Sitting of 21 February 2005

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

Palace of Westminster: Old Palace Yard
Lord Campbell-Savoursasked the Chairman of Committees:
Who authorised the construction of the new building at the north end of Old Palace Yard.
The Chairman of Committees (Lord Brabazon of Tara): My Lords, the joint review of security conducted by the Security Service and the Metropolitan Police recommended that the public search point be moved outside the Palace until the new reception and security building was constructed. The present temporary buildings are located in the only place suitable for this purpose. The recommendation was part of the security report which was agreed by the Joint Committee on Security and endorsed by the House Committee.
Lord Campbell-Savours: My Lords, we have conceded a lot and I presume that the negotiations with the Commons were very tough. What did we get in return from the Commons?
The Chairman of Committees: My Lords, as I have said, this is only a temporary facility until the new visitor and reception centre is complete. The planned date for opening the new centre is October 2006, at which time the Commons will accommodate the entire facility on their own territory. However, it is clear that there is nowhere else to put the temporary structure.
Baroness Gardner of Parkes: My Lords, is the Chairman of Committees aware that it is already difficult enough in the car park and that the structure represents a further loss of car parking space? What arrangements are being made to compensate for that loss, as well as to review the future car parking situation—we are being told that we may lose all parking facilities at the front of the building?
The Chairman of Committees: My Lords, car parking is a critical issue. The temporary buildings occupy only three car parking spaces. However, many spaces are available in the Abingdon Street car park, a review of which is currently taking place.
Lord Tomlinson: My Lords, is the Chairman of Committees aware that about only three years ago we spent a vast sum of money resurfacing the whole of that outside square because we had been advised that it is one
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of the great squares of Europe? How does the addition of these two monstrous buildings add to the appearance of that wonderful square?
The Chairman of Committees: In a word, my Lords, they do not add to the beauty of one of the "world squares"; neither, unfortunately, do the concrete blocks now in place nor the demonstration in Parliament Square. No doubt all such matters will he dealt with.
Lord Campbell-Savours: My Lords, who serves on the Joint Committee? Are any Peers members of it, and were any Peers actively consulted during the Recess?
The Chairman of Committees: My Lords, membership of the Joint Committee was recently made public for the first time, and I believe that four Peers serve on it.
Lord Richard: My Lords, I am sorry to pursue this a little further, but there is a slight problem. Many Members on these Benches are totally unclear about what consultations actually took place between the other place and this House. Did the proposals go to the committees of this House? Were they consulted, along with the usual channels? How did the consultation take place?
The Chairman of Committees: My Lords, the Joint Committee on Security is a Joint Committee of both Houses. I repeat that four Members of this House serve on it, along with a similar number of Members from the House of Commons. That committee initially approved the proposals recommended by the joint review of security. The recommendations of the joint review of security were endorsed by the House Committee of this House.
Lord Berkeley: My Lords, can the Chairman of Committees help the House a little further by naming the four Peers serving on the Joint Committee on Security, or is that secret?
The Chairman of Committees: My Lords, as I have said, who they are is public knowledge: they were set out in a Written Answer in Hansard. not very long ago. They are the Government Deputy Chief Whip, the Opposition Chief Whip, the Liberal Democrat Chief Whip and the noble Lord, Lord Peston.
Lord Swinfen: My Lords, given the world security situation today, is this Question not just a storm in a teacup?
The Chairman of Committees: My Lords, the Question is valid because these buildings have been put up in our car park. That seems to be the principal problem: they are occupying three car parking spaces, which are clearly at a premium.
Lord Stoddart of Swindon: My Lords, did the four Members of the House of Lords serving on the

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committee ask the House of Commons, as a reciprocal arrangement, for three places in its underground car park?
The Chairman of Committees: My Lords, I do not think they did, but I hope that the car parking situation will improve.
Viscount Simon: My Lords, is the temporary date of October 2006 going to be as temporary as that for the Tea Room at the other end of the Corridor, which has been on loan to the Commons since the 1920s?
The Chairman of Committees: My Lords, provided that the relevant committees give their approval to the design proposed for the new reception and security building to be located near the entrance to Westminster Hall, I am told that construction could start in around 11 months' time and should be completed by October of next year.

Overseas Students: Visa Fees
2.43 p.m.
Lord Sheldonasked Her Majesty's Government:
What estimate they have made of the revenue raised by charging overseas students for visas to Britain.
The Minister of State, Home Office (Baroness Scotland of Asthal): My Lords, the revenue raised through charging for visa fees for overseas students is on a cost recovery basis, not on profit. Visa fees are set at a level to ensure that the full cost of providing the world-wide entry clearance is met entirely from fee income and no part of the cost is met by the UK taxpayer. Revenue raised for the financial year 2002–03 was £6,548,580 and for 2003–04 it was £8,101,080.
Lord Sheldon: My Lords, I thank my noble friend for that reply. I understand that some of these charges can go up to £300, £400 and even £500. It is very difficult to see how these charges can be justified as they do not seem to be related to the 37 minutes which I understand is the average time taken to process these applications. Is it not very important to recognise that the people who come into this country to study are likely to become very important people in their own country when they return there, with enormous advantage to us? We should not he trying to make a profit but ensuring that the charges are reasonable in the circumstances.
Baroness Scotland of Asthal: My Lords, I agree with my noble friend about the importance of students coming here and the benefits to this country. I can reassure him that the costs of processing student leave-to-remain applications are based on approved Treasury cost recovery guidelines. This means taking the full cost of providing the leave to remain service
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and dividing it by the volume of applications to arrive at a fee per application. It does not mean calculating the cost of each activity associated with processing an individual application and extrapolating a unit cost from that.
Lord Howe of Aberavon: My Lords, I declare an interest as one of several Members of the House who are trustees of the Cambridge Commonwealth and Overseas Trusts. I am sure the Minister is aware of the overseas research scholarship schemes—recently extended, I am glad to say—financed by the Government, which are designed to compete head-to-head with other countries in attracting to our universities some the best students in the world. Is it not, to say the least, unwise to announce an increase of 100 per cent in the leave-to-remain charge for graduate students going on to postgraduate qualifications almost at the same time as the United States is announcing substantial relaxations in its visa requirements?
Baroness Scotland of Asthal: My Lords, I understand the noble and learned Lord's concern. Perhaps I may reassure him about the way in which visa applications will be dealt with. The whole of the time that a student will need to be here will be covered by the original visa given to the student and we hope that there will not be a need for further extensions in the way that the noble and learned Lord fears. We are committed to ensuring that international students are welcomed here, that they have a vibrant and proper time, and that they benefit hugely—as we will benefit—from their presence in this country.
Baroness Sharp of Guildford: My Lords, is the Minister aware that the costs of student visas in this country already compare unfavourably with the costs of student visas in other countries? What assessment have the Government made of the impact of these changes and their refusal to consider visa appeals, which was announced on 8 February, on the number of overseas students who might come to this country?
Baroness Scotland of Asthal: My Lords, I can reassure the noble Baroness that these issues have been considered very carefully, not least in regard to one issue in which this country may appear at first flush to be more expensive. The noble Baroness will know well that the effectiveness of the scheme overall gives incredibly good value for money. For instance, the length of most courses for a first-time degree is three years; in many other countries it is four or five years. So, overall, we have created a very good environment in which students are able to take advantage of the most excellent opportunities that they have right here in this country from our wonderful universities.
Lord Tomlinson: My Lords, will my noble friend undertake to examine the point that visas for overseas students ought to be made specific to an educational establishment? I recognise that students may want to change the place at which they undertake their studies

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but the visa ought to be institution specific in order that the institutions can themselves accept a responsibility for liaising with the Home Office when students who have come into this country supposedly to study do not turn up.
Baroness Scotland of Asthal: My Lords, I certainly undertake to take that matter hack, but I can assure my noble friend that a great deal of work is now being done with universities and establishments to ensure that we have a proper grip on these issues and that students who come here quite genuinely to study do that properly.
Lord Roberts of Conwy: My Lords, can the Minister confirm that the actual increase in charges is from £165 to £250 for a personal application and from £250 to £500 for a postal application? If the last figures now cover charges—and therefore mean no burden to the taxpayer—what happened previously and to what extent did the taxpayer subsidise these students?
Baroness Scotland of Asthal: My Lords, let me make it plain that in relation to the recovery costs, it is still not absolutely full cost recovery. As I have tried to make clear, the Government have accepted that there is a real benefit to this country in having foreign students come here and, as a result, we make a contribution of about £85 in that respect. On the other charges, an assessment was made in accordance with Treasury guidelines on what proper recovery should be made, and the figures were set at that level.
Lord Hannay of Chiswick: My Lords, can the Minister tell the House whether any inquiries into the likely effect were made before these increases were introduced and whether any information was sought from universities on their view of the impact on their student intake?
Baroness Scotland of Asthal: My Lords, I shall certainly write to the noble Lord. The student task force, which was set up last year, has successfully tackled a number of issues. We have been working very closely with the education sector to make sure that these matters are better and more properly understood. However, I shall write to the noble Lord about the details he seeks.

Network Rail and Train Operating Companies
2.50 p.m.
Lord Dubsasked Her Majesty's Government:
What steps they are taking to improve co-ordination between Network Rail and the train operating companies so that passengers are able to book tickets and reserve seats at a reasonable time before travelling.
Lord Davies of Oldham: My Lords. in 2004, the Office of Rail Regulation required Network Rail to
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commit to a staged recovery of compliance with the condition in its network licence requiring 12 weeks' advance notice of timetable changes for engineering works. The Office of Rail Regulation is closely monitoring the recovery process and has met individual train operators and convened industry meetings in order to promote co-operation between Network Rail and train operators.
Lord Dubs: My Lords, I am not sure what comment to make about that Answer. I did not understand a word of what my noble friend said—or, at least, in so far as I understood it, it belies reality. Is he aware that the result of an attempt to book tickets a few days ago on the West Coast Main Line was that the railway company said on the phone that it was not taking bookings; that the station refused to take bookings; and that it was possible to make a booking on the Internet, only to discover after the event that there were no reserved seats because it was not sure whether the train would run at the time stated? Is he aware that the result is that people who want to buy reasonably economic tickets are having to pay at the last minute the very highest prices and that people with disabilities can hardly make plans to travel at all? Is not this an absolute shambles?
Lord Davies of Oldham: My Lords, I am sorry that my noble friend did not understand the Answer; perhaps it was not as explicit as it might have been. The position is straightforward: we want Network Rail and its engineering works to hand over to train operating companies access to the rail 12 weeks in advance so that the companies can take bookings 12 weeks in advance. That was the custom in the past. It was ruined by the Hatfield disaster and we have been working since that time, through the renewal of the track and engineering works, to get back to the 12-week period. The good news is that we will be on target with the 12-week period in September of this year. The bad news, as my noble friend has accurately reflected, is that the period before Easter, which we hoped would be six weeks, is, for four operating companies, four weeks or less.
Lord Bradshaw: My Lords, I do not want to prolong this, but the problem exists before all public holidays in this country. People are not able to buy tickets in advance and cannot make plans to travel. Therefore, they are forced to travel by road. Will the noble Lord impress on the management of Network Rail—and I have no idea how that is done because the government structures are so obscure—that it must adhere to its target date and, what is more, that it must not occupy the railway on every public holiday, which is grossly wasteful of taxpayers' money and thoroughly upsets everyone's travelling arrangements?
Lord Davies of Oldham: My Lords, I agree with the sentiments expressed by the noble Lord, save one. The position is not obscure: the Office of Rail Regulation has told Network Rail, which has responsibility for engineering works on the track, that it is to meet the schedule of 12 weeks' compliance by September of this

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year. It sought to reach a compliance of six weeks for this Easter, and has failed in that respect. The Office of Rail Regulation called a meeting of the industry and brought in Network Rail last week to identify the latest state of affairs. I agree with the noble Lord that for people to plan their journeys intelligently those 12 weeks are required, and that is what we expect to achieve by September of this year.
Lord Faulkner of Worcester: My Lords, to follow up the point made by my noble friend Lord Dubs about the non-availability of the cheapest fares, is the Minister aware that First Great Western has been completely unable to offer any Apex tickets to any of its destinations at weekends for the past six or nine months? That has a particular bearing on the very large number of people who wish to travel to Cardiff for sporting events at the Millennium Stadium. I declare an interest, as its deputy chairman. The unavailability of those tickets is forcing people to pay twice as much for those journeys as they would otherwise have paid.
Lord Davies of Oldham: My Lords, my noble friend mentioned First Great Western, which is opening bookings for Good Friday this coming Friday—four weeks in advance—and for Easter Saturday to the following Friday on Tuesday 8 March, giving a two-week margin. It was called in with other train operators because the Office of Rail Regulation does not consider this to be remotely satisfactory. That is why it has been made quite clear to the industry that compliance must be achieved by September.
Baroness Golding: My Lords, is my noble friend aware that you can no longer buy tickets at railway stations on the West Coast Main Line to go on Eurostar and that you have to go to Waterloo to pick them up? Does he think that that is being done for the convenience of passengers?
Lord Davies of Oldham: My Lords, we have obviously had enormous strategic problems with the railways. The whole House will recognise that there are major reasons for that. However, I think that my noble friend will recognise that it is not in the interests of train operating companies to make the purchase of tickets difficult. Recently there has been great difficulty in booking tickets in advance and in making reservations, and that is to be deplored. The Office of Rail Regulation has made it absolutely clear that that is not to continue. The train operating companies are turning away good customers if they are not providing an adequate ticket reservation process, and it is in their interests eventually to do so.
Baroness Wall of New Barnet: My Lords, would my noble friend like to hear a different story? In the past two months I travelled to Manchester from London Euston and last week I went to Liverpool from London Euston. On both occasions, I booked on the
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Internet, reserved a ticket and paid less for a first-class ticket than I would have paid for what used to be called second class.
Lord Davies of Oldham: My Lords, I am always impressed by the richness of experience in your Lordships' House. At times, that can be quite helpful at the Dispatch Box.
Lord Campbell-Savours: My Lords, is there not an argument for bringing Virgin into the department and asking whether, in the light of immense public concern nationally, it can devise an interim system to enable people to buy cheap tickets?
Lord Davies of Oldham: My Lords, the whole purpose of the meeting at the Office of Rail Regulation last week was to make it clear that improvements were necessary. However, I sought to say in my original, somewhat obscure—although technically accurate—Answer that the biggest single problem for the train operating companies is access to the track in sufficient time. That difficulty relates to the whole issue of Network Rail and the maintenance and upkeep of the track.
Lord Stoddart of Swindon: My Lords, would not all these problems and many others be solved if we returned to a fully integrated railway system under public control? Was not that what the Labour Party promised before the general election of nineteen forty—
Noble Lords: Oh!
Lord Stoddart of Swindon: I meant 1997, my Lords—I go back a long way.
Lord Davies of Oldham: My Lords, I note the noble Lord's movement in his contribution from independent to old Labour. It was not unknown, under the former ownership of British Rail, for there to be difficulties with train timetables.

Housing
3 p.m.
Baroness Hanhamasked Her Majesty's Government:
In view of their house-building proposals in the south of England, what their rationale is for the demolition of houses in the north of England.
Lord Bassam of Brighton: My Lords, it is a fact that parts of the north and the Midlands are suffering from housing low demand and abandonment. New homes have been built in the north faster than the growth in the number of households. Attracting jobs and people to these places means offering homes that meet people's needs and aspirations. It is not sensible,

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realistic or value for money to extend the life of all existing housing through refurbishment. Some demolition must be part of the package.
Baroness Hanham: My Lords, I thank the Minister for that reply. Is he aware of the great concern that properties in the north of England are being demolished rather than conserved and restored, while parts of rural south-east England are being urbanised by large extensions of towns and cities? Does he not consider that both those factors may cause undesirable population drifts to the south from the north? If so, what can be done about it?
Lord Bassam of Brighton: My Lords, the Government of course have a national housing strategy. I do not entirely share the noble Baroness's view of the world. It is a fact that in some areas it is important to demolish properties. As it happens, up to March 2006 we are funding some 10,000 demolitions in the north, in the Pathfinder areas, compared with some 20,000 units that we are funding for refurbishment. So there is far more refurbishment being undertaken than demolition, but it has to be part of a balanced package.
Baroness Scott of Needham Market: My Lords, would the Minister agree that one of the reasons why it is not "value for money", as he puts it, to refurbish properties, is that it is government policy to charge VAT at the full rate on refurbishment while charging a zero rate for new buildings? Does he not agree that it is time the Government revisited that matter, given that in many parts of the country the problem is not a shortage of housing but the condition of existing housing?
Lord Bassam of Brighton: My Lords, I am obviously aware of the argument about VAT, but I do not believe that that is the major contributory factor to the fact that some houses have fallen so badly into disrepair through neglect and abandonment. There needs to be, in part, a demolition programme. I am sure that the noble Baroness would accept that there are homes that need to be demolished, due to their condition. But it is also important that the Government have a refurbishment and growth strategy.
Lord Hogg of Cumbernauld: My Lords, I must first declare an interest. In another place I had the great honour of representing the socialist triumph of Cumbernauld. Has my noble friend the Minister seen today's Times, which reports that the citizens of Cumbernauld, in response to a Channel 4 television programme, have demanded that the whole town be demolished? Would he accept from me that the 52,000 people who live in Cumbernauld are people of great good judgment, since they returned me to the House of Commons on no less than four successive occasions? Therefore, I cannot believe that they have made a proposal of this sort. Will he communicate quickly with the Scottish Executive to ensure that it resists any
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attempt to demolish the whole town of Cumbernauld, since demolishing houses forms no part of Labour Party policy?
Lord Bassam of Brighton: My Lords, given that the noble Lord did indeed represent Cumbernauld so well for so many years, it would be a travesty of socialism if Cumbernauld was ever to be demolished.
The Earl of Courtown: My Lords, has the Minister taken into account the pressure on landfill sites from all this demolition—of 10,000 houses, I believe he said—particularly with regard to contaminated waste?
Lord Bassam of Brighton: My Lords, we are talking about demolishing houses. I am not sure how contaminated the bricks and mortar might be that would go to landfill sites, but I know that in some of the demolition programmes undertaken nationally there is an element of recycling.
Lord Marlesford: My Lords, do the Government recognise a pretty fundamental fact—that if the beauty of England is to be handed on to future generations and safeguarded as it has been by successive governments, it will not be possible to provide all the houses in southern England that people might prefer to have? If houses are available in other parts of the country, market forces will ensure that people go where houses are available, and our countryside in the south, which is under new and serious threat, will be protected.
Lord Bassam of Brighton: My Lords, I believe that our Government have an enviable track record in conserving the countryside. After all, it was our Government who raised the threshold in increasing to 60 per cent the percentage of land for development that must be brownfield sites. Our Government also instituted a policy establishing two major national parks in the south. I believe that that is a fair statement of our intent with regard to conservation, care and concern about the countryside. I understand the noble Lord's point about ensuring that there is not excessive demand for space for housing in the south, but we have to have a balanced programme. That is exactly what this Government have.
Lord Stoddart of Swindon: My Lords, does the Minister agree that there is another element to the policy expressed by the noble Lord, Lord Marlesford? If people are to move to the north and other places, they need jobs. Does not that indicate that the Government really need to examine their industrial policy as well as their housing policy, so that employment is better distributed throughout the country? That used to be Labour Party policy at one time.
Lord Bassam of Brighton: My Lords, of course, the Government have a policy to ensure that all regions share in our prosperity. It is for that reason that we have actively supported the Northern Way proposals in that regard. We recognise the importance of

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bridging the economic gap between north and south, particularly, which that organisation's report has identified. That report also suggested that we needed to improve the rate of renewal of housing stock, particularly in the north.
Lord Avebury: My Lords, would it not kill two birds with one stone if the Office of Rail Regulation was relocated to the northern regions?
Lord Bassam of Brighton: My Lords, I am sure that that suggestion will be very carefully taken on board.
Lord Hunt of Kings Heath: My Lords, to what extent does my noble friend the Minister believe that the proposal of the Lyons review on the relocation of central government office jobs to the regions would have a positive impact on the readjustment of housing stock in this country?
Lord Bassam of Brighton: My Lords, without question, the Lyons review makes a very important contribution. I am confident that those proposals, when considered and responded to in detail, will provide some answers to some of the problems that we have discussed this afternoon.

Identity Cards Bill
3.8 p.m.
Brought from the Commons; read a first time, and ordered to be printed.

Business of the House: Standing Order 47
The Lord President of the Council (Baroness Amos): My Lords, I beg to move the first Motion standing in my name on the Order Paper.
Moved, That Standing Order 47 (No two stages of a Bill to be taken on one day) be dispensed with on Tuesday next, 22 February, to allow the Electoral Registration (Northern Ireland) Bill [HL] to be taken through its remaining stages that day.—(Baroness Amos.)
On Question, Motion agreed to.

Business of the House: Debate this Day
Baroness Amos: My Lords, I beg to move the second Motion standing in my name on the Order Paper.
Moved, That consideration of the report of the Select Committee on Economic Affairs on Monetary and Fiscal Policy: Present Successes and Future Problems, in Grand Committee today shall be limited to three hours.—(Baroness Amos.)
Lord Barnett: My Lords, may I ask my noble friend why it has been found necessary to time limit this important and indeed historic new debate in the Moses
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Room? Undoubtedly the time will be met, given the unfortunately small number of speakers, but why has it been time limited?
Baroness Amos: My Lords, noble Lords will be aware that Grand Committee cannot last for more than four hours.
On Question, Motion agreed to.

Commissioners for Revenue and Customs Bill
Lord Grocott: My Lords, I beg to move the Motion standing in the name of my noble and learned friend Lord Goldsmith on the Order Paper.
Moved, That it be an instruction to the Grand Committee to which the Commissioners for Revenue and Customs Bill has been committed that it considers the Bill in the following order:

Clauses 1 to 7,

Schedule 1,

Clauses 8 to 16,

Schedule 2,

Clauses 17 to 34,

Schedule 3,

Clauses 35 to 50,

Schedule 4,

Clauses 51 and 52,

Schedule 5,

Clauses 53 to 57.—(Lord Grocott.)

On Question, Motion agreed to.

Electoral Registration (Northern Ireland) Bill [H.L.]
3.9 p.m.
Baroness Amos: My Lords, I beg to move that this Bill be now read a second time.
Before I introduce the Bill, I should like to say a few words about my noble friend Lord Callaghan of Cardiff. On 14 February, my noble friend entered the record books as the longest lived former Prime Minister of the United Kingdom—a record held until then by the late first Earl of Stockton, Harold Macmillan.
My noble friend's career included a period as Home Secretary when he was responsible for Northern Ireland. It is difficult to imagine anyone in the future matching his achievement of having filled at various times the positions of Chancellor of the Exchequer, Home Secretary, Foreign Secretary and Prime Minister. I know that the whole House will wish to salute our longest lived former Prime Minister and to convey to him our warmest good wishes.
Lord Strathclyde: My Lords, I gladly follow the tribute that has just been paid by the noble Baroness the Leader of the House; it must be a quite exceptional tribute to a living Member of the House. The noble Lord, Lord Callaghan of Cardiff, carries great affection in this

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House. He has been much missed these recent months when he has been away from the House. It is worth recalling that he was Prime Minister at a difficult time, but his government were informed, as he was, by a profound love for their country, its history and the proud traditions of a Labour movement with which he always identified himself. Not only I but many of his old opponents behind me, and perhaps even all around me, will wish him well for a long future, many more birthdays, and thank him for the contribution that he has made to this House and to this country.
Lord McNally: My Lords, personally and on behalf of the Liberal Democrat Benches I associate myself with those good wishes. I hope that this is just a doff of the cap in the nineties on the way to a faultless century.
Lord Williamson of Horton: My Lords, I wish to associate the Cross-Bench Peers with these tributes to the noble Lord, Lord Callaghan, on this milestone in his life. It is clear that his contribution to the national life is very well known. I believe that all Peers, whether of a party or of none, share an appreciation of his work. The noble Lord embodies two special features of this House: high quality and longevity.
Baroness Amos: My Lords, the Electoral Registration (Northern Ireland) Bill has four main components.
First, it gives the Chief Electoral Officer for Northern Ireland the power to reregister former electors on to the Northern Ireland Electoral Register by 1 April 2005. Former electors are individuals who appeared on the register published on 1 September 2004, but failed to return the annual canvass from that year or failed to complete it accurately, and accordingly did not appear on the register published on 1 December 2004. Those electors will be put back on to the register to be published on 1 April 2005. This will be the register to be used for the Northern Ireland local elections in May.
The personal identifiers that the former electors gave when they originally registered will be kept when they are restored to the register. An elector's previous expressed preference on whether they wanted their name to be on the full or the edited version of the register will still he binding.
Secondly, the Bill ensures that those 83,000 electors who will be reregistered as a result of this Bill will be taken off the register if they do not reregister during this year's annual canvass in the autumn.
Thirdly, the Bill also gives the chief electoral officer power to carry forward names of electors who fail to complete the annual canvass form in 2005 on to the register published on 1 December 2005.
Finally, the chief electoral officer has been given the authority to apply the carry forward only following the annual canvass later this year. However, if necessary, the Secretary of State can extend the chief electoral officer's authority by way of affirmative order to cover the 2006 annual canvass as well. In response to concerns expressed by members of the opposition parties, we have agreed that the Secretary of State's power can be used only once.
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Let me now say something about the background and context of the Bill. In respect of Great Britain, the Representation of the People Act 1983 allows the name of an elector to remain on the register after a canvass until the registration officer makes a determination that he or she is not entitled to so remain ("the carry forward"). However, in Northern Ireland, names must be removed by the chief electoral officer if no form is submitted or if the form submitted does not include all the information required. This has the effect of preventing the carry forward of names from the register of electors from year to year in Northern Ireland: unless the chief electoral officer receives a properly completed form for each elector at the annual canvass, that person's name is removed from the register. This measure was introduced by the Electoral Fraud (Northern Ireland) Act 2002 as part of a package of anti-fraud measures.
While the measures introduced in 2002 have been successful in reducing fraud and increasing the accuracy of the register, an unfortunate side-effect has been a consistent fall in the numbers registered year on year. While it was expected that the measures would lead to a reduction in numbers, the continuous fall experienced now risks damaging the integrity of the register due to a lack of comprehensiveness. For example, in Great Britain around 93 per cent of eligible electors are registered whereas the comparable figure in Northern Ireland is about 85 per cent. I am sure that if only 85 per cent of the electorate in Great Britain were registered, all political parties would be pressing the Government to introduce measures to address the problem.
The main Northern Ireland parties have been lobbying Ministers hard to introduce measures to alleviate the falling numbers on the register. As a result we have decided to re-introduce the carry forward on a temporary basis until we can put in place new registration arrangements for Northern Ireland in the longer term that will help us attain a register that is both accurate and comprehensive.
Putting these additional 83,000 electors back on to the register will strengthen the democratic process in Northern Ireland, particularly with important local elections due in May. Strengthening democracy is at the heart of these measures.
I should like to stress that the introduction of these measures in no way diminishes the Government's commitment to fighting electoral fraud. Let me explain why.
The chief electoral officer has checked all the personal identifiers—that is, national insurance numbers and dates of birth—of electors, including the 83,000 individuals to be put back on to the register, against the central database held by the Department for Work and Pensions. Any individual whose identifiers do not match the central database has been, or will be, contacted to clarify the position. It may, of course, be that a simple error has been made, but if the information provided is false, that person will be taken off the register.
Individual registration will remain in place. This is fundamental to our anti-fraud measures. There will be no return to household registration. Photographic identification will continue. This has virtually eliminated attempted fraud in polling stations.

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The chief electoral officer will be giving special attention to any absent or proxy vote applications from any of the 83,000 individuals put back on the register. I hope that will reassure noble Lords that there will be no easing of the fight against fraud.
When we abolished the carry forward as part of our anti-fraud measures, it was a necessity because we had to start afresh in compiling a new register. Now that we are able to ascertain the identity of each elector, it is no longer necessary to prohibit the carry forward. Much of the abuse that took place was the result of household registration and electors having their identity stolen at polling stations. All we are doing is putting Northern Ireland back into line with the rest of the United Kingdom where every elector has the right to be carried forward for an additional 12 months.
I appreciate that there may be some concern that this Bill is being fast-tracked. Originally we had hoped that the measures would form part of a larger Bill that would have arisen if the political talks before Christmas had been successful. Unfortunately, that was not the case. We have no option now but to get the Bill through quickly because we want to ensure that the 83,000 electors are put back on to the register by 1 April, thereby allowing them to vote at the forthcoming local elections. I commend the Bill to the House.
Moved, That the Bill be now read a second time.—(Baroness Amos.)
3.19 p.m.
Lord Smith of Cliftonrose to move, as an amendment to the Motion that the Bill be now read a second time, at end to insert "but this House deplores the attempt in the Bill to weaken the application of the Electoral Fraud (Northern Ireland) Act 2002".
The noble Lord said: My Lords, I thank the Lord President of the Council for introducing the Bill and for attempting to explain the rationale for it. I regret that I found it somewhat unconvincing in certain respects.
My first and main point is that the Bill appears to dilute, if not overturn, the Electoral Fraud (Northern Ireland) Act, passed as recently as 2002. That Act, as the noble Baroness said, specifically aimed to reduce the amount of personation that has bedevilled political life in Northern Ireland since its inception. "Vote early, vote often" was a practice originally introduced by the Unionists. Later it was adopted and refined by the republicans. The 2002 Act was meant to make it more difficult to perpetrate that kind of fraud. Registration was toughened up by the requirement to produce a national insurance number, which we on the Liberal Democrat Benches and others vigorously promoted and which the Government later accepted. As expected, there was a reduction in the number of registrations on the electoral register. It would have been very surprising if that had not been the case.
Why, then, is it that within two years the Government are now proposing to neuter the provisions of the 2002 Act? The ostensible reason given is that the new register
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contains some 83,000 voters fewer than the previous year. Someone somewhere has concluded that this is too great a number.
The grounds for that assumption need to be probed fully. It is stated in the Explanatory Notes to the Bill that it is necessary because,
"the continuous fall experienced now risks damaging the integrity of the register due to a lack of comprehensiveness".
One does not have to be a semiologist to deconstruct the import of those words. They are simply rigmarole. How can there be a "continuous fall" after only two years? Also, it could be argued, and with much greater force, that the very reduction in registrations firmly establishes the integrity of the register.
The weakness of the reasoning is further to be seen in the wording of the Bill. It begins:
"A Bill to make provision about the registration of electors in Northern Ireland in cases where required information is not provided".
Again, Clause 1 (1)(c) states that where,
"the Chief Electoral Officer has no information which suggests that the former elector has ceased to be resident at that address or has otherwise ceased to satisfy the conditions for registration",
and so on. To put that in the negative on the face of the Bill is extraordinary. The point is that the chief electoral officer should know about such matters for certain. In Committee I shall move an amendment to that effect.
Out of a total of 83,000, what actuarially would be the prediction of the death rate over two years? Presumably, given natural attrition, to follow the terminology employed in the Bill, the death rate would have been "continuous". Similarly, what percentage of those 83,000 would be reckoned to have moved away from home? It should also he borne in mind that the Electoral Commission is undertaking a large-scale publicity campaign to remind people of the need to register. If that has little effect it will add to the suspicion that a large number of the 83,000 are phantoms.
The inclusion of those names which are not registered as required sets a bad precedent. People might well conclude that it does not matter if you do not register, as a Bill will conveniently be forthcoming to put you back on the register. Negating the 2002 Act and creating a bad precedent are a very poor basis for this Bill. I must also ask the noble Baroness—who has anticipated this question—why it is being rushed through now in the course of two days. Given the Written Statement last November by John Spellar, the junior Minister in the Northern Ireland Office, I cannot understand why the Bill was not introduced much earlier. Why is it being steamrollered now? The noble Baroness said that it was because the peace process has juddered to a halt. I accept that that may have caught people somewhat unawares. Nevertheless, steamrollering the Bill at this time, particularly in the light of the juddering to a halt of the peace process, is difficult to understand.
It would have been much more helpful to have been provided with some information about the new arrangements that the Government hope to propose for

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the registration of electors. We are being asked to take this matter on trust, without having been given even a hint regarding the nature of the new arrangements.
Finally, and importantly, I have to ask who wants this Bill so desperately to be passed? Personation flourishes the larger the electoral pool there is to manipulate—and that is even more the case if the register incorporates the dead and those who have moved away. This Bill gives quite the wrong signals. That would be the case at any time but particularly so at present. Public perception will be very sceptical. Clean elections are vital if democracy is to be sustained. I find it unbelievable, especially at this very critical time in Northern Ireland, that the Government are apparently hell-bent on promoting the Bill. I ask them to think again. I beg to move.
Moved, as an amendment to the Motion that the Bill be now read a second time, at end to insert "but this House deplores the attempt in the Bill to weaken the application of the Electoral Fraud (Northern Ireland) Act 2002").—(Lord Smith of Clifton.)
3.20 p.m.
Baroness Park of Monmouth: My Lords, I shall be very brief. I understand that the Bill before us is to enable the names of those who were on the Northern Ireland register in September 2004, but who were not so registered again in December, to be carried forward on to this year's register. Presumably, that includes those who opted for a postal vote. If so, that could well strengthen the hand of Sinn Fein, which was riding high in 2004, but must now be regarded as likely, in a growing number of cases, to be rejected in favour of the SDLP, if the voter feels that it is safe to do so.
Today's report of widespread poll fraud in this country in postal voting in local elections augurs ill for a truly free vote in Northern Ireland, and I wish to register my concern now that the Government seem to be more concerned about the fall in voter numbers than about the safety of the process. Will the new, stricter criteria for postal registration operate? Will last year's register he closely scrutinised in the light of this experience, so that there is no automatic transfer from 2004 to 2005 of tainted or false votes? I seem to remember that during a routine raid on IRA premises a year or two ago, sophisticated machinery for creating postal votes was discovered. This Sinn Fein/IRA expertise will not have gone away.
We are seeing, at long last, a perception among the nationalists that the IRA is no longer a force which purports to defend them from the state, including such legitimate organs of government as the police and the courts, but exists to operate and control the community through criminal gangs who are there to make money and retain power for the IRA—and to control the community to that end, rather than represent its interests.
I should be glad to be reassured that the recommendations of the Electoral Commission, published this month, for marked electoral registers to include a register of postal votes, will not hold risks for Northern Ireland, since the commission recommends
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that while access to marked registers should not be given to political parties, candidates and agents before polling day, they should be supplied for "electoral purposes" after the close of the poll, under the same terms and conditions as polling stations' marked registers. I was reassured to hear that those who wish can still exclude their names from publication. But I should like to be reassured by the Minister that that does not mean it will be possible for Sinn Fein/IRA to use the process for the next election.
We have at last reached the position in Northern Ireland, in the context of the McCartney murder and the widespread money laundering, at which people may be prepared to defy the IRA and vote for the SDLP, or indeed any other party, without fear of reprisals. I thank the Minister for the reassurance that she has given, but are we sure that none of the legislation, whether in this Bill or proposed future legislation, will put such people at risk? That would be tragic, just when people are testing the water to see whether they dare to make free choices. If there are cost implications in devising a procedure which provides necessary records but still protects the privacy of the individual voter, then they must be accepted.
As the fourth report of the monitoring commission rightly says:
"The leadership and rank and file of Sinn Fein need to make the choice between continued association with and support for IRA criminality and the path of an exclusively democratic political party".
We must be sure that, whatever measures we may take, those voters who wish to make such a choice through the election in due course can vote in the certainty that the law has been devised to protect them when they exercise their rights.
3.29 p.m.
Lord Patten: My Lords, I am glad to follow my noble friend Lady Park of Monmouth, if I may, as no one else has risen. She has shot a number of foxes that I would have wished to have a go at myself.
Over many years, I sat at the feet of the noble Lord. Lord Molyneaux of Killead, and, in a bipartisan spirit, the noble Lord, Lord Fitt, being given tutorials on electoral practices in the Province. I have learnt a lot from both noble Lords and from other noble Lords in the Chamber. I have three things to say about the rather alarming and possibly anti-democratic measure brought forward by the Lord President today.
First, as the noble Lord, Lord Smith of Clifton, has pointed out, it is hard to interpret the semiotics of the Explanatory Notes. The late Jacques Derrida himself would have found it difficult to disinter exactly what the phrase,
"the integrity of the register"
could mean. I am much more concerned about the integrity of the democratic process, not the integrity of the register. The Lord President will have to explain clearly to the House exactly what that phrase means. What is,
"the integrity of the register"?

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Secondly, in any one year, how many people in a group of 87,000 would one expect to have died? How many would one expect to have moved out of the Province—south of the border or to the United Kingdom, seeking to register their name on one or more occasions on this side of the water? That is a critical point. One cannot expect the House just to wish to roll forward more than 80,000 electors without having any indication of how many in any one cohort of 87,000 are living in the Province. I am sure that the officials who wrote the Explanatory Notes will have those facts at their fingertips to inform the noble Baroness the Lord President.
Thirdly, we are being compressed in 48 hours to do something that, I understand, has never been done before in either House at such a rate of knots—that is, to change the way in which people are allowed to be still committed to the electoral register even though they have not sought to place themselves on it. If we are to take the Bill seriously, we have to know what extra measures are in place to ensure that not the integrity of the register but the integrity of the democratic process is being protected and that this will not now be something that will be brought before your Lordships' House on an annual basis, endlessly rolling forward people who in many cases may be dead, moved out, or never existed in the first place.
I do not seek to damage the reputation of the noble Lord. Lord Smith of Clifton, among his fellow Liberal Democrats, but I found him very persuasive, and I am sure that my noble friend on the Front Bench will equally wish to press the Lord President on those points.
Baroness Farrington of Ribbleton: My Lords, it is normal courtesy in the House for people who wish to speak in the gap to give notice. It would be helpful if we had an indication in advance because then the subsequent speakers would know when to get up. I remind noble Lords that when the clock says three minutes, the four minutes for gap speeches are over.
3.34 p.m.
Lord Maginnis of Drumglass: My Lords, if I have infringed the protocols of the House I apologise to your Lordships. The Bill was drawn to our attention only on the day when the House went into recess and was brought to the House the very moment we returned from recess. I suggest that that is not untypical of the way in which Northern Ireland business is handled by this Government. I deeply resent it.
The reality is that not only is the Bill brought to the House in this way, but it is being concertina-ed, in so far as we have to go through the business in this short period plus whatever time is allocated tomorrow. That is not satisfactory. It is not the way in which we should tinker with such a Bill. When I was privileged to be first sent to your Lordships' House in 2001, the first substantive Bill that I participated in was the Electoral Fraud (Northern Ireland) Bill. It came here after due
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consideration by the Northern Ireland Select Committee under the chairmanship of the noble Lord. Lord Brooke of Sutton Mandeville. It was well considered and, although it came to the House even at that stage in a somewhat dishevelled state, it left as a very tidy Bill. It did what we had been hankering after in conducting the electoral process for the previous 30 years.
Now we get a Bill that corrupts what we achieved in 2002. I use the term "corrupts" advisedly because, sadly, corruption in Northern Ireland is not just about brown envelopes and money. It is about the way in which those who are paid huge salaries fail to carry out their duties as they should. They fail the people of Northern Ireland. I believe that that is what is happening now.
Why are there 83,000 people who have failed to register? The noble Lord, Lord Patten, said that people might have died or left Northern Ireland to come to Great Britain—not to the United Kingdom—and in so doing they reduced the number on the register.
There is another reason and a much more salient point to be made. There are people in Northern Ireland who are simply fed up with the failure of the electoral process. They do not want to be part of it. and they do not want to register. The reason why they do not want to register is simple: they know that, if they do and are not prepared to vote, there are those who will find a way of corrupting the system and voting on their behalf. Sinn Fein/IRA has not for the past almost 40 years wasted its time in streamlining methodology to beat the electoral system. As your Lordships know, you only have to beat the electoral system once—you can try and fail; you can try again and fail; you can try and fail the third time, but once you have succeeded there is no difficulty in being re-elected.
The Bill should not in its present form have been introduced to the House. I am opposed to it. It is unamendable. The best that I can do is to say that I strongly support the Liberal Democrat amendment; it is worth voting for. If time was given to the Bill I would not have to extend what I have to say, but let me finish with one final point—
Lord Glentoran: My Lords, I know that I speak from the Opposition Benches, but the rules of the House must be obeyed. I am looking at the Government Whip and the Leader of the House. Four minutes is the gap maximum, and we are already into six.
Baroness Farrington of Ribbleton: My Lords. I thank the noble Lord, Lord Glentoran, for his support. I tried to indicate to noble Lords the time available.
3.39 p.m.
Lord Shutt of Greetland: My Lords, I too thank the noble Baroness for explaining the requirements of the Bill. However, like previous speakers, I was here when we dealt with the Electoral Fraud (Northern Ireland) Act 2002. The object of that exercise was to clean up the electoral register. It seems to me that the object of this Bill is to make the register less clean. That cannot be right.

