House of Commons Hansard Debates for 5 Feb 1992

The Secretary of State for Education and Science (Mr. Kenneth Clarke) : I have been drawn here by the eloquence of the hon. Gentleman.

Mr. Dalyell : I had better complete the picture. The Minister says in his letter that the procedure was adopted with the Universities Funding Council in 1988 and he sees no reason why it should not produce the desired effect now. He hopes that that meets my concern, but it does not completely meet my concern. I should like to know in concrete terms what the Department has in mind to insert in legislation.

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In Committee, among the many letters which I offered to my colleagues was one from Lord Wilberforce. The Appeal Court judge of many years reminded us that what Ministers or any of the rest of us said in Standing Committee or on the Floor of the House mattered not at all when it came to the courts interpreting legislation. That is why it is so important and why I asked for a concrete undertaking about what will be introduced in legislation on the subject. I leave it at that.

Mr. Michael Forsyth : I am grateful to the hon. Member for Linlithgow (Mr. Dalyell) for reading out my letter, which I gave him this afternoon. That obviates the necessity for me to repeat the points in it. The hon. Gentleman is right to emphasise the importance of a co-ordinated approach and of the three funding councils operating with a joint medical committee. I do not know what I can say to the hon. Gentleman to persuade him that it is not necessary to put this on the face of the Bill to ensure that it is delivered, but I can give him an undertaking--in concrete, stone or any material of his choosing--that the Government will ensure that the funding councils take note of the views expressed in this House, and will ensure that there is co-ordination between the three funding councils in the form of a joint medical committee.

This will meet the reasonable expectations of those who have argued in favour of the importance of this idea. I do not underestimate it : I simply take issue with what the hon. Member for Linlithgow said at the end of his speech--that this matter must be written into the legislation, and that it is a matter for the courts. It is not. It relates to the relationship between the Secretaries of State in the territorial areas and their respective funding councils.

I hope that the hon. Gentleman will feel able to withdraw the amendment and will take comfort from having secured a far stronger undertaking than he was given in Committee. His persistence in advancing this view has scored something of a victory.

Mr. Dalyell : I am always prepared to accept assurances that doubtless are given in good faith, so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendments made : No. 3, in page 25, line 17 after be', insert-- (a) persons who are not members of the Council ; and

(b) '.

No. 4, in page 25, line 19, at end insert--

and in appointing such persons the Council shall have regard to the desirability of their being currently engaged in the provision of such higher education or in carrying responsibility for such provision.'.

No. 5, in page 25, line 20, leave out subsection (3) and insert-- (3) A committee established under this section shall be treated as if it were a committee established under paragraph 8 of Schedule 6 to this Act.'.-- [Mr. Michael Forsyth.]

Clause 36

Grants

Amendment proposed : No. 6, in page 27, line 9, leave out subsection (2) and insert--

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(2) The terms and conditions referred to in subsection (1) above shall not be expressed so as to affect the provision of financial support by the Council in respect of activities carried on by any particular institution.

(2A) Such terms and conditions may, in particular, impose requirements to be complied with by all institutions or all institutions falling within such class or description of institutions as is specified in the terms and conditions and,notwithstanding subsection (2) above, may be such as to require that, before financialsupport of any amount or description or any part of such financial support so specified is provided by the Council in respect of activities carried on by any particular institution, the institution shall have complied with such requirements.'.-- [Mr. Michael Forsyth.]

Mr. Worthington : I beg to move, as an amendment to the proposed amendment, amendment (a), leave out subsection (2A).

As the Minister will know, this clause and clause 48 have a great deal of history behind them, constituting what Lord Simon of Glaisdale called a double-barrelled gun. We are discussing the importance of academic freedom, the conditions under which grants can be given and the directions that can be given to institutions or the funding council.

We all agree that a strong element of accountability is necessary in the spending of public money and that some conditions need to be laid down by the Secretary of State. We have just discussed medical students and medical schools, and we should certainly know how many people are training to be doctors. Similarly, however, there needs to be a hands-off approach by the Government so as to secure academic freedom.

