UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 649-vii

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

EDUCATION AND SKILLS COMMITTEE

 

 

FURTHER EDUCATION

 

 

Monday 24 April 2006

BILL RAMMELL MP and PHIL HOPE MP

Evidence heard in Public Questions 562 - 665

 

 

USE OF THE TRANSCRIPT

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Oral Evidence

Taken before the Education and Skills Committee

on Monday 24 April 2006

Members present

Mr Barry Sheerman, in the Chair

Dr Roberta Blackman-Woods

Mr David Chaytor

Mrs Nadine Dorries

Helen Jones

Mr Gordon Marsden

Stephen Williams

Mr Rob Wilson

________________

Witnesses: Bill Rammell, a Member of the House, Minister of State for Lifelong Learning, Further and Higher Education and Phil Hope, a Member of the House, Parliamentary Under-Secretary of State, Department for Education and Skills, gave evidence.

Q562 Chairman: Ministers, while people are settling down and making themselves comfortable, can I welcome you both, Bill Rammell and Phil Hope, to the deliberations of our Committee. We have been looking forward for some time to seeing you. As you know, we thought it was an appropriate time to look at further education, what with the Foster and Leach Reports. It seems to us a good time to do an overview of what is happening in FE and what the hopes are for the future, that is the sort of inquiry we will be conducting. We were thankful when you suggested delaying slightly because it is a much better time to talk to you after all the reports are out and the White Paper has been published, so thank you for that guidance. That does not mean to say we will give you any easier time today than we might otherwise. Normally, when ministers come in front of us - I do not think either of you have appeared in front of the Committee before, it is your first innings, good - we usually give them a chance to make a short introductory statement, and you can either take advantage of that, we would welcome that, or go straight into questions. It is up to you two.

Bill Rammell: Just very briefly, Chairman. We welcome the opportunity to appear before you. I think the FE White Paper, which was our response to Foster, demonstrates a continuity of reform coming through the Skills White Papers, through Foster, through the LSC's Agenda for Change and now our White Paper. I think overall it has been reasonably well received and it has given greater coherence, focus and recognition to the FE sector, which I think we would all acknowledge, historically, has not felt sufficiently valued. I think it is a really important step forward.

Q563 Chairman: That is it?

Bill Rammell: Yes.

Q564 Chairman: Phil, are you happy with that?

Phil Hope: That is fine.

Q565 Chairman: Okay. Let us get going. One of the criticisms which we picked up after the publication of Foster was that some people were disappointed it was not quite radical enough, certainly in terms of structural reform. What do you say to the people who say, "Why are we delivering FE in the way that we deliver it? We do not need a vast body to deliver on regular education"? We do not have a big intermediate body between the Department and the delivery to schools. We have quite a small organisation in higher education, the Higher Education Funding Council, between the Department and universities. Why do we have this vast Learning and Skills Council with an enormous number of employees and an enormous budget? What is so special about FE? Why should this money not just go direct to FE at the delivery point?

Bill Rammell: I think there are a number of points there, Chairman. I think if we attempted to fund directly from the Department without any intermediary body, certainly I do not think we would get the level of attention to detail that we need on the ground. We are talking about a budget of something like £10.4 billion. I know there are a number of critics of the Learning and Skills Council but I think it is important not just to compare the LSC with some sort of ideal but compare it with what went previously. If we think back to 2001 there was incoherence within the system, a lack of strategic focus, there were inequalities between different areas. Although I would be the first to admit - and I am sure Mark Hason (?) would say this as well - the LSC is by no means perfect, there has been significant progress over the last five years, significant improvements in learner numbers, very significant increases in success rates from something like 59 per cent within FE up to now 75 or 76 per cent. There is a much stronger focus upon the skills. When you look at the White Paper, the focus that we are giving on the economic mission and the need for skills for employability is particularly important. Structurally the LSC has brought employers to the table, particularly through the council structure, in a way that did not happen previously. Were we to simply say we had made that progress and we are now going to tear it all up and we are going to have a direct funding link from the Department directly to colleges, I think we would lose out significantly.

Q566 Chairman: It sounds a little bit, Minister, if I can say this, like when Ofsted comes in front of us. Ofsted claims that everything that has been improved in schools is because of Ofsted and we are not always convinced that is the case. In the case of further education many of us would argue that the real improvement in skills and further education comes from hard-working lecturers and hard-working staff at hard-working colleges delivering, responding to leadership but leadership comes from a variety of directions, from ministers and elsewhere. It is still the case that it is a big bureaucracy. It is a big bureaucracy and a big budget. If it was delivered with more lecturers, more support staff and more front line delivery a lot of people would be quite pleased about that, would they not?