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Paragraph 18 of the Explanatory Notes presented with the Bill refers to,
"the name of an elector who was registered in the previous version of that register even though the CEO"—
chief electoral officer—
"cannot be sure—because of the elector's failure to submit the canvass form, or to include on that form all the personal identifiers—that the elector is still resident at the same address".
We are legislating for an uncertainty and that cannot be right.
I served for 25 years as a local councillor. One of my last experiences in that role was when someone telephoned me to complain that she was not on the electoral register. My first response was to ask, "Were you not able to vote as a result?". She said, "I do not do that". I therefore asked why she was ringing me about the matter. She said, "It is about credit. I cannot get credit because my name is not on the register". It may be that there are people in Northern Ireland who want credit; the register is used for purposes other than elections. It is indeed a strange affair that so many have not sought to be on the register. The indication is that 80,000 or so people are missing from it.
I do not know about the rest of your Lordships, but I have heard that there could be an election for another place on 5 May. We know that there will be elections for local government in England on 5 May. I understand that there is an election on 18 May for local government in Northern Ireland. However, I also understand that there is an idea of having that election on the same day, so that the local government elections are on the same day in England and Northern Ireland. It may of course be helpful for other purposes. But that is what I have been told may take place.
That is concentrating a lot of minds. There are those who, because of the local elections, know absolutely for certain that they will be facing elections on 5 May. There are those in Northern Ireland who may also think that that will be the case for them. As I understand it, residents of Northern Ireland who are not on the register—and who woke up today and said, "Good heavens! I am not on the register"—had 18 days, until 10 March, to contact the returning officer. If everything then proves correct, their names will go on the register as from 1 April.
The mechanics of elections have changed. We have the new idea of a rolling register and the register is far more up to date than it has ever been before. As a youth, I had to wait nearly two years to get the vote. The situation has gradually changed so that people are now put on the register straight away. The rolling register has enabled those who move house to be put on the register straight away.
This Bill is about making the register less clean. I think that there is another way in which these things could be organised. We know that nomination day for the local government elections in England is 11 April. It seems that we are already in the middle of an election campaign. If we have not reached that point by then, there is no doubt but that. by 11 April, electioneering will be well and truly in the ether. The same should be true in local government in any event. If the date of 10 March
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were moved on one month to 11 April, it would give everyone who legitimately should be on the register an extra month to get on it. There would still be adequate time to ensure that the register was valid for any elections on 5 May.
It may be thought, "You are compressing all this and it is all very difficult for returning officers". It will be difficult, but returning officers are used to busy periods and to taking on extra staff and so forth. Interestingly, one could wait as late as 26 April to get a postal vote, with all the administration that that entails. Establishing 11 April as the registration date would still allow registration officers another fortnight to clean up and publish their registers. We would then be able to use the existing legislation and amend the Bill to allow another month for those who, for whatever reason, believe that they have been missed off the register to be put on it.
I feel that there is another way forward and that we do not need a Bill that will make the electoral register less clean.
3.46 p.m.
Lord Glentoran: My Lords. I am grateful to the noble Baroness the Lord President for explaining the Bill. I also pay my compliments to the noble Lord, Lord Callaghan. The day I came into your Lordships' House for the first time to take the oath, I was sitting where the noble Viscount, Lord Slim, is, rather nervous and shaking, and Jim was sitting on the Privy Council Bench. In three minutes flat, he had me feeling very comfortable and relaxed. He told me about making his maiden speech from next door to where my noble friend Lady Park is sitting. It is a great day for him.
I return to the Bill. Parliament is being asked to pass the Bill, as has been pointed out several times by noble Lords, in a lot of haste. Indeed, it is completing its passage in this House tomorrow, and it is going to the other place and completing there on Thursday. However, the Government tell us that that is dictated by the proximity of the local government elections, on which the noble Lord, Lord Shutt, spoke at length just now. Some of us are a bit cynical about it. It is intriguing that the elections have been moved from 3 May to 5 May—the same day as the local government elections in England and Wales. Perhaps that act might give us a clue to other possibilities that the Prime Minister has in mind for that day. I wonder.
The problem identified by the noble Baroness is straightforward. In 2002, Parliament passed the Electoral Fraud (Northern Ireland) Act. For the first time anywhere in the United Kingdom, it required individual as opposed to household registration on an annual basis. Thanks to Conservative pressure, supported strongly by my friends the Liberal Democrats, the final legislation also ensured that each individual elector's national insurance number had to be included on the registration form.
In our view, that Act was necessary and remains valid. There was, and is, a clear need to tackle electoral fraud in Northern Ireland. It is a practice that goes back

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decades, with traditions of "impersonation" and the well known election cry, "Vote early, vote often". Various reports—including the Northern Ireland Select Committee report in 1998 and the Government's White Paper Combating Electoral Fraud in Northern Ireland—have highlighted the problem. We rehearsed all of the arguments during passage of the Act in 2002. Without going over them all again, we remain in no doubt that action was needed to tackle the problem.
The electoral fraud Act had an immediate impact—an immediate reduction in the size of the register of about 10 per cent, or some 120,000 potential voters. That was almost certainly a more accurate register than before, and according to the Electoral Commission it probably had a positive impact and increased confidence in the integrity of the electoral process in Northern Ireland. The commission's report on the operation of the Act in its first year noted that a survey had found that 72 per cent of a representative sample of the Northern Ireland electorate believed that the new system should reduce electoral fraud.
Moreover, the evidence suggests that it has been effective in stamping out electoral fraud in Northern Ireland. As the Northern Ireland Select Committee put it in its report on electoral registration in Northern Ireland published in December 2004:
"On the basis of all the evidence currently available to us, we are satisfied that the Electoral Fraud (Northern Ireland) Act 2002 has been successful in reducing both the perception among the electorate of the prevalence of fraud and the actual level of electoral fraud, so far as it can be measured. The measures introduced in the act have served to increase the level of public confidence in the integrity of the electoral process".
That is from paragraph 10 of the report Electoral Registration in Northern Ireland, HC 131, published on 15 December 2004.
Since 2002, however—where we are today—the fall in the number of registered voters has continued. The latest register, published on 1 December 2004, showed a drop of 2.6 per cent on the September register. In total, the register has dropped by almost 150,000 people since anti-fraud measures were introduced two years ago and stands at just 83.9 per cent of eligible voters. There is also a particular problem among younger voters, with less than 25 per cent of 17 and 18 year-olds registered. It was precisely the fear that, as a result of the new arrangements, the decline might become permanent that led PricewaterhouseCoopers to conclude, in research it carried out for the Electoral Commission:
"Unless the downward trend in the number of registered electors is rectified, it has the potential of embedding itself structurally in the registration process".
I am sure we all agree that that would be a small disaster. Added to that is the problem of declining voter turnout. At the European elections, turnout was down to 51 per cent, from 63 per cent at the 2003 Assembly elections.
We accept, therefore, that there is a genuine problem that needs addressing. Much of the blame for the decline in registration has been placed on the requirement in the 2002 Act for voters to re-register on an annual basis,
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coupled with the abolition of the ability to allow names to be carried forward for one year in circumstances where people had failed to register. That was the view of the Electoral Commission in its report of December 2003:
"The removal of the 'carry forward' appears to be the one factor that had the most significant impact on the number of people on the register".
The Bill before your Lordships' House today seeks to address that problem by enabling the chief electoral officer to put back on to the register the 80,000 or so people who were properly registered in 2004 but who failed to register at last autumn's annual canvass. I have some sympathy with the noble Lord, Lord Maginnis of Drumglass, about the loss of interest, but it is still a problem we need to address.
In addition, the chief electoral officer is given the power to carry forward names of electors who fail to complete the annual canvass form in 2005 on to the register published on 1 December 2005. As provision for a one-year carry-over exists in Great Britain, it can be argued that the Bill simply brings Northern Ireland into line with the rest of the United Kingdom—not something we on these Benches oppose—while retaining the additional safeguards in the 2002 Act that are vital to tackling voter fraud. In respect of those safeguards, we believe that the rest of the United Kingdom should be brought into line with Northern Ireland—for a change, we are going that way.
There are, however, aspects of the Bill that require clarification. Clause 3(2) enables the Secretary of State, by order, to extend Clauses 2 to 4 on one occasion for a further period of up to 12 months. Will such an order be subject to an affirmative resolution of both Houses of Parliament, rather than a negative one? Before the power is used, would it not be preferable for it to follow a report and specific recommendation from the chief electoral officer, rather than simply being exercised by the Secretary of State acting on his own?
In his evidence to the Northern Ireland Select Committee, an Electoral Commission commissioner, Mr Karamjit Singh, said:
"If you simply reintroduce the carry forward facility for a new system of individual registration there is a concern we would have that this might actually muddy the waters and actually perhaps lead to needless duplication".
That is from HC 822-i, dated 7 July 2004, at Question 29. Is the noble Baroness satisfied that the Bill will not result in any such muddying of the waters and that the there will be no needless duplication? Giving the chief electoral officer the power to carry over the register for a year is fine for those who are still living at the same address as when they previously registered. Large numbers of people, however, might have moved house. That is particularly the case among students and younger people who, as I said earlier, are already alarmingly underrepresented on the register. What action is being taken by the chief electoral officer to track those people, so that they are not lost from the register altogether?

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I would be grateful for clarification on those matters. Notwithstanding that, we will support the Second Reading of the Bill in your Lordships' House today.
3.55 p.m.
Baroness Amos: My Lords, I thank noble Lords who have spoken. I can perhaps deal with some of the wider issues raised at the outset. I repeat what I said in my opening remarks: there has been pressure from the Northern Ireland political parties, who have expressed concern at the alarming number of people who have fallen out of the register. All noble Lords acknowledge that there was an issue of fraud, but having worked so hard to achieve the integrity of the system, we would not now want to put in place anything that undermined it. I am absolutely confident about the integrity of the process and of the register. I will come back to that.
I was somewhat surprised by the comments of the noble Lord, Lord Maginnis of Drumglass. In the debate held, in government time, on Northern Ireland—the noble Lord, Lord Glentoran had alerted me to the need for such a debate in this House—I gave notice of the fact that this legislation would becoming. The House rose on 10 February, so there was adequate time for Members of the House who wished to speak in this debate to put their name forward. I was also surprised by the noble Lord's comments about the way in which Northern Ireland business is conducted in this House. I recognise the frustration that there is no devolved administration in Northern Ireland and the fact that we are dealing with so much business. However, there has been ample time for informal and formal discussion of Northern Ireland business, including in Grand Committee. I have always made it absolutely clear that I and other members of the Government are available for discussions on Northern Ireland because we understand the importance and sensitivity of the issue. We also recognise the difficulties with direct rule.
I now turn to the specific comments that were made. The noble Lord, Lord Smith of Clifton, raised the issue of the 83,000 people and who they comprised. There are no dead people included in that figure. The fraud measures that were put in place remain in place. Of course, the Electoral Office is given notice of the register of births, marriages and deaths. It is notified weekly, and the chief executive deletes names from the register weekly. So the register does not include anyone who has died. Young people can register as attainers once they have reached the age of 16.
Other concerns were raised about the Electoral Commission. The Electoral Commission supports the Bill, and the commission has no problem with bringing Northern Ireland into line with the rest of the United Kingdom. Again in reply to the noble Lord, Lord Smith, I say that all of the 83,000 have provided personal identifiers, so there are no phantoms and we are currently consulting the Northern Ireland political parties on options for new registration arrangements.
The noble Baroness, Lady Park, was particularly concerned about the safety and integrity of the process. The anti-fraud measures that have been put in
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place with respect to personal identifiers, individual registration and photographic identification will all continue, so the register has been cleaned up. The antifraud measures put in place have worked, which is why we feel confident that we can now have carry-over.
The noble Lord, Lord Patten, fundamentally misunderstood the nature of what we are trying to do. A process was put in place to move away from household to individual registration in Northern Ireland. Individuals were then required to re-register annually. After two years, it became clear that there was a problem. The anti-fraud measures having worked, the register having being cleaned up, we now feel confident to enable carry-over as we have in Great Britain, but for a one-year period, so that people understand what they need to do and to give us a breathing space to talk to the parties and think about the longer-term process.
The noble Lord, Lord Maginnis, was concerned that we were corrupting what had been achieved. I cannot agree, and I think that I have answered that point. The noble Lord, Lord Shutt, was also concerned that we would make the register less clean. Again, I cannot accept that, on the basis of the anti-fraud measures that will remain in place. I take the point made by the noble Lord, Lord Glentoran, who suggested that we should extend those measures to Great Britain. The register has been cleaned up, and we intend that it should stay clean.
The noble Lord, Lord Glentoran, asked me several questions. I confirm, as I think I did in my opening remarks, that the carry-over for the Secretary of State will be by way of an affirmative Motion. The Secretary of State will of course consult the chief electoral officer about whether he should use that power. The chief electoral officer has cross-checked for any duplication. As far as we are concerned, it will not muddy the waters. The chief electoral officer tried to contact all those who did not re-register last autumn. I think that that addresses the specific questions raised by the noble Lord, Lord Glentoran, and other noble Lords.
I finish by reiterating what lies behind the Bill. It is a temporary measure until arrangements are put in place for electoral registration in Northern Ireland that will lead to a registration system that is accurate and comprehensive. The legislation needs to be passed through Parliament quickly so that we can ensure that the 83,000 individuals who did not re-register last year are put back on the register to be published on 1 April. The noble Lord, Lord Shutt, asked me a specific question about that. I understand that it must be by 1 April because it must be in the month by which people must put their name down as prospective candidates. Perhaps I could drop the noble Lord a note about that.
Finally, we hope that the Bill will help to alleviate the increasing problem of falling numbers on the electoral register in Northern Ireland. As the noble Lord, Lord Glentoran, said, it brings the Province into line with the rest of the United Kingdom, but it does so without in any way compromising the successful measures introduced by the Government to combat

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electoral fraud in Northern Ireland. On that basis, I hope that noble Lords will feel able to give the Bill a Second Reading.
4.5 p.m.
Lord Smith of Clifton: My Lords, I thank the noble Baroness the Lord President of the Council for collaborating on some of the issues of concern to your Lordships. There is some unease about aspects of the Bill, and it was important that we had the principles behind the Bill fully rehearsed, especially at this time. En passant and incidentally, the Bill does nothing to address the problem of young people missing from the register. However, having heard what the noble Baroness the Lord President and other noble Lords said, we need now to look more closely and in detail at the Bill to try to improve it tomorrow. That we will do robustly. In view of that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Education Bill [H.L.]
4.7 p.m.
Report received.
Schedule 1 [Her Majesty's Chief Inspector of Schools in England]:
Baroness Andrewsmoved Amendment No. 1:
Page 67, line 5, leave out from "may" to "appoint" in line 6.
The noble Baroness said: My Lords, I rise to move this amendment to Schedule 1 in the name of my noble friend Lord Filkin. These amendments are technical. They result from changes to government accounting rules and practice. Similar amendments have been tabled to Schedule 13. The amendments remove the express statutory requirement for the Minister for the Civil Service —that is to say, the Prime Minister—to approve the number and conditions of Ofsted staff, the terms under which additional inspectors may be engaged and the remuneration and pension and other payments to the chief inspector.
Schedule 1 re-enacts Schedule 1 to the School Inspections Act 1996. Since then, practice has changed and the matters mentioned in the paragraphs to be amended are covered by government accounting rules. There is therefore no more need for that statutory requirement for the approval of the Minister for the Civil Service. I beg to move.
On Question, amendment agreed to.
Baroness Perry of Southwarkmoved Amendment No. 2:
Page 67, line 14, at end insert "and a list of such additional inspectors shall be published annually"
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The noble Baroness said: I shall speak also to Amendments Nos. 5 and 7. I start by thanking the Minister and her Majesty's Chief Inspector of Schools for their care in trying to meet our concerns about the Bill and their willingness to give time to discuss them with us. I also thank the Minister for having tabled Amendment No. 3 to meet some of our concerns, which is a great step forward. However, Amendment No. 3 simply does not go far enough to meet the requirements that I believe are necessary for really superb quality of inspectors and inspection.
Without trying to make a Second Reading speech, it is important to remind ourselves that the powers of inspectors are quite formidable. They have the power to raise the standards of schools and to reassure parents and the general public that the standard of teaching and of provision in the schools are what we would wish for our children. They also have the power to produce an adverse report, which sends a school into special measures and which is an enormously damaging experience for the school, for the teachers within it and, of course, for the pupils. Therefore, the quality of those inspectors and the quality of the inspection they provide have to be such that the public, the parents and the children themselves—those old enough to worry about it—can have total confidence.
The three amendments that I am speaking to attempt to do three quite separate but related things. First, they ensure that the list of those who are given permission to inspect, who are engaged by the contractors as additional inspectors and who will be inspecting in our schools—as the Bill stands, perhaps on their own from the very first day—will be a public list. The schools and teachers will know who these additional inspectors are and that they have been through the proper procedure for appointment. It is only fair that a secret list should not exist in a way that allows people to be dropped off the list without any recognition that something quite fundamental has happened to them, and that would be ensured by a public list.
Secondly, Amendment No. 5 requires that:
"Every additional inspector must satisfy the Chief Inspector that they have the necessary skills, expertise and experience, to perform their functions in a manner which enhances the reputation of his office"—
in other words, which enhances the reputation of inspection.
The amendment does not call for any specific time. It simply says that the additional inspectors, before they acquire the powers of the chief inspector himself in inspecting schools, must satisfy the chief inspector that they have not only the expertise and experience but also the necessary skill. This could be through HMI or in any way that was designed. That skill includes skills with people, the skills of people interaction, because the way in which an inspection is conducted is as important as the formal processes through which it goes. In other words, the confidence of staff, of the parents and of the head must be in the courtesy, thoroughness, honesty and impartiality with which the inspector approaches their job.

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Amendment No. 3, which the Government are offering and which we will be debating in a few minutes, does not provide for that. It provides for a list of desirable qualifications, experience and standards, all of which are wholly good and we are delighted to see, but it is still nevertheless ticks in boxes. It is not the same thing.
One distinguished Member of this House once told me the story of how he had been appointed to the company of which he became chief executive. When he was interviewed for the appointment, he was sent out of the interview for a time. After a long interval, a senior member of the interview panel came out and said, "Look, we are sitting here with a whole set of boxes that we have to tick before we can appoint you. You have not a single tick, but nevertheless we think you are appointable. We are going to give you a year's appointment, on probation." As I said, that person ended up, some years later, as a hugely successful chief executive of the company. So, ticks in boxes do not always provide the whole story, either for good or for ill.
4.15 p.m.
I and those who support me in this amendment are trying to say that we want more than a list which somebody goes through before they appoint. We want a way in which the HMI and, through it, the chief inspector can be assured that the personality and approach of additional inspectors will ensure success in the way that they approach their job along with their specific experience and expertise.
Amendment No. 7 offers a way in which this might be done. It suggests "a period of induction" by HMI through at least three inspections. I have to say that on the word processor my fingers hesitated over "three", remembering that HMI in former days used to have six months' mentoring. Inspectors were not allowed to go into a school on their own, without a mentor present, until they had passed through six months of such induction, mentoring and training. Three inspections seems a very modest requirement as a substitute for that six-month period with a full-time mentor. However, given all that we have been told by the Government of the need to get these assistant inspectors cracking as fast as possible—of course allowing that the requirement of three inspections with HMI will cover many of the existing registered inspectors who will become additional inspectors—I hope very much that the Government will feel that they can accept this amendment. It would be an enormous step forward in ensuring the real quality of the people who are performing inspections. I beg to move.
Baroness Sharp of Guildford: My Lords, my name is down among those supporting this amendment. I too would like to pay tribute to the Government for meeting with most of us to discuss these issues. In a sense, there has been a meeting of minds already.
In Committee we argued in favour of retaining the register, because we were concerned about accountability and quality control. In her response, the Minister stressed that the Government were no less concerned about quality. Indeed, the new system, with a
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greater role played by HMI, was aimed at improving the quality performance and accountability of the inspectorate. I would just like to remind the House of a number of quotes from the Minister's speech in Committee.
"Every additional inspector, HMI or not, and regardless of skill, competence or experience, will have to undergo the same training to implement the new system as HMIs".
She went on:
"There will be no entry test for additional inspectors but there will be a clearer, tighter framework for continuouos professional monitoring".
The register will be replaced
"by the chief inspector who will authorise inspectors who are fit to practise and remove that right if necessary".
So, the chief inspector is to authorise new inspectors. She said that:
"Contractors will [still] have a vital part to play. They will have to recruit inspectors and demonstrate that those recruits meet the criteria defined by Ofsted, matching competencies of HMI. HMI will monitor the process and ensure that they are consistently of high quality".—[Official Report, 11/1/05; cols. GC 153–55.]
Many of the additional inspectors will be employed by contractors and, if dropped, will be able to call on the full range of employment rights. She also mentioned that the Ofsted appeals tribunal had been costly to operate, quoting a figure of up to £100,000 for an individual case.
In the light of these reassurances that we were given in Committee and the subsequent debate, we have changed the emphasis of our demands. We are no longer looking for a formal register of inspectors. We are looking for openness. We now want the list of those named as additional inspectors to be in the open, to be published on a website or annually in the report of the chief inspector. We do not mind which, but we want something like that, so that people know who are the accepted additional inspectors that meet the qualifications required. Their names should be in the public domain. That is the essence of Amendment No. 2.
As the noble Baroness, Lady Perry, mentioned, we also seek a minimum requirement of qualifications and experience of those accepted as additional inspectors. To some extent, the Government have already met us in that regard but we would go further, particularly with the requirement that such inspectors have had experience working with an HMI before being put in charge of an inspection. That is the subject of Amendments Nos. 5 and 7, as well as Amendment No. 11, which is treated separately as it relates to Wales. We have heeded the Government's view about the disproportionate cost of tribunals. Given, as they argued, the likely employment status of additional inspectors and their rights under employment legislation, we have conceded that no formal appeals mechanism is necessary.
Her Majesty's Chief Inspector may take a view about who is fit to practise, and he does not have to defend that decision through protracted appeal procedures. We recognise that, in Amendment No. 3, the Government have come some of the way to meet us, but their amendments do not require the chief inspector to publish the list of additional inspectors, nor do they quite meet

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our objectives, particularly regarding the qualifications and experience of such inspectors. I have attached my name to the amendments tabled by the noble Baroness, Lady Perry, because they go a little further and would achieve precisely what we seek.
We are delighted that the Government have recognised the need for reassurance on quality control, but in some senses we feel that we have only a half loaf rather than a whole one. I hope that they can come that little bit further.
Lord Sutherland of Houndwood: My Lords, I support the three amendments, to which my name is attached, and pay tribute to the willingness of the Government and the chief inspector to be available for discussion before this debate. Things have moved on, as the character of the amendments suggests. None the less it is important that the amendments were tabled, because ultimately all three relate to the quality of inspectors. I have no doubt that a significant part of the progress that we have seen in schools has been due to the work of inspectors and the inspection system over the past 12 years. The concern of all noble Lords whose names are attached to the amendments is that a diminution of the quality and the perceived quality of the inspectorate could in the medium term adversely affect standards in schools.
Two or three aspects that have not been stressed also provide a reason to support the amendments. First, it is important to know not simply what the inspectors are—that is to say, their backgrounds and the qualities that they are supposed to have, in which respect Amendment No. 3 helps—but who they are. It is important to know who they are in a public domain, so that any questions would be raised in a public manner, which would give a due sense of responsibility to the work of the inspectors and those who might question their ability.
Secondly, it is important that before any inspections take place the chief inspector is assured of the quality of those who will go into schools. That is the reason for Amendment No. 5. The chief inspector must be assured that inspectors have the required skills, not as a result perhaps of their inspecting well or ill, but in advance of inspection, having ensured equally that training has been provided. That the chief inspector knows that in advance is critical for the children in the classroom. No one should enter schools without having already reached some band or passed some barrier on the basis of the abilities that they have and are seen to have.
I stress the quality of the inspectors, the fact that the list must be public, and that the chief inspector should know the inspectors' qualities and abilities before they go into schools.
Lord Hanningfield: My Lords, I support the amendments. I associate myself fully with the comments of my noble friend Lady Perry of Southwark, and agree with those made by the noble Baroness, Lady Sharp, and the noble Lord, Lord Sutherland.
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The Bill would remove the requirement of a chief inspector to maintain a register of approved inspectors, an issue that we have debated several times during the passage of the Bill. I join other noble Lords in thanking the Minister and his colleagues for their discussions and involvement in the issue, but I am afraid that, despite his best efforts, we remain highly sceptical that abandoning the current system of registered inspectors would significantly improve the inspection regime. We are not convinced that the amendments, for which we thank the Government, go far enough. As the noble Baroness, Lady Sharp, said, we have only half the loaf.
A serious concern is that such a change will have an impact on the quality of inspectors and their inspections. The Bill would allow the chief inspector to appoint or,
"arrange for such persons as he thinks fit"
as "additional inspectors". There is nothing in the Bill to ensure the accountability of inspectors or their suitability for the role. The previous system provided for the removal from the register of any person no longer fit to be an inspector. Without such a qualifying hurdle and register of inspectors, how does the Minister anticipate removing substandard inspectors?
I thank the Minister for listening to our discussions and concerns. However, we do not feel that the government amendments either address our specific worries or go far enough. Part of the problem is that the Bill still leaves open to doubt whether the necessary safeguards are in place to ensure that the inspectors are adequately skilled and trained to carry out those responsibilities. The creation of a benchmark is all well and good but given the importance of the matter it is imperative that each inspector's skills, experience and expertise are assessed. It would be perfectly possible for potential inspectors to possess the requisite paper qualifications yet be entirely unsuited to the role expected of them. We also believe that introducing a trial period is a sensible and rational measure that would allow both sides breathing space. It is important that a list of inspectors is published. That would add to the system's transparency and openness.
I have tried to highlight our concerns about scrapping the registered inspection regime. I welcome the fact that the Government have listened to a number of our concerns but I am sorry to say that the amendments tabled by the Minister do not go far enough. That is why I have attached my name to the amendments tabled by my noble friend Lady Perry.
The Lord Bishop of Portsmouth: My Lords, throughout the debates I have been watching this football match from the touch line. I notice that there has been, not exactly a goal on either side, but some convergence, if I might move to a slightly different image. At this stage it is perhaps incumbent on the Government to explain why they would resist the amendment, as it seems to make a great deal of sense.
The Earl of Listowel: My Lords, I wish to press the Minister on the inspection of early-years provision. As he will be aware, many providers in this area are

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concerned about the quality of the education and the poverty of many staff working in those environments. Unlike mainstream schools, where highly qualified teachers are readily available, in these environments, where children are still developing and so malleable, there is often a need for the boost of a good-quality inspection that a well qualified inspector can provide.
The Birth to three matters guidance that the Government produced provided excellent assistance in this area, particularly in advising provision of key workers. That is very welcome but I understand that the implementation of the concept has been very patchy. It is difficult to implement because workers are loath to form attachments with children. Children will cry when they leave someone with whom they have an attachment. It is painful to separate oneself from someone to whom one is attached, yet it is necessary. That also has consequences for the schedule of workers in the early-years environment, as they must be there all the time that the child is there.
I seek an assurance from the Minister that the quality of inspectors in the early-years setting will continue.
4.30 p.m.
Lord Dearing: My Lords, I want to be brief. I had the privilege of joining the discussions with Her Majesty's chief inspector attended by the noble Baroness, Lady Perry, and the noble Lord, Lord Sutherland. I am grateful to the Government for facilitating that and for their response there and elsewhere in the Bill.
I would like to associate myself with these three amendments for one reason. As I understand it, inspections of primary schools will be conducted not by HMI but by additional inspectors. An HMI will not always be involved in a secondary school inspectorate, so these people have massive responsibilities to us all. Such measures are necessary to give confidence that the system will be as it should be.
Baroness Carnegy of Lour: My Lords, I have not spoken previously on the Bill. I listened to the discussion about the inspectorate with great interest. The noble Lord, Lord Dearing, pointed out that additional inspectors will be inspecting primary schools.
I met a teacher the other day whose primary school had just been inspected. In this age of targets the school had concentrated hard and met all its targets, yet when the report came out it was almost entirely negative. As a result, the staff of the school were enormously distressed, sad, frustrated and, indeed, demotivated. One wonders whether, if an inspector produces a negative report when the staff feel that they have done extremely well, it improves the quality of that school. I do not believe that it does.
I mention this because if additional inspectors do not have the skill to turn any criticisms into positive statements that encourage, particularly when the school has met all its targets—which is the current way in which the quality of the school is supposed to be
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measured—they are not doing a good job. It is a simple example of how important it is that the right people should be additional inspectors.
Lord McKenzie of Luton: My Lords, I rise to make a brief point on the wording of Amendment No. 5, which concerns me. We have a shared agenda that additional inspectors should have the necessary qualifications and skills to perform the tasks required of them. The amendment requires each additional inspector to carry out those functions in a way that enhances the reputation of the office of the chief inspector.
I do not understand why the hurdle of enhancement is there. I can see that there might be an argument for wishing to maintain the office's reputation, but to put in a hurdle of enhancement seems unduly harsh, particularly as there could be two additional inspectors each bringing the same degree of skill to the party, but the first one might have an opportunity to enhance and the second only to maintain. Even if one accepted the amendment's thrust, its wording is particularly flawed.
The Parliamentary Under-Secretary of State, Department for Education and Skills (Lord Filkin): My Lords, in standing for the first time to speak on Report I would like to thank those Members who have acknowledged that the Government have been listening hard in our earlier debates on this important area. There are those who say that it is always a mistake for Ministers to listen to the House of Lords and give its Members what they want because they will only ask for more. I have not been of that opinion until now, but the House could persuade me otherwise.
I seek to suggest why—in terms of listening to the House and responding with Amendment No. 3—we have got it right. I share the view of all those who have spoken of the importance of maintaining a quality threshold. I am confident that the measures in the Bill, as enhanced by the amendments, will go further and we will have a better system of quality assurance as a consequence of the changes.
In Committee the noble Baroness, Lady Walmsley, spoke about the need to ensure that inspection teams have the right knowledge and expertise. We also talked about the blessed lists, to which I shall return in a minute. We have listened and we are at one on the principles. Much of what is proposed builds on and improves the current system.
The chief inspector will engage additional inspectors of an appropriate quality through the contracts with regional inspection service providers. If those providers fail to deliver to the high standards required of them in their contract with Ofsted, they will be in breach of contract.
There is general agreement on the increased involvement of HMI in routine school inspections, which is already one of the benefits of the Bill. The move to make the chief inspector in England directly accountable for all reports is a second major strengthening of the Bill. While that removes one of the reasons for the existing registration process which

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confers the right on a registered inspector to issue a report in his own name, we need to maintain the assurance that only those who meet particular standards of experience and competence will be allowed to inspect. That needs to be transparent for all to see. I am foursquare with the House on that point.
Government Amendment No. 3 will capture explicitly a number of those important elements. It will require the chief inspector to publish the rigorous standards as well as the qualifications and experience that all additional inspectors will be required to meet. The standards will be published and known. They will be buttressed by the publication also of the code of conduct to which all inspectors are required to adhere, because the way in which inspections are carried out as well as the quality has a bearing on both the feel and the potential quality of the report that comes from the inspection process.
The statement of the qualifications, experience and standards to which new subsection (2A) of the government amendment refers are designed to ensure that additional inspectors perform their functions in a manner that enhances the reputation of the chief inspector's office. In response to the helpful interjection of my noble friend Lord McKenzie, of course we want to enhance the chief inspector's reputation; we want it to be seen as improving rather than remaining static.
The second proposed new subsection of Amendment No. 3 also recognises the new arrangements and requires any contracts or arrangements entered into by the chief inspector to ensure that inspectors comply with the published requirements.
The government amendment will ensure that the standards, qualification and experience that inspectors must meet are transparent, but it will avoid the need for a bureaucratic and costly accreditation process that we believe would at best add no value and at worst get in the way of contracting arrangements for quality management.
The noble Baroness, Lady Carnegy, said that in the view of some schools inspected there is not perfection in the way that the existing system of registered inspectors operates. No doubt she is right, but I point out to the House that one can be a registered inspector as a result of meeting a quality standard 20 years or so ago, carry out three inspections per year and still stay on the register. There is no guarantee that as a result of being on the register one is necessarily at the cutting edge of quality and standards of registration. When I speak about the performance management element of the changes I hope that that will indicate why we believe that a new system will be better than the present system.
We have examined carefully the arguments in relation to publishing a list of those concerned. We had some vigorous discussions in the department about that. As a consequence, I am pleased to announce that the chief inspector has given an undertaking that he
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will publish the names of inspectors given to him by the regional inspection services providers that they are using at any one time under the terms of the contract.
That means specifically that the list will be of people to whom those contractors are committed and who meet the published standards of experience and qualifications required by anyone carrying out an inspection under the Bill. The chief inspector has gone further and said that the list of people who meet those standards will be published and made available on the Ofsted website. There will be a debate about how quickly that will be available, but at least every single term that website will contain the list of those who meet the standards. We have listened to Members of the House. If someone comes to inspect, for example, a school, the benefit will be that a parent or anyone else will know that the person carrying out the inspection has met or is claimed to have met the standards, what those standards are and the code of conduct that he or she is supposed to exhibit.
There will be the transparency that the House has asked for, which is right, and transparency with regard to the standards that are expected to be met for qualifications, experience and forms of behaviour. That is essential for public confidence in the inspection process. I assert that that is a substantially stronger system than is currently in operation.
Amendment No. 7 concerns the induction of inspectors. All inspectors will undertake training inspections and will not be allowed to inspect until they have demonstrated that they are able to deliver the new-style inspections to the required standard. We do not believe that specifying in the Bill the precise requirements for induction is helpful. The quality standards built into the new system will ensure that only those who meet the standards will be allowed to inspect.
I have some feeling for the noble Baroness, Lady Perry of Southwark—not as much perhaps as she would like—in her agony about trying to specify whether the number should be three, four or five. Perhaps she will grant that the House does its job better if it asserts certain principles and expects executive bodies to fulfil those principles. rather than second-guessing exactly by what mechanism they should fulfil those principles. Times will change, and standards will change. We need flexibility in legislation while giving clear benchmarks of what is expected. I hope that the noble Baroness will accept those comments.
The noble Baroness, Lady Sharp, admitted that she had changed the emphasis. She was partly feeling my fear at the beginning of what she said; the debate moves on. The list will be published, which I hope will go a long way to meeting the noble Baroness's wishes.
The noble Lord, Lord Sutherland, said that it was important that the chief inspector was assured before the inspection. I agree. The contract and the standards will ensure that any inspection undertaken by a contractor using someone who did not meet that requirement would be in breach of contract. That would not be lightly done.

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As regards the comment made by the noble Lord, Lord Hanningfield, I would like to say a few words on the performance management of the system—without sending the House to sleep. Ofsted will ask every school that is inspected to give its view of how the inspection was carried out. The contractor or HMI will therefore retain a record of the school's views on each inspection. So evidence will be built up about every inspector, which will feed judgments on the performance management of inspectors.
That is not to say that what a school says is automatically gospel—clearly, it is not—but it is relevant information. There will be an active system of performance management of every inspector, either by HMI or the contractor. Of course, HMI will be able to ask for such evidence from contractors if it so wishes. Therefore. there will be active management of the performance of each inspector and of whether the standards and code of practice are being adhered to, as well there should be.
The noble Earl, Lord Listowel, asked about early-years inspections. Almost all such inspections are likely to have HMCI's direct involvement. In the early years, there will also be a degree of specialisation by inspectorates around particular areas of expertise. That may not last for ever, but that certainly is how it will start.
With what we have put down in our later amendment and with the clear assurances that I have given and the commitment given by the chief inspector, I hope that the House will feel that we have fully met the points that were well put in Committee to probe us on this important part of the Bill. I hope that noble Lords will share my view that we will have a stronger system of quality assurance than we have at present as a result of the proposed measures for which the House has pressed.
Baroness Perry of Southwark: My Lords, I thank the Minister very much for that full and detailed reply. I have no quarrel with him that the system, as proposed, is better than what we have at the moment. I fear that he has not convinced me that the amendments are not necessary. The sole protection being offered against a faulty—if one can put it that way—or inadequate inspector is that the contractor that has produced such a person or group of persons would be in breach of contract.
4.45 p.m.
That may seem fine: the contractor would then presumably be taken off the list of contractors and those people would no longer be inspecting. That is small comfort to schools and teachers who may have been damaged in the mean time and who may have been through a desperately painful experience with those "faulty" inspectors. Our amendments are trying to produce a guarantee of quality before the inspections take place—not after, when the damage has already been done.
Lord Filkin: My Lords, I thank the noble Baroness, Lady Perry, for giving way. It is fundamental to the
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contract between HMI and an experienced inspection contractor that schools can be inspected only by people who meet a clear published standard. I find it implausible that they would act in breach of that. Therefore, I do not find the fear that the noble Baroness is theoretically advancing remotely plausible.
Baroness Perry of Southwark: My Lords, however plausible or implausible, that can happen, as we know. Even under the current system of registered inspectors there have been some very poor experiences.
HMI inspectors were put through a much more rigorous selection, appointment and induction process, with mentoring and so on. In my years as chief inspector, I think that the only difficulties I ever had were with individual HMIs who were bossy boots and went into schools saying, "I'm the Secretary of State's inspector. I can do what I like, and you've got to do what I tell you" or who were incredibly cruel and judgmental to individual teachers, thereby on occasions causing them acute mental and psychological distress and so on.
It is the way in which an inspection is conducted. not the checklist of the experience and qualifications that those people have. Some of the worst mistakes were made by people who were very well qualified and experienced. Perhaps they were too well qualified and too experienced because they thought that their experience, their way of teaching and their judgment of how things should be done were the only right way. They were unable to look with compassion at how other people were achieving success in teaching.
To continue with the Minister's arguments, I am delighted at the performance monitoring proposed by the chief inspector. I cannot therefore understand why we have to take the word of the chief inspector that he will do all of those things, but not have it in the Bill. The current chief inspector has made those commitments and promises, which is wonderful. In 10 years' time, another HMCI might produce plausible reasons why it was not a good idea to publish the list every year, why it did not work very well and why she or he wanted to change it. It may be said that there are perfectly good reasons why such detailed monitoring will no longer be necessary—experienced contractors may be doing splendid things, and so on. If all of that is so good, let us put it in the Bill. Let us ensure not just that the qualifications and experience are there but that the interpersonal and people skills are also a part of what the chief inspector approves.
Will the Minister look again at paragraph 2(4) of Schedule 1, which states:
"An additional inspector acting within the authority conferred on him by the Chief Inspector has all the powers of one of Her Majesty's Inspectors of Schools in England".
If that additional inspector is acting on the authority of the chief inspector, is it not reasonable to say, as Amendment No. 5 does, that:
"Every additional inspector must satisfy the Chief Inspector that they have the necessary skills"?

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Otherwise, why will the chief inspector give such inspectors his authority to have all the powers that he himself has?
I agree entirely with the Minister on Amendment No.7 that the reference to three inspectors is perhaps a little too precise. If the amendment were accepted and the Government came back with something that referred to a period of induction, I should be more than happy to concede that three is an arbitrary figure. Some people might need 10, while others need one. Those who have already been successfully inspecting as registered inspectors might need none.
I think that it is necessary to have something on the face of the Bill that insists on a period of induction, so that no newly appointed additional inspector is brought in because the contractor has had good reports of Miss Jones or Mr Smith as a head or senior teacher in a school. New inspectors must not go off on their own to inspect without prior monitoring of their performance in a school. I am not worried about their qualifications and experience, which are easy to check, but I am concerned about their behaviour in a school.
Therefore, it is essential to have a period of induction with HMI present. I am sorry to say that, although I am delighted with all that the Minister and the Government have done in tabling Amendment No. 3, I do not believe that it is enough.
Lord Filkin: My Lords, before the noble Baroness sits down, I shall respond to two of her specific probing questions. First, she was concerned that there would not be a process whereby a school could flag up things until it was too late. As part of the new system, there will be a hotline for schools to ring a separate senior inspector to bring any issues immediately to his attention. That directly addresses the issue of the behaviour as opposed to the qualifications and experience of inspectors.
Secondly, the noble Baroness said that Ofsted and the chief inspector are saying that a list will be published. Let me be clearer and stronger: the chief inspector is saying that, and I can also say that the Government think that the publication of such a list is right, proper and necessary.
Baroness Perry of Southwark: My Lords, I thank the Minister. Starting backwards from his remarks, if the Government think that it is right for a list to be published, what is wrong with putting that in the Bill?
A hotline is an excellent idea. Some schools will be brave and articulate enough to use it. However, inspectors are very intimidating people. To ask for a hotline when an inspector has already been pretty intimidating and unpleasant might be more than many small schools would feel able to do. We need protection for teachers, schools and, above all, for our children on the quality of inspectors who decree whether the education being provided is adequate, and we need it to be on the face of the Bill. I wish to test the opinion of the House.
4.53 p.m.
On Question, Whether the said amendment (No. 2) shall be agreed to?
Their Lordships divided: Contents, 149; Not-Contents, 133.

Division No. 1

CONTENTS

Addington, L.

Jenkin of Roding, L.

Alliance, L.

Kalms, L.

Anelay of St Johns, B.

Kimball, L.

Astor of Hever, L.

King of Bridgwater, L.

Avebury, L.

Laidlaw, L.

Beaumont of Whitley, L.

Laing of Dunphail, L.

Biffen, L.

Lawson of Blaby, L.

Bowness, L.

Lester of Herne Hill, L.

Bradshaw, L.

Lindsay, E.

Bridgeman, V.

Linklater of Butterstone, B.

Brooke of Sutton Mandeville, L.

Listowel, E.

Brougham and Vaux, L.

Livsey of Talgarth, L.

Caithness, E.

Lucas, L.

Campbell of Alloway, L.

Luke, L.

Carnegy of Lour, B.

Lyell, L.

Chadlington, L.

MacGregor of Pulham Market,

Chorley, L.

L.

Clement-Jones, L.

Maclennan of Rogart, L.

Cobbold, L.

McNally, L.

Colville of Culross, V.

Maddock, B.

Colwyn, L.

Marlesford, L.

Cope of Berkeley, L. [Teller]

Marsh, L.

Courtown, E.

Mayhew of Twysden, L.

Coventry, Bp.

Miller of Chilthorne Domer, B.

Craig of Radley, L.

Miller of Hendon, B.

Cumberlege, B.

Monson, L.

Darcy de Knayth, B.

Morris of Bolton, B.

Dearing, L.

Mowbray and Stourton, L.

Denham, L.

Murton of Lindisfarne, L.

Dholakia, L.

Neuberger, B.

Dixon-Smith, L.

Newby, L.

Eccles of Moulton, B.

Noakes, B.

Eden of Winton, L.

Northbrook, L.

Elles, B.

Northesk, E.

Elliott of Morpeth, L.

O'Neill of Bengarve, B.

Elton, L.

Onslow, E.

Erroll, E.

Palmer, L.

Falkner of Margravine, B.

Park of Monmouth, B.

Fookes, B.

Patten, L.

Fraser of Carmyllie, L.

Perry of Southwark, B.

Freeman, L.

Portsmouth, Bp.

Garden, L.

Razzall, L.

Gardner of Parkes, B.

Reay, L.

Geddes, L.

Redesdale, L.

Gilmour of Craigmillar, L.

Rees, L.

Glentoran, L.

Rees-Mogg, L.

Goodhart, L.

Rennard, L.

Greaves, L.

Renton, L.

Greenway, L.

Roberts of Conwy, L.

Hamwee, B.

Roberts of Llandudno, L.

Hanham, B.

Roper, L.

Hannay of Chiswick, L.

Russell-Johnston, L.

Hanningfield, L.

St. John of Bletso, L.

Harris of Richmond. B. [Teller]

Sandberg, L.

Hayhoe, L.

Sandwich, E.

Hodgson of Astley Abbotts, L.

Scott of Needham Market, B.

Home, E.

Seccombe, B.

Hooper, B.

Sharp of Guildford, B.

Howe, E.

Shaw of Northstead, L.

Howe of Aberavon, L.

Shutt of Greetland, L.

Howe of Idlicote, B.

Smith of Clifton, L.

Howell of Guildford, L.

Soulsby of Swaffham Prior, L.

Hunt of Wirral, L.

Steinberg, L.

James of Holland Park, B.

Stern, B.

1019

Stoddart of Swindon, L.

Tugendhat, L.

Sutherland of Houndwood, L.

Ullswater, V.

Swinfen, L.

Waddington, L.

Taverne, L.

Wakeham, L.

Taylor of Warwick, L.

Walmsley, B.

Thatcher, B.

Walpole, L.

Thomas of Gresford, L.

Warnock, B.

Thomas of Walliswood, B.

Watson of Richmond, L.

Tordoff, L.

Weatherill, L.

Trefgarne, L.

Wilcox, B.

Trenchard, V.

Windlesham, L.

NOT-CONTENTS

Acton, L.

Hughes of Woodside, L.

Ahmed, L.

Hunt of Chesterton, L.