The Minister kindly agreed to have another look at clause 36. Inevitably, we compare the Scottish legislation with that for England and Wales, and we find that part of what the Government propose is acceptable. Hon. Members on both sides are determined that the Government should not be able to issue instructions that affect the financial support for one particular institution. That would be interference. We set up the funding council to prevent that. In subsection (2), proposed in amendment No. 6, the Government have honoured that obligation and in general subsection (2) has no problems for us. Unfortunately, the proposed subsection (2A) brings in difficulties to which I shall address myself. The first difficulty is that some institutions could be in a class of one ; an institution in Scotland could be unique. I mention, for example, the school of architecture in Scotland. There is only one and I mention that because the Secretary of State for Education and Science said that the Government would not want a school of architecture to lengthen its degrees to seven years. The school of architecture would be in a class of its own, and, according to the proposed subsection (2A), it would be legitimate for the Secretary of State for Scotland to intervene.

10.15 pm

The second and more substantial objection is that amendment No. 6 uses the words "notwithstanding subsection (2) above". It seems that the Secretary of State, if it suited him, could ignore subsection (2). It would be possible for the Secretary of State to lay down a condition that would affect individual institutions. That is why we propose that subsection (2A) should be withdrawn.

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However, that is not our final position, and there is still some distance to go on the issue. As the Minister will know, in the other place, Lord Beloff moved an amendment, which was accepted, which said :

"such terms and conditions may not be framed by reference to particular courses of study or programmes of research including the contents of such courses or programmes and the manner in which they are taught, supervised or assesed, or to the criteria for the selection and appointment of academic staff and for the admission of students."

We are gradually on our way to the solution here. The Opposition object to the words "notwithstanding subsection (2)", because they seem to invalidate subsection (2), in which the Government have said that financial support cannot be interfered with to affect any particular institution.

Lord Beloff's proposition in the other place was valuable, because it clearly said that there were areas of academic freedom in which one must not interfere. In the spirit of the Government and the Opposition looking for a formula, I ask the Minister to respond.

Mr. Michael Forsyth : I advise the House that amendment (a) should not be made.

There is not a great deal of difference between the Government and the Opposition on the matter. Amendment No. 6 fulfils my commitment in Committee to redraft clause 36(2) to make it clear that institutions' specific conditions on grant are not permitted. The amendment achieves that admirably and I hope there will be less confusion about the Government's policy in the area from now on. I will spell it out. The Secretary of State's powers to attach terms and conditions to his grant to the council have not been, are not and will not be capable of allowing for institution- specific conditions. The wording in subsection (2A) is necessary to ensure that the general terms and conditions that the Secretary of State may impose are capable of taking effect. The hon. Gentleman is concerned about that wording, and his amendment seeks to remove it. We need the wording to ensure that institutions that comply with the general conditions benefit, and that those that do not comply do not benefit-- [Interruption.] I do not know whether the hon. Gentleman is following this. I am sure that the conversations taking place are to the benefit of us all, but he should be clear on this matter because it is a difficult point. It is a matter of legal wording, and I spent some time considering it.

I shall repeat what I said. We need the wording in subsection (2A) to ensure that institutions that comply with the general conditions benefit, and that those that do not comply do not benefit. For that reason, I cannot accept amendment (a), as it would prevent the powers from being used effectively in practice.

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I told the Committee that I had discussed these matters with Professor Forty, the chairman of the Committee of Scottish University Principals. I am glad to report to the House that he regards our amendment as a significant and helpful clarification of the Government's policy in this area, which he considers establishes an appropriate framework for the relationship between the Government, the funding council and the institutions.

The hon. Gentleman has fulfilled his purpose ; I am grateful to him for the constructive way in which he approached this matter and for his helpful suggestions. We now have a form of wording that meets what the Committee required.

Mr. Dalyell : Can we take it that the Minister is speaking on behalf of all the seven other Scottish vice-chancellors, and that there are no reservations among any of them? That is correct, is it not?