Bill Rammell: I am the first to admit that actually the real change that takes place, whatever direction we give from the Department, whatever the LSC does, comes down to lecturers and support staff within colleges up and down the country. I very much agree with you upon that. I think the framework within which those lecturers are working, within which the colleges are existing, has to be right. If we compare where we are today with where we were prior to 2001 certainly I think - and there is evidence to support this - that the framework is better. When you talk about the size of the LSC, when it came into being it reduced its administration costs by £50 million. It is currently going through another root and branch restructuring at the moment which I will acknowledge, and the LSC will acknowledge, is difficult but that will free up an additional £40 million which can be directly reinvested into the front line. That £40 million is out of an overall administration budget at the moment, excluding capital, of £219 million. I think that is a very significant gain which will be very firmly redirected to front line provision. Unless we are going to fund directly from the Department, and I think there would be some real downsides to that and that cuts directly across the general thrust of policy direction that we have been pursuing in recent years of ensuring that the Department is not a direct service provider that sets the overall strategic policy framework, unless we are going to go against that then I think we would have been wrong to say, "We are going to do away with the LSC". That does not mean, however, in any way, shape or form that I think we are at the end of the evolution of the LSC. I think we need to see the restructuring through that is taking place at the moment. I also think, as we set out within the White Paper, there needs to be - very much as we have done within schools, if you like - an intervention in inverse proportion to performance so that where colleges are doing well, where the inspection reports are positive, there should be less of a focus coming forward from the LSC and the LSC should concentrate on those areas where there is a failure of performance and they need to intervene very directly.

Q567 Chairman: Minister, a lot of people do not want to get rid of the LSC, they would just like it to be a more focused and strategic body, a bit more like the Higher Education Funding Council. Some of them would argue that they want it to be more independent because at the moment it really looks like an outpost of the Department, does it not? You do not find great bold statements or initiatives coming out of the Learning and Skills Council chairman or chief executive, they are very hesitant to be too bold because they see themselves as very much under the shadow of the Department.

Bill Rammell: I think neither Mark Case nor Chris Banks are very reticent when they are in my office and we are discussing these issues.

Q568 Chairman: In public. That is a very important point, is it not? They might be very frank to you in your office but what happens when they step outside and talk to this Committee, to providers, to the Foster inquiry?

Bill Rammell: I think if we are looking for strategic leadership within the sector, at one level in terms of the structure, yes, that comes from the LSC but the area that I am really keen to see us develop is the leadership within the institutions themselves where we need bodies such as the Association of Colleges and particularly the newly formed 157 Group who will act as advocates and champions of the sector. I think that is very properly their role. I do not think that is a public role that the LSC should take on but I can assure you that we do have very frank exchanges of views between ourselves and the LSC about the right way forward. I think that is the kind of relationship that is positive and beneficial to the further education sector.

Q569 Chairman: Minister, if I shift tack a little, there are two things that come out when you talk to experts in this field. One is about the size of the LSC, why do you need this vast individual organisation compared with HE and regular school education? On the other, they say why are we so hamstrung by so many intermediaries, so many organisations that check on us and regulate us do not give us a chance to get on with the job? We have heard ministers - your predecessors - saying they are going to get rid of a number. I know you might well say, "Okay we have not got ALI any more, we have moved ALI into Ofsted" but that leaves an awful lot of other intermediaries that the FE sector is responsible to, does it not?

Bill Rammell: It was a key finding from Andrew Foster's report that the FE landscape is quite complicated. I think we have responded to that. Before I come on to that I want to reiterate the point about the significant reductions in staffing and overall number terms that have taken place under the LSC. This is nowhere near the organisation that it was in 2001 and it is going through a further process of rationalisation and reduction at the moment. Yes, we have recognised it is a complicated environment, that is why certainly the ALI-Ofsted merger was the right way forward, I think. I remember as a backbencher when the two organisations were first set up and struggling to justify why we had these two inspection arms, and I think we have come to the right conclusion. The pulling together of LASDA, the Learning and Skills Development Agency, and the Standards Unit within the Department under the new Quality Improvement Agency that has been launched and will commit its three year development plan in the coming months is a further positive step forward. We will over time look for further rationalisations which will make it much clearer. One of the things that we are positively doing is making it much clearer what the delineation between the roles of the Department and the LSC are so that it is clearer for colleges on the ground. There are a number of functions that we have had within the Department, such as basic skills, learner support and offender learning, where we are transferring those properly to the Learning and Skills Council. It is a more coherent and rationalised landscape but I think that is a process that will continue over time.

