secretary of State holds the power to intervene.
Therefore, we are not talking about an autonomous company but about an arrangement with layers of other people superimposed upon it. I believe that that is a recipe for disaster. We should look, for example, at the Government's record on individual learning accounts. The Government introduced a scheme in which they gave autonomy to a company to go away and involve itself in a government scheme commercially. It was widely open to fraud, and the National Audit Office's report of what went on there makes fairly horrific reading. Therefore, the Government's record on this matter is not good.
I shall have a great deal more to say about Clause 10 when it comes to the Question whether the clause stand part because I believe that some real concerns exist in relation to it.
Perhaps, in passing, I may refer to the example given by the noble Lord, Lord Alton. I believe that he was talking about his son working on an Aztec project. He spoke about a primary school which had the most marvellous technological software—the best to be found. At present there is nothing to stop any primary school from developing that software and making it available to other schools. In fact, a school can even charge for that service. The money is received by the school and used for the benefit of the school. That can occur in the same way as playing fields, for example, can be used with different scales of letting charges. Schools can charge one level of fee to the voluntary and charitable sectors; they can be generous in their lettings policy for other schools in the area; they can act in a commercial manner if a commercial organisation wishes to use the facilities; or, indeed, if weddings take place on the school premises, again, they can be very commercial.
Therefore, there is a great deal that schools can do in order to exploit the facilities that they have and the developments that they have made in education. However, as I said, I shall have much more to say when it comes to the Question whether clause stand part. My concern is about the detail and not about the principle of giving more commercial freedom to schools at a local level.
Lord Peston: Before my noble friend replies, I have two factual questions to ask him. As I am trying to learn about education from the Bill, can he explain the existing legal position? What law prevents existing maintained schools from forming companies? In other words, what net is there in the Bill? Can he direct me to that? I assume that the answer to that is very clear and that I am simply ignorant.
My second question is: can he give me an example of what one can do by forming a company which one cannot do under the present situation? Can he give an absolute hard-and-fast example of something that schools can do once they become companies which they are prevented from doing now?
7 p.m.
Lord McIntosh of Haringey: At the beginning I almost felt that my role in this Committee was not necessary because the noble Lord, Lord Alton, and others successfully answered most of the points raised by the noble Baroness, Lady Sharp. Because of the promise of further debate on the wider issues in Clause 10, I shall attempt to confine myself to this group of clauses and to the issues raised in connection with them, and I shall not stray on to the issues which we shall inevitably debate later.
The noble Baroness, Lady Sharp, opened by talking as though we were imposing burdens on governors and schools. The noble Lord, Lord Alton, responded to that point very effectively. There is no obligation on any school or any group of schools to make use of the powers provided for by Clauses 10 and 11. The use of those powers is purely voluntary.
If we take the amendments literally, the issue comes down to whether we have companies under the Companies Act 1985 or a statutory body whose rules would be set up under Amendment No. 58 by the Secretary of State. I am a little surprised al that because the thrust of much of the debate on the Bill has been the extent to which there has been delegation to the Secretary of State, particularly by regulation. To use the Companies Act, which is provided for in primary legislation and is well known, rather than to give additional regulation-making powers to the Secretary of State as Amendment No. 58 would do, is a little counter to the thrust of the argument that I have heard.
The reason for proposing to use the Companies Act 1985 is simple: it is there; it works; the rules are all set out and it is easy for anyone to use. One can buy a company off the shelf readily. There are no new legal or accounting procedures to be learnt. The constraints on and protections of limited liability are well known and have been so for many years.
In answer to the noble Lord, Lord Alton, the two kinds of company that we expect to be formed are first, mainly companies limited by guarantee but, secondly, possibly—I shall explain the circumstances, perhaps in response to later amendments—companies limited by shares. In the case of companies limited by guarantee, the responsibility of the members of that company is limited to £1 or £10 or whatever sum is the initial guarantee. In the case of a company limited by shares, the responsibility is limited to the amount of the shares subscribed for. Therefore, the financial protection of those who take part in these companies is clear.
It is necessary for me to say a word about the three kinds of activity of the companies, because that is significant in explaining why we have gone along the route of the Companies Act. We envisage that the companies should have three purposes. One would be collective purchasing where the purchasing power of a group of schools in one authority or, indeed, more than one authority, would be greater than that of a single school. In answer to the noble Lord, Lord Peston, a supplier to a school is more protected if he is

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supplying to a limited company than to a corporate body in the more vague sense that a governing body is a corporate body.
Lord Peston: I thank my noble friend for giving way. Perhaps I may ask him whether he is certain of the answer he has just given as regards a supplier being more protected. Surely, if a school orders goods and writes a cheque, the supplier is fully protected. How can he be more protected? Unless things go on in schools about which I do not know and do not want to know, I do not see what problem could possibly arise.
Lord McIntosh of Haringey: Ultimately, the noble Lord, Lord Peston, is right in the sense that if a school defaults, the local education authority is ultimately responsible. If a company set up under Clause 10 defaults, the local education authority is ultimately responsible. In the end, the responsibility and the protection are the same; it is a question of the route taken to get there. This, again, is in answer to the noble Lord, Lord Dearing, who I believe would be happy with companies limited by guarantee, with the restrictions that there are.
I shall return to explaining the three purposes of the companies before I am diverted too far. The first is purchasing. The second is one of which examples have been given; that is, the common provision of services, of which software development is a good example. In the model runs carried out by the department, even without the powers existing, within Havering Borough Council education authority 12 schools are getting together for service delivery. There is the whole question of whether that vehicle is suitable for use for joint ventures. That is a matter which we can debate later if necessary. However, that has not been raised and I shall not raise it further.
Fundamentally, I want to respond to the point raised by the noble Baroness, Lady Blatch, about what she called the full panoply of company law. It is exactly because company law is so well established; because everyone knows what it is and because there are models to work from that the measure is proposed as the way into co-operation between schools. It may be said as regards purchasing that the local education authority may have greater purchasing power than a company of that kind. I anticipate that the noble Baroness, Lady Sharp, may make that point in reply. If that is the case and the schools are satisfied with the purchasing provision of the local education authority, there will be no temptation to form a company for that purpose. However, we understand that that is not always the case and that there may be some schools which want to make their own arrangements. That can, indeed, be done.
The answer to all of those questions is, fundamentally, that this is a voluntary provision. Nobody is required to do this. The provision enables groups of schools, if they wish, to do things which they might not be able to do now; for example, to gain larger discounts when they are purchasing; to have a vehicle for selling on service developments which may
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be of a wider value than to their own schools, and ultimately, if necessary, for the purpose of joint ventures. I can go into more detail on that point if necessary. However, in any of those cases it is desirable for the schools to be companies and not bodies of the form proposed by the amendments.
Lord Alton of Liverpool: I am grateful to the Minister for that reply. Before he sits down, perhaps I may ask one further question. For the purpose of people following our debate outside the Chamber, can he underline the fact that this is not about private gain; that if, indeed, any surplus was to accrue from the activities of a company inside a school, that that money would be ploughed back into education and the running of that school?
Lord McIntosh of Haringey: There are amendments tabled to that purpose, to which I propose to reply. However, I shall give a precise answer. When the company is being established for purchasing purposes, the benefits will go entirely to the school. The answer I have not yet given to the noble Lord, Lord Peston, is that a corporate body can purchase, but it cannot purchase on behalf of other schools, so it is a group of schools getting together to form a company.
When we come to a company limited by shares, for example software development, it may be necessary to bring into a company other bodies or individuals together with the schools in order to achieve the objective. It may be necessary, for example, for the company to have as participants printers, marketing people or further software developers. I am thinking on my feet because I do not know enough about the subject, but it may be necessary to bring in people who would be participating for profit. Those would be the circumstances in which there would be a company limited by shares rather than a company limited by guarantee. In those circumstances, shareholders in a company of that kind would be looking to it for profit. Although according to the rules that we shall set out they would have to be organisations with a significant involvement in education, I cannot give an absolute assurance that under those circumstances all the profits would go back to the school.
Lord Peston: Did my noble friend answer my question about what now prevents schools from forming companies? I missed that.
Lord McIntosh of Haringey: An individual school can form a company but it cannot form a company with other schools, which is the main purpose of this exercise.
Baroness Sharp of Guildford: I thank the Minister for his reply although he leaves me slightly more mystified than when I started. Perhaps he would like now to answer the two questions posed by the noble Lord, Lord Peston. Am I right that the current status of governing bodies is that of bodies corporate? I did

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not think that a body corporate could establish Companies Act companies. However, the Minister tells me that they can.
Lord McIntosh of Haringey: A single school could form a company for its own purposes. Our intention is that groups of schools should form companies for the purposes set out. They cannot do so now.
Baroness Sharp of Guildford: What can they do as companies which they cannot do now? The only answer given is that they can purchase jointly. The noble Lord rightly pre-empted my response to that. Is he rediscovering the local education authority? It does not seem a sufficient reason. If schools can already form companies, is the reason only that they should do so jointly? If they can already form themselves into Companies Act companies as governors, why do we need this legislation? It seems yet another example of an unnecessary piece of legislation.
Another issue worries me. It has been raised by others. If the company established—to which a governing body as governing body is party—goes bust, the local education authority has to pick up the tab. What is the purpose of establishing the companies? If at the end of the day the risk will have to be borne by the local education authority, we should leave the situation as it is. As has been indicated, schools can do a wide range of things. Without this legislation, many schools in Havering are getting together and promoting software. Telford City Technology College and the Birmingham 3E's are companies set up to exploit what the schools are doing. I cannot understand why we need this additional legislation.
Baroness Blatch: Before the Minister answers the noble Baroness's questions, perhaps I may extend the questioning. What is to prevent an individual school from forming a company and selling its wares to a neighbouring school or another school across the country?
Lord McIntosh of Haringey: It cannot form a company for the benefit of other schools. It can set up a company for the purpose of running its own school. I think that is what the noble Lord, Lord Baker, referred to. Paragraph 3 of Schedule 10 to the School Standards and Framework Act provides that power. It cannot set up a company jointly with other schools. It could not set up an Internet site or, under the School Standards and Framework Act, undertake software development with other schools.
Baroness Blatch: That is not my question. What is to stop an individual school from setting up a company, selling its wares to another school, neighbouring or across the country, for profit which benefits the individual school which sets up the company?
Lord McIntosh of Haringey: If a school were to do so, it would be using the resources of more than one school and the resources of those schools would
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together be more powerful than the resources of an individual school. That is why under Schedule 10 a Companies Act company would have an advantage. But, of course, if it is only for the benefit of a single school the power already exists.
Baroness Sharp of Guildford: I thank the Minister for his reply. The situation is not entirely satisfactory. I think that we shall return to the matter in Committee when debating whether Clause 10 shall stand part and on Report. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 52 to 57 not moved.]
Lord Pestonmoved Amendment No. 58:
Page 7, line 11, at end insert—
"( ) The governing body of a maintained school may not impose charges in respect of education provided at the schools."
The noble Lord said: I tabled the amendment at a time when I thought that I understood Chapter 3 of the Bill. My noble friend has educated me in many matters over many years, but I have to say that I certainly know less than I did before we debated the previous amendments. I am sorry that we shall have debate on whether Clause 10 shall stand part. I believe that we should give the Minister a chance to think again about some of the answers he has given us and perhaps debate the matter on Report. However, that is up to the noble Baroness when she reflects on what will happen after dinner.
I have sought hard to get into the mindset of whichever lunatic dreamed up Chapter 3. We are supposed to be discussing an education Bill. I find it hard to connect education as I understand it to Chapter 3. The Government must have something in mind. I had assumed that it was to do with things schools could not do previously. The question of charging seemed central if one were setting up a company. A company set up without deep thought on charging would be a most peculiar company.
My noble friend Lady David and I tabled the amendment to see what was involved with regard to charging. I took it for granted that the answer to the simple question, "Could a fee-paying element be introduced into education as a result of this section of the Bill?" would be a categoric "No". I hoped to receive such an answer. However, the answer given to the question by the Minister in another place was, "We have no intention of doing that". The response to my question on Thursday on selection by ability was, "We have no intention". But "we have no intention" does not answer the question, "What does the Bill say and allow?" Does the Bill in any sense whatever allow the charging of fees for education? I hope that the answer is no; or, "Yes, it looks as though it does so, we had better change the Bill to ensure that that does not happen".
There clearly must be charging. If the company is set up and provides facilities and services, it must charge for them. The principles by which those charges will be levied is not clear to me. Will they simply be full cost charges with no profit element? Alternatively, will they

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include a profit element? My noble friend partly answered my next question. If there is a profit element, who does it belong to? Again, I had assumed that it would belong to the company rather than a specific school.
I had thought that the answer to the question of the noble Lord, Lord Alton, would be that all the money would then be confined to education. However, unless I misheard that was not quite my noble friend's answer. I hope that he might again reflect on that.
I refer to one aspect of the clause which troubles me. In Clause 10(8) the words "company", "relevant local education authority functions", "facilities", "maintained school" and "participating school" are defined. However, the word "services" appears in Clause 10(1 )(a) but is not defined. Therefore, can my noble friend say whether the reference to "services" merely mean educational services, or whether it means services in some broad sense? If it refers to educational services, does it mean that no fees can be levied for them? Alternatively, if it means services in a broad sense, can my noble friend say what fees can be levied in that regard?
Let us consider an example of the sort that my noble friend did not consider. Let us assume that someone sets up a company that decides that its expertise will be in the teaching of foreign languages—a topic raised last Thursday. The company decides that it will be the expert on the technology of teaching foreign languages, including websites, and so on, and that it will sell such services to other participants. As those services would be educational, we can see how very close that would get to charging for education. There is a slight distinction here between charging the buying school and the parents. At this point the school only is paying, not the parents, and the free education criteria would not have been broken. Is there any possibility that by, say, defining the services as "extra" and, therefore, not central to the school, the parents could be charged at a later stage?
We must not be naïve about the situation. At present, there is a fairly arbitrary distinction between what schools can, or cannot, charge for; indeed, in my experience, schools are pretty reasonable and not stupid in the way they behave. They are not currently charging for education. However, I cannot see what stops them doing so. Perhaps we can take the obvious example of school trips, which, in many ways, are justified on educational grounds. As I understand existing law, for which many people in your Lordships' were responsible, you cannot charge for school trips. You can say only that people may voluntarily contribute to the cost. For those who know about pressure, the difference between not charging and contributing voluntarily is rather difficult to define, but I believe that you cannot charge under the law. Let us suppose that a company is formed specifically to organise school trips and that it levies charges for doing so. How would the voluntary principle apply in that situation?
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I ask all those questions simply for elucidation. I cannot believe that this Government—here I go into "creep mode"—would ever do anything that was other than excellent when it comes to education. None the less, I still believe that we need some replies to those questions. We also need some assurance on what this legislation would permit when enacted, and on what the Government would do. I beg to move.
Baroness Blatch: The noble Lord, Lord Peston, is talking about one form of charging, but there is another sort of charging involved. One relates to charging individual children for education; the other relates to whether or not one charges other schools for educational services. We are dealing with two different concepts. The noble Lord seeks to add the words set out in his amendment to subsection (5), which reads:
"The governing body of a maintained school may provide staff to any company in relation to which they have exercised a power conferred by any of subsections (1) to (4)".
The noble Lord rightly referred back to subsection (1)(a) of the clause.
I believe that I have some fairly disturbing news for the noble Lord, Lord Peston. Perhaps I may refer to Standing Committee G in another place on 13th December last when my honourable friend Mr Chris Grayling said:
"While the Minister is clarifying these points, will he tell us the degree to which the provision for the companies involves the delivery of educational services? Is it conceivable that a governing body would have the right to sack its head teacher and its staff, and bring in a company established by a more successful school to run the school? In theory, could a governing body subcontract out the entire management and educational management of it school to a more successful school?"
The Minster replied:
"That does not sound like a likely scenario. The governing body has clear responsibilities in this area, which it will exercise normally. The scenario is possible—subsection (1)(a) makes this clear";
in other words, it is possible. This Bill actually makes that a possibility. I repeat what the Minister said:
"The scenario is possible—subsection (1)(a) makes this clear—because we are considering services provided to schools by other schools. We want more examples of that".—[Official Report, Commons Standing Committee G, 13/12/01; cols. 157–8.]
That was the Minister's response. The Government want more of that; they say that that scenario is possible. That is not charging individual pupils; it is actually selling educational services.
I return to my earlier question to the noble Lord, Lord McIntosh. As I understand his reply, it is possible for an individual school to set up a company, and for an individual school to sell its wares to another school. The latter could be computer software programmes, a particular educational project developed within the school, or it could be practical services like catering and/or cleaning, caretaking, and so on.
I wish to extend my question to the noble Lord. As I understand it, it would be possible under the Bill for a school to set up a company to sell, say, catering, cleaning or educational services for profit. That possibility was mentioned by the noble Lord, Lord

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Peston. So I believe I am right to assume that we are not talking about a "not-for-profit" operation. Unless it is for profit, the school will derive no benefit. Perhaps the noble Lord can confirm.
Finally, governing bodies setting up such companies can lend their staff; indeed, not actually lend their staff but allow their staff to become part-time, and so on. They can release them for part-time or full-time membership of these companies. I wish to put this point to the noble Lord, Lord McIntosh, who is speaking for the Government on the issue. We are discussing an educational Bill. Teachers and head teachers are there for one purpose only—namely, to educate the children. Against the background of a teacher shortage crisis, and—dare I say it?—a governor crisis, I do not believe that any school at present has the capacity to allow its staff to become part of a commercial proposition that is ostensibly making money to bring back into the school without risking some form of culpability or liability falling on the school.
Lord Baker of Dorking: I hope that it will not embarrass the Minister if I rise, again, to support what he is about to say in reply to this debate. It seems to me that his answers this evening have been quite lucid. They reflect the correct definition of educational law, and they are very clear. He specified what a school can do now; namely, set up a separate company if it does so by itself, as well as partaking in all the activities that are worrying noble Lords on both sides of the Committee. He also explained what these clauses allow schools to do in conjunction with other schools. He is absolutely right in his explanations.
I believe that the anxiety expressed by the noble Lord, Lord Peston, is somewhat exaggerated. He has really started another debate on the whole question of parental charges. I do not believe that the mechanism being established by the Government will allow that to happen, indeed, that is quite a separate matter. On the question of foreign languages, a company may be set up in conjunction with schools. As a result of several schools joining in the process, a range of foreign languages instruction could be provided that was much wider than any school could achieve on its own. There might even be, for example, a school with pupils who wished to learn Portuguese. As that school had no Portuguese teachers, it might approach the company to ask whether it could provide such teaching, and at what cost.
No doubt private companies, quite apart from the one in question, would also be able teach Portuguese, so there would be a competitive element involved as well as a constraint upon what the new company could charge for its services to that school. However, there would be an element of profit and there is no harm in that. The profit would remain in the company; the company would be owned by other schools; and it would remain within the school system, with the services being distributed to other schools. I see no worries in that respect. It is a very sensible step forward. I should also point out to the noble Lord, Lord Peston, that I do not believe that charging could
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be introduced as a result of that process. The school wanting the Portuguese teacher would have to provide that service from the delegated budget of the school. It would need to ask itself whether or not it could meet the charge. It will not charge the parents of the children who want to learn Portuguese for special services. So I think that some of these anxieties are somewhat exaggerated. I would say to the noble Lord, Lord Peston, that much of this happens already with schools as a result of the greater freedom that schools have been given. These clauses allow even greater freedom, which I completely welcome.
7.30 p.m.
Baroness Sharp of Guildford: I was not going to intervene in the debate but I have been stirred to do so by a number of contributions. One of the answers to the noble Lord, Lord Baker, is that for many years now—as he will know perfectly well—schools have co-operated with each other. For example, those that do not teach Portuguese have co-operated with those that do. That has happened on a co-operative basis without any necessity to set up a profit-making company. Profit-making companies take money out of already very thin education budgets. Why do we have to make extra profit out of this situation? There is already co-operation between schools without having to make a profit out of it.
The second issue is the setting up of companies to perform functions. Schools already have the power to set up companies. We have the example of the 3e's company which is running a school in my area—Guildford. It very satisfactorily runs Kings College in Guildford and is now running a number of other schools in Surrey. It is the local educational authority rather than the governors which has called in the company to run the school. It does not make a profit because it has pledged to put any profit it makes back into the system. But that is not true of companies such as Nord Anglia Education Plc which is making a profit out of running the schools and doing very nicely on the Stock Exchange, thank you very much.
So there are those—I am not someone who has to creep in any sense—who see the underlying purpose of this clause to encourage the takeover of schools by companies such as Nord Anglia. In other words, as someone on the far Left might say, "It is privatisation by the back door". Perhaps the Minister can assure us that that is not what is meant by these provisions.
Lord McIntosh of Haringey: When my noble friend Lord Peston started I had a nice simple answer, since when—as it says in the serials—"the issue has got muddied" both forwards and backwards in what should be the order of proceedings.
The answer to my noble friend Lord Peston is categorically "No". In other words, the Bill does not change what charges can be made. The law governing charges is contained in Sections 450 to 458 of the Education Act 1996 and specifically in Section 451 which prohibits any charge being made—by anyone—for education provided to a registered pupil at a maintained school during school hours. There are