Amos, B. (Lord President of the Council)

Hunt of Kings Heath, L.

Irvine of Lairg, L.

Andrews, B.

Janner of Braunstone, L.

Archer of Sandwell, L.

Jones, L.

Ashton of Upholland, B.

Jordan, L.

Barnett, L.

Judd, L.

Bassam of Brighton, L.

King of West Bromwich, L.

Berkeley, L.

Kirkhill, L.

Bernstein of Craigweil, L.

Lea of Crondall, L.

Bhattacharyya, L.

Leitch, L.

Blood, B.

Lipsey, L.

Borrie, L.

Lofthouse of Pontefract, L.

Bragg, L.

McDonagh, B.

Brennan, L.

Macdonald of Tradeston, L.

Brooke of Alverthorpe, L.

McIntosh of Haringey, L.

Brookman, L.

MacKenzie of Culkein, L.

Campbell-Savours, L.

Maxkenzie of Framwellgate, L.

Carter, L.

McKenzie of Luton, L.

Christopher, L.

Mason of Barnsley, L.

Clark of Windermere, L.

Massey of Darwen, B.

Clinton-Davis, L.

Maxton, L.

Crawley, B.

Merlyn-Rees, L.

David, B.

Mitchell, L.

Davies of Oldham, L. [Teller]

Morgan, L.

Dean of Thornton-le-Fylde, B.

Morgan of Drefelin, B.

Desai, L.

Morris of Aberavon, L.

Dixon, L.

Parekh, L.

Drayson, L.

Patel of Blackburn, L.

Dubs, L.

Pendry, L.

Elder, L.

Peston, L.

Evans of Temple Guiting, L.

Pitkeathely, B.

Falconer of Thoroton, L. (Lord Chancellor)

Plant of Highfield, L.

Ponsonby of Shulbrede, L.

Farrington of Ribbleton, B.

Prashar, B.

Faulkner of Worcester, L.

Prosser, B.

Filkin, L.

Prys-Davies, L.

Fitt, L.

Radice, L.

Fyfe of Fairfield, L.

Ramsay of Cartvale, B.

Gale, B.

Randall of St. Budeaux, L.

Gibson of Market Rasen, B.

Rea, L.

Giddens, L.

Rendell of Babergh, B.

Golding, B.

Richard, L.

Goldsmith, L.

Rosser, L.

Gordon of Strathblane, L.

Rowlands, L.

Goudie, B.

Royall of Blaisdon, B.

Gould of Brookwood, L.

Sawyer, L.

Graham of Edmonton, L.

Scotland of Asthal, B.

Gregson, L.

Sewel, L.

Griffiths of Burry Port, L.

Sheldon, L.

Grocott, L. [Teller]

Simon, V.

Harris of Haringey, L.

Stone of Blackheath, L.

Harrison, L.

Symons of Vernham Dean, B.

Hart of Chilton, L.

Taylor of Blackburn, L.

Haskel, L.

Thornton, B.

Haworth, L.

Tomlinson, L.

Hayman, B.

Triesman, L.

Henig, B.

Truscott, L.

Hogg of Cumbernauld, L.

Tunnicliffe, L.

Hollis of Heigham, B.

Turnberg, L.

Howells of St. Davids, B.

Turner of Camden, B.

1020

Uddin, B.

Wilkins, B.

Wall of New Barnet, B.

Williams of Elvel, L.

Warwick of Undercliffe, B.

Williamson of Horton, L.

Wedderburn of Charlton, L.

Woolmer of Leeds, L.

Whitaker, B.

Young of Hornsey, B.

Young of Norwood Green, L.

Resolved in the affirmative, and amendment agreed to accordingly.
5.3 p.m.
Lord Filkinmoved Amendment No.3:
Page 67, line 14, at end insert—
"(2A) The Chief Inspector must publish in such manner as he thinks fit, and may from time to time revise, a statement of—

(a) the qualifications or experience (or both) that are to be required of additional inspectors who are not members of his staff, and

(b) the standards that such additional inspectors are to be required to meet in the exercise of their functions.

(2B) Any arrangements which provide for assistance by persons who are not members of the Chief Inspector's staff must be made on terms that require the person with whom the arrangements are made to secure compliance with any requirements that are from time to time published under sub-paragraph (2A)."
The noble Lord said: My Lords, as I outlined earlier, this amendment aims to provide transparency and assurance about the quality of inspectors under the new arrangements. The amendment will require the chief inspector to publish rigorous standards as well as the qualifications and experience that all additional inspectors will be required to meet. The statement of these standards will be specific and meaningful, both to inspectors and to schools.
The amendment will require any contracts or arrangements entered into by the chief inspector to ensure that inspectors comply with the published requirements, which will be monitored using the strict key performance indicators to be built into all contracts.
The overall effect of the amendment will be to ensure that the standards, qualifications and experience that inspectors must meet are transparent while avoiding the need for a system of accreditation which can be bureaucratic, costly and unnecessary. I beg to move.
Lord Hanningfield: My Lords, we have just passed Amendment No. 2 which will have an effect on this government amendment. I suspect that a composite amendment will now have to be brought forward. Would the Minister like to comment on that? Obviously, the amendment on the Marshalled List was written before the House agreed to the previous amendment.
Lord Filkin: My Lords, I do not particularly want to make a comment at this point. I am still reflecting with surprise on what happened on the previous amendment. However, of course we shall consider the conformity of the Bill at the end of the Report stage.
On Question, amendment agreed to.
Baroness Walmsleymoved Amendment No. 4:
Page 67, line 14, at end insert—
"( ) The Chief Inspector shall ensure that those additional inspectors assigned to inspect any school shall between them possess the necessary specialist knowledge, including, where

1021
appropriate, knowledge relating to children's affairs as defined in sections 10(2) and 11(2) of the Children Act 2004 (c. 31), in order to complete that inspection satisfactorily."
The noble Baroness said: My Lords, I welcome what the Government have tried to achieve with Amendment No. 3 and what the House has decided on Amendment No. 2. My amendment seeks to ensure that those persons inspecting schools have the relevant knowledge and understanding necessary properly to evaluate how the needs of children under the Children Act 2004 are being met by schools.
It is vitally important that inspectors are really up to date on recent legislation, and the Children Act 2004 is very recent. At lunchtime I talked to some teachers attending an event run by the Parliamentary Education Unit about the workings of the Houses of Parliament. I was horrified when one of them told me that his school had recently been inspected by someone who had not taught in a school since 1965. I have not taught in a school since 1987 and I would not consider myself competent to judge the classroom environment in the schools of 2005. So, reflecting on the words of the noble Baroness, Lady Perry, a few moments ago, there are issues both of quality and of being up to date—if I may put it that way.
The amendment now before us was tabled in Committee. At that stage the noble Baroness, Lady Andrews, considerably reassured me when she responded by saying:
"The most helpful thing that I can say to the noble Baroness … is that the current trials are looking at the aspects of the framework which capture the outcomes as set out in the Children Act in terms of the process of development. From the pilots, we have good and early evidence that that job is being done through the inspection framework, and it can certainly be developed and enhanced through the new training which will be available for the additional inspectors as they come on stream. The new inspection training will reflect that and all inspectors will have to demonstrate it fully through the training inspections".—[Official Report, 11/1/05; col. 166.]
Here I echo the words of the noble Baroness, Lady Perry. If it is so desirable, and knowing how committed the Government are to the outcomes for children set out in the Children Act 2004, why not put it in the Bill?
In Committee the noble Baroness, Lady Andrews, went on to say:
"Where inspection covers extended schools or children's centres, we shall certainly be looking to include specialist inspectors for the early years and elements of childcare in extended schools … We shall be using a common evaluation that will cover the foundation stage, primary, secondary and post-16 education … Teams will be configured to ensure that appropriate skills exist in the way that the noble Baroness wishes".—[Official Report, 11/1/05; cols. 167–68.]
That response appears to negate the Government's stated aim that every child in every school matters, and that school inspections should be one of the levers for that. The Government have said more than once that they will ensure that this happens. According to the DfES document, Every Child Matters: Change for Children in Schools:
"New inspection arrangements currently under discussion in Parliament mean that the criteria for school inspection would in future cover the contribution schools make to pupil well-being".
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The fact that the Government intend to have specialist inspectors in children's centres and extended schools is welcome, but how can we be certain that accurate judgments will be made during an inspection, for example, of a secondary school if those inspectors have no knowledge or understanding of children's affairs as defined under the Children Act?
While the government amendment that was previously debated is very welcome, I feel that we need to go just a little further, particularly in the light of the Government's commitment to the outcomes in the Children Act 2004. I beg to move.
Lord Filkin: My Lords, the noble Baronesses, Lady Walmsley and Lady Sharp, are seeking to ensure that inspectors have the necessary specialist knowledge to conduct inspections, particularly in relation to children's affairs as defined in the Children Act 2004.
In setting out the standards and experience he requires of inspectors, the chief inspector will have in mind clearly the legal requirements he has to meet in particular kinds of inspection. In school inspections, he will be required to cover the Every Child Matters outcomes and he will need to ensure that the training of inspectors covers these issues, although it is fair to say that many of these are covered in existing inspections. It will not be completely new territory for school inspectors to examine what the school does to contribute to these wider well being issues.
However, to ensure that there is no complacency, training materials which are being developed for the new style inspections will have the Every Child Matters outcomes woven through every aspect of the training. In other words, there will not just be an add-on section at the end—I am sure the noble Baroness, Lady Walmsley, would agree there should not be—because those outcomes ought to be embedded in every aspect of a school's work, thinking and performance. In addition, of course, there will be a specific module on Every Child Matters outcomes to give a final focus.
The ongoing monitoring of inspections and reports will ensure that the Every Child Matters outcomes are being covered and reflected in reports. This is an important part of the trialling that is currently taking place and will form an important part of the quality assurance that will have to be in place from day one in the early years of development of the new system.
Without going into great detail, the draft guidance for inspectors conducting inspections of schools—which we have shared with the noble Baroness, Lady Walmsley—already starts to give a flavour of the embedded nature of the five outcomes and how schools will be inspected by the inspectors for evidence not of processes but of the outcomes being attained. As is absolutely right and consistent with statute, as part of that the inspectorate will have to look particularly at the contribution that the school is making to vulnerable children, and particularly to two of the most vulnerable groups of children—looked after children and those with learning difficulties and disabilities. As this was part of the Children Act, I am

1023
sure the noble Baroness would expect to see it being echoed in the guidance and duties of inspectors carrying out functions.
I agree with the spirit of what the noble Baroness is seeking to achieve. I assert strongly that it will be met through the obligations placed firmly on the chief inspector to ensure that the training, development and quality assurance he has to bring to the implementation of this new system, building on past practice, properly meets the objectives and that there is no need for specific legislative emphasis.
Buttressed by the words of assurance I have given from the Dispatch Box today, I hope that the noble Baroness, Lady Walmsley, will feel inclined to withdraw the amendment.
Baroness Walmsley: My Lords, I thank the Minister for those words of reassurance, which have helped to set my mind at rest. I welcome in particular the fact that the inspections will he looking not only for process but for outcomes. That is vitally important.
We shall have to look carefully at how this works through into the inspection framework. The outcomes that we all seek under the Children Act 2004 will take time and if the inspections are to be a genuine lever for change the quality of the training and the framework outlined by the Minister will be vitally important. I am not inclined to press the matter further today. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Perry of Southwarkmoved Amendment No. 5:
Page 67, line 14, at end insert—
"( ) Every additional inspector must satisfy the Chief Inspector that they have the necessary skills, expertise and experience to perform their functions in a manner which enhances the reputation of his office."
On Question, amendment agreed to.
Lord Filkinmoved Amendment No. 6:
Page 67, leave out lines 15 to 17.
On Question, amendment agreed to.
Baroness Perry of Southwarkmoved Amendment No. 7:
Page 67, line 20, at end insert "once a period of induction by Her Majesty's Inspectors of Schools in England, lasting not less than through three inspections, has been completed"
On Question, amendment agreed to.
Lord Filkinmoved Amendment No. 8:
Page 67, leave out lines 34 and 35.
On Question, amendment agreed to.
5.15 p.m.
Lord Filkinmoved Amendment No. 9:
Page 68, line 5, at beginning insert "Subject to sub-paragraph (3)"
The noble Lord said: My Lords, we have brought forward these amendments in response to the concerns expressed at Committee stage about the impact on
1024
schools of inspection judgments, especially where they have been found to be causing concern, and the need to ensure that these judgments are sound. We have again—-although I hope I will not feel it was quite such a fruitless exercise—been listening to the House on this matter.
The group of amendments makes two important changes. Amendments Nos. 9 and 10 would ensure that any decision that a school requires special measures is taken personally by the chief inspector or by one of Her Majesty's senior inspectors whom he has directly authorised to do so. Amendments Nos. 36 and 37—with the rest of the amendments in this group being consequential on these amendments—would require the chief inspector, on completion of a Clause 5 inspection which concluded that the school required special measures or significant improvement, to send a draft of the inspection report to the governing body of a maintained school, and to the proprietor in the case of any other school, for comment. They would place a duty on the chief inspector to consider any comments made on the draft report by the governing body or proprietor within a prescribed period.
We had an interesting debate at the Committee stage about the procedures for schools to complain about inspection judgments. Noble Lords were particularly concerned that there should be a clear opportunity for a school to do so where the judgment was that the school required special measures or significant improvement, again for good reason. These amendments are designed to respond to those concerns.
I recognise that a designation that it requires special measures is an extremely serious matter for the school and I understand the argument that any mistake could have grave consequences for the reputation of the school and the head. During our debate I explained that under the new arrangements publication of all inspection reports is the responsibility of the chief inspector, which is not the current situation.
I explained also that the new moderation and quality assurance procedures have been devised with Ofsted to ensure consistency and reliability of inspection judgments. Under these procedures any decision that a school requires special measures will be carefully made in the light of the inspection evidence. The duty we propose under Amendment No. 10 would provide an additional step to ensure that the chief inspector himself authorises the report in those most serious of cases where a school requires special measures. I hope the House will welcome that.
The school will have opportunities throughout an inspection to provide evidence to the inspectors and to comment on the findings that are emerging. Amendments Nos. 36 and 37 would give the school an opportunity to see and comment on the draft of the inspection report. They would require the chief inspector to consider any comments made by the school before finalising the report.
All schools will in practice be sent a copy of the draft inspection report. But where the judgment is that special measures or significant improvement is required, we are proposing that the school should have longer to consider

1025
and offer any comments on the draft report. We intend that, where the draft report states that special measures or significant improvement is required, the school will have five working days to respond—I emphasise, five working days to respond—and this will be prescribed in regulations.
Where the draft inspection report concludes that no designation is required, the school will be expected to respond to the draft report quickly, normally within 24 hours, and we have found from the pilot evidence that the schools themselves want that rapidity. This will not place an undue burden on schools. In future, inspection reports will be shorter and more focused and the school will have an opportunity to offer comments to inspectors throughout the inspection.
We believe that the amendments provide further assurance of a fair system of inspection while at the same time ensuring that schools have a full opportunity to comment, particularly in the most serious situations. I hope the House will find them helpful. I beg to move.
Lord Dearing: My Lords, I am grateful to the Minister for the amendments and for the clarifications that he has given. They meet very well and precisely the representations that I have made on this part of the Bill. It is very important, in justice, when so much is at stake, that schools should have an opportunity for the matter to he referred to the top before anything is published. I am grateful.
Lord Hanningfield: My Lords, we have had some interesting debates in this House. I thank the Minister and the Government for responding to the detailed discussions in Committee and to the representations from teachers and schools. They feared that they would not have the chance to make representations at the right time, so I thank the Government for the amendments, which add greatly to the Bill. I also thank everyone who contributed to the debate in Committee.
Lord Sutherland of Houndwood: My Lords, I simply want to reassure the Minister that he was not listening in vain and his response has not been in vain. The amendment is helpful, and we appreciate it very much.
Baroness Perry of Southwark: My Lords, I, too, thank the Minister. The amendment goes all the way, as we all wished it to do. We are grateful for that. I am sorry that the Minister's other amendment did not go quite as far as we wished, but this one certainly does. I thank him very much for listening.
Baroness Sharp of Guildford: My Lords, we are also extremely grateful to the Minister. We are very well satisfied with the amendments, which go a considerable way towards providing the sort of complaints procedures for which we were looking.
On Question, amendment agreed to.
Lord Filkinmoved Amendment No. 10:
Page 68, line 13, at end insert—
"(3) The making of any report of an inspection of a school under section 5 which states the opinion that special measures are required to be taken in relation to the school must be personally authorised by

(a) the Chief Inspector, or

(b) one of Her Majesty's Inspectors of Schools in England who is authorised by the Chief Inspector for the purposes of this sub-paragraph."

On Question, amendment agreed to.
Baroness Perry of Southwarkmoved Amendment No. 11:
Page 69, line 25, at end insert "once a period of induction by Her Majesty's Inspectors of Schools in England, lasting not less than through three inspections, has been completed"
The noble Baroness said: My Lords, I recognise that there is an error in the way in which the amendment is drafted. The words "in England" should, of course, not be there. It is intended for Wales to require the same period of induction by HMI for new inspectors as England, although the Welsh have had the great wisdom to retain their registered inspectors.
I do not wish to push the amendment to a vote. I simply hope that the Minister can say something about the necessity of a period of induction for registered inspectors in Wales in the same way as the House has required for England. My apologies to all those in Wales that the words "in England" remain, but I hope that they do not take deep offence. I beg to move.
Lord Filkin: My Lords, I shall respond to what we thought the noble Baroness, Lady Perry, meant, as I think she would wish.
The amendment would require an additional inspector to complete a period of induction by HMI, lasting not less than through three inspections, before undertaking any of the chief inspector's functions. In Wales, school inspections are undertaken by registered inspectors, supported by team inspectors. Registered inspectors select and lead inspection teams and allocate work to team inspectors. They have overall responsibility for the conduct of the inspection. The registered inspector is also charged with the compilation of the inspection report.
The chief inspector in Wales is required to establish and maintain a register of such inspectors and give guidance to inspectors on inspection and the making of reports. It is therefore for the chief inspector to determine the conditions for registration. Registration is for a set period and may be refused if the chief inspector is of the view that the individual is not able to conduct an inspection competently and efficiently.
All inspectors are required to undertake and complete training provided by Estyn before being able to join an inspection team. Team inspectors must have teaching experience in the phase they wish to inspect and appropriate professional qualifications. They must also complete training provided by Estyn before being allowed to join an inspection team. Team inspectors also attend updating courses each year.

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Experienced team inspectors who have performed successfully are able to apply to become registered inspectors. They are required to have taken part in at least five previous inspections as a team inspector and to have led an assessment of at least three elements of the school inspection framework. Applicants must satisfy the inspectorate that they can meet the full range of requirements set down by Estyn. In particular, they have to submit a portfolio of evidence from inspections, which, if successful, leads to an assessment day. If successful on the assessment day, they become registered inspectors.
Team and registered inspectors are required to undertake training annually to update and develop their knowledge and skills. Such training is provided and monitored by HMI. Furthermore, HMI quality assures all inspection reports and visits schools to monitor one in five inspections undertaken by registered inspectors.
The vast majority of schools inspection work is undertaken by registered and team inspectors. There may be occasions when the chief inspector employs an additional inspector to lead or support an inspection, but such occasions are few and far between.
Estyn has clear and rigorous standards for both registered and team inspectors that must be met in undertaking inspection. The inspectorate would apply the same requirements—the requirements linked to professional background and experience of inspection—to anyone appointed by the chief inspector to act as an additional inspector to inspect a school. On the basis that tried-and-tested systems are in place and that they are sufficiently robust, I hope that the noble Baroness, Lady Perry, will feel comforted and not press the matter further.
Baroness Perry of Southwark: My Lords, I thank the Minister for that full reply. I can only say how wise the Welsh are, and I hope that in England we are moving much closer to an equally robust system. With those assurances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 2 [Functions of Her Majesty's Chief Inspector of Schools in England]:
Lord Dearingmoved Amendment No. 12:
Page 2, line 21, after "social" insert "physical"
The noble Lord said: My Lords, on this occasion I have the support of the noble Baronesses, Lady Walmsley and Lady Sharp, for which I am truly grateful. Perhaps I might apologise to the noble Baroness, Lady Walmsley, for something that I said in a previous debate on an amendment. On that occasion, in supporting the Government, I happened to mention that in my home town, Hull, results had been bumping along the bottom of the league table for GCSEs. I also said that the local authority's aspirations were not high enough. I have since learnt that its aspirations are now high. I am delighted to acknowledge that, and I am sorry that I did not know it at the time. Congratulations to my local authority.
1028
On the amendment before us, I have reduced my aspirations. Previously, I argued that the words "physical" and "mental" should be added to that well hallowed phrase,
"the spiritual, moral, social and cultural development of pupils"
as was the case in the 1988 Act, going back to the 1944 Act. On this occasion, I am limiting myself to "physical" because that is where I think there is a specific problem.
In advocating the inclusion of "physical" in the list, I have the support of the CCPR. It has asked to be associated with the proposal and says that "physical well-being" is a very broad term, the outcome of which is difficult to measure.
Since I became excited about the issue, I have quoted in the House some well established and well regarded research about obesity among our young people. After putting down the amendment, I read a report that there had been a further investigation that came to different conclusions, as is often the case in academic research. Although that further research acknowledged that obesity had been increasing, the level had been assessed on a different and, arguably, better measure from that which the Government use. It showed that it was not as high as before. Nevertheless, the Department of Health came out fighting after that report, saying that there was a problem and there needed to be action as proposed in the White Paper on health at the end of last year. So there is an issue, and it is best attacked in schools by looking at the physical development of our young people and at their diets.
I have no great ambitions to change the world, but I would like the Minister, if he is so minded, to confirm that Ofsted will concern itself specifically with the physical development of children and young people and with the way in which schools are responding to the Government's initiative to have games and physical education for two hours a day. Will he exemplify how the physical side of pupils' development is to be examined by Ofsted and confirm that the quality of school meals will also be covered? I beg to move.
5.30 p.m.
Baroness Walmsley: My Lords, I thank the noble Lord, Lord Dearing, for his very gracious apology. I assure him that it was not required. I believe that he needed to apologise to Hull rather than to me, and he has done that very graciously.
I and my noble friend Lady Sharp were very happy to put our names to this amendment—in my own case, for two reasons. The first was illustrated by a TV news item last week which referred to the specialist schools and the results obtained by them. The piece featured a physical education school, specialising in sport, and showed how additional participation in physical activity during the day improved alertness. The educational attainment of those children was very marked. We all know that people who are physically fit are also more mentally alert. That is one reason why it is so important that schools should attend to the physical well-being of children.

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The other reason for my support relates to my membership of the Science and Technology Select Committee of your Lordships' House, of which Sub-Committee I, chaired by the noble Lord, Lord Sutherland of Houndwood, who is present in the Chamber, is considering the scientific aspects of ageing. It has occurred to me that a great many of the aspects that we have been hearing evidence about relate to diseases and problems, the interventions for which are coming 60 or 70 years too late. What we really need to do is to look at the diet and exercise regime and lifestyle choices made by children. This is not simply about getting fat—it is about developing strong hearts and lungs by taking aerobic exercise regularly and developing good muscle tone that can be easily renewed after a period of passivity by the right sort of exercise. That is so important to the balance of elderly people, as it prevents them falling over and fracturing bones and so on.
All the things that the committee has been hearing about—muscle tone, having a strong heart and lungs, as well as not smoking at all and having a good diet so that you do not clog your arteries with cholesterol and other fatty substances—are so much affected by habits laid down in childhood. It is so important that schools should pay particular attention to those things, not just for the short-term educational attainment of the children but for their long-term health, and for the economic benefit of the country, as not paying attention to such things costs us all a very great deal in terms of money and human distress.
For those two major reasons, I am very pleased to support the amendment.
Baroness Howe of Idlicote: My Lords, briefly, I should like to support the amendment proposed by my noble friend Lord Dearing and the comments of the noble Baroness, Lady Walmsley. Although we have heard that research can come to opposite conclusions, there is little doubt that we have a growing problem with obesity. Both exercise and diet play a large part in that.
I am sure that noble Lords will all have been pleased to see that there will be a series of four programmes on Channel 4 in which Jamie Oliver will address the whole question of school meals. It looks as if there may be a little problem with the amount of funding per child per school meal. That may be something that we have to look at at a later stage—but at least the programmes will raise people's ideas and expectations. If the media are good for anything, they are certainly good for doing that. So perhaps we shall debate that later.
Lord Hanningfield: My Lords, I support the spirit of the amendment. I was fascinated to hear from the noble Baroness, Lady Walmsley, that, after several years of sitting on these Benches, with a bit of exercise we shall all be able to revert to our youth.
Baroness Andrews: My Lords, I am grateful to the noble Lord, Lord Dearing, for giving us an opportunity to have this short debate again. It is clearly a subject that he and the whole House are
1030
passionate about, and of course it reflects public concern. It is particularly typical of the noble Lord's integrity that he acknowledges that academics disagree. However, the Government, whatever academics say, are convinced and will definitely act. Having said that, although the noble Lord has reduced his aspirations, I cannot meet them in full. But I hope that I can convince him that in three different ways we are actually meeting the full scope of what he wants to achieve.
I turn to those three ways. First, there is the Bill itself; secondly, there is the inspection process and what it will cover; and, thirdly, there are the wider aspects of policy—and the noble Lord raised the issue of school meals.
The noble Lord has asked us to insert "physical health" into the Bill, but that is not strictly necessary. Clause 2, when taken together with Clause 11, provides that the chief inspector will have a general duty to keep the Secretary of State informed about the contribution made by schools to the well-being of children, having regard to physical health and recreation, among other things. That is because Clause 11 reads across to Clause 10(2)(a) of the Children Act 2004, which specifies physical and emotional well-being. So in effect we have a commitment through that relationship.
Clause 5, when taken together with Clause 11, provides that when conducting an inspection of an individual school, the chief inspector must report on the contributions made by schools to the well-being of children, having regard to physical health and recreation, among other things. So that explicit statutory relationship is established. Furthermore. no one should be in any doubt what that means. Following the debate on the five outcomes during the passage of the Children Bill, the more detailed descriptions of those critical outcomes are now set out in Every Child Matters: Change for Children in Schools, which is our executive statement about what we are doing and is available in the House if Members want to read it. On page five we define "be healthy" very clearly as including physical and mental health. Each of those is defined as a separate element; indeed, physical health is broken down into categories such as sexual health and healthy lifestyles. My noble friend has answered two debates recently which involved the role of parents in promoting health.
It is against that set of statutory descriptors that Ofsted will have to prepare its framework for inspection. Specifically, Ofsted will examine how well schools foster links with other organisations to promote the well-being of pupils as well as the extent to which schools contribute to the learner's capacity to stay safe and healthy. I take the point made by the noble Baroness, Lady Walmsley, about how activity during the school day energises learning. Indeed, that is something that we could all learn from.
The chief inspector is the least complacent of people, as I am sure the noble Lord, Lord Dearing, knows. Last September, he presented a report on physical

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health represented by outdoor activities, which is something to which he is tremendously committed. He said:
"Outdoor activities both at school and on residential courses enable pupils to enjoy challenging and unfamiliar experiences that test and develop their physical, social and personal skills".
Amen to all that, because we know from experience how much that generates motivation and affects learning.
The Government are not complacent, either. Ofsted will already meet the challenge laid down by the amendment proposed by the noble Lord, but that happens only on a three-year cycle. What we need and will provide are the additional policy initiatives and infrastructure which themselves will involve inspection. I shall briefly describe those to satisfy the noble Lord.
I referred in Committee to the role of the new school improvement partners, which will challenge and encourage schools in all areas where they consider that there is room for improvement to see how that can be achieved. One area will be the healthy schools programme, which we have debated in this House several times, with a holistic approach to health and learning that the school community will develop through everything that it offers pupils. That, indeed, will link into strong external partnerships regarding how that can be achieved more effectively. Ofsted will inspect that.
The noble Lord, Lord Dearing, welcomed extra funding for sport. Our aim is that by 2010 all children will have at least four hours of sport every week—two hours of high quality PE and sport at school and the opportunity for another two or three hours beyond the school day, when so much else can be achieved. Ofsted will report on those activities.
The public health White Paper sets out our firm expectation that all primary and secondary schools will develop over time to become extended schools. One of the most exciting developments is the way in which healthy communities and good schooling will be able to come together. There will be more opportunities, for example, to provide health centres on school sites, and we shall seek to inspect their effectiveness as they develop.
The noble Lord asked about diet and school meals. I do not want to go into too much detail but the Secretary of State has already made clear her very profound views on what we need to do to improve school diet. Those key messages include parents being in the front line of a new drive to improve the quality of school dinners and new minimum health specifications for processed foods to reduce their fat, sugar and salt contents ahead of the introduction of tougher standards for school meals in 2006.
We are also calling on the food industry, caterers, nutritionists and food interest groups to work with the Government to develop a new school food trust, which would give independent advice. Parents are absolutely vital in that. Again, Ofsted will play a key role in that issue. It will examine how the school fosters healthy
1032
eating through the new regimes and through the inspection system. Ofsted will look for evidence of how the school engages with parents.
I take the opportunity to put on record our position on school trips. We had a very good debate on that in Committee in the context of the amendment tabled by the noble Baroness, Lady Walmsley, on extra-curricular activities. We utterly applaud everything that she said about extra-curricular activities being enriching. In Committee we said that the Secretary of State for Constitutional Affairs is looking at how to deter unnecessary litigation. We have made progress. The Secretary of State for Education and Skills announced on 15 February that we will publish more detailed guidance later this summer which will seek to improve quality and quantity while focusing, critically, on improving staff confidence, cutting bureaucracy and enriching outdoor provision.
I hope that all those initiatives will more than satisfy the noble Lord that we have gone beyond what he wanted, and that we are very much en route to achieving better outcomes for physical health.
Lord Dearing: My Lords, I am grateful to all noble Lords who have contributed to the debate. 1 am particularly grateful to the noble Baroness for her acknowledgement of my apology. I am very grateful for the Minister's very full reply to the points I raised. I am well reassured that all will be well. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
5.45 p.m.
Baroness Sharp of Guildfordmoved Amendment No. 13:
Page 2, line 24, at end insert ", and
"( ) the degree to which schools are developing rigorous internal procedures of self-evaluation"
The noble Baroness said: My Lords, I have returned to this amendment, which we discussed in Committee at some length, because both at that time and when rereading the debate in Hansard, I found myself wholly unpersuaded by the Minister's arguments. The Minister has also written to me—I thank him for his letter—enclosing the guidance which is being issued to schools on self-evaluation. The Minister wrote that he hoped that that would be helpful,
"in demonstrating why we remain convinced that self-evaluation should not be statutory".
I can tell him immediately that, on the contrary, the more I read of the guidance, the more convinced I became that it would be very useful to make it a statutory duty on the inspectorate to make sure that schools are developing capabilities in self-evaluation. I shall come back to that point in a moment.
Clause 2(1) lists the issues on which the chief inspector has a duty to keep the Secretary of State informed in relation to schools. They range from the general issue of,
"the quality of the education provided by schools in England".

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to the more specific,
"the quality of the leadership in and management of"
schools. In Committee I argued that since the whole shift towards short, sharp inspections and the new relationship with schools—we on these Benches applaud that shift—was predicated on the development of robust self-evaluation procedures within schools, it seemed to me appropriate that, as with such issues as leadership and management, some mention ought to be made of that on the face of the Bill.
The arguments were very well summed up by the noble Lord, Lord Sutherland, in his brief intervention in Committee, when he said that the reasons for supporting the amendment were,
"first … that the philosophy of the inspection system that this Bill encapsulates requires a confidence in the capacity of schools to evaluate themselves … The Secretary of State needs to know that self-evaluation is working; otherwise, he will have to change the inspection system".—[Official Report, 11/1/05; col. 221.]
I remind noble Lords that Clause 2(1) concerns issues on which the chief inspector must keep the Secretary of State informed.
In Committee the Minister said in response that,
"the reason why it is not necessary, is that the assessment of the school's self-evaluation will take place partly through the inspection itself, which will test the school's judgment … against the evidence that inspectors have gathered".—[Official Report, 11/1/05: col. 223.]
What he is saying here is that the whole inspection is looking at how far a self-evaluation system is being developed. The Minister went on to say that,
"the school that is clearly not performing well, but which owns up to it and accepts it—in other words, it has an honest and realistic self-evaluation of where it sits and the commitment to do something about it—could find that it is in a different category from a school that is in denial".—[Official Report, 11/1/05; col. 223.]
That in itself illustrates how important self-evaluation is as it will affect the categorisation within the inspection itself. Finally, the Minister said:
"The inspector will compare the outcomes of the school's own self-evaluation with the outcomes of the inspection. How successful the school has been in identifying its own strengths and weaknesses will be an important test in the inspection and will be reflected in the reports".—[Official Report, 11/1/05; col. 225.]
It seems to me that all of this reinforces the whole notion that self-evaluation should be included in the Bill as one of the issues to be considered, and on which the chief inspector should keep the Secretary of State informed.
What about the guidance that has been issued to schools on the self-evaluation procedures? The guidance contains a very useful question; namely, is self-evaluation integral to our key management systems? The guidance states:
"Self-evaluation is not an activity carried out just once, before planning starts. It is continuous and is at the heart of the school improvement process. School leaders will want to ensure they have effective, non-bureaucratic systems in place which allow them to collect appropriate evidence over time as part of the cycle of development and review. In this way rigorous self-evaluation and the judgements derived from it can be integrated within their day-to-day management, especially in relation to: the performance management of staff",
1034
and so on. I emphasise the words "rigorous self-evaluation" procedures. That is what we want to see included in the Bill.
The guidance further states:
"One of the principles of the NRwS"—
the New Relationship with Schools, the White Paper underlying this Bill—
"is that schools should have a single, integrated development plan which maps out the actions needed to bring about improvement. It should have regard for and incorporate previous plans that have an impact on the work of the school. It must be based on an objective assessment of the needs of the school and should set out the priorities for development. It is all too easy to identify a weakness and include that area for development without diagnosing exactly what needs to be done and why. An intelligent self-evaluation will identify the precise issue that needs tackling and what to do about it. In this way action can be targeted to have the greatest impact".
I conclude, just as I did on the last occasion, that, since development of capabilities in self-evaluation is crucial to the success of the new relationship with schools, the growth of that capacity in our schools is of vital concern to the Secretary of State and the chief inspector, who should be keeping the Secretary of State informed about the matter. I beg to move.
Lord Hanningfield: My Lords, we support the amendment. I know that the Minister will say that it does not need to be on the face of the Bill because it is going to happen anyway, but we are entering a new era. We all support the concept of having much more self-evaluation, whether it is for schools, local authorities or whatever. This needs to be on the face of the Bill to stress its importance as an integral part of the new regime.
Lord Sutherland of Houndwood: My Lords, I do not need to repeat comments that I made in Committee, because the noble Baroness, Lady Sharp, has done that well and succinctly. I wish to add a further comment.
This clause refers to the duties of the Chief Inspector. In the process of keeping the Secretary of State informed, a list is provided. A large part of that list properly concerns the outcomes of education and the kind of education that is being provided, but there is also reference in the list to how well the process of education is being managed. This is one of the big changes that have taken place over the past 15 or 16 years. Those of us in the business of education have been made aware of—and, I hope, have taken on board—the importance of managing the process of education in the most effective and efficient way.
The Bill and previous Acts also refer to the importance of the quality of leadership in, and management of, those schools, including the management of financial resources. Schools have changed and taken this on board. The amendment identifies another exceptionally important aspect of managing the process of education: being aware of what is going on in the schools for which you are responsible. Since we last debated this matter, I have

1035
reread the relevant sections of Plato. Socrates was quite right to say that self-knowledge is a source of true wisdom. This is self-knowledge for schools.
Baroness Perry of Southwark: My Lords, I also support placing the amendment on the face of the Bill. As has been cogently said by others, the whole process of short inspections depends on the school having a rigorous system of self-evaluation. We used to talk about such matters as the "reflective practitioner" or the "thinking school". This is being reified in the new system of inspections. The main object of the short inspection is to ensure that the school is performing self-evaluation in a way that is more than paying lip service and putting ticks in boxes. It is too easy for self-evaluation to become purely routine with no real reflection or growth of learning among the school community.
The Minister will probably say that the amendment is not necessary. It would be a strange Bill if it did not include this provision, because short inspections would make nonsense of the huge list of outcomes that the chief inspector had to report to the Secretary of State if it were not made clear that she or he should rely on the self-evaluation of the school for much of the judgment that would be made. Can we please have the amendment in the Bill? It would not be a major concession for the Government to make and it would cheer us all up immensely.
Baroness Andrews: My Lords, I am all for cheering up noble Lords, and the amendment provides an opportunity to expand on the arguments that we made in Committee. It is not that we are just saying that this matter does not need to be in the Bill because it would happen anyway. There are other arguments.
It pleases me that there is a consensus around the House that self-evaluation is a positive and progressive development which is very much about schools having self-improvement and self-knowledge at the heart of all the processes that they undertake as they engage in teaching. We welcome that. However, we believe, not out of perversity but because we are intellectually persuaded, that putting the amendment on the face of the Bill would create problems.
First, the amendment presumes that self-evaluation is an outcome in itself, rather than a means to raising standards. Logically, that is not consistent with inspection functions, which essentially relate to the way that a school is delivering. Self-evaluation is a means to an end; it is not an end in itself. It is about how a school is achieving. It is a process. Secondly, the amendment would undermine the autonomy that is reflected in the new relationship with schools. This is a matter which all noble Lords have welcomed, because it puts schools in charge of much more than has been typical in the past. That autonomy would be threatened by putting an amendment such as this into the Bill. I shall explain why. Thirdly, yes, I shall refer to the way that inspections are carried out, but more strongly to our provision of support for self-evaluation as part of that process.
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Regarding the first argument, noble Lords made part of my argument for me, because the point of self-evaluation is that it is a dynamic and developmental process. In principle and in practice it has been developed by people such as Professor John McBeath over many years in Scotland and England and has been about schools finding the confidence to discover what is and is not going well and to find out ways of measuring, reflecting and auditing that. It has been a long academic process and we have arrived at a position where many schools are carrying out self-evaluation as a matter of course. But they are at very different stages. Some are confident because they have been involved in pilot schemes, in academic work and research projects. Others are very much at the beginning of the process and need to learn from others. It is work in progress and that is a reason why we took a conscious decision not to have a model for self-evaluation—such as the Lloyds TSB model or many others in the field—but that it was a matter that schools had to decide for themselves.
Accepting the amendment would contradict the notion that this is a matter that schools will own, can test and grow in confidence over. We could not police in detail every activity that might contribute to how the outcomes are achieved. 1 understand the concerns expressed by the noble Baroness, but we need to recognise what self-evaluation means in the context of the classroom.
Turning to the second argument—this is a new, brave and important expression of our new relationship with schools. It establishes a partnership that we wish to have with schools, based on a high degree of professional trust and confidence. It is to the credit of the Government that they have moved in that explicit direction. We want schools to have more autonomy to manage themselves, to have their own improvement priorities determined by what they know and how that can be done better. We sincerely believe that the amendment cuts across that principle and basic common sense in terms of the role of evaluation.
Thirdly, how are we supporting schools to develop robust and effective systems? How will Ofsted contribute to that? Every school is different, is at different stages of development and needs different types of help. That is why the guidance that we are developing will be full, sensitive and comprehensive. The noble Baroness, Lady Sharp, has already quoted from it. Yes, it does pose acid questions, against which schools can test themselves to check whether their evaluation is effective. But we will also provide strategic guidance on how to complete a self-evaluation form.
Quality control must take place partly through inspection. It will be tested against the external, objective evidence that inspectors gather, but it will also be promoted by the advice and support given by critical friends, the school improvement partners. Their important role is to challenge the self-evaluation process, examine it, support it and help the school to obtain advice. If schools are failing to manage, the school improvement partner will report that to the governing

1037
body, which can be expected to try to address deficiencies. So there is a process for developing the best system.
6 p.m.
The final safeguard is that the framework requires inspectors to evaluate the quality of leadership and management, including, specifically, how effectively performance is monitored and improved through quality assurance and self-assessment. Leadership and management are critical. It is one of the areas about which the chief inspector already has a duty to keep the Secretary of State informed. The chief inspector already regularly comments on the extent and quality of self-evaluation and, as I have said, there is a whole process in place now.
It is unlikely that a failure to evaluate effectively would be the sole factor in any judgment which would place a school in an Ofsted intervention category, though, clearly, inspectors would look closely at how the school's self-evaluation matches their own findings. That, we believe, is an additional and sufficient incentive for schools to carry out self-evaluation robustly.
I hope on those three grounds that the noble Baroness will think again. We are deeply committed to the process of self-evaluation—getting the best out of schools. We do not reject the amendment out of perversity but because we are not intellectually persuaded by it.
Baroness Sharp of Guildford: My Lords, I thank the Minister for her response but I am not convinced by what she said. First, we ask for the amendment to go in Clause 2 but not in Clause 5. In other words, it requires the chief inspector to report to the Secretary of State on how far self-evaluation procedures are developing satisfactorily within the body of schools. It is not an issue that we are asking to be reported on for each individual school. Originally I thought that perhaps we ought to have added it to Clause 5, but as the Minister spoke, it struck me that perhaps it was good that we had not added the amendment to Clause 5 as well because there is a very strong case for making self-evaluation a general issue on which the chief inspector reports as distinct from a specific issue in relation to each school.
Secondly, the Minister argues that self-evaluation is about process, not about outcomes. Yet, when one looks at the issue of,
"the quality of the leadership in and management of those schools",
is that not a process issue rather than an outcome issue? Clause 2(1)(d) even goes on to say,
"including whether the financial resources made available to those schools are managed efficiently".
That is the heart of a process issue. So the process issue is already in the list in Clause 2(1) and there is no reason why the process issue should not be included with the development of the capability and capacity for self-evaluation.
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Thirdly, the Minister said—I found this very odd—that the amendment would undermine the basis of trust and confidence in schools. But asking schools to develop the capability of self-evaluation is indeed putting more trust and confidence in the school. That is one of the reasons why we applaud the development of the short, sharp inspection and of the whole process of putting the emphasis on self-evaluation. We like it. But the Minister has to recognise that developing the capacity for self-evaluation requires training and the development of ideas within the school, which take time and resources, but schools generally have to move down that pathway. By putting the amendment on the face of the Bill we are flagging it up as an important issue.
Noble Lords may remember that in the Education Act 2002 the fashionable idea was innovation. That Act was created around innovation. In this Bill we have fashionable ideas—the new relationship with schools, the single conversation, the school improvement partner. These new words are fluttering around. I ask the Government to put on the face of the Bill a little bit of the philosophy behind these fashionable ideas that they want. So I cannot see why the Government object. The amendment is thoroughly sensible. I do not accept the Minister's arguments and I should like to test the opinion of the House.
6.4 p.m.
On Question, Whether the said amendment (No. 13) shall be agreed to?
Their Lordships divided: Contents, 144; Not-Contents, 125.