Chairman: Thank you for those introductory answers. We will push on and continue a little bit about the overview. Rob Wilson has some questions to open us up.

Q570 Mr Wilson: You published your White Paper on 27 March and included a response to Foster, recommendation by recommendation. I would like to know have you had any discussions with Andrew Foster since the date of publication of the White Paper?

Bill Rammell: Not since the publication of the White Paper but I had a series of discussions with him after the publication of his report. I think he did indicate publicly at the time of the launch of the White Paper that he was broadly very content with the policy direction we were moving within, within this White Paper. To put that into context, he came forward with 80 recommendations, 74 of those we have endorsed within the White Paper, the other six we have not rejected, we have just implemented them in a different way. The point I made at the beginning in my introductory statement was I think there is an awful lot of coherence in the policy development that has run through the successive skills White Papers, the LSC's Agenda for Change, Andrew Foster's report and our FE White Paper. Some people might say that does not make it very exciting because there is not a big clash but I would counter that by saying I think there is a consensus that has been established about the direction in which we need to move.

Q571 Mr Wilson: We have not seen much comment in the press from Mr Foster, you are summarising his response really as generally happy with what you have come forward with?

Bill Rammell: Yes, I think if you looked on the PA website, he put a statement out on the day of the launch indicating that fact.

Q572 Mr Wilson: Okay. There are 74 recommendations you have agreed with, can you just say where the areas of difference are that you found between yourself and Foster?

Bill Rammell: It is not a difference of fundamental principle. Let me give you one example where we agreed with the overall policy thrust but we have done it in a slightly different way. Andrew Foster recommended that we should bring together all the key stakeholders within the FE sector three or four times a year, chaired by the permanent secretary at the Department. We took the view that was a really important initiative, not only to pull those people together, to ensure we were getting the balance right in terms of the new relationship that we wanted between FE colleges and the LSC and the sector, but also to police the implementation of the White Paper. We thought that was sufficiently important that it is going to be chaired by the Minister of State. That is not a fundamental difference of principle, it is simply implementing it in a slightly different way.

Q573 Mr Wilson: There are no fundamental differences of opinion between yourself and Sir Andrew Foster?

Bill Rammell: No.

Q574 Chairman: I just thought we would get that clarified. Did you need to bring forward a White Paper because obviously a White Paper is a precursor to legislation and, as far as I am aware, there is not much legislation required for what you propose in the White Paper, or perhaps you could put me right on that?

Bill Rammell: I think there are a number of areas where we anticipate that there will be a need for legislation. Firstly, before I come on to legislation let me make a more general point. For all sorts of reasons I think historically there has been a feeling within the further education sector - and Andrew Foster characterised it as the neglected middle child within the system - that FE has not got the attention that it deserved. Quite apart from legislation I think it was really important that we pulled all the policy development together and focused on the necessity and the importance of the further education sector. I think that was an end in itself. Beyond that there are elements of change that will require legislation and we cannot guarantee when we will come forward with that. There is a normal process to be gone through inter-departmentally but I would hope that in the near future we will have an FE built to enact those pieces of legislation.

Phil Hope: I would just say one other thing. The processes that Sir Andrew Foster put into place engaged the sector very comprehensively. We were very impressed by the way that he went about his business. I think his report had huge support out in the field among both providers and employers for the recommendations and way forward that he was developing which made it helpful to us in developing a White Paper, which is a statement of Government policy as opposed to independent review, which was to respond positively to what Andrew Foster had to say. I think it was a very productive process to work in that way, to arrive at a statement of policy and hopefully legislation when and if we come to do that. I think it is an important point to make about how Andrew Foster went about his business being such a creative and productive process.

Q575 Mr Wilson: I would not disagree with any of that but why pull it together as a White Paper which is slightly misleading when there is so little legislation required to support it?

Bill Rammell: There is. I think we are making some fairly significant changes. For example, some of the powers that are currently vested in the Secretary of State for intervention in colleges in the cases of failure, are now going to be put in the hands of the LSC. I think at the moment there is sometimes a perception that there is a really high bar if you are going to get the Secretary of State to intervene in the case of failure. Handing those powers on a day to day basis to the Learning and Skills Council will be a positive step forward. It is about getting the balance right between freeing up those institutions that are doing well but also a tighter focus where things are going wrong. There are some elements of change which will require legislation but I think the White Paper itself has enabled us to have a focus upon the further education sector which virtually everyone I speak to within the sector positively welcomes.

