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Motion made, and Question put forthwith, pursuant to Order [28 June 2001],

1. proceedings on Consideration of Lords Amendments shall (so far as not previously concluded) be brought to a conclusion at Ten o'clock on the day on which those proceedings are commenced or, if that day is a Thursday, at Seven o'clock on that day.

2. The Lords Amendments shall be considered in the following order, namely, Nos. 12, 13, 14, 23, 27, 37, 1 to 11, 15 to 22, 24 to 26, 28 to 36 and 38 to 98.

Subsequent stages

3. Proceedings on any further Message from the Lords shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.—[Derek Twigg.]

Question agreed to.

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Education Bill

Lords amendments considered.

Clause 10

Powers of governing bodies to form or invest in companies to provide services etc.

Lords amendment: No. 12.

5.1 pm

The Minister for School Standards (Mr. David Miliband): I beg to move, That this House disagrees with the Lords in the said amendment.

Mr. Deputy Speaker (Sir Alan Haselhurst): With this we will consider Government amendments (a) and (aa) to the words so restored to the Bill, Lords amendment No. 13 and the Government motion to disagree thereto, and Government amendments (a) to (c) to the words so restored to the Bill.

Mr. Miliband: We believe that the new freedom for schools proposed in these clauses will be valuable in helping them to work together to raise standards. Labour Members stand for enterprise in, and by, schools. We want new partnerships between schools, and we want best practice to lead the rest—whether in relation to pedagogy, to the curriculum, or to information and communications technology. I am glad to say that in our endeavours, we have welcome support across the House for the measures that we are debating. As a member of the Education Bill Standing Committee, I sat in rapt attention, and was particularly struck by one impassioned speech. The Member in question said, in respect of these specific clauses, that

I could not have put it better myself. The Committee member in question was the hon. Member for Altrincham and Sale, West (Mr. Brady), whom I am glad to quote in this regard. He was clearly taking his cue from a distinguished predecessor of his, Lord Baker of Dorking, who said in a House of Lords debate:

Given my strong memory of the hon. Gentleman's impassioned speech, I was more than a little surprised to discover that the Opposition joined in the process of deleting the clauses in the other place.

Mr. Graham Brady (Altrincham and Sale, West): Perhaps I can help to jog the Minister's memory. I am sure that he cannot recall his predecessor's giving any satisfactory reassurance in respect of the concerns that we raised in Committee about where liability would fall if such companies were set up. As he will learn, it is perfectly normal practice in this House that, if we are not given adequate reassurance, we seek to amend the Bill later on.

Mr. Miliband: I am grateful for the benefit of the hon. Gentleman's years of experience in this House, which are

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greater than mine. All I remember from our proceedings in Committee is the eloquence of my hon. Friend the Member for East Ham (Mr. Timms), who was leading for the Government. He rebutted all manner of allegations and put a consistent and coherent view. I wonder whether there is a split on this issue, and whether this is a case of old Conservatives versus new Conservatives—or mods versus trads. I understand that the hon. Member for Stone (Mr. Cash) will lead for the Conservatives on this issue. I can give him my categorical assurance that the European Union has no involvement in this measure, so I hope that he will join me in seeking to reverse the House of Lords' view.

There is a serious point. The Bill is about supporting schools in finding new ways to innovate and work together, so that they can raise standards. The power we are debating is a new freedom for schools. It will not be used by every school, but it will enable those schools that choose to use it to develop new partnerships, to share good practice and to support other schools.

We are widening the choices that schools already have. It is already possible under the law for a single school to form a company, if that is necessary for the conduct of the school. This power will enable schools to work together to form joint companies, or companies that will support other schools. I find it hard to see why that form of collaborative and innovative activity to benefit the wider community of schools should be opposed.

Mr. Phil Willis (Harrogate and Knaresborough): I am grateful to the Minister for giving way while he is reading his notes. We want to be helpful this evening, but could he give us examples of how the new powers will be used? What sort of companies will be formed? What will their activities be? Why is it not possible under existing legislation for schools or local authorities to do that work, because they have been doing so ever since 1944?

Mr. Miliband: I know that the hon. Gentleman is always keen to be helpful. I assure him that this is the best that I can do in terms of a speech and I am not reading someone else's notes. I shall come to some examples of how this will be a beneficial measure in terms of pedagogy and curricula. If he feels that I have not addressed his concerns sufficiently, I hope that he will interrupt me again.

We have always been clear that the formation of a company is not an end in itself. It is valuable only as a means to an end. Forming a company is the simplest mechanism available for groups of schools to have joint legal identity. If a group of schools want to purchase their supplies together and so benefit from economies of scale, it will help them greatly if they can do so as a single legal entity. Because a company provides limited liability status, these clauses will also mean that schools can reduce the financial risk of collaborating. That will leave them free to take advantage of the opportunities offered to them. [Interruption.] I hope that the hon. Member for Harrogate and Knaresborough (Mr. Willis) is not missing the key point that I am making. In relation to both purchase and provision of services, the opportunity to establish a company will stretch the possibilities for schools to share best practice beyond the current boundaries.

Through increased delegation of budgets by local education authorities, schools have the freedom and confidence to buy the services they need from those best

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placed to deliver them. If private sector providers can sell services to schools, I see no reason to prevent schools themselves, which may have some of the most expert people available, from providing services as well. The services offered by a school company may represent an opportunity for other schools to buy in real practical experience and expertise. A service delivery company may share a particular school improvement expertise, perhaps helping a weak school to become stronger, thereby giving pupils the quality of education that is their right.

We must make the best use of the talent and experience that is to be found in schools. The opportunities could be very wide; I shall give a couple of specific examples for the hon. Gentleman and other hon. Members. A group of schools that has developed a software package or an anti-bullying training pack may join another partner to ease production and distribution of the service. The expertise of the different partners will help to give schools access to high-quality services from which they would otherwise be unable to benefit.

I am clear that the provisions will provide a worthwhile opportunity for schools. I emphasise that it will be an opportunity: there will be no compulsion on schools to enter into companies. Nor will there be any compulsion on other schools to purchase from companies. However, this will be an opportunity to lead the way.

In seeking to restore to the Bill the clauses removed by the other place, we are proposing some small changes that I should explain for the benefit of hon. Members. Two of the amendments will place in the Bill detail that was to be contained in regulations. The first is the requirement that school companies will be required to register under the Companies Acts as companies limited by shares or by guarantee. We may wish to consider that in more detail, given the amendment tabled by the hon. Member for Harrogate and Knaresborough. The second is that only those specified in regulations may join companies. Placing those details in the Bill will offer greater clarity and more visible protection to companies. The other two Government amendments tighten up the requirement for companies to operate only in accordance with the requirements set out in regulations.

We also wish to restore clause 11, which sets out the regulatory regime that we propose to introduce for service delivery and purchasing companies. It will create a necessary framework of safeguards for school companies to operate in. We are preparing regulations that we intend to be flexible and to avoid unnecessary constraint on the operational freedom of school companies. The regulations will include requirements about company operation and membership, and will create supervising authorities to oversee the school companies. The clause will also require governing bodies of maintained schools wishing to form or join companies established under clause 11 to obtain the consent of the LEA. As the House knows, we will consult relevant organisations in the education service on the draft regulations, taking careful note of the responses.

I hope that I have addressed some of the concerns felt by Opposition Members and that the House will join me in rejecting the Lords amendments and agreeing to the Government's substitutes.

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