Mr. Forsyth : I do not think that I could speak for the principal of Stirling university in his capacity as chairman of the Committee of Scottish University Principals. What I told the Committee was that I would consult him. I met him, and he tried to help to frame a form of wording that would meet the anxieties expressed by his colleagues. I think that he would be cross with me if I were to suggest that he was necessarily speaking for all of them. To be able to speak for all the university principals on any issue would be quite an undertaking.

Mr. Stephen : The Minister chose his words carefully in describing the chairman's view. Does he believe that the chairman approves of the wording in the amendment and that all his concerns are satisfied? The Minister said that the chairman thought that the wording made a useful contribution--or words to that effect. We should be clear whether he is or is not satisfied with the amendment.

As a lawyer, my view is that subsection (2A) is very difficult, verging on the incomprehensible, and certainly would not get a plain English award. Parliamentary drafting is at its best when it is simple, lucid and clear, and this subsection certainly is not. From what can be discerned about the wording, the phrase "notwithstanding subsection (2)" tends to suggest that it could apply to a single institution. As subsection (2) is about ensuring that the terms and conditions cannot be applied to specific institutions, the amendment fails the very test that the Minister set himself in Committee.

Mr. Forsyth : I do not wish to become involved in an argument about the quality of the drafting. I accept the hon. Gentleman's complaints about the difficulty of the wording. At the time when the Committee was seeking to change the wording, I was advised that the process would be rather difficult and clumsy. I agree that the wording is not--I was going to say crystal clear, but that would have implied that it was not clear. I am advised that the meaning is clear, although I accept that it needs to be read carefully.

The hon. Member for Clydebank and Milngavie (Mr. Worthington) seemed to feel that the words "notwithstanding subsection (2)" would allow the Secretary of State to ignore the subsection. They do not mean that ; they mean that the Secretary of State can impose general conditions that impact at institutional level. The hon. Gentleman asked about the position regarding the university principal, John Forty. I understand that he has

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told the Department that he thinks that his colleagues would find the provision acceptable, and that he is happy with the wording as it stands.

The hon. Gentleman also asked me about classes of one. Classes of one are possible, but, if the Secretary of State knew in advance that a class had only one member, he would fall foul of subsection (2) and the ban on institutions' specific conditions. If, however, a general condition in the event proved to apply to only one institution, that would be allowed.

I am sure that that is very clear to the hon. Gentleman. I can only say that it was the Committee that asked us to deliver ; we have delivered, and I hope that its members will not complain. I believe that we have a measure that should satisfy the Committee and the university principals, and, more important, provide a basis for future funding that will command consensus support.

Mr. Dalyell : I do not think that hon. Members should lightly try to advise those in the other place. I trust, however, that I will be permitted a reaction which I hope will not be in any way offensive. I hope that the measure will be subjected to the eagle eye of Lord Wilberforce and his colleagues the Law Lords, and that they will scrutinise it carefully. It is obviously a pitch for the lawyers in the other place, and I hope that the Minister's words pass the test.

Mr. Robert Hughes : I express my appreciation to the Minister, who has at least attempted to make clear in the legislation that which the Committee sought. I make no complaint--I am not carping--when I say that the Government amendments are far from clear to me, and I am not sure that they are clear to anyone. The principle of what we are trying to achieve, however, is entirely clear. It has not been possible for me to consult the principal of the university of Aberdeen to find out whether he is satisfied with the amendment, but I suspect that, even if I had been able to do so, he might not have been able to give us categorical advice.

In Committee, the Minister said that it would be difficult to draft an amendment to make clear the issues about which we were concerned--academic freedom, for instance. I think that he has made it clear that he accepts the principle. Although we have not had much time between Committee and Report, I hope that the Minister will assure us that, between now and discussion of the Bill in the other place, the Government will look closely at the provision with the parliamentary draftsmen and that, if any tidying up proves necessary, it will be done. I should be content with that.

Mr. Michael Forsyth : Of course I give that assurance to the hon. Gentleman.