Division No. 2

CONTENTS

Addington, L.

Eden of Winton, L.

Alton of Liverpool, L.

Elis-Thomas, L.

Anelay of St Johns, B.

Elles, B.

Astor of Hever, L.

Elliott of Morpeth, L.

Attlee, E.

Elton, L.

Beaumont of Whitley, L.

Falkner of Margravine, B.

Bell, L.

Feldman, L.

Blaker, L.

Fookes, B.

Bridgeman, V.

Fowler, L.

Brooke of Sutton Mandeville, L.

Freeman, L.

Brougham and Vaux, L.

Garden, L.

Buscombe, B.

Gardner of Parkes, B.

Caithness, E.

Geddes, L.

Cameron of Dillington, L.

Gilmour of Craigmillar, L.

Campbell of Alloway, L.

Glentoran, L.

Carnegy of Lour, B.

Goodhart, L.

Chadlington, L.

Greaves, L.

Chan, L.

Greenway, L.

Clement-Jones, L.

Hamwee, B.

Cobbold, L.

Hanham, B.

Colville of Culross, V.

Hannay of Chiswick, L.

Cope of Berkeley, L.

Hanningfield, L.

Courtown, E.

Harris of Richmond, B. [Teller]

Craig of Radley, L.

Hayhoe, L.

Cumberlege, B.

Hodgson of Astley Abbotts, L.

Darcy de Knayth, B.

Home, E.

Dearing, L.

Hooper, B.

Denham, L.

Hooson, L.

Dholakia, L.

Howe, E.

Dixon-Smith, L.

Howe of Idlicote, B.

Dykes, L.

Hunt of Wirral, L.

1039

James of Holland Park, B.

Perry of Southwark, B.

Jenkin of Roding, L.

Phillips of Sudbury, L.

Kalms, L.

Plummer of St. Marylebone, L.

Kilclooney, L.

Prashar, B.

Kimball, L.

Razzall, L.

King of Bridgwater, L.

Reay, L.

Laing of Dunphail, L.

Redesdale, L.

Lamont of Lerwick, L.

Rees, L.

Lester of Herne Hill, L.

Rennard, L.

Lindsay, E.

Renton, L.

Listowel, E.

Roberts of Conwy, L.

Livsey of Talgarth, L.

Roberts of Llandudno, L.

Luke, L.

Roper, L.

Lyell, L.

Russell-Johnston, L.

MacGregor of Pulham Market,

St. John of Bletso, L.

L.

St John of Fawsley, L.

McNally, L.

Sandberg, L.

Maddock, B.

Scott of Needham Market, B.

Maginnis of Drumglass, L.

Seccombe, B.

Mancroft, L.

Sharp of Guildford, B. [Teller]

Marlesford, L.

Shaw of Northstead, L.

Masham of Ilton, B.

Shutt of Greetland, L.

Mayhew of Twysden, L.

Skelmersdale, L.

Miller of Chilthorne Domer, B.

Smith of Clifton, L.

Miller of Hendon, B.

Steinberg, L.

Montrose, D.

Stewartby, L.

Morris of Bolton, B.

Sutherland of Houndwood, L.

Mowbray and Stourton, L.

Thatcher, B.

Moynihan, L.

Thomas of Gresford, L.

Murton of Lindisfarne, L.

Thomas of Walliswood, B.

Neuberger, B.

Tope, L.

Newby, L.

Tordoff, L.

Newton of Braintree, L.

Trenchard, V.

Noakes, B.

Tugendhat, L.

Northbrook, L.

Waddington, L.

Northesk, E.

Wakeham, L.

Oakeshott of Seagrove Bay, L.

Wallace of Saltaire, L.

O'Neill of Bengarve, B.

Walmsley, B.

Onslow, E.

Walpole, L.

Palmer, L.

Warnock, B.

Park of Monmouth, B.

Wolfson, L.

Young of Hornsey, B.

NOT-CONTENTS

Acton, L.

Evans of Parkside, L.

Ahmed, L.

Evans of Temple Guiting, L.

Andrews, B.

Falconer of Thoroton, L. (Lord

Archer of Sandwell, L.

Chancellor)

Ashton of Upholland, B.

Falkender, B

Bach, L.

Farrington of Ribbleton, B

Barnett, L.

Faulkner of Worcester, L.

Bassam of Brighton, L.

Filkin, L.

Bernstein of Craigweil, L.

Fyfe of Fairfield, L.

Birt, L.

Gale, B.

Blood, B.

Gibson of Market Rasen, B.

Borrie, L.

Giddens, L.

Bragg, L.

Golding, B.

Brennan, L.

Goldsmith, L.

Brett, L.

Gordon of Strathblane, L.

Brooke of Alverthorpe, L.

Goudie, B.

Brookman, L.

Graham of Edmonton, L.

Campbell-Savours, L.

Griffiths of Burry Port, L.

Carter, L.

Grocott, L. [Teller]

Christopher, L.

Harris of Haringey, L.

Clark of Windermere, L.

Harrison, L.

Clinton-Davis, L.

Hart of Chilton, L.

Crawley, B

Haskel, L.

David, B.

Haworth, L.

Davies of Oldham, L. [Teller]

Hayman, B.

Dean of Thornton-le-Fylde, B.

Hogg of Cumbernauld, L.

Desai, L.

Hollis of Heigham, B.

Dixon, L.

Howells of St. Davids, B.

Drayson, L.

Hughes of Woodside, L.

Dubs, L.

Hunt of Chesterton, L.

Elder, L.

Hunt of Kings Heath, L.

1040

Irvine of Lairg, L.

Ramsay of Cartvale, B.

Janner pf Braunstone, L.

Randall of St. Budeaux, L.

Jones, L.

Rendell of Babergh, B.

Jordan, L.

Richard, L.

Judd, L.

Rosser, L.

King of West Bromwich, L.

Rowlands, L.

Kirkhill, L.

Royall of Blaisdon, B.

Lea of Crondall, L.

Sawyer, L.

Leitch, L.

Scotland of Asthal, B.

Lipsey, L.

Sewel, L.

Lofthouse of Pontefract, L.

Sheldon, L.

McDonagh, B.

Simon, V.

Macdonald of Tradeston, L.

Smith of Gilmorehill, B.

McIntosh of Haringey, L.

Snape, L.

MacKenzie of Culkein, L.

Stone of Blackheath, L.

Mackenzie of Framwellgate, L.

Symons of Vernham Dean, B.

MacKenzie of Luton, L.

Taylor of Blackburn, L.

Mason of Barnsley, L.

Thornton. B.

Mitchell, L.

Truscott, L.

Morgan, L.

Tunnicliffe, L.

Morris of Aberavon, L.

Turnberg, L.

Patel of Blackburn, L.

Turner of Camden, B.

Pendry, L.

Uddin, B.

Peston, L.

Wall of New Barnet, B.

Pitkeathley, B.

Warwick of Undercliffe, B.

Plant of Highfield, L.

Whitaker, B.

Portsmouth, Bp.

Wilkins, B.

Prosser, B.

Williamson of Horton, L.

Prys-Davies, L.

Woolmer of Leeds, L.

Radice, L.

Young of Norwood Green, L.

Resolved in the affirmative, and amendment agreed to accordingly.
6.15 P.m.
Lord Hanningfieldmoved Amendment No. 14:
Page 2, line 24, at end insert—
"(g) the behaviour and discipline of pupils and levels of truancy in those schools."
The noble Lord said: My Lords, Amendments Nos. 14 and 23, in England, and Amendment No. 49, in relation to Wales, will introduce a new category to the inspection regime on which the chief inspector would report and be expected to keep the Secretary of State informed; namely, on the behaviour and discipline of pupils and the levels of truancy in each school. Similar amendments were moved in Committee. However, we have returned with a slightly refined amendment which will incorporate the level of truancy in each school which Ofsted will be expected to report on and assess.
As was argued in Committee, in recent years we have seen a very real and genuine concern about the growing levels of indiscipline and classroom violence in our schools. Such a development is simply unacceptable. Pupils have the right to expect to be taught in an environment free from intimidation and fear, while teachers deserve the right to get on and do their crucial jobs without a similar threat. It is indeed one of the key worries consistently identified by teachers. It is one of the main reasons—along with red tape—why teachers leave the profession.
Furthermore, we know that school standards and behaviour in the classroom are closely linked. Children learn best in a safe, secure and structured environment. They cannot learn in classes where loutish behaviour and disrespect for others is the norm.

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In recent weeks we have seen further concern about the inability to contain the levels of truancy. The report published by the National Audit Office on 4 February concluded that truancy in England had not fallen despite numerous government schemes and that nearly £1 billion had been spent on attempting to redress the problem. The report concluded that the school truancy rate is exactly the same as in 1997: 0.7 per cent.
Truancy, as we all know, is linked to crime and general disorder. Clearly, it is a serious problem and one which governments have failed to address. It is hoped that by incorporating this new Ofsted category, we will at least be attempting to bring a better understanding and knowledge of the issue. Indeed, in establishing it as a category, it will be possible for parents to identify which of their local schools have concerns relating to particular problems of discipline and truancy and will allow the relevant education authorities to identify the schools that are particularly affected and to target resources more effectively.
The noble Lord, Lord Sutherland, commented in Committee that he reckoned that discipline and truancy rated virtually as highly as academic standards when parents choose a school for their children. Clearly there is a need for such information to be assessed and made public if necessary. At present there is no category within the inspection regime that deals specifically with the concerns about school discipline and truancy. As concerns about the problem evolve, so must the inspection regime.
These are amendments that the vast majority of parents would support and welcome. I beg to move.
Baroness Walmsley: My Lords, I rise to support the amendment. We on these Benches would like to be tough not just on bad behaviour and truancy but on the causes of bad behaviour and truancy. We believe that there are two major causes of bad behaviour. The one stems from situations within the school, but the other very often stems from situations outside the school.
On the latter, we have today tabled an amendment, which will be published tomorrow and your Lordships will see, about support, help and information for parents, which we believe is a terribly important factor in helping children to learn how to behave well and helping parents to teach them how to behave well and to reinforce the messages that they are getting from within the school.
But the first of those two causes is something that happens within the school. Very often, bad behaviour is an indicator that teachers do not have good classroom management skills and/or that the curriculum is not relevant and suitable and interesting to some of the children who then become bored and do badly. The inspectors should be inspecting both of those two things anyway. However, where schools identify that they have a problem with bad behaviour, it is important that they look carefully at what they are or are not doing themselves that causes the situation to arise, and that
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they then do something about it. We think it perfectly reasonable that the inspectors should hold schools to account for what they do in that respect.
Baroness Howe of Idlicote: My Lords, I support the amendment moved by the noble Lord, Lord Hanningfield, and supported by the noble Baroness, Lady Walmsley. Bad behaviour and truancy have certainly been a problem during the 50 years or so that I have been involved with schools and juvenile courts. There does not seem to have been enough effort over a consistent period of time to deal with it sufficiently. We know that in schools some of the truant children tend to have parents with little belief in the value of schooling. Equally, it can be shown that where teachers and the school take a consistent attitude the schemes are beginning to have an effect—there are a number of examples in the National Audit Office report. What is worrying is the lack of any consistent pattern throughout schools, or throughout local education authorities. Sometimes a school complains that it does not get the backing of the local authority, and sometimes it is the other way round and due to the quality of the teachers.
The final paragraph of the executive summary of the National Audit Office indicates why it is essential that this should be on the face of the Bill. Being on the face of the Bill reaffirms the importance of a particular issue, even though, as the noble Lord will tell us, it is is happening already. The National Audit Office comments that Ofsted inspection teams have a unique insight into how schools are run, yet attendance plays a very small part in most inspections. We have a unique opportunity to put it on the face of the Bill, among the issues being considered by inspectors when they conduct their inspections. I hope we are not going to be put off by the fact that it is already covered and already happening. We know the Government have already taken a lot of steps, and the new Secretary of State for Education is clearly very concerned and firm about the things that have to be done. So why not reinforce the good work already undertaken by writing it into the Bill?
Lord Dearing: My Lords, I have no idea whether the Government will accept this amendment. If they do, so be it, but I have some comments.
I supported the proposal on self-evaluation by the noble Baroness, Lady Sharp, because it is new and central to the whole new approach to inspection. There is no track record and therefore it seemed to make sense to get it on the face of the Bill in Clause 2, not Clause 5. When we come to behaviour, we are not talking about something new. As has been said, it has been a problem for a long time and has not been getting any better. The issue is, specifically, do we need to tell the inspectors, "Hey! Behaviour: get into it", as opposed to other policies to deal with the issue?
I have said it before, but as far as the inspectors are concerned, since I think 1999—but over the past few years—there have been three special reports by the inspectorate on the issue of behaviour. It is dealt with in the annual reports. For example, the last report—

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which caught the national headlines—drew attention to the fact that there had been no improvement on that figure of around 10 per cent of schools where behaviour is not satisfactory, and pointed out that the percentage of schools that could be graded good or better in behaviour had fallen from about 75 per cent to two-thirds. Clearly, there is no need to tell the inspectors that this is important or that they need to look at it. They are indeed looking at it. The issue is not whether the inspectors are doing their job, but whether the policies are adequate to deal with the problem.
I have said before that if you are going to address the problem effectively it is through the teachers. I have been glad to see that the Government have inserted into the clause—is it Clause 72? I forget—that this is to be the specific job of the newly defined Teacher Training Agency, along with the moral, social and cultural—not physical—behavioural development of pupils. The Government have gone to where it really matters. As for policy, they are spending money—£250 million over the past three years, which is real money.
We also have the speech by the Secretary of State on 1 February in Blackpool. I cannot recall a Secretary of State devoting so much of a major speech to one issue, nailing her colours to the mast and acknowledging that there needs to he a new look at this problem:
"I believe we must redraw the lines of what is acceptable behaviour".
So I am seeing a realisation by a Secretary of State that there is a major issue, that we have not got it right yet. The noble Baroness, Lady Howe, spoke some time ago about the findings by Professor Elliott, then of Newcastle University, that, by world standards, our standards of behaviour in schools are not good enough. I will not say exactly what he said because he may have gone a touch too far in relation to the evidence.
If the Government want to accept the amendment, fine. However, I do not think it is the issue. The inspectorate are doing the business.
Baroness Warnock: My Lords, I am in sympathy with one of the things said by the noble Baroness, Lady Walmsley, about the need to look at the causes of problems which have been with us for such a long time. One thing that the inspectorate perhaps should look at, which is why I am inclined to support the amendment, is the policy of the school with regard to children who might be classified as having special needs, particularly in the behavioural and emotional area. Children who, for various reasons, are incapable of concentrating or of not disrupting other children are put in the ordinary classroom as a matter of government policy. These children may cause other children to behave as badly as they do themselves. It is important for the inspectorate to address whether there is enough support for children who are being included in the mainstream because of the Government's well-intentioned policy. I have had letters from numbers of teachers who say that the policy of inclusion causes immense problems in the area of behaviour in the classroom.
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It would be within the scope of the new relationship between the inspectorate and the schools—which I greatly welcome—to comment on the inclusion policy of the school: whether it is well implemented, or can be made to work, or is too ambitious for the resources of the school. That has an enormous effect on the behaviour of children in school and on the ethos of the school. It is very difficult to manage children who are designated unmanageable in a large school and a large classroom. The inspectorate could comment on that in its inspection.
6.30 p.m.
Baroness Perry of Southwark: My Lords, I had not originally intended to intervene in this debate. because the arguments have been so cogently made and the noble Baroness has just added her weighty voice arguing for the importance of the amendment. However, I was so surprised by the arguments advanced by the noble Lord, Lord Dearing, against the amendment that I had to intervene.
The noble Lord's argument seemed to be on two counts: first, that the inspectorate should not be told to do something that has previously existed. If we look at the list of things that the chief inspector has a general duty to keep the Secretary of State informed about, we cannot think that any of them are new. The quality of education? I would hope that it had been considering that for some time. Do schools meet the needs of pupils? Do they reach a satisfactory educational standard? What is the quality of their leadership? All of those duties have existed for a long time, and I hope that the inspector will continue to report on such things, which have been and will continue to be important in the provision of education.
The noble Lord's second argument seemed to be that because the Government were doing something about that and spending £250 million it did not matter whether anyone looked to see whether that money was being well spent. Surely to goodness, if we have a huge range of government initiatives, which we all welcome, to do something about misbehaviour and unruly behaviour in schools, it is terribly important that the inspectors ensure that those initiatives are working and that the money is being well spent. Any Secretary of State would want to know that. It is one of the great advantages of having an inspectorate that it can report back to the Secretary of State on the efficacy of the initiatives that she or he has introduced.
So there is no possible argument against including that in the Bill. It is such a major issue of public concern. A few children misbehaving in a class can deny the right to be educated to the rest of that class. I have been in classrooms where two or three children were misbehaving and the educational structure was simply breaking down. The teacher could not get on, with her lesson, and the rest of the class could not get on with learning. That is a crucial, central issue, and I hope that, whatever the civil servants have said to Ministers about

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the provision being already there, Ministers will use their own considerable wisdom and say that, yes, that is a good thing to have in the Bill.
Baroness Carnegy of Lour: My Lords, I re-emphasise what my noble friend just said. I was astonished by the reply that the Minister read out to the previous amendment about self-evaluation. When that is read, it will look pretty peculiar. I am glad that the House has changed that part of the Bill, and I hope that the Government will see fit to leave it thus.
If parents discovered that the Government had said that they did not want to include in the Bill the obligation on the inspector to inform the Secretary of State about behaviour, discipline, and levels of truancy, they would be absolutely astonished. Those are considered to be among the major problems in education. If we are to hear the argument that it is not fair to do that, as I suspect we may, most parents would think it very fair. It is all about how a school is run, the ethos of the school, the leadership of the school and the general atmosphere in which children live in the school. I hope that the Minister will give us a nice, friendly reply and either accept the amendment or at least say that the Government will consider it.
Lord Filkin: My Lords, I hope that I always give nice, friendly replies. As noble Lords would expect me to say, I thought that the noble Lord, Lord Dearing, put his finger on it. Behaviour, discipline and attendance are fundamental to educational attainment and the achievement of the five outcomes. If we thought for a second that we would improve those by one jot by underlining what is already happening, we would do so, but I am afraid that, irrespective of the advice that one receives from civil servants, Ministers should not legislate when they think a provision otiose or that it does not serve the purpose. That would be kidding the House; that would be fooling the House.
Let me make it absolutely clear that, as the noble Baroness, Lady Howe, was gracious enough to acknowledge, you could hardly find an issue higher up the agenda of the new Secretary of State for Education and Skills than this one. She has absolutely cited that behaviour, attendance, the ethos of the school and the discipline of pupils are fundamental to the learning of all pupils and to parental confidence in the education system. She is absolutely right in that respect; that goes to the heart of the matter.
So would the amendment make a difference? The chief inspector has reported on behaviour and attendance in every one of his annual reports since the creation of Ofsted in 1992. If the House feels that in some way he is about to stop doing that, no doubt it will vote for the amendment, but the chief inspectors, present and past, are not foolish. They understand the centrality of the matter, and the Secretary of State wants advice from the chief inspector about how he views the behaviour, attendance and discipline in the schools that he has inspected during the past year. It is central for him to express his responsibilities in that
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way. Whether or not that is in the Bill will not stop or hinder him or make the slightest difference one way or the other.
Why will the chief inspector be so clear on that? He has already made it clear that, as part of the framework for schools under the new inspection arrangements, inspectors will evaluate the behaviour and attendance of learners. No child can learn if he does not attend school or is in a disruptive or rowdy atmosphere. Attendance and behaviour are fundamental to the inspection process. He has therefore made it clear that inspectors will in every school that they inspect consider how behaviour, discipline and attendance affect the extent to which pupils are achieving and the school's contribution to the children's well-being.
Going further than that, we have set out the process of joint area reviews, whereby Ofsted, as the lead inspectorate, will consider the arrangements in a local authority area and see how all the bodies collectively contribute to good outcomes for children. The draft framework for inspection of children's services through joint area reviews, which is currently out for consultation, will explicitly identify where behaviour, discipline and truancy can be captured in relation to the impact on those outcomes. So it will find expression not only through individual school inspections and the annual report of the chief inspector but through the fundamentally important joint area review processes.
Going further, as the noble Lord, Lord Dearing, acknowledged, we have already tabled our own amendment to ensure that the new teacher development agency will, in securing a well trained workforce, ensure that it is able to promote good behaviour in our schools. Much of that provision will be inspected by Ofsted.
As I said, behaviour and attendance are already a major aspect of what inspectors consider. Reference was made to the Secretary of State's speech on 1 February, to which I shall briefly refer. It would he wrong to believe that the problem is in any respect getting out of control. That does not mean for a second that we do not think that there is an enormous need to have a much stronger push for better behaviour and attendance in our schools. She said in that speech that getting it right meant making it clear that there were clear boundaries and that crossing them would lead to consequences.
First, local authority directors will review schools where behaviour is rated unsatisfactory by Ofsted. Secondly, Ofsted will follow up visits to every school where behaviour is rated as unsatisfactory within 12 months to check on progress and ensure that improvement is under way. Thirdly, there will be a new drive by local authorities to use parenting orders to enforce parents' responsibility to enforce discipline and attendance at school. Fourthly, schools will pool their experience in new foundation partnerships, with resources devolved to their control to enable them to buy support to remove disruptive pupils from classrooms and nip their bad behaviour in the bud.

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A key element of the package of changes relevant to this Bill is that the chief inspector has agreed to revisit those schools where behaviour has been judged unsatisfactory. So the inspection process will reinforce it.
On attendance, inspectors are directed through the guidance to look at pupils' levels of attendance and the efforts schools are making to ensure it. It is therefore self-evident that inspectors must consider school attendance as part of their inspection.
I will say a few words on Wales. The amendment refers to an explicit duty on the chief inspector to inform the Assembly. The Assembly already recognises the difficulties faced by teachers and staff dealing with disruptive pupils and is committed to improving attendance. The fall in absenteeism in Wales in 2003, for the third consecutive year, is encouraging. For this very reason, in meeting the requirements of Clause 19 to keep the Assembly informed about,
"the educational standards achieved in schools",
the chief inspector gives specific attention to these areas. To reflect and discharge this duty the new common inspection framework introduced in Wales from September 2004 makes explicit reference to behaviour, discipline and attendance. With specific reference to such developments, inspectors will be required to assess how well learners achieve and to include judgments on how pupils behave, on how they achieve high levels of attendance and on their motivation. Estyn requires inspectors in every instance to evaluate and report on standards of behaviour from direct observation.
I could not make it clearer how strongly the Government believe that improving behaviour, attendance and discipline in schools is in the interests of children. It is in the interest of parents who want their children to have good outcomes. Fundamental will be getting parents to work with schools in recognising that they have a role to play in supporting discipline and learning in schools, and the schools to support those parents in doing so. I have signalled some of the measures that we will be taking to drive this forward powerfully. Our commitment could not be stronger. We do not want to fool the public into thinking that putting the words into the Bill will make any difference one way or the other. We will drive these changes, not through this measure but through the other measures that I have signalled. Our commitment and the chief inspector's commitment to this could not be stronger.
Baroness Carnegy of Lour: My Lords, before the Minister sits down, with the greatest respect, this part of the Bill is not about all that, but about whether the chief inspector reports to the Secretary of State on how it is all going—the overall picture.
The noble Baroness on the Liberal Democrat Front Bench made that point about the previous amendment. This is a general requirement. If, after all that the Minister has said, the chief inspector is not
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obliged to report to the Secretary of State on that matter, where are we? It is a very strange reply that he has given.
Lord Filkin: My Lords, I want to respond to the noble Baroness—briefly, because I do not think we have a meeting of minds on this.
If we thought that there was the slightest doubt that the chief inspector would not see that behaviour, attendance and discipline were not central to learning and the ability of schools to teach. we would put such a duty on him. It is obvious that he sees that. I have reinforced and explained that for all the procedural guidance. The killer, in summation, is that he has been doing that for every one of the past 13 years. Thank heavens that he has. He will continue to do so in the future.
Baroness Howe of Idlicote: My Lords, of course it was extremely reassuring to hear what he had to say about the future. What is really worrying me is this same quote from the National Audit Office, to the effect that Ofsted inspection teams have had a very small part in most inspections. There is a risk that the most is not being made of inspectors' wide experience to help schools and authorities improve.
The Minister is talking about the future—we are all impressed with the extent to which the Secretary of State has laid out plans and the noble Lord has reiterated them—but it has not been happening in the past. Clearly, if one has taken note of what the National Audit Office said, why not reinforce the whole thing by putting it in the Bill?
Lord Hanningfield: My Lords, it has been an interesting debate. I am going to use some of my experience as, apart from being on the Front Bench here, I am leader of the authority with the most schools and most pupils in the whole country—600 schools.
I have seen things at first hand for many years. I do not often agree with the noble Lord, Lord Dearing, but in this case I do. Schools need help. They really need help.
What we are doing by putting this in the Bill is raising its profile in Ofsted inspections. I very much support what the noble Baroness, Lady Howe, just said. For years we had the same problem. I have seen a school turned round very rapidly by a new head teacher—the same school, the same pupils. It can be done. Therefore, we raise the profile.
I agree with the noble Baroness, Lady Walmsley, that we need to tackle the problems to get the cure. What we are trying to do is to give a little help. I want to repeat that it is probably our biggest problem in the whole education world at the moment. I support what the Secretary of State says, but one swallow does not make a summer and one speech does not cure the problem. We need the problem cured at the roots, which is in the schools.
In my own county there are different problems in different schools, different solutions for different areas. It is not easy. I have tried to tackle it and am very

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much one of the ones concerned about it. I sincerely believe that this is one of the most important amendments that I am putting forward. As the noble Baroness, Lady Howe, just said, we must raise the profile and use the Ofsted inspections and inspectors to help the whole system, to help schools solve it. Every school needs a different solution. There is no national solution. By putting it in the Bill we are raising the profile. I know that all the good work will continue but this amendment is needed if we are going to get the education system to work in this country. I must test the feeling of the House.
6.46 p.m.
On Question, Whether the said amendment (No. 14) shall be agreed to?
Their Lordships divided: Contents, 127; Not-Contents, 120.

Division No. 3

CONTENTS

Addington, L.

Hooson, L.

Astor of Hever, L.

Howe, E.

Attlee, E.

Howe of Aberavon, L.

Beaumont of Whitley, L.

Howe of Idlicote, B.

Blaker, L.

Hunt of Wirral, L.

Brooke of Sutton Mandeville, L.

James of Holland Park, B.

Brougham and Vaux, L.

Jenkin of Roding, L.

Buscombe, B.

Jopling, L.

Caithness, E.

Kalms, L.

Carnegy of Lour, B.

Kimball, L.

Clement-Jones, L.

Laing of Dunphail, L.

Colwyn, L.

Lamont of Lerwick, L.

Cope of Berkeley, L.

Lester of Herne Hill, L.

Courtown, E.

Lindsay, E.

Craig of Radley, L.

Livsey of Talgarth, L.

Craigavon, V.

Luke, L.

Cumberlege, B.

Lyell, L.

Denham, L.

MacGregor of Pulham Market,

Dixon-Smith, L.

L.

Dykes, L.

Maclennan of Rogart, L.

Eden of Winton, L.

McNally, L.

Elis-Thomas, L.

Maddock, B.

Elles, B.

Maginnis of Drumglass, L.

Elliott of Morpeth, L.

Mancroft, L.

Elton, L.

Marlesford, L.

Falkner of Margravine, B.

Masham of Ilton, B.

Feldman, L.

Mayhew of Twysden, L.

Ferrers, E.

Miller of Chilthorne Domer, B.

Fookes, B.

Miller of Hendon, B.

Fowler, L.

Montrose, D.

Freeman, L.

Morris of Bolton, B.

Freyberg, L.

Moynihan, L.

Garden, L.

Murton of Lindisfarne, L.

Gardner of Parkes, B.

Neuberger, B.

Geddes, L.

Newby, L.

Gilmour of Craigmillar, L.

Noakes, B.

Glentoran, L.

Northbrook, L

Goodhart, L.

Northesk, E.

Greaves, L.

Oakeshott of Seagrove Bay, L.

Greenway, L.

O'Neill of Bengarve, B.

Hamwee, B.

Park of Monmouth, B.

Hanningfield, L.

Patten, L.

Harris of Richmond, B. [Teller]

Perry of Southwark, B.

Hayhoe, L.

Phillips of Sudbury, L.

Hodgson of Astley Abbotts, L.

Plummer of St. Marylebone, L.

Home, E.

Razzall, L.

Hooper, B.

Reay, L.

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Redesdale, L.

Stewartby, L.

Rees, L.

Stoddart of Swindon, L.

Rennard, L.

Thatcher, B.

Renton, L.

Thomas of Gresford, L.

Roberts of Conwy, L.

Thomas of Walliswood, B.

Roberts of Llandudno, L.

Tope, L.

Roper, L.

Tordoff, L.

Russell-Johnston, L.

Trenchard, V.

St John of Fawsley, L.

Tugendhat, L.

Sandberg, L.

Ullswater, V.

Seccombe, B. [Teller]

Waddington, L.

Sharp of Guildford, B.

Wakeham, L.

Shaw of Northstead, L.

Wallace of Saltaire, L.

Shutt of Greetland, L.

Walmsley, B.

Skelmersdale, L.

Walpole, L.

Smith of Clifton, L.

Warnock, B.

Steinberg, L.

Wolfson, L.

NOT-CONTENTS

Acton, L.

Hogg of Cumbernauld, L.

Ahmed, L.

Hollis of Heigham, B.

Amos, B. (Lord President of the

Howells of St. Davids, B.

Council)

Hughes of Woodside, L.

Andrews, B.

Hunt of Chesterton, L.

Archer of Sandwell, L.

Hunt of Kings Heath, L.

Ashton of Upholland, B.

Irvine of Lairg, L.

Bach, L.

Janner of Braunstone, L.

Barnett, L.

Jones, L.

Bassam of Brighton, L.

Jordan, L.

Blackstone, B.

King of West Bromwich, L.

Blood, B.

Kirkhill, L.

Borrie, L.

Lea of Crondall, L.

Bragg, L.

Leitch, L.

Brennan, L.

Lipsey, L.

Brooke of Alverthorpe, L.

Listowel, E.

Brookman, L.

Lofthouse of Pontefract, L.

Carter, L.

McDonagh, B.

Christopher, L.

Macdonald of Tradeston, L.

Clark of Windermere, L.

McIntosh of Haringey, L.

Clinton-Davis, L.

MacKenzie of Culkein, L.

Crawley, B.

Mackenzie of Framwellgate, L.

Dahrendorf, L.

McKenzie of Luton, L.

David, B.

Massey of Darwen, B.

Davies of Oldham, L. [Teller]

Maxton, L.

Dean of Thornton-le-Fylde, B.

Mitchell, L.

Dearing, L.

Morgan, L.

Dixon, L.

Morris of Aberavon, L.

Drayson, L.

Patel of Blackburn, L.

Dubs, L.

Paul, L.

Eatwell, L.

Pendry, L.

Elder, L.

Pitkeathley, B.

Evans of Parkside, L.

Plant of Highfield, L.

Evans of Temple Guiting, L.

Portsmouth, Bp.

Falconer of Thoroton, L. (Lord Chancellor)

Prosser, B.

Ramsay of Cartvale, B.

Falkender, B.

Randall of St. Budeaux, L.

Farrington of Ribbleton, B.

Rendell of Babergh, B.

Faulkner of Worcester, L.

Richard, L.

Filkin, L.

Rosser, L.

Fyfe of Fairfield, L.

Rowlands, L.

Gale, B.

Royall of Blaisdon, B.

Gibson of Market Rasen, B.

Sawyer, L.

Giddens, L.

Scotland of Asthal, B.

Golding, B.

Sewel, L.

Goldsmith, L.

Sheldon, L.

Gordon of Strathblane, L.

Simon V.

Graham of Edmonton, L.

Snape, L.

Grantchester, L.

Sutherland of Houndwood, L.

Griffiths of Burry Port, L.

Symons of Vernham Dean, B.

Grocott, L. [Teller]

Taylor of Blackburn, L.

Harris of Haringey, L.

Thornton, B.

Harrison, L.

Tomlinson, L.

Hart of Chilton, L.

Triesman, L.

Haskel, L.

Truscott, L.

Haworth, L.

Tunnicliffe, L.

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Turner of Camden, B.

Whitaker, B

Uddin, B.

Wilkins, B.

Wall of New Barnet, B.

Williamson of Horton, L.

Warwick of Undercliffe, B.

Woolmer of Leeds, L.

Watson of Invergowrie, L.

Young of Norwood Green, L.

Resolved in the affirmative, and amendment agreed to accordingly.
6.57 p.m.
Lord Hanningfieldmoved Amendment No. 15:
Page 2, line 24, at end insert—
"( ) The Chief Inspector must keep under review the contribution made by schools in England to working with the children's services authority for the area in which the school is situated and the authority's relevant partners to improve the well-being of children and relevant young people within the authority's area."
The noble Lord said: My Lords, these amendments pursue the intention that the Every Child Matters principles at the heart of the Children Act 2004 are not lost in the Bill. Although we agree that details of process are not necessarily required in primary legislation, we are concerned that aspects of the Bill are being agreed to on the back of a policy whose thinking is not 100 per cent developed. Currently, the policy development of A New Relationship with Schools shows the "single conversation" and the role of the school improvement partner to be about educational attainment.
That will not change if the Bill does not place a duty on the chief inspector to inspect schools' contribution to the whole policy. Given that shorter, sharper inspections will be the future of school inspections, Ofsted will not have the resources to judge non-statutory outcomes. It is not consistent or equitable for local authorities, as the champions of children's services, to be judged on the performance of schools—through the proposed joint area reviews, to which the Minister referred in his previous answer—without a reciprocal duty on schools. Having the wider school contribution specified but not prescribed in the Bill will aid local authorities, which value legislative clarity in the face of policy confusion.
Amendment No. 15 and Amendment No. 50, which relates to Wales, would ensure that it is a HMCI function to check how schools engage with other institutions responsible for the well-being of children and young people within the authority's area. Amendment No. 26, and Amendment No. 52, on Wales, would add schools' contribution to working with the children's services authority and other agencies to the criteria upon which the chief inspector must report.
The joint area reviews will be very important from the local authorities' point of view. Schools must be told that they will have to contribute and that it will not be for only local authorities to do so. I beg to move.
7 p.m.
Baroness Walmsley: My Lords, Amendment No. 25, which is tabled in my name, is almost the same as the noble Lord's amendment. I associate myself and
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these Benches with the words of the noble Lord, Lord Hanningfield, in introducing this group of amendments.
My amendment is very similar to one tabled in Committee, when the Minister very patiently responded at length to my long list of questions. Despite his patience and thoroughness, I still wish to see concrete provision in the Bill to ensure a role for Ofsted as a "lever of influence", to use the Government's words, under the requirements of the Children Act 2004.
In his reply to me the Minister began with something with which I strongly agree:
"Earlier in our proceedings we stated that the well-being objectives are not separate from, in conflict with or irrelevant to the tradition of educational attainment. I think that there is a broad consensus in the Committee on that point".
Indeed there was and there still is. Unfortunately he went on to say something with which I do riot agree:
"The amendment tabled by the noble Baroness, Lady Walmsley, attempts to include the contribution made by the school to working with the children's services authority and its relevant partners to improve the well-being of children and relevant young people within the authority's areas. That represents a substantial loss of focus away from the school and the work it does for its own pupils".
The words of the noble Baroness, Lady Andrews, earlier this evening are to be taken into consideration here. She said that the outcomes in relation to wellbeing of the Children Act 2004 are integral to every aspect of a school's work. I disagree with the Minister's suggestion that it would be removing the school's focus, because its focus is in fact on every aspect of children's well-being as it goes through its educational work with those children.
The Minister went on to illustrate his point by talking about the links with the wider community that Ofsted inspections already explore in several ways:
"first, the extent to which the curriculum meets the external needs; secondly, the way in which schools work with other services to guide, care for and support their pupils, and, thirdly, how well resources are managed and the effectiveness of any links with other providers of children's services".
He continued to talk about extended schools:
"In schools with extended services, which have been included in pilot inspections, inspectors report on how the services were selected to meet the needs of the community and what impact they have on the children's development".
That is all very well but extended schools are not the only way in which schools are broadening what they do in the community. There are, in particular, more and more links of one school with another. That is one of the aspects that the inspectors need to consider. In introducing the Education Act 2002, on which I worked with my noble friend Lady Sharp, the Government were keen on clusters of schools working together for innovation and various improvements.
Those partnerships are the sorts of things that the inspector needs to be looking at to see how well schools are engaging. The Minister talked about the school improvement partner—SIP—
"who will act as a critical friend. The school's engagement with the wider community and its effect on educational outcomes will feature in this single conversation between the SIP and the school".—[Official Report, 11/1/05: cols. 214–215]

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It occurs to me that the SIPs will have an awful lot of work to do; they have been mentioned four or five times this evening already. They are new. Therefore, we cannot rely on whatever they think they might be going to do. The matter is so important—and we all know how important it is to the Government as well as to these Benches and the Conservative Benches—that I cannot understand the Government's resistance to putting it in the Bill.
Lord Filkin: My Lords, I shall speak to Amendments Nos. 15, 25, 26, 50 and 52 together, although as I signalled earlier I do not necessarily see that some of the later amendments are consequential on the first.
The key publication Every Child Matters: Change for Children in Schools set out the implications for schools of the Children Act 2004 and the wider programme of change we are introducing to improve children's well-being. I know that in large measure we share a common view on the importance of that, and these are broadly relevant processes to achieve better outcomes.
That document makes it very clear that success depends on services working together. The local context in which schools are working will change as local authorities in England develop children's trust arrangements. I can assure both Benches that schools must play an active role in the wider community and cannot work in isolation from one another or other agencies.
I turn to Amendments Nos. 15 and 50, which require the chief inspector to keep under review the contribution made by the school to working with the children's services authority. We believe that in practice that is rendered unnecessary as a result of the remit he has in relation to the development of integrated arrangements for inspecting children's services through joint area reviews in England. I hope that the noble Lord, Lord Hanningfield, finds that helpful and clarifying.
Noble Lords will be aware that we are introducing joint area reviews which will draw together for the first time a range of inspection findings determined by a common approach through an overall framework for inspection of children's services. This framework will draw on and be informed by school inspection findings for schools within the area. It will also include additional surveys of pupils in the area to seek their views about their experience of the services provided.
The joint area reviews to which the noble Lord, Lord Hanningfield, rightly referred will then assess what it is like to be a child in a local authority area. They will report on how effectively the local partners work together to improve well-being for children and young people in the locality. The new arrangements will be introduced in September 2005. Ofsted and the nine other relevant inspectorates are consulting on a draft of the framework and on arrangements and criteria for joint area reviews.
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Through that requirement to inspect children's services, the joint area reviews will achieve what is intended by the amendment of the noble Lord. Lord Hanningfield. They will serve to keep under review the contribution made by schools and other services to working with children's services authorities. We can expect the chief inspector to report his findings in his annual report as well as in reporting on the outcomes from individual reviews.
The joint area reviews will look at how organisations are co-operating and the chief inspector will expect his annual report also to report on that. In Wales a children's services authority's functions under the Children Act, including the contribution made by partners at all levels, will be inspected by the Assembly, and in so far as relating to education, training and youth support services, by Estyn.
Amendments Nos. 25, 26 and 52 relate to the contribution made by the school to working with the children's services authority. I shall speak to amendments for both England and Wales here.
It is right that a central aspect of school inspections should lie in assessing the contribution made by schools to the well-being of their pupils. School inspections already explore links with the wider community through judging the extent to which the curriculum meets external needs and the way in which schools work with other agencies to guide, care for and support their pupils and how well resources are managed.
In Wales work is in hand to cross-reference the five elements of well-being as defined in the Children Act to the new common inspection framework. Inspectors therefore assess in Wales whether the school,
"has clear, well-documented procedures for assuring pupils' well-being and health and safety when in the school's care".
I will say a little more about extended schools. We are looking to all schools over time to provide a core of extended services either on-site or across a cluster of local schools and providers. In schools with extended services that have been included in pilot inspections inspectors report on how the services were selected to meet the needs of the community and what impact they have on the children's development and how effectively they are used as a resource.
The amendments seek to have school inspection address the contribution made by the school to working with the children's services authority. As the noble Baroness, Lady Walmsley, knows, that goes back to debates that we had in the Children Act. Those debates were well-ventilated in another place and in this Chamber; and Parliament decided that the duty to co-operate should sit at a strategic level. There were plenty of other mechanisms for ensuring that schools were motivated to work co-operatively with others.
I do not believe that we should repeat those debates. The Government have not changed their position since the Children Act in thinking that a specific duty on schools in that respect is unnecessary, because there are other mechanisms for doing so. The other mechanisms being developed draw together a view on the provision made by a children's services authority, including the contribution made by partners at all levels.