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certain exceptions; for example, music lessons and—more dubious perhaps—school trips where I understand that there is pressure which is short of compulsory charges. There would be a change if the amendment were agreed to because the clause would say that,
"a maintained school may not impose charges in respect of education provided at the schools",
which would not only make it impossible to charge for music lessons—my noble friend Lord Peston might be happy with that—but to charge adults for attending evening classes in the school. I suspect that he would be less happy about that. Let us leave it at the simple fact. The fact is that the Bill does not change the law regarding charging in a maintained school.
Now we turn to where the waters start to get muddied—charging for facilities and services and the definition of "facilities" and "services". In dealing with the previous group of amendments, I attempted to give examples of the kind of facilities and services about which we are talking. Those are broadly educational facilities and services. I do not know what Members of the Committee would call "purchasing"—for example, is the purchasing of materials for a school educational purposes, or educational when it is textbooks and not educational when it is material for cleaning the lavatories? We are into theology here. The important issue is that Clauses 10 to 12 give groups of schools an ability to do things that they cannot do at the moment but only if they want to. There is no threat in terms of charging parents. There is no threat in any of the other ways which were referred to, but which will have to be referred to in more detail when we come to the Clause 10 stand part debate.
Of course the noble Baroness, Lady Blatch, would never intentionally muddy the waters. But she was quoting the Minister of State for School Standards in the Standing Committee in December last year. The Committee was debating the power to innovate when he gave the clear commitment that in no circumstances would the Government ever allow charging for state school education. I think that that is as simple an answer as there can be. There are circumstances in which charging is possible, as we have said, for music lessons and between schools for services which they provide to each other. But nothing in the Bill—and this is the important point—increases the possibility of charging.
Baroness Blatch: Before the Minister sits down, I certainly did not attribute to Mr Timms in another place that children could be charged for education. I agree with my noble friend and with the noble Lord, Lord McIntosh: I do not believe that under the Bill it is possible to charge children of statutory age in mainstream education other than what the law allows for in, for example, music.
I was saying that it is possible under the Companies Act—and the Minister in another place confirmed this—to dismiss all the staff of a school and to buy in management. Equally, it would be possible to sell management to run another school.
Lord McIntosh of Haringey: Not as a provision of this Bill, is the fundamental answer to that. Again, we shall
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debate this matter when the amendment is less restricted. But that is why we have provided, first, for a supervisory authority and, secondly for an LEA to give approval. There are two layers of control now. I know that the noble Baroness, Lady Blatch, does not like that, but it is the protection to which she refers. There is no greater possibility arising from this Bill for the kind of takeover that she is talking about.
Lord Peston: I thank my noble friend. I feel a little more enlightened. I now understand that the whole clause is about jointness between schools. I shall certainly reflect on that matter. That is certainly something that I have learnt. He said categorically—prompted by the noble Lord, Lord Baker—that no new charges can be introduced. I am not convinced. The Portuguese example is a very good one. Let us assume that a company is very good at teaching Portuguese and the school wants Portuguese taught. The company says, "We shall charge you so much" and "the teaching of Portuguese involves a trip to Portugal plus access to a particular website that we own", and matters of that kind. The school would have to go back to the parents and say, "We are sorry but we cannot teach your child Portuguese" because of that charge.
Then we get into the music teaching business where the parents say, "Well, couldn't we pay for all this?" Let me add that I do not approve of children having to pay for music lessons. I could go on to give other examples of what they have to pay for.
We now get very close to pressure for charges. Although I am about to withdraw my amendment until we debate these matters on Report, I do not think that the matter is quite as simple as is set out in the earlier legislation about not charging, because we get very close to the difference between a charge and a voluntary payment under pressure. Parents might feel obliged to say, "Yes", particularly if they live in a part of south London where, I might add, there is a significant Portuguese community. They may feel that they should agree to pay so that their children can learn to speak Portuguese.
So I accept entirely what my noble friend has said at a formal level. But I do not think that the question of charges, including charges to pupils, when it involves the definition of educational services is quite as dead as my noble friend would suggest. It is certainly not dead enough for me not to want to consider it further before Report. But of course all my amendments have been tabled solely for clarification, so I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 59 to 61 not moved.]
Lord Davies of Oldham: I beg to move that the House do now resume. In moving the Motion, perhaps I may suggest that the Committee stage begin again not before 8.41 p.m.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Consignia
7.40 p.m.
Lord Hoylerose to ask Her Majesty's Government what they are doing to improve industrial relations in Consignia.
The noble Lord said: My Lords, I must declare that I am a member of Amicus. A section of Amicus is the Commercial Managers Association, which has 15,000 members in Consignia.
Although we are discussing industrial relations, we cannot escape from what I believe is a dire threat to the postal service that is not solely the pride of this country but has in many ways been the envy of the world, because it provides a universal service at a uniform price. That is being endangered by the proposals of Postcomm. The only way that the Post Office can meet the competition is if we follow the European directive, which calls for competition to be introduced, but gradually, at a pace that Consignia can withstand, so as to he beneficial. Postcomm's proposals, far from going along that line, may destroy what the Post Office is committed to do: provide a universal service at a uniform price. That is the danger.
I am not sure whether Postcomm realises that it is putting that at risk, but any competition should benefit all—not only the large user but the small user; those in both urban and rural areas. Cherry picking is taking place on a large scale. In its proposals, Postcomm has got its figures wrong. The figures have been examined by Consignia, the unions and independent authorities.
In the first phase, 2001–04, far more of the market is being opened up. For example, 50 per cent of the market by volume and 40 per cent of the market by revenue will be opened up. That contrasts with Postcomm's figures of 40 per cent by volume and 30 per cent by revenue. Cherry picking on that scale puts at risk the profitability of the Post Office and puts at risk the universal service, because to meet that figure will cause a large increase in stamp prices, as has occurred in Sweden.
The tragedy, which people appear to be unable to get through to Postcomm, is that once it does that—once the damage has been done to the postal service we cannot pick up the pieces of the jigsaw and put it back together again.
I do not intend to take 10 minutes, as my noble friends and other noble Lords have been reduced to so few minutes, but it is against that background that we must consider industrial relations. Industrial relations have been poor—largely due to bad management; I have always said that management gets the industrial relations and unions that it deserves—and there has been a good deal of unofficial action. For instance, last year, more than 60,000 employee days were lost—a 20,000 increase on the previous year. The Post Office has a poor record on harassment and bullying at work. Almost 10 per cent of employees admitted that they had suffered from harassment. That is not a good thing; it is the wrong kind of foundation on which to build.
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Thanks to the efforts of my noble friend Lord Sawyer and the Sawyer report, we have avoided a crisis—we could have been on the eve of a national strike tonight but, thank goodness, common sense has prevailed. Thanks to the Sawyer report, industrial relations in the Post Office are becoming more stable, official action has almost ceased and the two sides are talking together.
The partnership concept offers the way forward. It is absolutely necessary because—I speak as a member of Amicus, which has knowledge of many industries—the centralised command and control method in the Post Office belongs many years in the past. I hope that the concept of partnership will take over. It is absolutely necessary because only in February this year, the CMA commissioned an inquiry among senior managers. I do not want to go into too much of the report's detail, but it found that most managers did not feel that the present top management was up to the task of meeting the challenges that lie ahead for the Post Office.
One would have thought that that would have set alarm bells ringing in Consignia. Although that survey of senior managers was sent to the chief executive, John Roberts, and the chairman, Allan Leighton, in February, as I speak we have not received an acknowledgement, let alone a meeting about it. Surely, that is not the way to run industrial relations. As I said, if it were not for the Sawyer report, which talks of partnership, I should be painting a fairly bleak and black picture. That is the only way forward. When there has been talk of 30,000 redundancies in the industry, we need to use all the skills, talents and expertise not only of managers but of the workforce. They must pull together in partnership if they are to meet the competition.
That is the problem facing Consignia and its employees. That is why morale has been low. But with the new concept of partnership there is now hope that it can move forward. But I must tell my noble friend—I hope that he will reply to this point—that it cannot move forward while the sword of Damocles in the form of Postcomm's proposals hangs over the industry The Government cannot hide behind what the regulator says. They must accept responsibility for the present position, face up to it and take measures to ensure that we have a viable Post Office that continues to provide a universal service at a uniform price.
7.50 p.m.
Lord Davies of Coity: My Lords, I am grateful to my noble friend Lord Hoyle for introducing this debate. I have no doubt that it was the report of my noble friend Lord Sawyer that prompted it.
Since my noble friend's report was published, a great deal has happened. On 25th March, there was a major announcement, stating that far-reaching reorganisation would take place in the postal service and that more than 12,000 jobs would go. The newspapers speculated that over 40,000 jobs would disappear and that 3,000 urban post offices would close. To some degree, all those circumstances have an impact—directly or indirectly—on industrial relations.

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All proposed change in the workplace breeds feelings of insecurity and suspicions among those at the sharp end—the workforce. Without labouring the point, I must say that that was the case for the Luddites. The Luddites were condemned for retarding progress by smashing the machines. However, their motive was not stopping progress but safeguarding jobs, their livelihoods and those of their families, all of which were to be taken away by the introduction of machinery. Nobody in the management bothered to consider their plight. In the headlong drive for productivity—that word was not used then—and greater profit, the workers were forgotten. Management actions became counter-productive.
That was a long time ago. By the 21st century, we ought to have learnt more about industrial relations in the Post Office than my noble friend's report suggests. I have spent the greater part of my working life in industrial relations in the private sector, mostly representing low-paid workers in food manufacturing, retail distribution, wholesale grocery and catering, to name but a few. In most cases, I represented women workers and part-time workers. From all that, I learnt that partnership was more beneficial to those whom I represented than conflict. My union, USDAW, was one of the first to initiate that approach.
When I was general secretary of USDAW, I signed a partnership agreement with the noble Lord, Lord MacLaurin of Knebworth, who was chairman of Tesco. Today, Tesco is one of the most advanced retailers in Britain. Nearly 100,000 of its staff are members of USDAW, and the workforce is among the best paid and provided for in the retail sector. That is, undoubtedly, an example of good industrial relations.
It is important that management must believe in good industrial relations and must work to achieve them. Managers must respect those who work for them and convince them that they do. They must be totally interested in the well-being of those whom they employ and ensure that they are confident of that. Regrettably, that picture is not reflected in the report produced by my noble friend Lord Sawyer. The picture is more that of a them-and-us situation, rather than a partnership working for the good of all.
Of course, the fault is not all on the side of management. Often, justifiable criticism can be directed at workers and their representatives. However, I know from decades of experience that, if a them-and-us culture of conflict is to be removed, it is management who must do the most work. Attitudes must change; there must be patience and tolerance. Understanding and respect must be the name of the game. Only in that way can mistrust and lack of confidence among the workers be removed, making a clear way forward for the benefit of a culture of partnership for the benefit of all. There will be progress and increased economic solvency for the postal service, security of employment and improved conditions for staff and an improved service for the consumer. That is not just a theoretical forecast; that is exactly what happened with Tesco.
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When I first became involved with Tesco, it was a pileit-high and sell-it-cheap company that hired and fired at will and had no industrial relations. We should compare that situation to where they are today.
I thought that I might run out of time in this debate. It looks like I must stick to four minutes, so I shall come to the end of my speech.
In a previous debate, my noble friend Lord Clarke of Hampstead said:
"I said that one penny on postage would produce £180 million. If it had been two pennies—still the cheapest postal service in Europe—we would have wiped out the deficit that the Post Office faces today".—[Official Report, 25/3/99; col. 38.]
Although I have the greatest respect for my noble friend, I am not persuaded that that would have been helpful. I also suspect that such an approach may have been used in the past to solve immediate problems, while leaving core difficulties undealt with. We must ensure that Consignia—not the Government—uses the services of ACAS in order to develop a culture of partnership and remove the existing conflict.
7.56 p.m.
Baroness Gibson of Market Rasen: My Lords, I thank my noble friend Lord Hoyle for allowing us to have this important and timely debate.
I spoke about Consignia and its industrial relations in a previous debate during which worries similar to those being voiced today were expressed. Between then and now, I have had the opportunity to meet those who run Consignia, and I feel somewhat more assured than I did then. They appear to recognise what is needed to ensure the continuation of high quality postal services. That recognition is, at least, a starting point.
I shall concentrate on the position of workers who are employed as managers in Consignia and who face decided difficulties in that organisation. I declare an interest as a former national official of Amicus, the union that organises the managers in their CMA section. I have also talked to those managers and know how eager they are that Consignia should succeed. Those managers are keen to work within Consignia to ensure its success. They are in a unique position, squeezed between powerful forces. They take the pressure from above—from those who run Consignia and who are eager to reform it and its working practices—and from workers at the sharp end who encounter daily difficulties that sap their morale and increase their fears.
It is obvious that managers are pivotal to Consignia's success and that they must be allowed to exercise discretion and judgment in many different circumstances. Unfortunately, the managers do not believe that they are being allowed those freedoms. They believe that their voice is rarely listened to and that their views are ignored. Those men and women want to play a considered and respected part in Consignia. If their knowledge of how the postal system works is ignored, it will be Consignia and the public who will lose out. No one will gain.

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Industrial relations are not a concept that applies only to employers and workers in urban areas. Employers and workers in rural areas are affected too. I still worry about services in rural areas. Rural postal workers are not just postal employees; they are part of the life of their area. Postmen and postwomen play a large part in their community. They know the local populace; their knowledge is second to none. They take messages from neighbour to neighbour, especially if houses are spread widely around a village or hamlet. They can keep an eye on the elderly, the lonely and the young family who may need help. In cases of illness, they know whom to contact when the doctor needs calling or a son, daughter, mother or sister needs to be told. They are a fundamental part of the rural scene. If the rural postal worker goes, a part of the social network goes too.
In a recent interview, Allan Leighton, the chair of Consignia admitted that,
"the management needed to hold their hands up because they had made mistakes in the past".
On industrial relations, he said:
"There has been too much in-fighting in Consignia, when it should have been looking after its people and its customers".
He recognised that an improvement in industrial relations must be the foundation for turning round the Post Office and that the better industrial relations achieved in the six months since the publication of the report by my noble friend Lord Sawyer represented a platform that could be built upon. The CMA likewise is on record as welcoming the partnership initiative and sees it as the best way forward.
Finally, in the repeated Statement of 25th March, which has been mentioned by my noble friend Lord Davies of Coity, the Secretary of State for Trade and Industry stated:
"I have made it clear to the new chairman that there needs to be an effective partnership relationship between the management and the workforce if we are to deliver [the competitive postal markets of the 21st century]".
He also said:
"And we will do everything we can through the Employment Service, and other agencies, to provide support, assistance and new opportunities to those losing their jobs".—[Official Report, 25/3/02; col. 33.]
The Consignia management has stated that it will resist compulsory redundancies. I want to place on record tonight that we are watching to ensure that both the government and the Consignia pledges are adhered to.
8.1 p.m.
Lord Brookman: My Lords, my noble friend Lord Hoyle, in his customary fashion, set out his views on how best industrial relations in Consignia could be improved. Those of us who are interested in industrial relations and the postal service should be grateful to him.
The debate, following the loss of the quite amazing and much loved Baroness Castle of Blackburn, somehow brings into perspective how in many respects relationships between government, employers and employees have moved on. Being actively involved as a
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trade unionist throughout the Conservative years of government, and to be here now in the House of Lords witnessing positive legislation such as the minimum wage, trade union recognition and the working time directive to name but a few, is heart-warming. Most noble Lords here today have made a considerable contribution to industrial relations and the industrial relations world. Indeed, one noble Lord was overheard to say, "I see the mini TUC is on duty tonight!".
Much has been said about the independent review initially sought by the CWU some two years ago. That review, which I have read, looked at industrial relations in Royal Mail. My noble friend Lord Sawyer, who I see in his place, chaired that independent review and he, together with the two other members, Ian Borkett and Nicholas Underhill QC, should be congratulated. It is an honest, common-sense analysis, outlining a series of recommendations which I am advised are slowly but surely being implemented. That is good news to us all.
Reading the independent review, I felt a little uncomfortable. For example, knowing many fine people in the CWU and reading that there was a,
"lack of accountability to the national union",
by a very small number of branch officials made me wince. Industrial relations have suffered and will continue to do so while certain management employ macho management ways and bark out orders in a military style. Front-line managers seeing their role as authoritarian and purely directive is counterproductive. Against those views expressed in the review, it was extremely pleasing to read of the breakthrough last week on pay and other matters. The review's key message of common sense has prevailed.
However, this debate refers to the Government and their position. Thirty thousand job losses have been declared and we have seen headlines such as that from Consignia's chairman, Allan Leighton, saying, "Why am I sacking 30,000 pasties? Because we're in the mire—big time". His position is clear: the sacrifice of some to save the many.
That approach concerns me. All my working life I was involved in one way or another in the steel industry. It was once publicly owned and British Steel corporation employed some 250,000 people when it was formed in 1967. Now renamed Corus—that is significant, is it not?—the company employs about 40,000 people world-wide. Throughout the years it has been relentless in its approach—"cut to survive". So my point is that clearly what is missing in this country of ours is relevant participation, consultation, workers involved in matters such as rationalisation and, yes, closures where they occur, so that possible alternatives can be found or at least considered.
The situation should not be as Mr Leighton described:
"It was a sad day, last Monday [25th March] arriving at 6.15 a.m. at the East London depot of Parcelforce to tell employees it was to close after 27 years".
That is not proper consultation, partnership, stakeholdership or any other form of satisfactory industrial relations. What we need—and what Consignia needs—is the ability for those who bear the

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brunt of change to have a voice prior to the changes being announced. That would bring about better industrial relations, trust and commitment. I await with interest to hear my noble friend's response to my final remarks.
8.5 p.m.
Lord Sawyer: My Lords, I am grateful to my noble friend Lord Hoyle for initiating the debate and to my noble friends on this side of the House for giving their time, knowledge and experience to this difficult issue. I want briefly to do two things. First, I want to comment on the progress that has been made since the publication of our report. Secondly, I want to comment on what needs to be done in the future.
First, as regards progress, the avoidance of the pay dispute and the use of mediation—the agreement to a two-year pay deal—is, in my opinion, sensible and a great victory for the use of mediation and arbitration and for the use of ACAS. That is the way in which the business should conduct its industrial relations in the future.
Secondly, the general moratorium on unofficial strikes still holds. It has been in place since August and the effect on quality of service has been marked. If the management and unions can continue the moratorium, that will hold them in good stead in the future.
Thirdly, the doubling of the number of managers attending training courses and the emphasis on the courses being moved from the application of agreements to behaviours to dealing with issues such as harassment, bullying, diversity and how to get people to work in co-operation rather than adversity is much to be welcomed.
Fourthly, the establishment of the 17 trial partnership boards is still waiting to take place. It is ready but is being held in abeyance because of the pay dispute. With the new two-year deal, people should be able to divert their energies to making the partnership boards work. They will bring great benefit to the business. We have seen the appointment of Mr Rupert Midalon and Ms Francis O'Grady who I am sure some of my noble friends will know from her work at the TUC. They will be two new independent members of the national partnership board and I welcome those appointments.
We have also seen the establishment of an independent support team, headed by Sue Marsh. That will be independent from both the unions and management and it will have employees and union representatives seconded to it. It will work entirely on the development and implementation of partnership communications, behaviours, the application of agreements, management development and union participation in the business. All those joint project teams will work behind the scenes doing good and useful work. That is to be commended but we rarely read about it in the newspapers because none of the constructive industrial relations work attracts the kind of headlines produced by strikes.
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As regards the future, the real issue is commitment. We need more than words. That is no criticism—to some extent I have only been able to produce words—but we need action in the field, among people working together daily on partnership projects. We need commitments from the Government to partnership and Ministers speaking on platforms and at the Dispatch Box about the benefits of partnership.
The chairman and chief executive recognise that the commercial success of the business can be achieved through partnership. It cannot be achieved through the normal business channels which might apply to other commercial companies. In this business, commercial success can come only from the commitment of the workforce. That message needs to come loudly and clearly from the top. Managers must be listened to. I agree with my noble friend Lord Hoyle that it is important that managers who are keen and willing to play a role in partnership are listened to and are given an opportunity to be heard.
I want to put on record my thanks to Mr Peter Skyte, an official of the CWU who over the past few months has played a constructive role in difficult circumstances. Finally, I say to my friends in the CWU that now the pay dispute is out of the way I want to see the resources and energy of that great union devoted to building a completely different and new model of industrial relations based on partnership. I hope that in moving forward they will have the good sense to listen to the wise words of my noble friend Lord Clarke of Hampstead, who still has many wise words of counsel to offer in this business.
8.10 p.m.
Baroness Turner of Camden: My Lords, I welcome the opportunity to participate in this debate and I thank my noble friend Lord Hoyle for making it possible. I am sure that I am not the only Member of your Lordships' House to have become rather worried by the large advertisement which appeared in the April edition of the Parliamentary Monitor. It was from the Communication Workers Union, warning against the possible loss of the universal postal service as a result of the proposals of the Post Office regulator, Postcomm—bent, as it said, on increasing competition. The union stressed that some 30,000 jobs could be lost.
Of course I was concerned about possible job losses but, as a member of the public and as a consumer of post office services, I was also concerned about the possibility that the universal postal service could be damaged or disrupted. I have a great respect for the men and women who run our postal services. There may be occasional blips, but in general it is a first class service.
My specific interest is that my union, Amicus, has within its membership managers who work in the postal service, already referred to by my noble friend Lady Gibson of Market Rasen. The Communication Managers' Association is an autonomous section of my union. The association has provided me with a copy of its response to the Postcomm proposals. It is not against competition; it recognises that EU directives impose an obligation to introduce some competition, but it is