10.30 pm

Mr. Worthington : I think that we are making good progress on this issue. One of the advantages of accepting that both the Minister and Opposition Members are still looking for a solution is that we could clarify the attitude of the vice-chancellors. There is ambivalence about this issue. I know that the Minister met Professor Forty to discuss it and I accept the Minister's assurance about what Professor Forty said. I know, too, that the Committee of Vice-Chancellors and Principals at national level is not happy about the proposal and feels that it needs to be looked at again.

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If the hon. Member for Kincardine and Deeside (Mr. Stephen) can read this and impose upon it the same reservations, as a lawyer, that I have, it is clearly open to misinterpretation. We do not even have to take into account the credibility of the hon. Member for Kincardine and Deeside as a lawyer. The test of the clause is whether it can be understood. We have heard doubts expressed about whether it can be reasonably well understood.

I accept the Minister's assurance about a class with only one pupil. He made a valuable point. I still think that there would be value in looking at the amendment that was accepted, although against the Government's wishes, in the other place--about it being made absolutely clear that the terms and conditions that are applied to grants cannot be framed by reference to particular courses of study, or by reference to particular programmes of research, and that they cannot be about the criteria for the selection and appointment of academic staff or for the admission of students. Those are valuable additions to the clause in order to make it absolutely clear that what the Government and Opposition are attempting to do is to make it clear that conditions that interfere with academic freedom cannot be imposed.

On the basis of people not being backed into corners, of not being confrontational and of still looking for an improvement to the wording, I am willing to withdraw the amendment. We do not say that the Government's amendment is the best solution. We accept the Minister's assurance that they have taken steps forward but that they will see whether they can take further steps forward by introducing absolutely clear-cut wording into the clause. On that basis, I beg leave to withdraw the amendment.

Amendment to the proposed amendment, by leave, withdrawn. Amendment No. 6 agreed to.

Clause 37

Further functions

Amendment made : No. 7, in page 28, line 11, at end insert-- ( ) The Secretary of State shall not make an order under subsection (5) above unless he has consulted--

(a) the Council ; and

(b) such organisations as appear to him to be representative of institutions within the higher education sector.'.-- [Mr. Michael Forsyth.]

Clause 41

Closure of institutions

Amendment made : No. 8, in page 30, line 43, at end insert-- ( ) An order under subsection (1) above shall not be made unless the Secretary of State has consulted--

(a) the Council ; and

(b) the governing body of the institution proposed to be closed.'.-- [Mr. Michael Forsyth.]

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Clause 39

Power of Privy Council in relation to designated institutions

Mr. Dalyell : I beg to move amendment No. 89, in page 29, line 4, leave out from "functions" to end of line 7.

This is a probing amendment. Like all probing amendments, it can be elastic. My first point relates to the central issue of money, and it is to ask the Minister what he would have said in response to new clause 21, about superannuation entitlements. I hope that that does not stretch the House's patience too far. We know what happened a few minutes ago--there was a mistake--and this is an important subject. The purpose of the probing amendment is to ask what the Government's attitude is to academic endowments. I couple it succinctly with a strong personal feeling that in this country we do not take advantage of potential endowments as happens in the United States and, perhaps above all, in Israel. Anyone who has been to the Hebrew university in Jerusalem will have seen many faculties endowed by people whose names have been preserved

Dr. Ashok Kumar (Langbaurgh) : Hear, hear.

Mr. Dalyell : My hon. Friend is a scientist who has travelled widely, and he knows exactly what I am talking about.

Some universities abroad attract a great deal of money through named bequests. It is an understandable trait of human nature that people often like their names and those of their wives or others to be remembered, and they give a great deal of money to that end. We have lost in the past 20 or 30 years by not tapping that source of money.

