Eighth Standing Committee
on Delegated Legislation
Tuesday 5 March 2002
[Miss Ann Widdecombe in the Chair]
Draft Contracting Out (Local Education Authority Functions) (England) Order 2002
The Chairman: Order. Before I call the Minister I want to say that the 90 minutes for which the Committee can sit runs from now, not from 4.30 pm when the sitting should have started.
The Minister for School Standards (Mr. Stephen Timms): I beg to move,
That the Committee has considered the draft Contracting Out (Local Education Authority Functions) (England) Order 2002.
May I begin by welcoming you to the Chair of the Committee, Miss Widdecombe, particularly on the day when your fame is likely to be increased even further by a television broadcast this evening? I know that you will preside over our deliberations with scrupulous fairness today, and it is a pleasure to serve under your chairmanship.
The order that we are considering is made under the Deregulation and Contracting Out Act 1994. I am glad that we have an opportunity to debate it today. The order has one purpose: to allow local education authorities greater flexibility in the provision of their services. There are two reasons why that is necessary. First, we ask a lot of LEAs, and we are right to do so. They have the task of securing high quality services for schools, parents and pupils in their areas. They have a key role in bringing about many of the improvements that we want. However, they may not be able to achieve those improvements entirely alone. In many cases they will want to work in partnership with others.
We cannot, I think, expect all LEAs to have in their own organisations all the skills and expertise needed to carry out their wide-ranging responsibilities. We need to build LEAs' capacity through effective partnership working. Many LEAs already use partners for back office functions. However, growing capacity issues are arising for LEAs that want to provide high quality front-line services such as those in the extensive list in the order. By working in partnership with different providers of services from the public, private and voluntary sectors, local authorities can focus on the more strategic issues. They can think ahead and monitor quality instead of always concerning themselves with the direct delivery of services by their staff.
The second reason why greater flexibility is necessary is that our policy of best value obliges local authorities to review their services. They should consider, first, whether the service in question needs to be provided and, if so, who is best placed to provide it.
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That is the cornerstone policy for ensuring that standards in local services are improved and continue to improve and that they present best value to the customer. At the moment, local education authorities are limited in the range of services that they can deliver in partnership with others. Whether or not they are the organisation best placed to provide a service, they are obliged by statute to undertake many educational functions in-house. Tasks such as drawing up a school organisation plan, making arrangements for statementing pupils with special educational needs and enforcing school attendance orders currently have to be undertaken by an officer of an LEA. The order will allow LEAs, if they wish, to contract with private or voluntary bodies to deliver services such as those, which require the exercise of discretion in individual cases. It will give LEAs greater flexibility in securing the most effective delivery of their services.
I want to make it clear that LEAs will remain ultimately responsible and accountable for all contracted-out functions. They will continue to set the direction and the strategy, and they will ensure that the implementation of that direction and strategy is reflected in their contracts. Although a contractor may carry out functions on behalf of the authority, it is the authority that retains overall control and ultimate accountability. To reflect that, we have excluded from the order a number of key strategic decisions that we believe an authority should not contract out: the approval of key plans, such as an authority's education development plans and early-years and child care development plans; setting local policies, such as school admission policies; reviewing arrangements for children with SENs or behavioural difficulties; putting forward proposals for new schools or to close schools; and determining the education budget and the budget share that schools receive.
The Committee will recognise that it is right that those decisions remain for the LEA to determine. By excluding those key strategic decisions from the scope of the order, we are emphasising the LEAs' importance in setting the overall strategic framework for education in a local area, for which the authority is directly and democratically accountable. All of that means that LEAs will set strategy, budgets and local policies. If LEAs wish, they will be able to contract with others to carry out other functions, which can be summarised as advising on, consulting on and implementing local authority strategies and policies. There is no ambiguity; the key strategic policy making and budgetary responsibility of the LEA remains clear and unchanged.