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critical of the way in which Postcomm has sought to implement those directives. The association points out, quite correctly, that Postcomm has a statutory duty to ensure the continuation of a universal service at a uniform price. According to the National Audit Office, however, Consignia might find it hard to finance the provision of a universal service at current prices and at current levels.
That the present exercise in restructuring will mean job losses is also confirmed by the incumbent chairman of Consignia. Much of what he has said also confounds those who claim that the present difficulties within the Post Office arise from its failure fully to embrace competition. Until recently this was an institution which declared large profits every year—before there was any competition. Why has there been a change? The chairman asserts two reasons; first, that postal prices have remained low compared with the rest of Europe and, secondly—perhaps more important—the fact that most of the large profits made in previous years went to the Treasury. "We needed that money to invest in our business and in our people", he said.
Under Postcomm proposals, Consignia faces having one-third of its market opened up to cherry-picking competition. The market could be opened up entirely to competition within the next two or three years. It seems unlikely, with the profitable sectors hived off and privatised, that Consignia would be in a position to sustain a universal postal service at a uniform rate and at a reasonable cost. Inevitably, there would be redundancies—not as many, it is hoped, as forecast by the CWU, but far too many to be sustained from a social viewpoint.
What happens to the remaining rural post offices? That point was raised by my noble friend Lady Gibson. Again, it is the poorest and most vulnerable in our society who will feel the pressure the most. They depend on post office services in a way that the better off do not. Generally speaking, older, poorer citizens do not have access to e-mail. The services provided by rural post offices are necessary to them.
Those communication managers who are members of my union point out that much of the research on which Postcomm based its proposals is not all that accurate. The impression has been given that total liberalisation is general throughout Europe, but apparently that is not the case. In fact, the competitive market outside the UK consists of Sweden, Finland, New Zealand and Argentina. The market has been relaxed, although only to a limited extent, in the Netherlands, Germany, Spain and the US. None has suffered the maximalist approach about to descend on Consignia.
It is to be hoped that further progress down this route will be halted so that further consideration can be given to the very well-informed objections from the trade unions concerned.
8.14 p.m.
Lord Haskel: My Lords, my noble and very good friend Lord Hoyle asks what the Government are doing to improve industrial relations at the Post Office. I hope
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that my noble friend will forgive me for responding to a Question with a question: what are industrial relations at the Post Office to do with the Government? Surely industrial relations are a matter for the management and the unions, working together in partnership. Industrial relations form part of the style, the vision and the ethos that management and the unions have for the work of running the Post Office. It is not a matter for the Government, neither in their capacity as shareholders nor in their government capacity.
That is doubly true now that the Government have appointed a new chairman, Mr Allan Leighton. The other reason why the Government should not get involved in industrial relations at the Post Office is that industrial relations are an important element of the restructuring of the Post office. Restructuring is obviously essential. All the signs have been there for some time: a high turnover of staff; losses in spite of income holding up; costs obviously out of control; and many post offices not only unprofitable but also in the wrong place. In a purely commercial world, such a company would lose out to competitors and go out of business, but there are social and political considerations which mean that the Post Office must continue in business, providing a universal postal service. That makes industrial relations even more complex and difficult.
So as well as reasonable terms for those who go, there has to be encouragement for experienced employees to stay in order to maintain the service. That is a tricky bit of industrial relations, again best left to management and the unions. We have seen that setting rates of pay is also best left to them and to arbitration. In the Post Office, which has to be restructured in order to continue, it may be more efficient to pay above the going rate, because that reduces staff turnover and encourages the good people to stay.
My noble friend Lady Gibson spoke of managers. Presumably, post offices too will be rationalised, and so will their managers. Not only should there be an inducement for sub-post masters to retire early; there will also have to be inducements for some sub-post masters to move from the old areas that do not need as many post offices to new areas that require more.
So I do hope that, when my noble friend on the Front Bench comes to reply to the debate, he will say that he has no intention of becoming involved in industrial relations at the Post Office. It is a most unsuitable case for government meddling and interference. Industrial relations form part of the work of management and the unions in restructuring the Post Office. The Government must give them the time to develop, once again, that wonderful affiliation to the Post Office that staff have had over the years. It is the kind of affiliation referred to on many occasions by my noble friend Lord Clarke. It is a valuable affiliation that will motivate and enable every employee to deliver the good results that we all want to see in the Post Office of the future.
8.18 p.m.
Lord Clarke of Hampstead: My Lords, like other speakers, I am grateful to my noble friend Lord Hoyle

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for giving us a chance once again to talk about the Post Office. I declare my usual interests. I joined the Post Office in 1946 as a telegraph boy. I then became a postman and, later on, I became a trade union representative in the industry.
I shall have to rush because there is so much to say. Four minutes is nowhere near long enough; I shall need four minutes just to respond to the final comments of my noble friend Lord Haskel. I agree 100 per cent with my noble friend that there is no room for government in industrial relations.
If only that were true. Over the years, I have seen Post Office management representatives run to the telephone to find out whether they could come to an agreement with the union. I have seen government interference when people have asked for tariffs to be looked at; I have heard the telephone calls and seen the letters going backwards and forwards. My noble friend Lord Haskel should not tell this House that there is no place for government interference. I agree with my noble friend, but until the time comes when governments stay out of industrial relations, we shall have problems. However, they are of course a lot better since the report produced by my noble friend Lord Sawyer.
Last week we learned that the head of Consignia is to be replaced by someone as yet unknown to those outside the circle where such decisions are made. Of course it will not be the Post Office which makes the decision, it will be the Government. We all know that. I do not expect my noble friend on the Front Bench to comment in any detail about what I believe to be an act of scapegoatism.
I should like to place on the record of this House that I believe beyond any doubt whatever that Mr John Roberts has given unstinting and loyal service to the Post Office in all the positions he has held during a career that started in 1967. At all times an honourable man, he deserved better. I wish him well for the future. I wonder whether it has anything to do with the fact that John Roberts was able to stand up to Postcomm and its interference in the running of the Post Office. Is it a coincidence—or is it just bad luck for John Roberts?
Industrial relations in the Post Office have been bedevilled by political interference for so long. Last week—unusually for me—I read a paper. I read that a Cabinet Minister is frustrated by John Roberts. I expect John Roberts and his friends in senior management have been frustrated by the interference that they have had to put up with from the Government, not only this one but the previous one and others before that. It has always been difficult.
Now that my noble friend Lord Haskel has had time to calm down from his outburst, I can say, "Yes, get the Government out of it"—but let the Post Office run in a way that enables it to do the things that Tesco does. My noble friend Lord Davies of Coity referred to Tesco, but I wonder whether Tesco has been able to keep its costs 13 per cent below the 1988 level of the retail prices index. The Post Office has had to do that at the direction of government.
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For many years, Post Office workers have seen change after change after change introduced but few have been of any visible benefit to the people who do the job. Those people produced a £3.8 billion profit over the past 20 years, but as my noble friend Lady Turner said, 70 per cent of that £3.8 billion went straight into the Treasury's coffers.
Both management and the union deserve praise for reaching agreement on the pay deal. I agree that there is still work to be done, but I should like to give a piece of advice to my noble friend the Minister in regard to the pressure and the bullying about which we have heard: call the dogs off—otherwise, with the best will in the world, it will happen again despite working together and the harmony that has been created. At the moment people in Romec, the profitable arm of the Post Office which is responsible for cleaning, maintenance and engineering, are facing outsourcing and the loss of their jobs. I ask my noble friend the Minister to take note of that.
It is worth remembering that days lost through strikes during 1999–2000 were recorded as the lowest since records began in 1891. That year, days lost in the postal service were 0.2 per cent of all days lost. The sorrowful story of industrial relations in the 1990s is one of government interference—interference that has led to the holding down of postal prices to the lowest in Europe. That has contributed to the change of financial fortune in the Post Office and I reject entirely the idea that if you keep your prices low somehow or other manna will fall from heaven and pay your people the wages they deserve. I hope that government dogma do not lead us back to industrial unrest in our once great postal service.
8.22 p.m.
Baroness Byford: My Lords, I apologise for speaking in the gap. The error is mine. I had always intended to take part in the debate today. I shall make two quick points.
I should like to add my voice to those who have condemned the attempt to open up our postal services to European competition by 2006. Why do we have this obsession with beating other European countries to the implementation of directive after directive? How does Consignia view this decision? Does the Minister accept that this will bring greater pressure on Consignia management and staff?
I declare an interest as a patron of ViRSA, an organisation which has done a lot of work with post offices, particularly rural post offices.
I cannot allow a debate on the Post Office to pass without mentioning that last year saw the closure of 547 sub-post offices and that another 3,000 may close with the rationalisation of the urban system. Payment of pensions and child benefits and encashment of giros forms a large part of the work of rural and urban post offices. The Government are in the process of moving this work to the banks. Will the Minister explain why, when the Post Office has its own national savings ordinary account, it could not use this account and keep the work within the Post Office system? The system

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works only as long as the holder has money on deposit at the post office. It does not offer overdrafts and is ideal for people who have little or no money apart from benefits. Has this system been considered? Can it not be used for the automated credit transfer of pensions, child benefits and emergency payments?
This weekend on "Any Questions", Janet Daley pointed out that the welfare state exists to pay benefits according to the objective criteria. She criticised the Prime Minister for using them to coerce people into a certain behaviour pattern. It is even more reprehensible for the Government to use them to force people into a certain commercial pattern.
We are grateful to the noble Lord, Lord Hoyle, for the opportunity in this debate to express our hopes for the future of Consignia. We all want a continuation of a universal service and confidence in the future of Consignia for those involved in it.
8.25 p.m.
Lord Newby: My Lords, I, too, thank the noble Lord, Lord Hoyle, for initiating the debate. It is eloquent testimony to the state of industrial relations in Consignia that the debate is necessary at all. It is inconceivable that we would have a similar debate on other sectors of the economy where industrial action was once rife—for example, the motor industry—because over the past 20 years industrial relations have been transformed. Why has this not happened in the Royal Mail?
Some of the reasons are set out in the latest report from the group of the noble Lord, Lord Sawyer. He referred to an inability of front-line managers and union representatives to work together; he referred to the problems of leadership and communication; and he referred to the fact that problems were caused by a reluctance to accept that change was necessary at all.
He reached two conclusions: first, that there must be an end to industrial action; and, secondly, that there must be a change in the culture to develop a partnership method of working. In terms of industrial action, clearly the responsibility rests with both the CWU and the individual groups of workers whose unofficial action has bedevilled the Post Office for many years. Everyone must have been relieved when the latest threat of strike action was withdrawn, and equally relieved and encouraged by the dramatic falls in official action which have taken place over recent months.
But leadership in terms of a partnership system of management to introduce more efficient working methods must come from management itself, as set out by the noble Lord, Lord Davies of Coity. The report of the noble Lord, Lord Sawyer, argues that management at the top has accepted this principle. If so, some of the comments over recent months by both the chief executive and chairman of Consignia about redundancies—made in advance of any form of consultation— appear, unfortunately, to be based on the command and control approach which has served the Post Office so badly in the past.
On the positive side, some of the proposals in the latest package for change, which are now the subject of further negotiation, clearly are long overdue and should
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be widely welcomed—the five-day week is one such. Other proposals, such as longer delivery rounds associated with the ending of the second post, are more contentious, but they, too, are surely necessary to make the efficiency gains which Consignia now desperately needs.
A partnership between management and workforce is clearly essential and progress is being made, but success also depends on the attitude of Postcomm and the Government. For Postcomm, there must be a clear recognition that the postal service can be successful and efficient only if it can respond to change within an adequate timescale and with adequate resources. The initial proposals for liberalisation were simply too fast. Liberalisation must take place over a longer period. Equally, there is now virtually universal acceptance of the need for the cost of stamps to rise in order to improve the revenue situation. There is clearly popular support for such a move.
As the noble Lord, Lord Clarke of Hampstead, made clear, the role of government over a number of decades has been far from benign. The constant policy of draining funds from the Post Office made it impossible for it to respond to the changing environment in which it was operating. This was extremely frustrating both to management and to unions and helped to foster poor morale and poor industrial relations.
I agree with the noble Lord, Lord Haskel, that industrial relations within Consignia should not be a matter for government, but clearly government still play a major role in the direction of Consignia. I would particularly welcome any comments which the Minister feels able to make on the role which the Government are playing in terms of the further development of the Postcomm proposals.
Everyone who cares about the postal service is willing the Sawyer process to succeed. The sign of real success will be when the House no longer debates Post Office industrial relations because the problems of today have become the problems of the past.
8.30 p.m.
Lord Rotherwick: My Lords, one must come to the conclusion that the blame for the dire state of industrial relations in the Post Office lies fairly and squarely on management and unions alike. This is an organisation which only a few years ago was regarded as a model for other post offices around the world for the unequalled reliability of its delivery service, but which now manages to lose a million items a week; an organisation that was producing an annual profit of £600 million a year, compared with its current loss, which is running at almost £550 million a year.
Although the blame for poor industrial relations lies with the two sides I have mentioned, another party has contributed massively to the lack of motivation and poor morale of both management and staff. That is, of course, the Government.
In a recent Statement, the Secretary of State blamed the previous Conservative government. She said that,
"successive Conservative Governments … allowed the Post Office to stagnate and starved it of investment".—[Official Report, Commons, 25/3/02; col. 565.]

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Perhaps she overlooked the fact that the present Government have been in power for five years and, since 1998, have taken £2 billion in dividends.
I turn to the report of the Sawyer committee review of industrial relations in the Royal Mail. I have time merely to point to key issues in this well-balanced report. In the year to March 2001, the Post Office lost 66,000 days in industrial action. Staggeringly, this equates to half the number of days lost to industry and commerce in Britain in 2000–01.
I can do no better than quote the report:
"There is a clear divide between management and staff which is exacerbated by the lack of trust and respect for each other".
The report adds that,
"there is a constant threat of industrial action, official and unofficial—and when it occurs it can be highly intimidating",
including instances of both threatened and actual physical assaults on managers. One must seriously question whether, with this head-in-the-sand attitude, there is any hope for improvement in industrial relations in the Post Office.
In conclusion, I can do no better than quote once again the report:
"The primary responsibility for stopping strikes inevitably lies with the union … but too often strikes are a response to high handed or insensitive management behaviour".
It calls for a,
"fundamental change in the industrial relations culture",
in Consignia, and states:
"We expect both Royal Mail and the CWU at the highest level to take all steps in their power to prevent further industrial action—official and unofficial".
Therefore, it is most encouraging to hear the noble Lord, Lord Sawyer, say that the moratorium on strikes is holding at present. One hopes that it will continue. That should be the message, bereft of party politics, from all sides of this House.
8.33 p.m.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville): My Lords, I begin by congratulating my noble friend Lord Hoyle on securing the debate. My noble friend and other noble Lords have raised a number of issues on the important subject of industrial relations within Consignia. I am grateful for the many constructive comments that have been contributed.
First, I must say that although there are without doubt problems in the company, there should be no implied criticism of individual postmen and women, who provide magnificent service to the general public in all weathers. They have been immensely loyal and hard working, and that must continue to be recognised.
The problems within Consignia are, of course, not a recent development. There is a history of industrial relations problems. Since the late 1980s, the Post Office has experienced great difficulty in agreeing or fully implementing new working practices that were intended to bring benefits to the business and its
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employees and to improve services. For example, in 1996, over 800,000 days were lost during a national dispute. That cannot be the right way to continue. Therefore, let us have no nonsense about the previous government's record on this or not intervening in industrial relations matters.
The Government, of course, share the concerns about the poor industrial relations climate that exists within Consignia. But I agree with my noble friend Lord Haskel that industrial relations are a matter for the company and the unions. Government intervention would go against the thrust of our reforms of the postal services market and would seriously undermine what we have achieved in giving the company the freedom to act commercially at arm's length from government.
I strongly agree with the noble Lord, Lord Clarke. In the past, government have intervened too much in the Post Office and that has not been at all helpful. I do not think, however, that there should be any desire to continue this. It has to end, and we have to make industrial relations clearly matters for the company and the unions. We have made the government position on this clear to both of them.
The Government have, on the other hand, consistently encouraged the management and the unions to work together to resolve disputes at local, regional and national level. They are best placed to achieve this. The Government will also help where appropriate—for example, by helping to facilitate change through the Partnership at Work Fund and to resolve disputes through ACAS services. In answer to the point raised by the noble Lord, Lord Sawyer, the Government will speak out and will make clear that they stand firmly behind the partnership approach.
The review by the noble Lord, Lord Sawyer, has been mentioned several times. It is an excellent review. It makes a clear and independent assessment of the existing problems in Consignia and of the best practice that exists. It was also encouraging that the Royal Mail and the unions jointly asked for the review to be undertaken. I agree with my noble friend Lady Gibson that this provides a platform on which to build.
The review made two main recommendations. The first was that industrial action should come to an end. The second was that the existing culture should be changed throughout the business through developing partnership ways of working. Working together in partnership is the only way to improve the industrial relations climate within the business, which is crucial if Consignia is to improve morale, turn its position around and regain the confidence of its customers.
It is also encouraging that the management and unions have responded positively to the recommendations of the noble Lord, Lord Sawyer. The moratorium jointly agreed last September, under which the Royal Mail agreed not to implement changes in working practices at local level without involving the national parties and the CWU suspended any threats of industrial action, is still in place. Although some unofficial action has occurred, it has