Q576 Mr Wilson: The piece of legislation you talk about was quite a small one. Give me a bigger, sizeable, chunkier piece of legislation which this requires?

Bill Rammell: I am not saying that there are huge changes that will flow from the White Paper but certainly there are some changes which will come forward. I will reiterate the point I made earlier: the very fact that we have a White Paper has led to a very beneficial focus upon the work of further education colleges, which is probably overdue.

Q577 Mr Wilson: I do not seem to be getting an answer to the question, we seem to be going around in circles. A White Paper is a precursor to legislation. There does not seem to be much legislation. I understand about pulling everything together in one place but why a White Paper when there is no real legislation at the end of it to be dealt with?

Bill Rammell: I think there is some legislation that is flowing from it.

Q578 Mr Wilson: It is miniscule really, is it not?

Bill Rammell: I think there is quite a substantive piece of legislation which will come forward. If what you were looking for was a White Paper which said we needed fundamental restructuring within the further education sector, I do not think that is the best way forward. It is about seeing that continuity of reform that has taken place between successive focuses on the further education sector and has in part already led to an improvement in results. We want to see those taken further.

Phil Hope: I would go further and say the White Paper also puts in place and articulates very clearly a very significant step change in the way that the FE will relate to employers, particularly in terms of a demand-led system for delivering training to the adult workforce. I think that is a very important and significant step and it will require, frankly, significant and substantial change by the FE providers in the way they go about doing their business. That does not necessarily require legislation but it does require Government policy to be very clear about the direction of travel that we expect it to happen and how funding regimes will change to deliver that. I understand your question about legislation framing in the White Paper but White Papers do a lot more than just press ahead with legislation, they actually make it very clear where Government policy is going and the direction of travel.

Q579 Mr Wilson: Would you agree with me that the reactions to the White Paper from within and outside this sector have been quite mixed?

Bill Rammell: No, I would not take that view actually. Something that both Phil and I have made a virtue of in the last year is going up and down the country talking to people on the front line. My very strong sense, talking to providers, is that there has been a broad welcome to the messages within the White Paper. I think it is important to stress as well that a number of the changes that we are proposing are born from that direct contact. An example on the 19-25 entitlement is something I have learnt in Government and politics is that if you hear the same thing in ten different places within a matter of weeks then you are fairly certain you might be on a real issue. That brick wall that people have been hitting at the age of 19 is a very strong message that we both received within the last year. I think that has been one of the elements of the White Paper package that has been most widely supported.

Q580 Mr Wilson: You do not agree with me that there is a mixed reaction but certainly some of the reactions we have seen have said it was mixed. There have been some good reactions but there have been some like the NIACE who have said it was a "... missed opportunity to address the balance of investment between full and part-time students as well as people preparing to enter the labour market, returners to it, those seeking mobility in it and those who have left paid employment". That is pretty mixed, is it not?

Bill Rammell: I think there is an issue. We have very good relations with NIACE but there is a fundamental debate about where you spend money within the system. I make no apology for the fact that this Government has significantly increased funding to the further education sector by something like 48 per cent in real terms over the last nine years. We are rightly focusing expenditure on the key priority which is 16-19 year olds with adult basic skills and the roll out of the national employer training programme. That does mean that there are not, relatively, as many funds as were previously the case to fund other forms of adult education. Phil might want to comment upon this. That is one of the issues that we proactively debate.

Phil Hope: One of the areas where there is a lot of agreement is around personal and community development where we have a ring-fenced fund of £210 million. We are rolling out now a series of new partnerships led by the LSC at a local level to energise not just the spend of that £210 million, which is not a ceiling but a floor for capturing more resource from local authorities - indeed the health expenditure is about raising people's awareness and education around health matters, voluntary organisations, community groups and many others at a local level - to take what is at the moment quite a patchy and incoherent programme of work at a local level into a much more coherent organised strategy and hopefully capture more resource into a coherent strategy at a local level. That is something that is large in the White Paper and which I know NIACE are very keen, in particular, to play an active role in helping us to deliver.

Q581 Mr Wilson: I spoke to my local principal at the Thames Valley University, which is in my constituency, and he raised three specific areas in which he has concerns. The first of which is that this is going to be too heavy on failing colleges; secondly, he is worried about the proposed expansion of sixth forms and concern about the schools drifting into more and more vocational subjects and, finally, about cutting back on adult learning which Thames Valley University has done already and is being viewed generally as a much lower priority.