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A children's services authority's functions under the Children Act will be inspected. The part played by schools in promoting well-being and in working with the wider community will be inspected, but schools were deliberately not identified in the Children Act as relevant partners required to work with the local authority to improve well-being because arrangements were seen as relating to strategic service planning, which is not the prime function of schools.
If implemented, the amendments would divert attention away from the purpose of school inspection. That is my central point. When an inspector goes into a school, the parents are expecting the inspector to tell them what the school is doing to improve the education and other well-being attainments of its own pupils. The inspector is not expected to report on whether a school is assisting pupils in other schools in other parts of the authority. The parents want the focus to be clear, sharp and strong on that individual school. Parents are right in that respect. Surveys of parents tell us that what a school does as regards the achievements of their own children is what matters—for proper, good parental reasons.
A duty on an inspector to consider how much a particular school contributes to the educational or other well-being attainments of children elsewhere in the authority will do a range of things. We will lose parental confidence that our focus is right. We will increase the burden of the inspection process and will distract it from its fundamental focus, and it will add to the scale of inspections. For all of those reasons, it is not desirable.
As I have signalled, through joint area reviews there are strong processes for Ofsted and the other inspectorates to see how the agencies are co-operating to address the children's outcomes. Nothing is lost as a consequence. In other words, we should keep the joint area reviews looking at the wider co-operative arrangements, but there should be a tight focus by Ofsted looking at how a school serves its pupils in raising their attainments. That is why we believe that we have got it right. We do not want to go back to the Children Act debates that we enjoyed so much in months gone by. I hope therefore that that is helpful to the House.
Lord Hanningfield: My Lords, I thank the Minister for that reply, parts of which were helpful. However, there should be more duty on schools to play their full part under Children Act provisions. I accept the joint reviews, and I am supportive of them, but I hope that they will identify progress as regards both the social support of children and the education of children.
As I see it, because of the competitive nature of schools trying to improve their standards, some schools might not want to play the full part in the Children Act provision that we all want. Therefore, I do not see some of the answers given by the Minister working in practice. We will come on to that debate later, when we talk about funding in schools. If one has real vision about what will happen to the school campus over the next 10 to 15 years and how extended
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schools will work, there will be a great deal of activity. The school is a valuable investment by the community—the taxpayer—which is not used enough.
If extended schools are properly developed, there will be all sorts of people on the school campus at different times, with money coming into the school from different sources. The school will have to play its full part in that, which is very exciting. If we could get that to work, we might solve some of the problems that we have talked about. The amendment might edge a few schools towards that, even if some are a bit reluctant. I shall not press the amendment, and I beg leave to withdraw it.
Amendment, by leave, withdrawn.
Baroness Walmsleymoved Amendment No. 16:
Page 2, line 37, after "teachers" insert "and other staff involved in providing support for teaching and learning"
The noble Baroness said: My Lords, in speaking to Amendment No. 16, I shall speak also to Amendment No. 17. The amendment probes whether or not Ofsted will have a role in inspecting training and professional development for the school workforce more widely than just teachers.
I tabled the amendment in Committee. In response, the Minister said:
"The noble Baroness proposes that Ofsted should now he given a power not only to examine the work of support staff in schools, but also the training that they receive and for which Part 3 of the present Bill provides.
That would parallel exactly the powers that the chief inspector already has in respect of teachers. On the face of it, it seems a sensible suggestion. Although this will shock the noble Baroness, Lady Walmsley, with noble Lords' permission the Government would like to reflect further on it".—[Official Report, 11/1/05; col. 236.]
7.15 p.m.
Indeed, the noble Lord has reflected further. I have here an excellent letter from the Minister, which is extremely helpful and for which I thank him very much. The Minister referred to two substantive issues.
He states:
"First, it is clearly right that the new Agency should be able to call on the expertise of Ofsted and, if appropriate, other inspectorates where that would be of value in reaching decisions on whether or not to make financial support available. Second, it is also clearly right that there should be a clear distinction in practice between those matters for which Ofsted is responsible and those which fall within the remits of other bodies, such as ALI"—
the adult learning inspectorate—
"or the Quality Assurance Agency (QAA). As I have explained, the inspection of some of the training for school support staff which the Training and Development Agency for Schools will sponsor is likely to fall more obviously to ALI rather than Ofsted. There are also potentially some varieties of training for teachers and other members of the school workforce which would be the preserve of the QAA".
It seems that the matter was perhaps a little more complicated than I might have indicated in Committee.
Towards the end of the letter, the noble Lord states:
"I do concede that there is a legitimate argument in favour of widening Ofsted's legal powers to some extent beyond the training of teachers and specialist teaching assistants (despite the fact that

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these are the only groups of staff involved in delivering teaching for whom there are currently national vocational standards in place) in order to ensure maximum flexibility for the future. I have therefore asked officials to discuss this issue again with Ofsted and other stakeholders and to identify a more suitable form of words that goes further towards meeting the intentions behind your amendment with a view to Third Reading".
I thank the noble Lord very much for that. I want to say no more today than to give him an opportunity to perhaps say a little more about his thinking in that direction and what we might expect to see at Third Reading. I beg to move.
Baroness Andrews: My Lords, I am glad that the noble Baroness found the letter from my noble friend helpful. As she said, we agreed in Committee to consider the matter further. The correspondence was the next stage. This is an important issue, which we have acknowledged. The work that the Teacher Training Agency and Ofsted have carried out together in recent years has shown what an essential role inspection of provision can play in assuring and improving the quality of teacher training. The amendment would extend that role in a logical way.
As the noble Baroness said, we have been at great pains to consider how the substance of the amendment might be reflected in the Bill. We have discussed it widely with the TTA and Ofsted. However, the closer that we have looked at the issue, the more potential difficulties have arisen, which I hope I will explain to the satisfaction of the noble Baroness.
The chief inspector's powers as regards the inspection of school workforce training are set out in Section 18A of the Education Act 1994. Schedule 14 to the Bill re-enacts those provisions as Section 18B. That allows for the inspection of initial and in-service training for teachers and specialist teaching assistants only. I need to make it clear that the performance of the wider school workforce is an entirely different matter and one that already falls within Ofsted's general functions of informing and advising the Secretary of State about the quality of education.
My right honourable friend has already asked the chief inspector to examine how well prepared support staff are for the roles that they are asked to play and to report on that by autumn 2006. So it is a live issue. But the scope of the chief inspector's functions in inspecting training covers only the three groups of staff working in the classroom for whom there is training to national standards; namely, head teachers, teachers and higher-level teaching assistants. Ofsted already inspects or has the necessary powers to inspect those in the future.
As the noble Baroness is aware, other sorts of staff are involved in teaching in schools for whom there are currently no national standards. The functions of a teaching assistant, classroom assistant or learning support assistant all vary from one school to another. The source of training goes as wide as their functions—from washing paint pots to supporting teachers. Much of it involves courses funded by the Learning and Skills Council leading to an NVQ. Some training involves HEFCE-funded courses leading to a foundation degree. We are looking at a very fluid picture, which will develop in the future. As the noble Baroness said, some of those
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functions would fall, quite rightly, to the adult learning inspectorate and the quality assurance agency, which is precisely where the difficulty occurs.
Extending the chief inspector's powers in the way proposed, given the very broad and dynamic sweep of training that is currently available, would create a real danger of confusion between the respective roles of Ofsted, ALI and, to a lesser extent, the QAA. That sort of confusion would not help to raise the quality of the different forms of workforce training and would work counter to that by confusing the roles and responsibilities of the different inspectorates.
Let me stress that we have given this very detailed consideration. I know that the noble Baroness has been grateful for these exchanges. She will know that officials have tried really hard to accommodate her but we cannot find any practical way of resolving the issues on the face of the Bill. To an extent, that is because the future direction that the training of the wider school workforce will take after it comes within the Training and Development Agency is still relatively unknown. As I said, it is very dynamic. The agency will be obliged by virtue of Clause 76 to consider whether there are assessments of quality of provision that it should take into account in exercising its funding functions, but whether the most appropriate source of advice on that quality will be Ofsted, ALI or another body will probably be decided on a case by case basis. If necessary, the Secretary of State can even direct the agency to have regard to quality assessments. Existing legislation offers some flexibility because both Ofsted and ALI may have new functions conferred on them, subject to certain limitations, by regulations made under the Learning and Skills Act 2000.
It may be that we will need to revisit at some point in the future the primary powers of all the inspectorates with an interest in this field. However, let me assure the House that the training of the wider school workforce will be subject to quality inspection by one or other of the agencies active in the field. As an additional safeguard, the Training and Development Agency for Schools will have power to appoint suitably qualified evaluators on its own initiative, as the TTA has sometimes done in the past on pilot initiatives.
I turn now to Amendment No. 17, to which we were unable to respond as fully as we wanted in Committee. In response to the question whether the current wording of Clause 2(5) limits the potential role of the chief inspector of schools to function with respect to initial teacher training at the expense of teachers' continuing professional development, I can confirm that it does not.
The chief inspector's powers to inspect teacher training were initially assigned to him under Section 2(5) of the School Inspections Act 1996. However, since 1998, he has had express power to conduct those inspections under Section 18A of the Education Act 1994. That section was inserted by Section 20 of the Teaching and Higher Education Act 1998 and is re-enacted in Schedule 14 to this Bill. It gives him the power to inspect and report on initial and in-service training of teachers and specialist teaching assistants. Clause 76(7) places a

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duty on the Training and Development Agency for Schools to have regard to any assessment of the quality of provision made by the chief inspector, which includes in-service provision when exercising its funding functions.
To cut a long story short, in practice that means that Ofsted will be able to inspect CPD, but its judgments will be taken into account in determining the funding of CPD provision by the Training and Development Agency for Schools. Ofsted's findings will also be available to inform decisions about CPD for its staff.
I have gone into this in some detail because it is technical. However, it is important and the question raised by the noble Baroness was important. I hope that she will be satisfied and will withdraw her amendment.
Baroness Walmsley: My Lords, I thank the noble Baroness for her reply and apologise that I did not go into detail about Amendment No. 17. I was so overwhelmed by the wonderful letter that I had about Amendment No. 16. However, on Amendment No. 17, I am grateful for the Minister's confirmation that the situation is as she said and that CPD is covered as well as ITT.
On Amendment No. 16, we were looking for some kind of co-ordination by asking whether Ofsted would be responsible. The situation that the Minister described is complicated. There is a diversity of provision. I admit that the amendment did not really achieve what I was looking for, which was for somebody to oversee the quality and delivery of the in-service training for the wider school workforce who, as the Minister rightly said, are extremely important to the learning experiences of children in the class room. That is perhaps not quite as important as the issue of qualified teachers, and so on, but is important all the same.
I thank the Minister for what she said. It is regrettable that we cannot achieve the sort of coordination for which I was looking. However, we shall watch what happens with the new agencies and arrangements. I beg leave to withdraw.
Amendment, by leave, withdrawn.
[Amendment No. 17 not moved.]
Clause 3 [Annual and other reports to Secretary of State]:
Baroness Sharp of Guildfordmoved Amendment No. 18:
Page 3, line 5, at end insert ", and
( ) must be available to respond to scrutiny by Parliament of reports made under this section including scrutiny of financial matters raised by such reports in accordance with the relevant Parliamentary procedures"
The noble Baroness said: My Lords, we discussed an amendment in Committee that eliminated the reference in Clause 3(a) to the Secretary of State on the ground that we were asking that the chief inspector should be directly answerable and accountable to Parliament. I was surprised to learn that that was already the case and that as a Crown appointment, he
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is directly answerable to Parliament. The reference to the Secretary of State in Clause 3(a) was because it was the established mechanism whereby reports from such public servants are laid before Parliament.
The purpose of this amendment is to probe a little further and explore a possible extension of the Select Committee role in relation to the chief inspector. In Committee the Minister said that the chief inspector,
"will be accountable, both to the Public Accounts Committee and to the Education and Skills Select Committee, for the quality of inspections and for the judgments in all inspection reports"—[Official Report, 11/1/05; col. 169.]—
accountable to Parliament, in other words.
This statement is perhaps a little disingenuous. A quick piece of research through the Public Accounts Committee website seems to show that the chief inspector has only come before that Committee once since 1997. That was to give evidence in December in 2003 to an inquiry about the performance of maintained secondary schools in England. However, the Education and Skills Select Committee does look closely at the work of Ofsted on an annual basis; indeed, it has done so biennially for the past couple of years. In 2002, the committee reported on the appointment of Mr David Bell as the new chief inspector.
In its fourth report of 1998–99, the then Education and Employment Select Committee recommended that the chief inspector should continue to be appointed by the Crown on the advice of the Prime Minister, but that before the appointment or reappointment was confirmed, the Select Committee should be given the opportunity to take evidence in public from the nominee and to report to Parliament on the proposed appointment. In its second report of 2001–02, the Education and Skills Select Committee once again stated its belief that Parliament should have a role in the appointment of the chief inspector and that such a role would contribute positively to perceived and actual transparency in the public appointments process and the accountability of the chief inspector to Parliament. In response, the Government stated:
"We have not closed our minds to further change but we are not persuaded by your proposal for involvement in the appointment of HMCI".
The probe that I want to put to the Government is whether they have had any further thoughts on this issue and whether we might be seeing the future appointment of chief inspectors brought before the Select Committee in the other place on a regular basis. I beg to move.
Lord Sutherland of Houndwood: My Lords, I do not feel that I can support either this amendment or the suggestion at this point that the Select Committee should be involved in the appointment of the chief inspector. I can think of many good reasons for involving parliamentary committees in major public appointments but, to put it in terms, I would not start here. If this were a general provision regarding

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appointments, it would be a very different debate, although again I am not sure that this would be the best place to start such a debate.
More specifically, however, I do not think that the amendment as tabled is necessary for various reasons. First, Ofsted is a non-ministerial government department. One might ask what that is, as I did when I was first appointed as chief inspector. I thought to approach the fount of all knowledge to find out. I arranged an appointment with the Cabinet Secretary who told me that he was not quite sure and that he had rather hoped that I would tell him. However, the nature of the department evolved in my mind, and part of what it is justifies the reason for including Clause 3(a), which provides for a non-ministerial government department to report to Parliament.
However, that having been done, it is clear that the ball is in Parliament's court. It must ask or summon as appropriate the chief inspector to appear before the relevant committees. As the chief inspector is a Crown appointment, Parliament already has the mechanism for doing that, and rightly so.
As has already been pointed out, Select Committees do summon the chief inspector to appear before them. Indeed, in my time as chief inspector the several summonses I received to appear before Select Committees were some of the more formative experiences of my life. Perhaps I may give noble Lords a quick score. Some 30 per cent of the time was spent on perspicacious questioning, from which I learnt a lot. Around 30 per cent of the time was spent on grandstanding, from which I also learnt quite a lot. Another 20 per cent of the time was spent on party political ping-pong, from which I did not learn very much at all, and on at least one occasion there was an element of downright silliness—from which I learned a great deal because you can expose yourself in asking questions and making comments.
However, the point is that such exchanges do take place and the constitutional provision is already in place. It is a matter for Parliament to exercise the powers it already has and which are set out in this Bill.
Baroness Andrews: My Lords, we have had a wonderful contribution from the noble Lord, Lord Sutherland, and I cannot improve on anything he has said. Although I am tempted to leave it at that, I have a brief speaking note to address one or two points that will help to reinforce the Government's position. HMCI carries with it the responsibility of being the head of a non-ministerial government body, which is different from the role of a non-departmental public body. It marks one of the ways in which the chief inspector is independent of the Secretary of State. Also, as head of Ofsted the chief inspector is designated as the accounting officer for government accounting purposes. That means that the chief inspector is required to appear before the Public Accounts Committee.
However, I take entirely the point made by the noble Lord, Lord Sutherland, that it is for Parliament to take the initiative and summon the chief inspector to appear
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before its committees. He has been summoned regularly to appear before the Education and Skills Select Committee. However, the most recent appearance by the chief inspector, David Bell, was before the Public Accounts Committee in December 2004 following the NAO report on school performance. Like the noble Lord, I suspect that the current chief inspector would rather appear less frequently, but he does not have the choice; he has to turn up when he is summoned, learn what he can from the experience and contribute as openly as possible.
The chief inspector regularly appears before the Education and Skills Select Committee to discuss the progress recorded in the annual report and plans for the future. The last report was published in September 2004. In November 2004 David Bell appeared before the committee to discuss issues such as the staffing and operation of Ofsted, children's services inspection, education outside the classroom and juveniles in prison.
Turning to the comments of the noble Lord about the independence of the chief inspector and the appointments procedure, it would be ill advised of me to respond to the noble Baroness by saying that we have had any further thoughts. She knows that there is a longstanding convention that the government of the day advise Her Majesty early about appointments, but we believe that to involve the Select Committee in the process leading to a decision on appointment would raise issues of accountability precisely along the lines raised by the noble Lord in his remarks.
I am sure that the noble Baroness will understand why we cannot accept her amendment. In the face of such overwhelming evidence, I hope that she will feel able to withdraw it.
Baroness Sharp of Guildford: My Lords, I thank the Minister for her reply. The amendment is probing in nature and I have to say that, on looking at it again with a view to arguing the case, I thought that it rather states the obvious. If truth be known, this is precisely what Parliament is already doing. The notion that Parliament might possibly extend its powers towards the process of appointments is not covered in the amendment as such, but I thank the Minister for responding to the issue. It is useful to clarify the relationship between the chief inspector and Parliament, although this is certainly not a matter which I intend to press to a vote. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Andrews: My Lords, I beg to move that the House do now adjourn during pleasure.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 7.35 to 8.35 p.m.]
Clause 5 [Duty to inspect certain schools at prescribed intervals]:
Baroness Walmsleymoved Amendment No. 19:
Page 3, line 42, after "prescribed," insert—

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"( ) in the course of any inspection of a school, to consult and have regard to the views of the head teacher, staff, parents, pupils and governors of that school,"
The noble Baroness said: My Lords, Amendment No. 19 prescribes that in the course of any inspection of a school the inspectors must consult and have regard to the views of the head teacher, staff, parents, pupils and governors of that school. It is the same amendment that we tabled in Committee.
During that debate, the noble Baroness, Lady Andrews, started her response by saying that her noble friend had already told her to stop nodding—I remember the moment well—so clearly there is considerable consensus across the House about the importance of consulting interest groups—
or "stakeholders". which is the fashionable way of referring to them. The disagreement is about whether it is necessary to put the phrase,
"consult and have regard to"
into the Bill.
In Committee, the noble Baroness, Lady Andrews, also said that,
"the School Inspections Act 1996 places a requirement on schools to arrange a meeting with parents and inspectors, and requires inspectors to consult the appropriate authority about the inspection. However, there is nothing in the statute about consulting pupils, head teachers or staff. That is something on which we shall reflect".
Perhaps the debate today is an opportunity for us to hear the results of that reflection.
The noble Baroness continued:
"However, we know that in the past inspectors have consulted widely with all the relevant parties. That has always been extremely important. Without that, we would not now have a school inspection system. However, the question of why we should put certain provisions into statute has been raised".
I contend that the reason we need to put this into statute is that we are laying the legislation for a new system of inspection, a system that is shorter and lighter of touch. However, in some way or other, the legislation we are discussing today needs to be no less rigorous and should involve everyone who has an important opinion to give to the inspectors about a school.
The noble Baroness then said:
"During the course of the event, there will be similar engagements with pupils and parents. The aim is to verify the evidence set out in the self-evaluation summary, ensuring that it accords with what people without any vested interests tell the inspectors about their experience of the school and how it is delivering".—[Official Report,13/1/05; col. 373.]
Of course, the parents and the pupils may not have the same vested interest as the governors or teachers, but they have a vested interest in the success of the school. They have a particular perspective—an inside knowledge, you might say—of how well the school is performing.
The noble Baroness then referred to,
"100 pilot inspections in which the head, staff, parents and governors have each had a full opportunity to take part in what is after all a defining moment for the school".—[Official Report. 13/1/05; col. 374.]
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By that she meant the inspection. But I noticed that the noble Baroness did not include pupils in that list—and she knows how keen I am that we should listen to the voice of the child.
I have again tabled the amendment to give the Government an opportunity to express their further reflections and to indicate the strength of our feeling that all the various stakeholders must be consulted. In order to preserve the rigour of the consultation in the new light-touch system, it is important to specify that those vital stakeholders groups are consulted and their views taken into serious account. I beg to move.
Baroness Massey of Darwen: My Lords, I support Amendment No. 32, rather than the others in the group. There always has been interest in consultation, as the noble Baroness, Lady Walmsley, so eloquently said, and this has been discussed a great deal in Committee and outside the Chamber.
I have always supported meaningful interaction with parents, pupils and teachers in schools, but these relationships must be appropriate and must form real consultation. In my view, that takes place best in informal discussion between parents, staff and pupils.
The Government have moved a long way on this matter. Amendment No. 32 covers the involvement of the school community but does not require formal consultative meetings. The notion of having to arrange one of those parents' meetings where no one turns up to be consulted is chilling; such meetings are also very time-consuming.
In the school where I am a governor—I have been a governor there for 15 years—we have experimented with how best to involve parents and young people, and I think we have reached some workable solutions. We have felt that involving staff, governors. parents and pupils should not be time-consuming for anyone. especially staff. We have a school council to represent pupils, and it receives feedback on concerns and consultations. We have parent representatives for each class, who negotiate and are involved with other parents, staff and the head. That is much more effective than formal annual parents' meetings.
Of course inspectors must talk to the school community, but such discussions must be focused. Information must be gathered from those who represent groups and must not involve bureaucracy, valuable time or disruption of the school's functioning.
I know from a recent inspection at my school that far too much time—mainly staff time—is consumed by arranging consultations. The Bill is trying, rightly, to cut down on bureaucracy and staff time, which we all agree is a good idea. Amendment No. 32 supports the spirit of involvement without time-consuming procedures.
Lord Hanningfield: My Lords, Amendment No. 31 in the group is in my name. I thank the Minister for listening to our concerns and putting forward amendments which cover the issues about which we are concerned.
Lord Filkin: My Lords, I thank the noble Lord, Lord Hanningfield, and my noble friend Lady Massey

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of Darwen. I also thank the noble Baroness, Lady Walmsley, for inviting me to show how we have moved in this respect.
We have listened. Amendment No. 32 is significant; it will ensure that when parents are notified of an inspection, they will also be informed about the arrangements Ofsted has made for them to make their views known. So they will be told how to do it.
Amendment No. 30 guarantees an opportunity for parental engagement by inviting their views. It does not prescribe the method by which parents' views are sought, which we think is for good reason.
Amendment No. 32 gives statutory structure to spreading the net wider than parents in ways that I would expect the noble Baroness, Lady Walmsley, to welcome, given how closely it echoes many of the issues she raised in her amendment. It covers head teachers, staff, the governing body, and all who are notified of inspection. That includes the local authority in the case of maintained schools and, in the case of a looked-after child, the person designated as an appropriate officer for the local authority. For voluntary aided schools, it means the diocesan authority and for secondary schools the Learning and Skills Council. Governors should have a say, and we have added them to the statutory list of those whose views Ofsted should have regard to.
We have not included the word "consultation", not because we are being churlish, but because it implies a legal duty on the inspector to try to engage with virtually everyone, and enters difficult legal territory. Instead, there should be a process by which people can express their views and Ofsted should be under a duty to listen to them. Putting in the word "consultation" would undoubtedly put considerable burdens on the process, while what the noble Baroness, Lady Walmsley, is aiming for—we agree with her—are clear methods by which those stakeholders can express their views without getting trapped in the legalities.
8.45 p.m.
The noble Lord, Lord Hanningfield, generously signalled that he was largely comforted about our new position, so I shall not labour the point about why we do not want to specify the meeting. It is not because we believe that the meetings are always hopeless, although I believe that they often are, but because we want the process to be more creative.
I shall say a few words about Ofsted's thinking on the matter, as it is relevant to the debate. Ofsted is trialling mechanisms for deepening parental engagement. They include holding a one-hour meeting with parents at the end of the school day and giving parents' views more prominence in inspection reports as a lever to encourage schools to take more responsibility for gathering parents' views, which we believe to be right. It also includes sharing best practice with schools in gathering parents' views. But Ofsted is looking further than that—for example, at the possibility of a web page for parents in each regional office; a questionnaire to be sent to all parents of schools that have been inspected in each
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region, which would be followed up a year later with a questionnaire to find out what differences they had noticed as a result of inspection; a parents' or users' focus group in each region; inviting parent governors to be part of the inspection process; and a national survey of parents to seek their views on how they could be involved more closely in inspections. Ofsted will continue to use focus groups of parents in the trials to evaluate the mechanisms for involving parents and to see what parents find works best for them.
We are pleased to see that Ofsted has been creative about the process, rather than simply considering one mechanism. Those mechanisms sit in the wider context of the Government's policy towards parents. We discussed that in a good recent debate in the House. Because time is pressing, I shall not go into much detail on that, but we are looking very widely at how to establish a relationship of trust between schools and parents, how to empower parents and respect them as customers of educational services and looking across public policy to see how the role and contribution of parents can be more powerfully engaged with public service delivery and public policy development.
There is much more to be said on that, as I signalled at the end of the debate to which I referred. For now, perhaps I can leave the signposts there. I appreciate the positive response that I sense from opposition Front Benches to the significant moves that we have sought to make to address the concerns of the House. I hope that the noble Baroness, Lady Walmsley, will be minded not to press her amendment.
Baroness Walmsley: My Lords, I am grateful to the Minister for his response and, in particular, for Amendment No. 32. It is an example of positive reflection taking place on the government Front Bench in response to the House's concerns.
I leave aside the issue of the meeting, which we shall discuss later. The system and structure that has been put in place by the Minister's amendment addresses the concerns that I and others raised in Committee. I am glad that I have been able to give the House the opportunity to hear the Minister's explanation of his amendment. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Turner of Camdenmoved Amendment No. 20:
Page 3, line 44, after "inspection" insert "(including a summary report and recommendations in language capable of being readily understood by, or explained to, pupils registered at the school)"
The noble Baroness said: My Lords, in moving the amendment, I shall speak to the other amendments in my name in this group. In doing so, I declare an interest, as I did in Committee, in that I am a former trustee and executive council member of the well known and highly respected charity, Save the Children. The amendments that I am sponsoring today are a result of a briefing supplied by that charity.
I tabled rather similar amendments in Grand Committee and return to the same issue today with a slight rewording, which I shall explain. The

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amendments all relate to aspects of the inspection process. Save the Children believes that children should have the right to be involved. That includes receiving information about when an inspection takes place and having access to inspection reports written in a form that is reasonably accessible to them.
The full and meaningful participation of children and young people in the inspection process is necessary for inspection teams to gain a full understanding of how a school is performing and the needs of the community that it serves. This involvement should include direct contact with members of the inspection team and an input into the school self-evaluation.
Article 13 of the UN Convention on the Rights of the Child states that all children have the right to obtain information and to express their opinions as long as this is not detrimental to others. It is now widely recognised that involving children and young people fully in issues that affect them has a number of benefits. Every Child Matters, which was produced by the Department for Education and Skills in 2003, outlined key areas for children, one of which was "making a positive contribution". Involving children in the inspection process could make a very valuable contribution to the way in which their school is run, but to do so they must have information relating to the scope, purposes and findings of an inspection.
When I spoke on similar amendments in Committee, I had the impression that there was some sympathy with the point of view I expressed. However, my noble friend the Minister did not accept the wording of those amendments, and in particular thought that the reference in the amendments to the production of age-appropriate reports meant that the wording lacked clarity. I thought she was right and I said that I would take the amendments away to see whether I could come back with better wording at Report. So instead of proposing that children should receive "age—appropriate" copies of reports, this has been altered to read,
"a summary report and recommendations in language capable of being readily understood by, or explained to, pupils registered at the school".
The other amendments in the grouping all deal with very similar issues and it seems sensible to have them grouped together in order to have one debate.
I hope the Minister will agree that an attempt has been made to meet her criticisms of the wording last time round and that she will feel a little more inclined to accept the wording which is now being put forward. I beg to move.
Baroness Walmsley: My Lords, I should like to speak to Amendment No. 28 in my name, which is grouped with Amendment No. 20 in the name of the noble Baroness, Lady Turner.
It is one of the smallest amendments and seeks to replace "of' with "and", but its effect is that the notification to the parents of registered pupils also goes to the registered pupils themselves. We have just debated the government amendment which includes pupils in the list. In view of that, I am perfectly happy to say no more.
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We tabled this amendment slightly before we saw the government amendment, even though it was actually published the day after ours—in fact, the two crossed. We are very happy with the Government's Amendment No. 32 which covers the base.
Baroness David: My Lords, I should like to support the amendments of my noble friend Lady Turner on helping children have a role in the new school inspection arrangements and to support the Government's Amendment No. 32, which requires the chief inspector to have regard to any views expressed by registered pupils at the school when conducting an inspection. That, of course, was discussed with the previous group.
I am very pleased that the new inspection framework places children at the heart of school inspection. The old inspection framework attempted to assess the quality of teaching; the new framework asks questions about how well the school meets the needs of learners and why. Schools are for children primarily, and not for teachers, and I welcome this change in the framework.
Having made the decision to change the framework, it is necessary to consider how children should be involved in the inspection process. The government amendment requiring views of children about their school to be considered is most welcome but I am concerned about how children can be involved once the inspection has taken place and schools consider how they can develop their provision to meet the comments made in the inspection report.
Requiring a summary report to be written in a language that children can understand is important. My noble friend explained the change that she had made. I think it is right that the inspectors should write the report rather than the school write the report once it is received. If inspectors are really going to understand what it is like to be a child at the school they are inspecting, writing a report in language that children can readily understand will, I believe, be of enormous benefit to the inspectors and the children. This is a very happy change that has taken place and I congratulate my noble friend on having changed the wording of the amendments that she tabled previously.
Baroness Andrews: My Lords, I am grateful to all noble Lords who have spoken, particularly to my noble friend Lady Turner for the way she has represented the views of Save the Children and has attempted to meet some of our concerns. There are three noble Baronesses who are major champions of the voice of the child, and I am grateful that they have responded so warmly to Amendment No. 32, which underpins so much of the subject matter of the amendments. I welcome the comments of the noble Baroness, Lady Walmsley, about her amendment, to which I shall briefly refer.
Amendment No. 32 changes the landscape of the debate in important ways. It requires the chief inspector to have regard to any views expressed by pupils. The new inspection framework will say that inspectors should seek the views of groups of pupils about their experiences of teaching and learning,

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about how the school contributes to the five outcomes set out in Every Child Matters, and importantly, about the degree to which the school seeks and acts upon their views.
I turn to Amendments Nos. 20, 43, 48 on pupil access to reports and ensuring that pupils can understand what has been reported about the school in their interests. We discussed it at some length in Committee. I sent examples of reports that are pupil-focused to a number of Peers and to the House Library. I believe that my noble friend Lady Turner and Save the Children were reassured by the descriptions that we gave of Ofsted's practice in providing inspection reports to pupils. I also believe that the assurances that I can give about inspectors and schools and how they will make such reports available will find favour with my noble friend and Save the Children.
I hope that this will also meet the point raised by my noble friend Lady David. Ofsted's guidance will be explicit about the outcomes of an inspection. Inspection reports must comment on pupils' views of the school, and a letter must be provided as an annex to the report for pupils in a language that is accessible to pupils. That will be a clear requirement. Ofsted's guidance is binding for inspectors, because it sets out expectations, and their work will be quality assured. Their adherence to guidance is part of that process.
Regarding Amendments Nos. 43 and 48, the framework will also specify that the chief inspector will expect schools to ensure that all pupils are made aware of the findings of the inspection. That is important. Failure to follow that framework will result in adverse reports, so it provides a real incentive for schools to implement good practice. I hope that putting that on the record will provide the reassurance necessary.
As I said, Amendment No. 32 deals with many of the issues regarding notification, and we believe that we have the mechanisms right and that we do not need a further amendment in primary legislation for that. The children who have been outside school, about whom the noble Baroness was concerned, will be notified through their parents. It would be a difficult burden on schools to provide two separate letters of notification.
One of the reasons why we have resisted the notion of a summary report is that that would mean yet another report. At a time when we are so anxious to reduce the burdens on schools and to streamline the system, we believe that the writing and publication of a single inspection report is integral to that. However, I assure my noble friend that we are entirely committed to the involvement of pupils, and the proposals are significant steps towards that. We will not stand still. We will evaluate and continue to review those matters. Clause 10 is wide enough to enable a move towards the publication of pupil-focused reports in future, if that is found to be desirable.
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I hope that we have moved towards the intention of my noble friend's amendment and that she will feel able to withdraw it.
9 p.m.
Baroness Turner of Camden: My Lords, I thank my noble friend the Minister for that response. I agree with her that Amendment No. 32 has changed the landscape of the debate, for which I am grateful, as are other noble Lords. What the Minister said about the Ofsted guidance is very useful, and that puts it on the record. I shall have pleasure in consulting Save the Children to see what it thinks. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Sharp of Guildfordmoved Amendment No. 21:
Page 3, line 44, at end insert ", and
( ) to establish a complaints procedure by which the appropriate body for a maintained school or the proprietor of a non-maintained school may complain about the conduct of any section 5 inspection or the findings of the report of a section 5 inspection"
The noble Baroness said: My Lords, we return to complaints procedures, on which we have had some discussion. We had a lengthy discussion in Committee, when two separate issues emerged. One was the short-term issue of complaints about procedures and factual errors in the inspectors' report that would need to be dealt with quickly before the report was published. Then there was the longer-term issue about the conduct of the inspection and judgments reached in the published report that could be damning for a school and might be contested by the school.
In Committee, the Minister explained how the new procedures—especially the change involved in making the chief inspector responsible for inspection reports—would enable the short-term issue to be dealt with quickly and with minimal bureaucracy. The Minister also explained how a helpline would be set up where schools could discuss their concerns with a professional who was independent of the inspection team, and how the managing inspector might visit the school and try to resolve disputes quickly on the spot where they arose between the school and the inspector or inspection team. Making the chief inspector ultimately responsible for the final report strengthens the hands of the HMI in any dispute with contract inspectors.
Amendments Nos. 9, 10, 36, 37 and 40, which we have discussed, reinforce those verbal assurances from the Minister in Committee. In Amendments Nos. 9 and 10. we have the assurance that any inspection report that places a school in special measures will be personally signed off by the chief inspector or by one of his senior colleagues authorised to act on his behalf. In Amendments Nos. 36, 37 and 40, we have the commitment that schools will have a chance to see the draft report and to comment on it and that their comments will be responded to within the prescribed period. In addition, we have had a clear commitment

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that, where a decision is taken that the school requires special measures or significant improvement, the report itself will say so clearly.
The amendments are welcome and answer our short-term concerns. However, we are no nearer solving the longer-term problems of needing an easier, fairer and less bureaucratic procedure than the present adjudication process. That issue is addressed by Amendments Nos. 33 and 53. In Committee, I quoted the opinion of Elaine Rassaby, the complaints adjudicator in 1999, who stated publicly that the procedures were so burdensome that many teachers gave up and did not bother to pursue complaints, even when the complaints were justified.
I say that we are no nearer solving those problems, and yet there are two significant moves. The first, incorporated in the Bill, is the assurance that HMI will play a more significant role in inspections and that the chief inspector will take responsibility for inspection reports. We now have, in addition, the commitment that the chief inspector will take personal responsibility for signing off any report that puts a school into special measures or requires significant improvements.
The second improvement, not incorporated in the Bill, is that we have the Minister's assurance that the independent adjudicator will be independent, not, as she is at present, appointed by Ofsted, but appointed by the Secretary of State and operating wholly outside the Ofsted machine. Both those moves are welcome.
Nevertheless, the Minister also said in Committee:
"We very much accept that the quality and credibility of the complaints process and the ability to resolve disputes, which is ideally what the complaints process should be about, is integral to the development of the new system".—[Official Report, 13/1/05; col. 392.]
The Minister has come back with the amendment to Clause 12, which appears to go some way, but we are seeking something more specific. In particular, we are worried that the adjudicator will still not be able to investigate the content of the report or the judgments made.
This issue is covered in subsection (1)(c) of our Amendment Nos. 33 and 53. As is well known, a teacher's reputation can be irreparably damaged by a bad Ofsted report. Is there to be no chance of restoring such an injustice when it has been shown to be unjustified? It is all very well assuring us that the chief inspector personally will sign off any reports putting schools into special measures, but—to be totally cynical—what happens when the chief inspector is Chris Woodhead and the school is Islington Green?
In relation to Wales and the complaints procedure there, the Minister again responded very positively. He said:
"There must also be opportunities for formal challenge to both the professional judgments and opinions expressed. Again, Estyn has such procedures which are published and made widely available. Ultimately, the professional opinion of the inspectorate has to be recognised and accepted … Those dissatisfied with the conduct of an inspection or with how Estyn has managed the complaint can approach the Welsh Administration ombudsman".—[Official Report, 13/1/05; col. 396.]
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The Minister also said:
"Initial consideration has been given to the appointment of an independent adjudicator in Wales akin to the post put in place by Ofsted in partnership with the Adult Learning Inspectorate. However, given the relatively small number of complaints received each year alongside the ready access to the Welsh Administration ombudsman, we do not believe that such an appointment would improve current procedures or provide value for money".—[Official Report, 13/1/05; cols. 395.]
Estyn is, I gather, currently reviewing its complaints procedures and has published a consultation paper which asks for comments by Friday 25 February. A footnote to this consultation document states:
"It is proposed that an independent complaints adjudicator is appointed for Estyn. This mechanism has been adopted successfully by some other inspectorates".
That implies that a decision has indeed been taken to appoint an independent adjudicator in Wales. Is that the case? Can the Minister fill us in on that point? I beg to move.
Lord Hanningfield: My Lords, I support Amendments Nos. 33 and 53. I shall not go into the detail that the noble Baroness, Lady Sharp, has just covered, but I think that we are all concerned. We have all supported the speeding up of the inspection processes; there is complete unity on that. Consequently, however, issues could, if you like, fall between the guidelines. Sometimes that could be a factual matter and sometimes it could involve a misinterpretation by an inspector during a visit. We are not sure that there are adequate safeguards to protect a school or an individual teacher. As the noble Baroness said, given that an adverse report could damn a school or ruin an individual teacher's career, we want to make certain that safeguards exist to ensure that schools and teachers receive the right support. Perhaps the Minister can clarify the situation. We support these amendments.
Lord Filkin: My Lords, the noble Baroness, Lady Sharp, did a better job than I could to signal the considerable number of different points at which the Government have moved to try to ensure that processes exist to enable schools which have been inspected to be a participant in the process of trying to ensure that they believe that the judgments and conclusions are fair, without allowing them to go as far as negotiating judgments, which clearly cannot happen.
I should start by emphasising how fundamentally important informed complaints resolution has to be in such systems. It is right that there are formal complaints procedures, and I shall talk about those in a moment. However, we know from very many other sources that the more you can have effective informal complaints procedures which resolve the issues informally and fast, the more you will get better justice and a better perception of justice and the more people will make use of those processes. I will therefore not talk at length about the processes being put in place as part of the Bill and its implementation, but I will check subsequently with my officials that we have already put all those issues in a clear form to you.