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been reduced significantly: 2,656 days were lost between August and February, compared to 48.704 between April and July.
The joint steering group of the noble Lord, Lord Sawyer, consisting of senior members of Royal Mail, the CWU and the Communication Managers Association, is through a series of meetings continuing to progress recommendations in his report.
A National Partnership Board, chaired by the noble Lord, has been established and is due to meet on 23rd May. The approach to partnership working has been shaped by the partnership vision developed by the joint steering group and the TUC partnership principles. A six-month pilot of regional and area partnerships boards in London, Scotland and the East Midlands will begin in June. A partnership support team has also been set up to support the National Partnership Board in delivering the partnership vision and the Sawyer recommendations.
It is also encouraging that Jonathan Evans, formerly UK human resources director of Orange, has recently joined Consignia and is part of the team with specific responsibilities for implementing the recommendations of the noble Lord, Lord Sawyer.
I agree with my noble friend Lady Gibson that middle managers and junior managers are critical to this process. I welcome the fact that a leadership development programme is now in place for all managers to be rolled out over the next two years and joint approaches are being developed to training and development and improving behaviour.
Communication is also crucially important at a time of change within the company. The unions and the workforce need to be consulted and kept informed of developments on a regular basis. There should be no surprises in what is being done to secure the future of the business.
The noble Lord, Lord Hoyle, raised the question of the Postcomm proposals. Postcomm is carefully considering the responses to its consultation document and will determine in the light of the evidence how best to introduce competition for the benefit of consumers consistent with its statutory duties, including its primary duty to ensure the provision of the universal service. The Government have followed that process closely and are in dialogue with the various players, but it is not for the Government to take on the role of a company or the regulator. They must each act in accordance with their own responsibilities and duties.
In answer to the noble Baroness, Lady Byford, the new chairman of Consignia has made it clear that he wishes to establish a new relationship between the company and the regulator—a constructive rather than a negative approach that recognises the opportunities and challenges of operating in a more competitive environment. That is very encouraging. As with industrial relations within Consignia, the way forward between the company and the regulator has to be through effective dialogue, not confrontation.
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However, I must point out to my noble friend Lord Hoyle that blaming one side or the other is not the way forward. All sides need to realise that they must get their industrial relations right or they will not be able to deal with the competition that they have to face.
In answer to the noble Lord, Lord Newby, it is not for the Government to intervene with the work of Postcomm. Postcomm is an independent regulator, established under primary legislation that has been passed by Parliament. Post Office management and the unions supported the creation of an independent regulator.
The noble Lord, Lord Davies of Coity, made it clear that a partnership approach can flourish in a competitive climate. I support that point. There is no climate in which it is more essential to have a partnership approach, because one cannot afford to have the lapses of service that occur when there are industrial relations failures.
The noble Lord, Lord Brookman, raised the question of redundancies. We very much want there to be consultation, but the problems of the business have to be tackled. It is only because similar problems in the steel industry were tackled that we still have a steel industry in this country.
The noble Baroness, Lady Turner, asked why the company had turned a profit into losses. We need look no further than the accounts of the Post Office. In the past two years, turnover has gone up by 7 per cent and 8.3 per cent. At the same time, group operating costs have gone up by 7.8 per cent and 13.7 per cent. Those are not issues that are forced on the business; they are within the hands of the business. It is up to the management and the people who work in the company to get them right.
The noble Baroness, Lady Byford, asked about the introduction of ACT. I do not believe that that is forcing people to do anything. It is a simple introduction of new and modern methods into the Post Office. I also do not think that it has much relevance to the industrial relations of the Post Office.
Baroness Byford: My Lords, I think that—
Lord McIntosh of Haringey: Oh!
Baroness Byford: My Lords, am I not allowed to ask?
Lord McIntosh of Haringey: My Lords, we are over the hour already.
Baroness Byford: My Lords, the noble Lord, Lord Sainsbury, implied that ACT had no implications for the Post Office, its workings, strikes and everything else, but I think that it does.
Lord Sainsbury of Turville: My Lords, I do not think that ACT has an impact on industrial relations. It is a highly desirable introduction of modern methods. We

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are only doing efficiently what the previous government attempted to do and we shall continue to do it.
Over the years, industrial relations in the Post Office have been nothing short of disastrous. As I said earlier, more than 800,000 days were lost to strike action in 1996–97 alone. The review by the noble Lord, Lord Sawyer, has given us a clear statement of the way forward. He believes that there is a genuine commitment to change on all sides in the Royal Mail. That commitment must be acted upon. The culture of change needs to be implemented quickly or the impetus will be lost. In Allan Leighton, the Government believe that they have appointed the right man for the job. He is a good communicator and genuinely wants to make Consignia a great place to work. That is what the Government—and the House, I am sure—wish to see. It will not be easy, particularly at this difficult time, when the company needs to cut its costs through restructuring and, regrettably, reducing jobs. Everyone in the company needs to be clear that unless it sorts out its industrial relations it will not be able to compete effectively in a marketplace that will inevitably, over time, become increasingly liberalised, with all that that means for profitability and jobs.

Education Bill
8.45 p.m.
House again in Committee on Clause 10.
On Question, Whether Clause 10 shall stand part of the Bill?
Baroness Sharp of Guildford: We have already debated the clause fairly widely, but one or two questions remain to be asked. The power for governing bodies to form or invest in companies was not made explicit in last September's White Paper, Schools—achieving success, and was therefore not subject to consultation. The proposal is far more radical than simply enabling private companies to provide support or to manage schools and LEA services. The Government have issued no justification for the move and no obvious educational benefit has been identified.
There are a number of important questions. Where do the funds come from to support the initiative? What happens if it goes wrong? Schools are funded not only by government grant, through the SSA process, but also by the local education authorities from local council tax. Although there has been a reduction in recent years in the number of LEAs spending more than the sum identified in the education SSA, £6 billion of a total education budget of £50 billion is still provided in that way. It is not reasonable for schools to be able to siphon off funds raised by council tax payers if there is no proper democratic accountability for their decisions.
Who is responsible if it goes wrong? There is a lack of clarity in the liability for debts. The Minister has said that the LEA is responsible if the organization
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goes wrong. Let us consider experience in further education. A college in Derbyshire purchased a night club, ostensibly linked to a curriculum area. When the night club went bust, considerable pressure was placed on the college budget.
What protection is there for the school budget if the company goes wrong? Under local management of schools it has always been possible for schools to vire their annual delegated budget. That budget is obviously intended for revenue expenditure, but many schools have utilised the freedom to build up unspent balances, often with the express intention of spending the money on large-scale capital projects. That has resulted in a reduction in staffing levels. If schools are able to establish companies, the potential for siphoning off delegated budgets for the purposes of funding the company will be huge. The experience of virement under LMS can lead only to the conclusion that there are likely to be detrimental effects on the funding of mainstream education.
What will happen to terms and conditions for staff? As the noble Baroness, Lady Blatch, has pointed out, Clause 10(5) allows governing bodies to provide staff to a company. There is a real danger that the concentration on forming companies, in particular the provision of staff, could be counter-productive to the standards agenda, with governing bodies and teachers being distracted from their main focus on the provision of high-quality education to pupils on the roll. Although the Bill makes no specific reference to teaching staff being provided to the company, they will undoubtedly be included in the generic term. This is a particular concern in the context of the crisis in teacher recruitment and retention and the severe problems of excessive workload now acknowledged by the Government.
The Government were forced to change their provisions on advanced skills teachers on the grounds that schools and individual teachers found the requirement to spend time supporting other schools unattractive and difficult to manage. It is regrettable that the Government have not learned from that experience but continue to advocate the sharing of staff.
What will happen if everything goes wrong? It is likely to be argued that the safeguard to the provision to form and invest in companies is in Clause 11 and its subsections which specify that the consent of the LEA would be required before the governors were allowed to embark on that course of action. However, again it is totally unclear whether in the event of the LEA withholding consent the Secretary of State has the power to intervene and overrule the LEA. The relationship of the Secretary of State's powers as detailed in Clause 12 to Clause 11 and its subsections still needs to be clarified.
All told, there are still many questions to be asked and answered in relation to Clause 10. That is one reason why I question whether it should stand part of the Bill.
Lord Roberts of Conwy: We have heard a great deal in our discussion of Clause 10 about the possibility of

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profit, but now we are beginning to hear about the possibility of loss, and who is ultimately responsible for such a loss. There is a prior question about companies to which I should very much like to know the answer. What will happen when a company of the type proposed in Clause 10 borrows money? Of course it has to have the consent of the LEA. However, I believe that the borrowing may very well count against the local authority's borrowing. I should like some clarification of whether that is a correct understanding of the position.
Moreover, not only one local authority—the local authority of the school—would be involved, as demonstrated by clauses subsequent to Clause 10. Indeed, the Minister has told us about the idea of schools grouping together to form companies and to benefit as companies. So more than one local authority would be involved, and a number of local authorities could be involved. However, although there will be a designated supervising authority, in the event of loss, what is the liability of the other authorities supervising schools which are part of the group forming the company? Not only would I like an answer to that question, but local authorities are somewhat anxious about the position.
Baroness Blatch: The unfortunate aspect of this debate is that we are arguing not about the principle, but about the dearth of answers to many of the questions posed. I read with great interest the discussions that took place in another place, but the quality of the answers given in those discussions left a great deal to be desired. Consequently, we shall have to ask the questions again, in the hope that we shall receive clearer answers.
More commercial freedom for our schools is a good thing. As we know, our schools have much to offer their local communities in many ways. As we also know, there is much that they are able to do already under current law. Indeed, the noble Lord, Lord McIntosh, confirmed earlier that schools are already able, if they so wish, to set up companies, sell their wares to another school and join together in consortiums for procurement purposes.
Lord McIntosh of Haringey: Will the—
Baroness Blatch: I shall, if I may, tell the noble Lord that, 20 years ago, when I served on my local authority, we did just that. We established a joint procurement operation which schools in four counties could buy into. We bulk ordered books and equipment for our schools. Nothing stopped us from doing that 20 years ago, and I see nothing at all stopping us now. That is not forming companies, but forming consortiums to gain the advantage of bulk purchasing. As I understand it, that is what the Bill is proposing. However, schools can already make sense of their buying power by coming together in larger numbers. I am talking about doing what makes sense for schools at a local level.
Although my noble friend Lord Baker of Dorking and the noble Lord, Lord Alton, are not in the Chamber, I want to make the point that schools are
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very different from city technology colleges and from universities. City technology colleges are independent schools, albeit in the state system, and universities also are independent. They are masters of their own affairs and own the responsibility for all that they do. They gain or not, as the case may be, by their own actions. The proposals are very different from that. The proposals impose a number of layers, the first of which is the school governing body together with any other schools, companies or outside bodies with which they join up. Superimposed on that is the local authority. Superimposed on that is the supervisory body, which may be the local authority. Superimposed on that is the Secretary of State. That makes for a fairly chaotic management line for running a company.
Moreover, the proposals are being made in the context of a shortage of teachers, a shortage of governors and a crisis in core funding for education. The Government do a great deal of boasting about how much they are putting into education, and, within a matter of days or weeks, we shall undoubtedly hear about a great deal more funding coming from on high to education. However, it is the core funding into our schools that is seriously depleted. Only today, I received notice of yet another project, this one for £27 million. However, every time the Government launch another such programme from the centre, more money is taken from the education budget, making less money available to schools.
These days, it is quite difficult to recruit governors—unpaid volunteers who can barely keep up with the new burdens imposed on them by much recent legislation. They are extremely responsible and give a great deal of time and commitment to their work. The Bill, however, proposes imposing on them a very complex set of arrangements, the operation of which will depend very much on guidance and regulations. In another place, Members from all parties pleaded with the Government to provide draft regulations so that we could actually see some of the detail which we have been trying to elicit from Ministers. Although those have not yet been produced, we have been given a policy paper to which I shall refer in detail later.
Meanwhile, I have tabled to the Government some Questions for Written Answer. On 23rd March, I asked,
"What would be the liability of governors, head teachers and other partners if a company, set up under Chapter Three of the Education Bill, were to fail; and who would be responsible for assessing the risk".—[Official Report, 25/03/02; cot WA 26.]
The Answer stated that,
"we would expect the liability of each company member to be limited to a nominal sum.
In other words, presumably, those who were owed money would simply go to the wall. The Answer continued:
"In the case of a company limited by guarantee, this would be the nominal guarantee figure of perhaps £10".

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That is not much of a guarantee. It is certainly not much of a guarantee for those who might be let down by the company's failing. It continued:
"In the case of a company limited by shares, this would be any amount outstanding on the shares, which we would anticipate to be a nominal sum".
If the value of the shares decreases, someone is going to lose out. If the company fails, the shares will become worthless to those who own them. The Answer continued:
"For member schools, the liability would not rest with individual governors or the head teacher".
That is good for the governors and the head teacher, but, as the noble Baroness, Lady Sharp, said, the culpability and liability will lie with the LEA. What pot of unused money do LEAs have to deal with the failures of the companies? Who would settle the outstanding accounts? The Answer continued:
"Other partners could include other company members whose liability would be limited in the same way as school company members. The situation of LEAs would differ depending upon the type of company. Just as schools spend their delegated budgets as agents of the LEA, so a purchasing company, when spending those delegated budgets, would also be acting as an agent of the LEA. This would not be the case for service provider companies, who would be spending income from contracts".
It continued:
"It would be up to a school governing body to assess operational risks".
That really is putting a burden on a school. The Minister stated that financial liabilities for school companies which failed would not rest with governors or the head teacher. Who will settle outstanding liabilities? The Government stated that the delegated budget of individual member schools would not be at risk. In the case of a purchasing company, the company would be spending member schools' delegated budgets and therefore would be deemed to be acting as an agent of the LEA. The LEA would be liable for the company's debt in the event of company failure. It is clear that someone somewhere would have to pay and from within the system. If it is the LEA, it would come from money that it would otherwise spend on education in its area.
The policy paper which is meant to be helpful in terms of detail states at paragraph 1.2:
"A great deal of work is under way both as part of the Department's New Models pilots and independently to investigate new ways of discharging LEA responsibilities in partnership with others in the public, private and voluntary sectors. The model of a more focused and strategic LEA, combined with that of the self-managing school".
It is hardly self-managing. If a school is not controlled by the LEA, it is controlled by the Secretary of State and self-management becomes far removed from what it was under the grant-maintained system. Paragraph 1.3 goes on to say:
"The first is that of enabling LEAs to contract out additional core functions to groups of schools as well as to other bodies".
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LEAs can contract out now; they can contract out their services either to schools or to a third party to provide services for schools. The document continues,
"examining alternative provision for auditing"—
auditing can be contracted out—
"grounds maintenance"—
that can be contracted out—
"building maintenance"—
that can be contracted out—
"cleaning and security"—
that can be contracted out. The document then goes on to say,
"carrying out a market scan of alternative broker/provider organisations".
What does that mean? Can the noble Lord help me on that?
Paragraph 1.5 refers to PFI contracts. I accept the point that is made by the Government but I do not think that this is the way to resolve it; namely, that the preparation of PFI contracts needs a great deal of expertise and certainly is a difficult and daunting task for schools. I say to the right reverend Prelates that it is particularly difficult for Church schools to cope with the complexities of putting together a PFI bid. I refer to either buying in the expertise to do that or working with other schools. I believe that it can be done without forming companies. However, the noble Lord will have to disabuse me of that view.
Paragraph 1.5 goes on to say:
"More efficient ways of procurement are needed and ideas being developed involve more collaboration between LEAs, schools, central government and the private sector".
It would be helpful—outside of what can already be done under the law—if the noble Lord could give examples of what needs to be underpinned by new legislation that would help schools in this situation. As I say, a group of Church schools coming together could, if they wished, corporately together purchase the expertise that they would need in order to put together a PFI bid. The document continues:
"Schools would be able to form companies to purchase collectively goods and services for member schools".
As I said, that was done 20 years ago and I see no reason why it cannot be done now. The document continues:
"schools would also benefit from a division of labour using a dedicated staffing resource so as to free teaching staff".
What does that mean? Paragraph 1.9 states:
"Schools with particular strengths and capacity would be able to share their experience and expertise with other schools, and use the proceeds of any sales of services to invest in improving their capacity further".
Again, that can be done now. As I said earlier using the phrase,
"under the panoply of company law",
a company would need a managing director, a chief executive, a company secretary and would need servicing in some way. We are talking about teachers, head teachers and people who are running schools. If they have to buy the expertise for someone to run a

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company, why do we not have the example of the 3E's or some such company which can do all of the things that are required by the Government; in other words, be entrepreneurial, commercial and assist schools to do their jobs better, but also become independent enterprises without using the precious staff of the schools?
In paragraph 1.11 there is already a significant demand for financial, legal and technical expertise in the development of PFI, to which I have referred. Which schools, even if they all come together corporately, have spare lawyers or spare financial experts? They do not have that; they would need to buy it in. That they can do now. Regulations are mentioned 11 times in the paper. How many sets of regulations will there be? What will they cover? Schools are saturated—we shall come to this on a later amendment—with guidance, guidelines and regulations. As I say, there are 11 references to regulations. It would be helpful to know how many sets of them we shall see. I do not know how many sets of guidance have been referred to by the noble Lord and by the Minister earlier.
Paragraph 2.3 refers to regulations which,
"may prohibit organisations other than maintained schools from joining service delivery or purchasing companies, unless they are specified in regulations. Bodies allowed to join would be: LEAs, independent schools, private sector companies … voluntary organisations … further education institutions, local authority owned public sector companies, individuals, except those with certain criminal convictions".
Tell that to the people who invented individual learning accounts. It seems to me that the Government have a lot to learn there. Co-operation between independent schools and maintained schools has never been better. There is a great deal of co-operation at the moment in terms of equipment, using technology centres, music centres, drama centres and all the rest.
Paragraph 2.5 states that, because members are private companies, they
"are the only people who will have shares (or a guarantee) in the company and the only way in which the company can be 'taken over' is by those members agreeing to sell all or some of their shares or allowing persons to become members by giving guarantees. They will not be able to sell shares to or allow guarantees to be given by anyone outside the permitted list of members otherwise the company will breach the regulations".
That does not appear to be in the Bill. It would be helpful to know about the conditions under which they would be free to sell shares or to invite new shareholders in. What protection is there against being taken over? In terms of protection from being taken over, how different are they from companies under company law?
Paragraph 2.8 of the paper states that,
"regulations will not specify the details",
and that that will be left to companies themselves to agree. We are talking about voluntary governors in that regard, who are already terribly busy running schools. The paper states that we will not give them details and that we will tell them to work it all out for themselves. Is that really the best use of governors' time?
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Paragraph 2.10 states:
"The precise arrangements may have to vary according to the circumstances of the individual company. Following consultation, we will ensure a proper balance between protecting the public money spent by those companies and enabling them to operate without undue restriction".
How will that happen?
Paragraph 2.12 states:
"If a member school's budget were to be suspended, the school would not normally be required to leave the company as this could be unduly disruptive but would become a 'silent member, contributing no further money or time to the company until their budget is restored to the school".
I find it inconceivable that a school that has been suspended would remain part of the company as a silent member and that absolutely nothing would be done about that. If a school that has had its budget suspended cannot join a company, how can a school with a suspended budget remain part of a company? That seems to be a contradiction.
Paragraph 2.13 states:
"Regulations may require the designation of a supervising authority for each company".
I believe that the supervising authority of each company would have to be a local education authority but it would be helpful to have that confirmed. Who will set it up? Who will serve on it? What powers of intervention will they have? Who will meet the costs of that company? Will it be a cost to the school budget, the LEA or the Secretary of State? Or would it, like so many other projects, come from the global education budget?
Paragraph 2.14 asks:
"Which LEA would be the supervising authority"?
According to the paper, that would be determined by local agreement. If one LEA had more schools as members of a company than any other LEA, it might make sense for the LEA with most schools to be the supervising authority. Again, where is that in the Bill? It is merely stated in a policy paper.
Paragraph 2.16 deals with borrowing. It states:
"Regulations may include a requirement for any company wishing to borrow to seek permission from the supervising authority".
It has to go to the LEA in order to set up a company and to the supervising body to get permission to borrow. Would the supervising authority consider the financial state of each of the schools, or would the corporate body—the company—be considered? The supervising authority would consult other LEAs that have schools as members of the company. Where will schools find the time to do all of that? Moreover, that proposal is not in the Bill.
Paragraph 2.18 states:
"In order to be able to claim VAT back, purchasing companies are deemed to be acting as agents of the LEA as they are spending their budget share. The LEA therefore becomes liable for debts".
Again, where will those funds in the LEA come from? As I asked earlier, can those companies offer services on a profit-making basis? If not, there would be no benefit to the company. If so, it makes a nonsense of what Members opposite have said about wanting no