Earlier, we discussed the chair of Scottish history and the Fraser endowment. Incidentally, I think that the Fraser endowment moneys have not been managed as wonderfully on the stock market as they might have been, but that is bye the bye. However, the important fact is that they were endowed in the first place, and that is how many such chairs occurred. In such circumstances, I feel entitled to ask what the Government's attitude is to academic endowment. It would be a great courtesy if they would tell us in answer to the issue that my hon. Friend the Member for Clydebank and Milngavie (Mr. Worthington) and our colleagues raised on the subject of superannuation entitlements, producing the new clause which read :

--. The Secretary of State shall ensure that provision is made for staff of institutions newly designated as universities to have superannuation entitlements which are no less favourable than those applicable to staff in established universities.'.

It would be a courtesy to the House if the Minister could respond to that.

Mr. Michael Forsyth : Perhaps I can help the hon. Member for Linlithgow (Mr. Dalyell) in so far as this matter is concerned with money. I suppose that new clause 21 was also concerned with money, so that there is a clear link between the two. I am grateful to you, Madam Deputy Speaker, for your tolerance, but I know from experience in Committee that the hon. Gentleman will find a way to pursue the matter, so I am happy to respond.

The key point in relation to academic staff and pension provision is that the main benefits which are payable by the two schemes are broadly the same, which is one eightieth of pension salary index linked for each year of

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reckonable service up to a maximum of forty eightieths at normal retiring age and a lump sum payment of three times annual pension. Therefore, conferring a right on individuals to transfer between them is of little value. In fact, the level of employee contribution in the university scheme, at 6.35 per cent., is marginally higher than that in the teachers' scheme at 6 per cent.

What I would have said in respect of new clause 21 is that it is wrong- headed because pensions are essentially a benefit which flows from employment and it is employers rather than individual employees who must decide which scheme to provide. It would also involve considerable extra financial burdens for employers, money which the Government believe should be spent on the provision of higher education.

On amendment No. 89, subsection (2)(c) is not a new provision. It is lifted directly from section 77 of the Education (Scotland) Act 1980 and was inserted into that Act by the Education (Scotland) Act 1981. The reason for the provision was that the Secretary of State's powers to reorganise educational endowments which were contained in part VI of the 1980 Act were being handed to education authorities, at least in respect of locally funded education.

The powers relating to grant-aided colleges were retained and transferred to the section of the 1980 Act dealing with the government of these colleges. It might interest the House to know that the Secretary of State's powers in part VI of the 1980 Act were simply carried over from the Education (Scotland) Act 1962. Therefore, the Secretary of State has had the powers to deal with endowments for at least 30 years.

The provision in clause 39 allows a simple means of amending endowments to reflect changes to the institutions to which they relate. For instance, if at present a grant-aided college, or, in future, a designated institution, were to change its name or merge with another institution, the appropriate change could be made to any endowments related to the college or institution.

So clause 39 simply transfers to the Privy Council the Secretary of State's existing powers in that area. We have made no changes to the provisions relating to endowments, in keeping with the spirit of the higher education White Paper, which was that existing and successful arrangements for the colleges should broadly remain as they are. By way of summary, let me say that the answer to the question asked by the hon. Member for Linlithgow is that there is no change in the Government's policy on the matter.

Mr. Dalyell : That was as helpful a reply as the Minister could have given. I think that the Department should discuss the matter with the Treasury, and reflect how endowments for hard-pressed institutions such as the University of Edinburgh could be encouraged. In that spirit, unless any of my colleagues wishes to speak, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn .

Amendment made : No. 80, in page 29, line 10, after above', insert

if neither the institution nor the governing body is, immediately before the order is made, a body corporate.'.-- [Mr. Michael Forsyth.]

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Clause 41

Closure of institutions

Amendment made : No. 8, in page 30, line 43, at end insert-- ( ) An order under subsection (1) above shall not be made unless the Secretary of State has consulted--

(a) the Council ; and

((b)) the governing body of the institution proposed to be closed.'.-- [Mr. Lang.]

Clause 42

Power to award degrees, etc.

Amendment made : No. 81, in page 31, line 5, leave out Secretary of State' and insert Privy Council'.-- [Mr. Michael Forsyth.]

Clause 48

Directions

Mr. Michael Forsyth : I beg to move amendment No. 9, in page 33, line 29, after directions' insert

under this section, and such directions shall be'.

