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6.30 pm

As regards the governing body, Baroness Ashton of Upholland endeavoured to be helpful in another place yesterday, and genuinely tried to answer the questions, but in so doing she created more confusion. As the Minister said today, the governing body plays an important role. The hon. Member for Stone is right—clause 2 cannot disregard all educational legislation. I presume that would include provisions in the School Standards and Framework Act 1998, which sets up the current basis of governing bodies and, indeed, the provisions in the Bill that supersede them. The Minister should look at what has happened in Guildford in the case of King's college and 3E's Enterprises. That involves a private company running King's college with the responsibility of putting a majority of its people on to the governing body. Irrespective of whether we agree with that, that is the reality. The Government want to set up more academies that will be semi-independent schools with their own boards of governors, which can be run by a company, and the company can put its own shareholders on to that governing body. That is a huge contradiction with what the Minister said today.

On teaching, Baroness Ashton said yesterday:

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But it can. There is nothing to prevent a school from saying to a teacher agency such as Select, "We want you to provide all the teachers for our school." So it was frankly dishonest to say that a company cannot do that. That is why we do not trust the Minister—we are not getting the right answers. [Interruption.] Well, perhaps it is that we cannot get the answers that we want.

Mr. Brady: Before the hon. Gentleman moves on, the now famous written answer that I received today suggests that the Government are trying to hide behind a very precise interpretation or legalistic use of words. It says that

It is perfectly possible under the direction of a governing body for the services of the school—the provision of education in the school—to be provided by a company.

Mr. Willis: With respect to the hon. Gentleman, that is exactly the point that we have been making for the past three and half months. The Government seem unable to grasp that simple point. Whether it is right or wrong, we simply want them to accept that it is the reality. We can debate the merits of it until the cows come home.

When we debated the amendments last Monday, we talked about a backstop and the responsibilities and duties of the local education authority. The Minister said categorically that if the LEA did not agree to one of these companies being set up, it would not be set up. I was reassured by that until I read page 9 of the guidance to the Lords, regarding clause 11. It says:

In other words, the Government are going to introduce a set of regulations that will tell local authorities the grounds on which they can grant or deny a company permission. But clause 11 contains nothing relating to regulations being introduced afterwards. That is an example of the double standards to which we are referring. Whatever the rights and wrongs of these clauses—or at least the one we are debating—we have received unsatisfactory and conflicting explanations from the Minister, the former Minister, the hon. Member for East Ham (Mr. Timms), and the noble Baroness in another place. That has created confusion around what was perhaps a noble objective. It is now ignoble, and I hope that it will be resoundingly defeated in this House and in another place.

Mr. Miliband: The debate has been wide ranging, as always with debates about school companies. On the one hand the hon. Member for Stone (Mr. Cash) says that we have not covered any of the issues that he has raised, but on the other he wants to claim credit for all the improvements that have appeared in the Bill. Meanwhile, the hon. Member for Harrogate and Knaresborough (Mr. Willis) gives us great credit for our attempts to cover the issues that have been raised, but believes that we have made the situation worse with every such attempt. I hope

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that that does not suggest that the new entente between the two Opposition parties is breaking down. Perhaps they are simply attacking from different points of view.

Mr. Cash: It is called a pincer movement.

Mr. Miliband: I hope that the hon. Gentleman is not going to engage me in a Gramscian endeavour concerning the difference between a war of position and a war of manoeuvre. Perhaps we can do that on another occasion.

In the course of the debates in this House it has been argued that although there is no objection in principle to schools having the freedom to set up companies, there are risks attached—that although schools may well make creative use of the freedom that we are giving them, they may make mistakes. On that basis, it is argued that schools should not be given the power in the first place. We believe that that is wrong. If we want innovation in our education system, we must give schools the freedom to make their own decisions about the best ways to raise standards, build partnerships and share their strengths with others.

I shall address yet again some of the issues that have been raised. A new element that has been put into the debate concerns the now notorious figure of Ms Gaby Hinsliff, who is traded across the Dispatch Box in a way that she has not had the privilege of enjoying before. I am pleased to say that her story in Sunday's edition of The Observer has absolutely nothing to do with our proposals to allow schools to set up companies. As my hon. Friend Baroness Ashton said yesterday, the proposals will not allow schools to contract out their responsibilities for the conduct of the school to a company of any sort. In fact, the article was about the announcement of the Government's strategy on social enterprise—an extremely worthy and important development. I am pleased that the official Opposition are embracing the third sector, as it is known. The two initiatives that were outlined yesterday were a Bank of England review of finance for social enterprises and a new social enterprise accreditation scheme. Far from it being a secret plan, it was launched yesterday.