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private sector involvement in education unless that is on a non-profit-making basis. It would be helpful to have some confirmation of that.
Paragraph 2.20 states:
"The Code of Practice on Local Education Authority—School Relations contains guidance on when LEAs can exercise their powers of intervention in schools".
Is that code of practice the one that is already in existence? Is it likely to be updated as a result of Clauses 10 to 12?
Paragraph 3.1 states:
"The power is drafted widely to enable flexible policies to be pursued".
It also states that the Government envisage,
"that the first use of the power would be to provide an alternative way to enable voluntary-aided schools to make use of the PFI to deliver their major capital investment needs".
What is the problem that has brought the Government to that view?
In paragraph 3.2 the Government say that they are investigating the use of joint venture companies to assist with these problems. Initially they expect to form a joint venture company with the Church of England, the National Society for Education and possibly with Partnerships UK. My first point is that the Government do not have a locus in all those organisations. What, in any event, is there to stop the Church of England, the National Society for Education and even Partnerships UK from forming a consortium? So far as I know, in law there is nothing to prevent that. Why do they necessarily have to form a company under Clauses 10, 11 and 12? It seems to me that they are independent of the state system and therefore should be able to operate in their own right.
I understand that a similar company is likely to be set up with the Catholic Education Service and that possibly another will be set up for all voluntary aided schools. Again, I do not argue against that. The point that I made earlier to the right reverend Prelate is that I believe those schools need more collaborative working in order to exploit for their own benefit both PFI and other possible commercial ventures.
Paragraph 3.4 states:
"Schools would be able to take advantage of the powers in Clauses 10 and 11 of the Bill to participate in a company and LEAs have powers in the Local Government Act 2000 to do the same. The Secretary of State might decide to join one or more of these [other] companies, by agreement with the other parties involved".
As I said, I consider that it would be a recipe for disaster if the Secretary of State, the LEA and one or more schools were involved in a consortium as a company under company law. They would face the possibility of shares growing or failing, of profits rising or falling, and the possibility of succeeding or failing. Culpability would perhaps lie with the schools and the companies, and liability would lie with the LEAs.
I am not concerned about the principles underlying these clauses; I am concerned about the detail. Thus far, we have not had a satisfactory answer to the questions raised in relation to the detail.
9.15 p.m.
Lord McIntosh of Haringey: The Question before the Committee is whether Clause 10 shall stand part. We have heard one speech about Clause 10 and, from the noble Baroness, Lady Blatch, a very thorough going-over of the policy statement, which of course refers to Clauses 10, 11 and 12. I shall have to start somewhere in responding to her.
I begin by responding to the noble Baroness, Lady Sharp. I believe that fundamentally she asked where the idea came from, who needs it and why we cannot do it in other ways. On the other hand, the noble Baroness, Lady Blatch, went on to say, "Yes, it sounds all right in principle but there are huge difficulties in practice". Therefore, I believe that they are approaching the issue from rather different positions.
In response to the noble Baroness, Lady Sharp, in the work that the department has been doing, particularly in its new models work, over a considerable period there have appeared to be gaps in the powers that schools have to innovate. Those gaps have appeared not only to the department but to schools which talk to the department. The schools appear to believe that they are constrained by difficulties in getting together and constrained by the powers that they have when they do get together for mutual benefit. Many schools believe that the department should devise ways of freeing them from the restrictions which inhibit their innovative ability.
Of course, there are proper questions to be raised. In opposing the group of amendments starting with Amendment No. 51, I have already said that it appears to us that the Companies Act model is by far the simplest. It does not have to be reinvented; it does not require new sets of regulations; and it does not require intervention by the Secretary of State. One can buy companies off the shelf; one knows what the responsibilities and limitations are; and one knows what the limitations on liabilities are because, after all, companies have limited liability—that is what they are about. And one can fairly readily, with a modicum of expertise which may have to be brought in but which might easily be found among the members of a group of governing bodies, find the professional expertise which is necessary to set up a company. Virtually anyone can do it. It does not cost much to start or keep a company going, although perhaps it costs a little more to start it.
The noble Baroness, Lady Sharp, asked where the initial funds come from. My answer is that they are very minimal for a group of schools with any spare capacity. Rather than find funds, they must determine what they want a company to do—whether it is to be a service provider or a purchasing company—and what the business plan for it is. They will have to produce a proper business plan and have objectives and a memorandum of articles. There must be within the memorandum of articles a statement of what they intend to do with their company. They will have to satisfy a supervisory authority, which will normally be the local education authority, that it is a good business plan and that the objectives are genuinely for the educational benefit of the member schools.

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I was asked what happens if it goes wrong. It is true that in the end, just as now, if anything goes wrong in a school the local education authority is ultimately responsible. If a maintained school overspends its budget, a solution has to be found. In the end, if there are creditors they have to be paid and the matter comes to the local education authority. However, there is nothing new about that. There is nothing to lead us to expect that a school company will be more likely to get into debt than a school at the present time.
I was given the example of a night club set-up by a Derbyshire college. Let me make clear that there is no possibility that a school company will get into that position. It will not be permitted for them to have a general trading object. As regards the relationship with the school budget, it simply is not possible for the company to drain the school budget in that way. It is not possible for a company to take over a maintained school. The governing body of the school is in all circumstances responsible for the conduct of the school. A company formed by schools cannot do anything that any other company cannot do. There is no justification for thinking that the fact that a school can set up a company means that it can charge for education—we have been through that argument—or do other things that are specifically prohibited.
I come back to the starting point of all this. No governing body or group of governing bodies is required to establish a company. If it does not want to do so, that is its choice. If it has a good relationship with its local education authority, as in the example of the noble Baroness, Lady Blatch, of 20 years ago, or if it wants to form a larger consortium in a different way, there is nothing to stop it doing that. The proposal is in response to a communication from schools which said that in certain circumstances this could be helpful.
The noble Lord, Lord Roberts, asked about borrowing.
Baroness Blatch: I wonder whether in the course of the debate we can see the information from schools which have been clamouring for this. Apart from Thomas Telford, I do not know of one. That would be helpful. Perhaps I may go back to a comment made by the noble Lord about what schools could not do and read again from col. 157 of Standing Committee G on 13th December. Chris Grayling, MP, asked:
"Is it conceivable that a governing body would have the right to sack its head teacher and staff, and bring in a company established by a more successful school,
that is another school, which could come in,
"to run the school? In theory, could a governing body subcontract out the entire management and educational management of its school to a more successful school?"
The Minister replied:
"That does not sound like a likely scenario. The governing body has clear responsibilities in this area, which it will exercise normally. The scenario is possible—subsection 1(a) makes this clear—because we are considering services provided to schools by other schools. We want more examples of that".
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He is saying that these clauses would allow a school to provide a full management service to another school.
Lord McIntosh of Haringey: I do not think that that is what Stephen Timms meant. I do not have the text in front of me. On a matter as complicated and textual as this, it is better that I write to the noble Baroness, Lady Blatch, and others who have taken part in the debate and put a copy in the Library. What I have said throughout is that there is nothing in the Bill which creates a new vehicle for contracting out the running of schools. That is the fundamental point. I am not prepared to answer definitively whether there is provision in previous legislation which makes it possible under certain circumstances, but there is not here.
I return to the point raised by the noble Lord, Lord Roberts, about borrowing. Borrowing would have to be approved by a prescribed person. That is the provision. The normal situation which we expect the regulations to prescribe is that the prescribed person will be the local education authority acting as the supervisory body.
I admire the noble Baroness, Lady Blatch, for going through our policy document from paragraph 1.1 to 3.5 covering three clauses and the regulations. She raised a series of questions which would take me at least 45 minutes to respond to if I had the ability to do so in these circumstances, and I do not. I shall try to respond to those points which seem to me significant now. I shall read the points she made and write her a rather long letter—I apologise for its length now—again with copies to other noble Lords who have taken part in the debate, with a copy placed in the Library.
We are talking here about maintained schools whereas the example—the 3E's in Guildford and other parts of Surrey—is a city technology college. It is independent and nothing to do with what is provided for in the Bill. We are now talking about something which is possible for maintained schools. It may have been possible for other schools in the past but not for maintained schools. I entirely agree with the noble Baroness when she speaks of the difficulties of finding enough teachers and governors. That is common experience. By making the provision as simple as possible, it is our intention that a limited amount of staff and governor time should be taken up in providing this vehicle; and—I repeat—only if they want to do so. The availability of a statutory model which has existed for a long time should make that considerably simpler. The intention is that there should not be any diversion from any core funding of the school and no diversion from the determination of the schools to devote themselves to achieving standards.
With regard to Answers to Written Questions, it is probably better if the answers come officially in response to the noble Baroness's supplementary Written Questions rather than my attempting to elaborate on the Answers to Written Questions that she has already received. I confirm that the limitation on the liability of members in the case of a company

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limited by guarantee is to the guarantee, which will normally be a nominal sum; and in the case of a company limited by shares to the amount outstanding on the shares.
The noble Baroness is right to say that a local education authority can contract out now. That is a route which is more likely to be widely pursued than the school company route. I express a personal opinion, but I think that where there is a good relationship between schools and the local education authority, where schools ask the local education authority to provide services or to purchase functions and are assured that it can be done and done properly, that is what will happen. I think it likely that this will be a minority activity.
The noble Baroness answered herself when she talked about the PFI contracts. She talked about the examples given in the policy statement of the relationships with the Church of England. Those are by no means complete; indeed, they cannot be complete because the legal framework for them is not yet in place. However, if one reads the policy statement and takes note of what the Government and the Church of England are thinking of doing, it must be seen to be positive.
The noble Baroness also asked how many groups of regulations would be introduced. The answer is one: they will be produced in the form of one group. I was asked more than once about the freedom to sell shares and about new shareholdings, as well as the possibility of take-overs. The answers to those points is that this is no different from any other Companies Act company. It is always possible for a Companies Act company to protect itself by ensuring that the sale of shares, which in any case can only take place within the permitted categories, will be constrained by its memorandum and articles. Any sensible school company—indeed, any company that is advised by a supervisory body—would ensure that that is the case.
I believe that I have gone as far as I can in dealing with the detailed points raised. The fundamental lesson that I want to leave with the Committee on Clause 10 is that we are doing no more here than respond to a certain amount of indication—not perhaps, a large amount—that schools would like to have greater freedom than they have at present. This was expressed, and examples given, at a conference in London in April organised by the Centre for Education Management, where 20 representatives of schools and LEAs indicated interest in the powers to form companies for a variety of purposes. If there is a report of that conference and I can make it available to noble Lords, I shall gladly do so. Clause 10 is intended to be a responsive clause. It is not intended in any way to be an imposition on schools or on local education authorities.
Clause 10 agreed to.
Clause 11 [Limits on powers conferred by section 10]:
9.30 p.m.
Lord Roberts of Conwymoved Amendment No. 62:
Page 7, line 35, after "authority" insert "and any similar authorities affected"
The noble Lord said: The amendment is inspired by concern on the part of the Welsh Local Government Association that governing bodies forming companies should have the consent of their local education authority not simply for forming companies or participating in them but for borrowing money. As I said during the clause stand part debate, the association is worried because such borrowing would count as borrowing by a local authority. That seems to me to be a very fair starting point.
In his reply to the clause stand part debate, I noticed that the noble Lord, Lord McIntosh of Haringey, said that such consents as would be necessary for borrowing would be provided—or not provided, as the case may be—by the designated supervisory authority. Local authorities tell me that the consent of such an authority is insufficient. They point out that as their schools would be participating in the company, they, too, should be involved in the matter of consent, especially in the case of borrowing. I am bound to say that the consent required under Clause 11(1) appears to be uncertain in its scope. Similarly, it is not clarified later in the clause.
It is not just the local authority mainly responsible for the governing body that may be involved; other local authorities and their governing bodies which may participate in the company could also be involved, as anticipated in subsection (5)(a) of this clause. The Minister has already acknowledged that one of the purposes of these clauses is to encourage schools to cooperate and act as consortia companies.
Amendment No. 62 addresses the point about the multiplicity of authorities which may be affected. It requires their consent as well as that of the designated supervisory authority. My noble friend Lady Blatch in the course of her speech said that all the references have been to the consent of the designated supervisory authority. As many authorities, as well as many schools, may be involved in these consortiums it would surely be as well to ensure that their consent is secured. That is what the amendment seeks to do. I beg to move.
Lord McIntosh of Haringey: With due respect to the Welsh education authorities, I do not understand the amendment. If the schools in a group seeking to form a school company are with one local education authority then that authority's permission is needed.
What can "similar authority" mean? It may mean another local education authority. But it is not necessarily limited to that. How an authority which is not an LEA would be affected is not clear to me. I think that the noble Lord, Lord Roberts, means that if the schools from more than one LEA want to join a company, each of them should seek the consent of

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their own LEA. If that is what the noble Lord seeks, I can assure him that that is what the Bill means. It may have to say so in regulation—I do not know.
Lord Roberts of Conwy: I am grateful to the noble Lord for his clarification, but I must tell him that it is somewhat different from everything that we have heard today. When we have talked about these companies and participation by other schools in such companies, the reference with regard to consent has always been to the designated supervisory authority and that authority alone. But clearly a company that involves participation by schools in other authorities has a responsibility to those authorities too. It is natural for an LEA to be concerned, particularly if that company becomes involved in borrowing money. That is the concern of the local authority. It is not sufficiently covered on the face of the Bill.
Lord McIntosh of Haringey: I think that there may be confusion between consent to form a company and becoming a supervisory authority afterwards. The amendment seeks—maybe it is not intended—to bring a body, possibly other than a LEA, into the consent procedure. I am saying that the consent procedure is very clear. If all the schools are in one local authority, obviously consent is needed from that LEA; if they are from more than one authority, then each of them should seek the consent of their own LEA. In other words, if one has five schools in authority A and one school in authority B, the five schools should go to authority A for consent and the one school should go to authority B for consent, but they should not have to seek consent from each other's LEA.
The question of who is the supervisory authority afterwards is a different question which is not addressed by the amendment. I should be happy to consider any amendment on that issue at a later stage.
Lord Roberts of Conwy: I am again grateful to the Minister for his explanation. I am bound to tell him that I am not entirely satisfied. I shall obviously study what he has said and what has been said in our previous debates on this issue. I beg leave to withdraw.
Amendment, by leave, withdrawn.
[Amendments Nos. 63 and 64 not moved.]
Baroness Walmsleymoved Amendment No. 65:
Page 7, line 42, at end insert—
"( ) A governing body may not require any person employed to work at the school to provide services in connection with the activities of any company in relation to which the governing body has exercised a power under any of subsections (1) to (4) of section 10 otherwise than under a contract entered into for that purpose.
( ) No person employed to work at the school for purposes other than those of a company in relation to which the governing body has exercised a power under any of subsections (1) to (4) of section 10 shall be dismissed, nor be subjected to any disciplinary process, nor in any other way be disadvantaged by reason of his unwillingness to provide services in connection with the activities of any such company nor shall any person be refused appointment to a post other than for the purposes of a company because of such unwillingness.
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( ) Sections 115 to 127 shall not apply in relation to any employment for the purposes of any company in relation to which the governing body has exercised a power under any of subsections (1) to (4) of section 10."
The noble Baroness said: I rise to move Amendment No. 65 and to speak to Amendment No. 79. The amendments are designed to probe whether a member of staff of a school that had set up a company could be required to take on company duties, be dismissed for refusal to do so or have his or her remuneration affected by the exercise of the school's power to form a company.
Amendment No. 65 would ensure that teachers and other staff would not be forced to take on company duties and, if they were to refuse, that they would not suffer any disadvantage. It would ensure that teachers were not put under any pressure to run or to work for such companies and that refusal to take part would not affect the teachers' careers.
We on these Benches are concerned that the proposals for schools to form companies could mean that good teachers who have what we used to call a vocation for teaching—who love the job and do it well—may be pushed into doing all sorts of other things or risk damage to their opportunities for career progression. At a time when there is such a concern about the impact of excessive workload and bureaucracy on teacher morale, the amendments' safeguards are necessary.
The PricewaterhouseCoopers report on teacher workload by the Department for Education and Skills states:
"Teachers in many schools perceive a lack of control and ownership over their work, undertaking tasks—particularly documentation—which they do not believe are necessary to support learning".
We are concerned that the Government expect more and more of teachers, heads and governors in relation to school improvement. It is therefore vital that they are not also expected to deliver additional services that may previously have been conducted by LEAs, social services or the health authorities without additional resources.
So far, we have received very little in the way of assurances on the matter. On the contrary, last October the Secretary of State told the Education and Skills Select Committee:
"I do not think we can get better public services without asking more of those who work in them. That is an inevitability. Where we have a responsibility, and I have a responsibility, is to make sure that in pushing forward that change and implementing that change we explain things carefully, we make sure what we do is on a clear evidence base, we resource it sufficiently, we offer professional development opportunities for those in the front line and we understand the pressure that we put on them".
That suggests that teachers will be asked to train as company managers as part of their professional development, that more will be asked of them as long as the No. 10 Policy Unit can trump up an evidence base for the establishment of companies within schools and that more pressure will be put on teachers. Can the Minister give us an assurance that teachers and other

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school staff will not be required to perform company duties in addition to their existing responsibilities? I beg to move.
Baroness Blatch: In view of the fact that my earlier citation of comments made by Mr Timms in the Standing Committee apparently turned out to be wrong—I cannot quote him now because I have sent off my copy of the Standing Committee report—perhaps I may paraphrase him, I think pretty accurately. He said that schools would be free to second teachers full-time or part-time and that schools would also be free to contract out their teachers full-time or part-time. It would be helpful to know if that is the case.
To pick up on the point made by the noble Baroness, Lady Walmsley, teachers are concerned that when schools that are already part of a company are recruiting they will be looking for teachers with that expertise—they will be touting for the kind of teacher that they want, who will not philosophically object to working within a company. That would work against the interests of teachers who come into teaching to teach and not necessarily to run companies.
One of the answers that the Minister may give to the noble Baroness, Lady Walmsley, in response to the amendment will be that no teacher will be forced to do anything against their will. Mr Timms also said that in another place, adding that teachers would get involved only by agreement. However, there is such a thing as pressure. There is the pressure that will come from people who will say that the company is buzzing and that it is making a lot of money for its school. If that becomes the predominant activity, rather than running the school and teaching the children, there will be pressure on teachers to become involved in order to keep their job or stay in the school in a positive role. That pressure may make them feel inhibited, and, against their better judgment, they may feel it necessary to get involved.
Although the technical answer is that no teacher will be required to act against their will, there should be some safeguard. There should be no prejudice against a teacher whose mission in life is to teach, not to be a member of a company.
9.45 p.m.
Lord McIntosh of Haringey: I agree entirely with the principle behind the first two paragraphs of Amendment No. 65 and with what the noble Baroness, Lady Blatch, said about pressure on teachers, even if the formal position is that nothing can be done without agreement. All of us have worked in circumstances in which pressure is put on people to do things that they do not want to do. It is a fact of working life. Sometimes, it is justified; sometimes, it is not. We must make sure that the occasions on which it is not justified are kept to a minimum.
Clause 10 defines the functions that may be performed by school companies. Companies that want to share their expertise and skills with other schools
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will, to some extent, involve the staff of schools that are company members. That must be understood. Amendment No. 65 would prevent staff being forced to work for—or, indeed, act in connection with the activities of—a company.
I agree with the first two parts of Amendment No. 65: staff should not be required to work for companies against their will, and they should be protected. They are, of course, protected, not necessarily by this Bill, but by employment law. They are employees like anybody else and, under employment legislation, a company cannot force an employee to work for a second employer. Before any member of staff could be asked to work for a school company, they would first need to agree to do so. There is no compulsion.
I hope that the Committee will agree that, beyond that, details of working arrangements are best left to local agreement between staff, the school and the company. Amendment No. 65 would introduce rather rigid requirements that could stifle innovation and could replace local agreement, which would be better.
The first part of Amendment No. 65 would put in place a requirement that no member of staff could be forced to work for—or in any way deal with—a company, other than by a specific contract. The second part would provide that staff should not be disadvantaged by their refusal. That is where pressure comes into it. There are many ways in which a member of staff could work for a company. As the noble Baroness, Lady Blatch, said, a teacher could be on temporary secondment or could spend part of the working week with the company. There would have to be remuneration arrangements for that.
The amendment would mean that a member of staff could not be required to have normal dealings with a school company. I am sure that it was not intended that it should mean that, but it does. A book order could be placed with a company, rather than with a traditional supplier. It would be inappropriate to require the contract of a member of staff to be specifically amended before he or she could be asked to deal with the ordering of books in such circumstances.
Baroness Walmsley: I am grateful to the Minister for giving way. The amendment does not state that teachers will be prevented from dealing with a company. It refers only to their being forced to work for a company.
The Lord Bishop of Blackburn: Perhaps I may make a contribution to the debate. It seems to me that we are all with the spirit of what is behind the amendment, but, sadly, I question whether we are in the real world. Let us take the recent example of the head teacher in Grimsby. As he justified his absence, he spoke of himself not as a teacher but as a principal. I may regret that, but it seems to me that much will depend on the nature of the company's activities. I can see teachers relishing educational activities in which companies may wish to engage or want to sponsor.