The order has been the subject of consultation with local authority associations, local education authorities, trade unions and other interested bodies. We have taken their views into account in drafting the order. The LEAs that responded to the consultation have broadly welcomed the additional flexibilities that the order offers to them. Taking advantage of some of the flexibilities offered by the order, LEAs may choose no longer to provide directly the staff and resources for drawing up and consulting on plans and implementing local policies. LEAs may have more of a contract
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management role in the future than day-to-day operational management, and they may want to develop and strengthen their procurement expertise. Many LEAs are already moving in that direction by focusing on providing strategic and community leadership rather than directly providing services. However, that is entirely for LEAs to decide for themselves in line with their responsibilities under best value.
One very important issue that needs to be at the heart of that process is the need for local consultation. We expect that LEAs will consult appropriately and involve local stakeholders. Our consultation document asked whether such consultation should be a condition of the order, and the majority of responses to the consultation were in favour of its being so. On reflection, however, we took a contrary view. It is likely in practice that any decision to seek voluntary outsourcing will follow a best value review, which includes the need to consult locally. We believe, therefore, that it should be for LEAs to ensure appropriate local consultations. We will emphasise the crucial importance of consulting appropriately when we issue guidance on the order to LEAs.
I should also stress that the company need not be a for-profit commercial company. It could be a voluntary organisation, a not-for-profit company or a company formed as a partnership or joint venture between a local authority and a commercial undertaking or voluntary body. LEAs will also be able to take advantage of the new freedoms on trading activity proposed in the local government White Paper to provide services for other LEAs if they wish to do so. What matters is that the service is provided by the organisation best placed to provide the highest quality service, whether that is public, private or voluntary.
Mr. Chris Smith (Islington, South and Finsbury): I have been following my hon. Friend's argument closely and I have no quarrel with the broad thrust of the draft instrument before us. Earlier the Minister spoke about the sense of direction and broad policy remaining very much in the hands of the LEA, while the delivery mechanism was contracted out to another body. In article 3 of the instrument, it very clearly refers to
''such person as may be authorised in that behalf''.
If someone is authorised in the way envisaged by article 3, is the Minister certain that the LEA retains the overall power over strategic direction?
Mr. Timms: I am grateful to my right hon. Friend for drawing my attention to that point. I can give him the assurance that he seeks. I agree that it would be quite wrong if that were not the case. It is essential to the process that we have put in train that overall responsibility is retained by the local education authority, and I am confident that the order will achieve that.
Mr. Phil Willis (Harrogate and Knaresborough): The right hon. Member for Islington, South and Finsbury (Mr. Smith) raises an important issue. It is one that, under the School Standards and Framework Act 1998, already affects authorities such as Islington,
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which was ordered by the Secretary of State to have all its services contracted out. That contract was given to Cambridge Education Associates. The same applies to Bradford, where the local authority was ordered by the Secretary of State to contract out its services to Serco and other private sector organisations. Does the Minister accept that in both those sets of circumstances, and others that may arise out of the 1998 legislation, the local authority does not have control over strategic arrangements? They are, in fact, handed over to the private sector company, or indeed a not-for-profit company, that is brought in to run services on behalf of the local authority.
Mr. Timms: I think that the hon. Gentleman's characterisation of the arrangements in those places and elsewhere is not completely right. However, those are very different circumstances from those envisaged by the order. It provides for an entirely voluntary process in which a local education authority, for its own reasons, decides that it wishes to enter into such an arrangement. No intervention is envisaged on the part of the Government.
The situations to which the hon. Gentleman refers are different circumstances in which a failure has been established, and an intervention made by the Government. Even in those interventions there isparticularly in the two instances to which he refersan important and substantial relationship between the local education authority and the contractor, and it is not the case that the LEA has no further part in the decisions. The precise arrangements do vary among the different authorities where there has been intervention. There is a good and effective relationshipone of considerable influencein the cases to which the hon. Gentleman draws attention. I would emphasise that they are different from what we are envisaging in the order, which is an entirely voluntary process for local education authorities.