I shall try to tackle some of the serious points that have been made. The hon. Member for Stone referred again to clause 2. The first point to make, which has been accepted on both sides of the House, is that clause 2 does not provide a blanket power to exempt schools from legislation for any purpose. It is important that hon. Members understand that it applies only to projects that raise standards. It is inconceivable that standards could be raised by voiding the responsibility of governing bodies.

In Committee, the Opposition's criticism was not that the clause is too wide ranging but that the power to decide whether exemptions should be granted, which will be held by the Secretary of State, advised by Ofsted, is part of a centralising tendency. In fact, a backstop is built in.

Mr. Cash: The Minister refers to the question of whether projects will raise educational standards. Under clause 1, that is determined by

but the question of whether schools companies will raise educational standards is implicit in the arguments that the Minister has been putting forward from the beginning. The two things obviously run together, and the

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hon. Gentleman is trying to pick and choose between different expressions in an attempt to get himself off a very difficult hook.

Mr. Miliband: I can assure the hon. Gentleman that I am not trying to pick and choose, as he puts it. Last week, we discussed the LEAs' role in deciding whether the plans for a school company should go ahead.

We have a second safeguard in clause 2, which is that the Secretary of State, advised by Ofsted, will be in a position to decide whether the proposed scheme will raise standards. Last week, hon. Members asked whether failing schools should be able to foist their failure on other schools, and I was able to provide reassurance. I have explained why clause 2 will not have the disastrous consequences to which the hon. Member for Stone referred.

I turn now to several points about liability which I was busy scribbling down as the hon. Gentleman spoke. If a company gets into significant debt, the supervising authority, which in most cases will be the LEA, will know about it through its receipt and assessment of the company's accounts. The supervising authority will then notify the school members and the LEAs of the member schools that, in its view, the school company had not properly managed its debt position.

It will be difficult for a company to get into debt through borrowing, which was also mentioned, and to be unable to repay its debts out of future income. We are building into the regulations a requirement for the company to seek the supervising authority's permission before it can borrow.

The hon. Gentleman also asked what will happen if a company goes bust. If a company becomes insolvent, its staff are likely to be laid off and its assets sold. However, there will be no risk to the school's assets or to the employment of staff at member schools, as the company does not own the member schools' assets or employ their staff.

Two hon. Members asked about profits. We believe that it is wrong that only private sector companies should be able to sell services to schools, and it is beneficial if other schools are able to do so. Where a company consists only of members that are education institutions, all its profits will be used for education purposes. Hon. Members asked whether a person—for example, a head teacher—could take a stake in a company and make a profit for himself. The answer is no, regulations will prevent that.

The hon. Member for Stone asked about the regulations proscribing what he called "disreputable persons" from participating in school companies, but we have not changed our plans on that—such proscription was the intention from the start.

The Charity Commissioners were mentioned, but they have absolutely nothing to do with these issues. They have no involvement in schools because most schools are not charities. It is worth adding, in parentheses, that schools would end up paying 20 per cent. of their rates if they were deemed to be a charity, so it is just as well they are not.

As a new Member of the House, I rather expected that at this stage of the proceedings we would be debating some important clash of principle between this House and

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the other place and that we would be fundamentally at odds over what we are trying to achieve. Instead, we are debating issues of detail which we have been over many times, and Ministers have provided answers many times.

If the House believes, as I do, that our best schools have remarkable expertise that deserves to be widely shared, it will support the concept of school companies. Companies will provide a means for our best schools to support and advise others in their areas of particular strength. We should not allow that potential to be lost. It simply does not make sense to argue that this idea has the potential to do good in a range of circumstances, but because it is conceivable, to use the hon. Gentleman's words, that there are circumstances in which it will not work, we should not allow it to be put into practice.

The House should decisively reject the Lords amendment. On this side of the House, we support innovation, more freedom for schools and decentralisation. We support the light touch bureaucracy that the official Opposition often claim to support but do not like when we put it into practice. They are stuck in what can only be described as "rejection mode". They reject without principle; they reject without reason; they reject simply for the sake of rejection. They are so busy saying no that they even say no to ideas that they claim to support.

I remember that a right hon. Lady once stood here and said "No, no, no". She may not be here, but her legacy lives on in the official Opposition, who insist on saying "No, no, no." On this side of the House we say yes, and I urge the House to support the Government.

Question put, That this House insists on its disagreement to Lords amendment No. 12 but proposes amendment (a) to the words restored to the Bill by that disagreement:—

The House divided: Ayes 260, Noes 160.

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