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Therefore, while I am with the spirit of the noble Baroness's amendment, I wonder whether we are addressing the situation in many of our high schools where with delegated budgets teachers are being asked to do, and want to do, things which I, with my vision of teaching, would rather they did not do. However, we need to protect those who do not want to do that from being forced to do so. I want to encourage teachers to teach; managers to manage; and company experts to "companify" or whatever the word is.
Lord McIntosh of Haringey: I agree with all that. I was saying—and my comments may have been unworthy—that the words,
"unwillingness to provide services in connection with the activities of any such company"
could be interpreted as "dealing with". I know that it is not intended and I should not make textual criticisms of amendments having spent 14 years in Opposition and having had to make up amendments. I know what that means.
Let us be clear. I believe that we are all in agreement on the matter. It is understood that we cannot have force, but we do not want unreasonable pressure. I hope that if sufficient companies are set up they will free teachers to carry out their core activities and that duties which they are presently required to do but which could be contracted to a company may be done by someone else rather than a professional teacher. That would be my objective for this part of the Bill and I hope that any regulations involved will be written in that sense.
The final part of Amendment No. 65 relates to pay and conditions and appraisal. Amendment No. 79 relates to the same subject. I have made it clear that there is no sense in which a school company can take over a school. We are giving schools the powers to form companies so that they can pursue innovative means of working. They will not assume responsibilities for running member schools; that will remain the responsibility of the governing body and the head teacher. The clauses do not alter that in any way.
Clause 11 provides for regulations to cover various aspects of company operation. Amendment No. 79 would provide an enabling power that regulations could make provision regarding the pay and conditions of persons employed with school companies. We anticipate that there will be circumstances in which companies recruit staff and become the employer. I understand the need to ensure that staff employed by a company have proper terms and conditions—they might not and probably would not be the same as those of teachers—and that that is a matter for local decision.
We do not want to specify the terms and conditions of locally employed staff when they will be covered by existing employment law, but we intend to issue guidance to governing bodies which consider forming or joining a company. I can assure the noble Baroness, Lady Walmsley, that the guidance will refer to
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appropriate approaches to the employment of staff. I hope that that gives the noble Baroness the reassurance she seeks.
Baroness Walmsley: I thank the Minister for his response and I welcome his reassurances that there will be no force on teachers to work for companies if they do not want to do so. However, teachers would be a little more reassured if the point were on the face of the Bill. Having said that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 66 not moved.]
Baroness Sharp of Guildfordmoved Amendment No. 67:
Page 7, line 43, leave out ", if regulations so provide"
The noble Baroness said: I rise to move Amendment No. 67 and to speak at the same time to Amendment No. 68. The purpose of the Amendment No. 67 is to make mandatory in primary legislation the three conditions listed in Clause 11(3). The provisions would then not allow those conditions to be discarded by the absence of regulations; in other words, rather than, "if regulations so provide", a company set up by a school shall meet the conditions listed in subsection (3).
In addition, we propose a further subsection. Subsection (3)(b) is already in place and is significant in this context because it requires any company set up under these proposals to be a company limited by guarantee rather than a company limited by shares. The new proposed subsection set out in Amendment No. 68 would reinforce that provision and specifically ensure that any profits made by the company would be ploughed back into the school rather than distributed to shareholders.
This proposal takes up once more elements of our earlier discussions about the form of any company, but I should like to say a few words about exactly what is a company limited by guarantee. Such a company has its own distinct identity. It does not issue shares as a tradable commodity. Members of such a company simply guarantee that they will contribute a fixed amount from their personal property to meet the company's debts. Often this will be set at no more than a nominal amount.
Such companies normally exist for charitable or other similar public good purposes. A great many companies limited by guarantee are in fact charitable companies. Member guarantees do not represent an investment in the company from which members might expect to derive a personal profit or gain; the expectation is that any profits from the company's business will be returned to serve the purpose for which the company was formed. Member guarantors can form companies with their own legal identity to pursue good causes in a trading environment, but they can do so without putting at risk their personal property. Companies limited by guarantee are not generally regarded as commercial propositions for acquisition, take-over or merger.

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In our discussions until now we have assumed that the companies set up by schools either could be companies limited by shares or companies limited by guarantee. I read that as meaning that, on the whole, it is more likely that such companies would be companies limited by guarantee. For that reason, I would be interested to learn from the Minister what is the Government's interpretation of this subsection, and whether, if profits are made, they would normally be ploughed back into the school. I beg to move.
Lord McIntosh of Haringey: Let me start by saying what I hope is what the noble Baroness, Lady Sharp, really wants to hear; that is, there will be regulations. The phrase, "if regulations so provide", has been used because, as the noble Baroness rightly pointed out, sub-paragraphs (a) and (c) of Clause 11(3) refer to prescribed requirements, while sub-paragraph (b) does not.
Baroness Sharp of Guildford: I am most grateful to the Minister. Perhaps I may point out that the phrase, "if regulations so provide" implies an element of discretion. When the phrase is left out, there is no discretion.
Lord McIntosh of Haringey: That is absolutely true, but if the phrase were to be left out, then the level of discretion would be reduced because it would be more difficult to introduce different regulations for different purposes. Basically, aside from joint ventures, there are two kinds of companies, one of which is a purchasing company while the other is a service provider company. It could be appropriate for companies to have different structures.
A purchasing company formed by a school to purchase goods and services could well be suited to being limited by guarantee. However, in the case of a service delivery company then the situation already anticipated by the noble Baroness, Lady Sharp, could arise, where one would want a company limited by shares because one would want to have people outside the member schools participating in order to bring in certain expertise. There is a list of the permitted members of such a company. Indeed, the noble Baroness, Lady Blatch, read it out during the debate on Clause 10 stand part. The policy statement which she dissected with such skill is our brief for the regulations, as I am sure the Committee understands. So one might want to have a company limited by shares for those purposes because one might want to have partners in the company who would be interested only if there were shares and the possibility of profit for them. I do not believe that anyone would say there was anything wrong with that. We have not formalised the regulations because we have not yet had the opportunity for public consultation on them.
Clause 10 also enables schools to join companies to obtain services through PFI contracts. Given the Secretary of State's likely involvement in such a company, one would not necessarily have the same regulatory regime for that. I do not feel very strongly
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about Amendment No. 67, but I believe that it is too restrictive to allow the flexibility that we need for these different kinds of companies.
Amendment No. 68 seeks to restrict the ability of a company to run its affairs as it sees fit. Preventing any profit being used for purposes other than education in participating schools may in practice mean that it cannot be paid to company members other than schools. That is an unnecessary interference. There is no reason why schools should not innovate in potentially profitable ways and there is no reason why they should not bring in outside partners to help them to achieve that. They will still benefit financially from it, but that may be achieved only if they have outside partners who can participate for a profit.
If we accepted Amendment No. 68 there would be no incentive for any organisation other than schools to join companies as it could not take its share of any profit earned by its activity. We intend to allow local education authorities, further and higher education providers and private and voluntary sector companies with an educational or training focus to join companies. We shall make this clear in the regulations, on which we will consult.
As to the distribution of profit, I emphasise that the constitution of the company—that is, its memorandum and articles—should and will specify how profit could be used. We envisage a situation where profit would be used for developing the aims of the company—for example, by purchasing new equipment—or it could be paid to members at a level recommended by the directors of the company, dependent on the nature and circumstances of the company and approved by the members of the company in general meeting. So the prospect of profiteers coming in and taking advantage of such a structure is not only remote but inconceivable.
Baroness Blatch: Is a member the school, or can a member be an individual? For example, can an individual of a school become a member of the company? In which case, if it was a profit making company, he or she could be in receipt of a share of profits.
Lord McIntosh of Haringey: Basically, the member is the school, not an individual within the school—a governor, a head teacher, a teacher and so on. As an extreme example, in addition to the school being a member it is possible that one could have someone connected with the school as a director or an outside member of the company. But those involved in such a way would have to take very great care about potential conflicts of interest.
Baroness Sharp of Guildford: I thank the Minister for his reply. I am left a little uncertain. Presumably when the Minister indicated that the school would be the member, he meant that it would be the governing body of the school.
Lord McIntosh of Haringey: It would be a corporate body.
Baroness Sharp of Guildford: As a body corporate it could be a member of a company. Indeed, it might be the only member of a company.
The Minister is not quite right to say that there would be no incentive to form a company if the profits had to be ploughed back into the school, as suggested in my second amendment. If we think about the amount of time that schools spend running fairs, jumble sales and other such projects—all the funds from which are ploughed back in for the benefit of the school—we see that there is a great deal of altruism around. People are prepared to take part in such activities. Schools are already selling software and ploughing the money back into the school.
What is envisaged here for the typical school that wants to start a company is a company limited by guarantee. Any profits it made would almost certainly be ploughed back into the school. Therefore, very little restriction would be imposed. Nevertheless, I thank the Minister for his reply. For the moment, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 68 to 81 not moved.]
Lord Roberts of Conwymoved Amendment No. 82:
Page 8, line 31, leave out subsection (7).
The noble Lord said: Clause 11 (7) provides that,
"Regulations may restrict the circumstances in which a local education authority may refuse to give any consent applied for under subsection (1)".
It is worth asking what the circumstances are in which such regulations might be brought into force.
This provision has caused some consternation in Wales. My friends in the local government association are simply asking in what circumstances it would be proper for the National Assembly for Wales to over-rule the local education authorities. Therefore, the amendment proposes the deletion of subsection (7).
I have some sympathy with the local government association. Why should the Assembly have this power to override the local education authority, which is, after all, a democratically elected body? The same argument applies to local education authorities in England. Again, they can be over-ruled by regulation so far as concerns the matter of consent. I beg to move.
Lord McIntosh of Haringey: Without the provision in Clause 11(7), there would be no power for the Secretary of State to make regulations to restrict the circumstances in which an LEA might refuse to give consent to a governing body applying to form or join a company. If we took that literally, and LEAs did not want schools to have companies, this could vitiate the whole purpose of Clauses 10 to 12 and there would not be any, because the wicked LEAs would say, "We don't want schools to engage in this initiative". That is not what we want, and I do not think that it is what the noble Lord, Lord Roberts, wants either.
Perhaps I may explain the intention of the restriction. We understand that schools as well as LEAs would welcome clear principles setting out when
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local education authorities can withhold this consent. We have therefore provided for regulations under Clause 11 to give schools more certainty about whether their application to join or form a company is likely to be successful.
In Committee in another place it was stressed that there was a need for a clear indication in regulations of when permission could be denied. We expect that under these regulations an LEA would be able to refuse consent when, for example, it had concerns about the leadership, management or financial health of a school. Other sensible circumstances would include when the school had serious weaknesses or was subject to special measures. We have given more detail on that in the policy statement that has already been referred to. We shall consult on the regulations and allow schools and LEAs to comment on the circumstances that we propose. We do not want local education authorities to have the power to refuse schools the opportunity to take part in this initiative just on a whim, but we think that they should have the power to refuse if, given their special knowledge of the schools, they consider them to be unsuitable for such a venture.
Baroness Blatch: There is no doubt in the case of a school that has serious weaknesses or is in special measures. That is a publicly known state of affairs. It could be automatic that any school in that situation need not apply. The Minister referred to an LEA believing that a school had serious weaknesses. It is possible that some LEAs with a philosophical objection to the setting up of a company could use that as a reason. Is there any right of appeal for the schools that would form the company against a malicious or vexatious withholding of consent?
Lord McIntosh of Haringey: That is a useful consideration that could be taken into account when we consult in public on the regulations. Regulations could say that.
I have a specific Welsh point for the noble Lord, Lord Roberts. He knows that the National Assembly for Wales has said that it supports the proposals and will make a commencement order when it wants the provisions to apply in Wales. It is for the National Assembly for Wales to consider what it will put in its regulations, just as the Secretary of State will do for England. The same arguments apply, but in the end it is for the National Assembly for Wales to make its own decision on what the regulations contain.
Lord Roberts of Conwy: I am grateful to the Minister for his explanation. Although many questions could arise, the comparative lateness of the hour dictates that I should suppress them for the time being. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 11 shall stand part of the Bill?
Baroness Blatch: The Minister will be pleased that I am not going to go back over our earlier debate on

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Clause 10. He rightly said that I dealt with all three clauses in some detail. However, there are one or two outstanding questions. One relates to a company that had school body members and a wholly commercial member involved. I take it that it would be either a company by guarantee or a company with shares. Although the school bodies would be interested in education, the commercial member would be a separate independent body making a profit for its own purposes, which may, incidentally, have something to do with education, but may not necessarily. Am I right in thinking the body would have to be either a share-based company or a company by guarantee and it would not be possible to have a mix? If a commercial venture was underwritten by shareholders, they would be walking off with a great deal more of the profit than the school-based members, who were limited by guarantee. I do not know the answer. I am asking as someone who is not as au fait with company law as the Minister is.
I agree with the noble Baroness, Lady Sharp, about the words, "if regulations so provide". Why are those words used here, when every other reference in the Bill says that regulations "may" or regulations "shall"? What prevented parliamentary counsel from saying—there has to be a reason; there always is a reason—that "regulations may provide for the prohibition by its constitution from admitting", and so on? It would be helpful to know that. The provision says that the company must "if regulations so provide", but where does that leave the company if regulations do not so provide? The word "must" allows no flexibility.
Finally, subsection (3)(a) provides that the company,
"must, if regulations so provide … be prohibited by its constitution from admitting to its membership any person who is not of a prescribed description".
Who will prescribe?
10.15 p.m.
Lord McIntosh of Haringey: The answer to the first question is a basic tenet of company law: one cannot have a company in which there is a mixture of limit by guarantee and limit by shares. It has to be one or the other. If it were a company limited by shares rather than limited by guarantee—in other words, if outside people had to be shareholders rather than members in the guarantee sense—one would have to write the memorandum and articles to protect the interests of shareholders who are bodies corporate—in other words, schools. It would have to be clear that the extent to which they are responsible for the activities of the company and responsible for any risk taking is reflected in what they get out of the company, so that the schools' financial interest is protected. I do not think that it will be possible to write that in regulations, but it will certainly be possible to write it in terms of a model memorandum and articles for the companies. I am sure that we would wish to do that.
The second question was about the phrase, "if regulations so provide". The phrase puzzled me. My understanding is that paragraphs (a) and (c) of
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subsection (3) continue to use the word prescribe, so that there will have to be regulations in respect of them, whereas paragraph (b) does not. I think that it is simply a matter of drafting that three paragraphs with different relations to regulation have been included together. If there is any better explanation than that, I shall write to the noble Baroness, Lady Blatch.
Baroness Blatch: I think that that is a very skilful answer. If it is correct, and I suspect that it may well be, the word at the beginning of the subsection should be not "if" but "where". It should therefore read, "The Company — where regulations so provide".
Lord McIntosh of Haringey: I shall see that that view is conveyed to parliamentary counsel. I shall not go any further than that. I have also forgotten the third point.
Baroness Blatch: Who will prescribe?
Lord McIntosh of Haringey: If it is necessary to do so, it could be prescribed in regulations. Our wish, however, would be to have as much local decision-making as possible.
Clause 11 agreed to.
Clause 12 [General powers of the Secretary of State in relation to companies]:
Lord Roberts of Conwymoved Amendment No. 83:
Page 8, line 34, after "State" insert "(in relation to England) or the National Assembly for Wales (in relation to Wales)"
The noble Lord said: There is some doubt as to whether Clause 12 applies to Wales, and one purpose of my amendment is to give the Government a chance to clarify the position. The Government may well say that the position is already clear. Indeed, the Wales Office brief notes Clause 12 as applying to England only, and the Assembly Minister for Education, Jane Davidson, told the Assembly as much on 10th January.
The Welsh Local Government Association, however, points out that the clause as drafted appears to give the Secretary of State power in respect of England and Wales. The association refers in particular to Clause 209(4). What it is getting at, I think, is that Clause 12 comes into force on the day on which this Bill becomes an Act and that there is nothing to stop the Secretary of State from forming or participating in companies which may operate on an England and Wales basis. I think that the association is probably right in its interpretation.
The Welsh Local Government Association is not partial to this clause and would not favour the amendment that I have tabled in order to clarify the situation. My amendment would give the Assembly the same power to set up companies as the Secretary of State has. The present Assembly Lib/Lab government do not wish to have the power either. However, a future Welsh administration might have a different view, especially if it found that the power was successfully applied in England.

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I am bound to say that the deliberate refusal of the power sits oddly with the power taken in Clause 10. Clause 12 is obviously complementary in many ways to the power of governing bodies to form companies. It allows the Secretary of State a similar power if he or she wishes to participate or operate on a larger, possibly national, England and Wales basis. On that basis it is a power that I should have thought should be available to the Assembly as well as to the Secretary of State if it is to be available at all. I beg to move.
Lord McIntosh of Haringey: I can hear from here the rejoicing in the Valleys at the prospect of a Conservative government in Wales. I shall live long enough to see it!
The difference between England and Wales concerns a difference of the existing law. Section 40 of the Government of Wales Act 1998 gives the Assembly the power to form a company if it should in future choose to do so. As the noble Lord, Lord Roberts, rightly said, the National Assembly for Wales sees governing bodies as having a role to play in forming, joining and investing in companies which are covered in Clauses 10 and 11, but it does not see a need to be able to form companies in this area because it already has the power under the 1998 Act. If a specific power were included in the Bill, it would carry the implication of limiting the Assembly's general powers to form companies, which I think would be accepted as being unhelpful.
Baroness Blatch: If it has the power under the 1998 Act, it must be a power that has been passed by this Parliament and it must be a power that also applies to England.
Lord McIntosh of Haringey: No, I am talking about the Government of Wales Act. The provisions of the Government of Wales Act apply to Wales and not to England.
Lord Roberts of Conwy: I believe that the National Assembly for Wales is a corporate body. I am most grateful to the Minister for his explanation. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 84 to 86 not moved.]
Baroness Sharp of Guildfordmoved Amendment No. 87:
Page 9, line 3, at end insert—
"( ) Subsections (3) and (4) of section 11 shall apply to any company referred to in subsection (1) as they apply to companies in relation to which a governing body has exercised a power conferred by subsection (1) of section 10."
The noble Baroness said: In moving Amendment No. 87, I wish to speak also to the Question that Clause 12 shall stand part of the Bill.
Amendment No. 87 brings us back to the whole issue of a company by guarantee but it is set in a different context. Clause 12 concerns a company being established by the Secretary of State rather than by a
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school or group of schools. The question posed by the amendment is whether such a company should not also, as is proposed in Clause 11(3)(b), be a company limited by guarantee meeting prescribed regulations.
The advantage of the company being limited by guarantee is one to which I drew attention on previous occasions; namely, that the profits made by that company would be ploughed back into education. The issue is whether the Secretary of State should be involved in a business that is making profits out of education. The possibility of the Secretary of State being a participant in a company and making profits out of education is raised by Clause 12. The fact that profits can be made in education is illustrated by the degree to which companies such as Nord Anglia are successful these days. For example, Capital Strategies, an analyst of the education market, indicated that share prices in the top 25 education firms during the five years 1996 to 2001 rose by 293 per cent. It predicts that the value of the education market will double to more than £5 billion in the next five years. In other words, it is a good investment, if any Members of the Committee are looking for good investments at the moment.
Companies that derive large parts of their income from the education sector are already performing three times as well as the average stock market company. The growth of the UK education market could be compared with the situation in the US. Education management organisations over there have increased from one to 45 companies in five years, and every major brokerage firm in the country now has an education division.
I turn to the clause stand part debate. There was a time when there was a clear distinction between the public sector and the private sector. Many objected to the public sector entering enterprise of any sort—public or private enterprise—because the public sector could raise capital at unduly preferential rates. It was felt that a public sector company had an unfair advantage over other companies. That was one of the main arguments against nationalised industries for many a long year.
We are now seeing a merging of the public and private sectors in several spheres. That is not necessarily something from which to run away. The Government are probably anxious to promote that merger. However, it raises problems, in particular with regard to the Secretary of State as an active player. One can understand the way in which local authorities—hospital trusts—can play a part in PFI contracts.
Another problem involves the whole question of public sector workers and the concept of the ethos of the public sector. For example, in a recent submission to the Select Committee on Public Administration, the TUC said that the values that constitute the foundations of the relationship within the public sector were trust, professionalism, concern and respect, that those are essentially non- commercial and that to introduce a wholly commercial motive would lead to a worse result for both parties.