Madam Deputy Speaker : With this we may take the following amendments : No. 86, in page 33, line 29, at end add

, provided that these directions have previously been approved by the Committee of Scottish Vice-Chancellors.'.

Government amendment No. 10, in page 33, line 29, at end insert-- ( ) The Secretary of State may give general directions to the Council about the exercise of their functions.

( ) If it appears to the Secretary of State--

(a) that the financial affairs of any institution within the higher education sector have been or are being mismanaged ; or

(b) that, in consequence of matters outwith the control of such an institution, it is likely that the financial position of the institution will be significantly adversely affected,

he may, after consulting the Council and the institution, give such directions to the Council about the provision of financial support in respect of the activities carried on by the institution as he considers are necessary or expedient by reason of the mismanagement or, as the case may be, adverse effect on the institution's financial position.'.

Amendment (a) to the proposed amendment, in line 6, leave out from mismanaged' to end of line 8.

Amendment (b) to the proposed amendment, leave out subsection (b). Amendment (c) to the proposed amendment, in line 15, leave out from mismanagement' to end of line 13.

Mr. Forsyth : Amendments Nos. 9 and 10 arose out of undertakings that I gave in Committee to take clause 48 away and to bring forward amendments which would do two things. First, they would make it clear that the power extends to institution-specific directions. Secondly, they would restrict directions to financial matters. Amendment No. 10 goes rather further than this, since it allows the Secretary of State to make an institution-specific direction only where it appears to him that there has been mismanagement of the financial affairs of the institution, or where the institution's financial position has been significantly adversely affected for some other reason. In addition, the directions may relate only to the provision of

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financial support by the council to the institution, and they must arise out of the financial difficulties suffered by institutions, and not from any other source.

I believe that the amendments provide a firm basis on which to develop a constructive relationship between the Government, the funding council and the higher education institutions in Scotland. The amendments represent a significant restriction of the Secretary of State's powers in this area and follow extensive representations by the hon. Member for Clydebank and Milngavie (Mr. Worthington). As with conditions on grant, we have discussed the matter with Professor Forty, the chairman of the Scottish Committee of University Principals, and I am pleased to report that he was encouraged by the way in which we proposed to restrict the power. In particular, he saw the reference to financial difficulties arising otherwise than through mismanagement as an acceptable form of potential protection for institutions which may be confronted with funding difficulties through no fault of their own. On that basis, I commend the amendments to the House.

It may be helpful if I remind hon. Members that the Secretary of State's power of direction in relation to higher education funding always has been capable of extending to institution-specific direction. That was true under the Education Reform Act 1988, although that Act did not spell out that institution-specific directions were permitted because the legal advice available to the Government at that time indicated that it was not necessary to do so. It was made abundantly clear, however, during the passage of the Act that the power of direction was intended to be capable of being institution-specific.

Since then, there has, of course, been the court case in England relating to conditions of grant, and the legal advice now available to the Government is that the 1988 Act will no longer do. If we are to continue to have institution-specific powers of direction, we must say so explicitly, and that is what we have done. The policy therefore has not changed, but the legal environment has, and the words that we need to achieve the same effect in legislation have had to change too.

10.45 pm

The power is clause 48 is intended to be used only as a last resort in emergencies after the other available solutions have been found wanting. The power of direction is, in a sense, a form of disaster insurance. We cannot foresee precisely what disasters will hit the higher education system in years to come, I hope that none will, but we need to have some way of dealing with them if they do arise. Amendment No. 10 allows us to cover both disasters that appear to have arisen because of financial mismanagement and those caused by other factors. The reason for extending the provision beyond financial mismanagement is that it would allow the Government to help where, for instance, a natural disaster had struck an institution and put it out of operation, or if a significant portion of its funds were lost due to the collapse of a deposit-taker. We could all think of examples of that. Mismanagement might not be involved, or it might be difficult to take a reasonable view on whether it was or was not, but action would still be needed. Accordingly, I

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