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I shall refer to two headlines. First, Ofsted has issued a draft complaints procedure for consultation with teacher and governor representative bodies. The National Association of School Governors has already indicated that it is broadly content with them. The NUT has issued a press release saying that it is delighted about the helpline. I will double check that we have got all of that on the record with both Front Benches.
The draft procedures that Ofsted are consulting about will make it clear that inspectors should try to consider and to resolve any concerns a school raises about an inspection or judgments as part of the process. There should not be a stand-off process, there should be active listening and engagement because that is both decent and efficient.
Schools will have opportunities throughout the inspection process to respond to emerging findings, and to draw attention to any evidence that they think points to different conclusions from those to which the inspection process is minded to reach. They will receive a draft report: an opportunity to comment on factual accuracy. Later on, in our amendment to Clause 12, we will signal and discuss where we think we have made a significant shift in terms of schools requiring major improvement of special measures, through the care with which the process is tested with the school before those issues go into the public domain. Given the time, I will not go into detail now.
I also want to double check that the draft guidance on the moderation procedures for schools causing concerns has also been shared with Opposition Front Benches, because they are again part of this picture. Without labouring the point, when I prepared my notes I saw five separate stages that the inspectorates had to go through to try to ensure that the school and its governors were given opportunities to engage with them, before the inspectorate came to a conclusion that special measures were appropriate. These of course included a process for a second pair of eyes, totally separate from the inspectors who had made those judgments, to see whether the evidence and the representations made by the school supported them. For those cases, the moderation process is again building a strong double layer of protection. It is not just the judgments of the inspectors themselves; other inspectors with seniority and experience have to look at that to see whether they consider the conclusions valid. In doing so, they would also be looking at the views that the school might have given—for example, that it felt that the evidence did not merit the conclusions that were being reached by the inspectors.
Again, without labouring the point, I am signalling that this is part of the overall picture of trying to ensure that the conclusions reached are ones that are fair, that are supported by the evidence, and are reached through a process which makes those who are being inspected feel that they have had every opportunity to put their part of the story, and that they have been listened to. That is the background. The more that that works, the less formal complaints procedures are required. We know from the work of the noble and
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learned Lord, Lord Woolf, and others, that that is the sensible way to get justice, rather than rushing off into formal processes.
Having said that, there is an adjudicator in place, who does substantially what is asked for in the amendment put down by the Opposition Front Bench. The independent adjudicator is completely independent of Ofsted. She has the remit to examine a complaint about any of the issues covered by subsection (1)(a) to (c) of the proposed new clause. She is not able to overturn professional judgments, nor should she be for reasons that I think we understand—otherwise the independent adjudicator would become the inspector. However, she is able to make recommendations if she considers there is no evidence for a judgment, or if a report does not adequately explain the link between the evidence and the findings. The adjudicator can recommend that the chief inspector reconsiders a complaint in the light of her comments, and if he rejects her recommendations, he must make a public statement of his reasons. The powers are very strongly there.
9.15 p.m.
The noble Baroness, Lady Sharp, was concerned that the adjudicator should not be appointed by Ofsted or the Adult Learning Inspectorate. I can set her mind at rest. The adjudicator is not appointed by either of those bodies, but by the Secretary of State. Therefore, there is a proper separation of the appeal process from the decision-maker. For these reasons, we believe that the chief inspector will be able, without limitation, to play a proper part in the formal complaints process, in what we hope will be the relatively few cases that the informal processes have been unable to resolve.
I turn to Wales and Amendment No. 53. Again, this would add a duty on the Assembly to make regulations appointing an independent adjudicator. Estyn, Her Majesty's Chief Inspector of Education and Training, has detailed some transparent procedures for the handling of complaints. In Wales, under the common inspectorate framework, there will be a school nominee attached to each inspection team who can bring additional evidence to the team at any point during the process.
On the production of reports, regulations already provide for reports to be made within 35 working days. Within this period Estyn's guidance requires the registered inspector to give the school a late draft of the report, to help with checking factual content. The school has five working days in which to consider it. An inspector has to take account of the comments offered and correct factual errors. Beyond this, any complaint on the professional judgment made would initially be considered by the lead inspector and, if not satisfied, the complaint may be considered by a senior HMI or the chief inspector.
On processes and procedures, during an inspection such provision is already made. Those dissatisfied with the conduct of an inspection can approach the Welsh Administration Ombudsman, who is empowered to investigate complaints of injustice due to

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maladministration by the Welsh public bodies, including Estyn. The ombudsman has powers to investigate complaints about the administrative action taken by Estyn or those acting for the inspectorate. If, in the opinion of the ombudsman, a complaint was justified, the inspector would be required to take action to meet any recommendation set out by the ombudsman within a set period. There are already accepted and accessible procedures for a challenge to be made to the professional judgment registered in an inspection report.
The noble Baroness, Lady Sharp, asked about the ongoing consultation by Estyn and whether a decision has already been made to have an independent adjudicator in Wales. I am going to have to rely on head signals rather than paper, but I am assured that no such decision has been made. I will probably want to send her a letter with a little more detail than is available from telegraphy at this time of night.
I hope that has been helpful in signalling that in both England and Wales there will be powerful processes for informal resolution, but long-stop processes for formal resolution as well.
Baroness Sharp of Guildford: My Lords, I am grateful to the Minister for his lengthy explanation. We are happy with the informal procedures. I now feel more reassured about the formal procedures. Making the adjudicator completely independent of Ofsted is an important step. We appreciate that this is taking place.
We also appreciate that, in the guidance, the Minister will have the opportunity to suggest that the chief inspector takes another look at reports, if something should be looked at again. The Minister will not overturn the judgments, but may question them on occasion. This is important and I thank the Minister for the explanation, because it is helpful to have it on the record, so that people understand that these procedures are moving forward and are openly fair.
We also accept his assurances on Wales, and I would be pleased to have a letter to pass on to my Welsh colleagues. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 22 and 23 not moved.]
Baroness Sharp of Guildfordmoved Amendment No. 24:
Page 4, line 46, at end insert—
"(g) any provision supportive of the education of pupils at the school which is made at the school or elsewhere for the benefit of its pupils by persons not directly under the control or supervision of the head teacher of the school or the appropriate authority"
The noble Baroness said: My Lords, the amendment is intended to probe issues concerning the inspection of out-of-school provision for over-eights and to tease out issues concerning responsibility for the quality of provision.
The amendment refers to such things as breakfast clubs, daytime or after-school sports clubs, pre-school clubs and other activities, which are increasingly arranged by school authorities, notionally, often, as
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"lettings" of premises to enterprising people within their school communities who operate, in effect, as small businesses. Those people derive an income from the charges that they make to parents for the provision that they offer and pay a letting fee to the school funds for the rooms made available to them.
Although notionally an arm's-length letting operation, in reality those projects are often part of the whole school community operation and are considered contributory to the whole education provided at the school. All of us welcome the notion of the extended school, which is not necessarily provided by the school itself but can be the result of the community coming together and providing those facilities.
Although many such projects are subject to examination and inspection from the point of view of safety and the suitability of the operators to work with children, they are not subject to inspection for their educational value and practice within the framework of Ofsted. The purpose of the amendment is to highlight that trend and to promote its better regulation.
The question of the regulation of childcare has a very long history, and there has always been controversy about where the boundary of state concerns should be drawn. Since 2001, Ofsted has taken over all registration and inspection of childcare and early-years services, creating a more streamlined approach. However, recent developments raise philosophical and practical questions about the continuing system, which allows care for children aged eight or over to be unregulated.
The move to integrate education and care services, both through integrated inspection and related Every Child Matters reforms, is breaking down the traditional distinction between education and care. The increasing move towards co-locating services through extended schools, including schools providing or at least "hosting" childcare services, further blurs those lines. Those changes highlight the anomalies in the current system. For example, schools could theoretically be inspected for the education that they provide while services solely for children aged eight and over taking place on their premises or under their management would not require registration, inspection or regulation.
The general justification for not extending regulation to over-eights has been a desire not to place unnecessary burdens on providers, often with few staff and little turnover. It is certainly an issue. However, as the childcare market has expanded over recent years—a process that will only continue—this case looks weaker, especially given the increasing role of schools and their additional capacity and experience of regulation. Clearly, though, given the pressures that providers are already under, moves towards removing the age criteria for childcare registration and inspection would have to be handled very carefully.
Are there any plans for moving the matter forward and for considering how to deal with the anomalies arising as a result of what is happening through the extended schools and the move into wider provision? I beg to move.
Baroness Andrews: My Lords, certainly we support the general intention expressed in the amendment. We

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agree entirely that Ofsted should consider the contribution of the extended number of services that schools provide. We are delighted that so many schools are taking up the childcare option within the learning context and so on. So many other things are happening in schools: in addition to breakfast clubs, which the noble Baroness mentioned, a huge range of before and after-school provision has been developed in the past five years. That is to the credit of schools, teachers, support staff and many others, not least the providers who have come forward—
Baroness Sharp of Guildford: My Lords, perhaps I might draw attention to the fact that the noble Baroness herself was involved in creating an organisation—it used to be called Education Extra; Contin You is its name today—that has done an enormous amount to extend this area. We are all grateful to her for what she achieved in that position.
Baroness Andrews: My Lords, I was not fishing for compliments, but I am grateful to the noble Baroness for placing on the record the credit of those organisations. It is gratifying to see the modest ideas that we started off with 10 years ago becoming a normative influence on the way that education is delivered. I am delighted that she said that. I wish that I could now accept her amendment; sadly I cannot.
There are two reasons: first, the amendment goes wider and has greater implications than was probably intended. Secondly, within the terms of learning, the areas addressed are already covered by the inspection framework. However, as the noble Baroness addressed the integration of care and education in such detail, I would rather write to her specifically about the mix of inspection frameworks. I do not want to improvise from the Dispatch Box, as a great deal is happening to bring together inspection frameworks. I would like to reflect and write to her about that.
Schools arrange for a wide variety of out-of-school and after-school clubs. Many are delivered by other organisations outside schools. In those cases, where such provision is planned by the school for the benefit of the pupil, even if it is delivered by another organisation the school takes responsibility for the contribution that it makes to the education and well-being of its pupils.
Even when the school provides a care service, there is a learning environment and a learning setting integrating care and learning for young children. There are exciting possibilities for what we can offer now. In those cases, Ofsted will ensure that it inspects the impact that such provision has on the statutory purposes of inspection; particularly the quality of education and the educational standards achieved.
In terms of the amendment's narrow point, Ofsted is there working away. It has the power to assess the contribution in three ways: first, assessing as part of the overall effectiveness of a school links with other organisations to promote well-being; and, secondly, evaluating the quality of the provision, assessing how well programmes and activities meet the interests of learners. That includes in particular enrichment activities
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and extended services. The third is evaluating leadership and management and assessing the effectiveness of links made with other providers, services and employers to promote the integration of care, education and extended services in schools.
That provides for the narrow point. I should refer to the Ofsted report on outdoor education and, more recently in December 2004, on out-of-school education.
The amendment presents serious difficulties. It would require a report of a school to include an assessment of services over which it has no authority or control; that is inconsistent with the institutional assessment. For example, a youth club operating out of hours or the Scouts or Brownies might fall into the category of services that the amendment would capture. They are not educational organisations in the sense that we are using the term. Ofsted would have the power to inspect the youth club but no power to inspect the Scouts or Brownies; and nor should it.
The amendment would mean that schools were held to account for something that was not within their control. Given that we are trying to reassure and support schools to continue with school trips, the amendment could be retrograde when it comes to calming nerves and ensuring, that more schools provide greater opportunities for curriculum enrichment.
Furthermore, some of the services that might be supporting the education of pupils at a school will already fall within the remits of other inspectorates. Extended services might include health services, so we have to consider which is the most appropriate body. It is clearly not Ofsted; it would be the Healthcare Commission or the children's social care inspectorate.
The amendment takes us into very much uncharted water, but I take the point that the noble Baroness has made. I hope that I have reassured her about the role of Ofsted in this growing field. We will write to her in more detail about the particular instances that the noble Baroness raised about care settings.
9.30 p.m.
Baroness Sharp of Guildford: My Lords, I thank the Minister very much for her response. As the noble Baroness realises, this was a probing amendment. The answers given are extremely reassuring. I am very glad that Ofsted does not have powers to inspect scouts and brownies, nor should it. When looking at the degree to which Ofsted's empire has been extended to, for example, childminders, there are times when we feel that its tentacles will reach into every part of the world. I am not sure that they should. It is right, as we discussed regarding out-of-school trips, that there are parts of this life where Ofsted does not reach.
Nevertheless, as regards over-eight year-olds there is the issue of activities taking place on school premises even while staff are still around. Some after school clubs are organised by outside organisations where a charge is made. Perhaps some linking has to be done. I look forward to hearing from the Minister. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos 25 and 26 not moved.]
Clause 6 [Duty to notify parents of section 5 inspection]:
Lord Filkinmoved Amendment No. 27:
Page 5, line 9, after first "the" insert "registered"
On Question, amendment agreed to.
[Amendments Nos. 28 and 29 not moved.]
Lord Filkinmoved Amendment No. 30:
Page 5, line 11. at end insert—
"(1A) Any notification given under subsection (1)(a) must include a statement, in a form approved by the Chief Inspector, inviting the registered parents of registered pupils to inform the Chief Inspector of their views on matters relating to the school."
On Question, amendment agreed to.
[Amendment No. 31 not moved.]
Lord Filkinmoved Amendment No. 32:
After Clause 6, insert the following new clause—
"DUTY TO HAVE REGARD TO VIEWS OF CERTAIN PERSONS
In conducting an inspection of a school under section 5, the matters to which the Chief Inspector must have regard include any views expressed to him by any of the following persons—

(a) the head teacher,

(b) in the case of a maintained school, the governing body,

(c) in the case of any other school, the proprietor of the school,

(d) any person prescribed for the purposes of section 6(1)(b),

(e) members of the staff of the school,

(f) registered pupils at the school, and

(g) the registered parents of registered pupils."

On Question, amendment agreed to.
[Amendment No. 33 not moved.]
Clause 12 [Duties of Chief Inspector where school causes or has caused concern]:
Baroness Walmsleymoved Amendment No. 34:
Page 7, line 7, leave out paragraphs (a) and (b) and insert—
"(a) that additional support is required by or under the direction of the local education authority, or
(b) that additional support is required at the initiative of the appropriate authority"

The noble Baroness said: My Lords, in moving Amendment No. 34, I shall speak to all the other amendments in the group, which are a development of amendments laid in Committee. The purpose of the amendments is to change the designation of schools in "special measures" and those "requiring significant improvement" to two more positive categorisations.
In Committee, we argued for the terms, "special measures" and "significant weaknesses" or "notice of improvement" to be replaced by the term "schools in need of additional support". We accepted the Minister's argument (at col. 424 of the Official Report for 13 January) that it would not be good policy if we,
"sought to put everything into one category … and did not make the differentiation",
1080
as it would mean,
"either the schools needing significant improvement would be put into the very heavy sin bin category or we would compromise on the very heavy intervention sin bin category because we had many [schools] that needed significant improvement",
which is not anywhere near so serious.
However, we are still concerned about the punitive language that is being used to label schools. "Measures" are done "to" a school and not "with" a school. All the research into school improvement shows that the most positive results are gained when all the staff, parents and pupils feel supported in their efforts to improve rather than the school being la belled as a failure.
In 1999, the NUT commissioned Margaret Scanlon and Barbara Lee at the NFER to conduct research into the impact on schools of special measures. In their report, The Human Cost of Special Measures, they described the,
"Feelings of public humiliation and reduced confidence experienced by both teachers and pupils as a result of negative press attention and stigmatisation".
Six years on, teachers and pupils still have that experience. It is those negative and unhelpful perceptions that our amendment is trying to avoid. I know that the Minister cannot have an effect on the press, but he has control of what is in the Bill to a great extent. I am hoping that he might think again about how we express those things.
Our amendments have tried to differentiate between schools where the measures to bring about improvements can be taken internally by a school against those where external help is brought in by the LEA. We have done that by the way in which the amendments are worded. For example, we have said,
"by or under the direction of the local education authority".
We have also said,
"that additional support is required at the initiative of the appropriate authority".
Therefore, we have made it clear that we appreciate that there are two categories of schools: those that the inspectors believe can help themselves and achieve improvement using their internal resources; and those for which a great big package of external support is required—fresh eyes, fresh pairs of hands and even fresh faces.
I look forward to hearing the Minister's response to this reworking of a similar idea, which I hope takes into some account the remarks that he made in Committee. I beg to move.
Lord McKenzie of Luton: My Lords, I have a few comments to make about the wording which troubles me.
I understand the issue, and if it were just a matter of semantics, I would have more sympathy with the amendment. As drafted, references to additional support being required could cover a whole myriad of things that might come from a school inspection. There is probably hardly a single Ofsted report that does not make reference to some things needing to be improved a little, whether that is extra support on

1081
recruitment or retention, SEN, data, HR, or capital programmes. All those would be routine follow-ups into any inspection report or analysis that an LEA makes on an on-going basis. If you switch the emphasis to that which the governing body would require, it could cause problems as governing bodies often reasonably make all sorts of demands on LEAs, which are not unreasonable in themselves but which must be balanced in terms of available resources.
Although I understand the intent of the amendment, the wording opens it up to a generalised category, which covers too many circumstances, and far more than the Bill was intended to cover.
Lord Filkin: My Lords, I was glad that the noble Baroness accepted that it was not right to have just one category. I thought that she had been ingenious in coming up with two categories of additional support. But that is probably as far as we shall meet on this.
I shall not speak at length as it is one of those issues when our position is pretty clear and strong. We believe that we are right.
As we said before, it would be misleading to parents and others to change the provision in the way proposed. The special measure designation covers the most serious cases of failure and triggers urgent and radical action to turn a school round. Referring to a school where,
"additional support is required by or under the direction of the local education authority".
would send completely the wrong signal to parents and the wider community. It would not make clear the seriousness of the situation.
I agree with the noble Baroness that additional support is necessary and the Bill already ensures that schools will receive additional support. It provides that when a maintained school is considered to require special measures or significant improvement, the LEA must prepare a statement of action that it proposes to take. There is no disagreement between us on the need for additional support.
But it is not always a matter of providing additional support. Sometimes intervention requires a change of weak leadership; that is a fact of life. It would send completely the wrong signal to refer to a school as in need of additional support when in fact it may need new governance, a new head teacher and perhaps new staff. That is the reality of it. Therefore to suggest that the one solution of additional support would fit all cases is, we believe, wrong. The Bill provides both for urgency and flexibility in addressing the problems of schools placed in the cause for concern category.
This is not the first time that we have heard the NUT argument powerfully promoted by Members on the Liberal Democrat Benches. I am sure that it is true that there is a human cost to being placed under special measures. There is a human cost in being part of any failing organisation. That is a reality of life. However, there is a much more significant human cost to those who are feeling the consequences of a failing school—the pupils. That is where our central focus has to be,
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on ensuring that those pupils are provided with a better education as rapidly as possible. Fudging the issues or pretending that just a little more advice, support and love will be enough—I do not say that flippantly—will not do for some of the most serious cases.
As I recollect, around half a million children in our society are now benefiting from a better education as a consequence of the special measures designation having led to really tough action to improve their schools. I pay tribute to all who have helped to bring that about. including staff, teachers and parents in those situations.
The intention is not to be punitive for its own sake, but in the worst situations the reality that change is necessary must be faced. I do not think, therefore, that to imply that such situations can be rectified simply by more support is true or would be an adequate response to children's needs. I hope that that is helpful to the noble Baroness.
Baroness Walmsley: My Lords, the noble Lord has been helpful and it is clear that there is no meeting of minds on this. However, it was useful to hear the Minister assure us once again that the package of support or the changes required in the interests of pupils and schools will be forthcoming when the inspectors have identified that they are needed.
The noble Lord is right to point out that on occasion we do air within this place the concerns expressed by the NUT as well as other teaching unions such as the Secondary Heads Association and the NAHT and, on other subjects, the NSPCC, Save the Children, UNICEF and many other organisations. That is one of the good things about this House. We have the opportunity to take Bills apart, to go through their provisions with a fine-tooth comb, and to reflect the concerns expressed to us from many different areas. I believe that Bills benefit from such scrutiny.
I appreciate the Minister's patience in addressing this issue for a second time. I can assure him that he will not have to do so for a third time. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 35 not moved.]
Lord Filkinmoved Amendments Nos. 36 and 37:
Page 7. line 10, leave out "(2) and (3)" and insert "(1A) and (1B)"
Page 7, line 11, leave out subsections (2) and (3) and insert—"
(1A) The Chief Inspector must—
(a) send a draft of the report of the inspection—

(i) in the case of a maintained school, to the governing body, and

(ii) in the case of any other school, to the proprietor of the school, and

(b) consider any comments on the draft that are made to him within the prescribed period by the governing body or proprietor, as the case may be.
(1B) lf, after complying with subsection (1A), the Chief Inspector is of the opinion that the case falls within paragraph (a) or (b) of subsection (1)—

1083
(a) he must without delay give a notice in writing, stating that the case falls within paragraph (a) or (b) of subsection (1)—

(i) to the Secretary of State,

(ii) in the case of a maintained school, to the local education authority, and

(iii) in the case of any other school, to the proprietor of the school, and

(b) he must state his opinion in the report of the inspection."
On Question, amendments agreed to.
[Amendments Nos. 38 and 39 not moved.]
Lord Filkinmoved Amendment No. 40:
Page 7, line 24, leave out "(3)" and insert "(1B)(b)".
On Question, amendment agreed to.
[Amendments Nos. 41 and 42 not moved.]
Clause 13 [Destination of reports: maintained schools]:
[Amendment No. 43 not moved.]
Clause 14 [Measures to be taken by local education authority]:
[Amendment No. 44 not moved.]
9.45 p.m.
Baroness Walmsleymoved Amendment No. 45:
Page 8, line 28, after "must" insert ", after consultation with the appropriate body for a maintained school and the head teacher of that school"
The noble Baroness said: My Lords, the amendment was also tabled at the Committee stage. In response, the Minister stated:
-We totally agree that the LEA should consult with the school in preparing the statement. It is essential that the head teacher is involved from the outset. That already happens without any legal requirement. It must and will continue in the future".—[Official Report, 13/1/05; col. 434.]
If it must and will continue then why not place it on the face of the Bill to guarantee that it does?
The Minister went on to say:
I think that we have to resist cluttering up primary legislation with detailed specifications of process. That is what guidance is for. I repeat: Hansard is for ever. If we have given a commitment, we have given a commitment".—[Official Report, 13/1/05; col. 435.]
Circumstances change and we all have bitter experience of Hansard not always meaning for ever. If the Minister is prepared to include on the face of the Bill an amendment about consultation after Clause 6—an amendment we warmly welcome—then why not here? I beg to move.
Lord Filkin: My Lords, I find it extremely unfair to have my flexibility on one part of the Bill prayed against me on another. But let us put that to one side.
We made clear in the earlier debate our understanding of these concerns. We agree that turning a school round is very much a team effort and not only a matter for the local authority on its own. As
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a matter of practice the governing body and the head teacher will be consulted by the local authority in preparing their statement.
But I am afraid that what I said on the previous occasion has not changed. We do not believe that it is appropriate to specify such consultation on the face of the Bill. These matters are more appropriate for guidance. We do not need to set out in the Bill who must talk to whom at each step of the way. But 1 repeat with absolute clarity the assurance that the guidance will make clear that the local authority should work closely with the head teacher and the governing body in drawing up its statement of action.
I cannot envisage circumstances in which this Government or any other government—were such an unhappy day to come—would consider it appropriate to change from that position. One would expect that the local authority would want to engage in a dialogue with the school about turning it round. For that reason, we think it is right.
The early notification of the inspection findings, to which we referred earlier, would enable the governors and the head teacher to start to consider how to address issues identified by an inspection. The Bill requires an action plan to be prepared by the local authority and it requires the school to revise its current development plan to take account of inspection issues. The school improvement partner will and must work closely with both the school and the LEA, providing advice on what support is required.
All these procedures will be covered explicitly in the guidance. The Bill is intended to simplify existing procedures for follow up action by the LEA and school following the designation of a school as requiring special measures or significant improvement. We believe the amendment is not appropriate because these are properly matters for guidance. I hope that the clear commitments I have given are helpful.
Baroness Walmsley: My Lords, I thank the Minister for that reply. It is helpful that he has referred to such matters from the Dispatch Box. The amendment reflects the concerns of more than one organisation. The NAHT, the LGA and the NUT have all come to us about the matter and so it is helpful to have a reiteration of the position by the noble Lord from the Dispatch Box. I trust that it will set a whole range of minds at rest on the issue because it would he a nonsense if all this went ahead without such consultation. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 46 not moved.]
Baroness Sharp of Guildford: My Lords, Amendment No. 47 relates to Clause 15, which concerns the destination of reports for non-maintained schools. It seeks to amend subsection (1)—
Baroness Walmsley: My Lords, I am sorry. We have just discovered that the first name on the amendment

1085
is that of the noble Lord, Lord Hanningfield. We must have all tabled it together. That is probably what happened.
Baroness Sharp of Guildford: I beg your pardon, my Lords.
The Deputy Speaker (Lord Lyell): My Lords, the names of the noble Baronesses are on Amendment No. 47.
Baroness Sharp of Guildford: My Lords, the noble Baroness, Lady Morris, will speak to the amendment.
Baroness Morris of Bolton: My Lords, I have been waiting a long time to speak.
Lord Hanningfield: My Lords, my noble friend has been waiting all day to speak.
Baroness Morris of Boltonmoved Amendment No. 47:
Page 9, line 7, at end insert "and the local education authority in which the school is situated."
The noble Baroness said: My Lords, I have been waiting a long time to speak.
Amendment No. 47 is relatively simple and straightforward. It would ensure that local authorities automatically received a copy of a report covering any institution in the children's services authority area in which they had a strategic role. For local authorities not to receive such a report automatically is at odds with central government's acknowledgement of the overarching leadership role that they play, as set out in the DfES five-year strategy and the Children Act 2004.
I hope that this is not the start of a trend in bypassing the sharing of information with local government which, after all, will be judged on the inspection's content in so far as it affects children's and young people's activities undertaken in their area. We hope that the Minister could lend his—or her—support to what we judge to be a sensible and rational amendment. I beg to move.
The Deputy Speaker: My Lords, I confirm that we are discussing Amendment No. 47.
Baroness Sharp of Guildford: My Lords, I apologise to the House. The amendment was in all our names, and, rightly or wrongly, we believed that we were leading on it.
I endorse the words of the noble Baroness, Lady Morris. In such circumstances, it is important for LEAs to know what is happening to the schools that are independent of them although often dependent on them for finance. An increasing number of academies established as independent schools nevertheless play and will continue to play an increasingly important part in
1086
the provision of education in the local community. If the LEA is to retain its strategic role, it is vital that it has first-hand knowledge of what is going on in those schools.
Baroness Andrews: My Lords, I am grateful to noble Lords for setting out a beguiling definition of something simple and straightforward. The amendment is not quite that simple and straightforward, however.
Clause 15 requires the chief inspector to send his report to the proprietor of a non-maintained school. In the case of a non-maintained special school only, the proprietor must also send a copy to the local authority where fees are paid by that local authority. The proprietors of all non-maintained schools must, however, make their report available to all members of the public and take reasonable steps to make sure that parents receive a copy.
The amendment would require the chief inspector to send reports for each non-maintained school to the relevant local education authority. I take the noble Baroness's point that local authorities need to know what is going on in the non-maintained sector and in academies. However, noble Lords will equally understand that an LEA's interest in a non-maintained school is, because of the difference in funding, different from that in a maintained school.
Let me stress that there is no question that the reports on non-maintained schools are not available to be read. All reports from the chief inspector are available on his website. Indeed, if a local authority has an interest in the outcomes of an inspection of a non-maintained school, there are mechanisms whereby the LEA can be alerted, notified and directed towards that report. Through Ofsted's website, users can select what information, including reports, they would like to be kept informed about. They can choose to be alerted that an inspection has taken place in a particular area. They can choose to be automatically informed when the reports are published and about how to access those reports. The area that can be selected could be as big as three LEA areas.
For academies, we are at the beginning of the process of inspection. The department can and does encourage academies to let the LEA know when they will be inspected when Ofsted informs them that it is about to inspect. We already have in place a protocol with Ofsted about making publicly available the dates when it is going to inspect academies. That is best practice; it is proportionate, and we hope that both noble Baronesses will feel that their concerns about LEAs not being able to have access or being informed are satisfied. On that basis, I hope that the noble Baroness, Lady Morris, will withdraw the amendment.
Baroness Morris of Bolton: My Lords, I thank the Minister for her answer. I understand what she means about best practice, but I should have thought that in these days of partnerships between all sorts of institutions it would not have been a difficult thing to do. With local authorities, it is rather like devolving power to where "the rubber meets the road", as the Americans say. We feel that they should be involved and have an understanding about what is going on in

1087
all the schools in their area where they cover a strategic and leadership role. For now, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 48 not moved.]
Clause 19 [Functions of Chief Inspector]:
[Amendments Nos. 49 and 50 not moved.]
Clause 21 [Power of Assembly to establish advisory panel]:
Baroness Morris of Boltonmoved Amendment No. 51:
Leave out Clause 21.
The noble Baroness said: My Lords, Clause 21 would allow the Welsh Assembly to establish an advisory panel to advise on any functions or responsibilities of the Chief Inspector of Schools in Wales. I thank the Minister for writing to me and to my noble friend Lord Hanningfield on this issue following Committee stage. However, we found the Explanatory Note was somewhat vague, and highlighted the fact that many of the panel's powers would be determined later by regulation. That is no criticism of the Minister, who, I suspect, is probably as much in the dark as the rest of us and has undoubtedly provided as much information as possible. However, once again, we are expected to give the green light to yet another quango with scant knowledge of its functions or powers. Indeed, the Minister's letter remarked that the powers of the panel would be decided following a consultation exercise conducted at some unknown date in future. The matter is left to guidance or regulation, like so much of the legislation that we scrutinise nowadays.
We are raising this matter once again for both general and specific reasons; generally, because we believe that it is imperative that we guard against the creation of unnecessary quangos or bodies that add very little to the effectiveness of public service delivery; and, specifically, for a number of reasons. We simply do not believe that the case has been adequately made for such a panel.
I remind your Lordships' House, as my noble friend Lord Roberts of Conwy did during Committee, that the Assembly already has a committee of Assembly Members dedicated to education. It also has Her Majesty's Chief Inspector of Schools, a Crown appointment, on which the Assembly is consulted. One would have thought that the chief inspector and the education committee would provide sufficient advice. Indeed, it could be argued that further advice from a panel would be superfluous and could even cause confusion in decision-making.
On reading the clause, it is noticeable that the Bill is uncertain on the functions of the advisory panel other than its own appointment, fixing remuneration and allowances, ensuring co-operation with HMCI and making reports to the Assembly. The proposed panel gives the impression of being superfluous from its inception. There is little that it can do that HMCI cannot do better or with more authority.
1088
Despite the valiant attempts of the noble Baroness, Lady Andrews, in Committee and the letter from the noble Lord, Lord Filkin, we on these Benches remain unconvinced of the merits and necessity of such a panel. We cannot see that it would be anything more than an unnecessary quango that would add little and yet take significantly in terms of public costs and time. I beg to move.
Baroness Walmsley: My Lords, I shall say a very brief word. I believe in devolution and I believe that the Assembly wants the panel. In that case, as far as I am concerned, it should have it.
Baroness Andrews: My Lords, on that note, I shall start at the back of my speaking notes and reinforce the point that the noble Baroness has just made. This is indeed something that Welsh Assembly Ministers and everybody in the Assembly—and there has been wide consultation at every stage—wants and has asked for. It is firmly of the opinion that such advice that it has sought is needed. The chief inspector has been kept fully informed of the proposals at all stages and has met with the Minister. The proposals have been welcomed inside the Welsh Assembly and by practitioners and, as the noble Lord, Lord Roberts of Conwy, mentioned, the NUT is very much of a mind to support them.
10 p.m.
The new body is welcomed by all parties in Wales. It is a very modest body. It will help Estyn to formulate part of its strategy. Unlike Ofsted, 15 per cent of Estyn's work constitutes a strategic power which helps to inform the pattern of provision and the way in which education policy is developed. That is one of the very clear reasons why this new and modest body is necessary.
The noble Baroness said that much of this matter will be left to regulations. That is the way things are done under devolution. Regulations are made in full consultation with all interested parties and in accordance with the Assembly's own procedures for making subordinate legislation. Indeed, those procedures involve at least as much scrutiny as in Parliament. Draft regulations are open to scrutiny and debate. There is no negative procedure so everything is debated. They are laid before the Assembly and they may be considered by the relevant subject committee. They will be scrutinised by the legislation committee. It is a robust and rigorous process.
I wish to address a few issues that the noble Baroness raised. The new panel will, indeed, provide the Assembly with an informed and independent view on the range of duties and responsibilities it is required to discharge with regard to Estyn. Currently there are no mechanisms to provide the Assembly with independent advice on such matters. There is no question that the body does not know what it is going to do, as the noble Baroness implied. It is anticipated that its role would include, for example, provision of advice to the Assembly on the handling of any complaint lodged against the chief inspector and advice in meeting the Assembly's statutory

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obligation to approve Estyn's annual plan. We addressed some of the relevant issues in our letter. It is worth putting on the record that the noble Lord, Lord Roberts, gave the proposal a modest but warm welcome on Second Reading, provided the constitution met his very high standards.
We confirmed in our letter that although the exercise of the power and decisions on the detail would need to be framed in the light of consultation, it is very much anticipated that the panel will draw together experienced practitioners from across the field of education and training, and perhaps from the business sector due to work-based learning. This body is not a quango; it has only six members. Membership is likely to comprise approximately six people with appointments made by Ministers in accordance with the Assembly's code of practice for public appointments.
It is anticipated that the panel would meet three or four times a year although there may be a requirement for further meetings. The secretariat for the panel would be provided by officials from the Assembly's Department for Training and Education. Costs would therefore be limited to travel and subsistence expenses for panel members. It is not anticipated that members will receive a salary or fee for their contribution to the panel. It would be a modest, expert and very useful body.
However, there is a necessity to create further accountability. Questions were raised about why a complaint registered against the chief inspector could not simply be referred to the Welsh administration ombudsman. I must emphasise that there have been instances where the Welsh administration ombudsman has ruled that she is not in a position to consider a complaint lodged against the chief inspector. It has, therefore, fallen to the Assembly to consider such matters. To date this has been managed through ad hoc arrangements. There is, therefore, clearly a gap that needs to be filled in that respect and the panel will ensure that there is a standing body with a range of experience that will be extremely useful in that regard.
In that context the powers to provide access to people and papers will be central in ensuring that the panel has unfettered access to papers and can provide
1090
an informed judgment. It will be able to draw advice from other bodies but its role is not the same as that of the Education and Lifelong Learning Committee. That body's role is very much one of scrutiny. The committee is part of the National Assembly and it is quite separate from the Assembly government. The Education and Lifelong Learning Minister is a member of the committee but he is not in a position to commission the committee to undertake particular pieces of work or to provide advice.
So the panel will have a new function. It will be different from that of the Education and Lifelong Learning Committee and will be completely consistent with the First Minister's recent paper, Making the Connections. Delivering Better Services for Wales. So it will not be a decision-making body and it will not have executive powers. It will be a critical friend that will be able to fill a gap that we need to be filled and will be able to make a contribution when the Assembly needs advice on specific issues. It will have been achieved in the spirit of devolution and I believe that it is the feeling of this House that the Assembly, having welcomed the proposal, should be able to achieve what it wants.
Baroness Morris of Bolton: My Lords, I thank the Minister for bringing some focus to the slight vagueness that we received in the letter. Being my own critical friend, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 27 [Duty to arrange regular inspections of certain schools]:
[Amendment No. 52 not moved.]
[Amendment No. 53 not moved.]
Clause 43 [Categories of schools causing concern]:
[Amendment No. 54 not moved.]
Lord Filkin: My Lords, I beg to move that consideration on Report be now adjourned.
Moved accordingly, and, on Question, Motion agreed to.
House adjourned at six minutes past ten o'clock.

Official Report of the Grand Committee on the Companies Act 1985 (Operating and Financial Review and Directors' Report etc.) Regulations 2005
Monetary and Fiscal Policy (EAC Report)
Child Trust Funds (Amendment) Regulations 2005
Government Resources and Accounts Act 2000 (Audit of Public Bodies) Order 2005
Monday, 21 February 2005.
The Committee met at half past three of the clock.
[The Deputy Chairman of Committees (Lord Ampthill) in the Chair.]
The Deputy Chairman of Committees (Lord Ampthill): Before the Minister moves the first order to be considered, it may be helpful for me to say a word about the procedure for today's Grand Committee. Our proceedings are essentially the same as those in the House. Noble Lords will speak standing. All noble Lords are free to attend and participate and the proceedings will be reported in Hansard.
As there is more than one item of business today, each item will be called on by the Clerk. So far as concerns the regulations and order which are to be debated today, I should perhaps make it clear to noble Lords that this Committee is charged only to consider these items, not to approve or not approve them. The Motions to approve will in due course be moved in the Chamber in the usual way.
If there is a Division in the Chamber while we are sitting, this Committee will adjourn as soon as the Division bells are rung and resume after 10 minutes.

Official Report of the Grand Committee on the Companies Act 1985 (Operating and Financial Review and Directors' Report etc.) Regulations 2005
  Companies Act 1985 (Operating and Financial Review and Directors' Report etc.) Regulations 2005
  Motion not moved.
  Companies Act 1985 (Operating and Financial Review and Directors' Report etc.) Regulations 2005

    Monetary and Fiscal Policy (EAC Report)
    3.32 p.m.
    Lord Pestonrose to move, That the Grand Committee do report to the House that it has considered the report of the Select Committee on
    GC 182
    Economic Affairs on Monetary and Fiscal Policy: Present Successes and Future Problems (3rd report, Session 2003–04, HL Paper 176).
    The noble Lord said: As always, we, the Economic Affairs Select Committee, are pioneers. We are the first committee to agree that its report should be debated in the Moses Room. I volunteered us on the grounds that doing it this way gave us a convenient day and time and an acceptably short gap between publication date and debate. It is still my view that this is a good way of doing things.
    There is one slight downside; namely, that in this Room there is no TV relay. When we debated the matter in the Chamber itself I understood that this particular problem would be rectified soon—I assumed during the summer. Just for the record, I must say that were we not in due course to have a television relay in this Room I would cease to support the pioneering trail that we have currently set out on. That has to be available in the normal way.
    I now turn to the report. I must of course thank both our special adviser Professor Mike Wickens of York University and Robert Graham-Harrison our Clerk. I have to say more definitely than usual that without their help we would have made little or no progress in this very difficult area of economic policy.
    None the less, I can also say that we have stuck to the tradition of the Economic Affairs Committee; namely, that we have an agreed report; we have had no votes—so I have served my six years as chairman without a single vote; and we had no party division whatever. That does not mean that we abandoned our political views, but we did not let that permeate the serious consideration of matters of this kind.
    Everything we have done—and I think that your Lordships will accept that that is true of this particular report—is evidence-based; every part of it is fully argued and is fully transparent. In particular, where the evidence is not decisive, one way or another, or the theoretical argument is finely balanced, we have recognised the resulting difficulties and therefore do not pretend that there is only one right way of doing things. If only that were true of the governments that we have had for the past quarter century, our country would be a rather more successful place, successful though it is.
    I will concentrate on two topics and hope that the other Committee Members taking part will choose those topics if they like and also deal with one or two of the others. In doing that, I must say at the outset that I am extremely disappointed by the Government's reply to our comments on fiscal policy. The Government's reply has a defensive and "we are above criticism" tone, which I find unattractive, particularly because your Lordships' committee was supportive of the Government's commitment to a well articulated fiscal framework just as we were the first serious body to support the independence of the MPC. I find the Government's reply unattractive and quite distasteful given how much work we did and the fact that the Government did not feel that it was their duty to give

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    us a properly reasoned set of answers. That is not to say that we are always right, but we deserve proper consideration.
    As I said, our analysis and recommendations were intended to be helpful. We did not say that the broad approach used by the Government was not good. We simply asked what could be done by way of independent scrutiny to make it better. That was our approach. To be told in the Government's reply that the job of scrutiny is well done by independent commentators is quite absurd given that the independent commentators demonstrate quite clearly that they cannot agree themselves on any of the important matters. They cannot agree on the date or length of the cycle or the distinction between capital and current expenditure and matters of those kinds. The notion that the job is done well by them is ridiculous.
    In addition, serious economists—and there are plenty in the Treasury—are well aware of the complications that arise in this area and therefore well aware of the need to argue these matters. I also note what the Government tell us about the effective job that the Treasury Select Committee does in scrutinising fiscal policy. I am afraid that my deep respect for the other place prevents me from commenting on the work of the Treasury Select Committee, but I reflect sadly that the Treasury itself finds it impossible in its reply to your Lordships' committee's report to say what a good job your Lordships' committee does.
    The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord McIntosh of Haringey): That is my job.
    Lord Peston: If I may say so, no it is not, although it may come to that in due course. It is the job of the Treasury, given what we did, at least to start by saying, "We thank your Lordships for all that you have done and our arguments are as follows".
    At the very least, we would have expected in the Government's response to your Lordships' report something representing an argument not least to our suggestion that the relevant distinction between permanent and temporary changes in public expenditure are a better way of looking at these matters than the rather old-fashioned current-versus-capital-expenditure approach. I am not saying that we are right, although I believe that we are, but when we put forward an argument, we would like to hear the actual view of the Treasury.
    Also, over a long period in a non-inflationary environment, in broad terms our view was that pretty well all public expenditure must be tax financed bearing in mind that borrowing must be repaid and interest charges must be met. I say in broad terms, because relative to GDP, there may be a long-term demand for bonds that only the public sector can meet. In that case, of course, there can be a permanent issue of bonds keeping, say, the ratio to GDP constant, but solely in order to meet the demands of financial
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    markets for those assets. So far as I understand the economics, everything else must be tax financed, one way or another. Subject to that, the rest of the budget will always be balanced, in the long run.
    The Government tell us that lying behind their approach is the notion of intergenerational fairness. They see that as part of the argument. I shall forbear from dwelling on the old joke of, "What has posterity done for us?"—although I am well aware that our successors on the Economic Affairs Committee, as they look at the topic that they have chosen, will be stuck with answering that question at some time or other. I shall ignore that for the moment. The notion of intergenerational fairness, whether derived from philosophical or economic views, is fraught with difficulties. If we started from the concept of intergenerational fairness, we would be hard put to show how it led us to the Treasury's view on the current versus capital distinction, especially as set in the national accounts.
    We can be pretty sure, however, that our successors will be richer than we are. Therefore, on progressive tax grounds alone, they will be better placed to meet any financial burdens than we are. If you believe in intergenerational fairness, you might well believe in pushing the burden forward, rather than keeping it within the generation. I agree that those are technically difficult matters. Earlier today, I reflected on what Keynes argued in 1929 when he said, with Sir Hubert Henderson in a very famous pamphlet, that—looking, say, 50 or 100 years forward—domestically held debt if repaid will be repaid by posterity to posterity. He totally denied the notion that there was a forward-looking burden. That has always been worth thinking about.
    I hasten to add that, in reminding Members of the Committee of Keynes's view of 75 years ago, I shall not go on to say that there is no such thing as sound finance or that we should abandon fiscal rules—quite the contrary. However, my view is that the fiscal guidance that the report gives to the Treasury is well worth following.
    My second topic is the switch to the CPI. We argued, inter alia, that that switch had not been properly thought through. I am bound to say that the Government's response only confirms that opinion. They tell us that the CPI,
    "has a number of distinct advantages — for monetary policy purposes".
    They also cite with approval the view of the Governor that it does not have major significance for economic policy. I have to ask a question as a matter of elementary logic. How can something be a better measure, and yet at the same time make no difference to what happens? My definition of a better measure is something that enables you to operate more efficiently or better in some way.
    The illogicality is worse than that, as the Government also cite with approval the IMF's view that the change in the inflation target was well communicated and well understood by financial markets. If the change was insignificant, especially to

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    measurement and on to policy, what was there to communicate to financial markets or for them to understand? You really cannot have it both ways. Either the move was very important, in which case we would like to see it justified, or trivial, in which case there is no problem.
    The point holds a fortiori on the Government's response to our comment on the effect on the labour market. The Government say that the switch has no direct implication for the labour market and again cite with approval the Governor, who believes that wage bargaining should be unaffected. Does that mean that the level and rate of rise of nominal wages will stay the same, so that real wages will appear higher when nominal wages are deflated by the CPI rather than the RPIX? None the less, although real wages will appear higher on one index than another, that will lead to no change in bargaining behaviour or what happens in the labour market. As a minimum, one would again like a full analysis of how you can have two indices that are both not significantly different, and are significantly different, but have no effect on the labour market.
    When it comes to index-linking more generally, in either the public or private sectors, will no attempt be made anywhere in the economy to try to use the CPI in future? One at least has to ask the Treasury if it will tell us the answer to that question. Is there no possibility that confusion could arise in the labour market because of the existence of the two indices? I have never been a union leader, and I do not see myself becoming one, but if I were bargaining I would always choose whichever index got me the best rate of rise in nominal wages. I absolutely could find an economist who would tell me whichever one I was choosing was the right one—until the next week, when I would find a different economist and be told something different. When Ministers make speeches referring to inflation, what are we to assume they have in mind by way of the relevant index? Will they never show any preference for one index over another?
    Those are my main points, and I am keen to leave room for my colleagues to make their points. I reiterate my view that your Lordships' Economic Affairs Committee, over my six years, and now under the leadership of my successor, the noble Lord, Lord Wakeham, works enormously hard on these matters and we do take them seriously. It is about time that the Government, through the Treasury, responded in an appropriate way. I beg to move.
    Moved, That the Grand Committee do report to the House that it has considered the report of the Select Committee on Economic Affairs on Monetary and Fiscal Policy: Present Successes and Future Problems (3rd report, Session 2003–04, HL Paper 176).—(Lord Peston.)
    3.47 p.m.
    Lord Wakeham: I congratulate the noble Lord, Lord Peston, not only on his speech today, which was more forthright and more critical of the Government than my speech is going to be, but I agreed with a great
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    deal of what he had to say. Also, I congratulate him on his remarkable time as chairman of the Economic Affairs Select Committee. He was also chairman of its predecessor, the Monetary Policy Committee. In all, his service of over six years is probably unique, and it has been of greatest value to the House of Lords, to Parliament, and to the nation more widely. The reports produced under his chairmanship, before I was on the committee, were always evidence-based, authoritative and much respected. Nevertheless, they also had his personal style about them, and they were the better for that. It is a great honour for me to succeed the noble Lord as chairman of the Select Committee, and I hope to keep up the high standards that he maintained.
    One thing that I noted in his speech—I do not know whether it was an aside or a main point—was that he asked, "Why do we not put things off to the future?". For good reason—I was reading articles this morning about some of the nation's pension liabilities. If there was ever a case of putting things off to tomorrow, either in the private sector or public sector, the pension liabilities that will be left to future generations— maybe to us for a bit to have to receive the pensions but for future generations to have to pay for them—is a massive problem for whoever will be in government for the next 25 years or so.
    This is a significant occasion, being the first debate of a Select Committee report to be held in the Moses Room. I am aware that not all committee chairmen think it is a good idea. My view is that given the competing pressures for time on the Floor of the House, it represents a pragmatic and sensible step. When I was consulted, I made it clear that it had my agreement provided that it represented additional debating time and that each time it was proposed the relevant Select Committee agreed. The fact that it is additional time begs the question: what is normal? It is easier to say what is not acceptable than what is absolutely acceptable. As an example, the delay in debating our previous report on ageing, when almost a year had elapsed, was clearly unacceptable. What the Government will not be able to do is to shuffle off Select Committee reports to the Moses Room as and when it suits them. They have assured me that they have no intention of doing so, and that is to their credit.
    The report that we are debating today has made some important points on monetary policy and, for the first time, we have made some points on fiscal policy. My comment may appear rather inadequate when I say that the Government's response is somewhat thin. The noble Lord, Lord Peston, put it rather stronger than that and I think that he may have made the point better than I have done. On some points the Treasury did not comment at all, leaving it to the Governor. So I look forward to hearing from the Bank, and perhaps later in the year the committee will ask the Governor whether he would like to come back to see us again.
    With regard to other points that we made in the report, I want to comment briefly on three of them. They are separate points but, to some extent, they may have a common theme. We noted that, in assessing the

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    inflation outcome in recent years, the outcome was nearly always below target. We also noted that interest rates remain high in the United Kingdom relative to the US and the euro-zone. There may be some connection. The view of some may well be that the MPC might have been too conservative in its forecasts and, as a result, we have had interest rates somewhat higher than would be strictly necessary. On the other hand, some might feel that it is an innate sense of caution by the committee, perhaps not having quite as much confidence in the economy as emanates from the Treasury.
    Secondly, we were interested in the concern and public emphasis that the Monetary Policy Committee has given to housing when house prices are not even included in the new consumer price index. That appears to be a concern that the Bank has over financial stability more generally, even though financial stability itself is not included in the Bank of England Act as one of its tasks. One might well ask what takes precedence in the eyes of the MPC—the inflation target or financial stability.
    All those who serve on the Monetary Policy Committee are distinguished and erudite persons, but we wonder whether there has not been a subtle change in the membership of the MPC. The Bank of England Act and the Chancellor's statement of May 2004 mention relevant knowledge and experience. It has always been understood that that referred particularly to knowledge and experience in monetary policy. Indeed, the Bank itself has resisted claims for appointments from unions and business on just that basis. We wonder whether any widening in the selection of membership of the MPC has dangers for the standing of the MPC and whether it needs to be watched.
    Those three points are not in any sense minor ones but, even taking them into account, it is very important that I end by stressing that the Governor and the MPC have been hugely successful in achieving the inflation target, even though that target has changed, and I congratulate the Governor and his team on that achievement.
    3.54 p.m.
    Lord Barnett: I add my personal congratulations to the chairman of the Select Committee, my noble friend Lord Peston. I believe that, from the quality of the reports, anyone on the committee and, indeed, anyone who over the years has read our reports will recognise that he has been an excellent chairman. The report was all party and unanimous on the difficult subject of the economy.
    I am sure that, at the present time, some Members of the Committee will seek to make the odd party-political point. If I am looking at the noble Baroness, Lady Noakes, I am sure she will forgive me. For my part, I shall not be party-political, other than to agree with my noble friend Lord Peston in virtually everything that he said about the lack of response from the Government or the Treasury to our report.
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    I shall say a few words about monetary policy. As the noble Lord, Lord Wakeham, rightly said, it is difficult to criticise the Monetary Policy Committee in respect of its achievement of its target level of inflation, which was 1 per cent up or down. I know it can be argued that it inherited a marvellous situation or that there are other reasons for its success, but the fact is that it achieved the target that it was set. However, I have always worried whether the MPC needed to set interest rates at the level it did in order to achieve that target. In paragraph 90 of our report, we were explicit and stated:
    "Evidence … in recent years [is that] monetary policy has been too tight. This implies that UK interest rates should be lower than at present, possibly by as much as 50, or more, basis points".
    That was the unanimous view of the committee—all our recommendations were unanimous—and we did not receive a response to it. Indeed, that applied throughout the Government's response in which there was no serious attempt to argue one way or the other.
    The Chancellor gave the Monetary Policy Committee a second remit with three famous words, "subject to that"—that is to say, subject to achieving the inflation rate—it should go on to consider the Government's economic policy. Reading the latest minutes, or indeed, any other set of minutes, one is hard put to find that the Monetary Policy Committee ever considered—except for the facts—what, having achieved the inflation rate, it could or could not do to help the Government achieve their economic policy and, indeed, to help the country to achieve even better, sustainable rates of economic growth.
    It is not sufficient for the Government to reply, as they did in paragraph 4 of their response to the report, that they have no comment at all because they believe in the operational independence of the Monetary Policy Committee. It is unbelievable that the Treasury does not have a view and does not express it to the Monetary Policy Committee. The Governor and the Chancellor of the Exchequer no longer have lunches; they apparently have breakfasts. One assumes that, other than discussing the weather, the Chancellor says a word or two about the economy to the Governor of the Bank of England. Maybe the Minister can tell us that he does not. I do not know what they talk about. A senior Treasury official is present at every Monetary Policy Committee meeting. Can my noble friend tell us whether he opens his mouth? Does he ever give the Treasury view of what it should or should not be considering? I find it incredible that it never discusses anything remotely concerned with the remit given to the Monetary Policy Committee.
    Like my noble friend Lord Peston, I shall concentrate on fiscal policy. Again, it would be difficult to disagree with the argument that the Chancellor has been successful—whether because of luck or because of a great inheritance—in maintaining the level of growth. Given the way that the economy has gone of the past eight years, is difficult to say that he has not done an excellent job. I would be the first to concede that, although I do not often speak about my noble friend in that way, as the Minister will recognise.