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In Just Capital, Adair Turner states:
"There is a danger that the introduction of overt commercial relationships cannot be achieved without eroding those intrinsic motivations [as opposed to the commercial motivations]… The market economy is a tremendously powerful tool to achieve ends, but it should not pretend to reflect the full range of human motivation and aspirations".
I therefore pose the question: what will happen to educational services if the Secretary of State does create companies? Will those companies be companies limited by guarantee? What happens if the company goes bust or into administration? I beg to move.
Baroness Blatch: Those are important questions. I know that the Minister probably knows more than most of us about company law but it seems to me that if the Secretary of State is to set up companies himself and/or participating companies limited by guarantee is he guaranteeing himself? Is he underwriting his own activities? It is either that or Mr Gordon Brown has to bail him out; I am not sure which is the case. If there have to be calls on the guarantee or on the failure of the company, would that come from the global fund for education?
10.30 p.m.
Lord McIntosh of Haringey: I shall deal first with Amendment No. 87. The amendment seeks to provide enabling powers for the Secretary of State to make regulations which could require companies in which the Secretary of State is investing—that is, under Clause 12—to comply with the same requirements as companies formed by governing bodies under powers conferred by Clause 10. I hope that I have that right.
Under the amendment, any company in which the Secretary of State invested would have to prohibit membership for non-prescribed persons, meet restrictions as to its constitution and other matters connected with the company's affairs, and obtain permission to borrow money from a prescribed person. One of the main objects of the clause is to provide more efficient and less expensive means of procurement and management of facilities for and services to schools and LEAs. The amendment would slow down those processes and increase costs to government.
The requirement to place these companies under the same regulatory controls as those formed by governing bodies is unnecessary because all companies in question will be subject to the requirements of company law. The directors of the company will have a legal duty to ensure lawful and effective financial controls. Although the suggestion sounds superficially reasonable, it would be unnecessarily restrictive to the conduct of efficient business.
I turn now to the broader issue of Clause 12 and the Question whether the clause should stand part. I start by saying that there are those who argue that the Secretary of State already has inherent powers to do everything that is in Clause 12. Indeed, the department's lawyers believe that to be the case. However, by placing this clause in the Bill we want to
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clarify the position and put the matter beyond doubt, not only for the sake of government but for the sake of anyone who is likely to deal with a company of this kind.
The existence of a specific statutory provision will reassure prospective partners in any company who are more comfortable with written statutory powers than with looking up the cases and evidence, which the department's lawyers have been looking up, as to whether the Secretary of State has the powers. For example, they will be familiar with Section 2 of the Local Government Act 2000, or, in relation to the National Assembly for Wales, Section 40 of the Government of Wales Act 1998, or Section 4 of the Health and Social Care Act 2001. We want the power to be set out in one place; we want it to be clearly stated; and we want other people to be able to understand where it is. That will save people seeking expensive, independent advice if they want to deal with a company set up in this way.
Taking part in companies will not simply involve a handing over of cash. Each company with which the Secretary of State is involved will have to demonstrate, as do all other companies, value for money and robust business plans. They will have to seek to protect the public investment at all times. Individuals who seek to exploit this provision will find themselves subjected to close scrutiny before any decision to invest is taken and close shareholder scrutiny thereafter. In putting this clause on the face of the Bill, we believe that we are making it easier for companies to understand what is involved, but we do not believe that we are making it easier to take part in the sense of lowering any of the barriers.
Experience has shown that schools—particularly small schools and those in the voluntary-aided sector—often have difficulty in obtaining access to advice and services through conventional means, other than by incurring considerable costs. A single school might incur costs of several hundred thousand pounds for legal, financial and technical advice which may not be of the quality it would expect. Therefore, we are taking these measures to develop, in the first instance, the use of joint venture companies which will provide advice, procurement and contract management services to individual schools, local education authorities or representative bodies of voluntary-aided schools, such as faith groups.
To some extent, we have already talked about the experience of the discussions between the department and representatives of the National Society (Church of England) for Promoting Religious Education. They are working through the processes to establish the first of these companies, which will be able to take place when the Act has been passed. They will develop a partnership that will enable the national society, the Government and, more importantly, schools to minimise the time and cost involved in delivering large-scale capital projects. The first project for the new company will be to secure the necessary funding to ensure that as many of the 20 or so Church of England primary schools chosen for this project are refurbished or replaced to enable them to continue this

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Government's drive to raise standards and to provide an improved learning and working environment for pupils and teachers.
The Church of England project will be only the first use of the clause and we shall use the experience of this project to inform future developments in handling and financing major capital projects for local education authorities, establishing a consultative user group within the Church of England project that brings together representatives from a wide range of partners such as LEAs, the Local Government Association, local diocesan officers and other faith groups. In that way we shall seek to take the views of those most affected by these ways of working. The projects will have to demonstrate value for money and will have to be approved by the project review group, which is chaired by the Office of Government Commerce before any contracts for PFI projects can be signed. Indeed, as this will be a commercial venture we expect to see any profits ploughed back into enhanced services for those schools making use of the joint venture company.
Concern has been expressed about the liability of the Secretary of State. The answer to that is that which I have given throughout. We are talking here of a limited liability company. Those who deal with limited liability companies know what is meant by "limited liability". It is no different for companies set up under Clause 12 than for those set up under Clauses 10 and 11.
The Lord Bishop of Blackburn: I intervene briefly to support the Government's intention in Clause 12 and to hope that, indeed, it does stand part. Much of what I intended to say the Minister has said on my behalf. We are all keen to improve educational standards. However, I have listened a lot in the last two days of debate on the Bill. Given that we are a revising and probing Chamber, it seems that we are slightly reluctant to give the powers of innovation in order that these fresh initiatives to raise standards may be achieved. This is an enabling power to ensure that the Secretary of State has the powers which many believe the Secretary of State already has. It clarifies that and clears it away.
I am tempted to say a word about Mammon. However, in response to the noble Baroness, Lady Sharp, it seems to me that the motivation for commercial enterprise can be good. There are companies which are motivated to market a good product and to provide employment almost as much as to make a significant profit, or at least there should be. We are concerned that innovative projects go ahead in the way that the noble Lord, Lord Dearing, remarked earlier today, which would not go ahead without a power of this kind. I am grateful to the noble Baroness, Lady Blatch, for referring to that earlier in this group of amendments.
The Minister spoke about the PFI and the national society initiative. I declare an interest as chairman of the council of the national society. No one is forcing the 20 or so small schools to go into this. They have self-selected themselves. However, there is no way that
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they could achieve this on their own without an umbrella organisation such as the national society engaging with the Secretary of State in the Conflation of such a company. I hope that with those few remarks I can support the inclusion of the clause and hope that it does, indeed, stand part of the Bill.
Baroness Sharp of Guildford: I thank the Minister for his reply and take on board the remarks made by the right reverend Prelate. However, I remain somewhat unconvinced. It seems to me, as I understand it better now, that the proposal is a vehicle for PFI. As always, one sometimes wonders whether PFI is necessarily the best way forward for some of these initiatives. As the Minister well knows, from these Benches we feel that on occasions the Government could raise money more cheaply outside PFI than within a PFI context. In those circumstances, it is only the somewhat arcane rules of the Treasury which prevent Government from raising capital in that sense. Nevertheless, having heard the Minister, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 12 shall stand part of the Bill?
Baroness Blatch: I shall be brief as I spoke to this matter in debate on whether Clause 10 shall stand part of the Bill.
First, the right reverend Prelate mildly criticised those of us who have spent quite a lot of today sounding hesitant and cautious about what the Government seek to do. I have made clear, and continue to say, that I have no difficulty with the principle. However, we have given up on another place acting as a check and balance on the Government. This is the Chamber which does so. We have a duty to protect the interests of all those who will be involved. At the end of the day they could be deemed culpable if the companies fail.
My second message is serious. The Government's venture into the world of privatisation was through the individual learning account. We have just received the report. Having read it over the weekend, it makes fairly awful reading. Some innocent people have been harmed. Companies have gone bust as a result of that exercise. Many are in grave difficulty. Potential students who would have taken advantage of individual learning accounts have been left with no provision. We await with bated breath some substitute scheme. Real people have been hurt: teachers, school staff, non-teaching staff and people who we feel have a primary duty to education and children, not to private companies. Whatever happens as a result of these clauses—it may be the most exciting development we have had in a long time—it is right that we challenge the detail and ensure that if the measure goes back to another place it is with many of those questions answered because that is important.
I think that parliamentary counsel must have had an attack of the vapours. I have never known parliamentary counsel to be flexible. For

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parliamentary counsel to agree that an otiose provision should be in the Bill seems to be a real coup. I do not know who managed to convince them that it is worth putting a clause in the Bill that is unnecessary. Perhaps parliamentary counsel are changing the habits of a lifetime.
I am not convinced that one needs this vehicle for the PFI exercise which is being talked about. I am not sure that a company needs to be set up with regard to the collaborative effort to exploit the PFI schemes for the benefit of faith schools. However, we have another stage of the Bill to explore that issue. I withdraw my objection to the clause standing part of the Bill.
Lord McIntosh of Haringey: It is incumbent on me to do two things. First, we shall pass on to those who wrote instructions to counsel the congratulations of the noble Baroness, Lady Blatch. It is not true to say that the provision is otiose. There is a significant value in having in one place the powers of the Secretary of State so that those who are dealing with such projects know what to rely on without extensive constitutional research.
Secondly, without in any way seeking to excuse what happens with individual learning accounts, this is a very different beast. We are talking about local projects with people who know each other. It is very different from the scale and procedures of individual learning accounts.
Clause 12 agreed to.
Clause 13 [Power of Secretary of State and National Assembly for Wales to give financial assistance for purposes related to education or childcare]:
10.45 p.m.
Baroness Blatchmoved Amendment No. 88:
Page 9, line 17, leave out paragraph (b).
The noble Baroness said: We come again to a provision to which I have no objection in principle. Clause 13(1) says:
"The Secretary of State (in relation to England) or the National Assembly for Wales (in relation to Wales) may give, or make arrangements for the giving of, financial assistance to any person for or in connection with any of the purposes mentioned in subsection (2)".
Among the items mentioned in that subsection are services related to childcare. It also makes provision in relation to higher education. However, in moving this amendment I wish to speak specifically about childcare services.
The noble Lord, Lord Peston, who is not now in the Chamber, has tabled a later amendment for which he will receive my wholehearted support. I am worried about the finances for education. As noble Lords will be aware, education has a global budget that starts with Mr Gordon Brown, the Chancellor of the Exchequer, and then moves to education—which has beaten all records for top-slicing money held by the centre to spend on whatever the idea of the day may be. Indeed, only today I received yet another missive from the Department for Education and Skills regarding the
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spending of £27 million on another project. In themselves these projects are sometimes very attractive and sometimes very quirky. However, every time that £27 million, £1 million or even £1 is taken off at the national level, such money does not find its way to local government. If that is the case, it does not find its way into schools. The perennial point that I have been making is that the core funding of schools is being depleted all the time.
We are constantly adding to the burdens of local government. Every time we do so there is a cost involved which has to be met. If the cost is met, it is met from the education budget. The increasing incidence of national government and local authorities holding back money continues to deplete schools' core budget. The provision in Clause 13 to pay for childcare services represents a new burden. I suspect that the noble Lord, Lord Peston, will not be moving his later amendment tonight. However, it provides that any funding spent in this area "must relate" to education. If that is not the case, it is not a genuine call on education funding.
I am concerned that we are imposing functions on the education budget that properly belong under the umbrella of social security or social services; or, indeed, which should come under the Home Office. Such functions do not always belong to education. As I read the clause, childcare services relate to a child from a very early age through to the point of moving into statutory education at the age of five. As there is no reference in the financial memorandum of the cost involved, it would be helpful if the Minister could tell us whether that cost will come from within the education budget. Alternatively, will there be a new allocation, or a transfer from another department into the education budget? Further, what kind of service is envisaged in totality that will require proper funding? We are not talking about inexpensive services; indeed, they are very expensive. This is not an argument against the principle of doing what we can to ensure that young people below the age of five are better prepared to take advantage of mainstream education when they reach the statutory age.
I do not wish in any way to deny the merits of the case that will be put forward by the noble Lord, Lord Northbourne, because he will have my support. I know that the noble Lord will argue most strongly for the policy. However, I believe that there needs to be some honesty in politics at this point. If it is a new burden and it is to be properly met, local authorities should be given the wherewithal to deal with it. I beg to move.
Lord Northbourne: I wish to speak to Amendment No. 89, which is tabled in my name. I support the noble Baroness, Lady Blatch, in her view that proper funding for new functions imposed on the DES ought to be provided. However, the purpose of my amendment is rather different.
At the end of the 19th century, a small minority of children arrived in school disabled by rickets or tuberculosis. It was only when medical science discovered the causes of those diseases that society moved in to prevent their causes—malnutrition, poor

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ventilation, poor housing and so on. Today there are few, if any, children who arrive at school with rickets. There are, unfortunately, a very few who arrive with tuberculosis.
However, in the 21st century a significant minority of children arrive at school disabled mentally or emotionally by the environment in which they have lived during the first years of their lives. I argue that the foundations of education are laid in the years before the child reaches his second birthday. That is the period of his life when a major part of his brain development takes place. That development is influenced not only by heredity but also by the environment in which the child grows up.
If those foundations are laid wrong the damage may be hard to change later. I add, in parenthesis, that much of the knowledge of this subject has become available only in the last decade or two through new neurological discoveries based on more powerful brain scanners.
Rather like the situation with rickets and tuberculosis, now we have new information on which arguably we should be acting. A child who arrives in school with learning difficulties which arise from the environment in which he grew up, may not be statemented but he is a disadvantaged child and a potential problem for the school.
So, is there not a case for taking measures in the early years which would reduce the number of children who arrive in a school in that category? I predict that within five years, and perhaps within two years, the Secretary of State will come to the conclusion that that prevention is worthwhile. I think that nearly all parents of young children start off wanting to do their best for their child. I believe and am confident that many parents welcome information, support and help, provided that it can be given without being stigmatising or intrusive. From my experience of the Parenting Forum I believe that it is possible to do this. My amendment, therefore, is simply permissive. It gives the Secretary of State the power to act if and when she decides that it is right to do so.
Baroness Howe of Idlicote: I speak to Amendment No. 89. Although I understand the reason the noble Baroness, Lady Blatch, moved Amendment No. 88, I am not really in favour of it.
I start by congratulating the Government on the clause. Frankly, I would have given my eye teeth for it at a time in the 1960s when people were scrabbling around to get funds to start pre-school playgroups, adventure playgrounds in deprived areas and to use school premises for other community purposes.
In those days, state pre-school education was minimal. Any expansion of it was prohibited until the noble Baroness, Lady Thatcher, managed to abolish circular 8/60. Again I congratulate the Government and their predecessors on the fact that nursery education is available for some 90 per cent of three-year olds.
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However, as the author in those times of a pamphlet entitled Under 5, I always felt that the nought to three year olds were a particularly vital age—particularly for supporting especially vulnerable parents and children. All of that and the reasons for it, which have now grown, have been most ably explained by my noble friend Lord Northbourne. Therefore, I shall not expand further on that matter.
I was especially pleased that Ofsted's annual report noted the nought to sixes as one of six key issues on which it hopes to focus in coming decades. So presumably it considers the nought to threes to be within its education remit. I hope that the Minister, too, considers the nought to threes—the nought to sixes, but specifically the nought to threes—to be within her education remit. I also hope that in response to the amendment, she will provide examples of how the clause could be used to help families in deprived areas where the earlier that educational support, whether childcare or whatever, can be given the greater the hope of a successful, fulfilling statutory educational period for both the child and, I would argue, the teacher.
Baroness Walmsley: I support the amendment moved by the noble Lord, Lord Northbourne. I remember clearly a remark made to me by a reception teacher whose lesson I was observing many years ago as part of my teacher training. She said, "You know, when they arrive in my class, in many cases their educational attainment is already determined. If they are lively and curious when they enter the reception class, we can develop them and they will do well. But if they arrive incurious and with a dull look in the eye, they are already lost and it is difficult for the best of schools to bring them back in again". My experience as a parent backs that up.
Best practice in early years education acknowledges that the development of children's verbal skills, physical co-ordination, emotional development and social skills in those early years, before they go to school, are most important. Of course, those things do not start at the age of three when they enter a nursery setting. They start at the age of zero. Those who are most influential in assisting a child to develop all those things, which are so important for the beginning of formal education really to take off, are parents.
I heartily endorse the amendment to give support to parents to understand how children develop and to find ways efficiently to further that development so that when they enter the nursery setting they can take advantage of what one hopes will be good quality nursery education and that when they enter formal education—perhaps not quite as early as four—they will really fly.
Lord Rix: I know that my noble friend Lord Northbourne is especially anxious to ensure adequate support for young children who may suffer mental, emotional and cognitive disabilities as a result of their early upbringing before entering school. That concern is laudable, and as such I support Amendment No. 89. However, I am sure that Mencap and the Special

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Education Consortium would want to add to the list of potentially deprived children those born with a learning disability. Additional financial assistance for their early education would be welcome, as would the maximum possible guidance and support for their parents. The amendment accords with my aspirations, and I should be glad to hear whether the Government's putative plans in that direction are indeed beginning to take shape.
Lord Alton of Liverpool: I add my voice in support of the amendment moved by my noble friend Lord Northbourne. In particular, I support what my noble friend Lord Rix said about the importance of parents being involved in,
"the task of developing the child's emotional, educational or physical potential"—
the words used in the amendment.
There is always a temptation to assume that the institutional care offered by the education system to children of any age can, in some way, compensate for the involvement of the parent in the child's upbringing. I was struck by what Dame Elizabeth Butler-Sloss said in an interview with The Sunday Times about three weeks ago. She said that we all needed to revisit the arguments of the 1970s and consider the importance of both parents being available during a child's upbringing. She was particularly emphatic about the emotional scarring that could happen to a child if one or other parent was not available.
We should not lose sight of that part of the amendment proposed by noble friend Lord Northbourne. According to one survey, 800,000 children no longer have contact with their father. The absence of male figures from the upbringing of children has a profoundly disturbing effect on those children and is one of the reasons why we see youngsters behaving in the dysfunctional ways about which so many people are now rightly concerned.
The amendment should cause us all to pause and think about what we want of the children coming through our schools. Where does the process start? For children at such an early age, it starts in the home and the school. However good teachers in nursery schools or early years education may be, they are not a replacement for parents who are not engaged in the process, playing their important role. We would be foolish to think that they could be a substitute.
11 p.m.
Lord Jones: Parents carry a great responsibility, and I hope that the Government will make even more effort to ensure that they do. I hope that the amendment proposed by the noble Lord, Lord Northbourne, will get more than a sympathetic response from the Dispatch Box at this late hour. As long ago as 1976, when I was a young Minister with an education brief, I was able to make the first grant ever to the Pre-school Playgroup Association in Wales. I realise that I did that without access to the pamphleteering skills of the noble Baroness, Lady Howe of Idlicote.
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Will the Minister tell us where she believes our local education authorities are going? In the series of mini-debates that I have heard tonight, it has been clear that our schools are—necessarily—getting more and more power, more discretion and more authority. Do Ministers believe that the local education authorities will, over time, wither on the vine? Do they have confidence in the local education authorities? Do they believe that the powers now being vested in our schools are at odds with the long-term future of the local education authorities?
I end as I began: I hope that the amendment gets more than a sympathetic hearing.
Baroness Ashton of Upholland: It has been an interesting debate in which everyone has spoken in support of the principles behind support for childcare. I welcome that. The Government are pleased that we are well on the way to fulfilling our ambition of providing an early education place for all our 3 and 4 year-olds whose families want one. At the same time, we are expanding the number of childcare places by stimulating the growth of provision in the private sector through the introduction of subsidies aimed particularly at the disadvantaged.
We all know that there is still a significant gap between demand for affordable, accessible, good quality childcare and what is available, especially—as Members have said—in disadvantaged areas and for disadvantaged groups. One of our aims is to respond to parents' wishes for early education and childcare to be more closely integrated. Findings emerging from the effective provision of pre-school education illustrate the educational benefits of integrated services. Centres providing integrated provision are consistently associated with greater developmental progress in other centres. Individual combined centres scored highest in the assessment of quality.
That is the background against which we are debating the amendments. I agree with the noble Lord, Lord Alton, that parents play a most important role in the early development of their children. I also agree that it is important that both parents are involved—although we know that that is not always possible and occasionally not always desirable.
I was delighted that the noble Lord, Lord Rix, spoke of special educational needs for the early years. We are looking to develop that more, in particular for our children in early years education. With the development of special educational needs co-ordinators, we are now working closely to enable us to do what we have always wanted to do; that is, to identify special educational needs as early as possible in order to address them and equip children. I often say in the department, and I believe I have previously said it in this House, that I want all children to arrive at school with their rucksacks containing their apples and rulers and their special educational needs kits should they need them to enable them to receive the appropriate provision to develop educationally.
I am grateful for the support of the noble Baroness, Lady Howe, for our proposals. In referring to the nought to three year-olds, it is important to remember

