|Previous Section||Index||Home Page|
Mr. Willis: Yesthat is why I was asking why we were taking this particular route. If the Government were proposing wholesale privatisation of the education system, that would be another story. I would not agree with what they were doing, but one could understand why they would wish to take the proposed approach. I cannot understand from the Minister's examples, or indeed those given by colleagues in another place, what great advantages the provisions have that could not already be achieved. We already have examples of schools working together to provide, for example, grant maintenance contracts or schools meals contracts. There are marvellous examples of bodies such as the Yorkshire Purchasing Organisation, which for 30 years has been providing joint purchasing arrangements for schools and local authorities. There are examples of airports, such as Manchester or Leeds-Bradford, in which local authorities are working together to provide a joint service. All the legislation is in place to enable those things to happen, yet we have had no explanation as to why we should proceed with the Bill.
Mr. Willis: That might be a little too close to the bone, because I think that in many ways that is the Government's aspiration. It is difficult to know exactly what they are hiding behind as regards these provisions.
We are concerned that the Government have not properly thought through the implications for schools and LEAs in relation to company law. We are particularly concerned that school companies should not be a means for individuals to make a profit. I ask the Minister this direct question: what is there in the Bill to prevent any individual, including a member of the governing body, from siphoning off profits? On Third Reading, Lord McIntosh of Haringey stated:
That brings me to my amendment concerning whether school companies should be limited by shares or by guarantee. I want to remove the possibility of the former option because that would remove the element of potential profiteering by individuals. If the Government are determined to get the Bill throughthe Minister will have to give a very convincing argument when he winds upthey must give us a guarantee that any profit made out of a public investment of funds into a company returns to the school or schools for investment and does not go to private individuals or private organisations. The amendment would limit school companies by guarantee rather than shares to ensure that no individual profits. If the Minister does not agree with thatif he believes that outside agents can invest and take a profithe must accept that governors and teachers should also be able to invest and make a profit. I am not debating whether that is an honourable position for the Minister to take, but he must make it absolutely clear whether it is the case. If so, he will not have the support of Liberal Democrats here or in another place.
Those concerns arise because the provisions are confused and unclear, and contain several significant weaknesses. I am at a loss, as are other hon. Members, to understand what they will really add to the Bill or what benefits they will bring to schools. There is no great demand for those steps to be taken. The Government seem to be opening up the education system to complexity and risk that it does not need. My hon. Friend the Member for Stone (Mr. Cash) clearly set out many of the issues surrounding liability, especially financial liability, and the complexities of corporate law that schools will end up having to deal with.
The Government have failed to explain several matters. Indeed, some of the contributions made by Ministers in Committee were confused, to say the least. One such matter is LEA liability. The key question is how the LEA's ultimate liability is to be enforced in law. How is somebody who has suffered a loss as a result of mismanagement in a company established by a governing body to go through the process of getting their money back from the LEA? That is far from clear, as it is not stipulated in the Bill. We are on a wing and a prayer. The Government may be able to explain itno doubt the Minister will say that "regulations may provide"but there is no clear legal chain that would enable it to happen.
Nor has there been a clear explanation of the nature of the liability that will be built up. There is great confusion about that. The then Minister, the hon. Member for East Ham (Mr. Timms), said in Committee that he envisaged two types of companies being set up:
My hon. Friend the Member for Stone referred to the complexities of dealing with company law. School governors already deal with huge amounts of complex rules and regulations. The days are long gone since governors could sit passively on the governing body,
Mr. Cash: Does my hon. Friend agree that one of the most extraordinary contributions made by Ministers in the other House when these arguments were being advanced was to suggest that it is just a voluntary arrangement that does not have to be complied with? That is to dismiss the whole complexity of the framework in the Bill as something that might just happen on the margins. Does my hon. Friend agree that that is an extraordinary position for the Government to find themselves in?
Chris Grayling: My hon. Friend makes an important point. From the point of view of any governor or anybody who is involved in the management of a school, there is no way in which any of these activities could be at the margins. If the school sets up a company, that person must have a duty of care and a detailed knowledge and understanding of what is going on. The provision could represent a huge diversion for governing bodies.
The implications for the work load in schools are substantial. The Government failed to respond adequately to a point that was made about that in Committee. My hon. Friend the Member for Eddisbury (Mr. O'Brien) tabled an amendment that would have provided for the head teacher of a school that set up a company to be on the company's board. The Government said that that was unnecessary, but how can governing bodies make decisions that can fundamentally affect the school's operation, assets, grounds, space, staff and resources without the head teacher having a say in them?
At a time when teachers' work load is already great, we risk placing on head teachers and staff considerable additional responsibilities for a measure that will provide no obvious benefits. As hon. Members have said, many schools are already undertaking the activities for which
As I said in my intervention on the hon. Member for Harrogate and Knaresborough, the provisions' boundaries are unclear. A school could contract out its whole education system under the Bill. When I made that point in Committee, the Minister replied:
Let us consider the borrowing restrictions and the liabilities that the companies could accumulate. The Government are quick to say that the companies need the LEAs' permission to borrow and that everything is nicely covered. What about contingent liabilities? They are topical because the Government are keen on them and their non-appearance on national balance sheets. What happens if a company that a school set up accumulates substantial contingent liabilities that are not related to borrowing? Where is the watchdog control over that? Are we saying that LEAs are liable, regardless of what happens and of the financial steps taken by the directors? Can directors trade in the full knowledge that the LEA will ultimately pick up the bill if they do not succeed?