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    But when I asked a Question recently about the golden rule, which is central to the Chancellor's policy, I was told by my noble friend:
    "Certainly I agree that it would not be right to jump into drastic action as the result of very minor changes".
    Later, during the same Question, he went on to talk about this crucial area of investment in relation to the golden rule. He told us that,
    "investment by itself is not an unmitigated good or bad. There are good investments and bad investments".—[Official Report, 31/1/05; col. 6.]
    So one assumes that the Chancellor has chosen only good investments for the purposes of his golden rule.
    A recent decision by the Office for National Statistics, which, frankly, I found incredible, was that the maintenance of the public rail system should be classified as capital investment. I recognise that the Opposition will wish to make something of that, but I suppose that it is libellous or slanderous to say that the ONS deliberately changed its definition of capital investment in order to suit the Chancellor. But frankly, if it is cheating—as Oliver Letwin said and as the noble Baroness will no doubt repeat using different language—and fiddling the figures, one needs to cut borrowing even more. However, instead, the Opposition propose to cut taxes. That is the only party-political point that I shall make.
    We are dealing with a serious problem here—the achievement and success of the golden rule, which the committee and I very much support as opposed to the European Union's policy in relation to managing these problems. But, frankly, what is an unmitigated "good" or "bad"? Apparently, whether investment is good or bad, it is still to be included in the golden rule. That issue is well covered in paragraph 67 of our report. The essential point that we made was that if investment, however it is counted, does not yield revenue, that is a serious matter. We did not receive a single reply on that central problem.
    As I said, the Select Committee is unanimous and all-party, and there was never any question of trying to be clever with the Treasury. We sought to help to analyse how the golden rule could be made even more effective than it has been, but we never had a single comment from the Treasury on that point.
    Therefore, the question arises of whether fiscal policy should be treated like monetary policy and assigned to some kind of independent agency. Rightly in my view, in paragraph 83 of the report the Select Committee said that that should not be done. However, importantly, in that paragraph we went on to say that,
    "we respond more positively to the idea of having an independent assessment by experts of whether fiscal policy is being conducted within the fiscal framework".
    We did not recommend a major change; all we asked was that the Treasury should review it. We could not have been more moderate. We asked the Treasury—we were trying to be helpful—at least to review the possibility. It might come up with the answer that it is not the sensible way forward. That is okay, but
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    perhaps the Minister will tell us because in the Treasury's reply there was no good reason why that matter should not even be reviewed.
    Finally, I move on to the whole question of the ONS reclassification. Indeed, it is not only reclassification but classification generally of what should be treated as capital investment. I should be glad to hear my noble friend's view of what should be treated as capital investment here. It is central to the golden rule and we cannot just ignore it and say whether it achieves any form of revenue and whether interest and depreciation should be counted. All those points we raised in a sensible way in the report. As I said, we did not have a response. I hope that my noble friend will be able to give us one now.
    I hope that this debate and the Select Committee report will give a general message loud and clear to the Treasury. I should plead guilty as, some years ago, when I was in the Treasury, I could not have cared less what happened in the House of Lords and what it said or did not say. That was my view then, before I came to this place and saw for myself how a Select Committee—one I chaired myself at times—sought not to make party-political points, but to help any government to achieve better results. It does not deserve to be dismissed out of hand, as happened on this occasion. The House of Lords committee has done an excellent job. It sought to help, not to hinder or to be party political. It deserves a better response than we have had so far. I hope that we will see it today.
    4.6 p.m.
    Viscount Trenchard: I thank noble Lords who serve on the Select Committee for their report, and the noble Lord, Lord Peston, for introducing the debate. I feel somewhat nervous as the first of a small number of speakers who have not put the hours in or done the work that noble Lords on the committee have. I also hesitate to disturb the comfortable and apolitical atmosphere that guides the committee's proceedings—which I entirely welcome. As those who have spoken have already pointed out that the Government appear to pay little attention to the committee's neutral and cross-party approach, I think that I may be forgiven for making some rather more party-political points than I would have done had I been bound by the framework of the processes and modus operandi of the committee.
    The greater part of the committee's report deals with the performance of the Monetary Policy Committee of the Bank of England. As the noble Lord, Lord Peston, commented, the committee's proceedings have been largely free of party-political division. However, would it be so easy to achieve that if the balance of the committee's work shifted to examining questions of fiscal policy?
    The committee was surely right in its view that the potential significance of the change from the RPIX to the CPI has not yet been sufficiently explained by the Treasury. Given the importance of housing-related costs such as council tax and buildings insurance to the average household budget, it is perhaps surprising that

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    the Government have changed to a measurement system that takes no account of housing costs. It is also true that, as noted in the report, with the CPI being below and the RPIX being above their respective target levels—hence inflation appearing to have shifted from overheating to underheating—the Bank has a difficult and confusing communications exercise.
    The committee is not convinced that the change of inflation target was properly thought through, and that its effect on the labour market was adequately analysed before the change was decided. I hope that the Minister will tell us whether the Treasury will accept the committee's recommendation that it should provide an early statement of explanation and clarification beyond the brief and inadequate response contained in the report published on 7 February.
    The report shows that the Select Committee examined in detail the importance given by the MPC to developments in the housing market, such as the recent surge in mortgage borrowing through equity withdrawal. The committee expressed its concern that for the MPC to undertake short-term stabilisation of the real economy takes it some distance from its statutory remit. However, that is not necessarily true, unless pursuing the second objective set for the Bank in the Bank of England Act—to support the economic policy of Her Majesty's Government—conflicts with the first objective—to maintain price stability. I would expect that these two objectives would not normally conflict with each other and could normally be pursued in tandem.
    The committee makes a good point in paragraph 82, which is particularly relevant in view of the Treasury's habit of reclassifying current expenditure as capital investment. When we debated the pre-Budget report on 16 December, I was joined by many noble Lords in predicting that the Chancellor was on course to break his golden rule; there was already a deficit in the public finances of £17 billion in the current fiscal year, despite higher oil prices having delivered a windfall bonus of some £4 billion. It is no surprise that January has turned out to be an excellent month for the Treasury; with self-assessment income tax receipts and a quarter of the year's corporation tax revenues due. A surplus achieved at £9.2 billion was some £3.5 billion greater than a year ago. However, the cumulative deficit for the year at £19.2 billion is only £2.5 billion less than the equivalent at the same time last year.
    The global economy and the UK economy have had a good year, and Britain's companies have done commensurately well. Increased national insurance contributions and increased income taxes earned as a result of the Government having increased the threshold of the 40 per cent higher rate band in line with inflation but not earnings, account for a part of the increase; so do higher oil prices. The structural reforms of the 1980s and early 1990s have left an enduring, benevolent economic framework, which is still yielding good, continuous economic growth despite this Government's wasteful diversion of our resources towards the public sector, which has become an increasing problem in recent years.
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    In December, the Chancellor forecast that the current account deficit for 2004–05 would be £12.5 billion. In order to achieve that, he needs a further surplus of £6.7 billion in the last two months of the financial year. The pre-Budget report forecast that the golden rule would be met by a margin of only £8 billion, nearly the same amount, so it is clear that there is no room for complacency. Against this background, it is no surprise that the Government have decided to fudge the figures for the third time in two years. I would not go along with the noble Lord, Lord Barnett, in saying that we cannot blame the Treasury for this. As I understand it, under the current structure the Office for National Statistics reports to the Treasury.
    In 2003, the Department for Transport asked the Rail Regulator to reclassify rail subsidies as grants, ensuring that they would be treated as capital rather than as current expenditure. That change alone accounts for £6 billion out of the £8 billion margin for the golden rule claimed by the Chancellor. Then there was the change by the Treasury last year in the method of calculating budget balances from absolute amounts to percentages of GDP. The effect is to increase the relative weightings of past surpluses as compared with current deficits in assessing the degree of adherence to the golden rule. In earlier years, the legacy of the last government's sound economic management ensured that the Treasury could operate well inside the limit, but now every £1 billion is crucially important to the Chancellor's credibility. Perhaps that explains why the Office for National Statistics, after taking advice from the Treasury, has now decided to reclassify a substantial amount of current spending on roads as capital expenditure.
    As Mr Richard Alldnit, Chief Executive of the Statistics Commission, has observed,
    "The timing issue looks potentially uncomfortable so we will be asking the Office for National Statistics what triggered it and to clarify why some of this spending was treated as current in the past. We reiterate the need for demonstrable independence in official statistics".
    I think that the Committee would like to know what is the opinion of the Select Committee on the need for an independent national statistics office and I would hope that the committee might address that question in the future. I would certainly agree with the committee that there should be an independent assessment by experts of whether fiscal policy is being conducted within the fiscal framework. I would like to hear from the Minister whether the Treasury still believes that the current arrangements work well in the light of the comments by respected observers, reported over the weekend, following the Government's decision on the reclassification of road maintenance expenditure.
    The Government's response has also failed to address the committee's recommendation that the Treasury should review the feasibility and advantages of setting up a body like the Council of Economic Advisers in the United States. It is becoming clearer that the committee is also right in its view that parliamentary scrutiny of macroeconomic issues should be increased.

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    Many experts consider that it will still be touch and go as to whether the Chancellor will be able to claim that he has observed the golden rule, despite the Government having moved the goal post three times and to no small extent. The Treasury has consistently been overly optimistic in its forecasts of budget surpluses, which have been reduced every year since 1999–2000. Its own forecast that the next economic cycle will start in 2006–07 with a virtually neutral budget, the position is therefore not at all encouraging. Even if through a combination of luck and the residual effects of the economic policies of the previous government and sensible monetary management by the Bank of England, this time the Treasury should turn out to be accurate in its budget forecasting, independent observers such as the Institute of Fiscal Studies still believe that £11 billion of tax rises will be needed after the general election.
    Perhaps the Minister will tell us whether that money will come from further increases in national insurance contributions or from income tax by continuing to draw more and more taxpayers into the higher rate band or from where? This Government have increases and are increasing the proportion of GDP taken by taxes and national insurance contributions in any case. This does nothing to improve this country's deteriorating position in the world competitiveness league, down from fourth to 15th place or more by some methods of assessment.
    Members of the Committee may have seen reports over the weekend that one in four jobs is now in the public sector. These are the only new jobs which carry defined benefit, final-salary-linked pension schemes. Only 18 per cent of those currently employed in the private sector are contributing members of defined benefit pensions schemes, whereas 78 per cent of public sector workers still enjoy such schemes.
    Watson Wyatt, the financial consultants, estimate that the unfunded public sector pension liability has soared to £700 billion, more than 60 per cent higher than the Government's estimates. This huge liability is growing all the time. Every week, you can see advertisements placed in the appointments sections of the major newspapers inviting applicants for senior positions in new quangos on attractive terms, including inflation-linked final salary defined benefit pension schemes.
    Mr Brown must now rue the day he stripped pension funds of their tax-free status in 1997. I would urge my right honourable friend Mr Oliver Letwin to waste no more time in committing firmly to restore the dividend tax credit to pension funds and charities. Such a move is logical and fair and I believe will be entirely self-financing in the medium term because it will provide a much-needed boost to savings, raise the stock market, reduce companies' pension deficits and increase their profits and contributions to the Exchequer.
    I know the Minister's views on this matter, but I look forward to hearing the views of other Members of the Committee. I believe that it is an obvious, sensible step to take and I earnestly hope that my colleagues on these Benches will adopt it as policy.
    4.21 p.m.
    Lord Sheldon: My first task is to thank my noble friend Lord Peston for his chairmanship of the Select Committee over a longer period of time than we might expect in future. I also want to acknowledge his success in handling the committee and producing the valuable reports. It has been a great advantage to be a member of the committee. I have taken a great deal of pleasure from our discussions and the conclusions we reached. The noble Lord, Lord Wakeham, is a worthy successor.
    Although the past informs us in the actions that we take and the views we reach, in the House of Lords it does not rule us in quite the same way. We in this part of the Palace are therefore able to look at these things perhaps a little more dispassionately. I am sorry that the Government's response was negative. They may not happily agree with everything we say, as one might expect, but the committee has the experience and expertise without the political past which must be overcome. That is an advantage for the committee and it should therefore have been treated with greater seriousness.
    The report is not party-political; it does not even avoid a political relationship. It tries to be helpful and to produce results which will help the Government and the country generally.
    If we look at the economic achievement of the Government, the defining economic decision of the Chancellor of the Exchequer was the wholly unexpected handing over to the Bank of England the responsibility for the control of interest rates. This was held to be the great financial power of the Chancellor of the Exchequer—it dominated so much of his life. The Prime Minister was also always involved in such matters and the political realities of the time tended to distort some of the economic involvements in which they were engaged. The handing over of this power showed a confidence that with his management of the economy it was not going to be a power that he felt he would need. This was a level of confidence which was surprising but which proved to be justified and successful.
    Although there was the reservation that in exceptional circumstances when the national interest demanded it, the Government would have the power to give instructions to the Bank on interest rates for a limited period, it was not a power that he was expected to exercise and in eight years it has never come near to being used.
    The Bank's Monetary Policy Committee is made up of the Governor, deputy governors, the Bank's Chief Economist, the Executive Director for Market Operations and four external members appointed directly by the Chancellor. The members appointed directly by the Chancellor were well chosen. It was a body of great expertise. More recently, some new appointments have not been quite so well focused on monetary economics. It is necessary that the reputation of the MPC, which was not easily won, is maintained.
    The MPC meets on a monthly basis and the Treasury has the right to be represented in a nonvoting capacity. As my noble friend Lord Barnett

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    asked, will the Minister say how it works in practice? Who attends and what kind of contribution does he or she make? Members do not go there just to listen—they must speak up. What do they say and what demands do they make? If not demands, what contributions do they make?
    Decisions are made by a vote of the committee on a one-person-one-vote basis, with the Governor having the casting vote if there is no majority. Will my noble friend say how often that casting vote is used? That is an important point. Does the committee reach arrangements easily, or does it have to wait until such time as it is necessary?
    The quarterly inflation report published by the Bank looks at the prospects for inflation in the light of the inflation target. It examines the economic and monetary factors throughout industry and commerce which the MPC reckons will have a bearing on inflation over the future. That is usually about two years, being the time it considers it takes to work all these things through. Taking all that into account, it decides on the interest rate and the Bank carries this through by operating in the financial markets.
    That has worked well and is a tribute to how the system was set up and is working. What I would like to hear from my noble friend is the extent to which the Treasury is informed and involved in the process. Are its comments invited? Does any Treasury Minister make any contribution to the final decisions?
    One aspect of the Budget last year, which I did not think received quite the attention it deserved, was the announcement that the measure of inflation was to be changed from RPIX, which excludes mortgage and interest payments, to the harmonised consumer price index; the HCPI or, as we now call it, the CPI. The Chancellor first mentioned this change in his Budget speech back in 1997 when he spoke of the case to move to a new measure of domestic inflation at some stage in the future.
    The problem with using the RPI and the RPIX is that they are revised four times a year and are altered to take account of the way by which patterns of consumption change. That is important because people raise their standards of living over the years and consume better products. The index therefore tends to overstate the rise in the cost of living. That has an effect on pensions, which follows the RPI. It shows not only the cost of living as it has become, but it absorbs the improvements in the standards of living. So the changed RPI becomes a different measure from the cost-of-living index which allows not just the maintenance of the standard of living but also the improvement in the standard of living.
    The harmonised consumer price index handles this problem in a different way. Each country in Europe has a common method of calculating the index of prices so that comparisons can be made between countries. Each country covers the categories which are over one per thousand of the national shopping basket. This method helps in comparing inflation
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    between different countries. That is important, given the present moves for comparison between the ways in which these indices are calculated.
    The Chancellor has accepted that the RPIX measure is well known and understood, but the CPI index is in line with the best international practice and is used widely in Europe and every other G7 nation, save Japan.
    Both the RPI and the CPI do not deal adequately with house inflation. This is one of the big problems that we have. House inflation is a matter of enormous concern to people in this country and elsewhere, but there is no proper measure of bringing it into the RPI. It has been said that work will be done to find an acceptable measure of housing for the inflation index. My question for my noble friend is: how is this work proceeding? It seems to me that this is the holy grail of inflation indexing.
    How do you index housing and join it into the costof-living index? Work is supposed to be being done. I should be most interested to hear how the Government hope to get a suitable index which includes the temperamental measure of housing.
    I turn to the current account deficit, which is the most important of the three points that I wish to make. In the third quarter of last year, the current account deficit increased to £8.8 billion—equivalent to 3 per cent of GDP. This is the highest deficit since the record deficit of £8.9 billion in the first quarter of 1999. The quarterly deficit on trade in goods and services grew to over £10 billion for the first time.
    Although the increasing deficit may not be an immediate problem, there must be real concerns about the longer term. Our manufacturing industry has been declining in importance for many years while low-cost countries have increased their sales of manufactured goods to us and to the markets that we had. More recently, they have benefited from increased productivity and overseas investments into their manufacturing industries. Some industries, instead of investing in this country, have invested in some of the new developing countries.
    Typical of that and very important also, are the developments in China and, to a lesser extent, in India. They have what are now their advantages of large resources of cheap labour and lower tariffs than in the West. Some of the articles are now being made in China and the proportion of goods being produced and exported to the markets that we held are dominating much of the changes that are happening in this area. We have tried to counteract some of the loss of industrial exports by means of our financial and service sectors. Whether that will be enough in the years ahead is a matter of considerable uncertainty.
    Undoubtedly, the loss of our industrial export markets and the imports of the replacement goods will be very difficult to turn round. The reputation of successful manufacturers is very difficult to reacquire once it is lost. Once you have lost your market, to re-engage with it is very difficult indeed. The effect of manufacturing incentives has declined for a number of years and now needs to be re-examined. The question

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    I have to put to my noble friend is: what kind of fundamental re-examination is going on? If it means greater involvement by the Government, this may be necessary. I should like to hear his comments on that.
    4.33 p.m.
    Lord Northbrook: We are all grateful to the noble Lord, Lord Peston, and his committee for their fascinating and informative report. I should also like to draw attention to the quality of the witnesses questioned. I am also pleased like other speakers that we have had a government response to the report, although, like the noble Lord, Lord Peston, I am disappointed when the Government do not in some cases reply at all to some recommendations made.
    I am sorry that we are relegated to the Moses Room to discuss such an important subject. I now understand, from the noble Lord, Lord Peston, the reasons for that more clearly. Like him, I find the problem of TV relay disappointing. As one of the few speakers who did not serve on the committee, I can impartially praise the high quality of the report. I can do no better than to go down the abstract and make a few comments from a City perspective, declaring, as usual, an interest as an investment fund manager.
    As the abstract states in its first paragraph, the committee was examining the performance of the MPC. I say straight away that I think the MPC has done, in general, an excellent job. Indeed, in my maiden speech in this House in 1992, I recommended that more independence should be given to the Bank of England. Now, I am glad that this has happened.
    The committee's first detailed point is that it has some concerns about the Chancellor's decision to change the MPC's operational target to the CPI basis, and is not sure that the change was properly thought through. When I first heard of that change, my immediate reaction was that the Government were doing it as a means to lower interest rates. That was because the CPI index was standing at about 1.5 per cent and the new target was to be 2 per cent. When I informally asked my noble friend Lady Noakes about the matter, knowing her experience of the Bank of England, she informed me that in her view the MPC would take a careful look at the CPI target and not necessarily follow its progress alone in determining interest rate policy. How right an interpretation that has been.
    It has been very surprising to me and to many in the City that the Treasury and the MPC appear to be thinking on different lines. The Treasury has produced the index—the CPI—which omits a wide range of housing costs, and asked the MPC to see that it remains below 2 per cent. On the other hand, the MPC has chosen to focus on the very area which has been left out of the CPI. Instead of cutting interest rates, it increased them last year because of its worries about the potential inflationary consequences of an over-strong housing market.
    I have considered the Chancellor's evidence to the committee for the reasons for the move to the CPI but, like the predecessor committee, do not find myself
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    convinced—although I am not an economist—that the index is as appropriate for the UK. I agree very much with the committee's opinion that the preparation for it was not enough; nor was it subject to public discussion before the final choice was made.
    The switch has also made life difficult for the MPC, as the indices are behaving in different ways. As paragraph 12 of chapter 2 of the report states, the CPI has been running well below the target, and the RPIX has been above it. I acknowledge the authoritative voices in paragraph 13 who are very relaxed about the change, and note with interest the Government's response that the gap between the two will narrow to 0.5 per cent by October 2005. I wait to see how that progresses. However, I still ask the Minister, as does the report, to provide some clarification of the decision even at this stage.
    The next conclusion in the abstract I have to disagree with. I do not have such reservations about the emphasis placed by the MPC on house price inflation. Nor can I agree with the opinion of Willem Buiter of the European Bank for Reconstruction and Development. He was sceptical about whether monetary policy could be used to rein in house prices. He said:
    "It was like tackling inflation with a pea shooter".
    It seems that a far better way to control house prices in the long term is to alleviate the chronic shortage of supply. It is that that should be tackled by the Government, through streamlining the planning process, which will help to improve supply. As a consequence, raising interest rates is only a necessary short-term solution to the situation.
    However, as the Government seem unable despite a lot of talk to do anything about the planning logjam, the MPC has no choice but to use interest rates to calm the market down. Will the Minister therefore explain why the Government have changed to an index which excludes housing costs, whereas the MPC is taking them so much into account in setting interest rates? Who is right on that? In the City we, unlike the IMF, are still confused.
    On the subject of oil prices and how the MPC should react, I do not have much to say about the committee's views, except to make the point that a high oil price is not necessarily as big a problem for the UK economy as it was in the 1970s. I understand that oil prices would need to rise to $80 a barrel before we have a similar problem to the one we had then.
    I now move on to one of the most important sections of the report, the MPC's forecasting record. As is well known, the MPC makes projections of inflation and GDP growth up to two years ahead on the basis of constant future interest rates and market forward rates. Recently it has announced that it will use market forward rates only, which I hope will not make it too short-termist.
    Pages 15 and 16 of the Select Committee report show that the MPC has been consistently inaccurate in its forecasting of GDP and inflation, on both the upside and the downside. In the August 2004 inflation report the average forecast error of the mean value of the RPIX

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    forecast for two years ahead was 0.3 percentage points above the average outcome, while the corresponding figure for annual GDP growth was 0.2 percentage points below actual. This shows that between 1999 and 2004 the MPC over-predicted inflation and under-predicted growth. Charts 1 and 2 on pages 15 and 16 show a very volatile MPC prediction pattern over the period. Looking at the period in detail, the MPC consistently over-predicted inflation between 2000 and 2002 and consistently under-predicted it from 2002 until the third quarter of 2004. In both cases, the margin was sometimes quite wide.
    Turning to the growth of GDP. the report states that there were three different stages of inaccuracy. From 2000 to 2001 the MPC consistently underestimated, then from 2001 to mid-2003 it consistently overestimated before underestimating it once again until the end of the period, which was the third quarter of 2004. Thus, the report comes to the conclusion that, like its forecasts of RPIX, the MPC seems to have made persistent forecasting errors of GDP growth that at their worst in 2000 were more than 1.5 per cent out of line.
    As a result of the overestimate of inflation, the report questions whether interest rates were kept too high between 2000 and 2003, as do I. Does the Minister agree with that? There then follows a long section in the report on GDP forecasting errors, which is rather over-technical for me. However, in paragraph 52 there is a crucial sentence:
    "The problem we then have is to understand precisely on what basis the MPC does change interest rates".
    Will the Minister give me any help on the Treasury's understanding?
    In paragraphs 56 to 59, there are three very useful recommendations about how the Bank can make its decision-making process clearer. First, the Bank,
    "could be much clearer about the relation between inflation, excess demand and the way they affect the interest rate decision".
    I agree with the committee's recommendation that:
    "The Bank review its presentation of these issues in its quarterly its quarterly Inflation Report and give more emphasis to (and provide a measure of) the state of excess demand than to the growth rate".
    Secondly, in paragraph 57 the committee recommends that the new quarterly macroeconomic model—not Beckham but the BEQM—be accessible to the public in the same way as the Treasury's model used by the ITEM club is, so that the public may have an independent assessment of future inflation and monetary policy based on it. I do not think that the Government replied to that point.
    Finally, I can only repeat verbatim sections of paragraph 58:
    "Errors in forecasting remain a live issue. We also reiterate our view that proper parliamentary scrutiny of the MPC requires that both the Treasury Select Committee and our Committee have full access to the Bank's models. We recommend that measures are taken to facilitate this".
    Again, the Government have not included a response to these paragraphs. Will the Minister make up for this by giving his response?
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    I wish to cover three final issues in the report. First, I support, like other speakers, the concern in paragraph 61 that none of the recent external appointments to the MPC is an acknowledged expert in monetary economics in the way that previous appointments were, and that, as a result, the MPC may suffer a loss of credibility, especially when tough decisions may be required. Also in paragraph 62 the committee recommends that the Chancellor should restore his former practice of choosing external members of the MPC with acknowledged expertise in monetary economics, ensuring an appropriate balance on the committee.
    Secondly, I find the idea of the possible establishment of a body like the US Council of Economic Advisers interesting and ask the Minister for his opinion on that. Thirdly, I would like to comment on the committee's view that the golden rule is a good rule of thumb but that permanent increases in government expenditure should be tax-financed and temporary increases debt-financed.
    The committee then reports that in this way the fiscal framework would be flexible enough to cope with the business cycle and restrictive enough to prevent fiscal policy from becoming unsustainable. I shall not be that political here, but I would venture to disagree with the committee. The golden rule has, in my view, severe faults, the first of which is the definition of capital and current spending, as mentioned by other speakers; and the second is that the economic cycle does not seem to be very clear. The timing over which it is measured can be artificially manipulated. Also should any increases in government expenditure be deemed to be permanent?
    So, in summary, I should like to congratulate the committee on an excellent report and I look forward to hearing the Minister's reply.
    4.46 p.m.
    Lord Desai: I begin by saying that it is a great pleasure to take part in the debate. I particularly wanted to because my noble friend Lord Peston has been a remarkable chairman of the committee. I thought that on this final hurrah I should be present.
    In the debates on these reports, people who are not members of the committee do not often speak, but I thought that I would make a moderate contribution. I had not realised that this side was going to ambush this debate—there must be an election coming.
    I start by saying that my remarks will be more theoretical and general and not very practical. I have not done anything practical in my life; I am not about to start now.
    First, topics such as the right measure of inflation are not settled in economics. They have not been settled for about 200 years. Therefore, what price index you choose is partly a matter of taste and partly a matter of what is available. If you choose one particular slice of commodities as a measure of inflation, something else always turns up outside that measure which causes you problems.

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    In an ideal world, each of us would have a separate inflation index. The appropriate index for the Government to adopt is a matter of speculation. But I find the idea that measurement itself can affect outcomes somewhat peculiar. Putting the Heisenberg principle aside, I do not know why measurements as such, which are all inadequate and underlie our economic factors, should cause a problem to the extent that the Bank of England has to choose one declared index and follow it. The problem would not be so much with the index, but with the target level chosen.
    There is an interesting point on what was then called HICP, but which is now called CPI. I thought that the Bank should have adopted a moving target for a while until the difference between the CPI and the RPIX converged to a normal level. It is not easy for banks to adopt moving targets —that might cause uncertainty—so 0.5 per cent was taken off the target.
    The problem is that the economy is behaving so well that there is very little to complain about. That is the central message. We are doing fantastically well. Inflation is not very high and growth is good. Indeed, my right honourable friend the Chancellor has made economics a very dull subject to follow. It was very exciting in the days when the noble Lord, Lord Lawson, was Chancellor and we looked at the exchange rate every day, waiting for it to change from the morning to the afternoon. Unfortunately, those good days are gone. This is not a party-political criticism; I am an economist and I miss the excitement of following economic news.
    The fact is that the Bank has not been able formally to take house prices into account. We know that house prices have been volatile either due to nominal supply or because of a short-term bubble effect. I think that the MPC has more or less got it right. We may believe that the interest rate is too high, but with a lower interest rate the housing bubble would have been much worse than it is now. Commodity prices are down due to factors such as globalisation, China entering the market and flooding it with cheap goods, and the inflation of services. Those are different factors and one has to strike a balance.
    One thing that I know about my friend the Governor of the Bank of England is that he is an inflation hawk and that there is no likelihood that the Bank's policy will be too soft, as might be thought. My view is that the Bank has taken a price measure, which has to be co-ordinated with other European countries, and it has then adjusted it by taking account of the housing market in an informal way. That is good because if you follow formulae too closely, you come to grief. There must be a certain amount of discretion and a certain amount of automatic policy-making.
    I have the same feeling about forecasting error. I am surprised that the committee has made so much of a two-year forecast of inflation and growth. What does it matter if two years ahead the inflation forecast is wrong? Market participants will look at the latest relevant growth forecast and, if the continued revision of growth and inflation forecasts converges on the actual, I do not think that the costs of bad forecasting will be that high. I must stop.
    [The Sitting was suspended for a Division in the House from 4.53 to 5.4 p.m.]
    Lord Desai: To recap briefly, I do not think that the choice of one or other measure could make that much difference to policy or that the wrong target was adopted. The MPC seems to have taken account of the CPI, but had an eye on the housing market. Therefore, the interest rate level that is now prevalent cannot be said to be too high because, had it been lower, the housing price bubble would have been worse. That is my position.
    On the growth and inflation forecasts, an error in the two-year ahead forecast from actual does not have operational significance, because anyone who operates in the market would be looking at the most recently available forecast and there are ways of correcting mistakes in that respect. In any case, all forecasts are a loss-making activity and nobody should make them.
    I agree with the committee's recommendation that the Bank of England quarterly model should be available to everyone, just as the Treasury model is. In a sense, the Bank should be as transparent as possible in its policy.
    On fiscal policy, I am in substantial disagreement with Committee Members opposite and my noble friend Lord Peston about the reclassification of repairs and maintenance. Maintenance and repair are part of gross capital formation. It is only when we want to have net capital stock that we have to take out repair and maintenance properly. This is a private reference for my noble friend Lord Peston but, if we have an improving vintage in machinery, it is difficult to calculate net capital stock at all. The reason we have GNP rather than NNP is because to calculate net capital stock or net income takes a long time. Therefore, a prudent Chancellor would never define his rule in terms of net investment—it would always be gross investment.
    This is not a trick. These are difficult issues. There is still no agreement in economics about what is capital, much less how to separate repair and maintenance from net investment. It is not as if somebody has conspired at the last minute to do this. There may be other items which might be reclassified either way. In return, I hope that some day people will say, "It is not investment; it is consumption".
    Fashions also change in economics. We are all relaxed about the trade deficit. Committee Members may remember that in the 1980s everyone was up in arms about the trade deficit. Now we are completely relaxed about it because the markets have changed. You can fund any amount of trade deficit because of capital mobility. The horror of trade deficit, which hung over successive British governments, has now disappeared. I remember Lord Shore of Stepney once asking me in complete puzzlement, "What happened to the sterling crisis that used to follow a trade deficit? Where has it gone?". I said, "Look, this is a different capital market".
    It is always risky when someone announces a certain rule, implements it too rigidly, and then says, "Ah! Somebody is cheating". My feeling is that the

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    Chancellor has always been more right than not. Until the Budget, everyone thinks, "Oh God! He's going to miss it this time", but this is about the fifth year that I have heard that he will break the golden rule. Every time, somehow, Houdini-like, he escapes. I predict that, come Budget day, he will have his golden rule satisfied. We will find out on that day because he will produce not only a rabbit out of the hat but, the way that the economy is going, things will be considerably in his favour and he will probably meet the target.
    I have a major disagreement, not with the report of the committee, but with the Chancellor in his pursuit of productivity growth. I agree with the committee that there is not much any government can do about raising productivity growth, although they can be remarkably effective in lowering it and many governments have succeeded in that. The mistake is that productivity is actually a misleading and difficult thing to measure. It is not what any government should focus on. What they should focus on—I have said this in the presence of the Chancellor—is whether there are enough profit-making firms in the economy. Productivity does not matter—profitability does. We want profitability.
    There have to be a number of profitable firms in the economy. If there are sufficient, the economy is doing well. Profitability is a peculiar thing. With one out of four people in employment in the public sector—where productivity, by definition, does not grow—we will shoot ourselves in the foot if we go down that path. The Chancellor should really be measuring profitability in a systematic way and reporting on that and seeing how tax policy or R&D allowances would affect profitability. That is a much surer way.
    I conclude by congratulating the committee on the reports that it has published this year. I am sure that the good tradition will continue with the noble Lord, Lord Wakeham, who takes over from my noble friend Lord Peston.
    5.10 p.m.
    Lord Newby: I, too, congratulate the committee on the report and also on the timely nature of today's debate. It is important that debates on these reports are done in a sensible and timely way because we lose the relevance of the context to a certain extent—certainly in this kind of debate. If the price of having a timely debate is having it in this forum rather than in the Chamber, that is a price worth paying. In any event, this format works very well for this kind of debate.
    I also congratulate the noble Lord, Lord Peston, on his swansong in terms of reports. There has been a remarkable series of reports and, despite all the stresses and strains, the noble Lord has been able to maintain a proper set of priorities. When we were looking at the workings of the Monetary Policy Committee a few years ago, we went to Frankfurt in Germany and visited the European Central Bank. In the afternoon, we went to the Bundesbank. The important event of the day, however, was a football match between
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    Manchester United and Arsenal. The Clerk, who thought that he would have a day of learning about monetary policy, was sent back to the airport to rearrange our flights so that noble Lords would not have to miss the football.
    The only problem was that the Bundesbank officials were being rather long-winded in their answers. The noble Lord, Lord Peston, very ostentatiously looked at his watch after proceedings had been going on for about 20 minutes and said, "Well I don't know about you, but we have a very busy schedule". He stood up and we all obediently marched out, caught our early plane and the football match was duly watched. It was a very impressive performance.
    Today's report is very wide-ranging and makes a number of significant points and proposals. I join other noble Lords by beginning with a comment on the Government's reply. The noble Lord, Lord Peston, said that the attitude of the Treasury was that it was above criticism. The two words that I had written down before today's debate were "patronising" and "complacent" and that is the tone of the response. It is the typical tone of Treasury responses to reports from your Lordships' House and I do not think that it helps inform public debate when the Treasury frankly cannot be bothered to take anything that we do seriously. We had the same problem when we were looking at the Finance Bill and the Treasury refused to comment on very detailed and thoughtful proposals on completely spurious grounds. It has done the same again and it does neither the Treasury nor its political masters any justice.
    Looking at the proposals in the report, the first issue covered was the change in the inflation target, which the committee said was not properly thought through. When the Chancellor changed the inflation target, I thought that the unspoken reason for doing that would be that it would make it easier for Britain to join the euro-zone and I inwardly rejoiced. The Chancellor has not had the courage of his convictions to say whether that is the case—and perhaps it is not—but it is one practical benefit of having adopted this target.
    Although I agree in one sense with the noble Lord, Lord Desai, about the limited extent to which inflation measures can influence demand, there is one particular problem that may arise if different actors for different purposes look at different and diverse measures. If that is the case and the Chancellor is right when he says that wage bargaining is increasingly based on the new index, which is rising at a lower rate than the old index, if social security, pension updates and other benefit updates are based on the old index, there will be an increasing divergence between two levels of payment over time. It is an unintended consequence that over a long period, not least on pensions, that could have a very significant impact. It must only be a matter of time before all elements of government decision-making need to be based on one target, which presumably will be the new one.
    I was interested to hear what the committee had to say about the impact on inflation of an oil price shock. I shared the committee's concern about the approach

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    being adopted by the Governor and the MPC. The Governor said that a rise in oil price was a demand shock, and therefore an increase in interest rates was more appropriate than writing a letter to explain why no increase was required. That would be a reasonable response if it were a domestic demand shock, but if the demand shock were happening in China and India and the price of oil were rising for that reason, it is far from clear to me that a relevant policy response in the UK, where demand for oil is not increasing, is to put up interest rates. I was surprised at the Governor's response, and we can only hope that we do not have a significant hike in commodity prices in the short term.
    I do not want to go into any great detail about the forecasting period, although I was interested in the committee's suggestion that the Treasury Select Committee and the Economic Affairs Select Committee should have full access to the Government's models. With the exception of the noble Lord, Lord Peston, and possibly other Members of the Economic Affairs Select Committee, a model would not be much good on its own. Most of us would not be able to make much of it unless we had more qualified staff working for the committee who could interpret the model and enable the committee to do something with it. Although there is a case for strengthening the staff of this and other committees, that should be a prerequisite of getting the model.
    My suspicion and concern about the way that the MPC operates and looks at the figures has nothing to do with the forecasting record, but the fact that the MPC sees the inflation target as a ceiling, not a symmetrical target. If we look at the way that it approached that central figure—whether it is 2.5 per cent or 2 per cent—I do not believe that those in the MPC believe that a divergence of 0.5 per cent above the figure is the same as a divergence of 0.5 per cent below the figure. I think that they think that if there is a divergence of 0.5 per cent below the figure, that is fine and we do not need to worry, but if it were 0.5 per cent above the figure, they would worry a lot. Therefore, the way that the figure is described is misleading.
    Incidentally, I am not sure that a ceiling would not be better than a symmetrical figure, but at the moment, the Bank says one thing and does another. As the committee pointed out, by acting in that way, interest rates have been at a higher level than might otherwise have been the case. I was very interested that the committee believes that there might be a difference of as much as 50 basis points—I am not sure how that figure was arrived at. It seems plausible, but I would be interested to know why the figure of 0.5 per cent, rather than 0.75 per cent or 0.25 per cent, is seen by the committee to be an appropriate figure.
    The most important area of the report is that dealing with fiscal policy. We now see considerable concern about how the Government are interpreting the golden rule and fiscal policy more generally. I think the committee is absolutely correct to stress the arbitrariness of the present distinction between current and capital expenditure.
    I suspect that the committee can have had no notion when the report was being written that the Treasury was about to influence the ONS to shift the definition
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    of current expenditure on road repairs so that that became capital expenditure. The ONS had a marvellous explanation for that. It made the decision independently of the Treasury. To use its words, the Treasury had "influenced the decision" but the influence had not been improper. That is all right then. It demonstrates, among other things, that whatever else the ONS is, it is not independent of the Treasury and does not believe that its role is to be independent of the Treasury.
    My concern with last week's decision is not simply that it undermines the credibility of the golden rule, but also that it opens the way in which the credibility of the golden rule can continue to be undermined. If you count road repairs as capital expenditure, why can you not count school repairs, hospital repairs, or virtually anything? I dare say that in years to come as times get tough, as undoubtedly they will, the Treasury will be influencing, not improperly, the ONS to include these other things.
    It is in everybody's interest to get a measure of consensus about how the golden rule operates. All parties agree that in principle it is a good idea. There are a number of ways that it could be done. The ONS could be made more independent of the Treasury. That might be done partly by having the head of the ONS appointed by somebody other than the Chancellor. I also like the idea of having for the ONS, not the statistics commission model, but more the court of the Bank of England model—a group of people who cluster around the staff and give it support against influences, proper or improper, from elsewhere. That would help.
    The other thing—and I have bored the House on this before—is that it would be helpful if the National Audit Office had a capability to look and audit the assumptions being made by the Chancellor across the piece as he makes his Budget judgment.
    Finally, I should like to say a small amount about the supply side of the economy and productivity. While I agree with the noble Lord, Lord Desai, that it is a slightly slippery concept and, depending on how you measure it, you can get very different answers, I believe that it is a good proxy, possibly a better proxy than profits in many cases, for judging how well an economy is doing on international competitiveness, which is so important.
    I agree with the committee that micro-managing productivity, as it were, will not work and that further tax incentives and regulation is inappropriate. The one area that I will stress even more than the committee did is the role that the Government play via the education system in increasing or retarding the level of productivity growth.
    I was amazed and appalled last year to be told by the chief executive of the Learning and Skills Council in Yorkshire and the Humber that in that region 27 per cent of over 16 year olds were functionally incapable of understanding the Yellow Pages. If you have that level of basic inability, it is very difficult to pursue an effective productivity agenda up and down the skills level. It is very important, therefore, that the