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our Sure Start programme. That has been funded with £449 million in order specifically to work with parents and children, and in particular to focus on the physical, intellectual and social development of babies and young children under four. We are working closely to realise that ambition in order to ensure that in our most disadvantaged neighbourhoods we have Sure Start programmes in operation and to develop the programme so that everywhere we can support our children.
I want to deal specifically with the concerns raised by the noble Baroness, Lady Blatch, and, as she rightly requested, to do so with honesty. We are concerned to ensure that we have provision for childcare, particularly in our early-years work. The providers in the voluntary and private sectors want to be able to access it more easily. It is about cutting down on regulation, bureaucracy, guidelines and so forth by encompassing those within one power.
However, it will not be drawn from the school's budget. There would not be provision within that for a school to move money within its budget. It is about a separate funding scheme coming together. It is part of the spending review currently before the Treasury and it will be part of a separate pot of money. I know that the noble Baroness feels passionately about attempts to move money out of education and I agree with her. Our scheme is about a separate budget. It lives within the Department for Education and Skills and part of it is aimed at working with our providers in the public, private and voluntary sectors who are also providing early education.
We want to provide what we describe as "wrap-around" care; to provide for some children the ability to have their early education and to be cared for beyond that in the same setting in a childcare way, not in an education way. That is the purpose behind the proposal to include childcare within the provision.
I turn to the amendment tabled by the noble Lord, Lord Northbourne. It proposes to add support for early years education to Clause 13(2)(b). I should make it clear that the definition already in place in Clause 13(2)(a) to support education or education services will include pre-school children such as those in receipt of nursery education. In addition, the amendment includes services to support carers with the emotional, educational or physical development of children aged nought to three. We are doing that through the Sure Start programme, as I have indicated.
I hope that on that basis the noble Lord will feel able to withdraw his amendment.
Lord Jones: Before my noble friend concludes her remarks, will she consider the question I posed about the long-term future of local education authorities?
Baroness Ashton of Upholland: I apologise to my noble friend Lord Jones. I knew as I was about to sit down that I had missed something of great importance. Local education authorities have a great role to play. I do not see them in any way withering on the vine—the expression used by my noble friend.
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Local education authorities are developing in ways that will enable them, particularly through the Education Bill, to develop their strategic role. But we as a Government are not committed to seeing them disappear. We are interested in ensuring that schools are able to do things that schools can do best and local education authorities are able to do things which we believe they can do best
Baroness Blatch: On that point I think we should say that the jury is still out. Certain colleagues of the noble Baroness in other departments are talking about the development of regional government. As a result, the position of county government has now become rather vulnerable. The notion of regional and district government means that local education authorities could either become even more local or they could expand up to the regional level. Furthermore, we must consider devolution, which certainly reflects the ambition of some of the political advisers in No. 10 Downing Street. I do not think we have heard the last with regard to the future of local education authorities, or at least government at county level, in which most authorities reside.
I should like to say to the noble Baroness, Lady Howe, that the proposal in the amendment seeking to remove this power merely served as a mechanism to stimulate the discussion that we have now had this evening. I thought that it was important to address not only the policy aims which were enshrined in the amendment tabled by the noble Lord, Lord Northbourne—and which I support—but also to ensure that the poor old local education authorities, which ultimately will have to deliver the policy, are given the wherewithal to do so. If they are not, then we have a situation where LEAs have to rob Peter to pay Paul. It was important that the position was made clear.
The noble Baroness has promised totally new money. We shall be looking for that in the CSR review when it is announced. The noble Baroness is right to point out that cross-departmental arrangements are continually developing both through the previous government and with the present Government. I know that the Home Office has worked with both the education and health departments. That is good, but it has always been difficult to arrange cross-departmental funding. Persuading one department to pay for a function in another department is always difficult. If this is a pot of new money that will reside in the education budget, I hope that it will be sent down to the local education authorities, as is their due.
Baroness Ashton of Upholland: I should point out to the noble Baroness that we already fund childcare. Because we are already doing that the funding is already is existence. I would not want the noble Baroness to think that a new pot of money was being introduced because we were not already making headway in this area.

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What I sought to indicate was that the money for childcare is currently a distinct sum that we are spending. When we look to allocate moneys in the spending review, they too will be distinct.
Baroness Blatch: I am grateful for those comments, which lead me to the next point I wish to make: why have these provisions been included in this part of the Bill? The power to give financial assistance for childcare is already in place. Indeed, the entire list of educational provision set out in subsection (2) repeats powers that are already in existence. I do not know whether this reflects the attack of the vapours to which I referred earlier; namely, that this is a another clause which is not strictly necessary but it has been included in order to put the position beyond doubt.
It would be most helpful if the noble Baroness could say what is distinctive about subsection (2)(b),
"the provision, or proposed provision, in the United Kingdom or elsewhere, of childcare or of services related to childcare",
and explain why it has been included at this point, given that the provision is already in existence elsewhere.
Baroness Ashton of Upholland: The point of the clause is to bring together a series of different funding streams that are currently in operation. At present they are being handled in several separate ways. Perhaps it would help if I cite one or two examples for the noble Baroness.
At the moment we have the Standards Fund, but we have to limit the use that schools can make of it because it has a separate basis on which it is organised and recognised. We cannot allow schools the freedom to use the fund in the ways they might wish to. We were unable to use educational funding powers to support the threshold pay costs for those employed by local authorities to work in care homes. That, too, is a separate funding stream. We are now bringing those funding streams together under one power, thus enabling the Secretary of State to use the money for these purposes.
Baroness Blatch: I am puzzled by the noble Baroness's words because the power here is one only to make financial provision. There are already powers to make financial provision. If the Government wish to reduce the amount of money in the Standards Fund and then use some of that money for childcare purposes, the Secretary of State does not need further legislation to allow him to do so. In fact, the Secretary of State always alters the Standards Fund on an annual basis. In one year it may cover X, but then the following year it will cover X-minus or X-plus. I cannot understand why it is included as a new power. I queried it because if it is a new power there should be new money. But the Minister said that there would be a specific additional sum of money which would not come from the existing education budget, and that is what we shall look forward to in the forthcoming review.
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My fundamental point in initiating the debate on the whole funding issue was that it should not be a financial burden at the expense of core funding for schools. With that, I rest my case and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
11.15 p.m.
Lord Northbournehad given notice of his intention to move Amendment No. 89:
Page 9, line 18, at end insert—
"( ) the provision of early years education;
( ) the provision of services, support or guidance to parents or other carers to help them in the task of developing their child's emotional, educational or physical potential during the period between birth and the age of three;"
The noble Lord said: I am not sure whether or not I shall move the amendment. I intend only to respond briefly to the Minister.
The Government deserve to be congratulated on what has been achieved in childcare for three and four year-olds. However, the debate today has raised a number of interesting questions about funding. I should like to read the debate rather carefully before Report stage.
As to the question of nought to three year-olds, the noble Baroness has been able to tell me only that this issue is being dealt with by the Sure Start programme. I should like to know a great deal more about the programme—how it is going; how much has been achieved; whether it is only a talking shop, which is the impression that one gets; examples of projects that are underway; how much money has been spent so far and by which department. I believe that this should be a matter, at least in part, for the Department for Education because the education of a child essentially starts when its mind begins to develop, and that is at conception but certainly at birth.
Perhaps it will be possible for me to have a dialogue with the Minister or her officials before Report stage. On that basis I shall not move the amendment.
[Amendment No. 89 not moved.]
[Amendment No. 90 not moved.]
Baroness Blatchmoved Amendment No. 91:
Page 9, line 39, leave out "but does not include higher education,"
The noble Baroness said: Amendment No. 91 relates to a rather pedantic point about accurate drafting. Clause 13(3)(b) states:
"social and physical training (including the promotion of the development of young children), but does not include higher education".
However, subsection (2)(c) states:
"enabling any person to undertake any course of education, or any course of higher education provided by an institution within the further education sector".
I know exactly what it means but it does not say what it means. It means that it is not funding higher education in higher education institutions but it will fund higher education modules which are taught in further education institutions.

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There needs to be some qualification of the meaning of "does not include higher education" in subsection (3)(c). I do not know how that is to be done. I have not been critical of parliamentary counsel; I have referred to its uncharacteristic behaviour. However, this issue should be attended to because otherwise it looks contradictory. I beg to move.
Baroness Ashton of Upholland: I shall try to explain precisely what it means and, I hope, address the problem raised by the noble Baroness.
Clauses 13 to 17 are aimed at rationalising and simplifying our currently disparate powers to support childcare, early years, school education and further education. We believe that it is important to cover all these in one consolidated power so that funding systems can deal consistently in areas of overlap. We have briefly discussed the issues between childcare and early education, and of course, in pushing forward with our ambitious agenda for 14 to 19 year-olds spanning schools and further education, the existing fragmented powers stand in our way of ensuring that financial assistance can be provided in a simple and fair manner. That is the basis for the clauses.
We have found, as the noble Baroness rightly said, our current powers for funding the Higher Education Funding Council for England—in the Further and Higher Education Act 1992—to be fully adequate, and do not see the need to make changes there. We have ensured that Clause 13 covers some very specific areas of overlap between schools or further education and higher education, in terms of teachers' professional development, support for people undertaking courses of higher education at a further education institution, and so on. Beyond that, it is our belief that there is no need to change the existing funding regime for higher education, and I hope that the noble Baroness will feel able to withdraw her amendment.
Baroness Blatch: I understand the explanation, but it is my belief that the drafting is wrong. That was my point. I understand perfectly—although I always thought that HEFC was the body that funded higher education modules in further education, and I did not think that there was a need for this—and I accept the Minister's explanation. Wording such as "not including higher education provided in higher education institutions" might be used. Subsection (2)(c) includes the words,
"or any course of higher education",
and subsection (3) includes the words,
"does not include higher education".
That is contradictory. There ought to be some qualification as to precisely what the Minister means and what I believe she means.
Baroness Ashton of Upholland: I shall try. In subsection (2)(c) the first occurrence of "education" does not include higher education; but subsection (2)(c) also makes explicit reference to higher education, which is therefore an omission. We hold the view that the drafting is okay. However, in the light of
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the very positive contribution that the noble Baroness has made to the egos of parliamentary counsel, I am more than prepared to take this matter away and check it out.
Baroness Blatch: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 13 agreed to.
Clause 14 agreed to.
Clause 15 [Terms on which assistance under section 13 is given]:
Baroness Sharp of Guildfordmoved Amendment No. 91A:
Page 10, line 19, after "terms" insert "as prescribed by regulations"
The noble Baroness said: The reason for the amendment is to write some form of accountability into the grant-giving powers given to the Secretary of State under Clauses 13 to 17.
These provisions have received wide approval from all sides of the Committee. However, as the noble Baroness, Lady Blatch, pointed out in speaking to the amendments to Clause 13, there is not a bottomless purse of money. Resources dispensed in grants by the Secretary of State mean less money being distributed to schools by LEAs.
It is for the Secretary of State to balance the pros and cons of resources being devoted to one cause or another. But at some point the Secretary of State has to be answerable to Parliament for those decisions. It may seem odd that from these Benches we should be seeking more, rather than fewer, regulations; but the mechanism of a regulation provides—especially if such regulations require an affirmative resolution—for the Secretary of State to come before Parliament and justify his or her decisions before Parliament. That is why we seek to include the amendment in this clause.
An increasing share of our resources in education are now being channelled through the Secretary of State. This set of clauses enlarge and consolidate the powers of the Secretary of State in this respect. It is important that these powers should be subject to parliamentary scrutiny and accountability. That is the purpose of the amendment. I beg to move.
Baroness Ashton of Upholland: Since the purpose of this clause is to provide the Secretary of State with a single, simple power, it needs to cover many different payments and grants—from the substantial sums paid to local education authorities through the Standards Fund, to the grant-in-aid which supports the National College for School Leadership, to one-off individual payments; for example, to provide a particular service such as a training programme.
Were a requirement for secondary legislation to be incorporated in the power, as proposed, then the benefits of simplification and reducing bureaucracy that the power is intended to bring could hardly be realised. Different regulations would introduce

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different rules, accounting practices and restrictions—precisely the situation that the new power is intended to move away from.
It is worth putting on record that more than 85 per cent of the funding for education and childcare would not be provided under this power. That funding—the main support for schools and LEAs in the local government finance system—is provided with no secondary legislation governing the purposes to which it is put.
There remain many mechanisms by which Parliament would be informed of and decide upon the funding of education and childcare: through voting funds in the first instance and monitoring their use through the department's annual report, through Select Committee inquiries, through debates and through parliamentary Questions. The detailed terms and conditions under which grants and other financial support are made are fundamentally administrative considerations rather than matters for statutory instruments. Their inclusion in secondary legislation creates cumbersome and lengthy instruments that are inflexible and subject to lengthy amendment processes when required. That is why, in framing this funding power, we have followed the example of Section 2 of the Employment and Training Act 1973, which provides similar broad powers to support training programmes. Similarly, the powers under which the higher education funding councils and the learning and skills councils are funded do not require secondary legislation. This power simply puts another major strand of support for education and training on the same footing as that already agreed by Parliament elsewhere.
Other major aspects of public expenditure are not governed by secondary legislation. For example, defence spending is made on the authority of the vote without recourse to any further primary legislation. The same is true of grants for social care services. On that basis, I hope that the amendment can be withdrawn.
Baroness Sharp of Guildford: I hear what the Minister says. I am not totally satisfied with her answer, but I shall ponder on it further. At this late hour, I shall not take the matter any further. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 15 agreed to.
Clauses 16 and 17 agreed to.
Baroness Matchmoved Amendment No. 92:
Before Clause 18, insert the following new clause—
"REDUCTION OF REGULATION
(1) In relation to the conduct of education in schools and nursery schools, the Secretary of State and local education authorities shall have an overriding duty to minimise regulation and to reduce the amount of material they send to governing bodies and head teachers.
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(2) The Secretary of State must publish an annual report to Parliament setting out the progress he has made in the preceding year in reducing the number and volume of regulations, circulars and codes of practice that he or his predecessors have published.
(3) Each set of regulations, circular or code of practice issued by the Secretary of State shall include a statement by him of the time he expects it will take for governing bodies or head teachers of schools or nursery schools, as appropriate, to read, consider and implement the regulations, circular or code of practice concerned.
(4) In making his estimate under subsection (3), the Secretary of State shall impose no additional burden on schools or nursery schools to provide him or local authorities with information."
The noble Baroness said: The amendment would require the Secretary of State and local education authorities to minimise the amount of regulation and bumf going to schools and nursery schools. Even as we speak, we are already endorsing the provision of more regulation. A great deal more guidance and bumf will end up going into schools. If the policy papers that I have received are any indication, schools will receive a large amount of paper.
Between 1997 and July 2000, schools received more than 1,000 publications and regulations from the department. In the first six months of 2000 alone, the DfES sent out 140 circulars to teachers—one directive for every working day. A recent report by the National Union of Teachers found that 57.8 per cent of teachers leaving the profession were doing so because of the workload. That is well documented and we have discussed it in other debates.
Local education authorities now have to produce 17 different plans for the department, including a plan of plans, bringing together all the other plans—in fact, the mother of all plans, the local government plan. In a very good pamphlet on the subject for the Centre for Policy Studies, Andrew Povey said that it would take more than 1,000 man hours for teachers and local authorities to consider and complete all the plans that the Government have imposed on teachers.
The crisis of teacher shortages is building nationwide. The Government's response so far has been complacent and inadequate. One action that they could take today is to stop the flow of unnecessary directives and paperwork that the department sends out, much of which merely ties teachers up in form-filling when they would prefer to be working in the classroom. That extra work is driving many teachers out of the profession and preventing them from doing the job that they know best—teaching.
No doubt the Minister will tell us that the burden has been considerably reduced. That does not show on my desk. Every day when I come in I find not just one, but often two, three or four releases from the department—and I receive only the press releases, not all the papers and reports that come out of the department. I certainly receive only a fraction of what schools receive.
I understand from an announcement in the past week that one answer proposed by the Government is to employ more people in the classroom to assist the teachers to cope with that level of bureaucracy. The fundamental question is this. Would it not be more effective to cut the level of bureaucracy in the first

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place? Then, we could put both teachers and teaching assistants to better use in the classroom, to teach the children. I beg to move.
Baroness Sharp of Guildford: I rise very briefly to support Amendment No. 92. We on these Benches have long argued for rather less regulation and rather fewer directives being issued by the Secretary of State. I entirely endorse the comments of the noble Baroness, Lady Blatch, on the amount of paperwork that arrives on the desks of noble Lords, let alone on those of head teachers and teachers. If there is a way of limiting the flow of paper, it would be an excellent matter to pursue.
Lord Alton of Liverpool: Clause 19 deals with the composition of governing bodies, and, as the noble Baroness, Lady Sharp, has just said, Amendment No. 92 touches on the very important point of the build-up of bureaucracy and the build-up of requirements on teachers and governing bodies. When I was a young teacher, one of the joys of teaching was the fact that one was not encumbered with vast amounts of bureaucracy. My friends who have remained in the profession complain bitterly about the sheer volume of paperwork that is now inflicted on them. It seems to diminish their capacity to do their job properly as teachers.
Knowing that the Government are concerned to increase the number of people serving on governing bodies—and I entirely support them in that ambition—we should look at ways of trying to reduce the burdens placed on governors. In saying that, I should declare a non-pecuniary interest as a foundation governor of the Liverpool Bluecoat School. Moreover, like the Minister, I have also served on the governing bodies of maintained sector, voluntary aided and independent schools. In performing that role, I have found, just as I did as a local councillor, that the paperwork has exceeded anything that I was warned to expect. It could be a major disincentive in encouraging people to take part in school governance. People could be put off by the sheer scale of the paperwork that can arrive on their desks. I also think that much of that paperwork is repetitive and unnecessary.
Although it may not be necessary to include in the Bill a provision along the lines of the fairly dirigiste Amendment No. 92, we should all warmly support the spirit of the amendment. If the Government can give it a fair wind and say that they will look at ways of trying to reduce bureaucracy, everyone will be much happier.
Baroness Ashton of Upholland: I think that we all share the objective behind Amendment No. 92, to reduce the bureaucracy, paperwork and regulatory burdens placed upon our schools. I could not agree more with the comments of the noble Lord, Lord Alton, on that issue. Not today, but later we shall discuss governance issues and how to ensure we have a good system that enables us to recruit and retain our governors, who play such an important voluntary role
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in our schools. This objective is an important part of that, and I take nothing away from the noble Baroness, Lady Blatch, in moving the amendment.
I understand from parliamentary counsel that the effect of the amendment would be to reduce the level of regulation to nothing. Although I know that that is not what the noble Baroness is proposing, it is worth putting that on the record. We all recognise that there needs to be some regulation and bureaucracy within the system. It is also very important to ensure that we give schools the right kind of information. As a Minister, I tackle that issue every day. We are seeking a balance in ensuring that schools receive good information. I am particularly concerned with special educational needs. We have to ensure that we give schools the right type of information about the different types of special educational needs, for example, while not overburdening them with paperwork, as noble Lords have said.
The department is guarding against requiring schools to jump through bureaucratic hoops when there is no need to do so. Last year, we said that key measures in the Bill would be implemented according to best practice, including looking at their implications for those working in schools. We are doing that with the aim of lightening the load on our schools as far as possible. We have set out in the Government's regulatory reform action plan our programme to reduce the burden of regulations on the schools sector. Moreover, as noble Lords have said, we have significantly increased the number of support staff to help tackle the type of work that teachers can genuinely hand over to other people, leaving them free to teach. I know that the Committee agrees with that. On the basis that I support the spirit of the amendment even if I cannot accept it, I should be grateful if the noble Baroness would withdraw the amendment.
Baroness Blatch: I am grateful for that reply. Certainly, I should not want an onerous burden to be placed on the Government given that I argue that there should not be an onerous burden placed on local authorities or schools. It is important that the Government should indicate that the Secretary of State is conscious of the workload that is being imposed upon local authorities, governing bodies, head teachers and schools. I see now what the noble Baroness meant when she said that parliamentary counsel envisaged a situation where no measures of the kind we are discussing would exist. If every year one had to report a reduction on the previous year, eventually they would disappear altogether. That would be a heavenly situation for schools but I believe that even they would argue that they required some information from those on high.
However, I believe I can find a suitable form of words here. The very fact of a report being made to Parliament each year on the volume of information that had been disseminated in the school system would constitute a control on the Government's appetite for sending out circulars, regulations, codes of practice etcetera. Given that there has been some welcome of the intention behind the amendment, I shall take it

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away and try to find some way to beat parliamentary counsel at their own game with an acceptable form of words. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Davies of Oldham: I beg to move that the House do now resume.
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Moved accordingly, and, on Question, Motion agreed to.
House resumed.
House adjourned at twenty-two minutes before midnight.