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    Government press on with reforms to the education system to improve the level and status of vocational education.
    I am slightly surprised and saddened that the new Secretary of State seems to be in danger of ghettoising vocational training, even as she boosts it. I have some sympathy with the concerns expressed by the chairman of the Education Select Committee in another place about the possibility, or likelihood, of a two-tier system in education between vocational and academic being enhanced rather than removed by the Secretary of State's current plans. However, that is a debate for another day. I conclude by congratulating the committee, in particular the noble Lord, Lord Peston, for this report. I wish the noble Lord, Lord Wakeham, well for his stewardship of the committee in the year ahead.
    5.25 p.m.
    Baroness Noakes: It is always a privilege to take part in making history, in this case the first time that a report of a Select Committee of your Lordships' House has been taken in Grand Committee. At this stage, I am agnostic as to whether it is a good move, especially as it is scheduled on an afternoon when there will be Divisions, which disrupts the flow of the debate. I completely see that it is better to debate Select Committee reports earlier rather than later, so that we do not get into the position that we had, both this year and last, of having a backlog of debates.
    Pushing the debates into Grand Committee is only tackling the symptoms of the problem, and not the root cause, which is to do with the way in which the work of your Lordships' House is overburdened by the legislative programme clogging up what goes through this House. Of course, the Government's work must have priority, but there are a number of factors: the number of Bills; the complexity of Bills; and most importantly the way in which Bills arrive in your Lordships' House. The effect of so-called modernisation in another place is that we are not receiving Bills that have had full scrutiny there. Therefore, we get Bills that require major modification, which in turn takes up a lot of our time.
    One example is the Pensions Bill, which dealt with an area on which the Government had spent several years trying to work out their policy. It had been through another place, but when it came here it still had to have 684 amendments, most of which were government amendments, to make it just about fit for purpose when it left here. I am sure that even after that some parts of the Act will be found not fit for purpose. In due course, we will judge whether these sorts of debates in the Moses Room are acceptable. I have said that I am agnostic, but noble Lords might gather that I am on the sceptical end of agnostic—I am certainly not a true believer.
    Like other noble Lords, I thank the Economic Affairs Select Committee for its hard work in producing yet another stimulating report. I particularly thank the noble Lord, Lord Peston, for his final offering in his capacity
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    as chairman of the committee. The report has all the hallmarks of his approach, which is both rigorous and challenging. We thank him for all his work. My noble friend Lord Wakeham knows that he has a hard act to follow as chairman of the committee.
    It would be nice to be able to say that we welcome the Government's response to the report of the Select Committee, but the response is no exception to the general rule that government responses are disappointing. We have here a combination of avoiding the question and self-delusion, and I am also prepared to sign up to "patronising and complacent", in the words of the noble Lord, Lord Newby. The response also does one of the Treasury's favourite tricks, which is referring the committee to one of the Treasury's many other publications. So, the Treasury's response to the committee's recommendation at paragraph 91 about the trade deficit—about which the noble Lord, Lord Sheldon, spoke—did not contain a substantive reply. The Treasury said in effect, "Go away and read our Pre-Budget report". No attempt was made to answer the recommendation in terms. That is not good enough.
    In several places, the Treasury's response is along the lines that it does not comment on the decisions of the Monetary Policy Committee. This arises in connection with the recommendation at paragraphs 35 and 43 about the impact of house prices and oil prices on interest rate decisions. It comes up again in response to paragraph 91, which raises concerns about the level of interest rates—my noble friend Lord Northbrook made some valuable points about those issues.
    At one level, the distancing of the Government from the work of the Monetary Policy Committee seems to be consistent with the independent status of the Monetary Policy Committee in relation to interest rates, but I suggest that the Treasury's response is superficial and ignores the proper role of government. I agree that the Government should not comment on individual interest rate decisions. It would cause real difficulties if Horse Guards Road routinely blared away at Threadneedle Street when the monthly interest rate decision was announced. But the Government have a proper role in ascertaining whether their policy—as set out in the Bank of England Act 1998—is working well in practice.
    Like the noble Lord, Lord Barnett, I am sure that the Treasury has views on how the MPC handles interest rate decisions and the various factors that lead to them. The Government should certainly satisfy themselves that the outcome of those decisions is not systematically biased in favour of interest rates being too high or too low, because that is how well their policy is working in practice. The Government must have an ongoing responsibility for the effectiveness of their chosen method of implementing monetary policy independence.
    The Government are well placed to have views because, as the noble Lord, Lord Barnett, said, a member of the Treasury's staff is present throughout the Monetary Policy Committee's deliberations. The noble Lord, Lord Sheldon, asked the Minister a number of

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    questions about the Treasury's man in this process. I have a suggestion to make to my noble friend Lord Wakeham for when he plans the work programme of his committee: the role of the Treasury's representative in the interest rate setting process would repay careful consideration. At the moment, it is a very murky area. The Treasury's man is not mentioned in the statute, but we know from evidence that he is there throughout. We ought to be more informed about that.
    The Government are saying to the Economic Affairs Select Committee that they are not prepared to have a dialogue with the committee about what happens at the MPC. That is arrogant and unsatisfactory. How the interest rate setting process works in practice and its effectiveness are legitimate areas for public debate and are certainly legitimate for a Select Committee of your Lordships' House.
    Let me now turn to the Government's self-delusion in this report. In paragraph 83 of the committee's report, the committee recommends that the Treasury undertakes a review about having more independent scrutiny of fiscal policy. The Treasury does not explicitly reply to this recommendation. There is no real surprise there. Instead, we get a litany of self-praise from the Treasury. Part of it says that:
    "The Government has put in place a transparent framework for the conduct of fiscal policy".
    It goes on to cite as evidence the National Audit Office's so-called audit of the assumptions underpinning the Budget.
    We welcomed the involvement of the National Audit Office in reviewing the budgetary assumptions when it was originally announced. But I do not think that we would have been so effusive in our praise if we had thought that the relatively modest role of the NAO would be as magnified and over-played as it has been. The truth is that the NAO is allowed to look at only what the Chancellor says it can look at. The Treasury, not the NAO, sets the audit agenda. How independent is that?
    Secondly, the NAO audit the 11 so-called "key assumptions" on a rolling basis and not every time that the assumptions are used. And so, for example, it last looked at the tax yield this time last year, but it did not look at the picture overall at the time of the Budget last year. When the Chancellor prepared his Pre-Budget report last December, it did not look at anything.
    Another example is GDP growth. The NAO has in the past looked at the trend rate of GDP growth but it never looked at the GDP growth assumptions in the Chancellor's figures. Therefore, it gives no audit evidence about them. It is precisely because the current framework is not transparent and robust that my party has proposed that a fiscal policy committee be set up within the NAO and made responsible for economic modelling. The FPC would comprise independent experts appointed by the Comptroller and Auditor General. There would also be much more disclosure about the model and forecasts than the Treasury currently allows.
    We completely agree with the Economic Affairs Committee that fiscal policy cannot be transferred to an independent agency. That is properly the role of
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    government. But it is crucially important that fiscal policy is based on data which is open to scrutiny and properly validated. That does not describe the process which currently exists. I know that the committee took evidence from my right honourable friend Oliver Letwin last year. His thinking has evolved considerably since then and I hope that the committee get an opportunity to take evidence from him again.
    The noble Lord, Lord Barnett, constantly reprimands me for making party political points and he did so again today. I shall therefore refrain from commenting on whether the committee should take evidence from my right honourable friend in his capacity as Chancellor or as shadow Chancellor in the future.
    I had not expected the role of the Office for National Statistics in the classification of repair expenditure to be raised today. On Wednesday, we have a debate on the adequacy of national statistics which my noble friend Lord Marlesford has secured. My noble friend Lord Trenchard and the noble Lord, Lord Barnett, seem to have established a cross-party consensus on the apparent case for the Treasury, together with the ONS cooking the books in relation to roads expenditure. I hope that Members of the Committee who have spoken on that subject today will join us in that debate on Wednesday. However, I would value hearing the Minister's views on the correct treatment of road expenditure.
    Lord McIntosh of Haringey: Not today!
    Baroness Noakes: It would be valuable if the Minister would say something today as it has arisen from the contribution of so many Members.
    I conclude by repeating our thanks to the noble Lord, Lord Peston, for an excellent report and for our collective opportunity today to make history.
    5.38 p.m.
    Lord McIntosh of Haringey: It is a great pleasure for me to take part in a debate on a Select Committee report in Grand Committee. Although I began as an agnostic, I have moved in the direction of a true believer rather than towards my instinctive atheism on the issue. I think it is much more important for these reports to be debated quickly than to have any minor inconveniences which might exist as a result of their being debated in the Moses Room.
    When I look around me, as I have throughout the debate, I see that the attendance has been at least as high and probably higher than it often is in the Chamber. That is a tribute to my noble friend Lord Peston and his committee and also to the suitability of a Grand Committee for these proceedings. I join those who say that it is better to do it quickly here than too late somewhere else. The committee's report is already something like two months old, and the evidence goes back well over a year. I started reading the evidence over the Christmas holidays. As always, much as I admire the report, I

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    find the evidence even better. I am sure that my noble friend Lord Peston does not take offence at that. It was fascinating, some of it for historical reasons.
    Before I leave the subject of the Grand Committee, I should say that I have a lot of sympathy with what my noble friend Lord Peston says about TV cameras and a feed for it. The debate is on a specialist interest; not many people would watch it on the Parliament channel, but it would be more than you think. TV would give such debates a wider audience that would be difficult to achieve otherwise.
    I have said in general terms how much I appreciate the report, but I particularly want to pay tribute to the chairmanship of my noble friend Lord Peston over the six years. He and I. and he and the Chancellor, have had some disagreements about the sub-committee concerned with the Finance Bill, but there has been no disagreement about the main work of the committee, which has been a triumph. He is to be enormously congratulated on his work, and we wish the noble Lord, Lord Wakeham, well in the task of continuing.
    I wrote down that I sensed an undercurrent of disapproval at the Government's response to the report.
    Noble Lords: Oh!
    Lord McIntosh of Haringey: I crossed that out, because what started as an undercurrent became a tsunami. I recognise that there has been universal disapproval of the Government's response. Some of that is endemic; there has been disapproval of the Government's responses to all the reports of my noble friend Lord Peston. He has disapproved of all of them and— although he may not have used the words of the noble Lord, Lord Newby—has always thought them patronising and complacent. Nevertheless, that is a general thread that goes between the Treasury and the House of Lords, and there is very little that I can do about it.
    I want to make a particular point, however. A very large part of the proceedings of the committee—its questioning and its report—has been about the performance of the Monetary Policy Committee and the Bank of England's execution of monetary policy. It is a centrepiece of the Government's reforms to the monetary policy framework, made in 1997, that the Monetary Policy Committee was established and that the Bank of England was given full operational independence on monetary policy from the Government.
    That was the right decision. It was not always agreed at the time to be so, but it has now been recognised by all political parties as right. It has certainly proved better than what went before. It is a pivotal part of that independence that the Government do not comment on the monetary policy decisions taken by the Monetary Policy Committee.
    The noble Lord, Lord Northbrook, asked whether I agreed that interest rates were kept too high between 2000 and 2003. The noble Lord, Lord Newby, asked me whether I did not think that the Monetary Policy Committee had treated the 2.5 per cent—now the 2 per
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    cent—as a ceiling rather than a symmetrical target. I cannot possibly answer questions like that, as they know perfectly well. They know also that that applies to a very large number of the recommendations in the report, which accounts at least in part for the dissatisfaction with the Government's response.
    There are things that I can say about the Monetary Policy Committee because specific questions were asked about their procedures. My noble friend Lord Sheldon and the noble Baroness, Lady Noakes, asked about the role of the Treasury representative who sits in on those proceedings. The Permanent Secretary or the managing director for macroeconomic policy and international finance indeed sits in on the proceedings of the Monetary Policy Committee, but his role is to answer questions on fiscal policy to ensure that there is proper coherence between fiscal and monetary policy—which is what we are all looking for, and which is the theme of the report, as I understand it. It is not his role to express views on monetary policy, which has been devolved to the Monetary Policy Committee. Therefore, his views will not be expressed in the reports of the Monetary Policy Committee; nor should they be.
    My noble friend Lord Sheldon asked me a specific question about how often the casting vote had been used. My understanding is that it has been used only six times since 1997.
    The noble Baroness, Lady Noakes, very much surprised me, because I had understood that there was general Conservative support for the independence of the Bank of England and the Monetary Policy Committee. I shall have to read carefully what she said before I make a definitive comment. I thought that she was veering back towards the "Ken and Eddie show" and the idea that there should be discussion between the Treasury and the Bank of England on the issues that had been devolved to the Monetary Policy Committee—"dialogue" was the word that she used. I am not sure that I have found that view reflected in the position of Oliver Letwin.
    Having said what I can say about the work of the Monetary Policy Committee, it is important that I say more about the macroeconomic framework, which is the basis of government policy and the underlying thrust of the committee's report. The Government's macroeconomic framework is designed to maintain long-term economic stability, which allows businesses, individuals and the Government to plan more effectively for the long term, improving the quality and quantity of investment in physical and human capital and raising productivity. It is based on transparency, responsibility and accountability. It seeks to ensure low and stable inflation.
    By the way, I do not think that I shall go back to the debates that we had on the then Bank of England Bill. I heard the dread phrase "subject to that" used again by my noble friend Lord Barnett. At that time, we took a decision. I am sure that it was the right decision. On the whole it has been recognised as such. We have only one primary objective for the Monetary Policy

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    Committee, and other considerations are taken into account subject to that one objective. If you have multiple and potentially conflicting objectives, you in effect have no objective.
    The monetary policy framework seeks to ensure low and stable inflation. The fiscal policy framework seeks to ensure sound public finance and to ensure that spending and taxation impact fairly and between generations—I shall come back to that in a minute—while allowing fiscal policy to support monetary policy over the economic cycle. There are two fiscal rules to that framework. The foundation of the Government's public spending framework facilitates long-term planning and provides departments with the flexibility and incentives that they need to increase the quality of public services and deliver specified outcomes. The policies work together in a coherent way.
    I have a series of notes about how successful monetary policy has been, but I can spare the Grand Committee that. Since the monetary policy framework's introduction, it has consistently delivered inflation close to the Government's target. It is 2 per cent for the 12-month increase in CPI inflation. Between May 1997 and December 2003, the target was for a 2.5 per cent increase in RPIX inflation. That monetary policy framework is based on four key principles.
    First, there should be clear and precise objectives. Secondly, there should be full operational independence for the Monetary Policy Committee. Thirdly, there should be openness, transparency and accountability—we have only to contrast the minutes of the MPC with what comes from the European Central Bank to see that. Fourthly, there should be credibility and flexibility.
    The MPC has the discretion to decide how and when to react to events within the constraints of the inflation target. If inflation deviates by more than 1 percentage point—this is where I think I start to agree with the noble Baroness, Lady Noakes, about the constraints on the Monetary Policy Committee—the Governor of the Bank of England must explain in an open letter to the Chancellor the reasons for the deviation, the action that the MPC proposes to take, the expected duration of the deviation and how the proposed action meets the MPC's remit. In the concluding statement to its Article IV mission in 2004, the IMF stated:
    "The recent success of monetary policy stems in no small part from a strong policy and institutional framework. Credibility is underpinned by the success in achieving low and stable inflation and is reflected in well-anchored expectations".
    I now come to the issue that occupies a good deal of the committee's report—the switch to the new inflation target in December 2003 and the accusation that it was not well thought out. That puzzled me. The noble Lord, Lord Newby, referred to the fact that at the time of the assessment for entry to the euro the Chancellor had foreshadowed that the target would change to what was then called the Harmonised Index of Consumer Prices. I do not think that the noble Lord had any justification for his assumption that it was being done so that it would be easier to join the euro-zone. That is a nice thought on his part, but it is not the
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    basis on which it has been done. The National Statistician then said that it should be changed to the Consumer Prices Index. All other aspects of the monetary policy framework remained unchanged.
    There were three major advantages in the new target. None of them contradict the point that was quoted from the statement of the Governor of the Bank of England about the significance for monetary policy. First, the CPI better allows for the substitution of cheaper for more expensive goods and services within expenditure categories when relative prices change. Therefore, it may be considered a more realistic depiction of consumer behaviour. It can be updated and changed rather more quickly. I do not know what to give as examples, but there are many examples of ways in which the basket of goods and services has to be changed over time. Secondly, the CPI has a wider population coverage and is more consistent with national accounts principles of consumer expenditure, so it shares a coherence with other economic statistics and gives a better picture of spending patterns in the United Kingdom. Thirdly, it is a more comparable measure of inflation internationally and represents international best practice.
    How has that worked out in practice? The PBR in 2003 said that the difference between CPI and RPIX inflation was expected to narrow markedly from 1.3 percentage points in October 2003 to 0.5 percentage points two years later. That happened. In the January figures that were announced last week, the difference between the two is 0.5 per cent. Therefore, the predications that were made at the time seem to have been accurate. We expect the differential to remain broadly stable thereafter depending, of course, on a range of economic factors.
    The Governor of the Bank of England indeed said that the change in target does not have major significance for monetary policy. My noble friend Lord Peston seems to think that there is an inherent conflict there. I do not. I think that the changes that were made to bring the index into line with international best practice and to give a better picture of spending patterns does not imply a change in monetary policy, particularly because for all other purposes, the RPIX is being maintained.
    I am not alone in disagreeing with the noble Lord, Lord Peston. The OECD's economic survey of the United Kingdom in March last year stated:
    "[The new inflation target] should not, however, represent any fundamental policy shift".
    We announced the measure well in advance and have discussed it over and again. Full details have been given in Remit for the Monetary Policy Committee of the Bank of England and the New Inflation Target, which accompanied the Pre-Budget Report in 2003. Supporting analysis was provided by the Office for National Statistics. The Bank of England has published material and the IMF, in its concluding statement to the Article IV mission in 2004, said that the change in the inflation target was well communicated and well understood by financial markets. On that issue, I rest my case.
    Of course, there are matters arising that are worthy of discussion and were raised in the debate. My noble friend Lord Peston asked a perfectly reasonable

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    question about the assumptions in movements in real wages. My answer is that such movements are affected not only by the measure of inflation—it is measured by the central bank—but also by related supply and demand, occupation, region, unemployment rates and so on. The change in the target did not change the underlying level of inflationary pressure in the economy, which feeds into wage demands. Such measures are clearly significant and have to be recalculated.
    We then move on to the fiscal policy framework and co-ordination between fiscal and monetary policy. Again, the key facts are entirely favourable. The average surplus on the current budget since 1999–2000, which on our provisional judgment is the start of the current cycle, is positive in every year of the projection period. With the Treasury projecting the economy to return to trend by 2006, there is a margin against the golden rule of £8 billion in that cycle including the AME margin—that is, the demand-led part of public expenditure.
    Net debt remains well below the 40 per cent ceiling set in the sustainable investment rule. It is projected to stabilise at 37 per cent of GDP by the end of the projection period—£59 billion below that implied by the 40 per cent level. The United Kingdom's public finances compare favourably with other major economies. No other G7 country has had lower average government debt and deficits since 1997 than the United Kingdom.
    The fiscal framework is based on five key principles—transparency, stability, responsibility, fairness and efficiency. The fiscal policy objectives are: over the medium term, to ensure sound public finances and that spending and taxation impact fairly and between generations; and, over the short term, to support monetary policy, and in particular to allow the automatic stabilisers to help to smooth the path of the economy. Two rules underpin the fiscal framework—the golden rule and the sustainable investment rule.
    Is this a time-limited debate?
    Noble Lords: Yes.
    Lord Peston: Keep going.
    Lord McIntosh of Haringey: Well, I am told that I have one minute, and I had not quite finished. I wanted to talk about the golden rule, which was raised by my noble friend Lord Barnett and the noble Viscount, Lord Trenchard—and, helpfully, by my noble friend Lord Desai.
    Noble Lords: Oh!
    Lord McIntosh of Haringey: I think that, in the announcement of the changes proposed by the Office for National Statistics, some spending recorded as current expenditure would instead be classified as capital investment to comply with national accounts definitions. We have the opportunity to debate that on Wednesday, in a debate to be opened by the noble Lord, Lord Marlesford, who I am glad to see in his
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    place. Even so, on 28 February the Office for National Statistics will publish a full explanation of this change and the estimated effects. Therefore, I am afraid that the debate on Wednesday will be inadequately informed. The timing is unfortunate, but there is nothing that I can do about it.
    6 p.m.
    The noble Viscount, Lord Trenchard, repeated the request for an independent statistics office and an independent body on fiscal policy, but the noble Baroness, Lady Noakes, properly answered that. In the end, fiscal policy and taxation policy is a matter for the government and must remain so. As for the independence of the Office for National Statistics, I hope that if the noble Viscount looks at the distinction and independence of Sir John Kingman and Dr David Rhind, who head the Statistics Commission, he will see that we have taken adequate steps to deal with that.
    I was asked a number of related questions. I cannot remember, but it may have been the noble Lord, Lord Peston, who said that all public expenditure is tax-based; indeed it is. It is tax-based immediately if it is current expenditure, and it is tax-based if it is future expenditure by future generations. The issue of inter-generational fairness, which the noble Lord, Lord Peston, rightly raised, is important. I have always been of the view that the golden rule about not borrowing for investment, other than for investment within the economic cycle, is recognition of our requirement for inter-generational fairness and inter-generational justice. Of course, that is a crude measure, and there are times when it will go wrong. There are particularly times when provision for pensions will distort that, but fundamentally it is the correct way to move.
    The noble Lord, Lord Barnett, asked me what is the definition of investment for this purpose. We use the Office for National Statistics definition, which is the measure of net investment used in the national accounts. As for value for money for investment, we assess that by the PSA targets. I am not going to comment on the issue of how the MPC deals with house price inflation, except to acknowledge that the noble Lord, Lord Sheldon, is right; there are huge fluctuations, and it must be extraordinarily difficult to deal with. I will certainly not comment on the sensible point made by the noble Lord, Lord Wakeham, about the precedence in the mind of the MPC of the inflation target and financial stability. There are many academic publications to come from such a question.
    The noble Lord, Lord Newby, was the first to raise the issue of productivity, which rightly plays a part in the report. He is right to say that our skills levels are critical for productivity purposes. Our skills levels are rising; the proportion of economically active people in England with no qualifications at all dropped from 6.1 per cent to 5 per cent over the period of this Government. The proportion of people qualified to below level 2 also decreased from 24.2 per cent to 16.5 per cent. The proportion qualified to level 4 or above—in other words with higher qualifications—

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    increased from 23.7 per cent to 30.2 per cent over this period. However, I entirely take his point about the necessity of vocational education. We agree with the report's conclusion that improvements to the supply side of the economy are highly desirable.
    I have tested your Lordships' patience more than I would have wished to. I have enjoyed today's debate, and many interesting and worthwhile points have been made. It has been a pleasure to close this debate on behalf of a Government that is proud of their record of economic management, particularly of their co-ordination of economic and fiscal policy. Long may the Economic Affairs Select Committee continue to produce reports as good as this one.
    Lord Peston: I thank my noble friend for his reply. He must find this sort of thing immensely exhausting—
    Noble Lords: Division!
    Lord Peston: Ah. Then I will not even make my final remarks, because I do not think that we want to come back again—
    The Deputy Chairman of Committees (Lord Elton): If I may—
    Lord Peston: I am aware of the Division Bell, but I really think you ought to let me bring this to a close.
    The Deputy Chairman of Committees: One sentence.
    Lord Peston: It is a serious point concerning the way in which this committee will behave if we are made to stop now. It might well influence major decisions in future. I really do think that I ought to be allowed to thank all contributors to the debate, which has been excellent. There has been a good atmosphere in this rather small room. I hope that, subject to the television point, which my noble friend also made, we will have the courage to do this kind of thing again in future, bearing in mind that it is always the same group of old lags that take part in these debates anyway. It is nicer to do it in these surroundings rather than in a large, empty Chamber.
    On Question, Motion agreed to.
    [The Sitting was suspended for a Division in the House from 6.7 to 6.17 p.m.]

    Child Trust Funds (Amendment) Regulations 2005
    Lord McIntosh of Haringeyrose to move, That the Grand Committee do report to the House that it has considered the Child Trust Funds (Amendment) Regulations 2005 [4th report from the Joint Committee].
    The noble Lord said: I shall not detain the Committee very long with the details of the child trust fund, but I think it will help debate if I set out why the draft regulations that we are discussing today are necessary.
    On 21 October last year, we announced that the phased transfer of the families with children receiving income support and jobseeker's allowance on to child
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    tax credit would be deferred until 2005. That was to allow a full cycle of tax credits activity to be completed before those families were transferred on to child tax credit, with a view to preventing their payments being delayed in any way.
    We also confirmed that families will continue to receive the same level of financial support through benefits as they would from tax credits. The announcement is why there is a need to table the draft regulations that we are debating this afternoon.
    Under the Child Trust Fund, children born since 1 September 2002 receive government payments for their parents to open long-term savings or investment accounts. All children receive at least £250, with children in families with lower incomes receiving an additional £250, making a total of £500. Further payments will be made when children turn seven. In his pre-Budget report last year, the Chancellor of the Exchequer announced a consultation on adding another £250 for every child and a total of £500 for the poorest.
    We estimate that some 40 per cent of children will qualify for the second payment of £250 paid to families on low incomes. Eligibility for the payment to children in lower income families is based on a household receiving child tax credit, with household income below the threshold in child tax credit. Currently, that is £13,480. These eligibility criteria were extended for children who were born before the introduction of child tax credit in April 2003 or who are living in families who have not yet moved to tax credits from benefits. These children can qualify for the second payment by virtue of the family receiving specific benefits, including income support and jobseeker's allowance.
    The Child Trust Fund Act was drafted to allow children in households receiving those benefits to qualify for the additional payment if child benefit was first paid for them before 6 April 2005. That date was used in the Act because it was believed that, by then, all children in low income homes would qualify for the additional payment through child tax credit. However, the decision to delay the transfer on to child tax credit of the remaining families with children receiving income support or jobseeker's allowance means that the qualification for the additional payment needs to be amended to bring in children in families not on tax credits by 6 April 2005.
    These Child Trust Fund regulations will make sure that children in this group do not miss out and that they are treated on a par with children in lower income families receiving child tax credit. We anticipate that approximately 34,000 children will benefit from this draft regulation. New families, that is families with a first child, go straight on to child tax credit but families already receiving the child allowances in income support and jobseeker's allowance continue receiving, those benefits for a new child born in the family. The draft regulation provides for a further contribution for these children under Section 10 of the Child Trust Fund Act, specifically a further contribution of £250 for children where the date child benefit was first paid

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    is after 5 April 2005 and a person was receiving the child element in either income support or jobseeker's allowance for the eligible child.
    All these payments will be made automatically into children's Child Trust Fund accounts on the basis of information provided by the Department for Work and Pensions. Families will not need to claim the payment for their child. This proposed amendment will not create any compliance burden for these families or for providers. It simply ensures that all children in lower income families receive an extra £250, giving them a total government payment of £500, fulfilling the intention that the Child Trust Fund should provide most support to those who need it most through progressive payments.
    The other provisions are consequential amendments ensuring that the revenue can recover any payment subsequently discovered to have been incorrectly made and that the claims from account providers must include claims for the amount payable under these regulations. Let me emphasise again that providers are set up to do this routinely for the Child Trust Fund. This does not involve the introduction of any new administrative process.
    This statutory instrument is essential to ensure that children in lower income families do not miss out, and I commend it to the Committee.
    Moved, That the Grand Committee do report to the House that it has considered the Child Trust Funds (Amendment) Regulations 2005 [4th report from the Joint Committee].—(Lord McIntosh of Haringey.)
    Baroness Noakes: I thank the Minister for introducing the order, which is evidence of the complexity of how the Child Trust Fund regime is working in practice. We can only speculate on how many other such orders will be needed to tidy up loose ends.
    My party has no objection to the order in the context of the Child Trust Fund policy. As the Minister knows, we supported the Act only because it may contribute to improving savings ratios. We believed at the time of the Act, and continue to believe, that child trust funds are an electoral gimmick and that in practice they will not do much to generate additional savings. I think that we have already been proved correct on the first of those; that it is an electoral gimmick, as we saw in January with the Chancellor rushing around the country promoting them in what is very clearly a pre-election period. Fortunately, all that was eclipsed by the ongoing saga of the relationships between No. 10 and No. 11, so perhaps not much advantage was obtained.
    Since I have the Floor on child trust funds, I have a couple of questions for the Minister on how trust funds are progressing. The Minister probably knows that when a company analyses its share register it works out which shareholders it should have, who are absent and which are overweight. On the number of CTF providers, what is the Treasury's analysis of which providers are providing CTFs for people to put their
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    vouchers into, and which are absent? The ones that are absent are the most interesting when you analyse a share register. I am sure that it will be interesting when we look at the progress of a child trust fund policy.
    My other question for the Minister—the issue has started to arise in commentary on how the policy is being implemented in practice—is about the role of cash CTFs. There is increasing evidence that cash CTFs will be popular among a large number of the population, notwithstanding the Government's desire to have more children using equity-type products as being more appropriate for the longer term. Will the Minister comment on how cash child trust funds appear to be emerging as one of the favoured uses for child trust fund vouchers and what the Government intend to do about that development?
    Lord Newby: These regulations are an example of what inevitably happens with a policy that starts off relatively simply. Life is never simple when one gets into taxation and government expenditure. I suspect that, as the noble Baroness said, this is the first of a number of orders which will have the cumulative effect of making the scheme more complicated than was originally thought.
    As noble Lords will know, we oppose the child trust fund legislation. We did not believe that it would achieve the aims set out for it. That view is reinforced by every passing day. It is hardly surprising that a large proportion of parents are opting for cash. They are confused by the other offers on the table and do not know what to do.
    I was very interested in the article in the Financial Times over the weekend by Robert Budden, who said:
    "I spent a few hours trawling through the Government's child trust fund website and the sites of a few of the providers and I was still hardly any the wiser. In a great many cases it was unclear exactly where your money would be invested or what charges would be made".
    It is not surprising, therefore, that parents opt for cash.
    Is the Treasury satisfied that it has done enough to make it easy for parents to exercise the choice that they have when issued with the vouchers? Is the simple information that we were promised when the legislation went through being provided in all cases?
    Lord McIntosh of Haringey: I am moderately grateful for those responses, but I should emphasise that the effect of these regulations in relation to the total effect of the child trust fund is very marginal. Something like 2 million vouchers have gone out and these regulations affect only 34,000.
    The noble Baroness, Lady Noakes, asked me about the number of providers and potential providers. The number of actual providers is 82 and we have a list, which I shall gladly send to the noble Baroness. I am not sure that one can put a figure on the number of potential providers. I should have thought that all banks and building societies and a number of others—I see on the list the independent auditor of Oddfellows, for example—could become providers, so I do not think that the percentage of potential providers would

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    be a very meaningful figure. But if there is anything further that I can say on that point, I shall gladly write to the noble Baroness.
    The question of the noble Lord, Lord Newby, concerned choosing cash. My understanding is that quite a number of parents are opting for cash at the moment. There is a healthy debate on the merits of cash against equities, but it is far too early to see how it settles down. I think that there has been one 18-year period in the past 100 years in which equities underperformed cash, but, apart from that, I think that the basic argument that we put at the time is still sound. We give parents the choice and the best information possible and if, at the end of that period, they are resistant to the idea of investment in equities, so be it. We shall see how George Bush gets on with his pension reform and whether he can persuade pensioners in the United States that equities are better than cash.
    On Question, Motion agreed to.

  Government Resources and Accounts Act 2000 (Audit of Public Bodies) Order 2005
  6.32 p.m.
  Lord McIntosh of Haringeyrose to move, That the Grand Committee do report to the House that it has considered the Government Resources and Accounts Act 2000 (Audit of Public Bodies) Order 2005 [8th report from the Joint Committee].
  The noble Lord said: In 2003, the Government implemented key recommendations made by the noble Lord, Lord Sharman, on audit and accountability in central government. In particular, the Government responded to concerns expressed in Parliament by strengthening the statutory powers of the Comptroller and Auditor General in two ways. They did so, first, by making the Comptroller and Auditor General the statutory auditor of certain non-departmental public bodies where he is not already the statutory auditor and, secondly, by giving the Comptroller and Auditor General greater powers of access.
  The Grand Committee may recall that the Government continued the policy in 2004 by extending the Comptroller and Auditor General's statutory powers in respect of two more non-departmental public bodies and four special health authorities. The order being debated today is intended to continue the process that Parliament approved in 2003 and 2004. The order is being made under the Government Resources and Accounts Act 2000. I am grateful for the assistance that the Treasury has received from the National Audit Office throughout the process of preparing the order.
  The Government Resources and Accounts Act 2000 (Audit of Public Bodies) Order 2005 provides for the Comptroller and Auditor General to be made the statutory auditor for three development corporations—Thurrock, London Thames Gateway and West Northamptonshire—as well as the British Transport Police Authority.
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  Following a referral of the Hybrid Instruments Committee, the creation of West Northamptonshire Development Corporation was the subject of a special Select Committee under the chairmanship of the noble Lord, Lord Boston of Faversham, which reported on 17 November last year. Following the committee's report, the corporation has now been established.
  Urban development corporations are set up under the Local Government, Planning and Land Act 1980. This legislation provides for the auditor to be appointed by the Secretary of State. That was a common practice in those days but it is not consistent with policy since the report of the noble Lord, Lord Sharman, recommended that the Comptroller and Auditor General should be the auditor. We therefore need to use powers in the Government Resources and Accounts Act to give the Comptroller and Auditor General statutory audit responsibility for the bodies in accordance with government policy.
  The Railways and Transport Safety Act, which established the British Transport Police Authority, received Royal Assent in July 2003. The authority was formally set up by order under the Act on 1 July 2004. It replaced the British Transport Police Committee, which was appointed by the Strategic Rail Authority, and took over its responsibilities for overseeing the British Transport Police.
  The Railways and Transport Safety Act reflected our policy to create an authority closely modelled on local police authorities. Much of the Act was therefore based on the Police Act 1996, which established local police authorities.
  Subsequent to the passing of the Act, the British Transport Police Authority was classified as a non-departmental public body. The need for Comptroller and Auditor General statutory audit responsibility to be provided in the establishing legislation was not considered during the drafting of the Bill. It is therefore necessary to use the Government Resources and Accounts Act to give the Comptroller and Auditor General statutory audit responsibility.
  It may be helpful to explain that when a previous order under the Government Resources and Accounts Act 2000 was debated in another place in June 2004, a number of issues of concern were raised. Questions raised were, first, why we had to go through the process of debating a policy each year that had already been approved by Parliament, and, secondly, whether an assessment had been made of the impact of Comptroller and Auditor General audit on the bodies covered by the 2003 order.
  Most non-departmental public bodies are set up through new legislation. That legislation should, as a matter of policy, appoint the Comptroller and Auditor General as auditor. However, some new non-departmental public bodies are set up under existing legislation and may not provide for the Comptroller and Auditor General to be the auditor. This is the case with the development corporations listed in the order that is being debated today. The power to give the C&AG statutory audit responsibility—Section 25(10) of the Government Resources and Accounts Act 2000—

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  provides that the orders must be laid in draft and cannot be made before resolutions of both Houses of Parliament.
  The second issue raised in the 2004 debate was whether the Government had reviewed the regulatory impact assessment that was published alongside the 2003 orders. In reply, the Government said that best practice suggests that such reviews should be undertaken at regular intervals and that the Treasury would revisit the matter in due course. In the light of those concerns, the Treasury has done just that and a new regulatory impact assessment accompanies this order.
  Some of the main points in the regulatory impact assessment are as follows. The regulatory impact assessment records that the main risk is that because the C&AG has become the monopoly supplier of audit services to non-departmental public bodies, private sector auditors may be precluded from competing for business. Consequently, non-departmental public bodies' audit costs may increase and the quality of audits may reduce through lack of competition.
  We sought to test those risks by carrying out a review of the impact that the C&AG audit had on the first batch of non-departmental public bodies that moved from their previous auditor to the C&AG—that is, those covered by the 2003 order. Non-departmental public bodies submitted their views to the Treasury in confidence.
  In brief, the responses were generally positive, with bodies enjoying good relations with their National Audit Office colleagues. They said that all sides worked hard to ensure that there was no loss of continuity. If there were problems, they were the usual learning curve issues that any audited body would find with a new auditor. However, some bodies thought that experience over one audit cycle was not long enough to take a view.
  A few bodies had criticisms. For example, some were concerned about the rigid timetable that the National Audit Office prefers, as it can strain limited resources. Similarly, it was said that the National Audit Office did not always respect clients' timetables—for example, in completing audits in time for AGMs. Some bodies also thought that the National Audit Office should improve its understanding and knowledge of bodies that are not grant-aided. Finally, some regretted the inability of the Comptroller and Auditor General to audit companies, especially trading subsidiaries of bodies that he audits.
  A single year's audit experience is not really enough to gauge whether the 2003 regulatory impact assessment was accurate. But, in the light of the survey, we have reassessed the assumptions made.
  To sum up, there seems to have been little loss in continuity, and the impact on the audited bodies has been minimal. In broad terms, audit costs have been comparable and, in most instances, any adverse impact appears to be no more than the friction resulting from a new auditor. I say that with great
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  deference to the noble Baroness, Lady Noakes, who has been through all of this throughout her working life.
  The Committee may recall that the C&AG planned to increase the amount of audit work under the auditor's control that is contracted out to commercial firms. He hoped to raise the level from less than 20 per cent to 25 per cent by 2005–06. I can report that he expects to reach 22 per cent in 2004–05 and that he is on course to meet the 2005–06 target.
  With the caveat that it is probably too early to take a definitive view, I believe that the assumptions made in the 2003 regulatory impact assessment were pretty accurate. We believe that they also hold good for the four new non-departmental public bodies about which we are concerned today. But we propose to review the position in the light of further experience of C&AG audit on those covered by the 2003 orders as well as those covered by later orders, and we shall do so later this year.
  Finally, I should report that the Cabinet Office has been carrying out an extensive review of public bodies and it is likely that some will be reclassified as non-departmental public bodies in due course. The Government will need to take further orders through the House in order to ensure that the Comptroller and Auditor General has statutory audit responsibility for those bodies as well. The proposals continue the Government's commitment to improve parliamentary accountability, and I commend the order to the House. I beg to move.
  Moved, That the Grand Committee do report to the House that it has considered the Government Resources and Accounts Act 2000 (Audit of Public Bodies) Order 2005 [8th report from the Joint Committee].—(Lord McIntosh of Haringey.)
  Baroness Noakes: I thank the Minister for introducing the order and I should say straight away on behalf of my Benches that we fully support transferring the audits under this order to the Comptroller and Auditor General. We have always supported the report of the noble Lord, Lord Sharman, and that is not simply my personal position having spent nearly 30 years being accustomed to agreeing with the noble Lord, Lord Sharman.
  It is helpful that the Government have undertaken a survey of the experience of the bodies that are subject to the new audit arrangements, and I pay tribute to them for that. The Minister referred to my experience in that regard, and I would just say that clients always have criticisms about their auditors, whether they are newly changed auditors or long-standing auditors, and so none of the comments came as a surprise to me.
  I have just one or two questions for the Minister. The first relates to one of the points that came out of the survey concerning the frustration of not being able to have the Comptroller and Auditor General audit companies. One recommendation included in the report of the noble Lord, Lord Sharman, was for the C&AG to be able to audit companies in appropriate circumstances. Of course, that requires a change to

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  company law, and perhaps the Minister will say whether the Government intend to do anything about that recommendation and, if so, when. For example, we had an opportunity last year with the companies Bill when an amendment could have been made or a clause could have been included had the Government wanted to do that, and it seems to me to be entirely sensible that that should be done.
  Looking beyond non-departmental public bodies, I was interested to hear the Minister say that the Cabinet Office may be bringing more within the scope of those bodies. However, my question related to the kind of public corporations that are fairly unlikely to be brought within the Cabinet Office's redefinition of NDPBs and whether the Government have any plans to reconsider the audit of some quite substantial public corporations. Here, I have in mind the BBC, where C&AG has only limited ability to audit parts of value for money in agreement with the governors.
  The Minister will be aware that the Public Accounts Committee in another place has recently criticised that and has recommended that that scope be increased. But other significant public corporations are not within C&AG scope—for example, to mention one that is topical from our afternoon's debate, the Bank of England. I wonder whether the Government are contemplating extending the role of public audit yet further.
  Lord McIntosh of Haringey: This is a lesson in "everything comes back to haunt you". I opposed the
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  Police Act 1996 in this House and I took through the Government Resources and Accounts Act and the Railways and Transport Safety Act, and I am now suffering from the deficiencies.
  It would require a major change to allow the Comptroller and Auditor General to audit companies. The present Comptroller and Auditor General is not able to audit companies but it not impossible that a future Comptroller and Auditor General could personally audit companies, and that would make life simpler. But Sir John Bourn is not in that position and we have no urgent plans to make a change to that, involving significant changes in law, except in the circumstances that I have described.
  On the issue of new non-departmental public bodies, the noble Baroness, Lady Noakes, referred specifically to the BBC. She will recall that during the passage of the Government Resources and Accounts Act there was a great deal of debate about the BBC. Indeed, in relation to the Communications Act, for which I was also responsible in this House, there was significant disagreement about whether the Comptroller and Auditor General should have further powers in relation to the BBC. A compromise was reached that the National Audit Office, by agreement with the BBC, would carry out value for money studies. Those are proceeding and there is no present intention to make any change.
  On Question, Motion agreed to.
  The Committee adjourned at thirteen minutes before seven o'clock.

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