Bill Rammell: Let us try and address each of those in turn. Too heavy on failing colleges, this is similar to the debate we had within the schools area, and the way I normally respond to that is by saying if you had your child or someone within your family going to an organisation that was consistently failing I think you would want something done about it. We are, in a very real sense, mirroring the reforms put forward within schools within this reform package and saying that there will be a 12-month period, a notice for either a college that is inadequate or one that is barely satisfactory or coasting and that we do in those 12-months expect improvements.

Q582 Mr Wilson: To be fair to him I think he was concerned that there are only four per cent in this category, whereas around 50 per cent of school pupils leave school without a full Level 2 achievement. I think he was comparing the two and schools do not seem to be getting the same hard time that perhaps the FE colleges do.

Bill Rammell: I think if you go and talk to teachers or head teachers within schools they might take a different view to that. To get the figures into context between the first inspection round and the second inspection round there has been an improvement in terms of the numbers of colleges that were deemed to be inadequate. It started at 19, that figure is now down to eight. However, there is a broader group of colleges that according to the inspection evidence are either barely satisfactory or coasting, which is defined as satisfactory but not improving. There are about 50 of those colleges, which is about 12 to 15 per cent of the total. I think it is right and proper that we do not just focus on the ones at the very bottom but the group above it, we want to see improvements in that area as well and that is why we are saying in those circumstances there would be intervention. There would be very strong support, particularly through the newly established QIA, to help those colleges develop but I think that is the right focus. On the second criticism in terms of the expansion of school sixth forms, one of the things that we have done within the White Paper is very much to level the playing field because we made the policy announcement last year that there would be a sixth form presumption for a successful specialist school to be able to expand and take on a sixth form. We have now said within this White Paper that for a successful FE college, particularly to meet the demands of the 14-19 agenda, and the need for diplomas, there will be an equivalent ability to expand. Again my very strong sense, talking around the FE sector, is that levelling of the playing field has been very strongly welcomed. Thirdly, in terms of adult learning, there is a balance to be struck and when we talk about the dramatic and significant expansion of Train to Gain, the national employer training programme, focusing upon people who have been left behind, who are in the workplace and do not have the equivalent of their first full Level 2, I think it is absolutely right that we do focus attention and resources upon those people. That will mean that there is not as much money as historically has been available within other areas and that is where we do need a better balance of contributions between the state, the employer and the individual. Phil, do you want to comment?

Phil Hope: Just on that point. Certainly courses that will be under pressure are the short courses that do not lead to qualifications. I would emphasise that in those areas where people value those courses, whether it is individual learners or employers, an increased contribution from fees, indeed full cost recovery courses where they are valued, can continue and we would want them to continue to be run. Certain colleges have taken that challenge on through communication, through the work they have been doing with their communities, I am thinking of Brighton, for example, that has managed to sustain increases in fees and increased numbers of learners. This is the challenge and the fee guidance that we put out suggests good practice for different colleges to respond in that way to those adult learning courses that may not be able to qualify because they do not fit the priorities the Bill has outlined. I just want to pick up the second point about expansion of sixth forms. You mentioned the development of vocational, and presumably you are referring there to the new diplomas. I do not want to get into the territory of the Bill which currently four of us, at least, sitting in this Committee will be taking when we get to clauses 61 and 62 of the legislation, Chairman, but we will be looking very long and hard at the importance of these new 14 specialised diplomas that have to be delivered through a partnership, the 14-19 strategy between schools and colleges to make sure that every young person has that choice of a specialised diploma which meets their needs to be delivered by colleges and schools working collaboratively together at a local level. I think that is, frankly, a fantastic opportunity. As I say, I do not want to rehearse the arguments that we will go through in Committee but I think that is a very important part of the new direction colleges will claim at a local level in working with other partners.

Q583 Mr Wilson: Just to tell you the effect that these policies have had on Thames Valley University. It has resulted in them closing all their community location venues, of which there were about 15 in Greater Reading, and withdrawing all their ICT outreach venues in the town and they have had to pull 250 full-time equivalent student places which is saving about a million pounds. That is the effect.

Phil Hope: As I say, Chairman, the issue here is about the opportunity the colleges have got to take the courses that they were previously running and to market those courses with an increased contribution in fees from those taking part. As we focus on the priorities of 16-18s of Level 2 qualifications within the adult workforce planning things like skills for life, Chairman, and an expectation that there will be an increased contribution up to 50 per cent by 2010 from individuals to pay for their courses that do not lead to these qualifications, we know that colleges which go out in the community, market in that way and sell those courses in that way, those courses that are valued by those employers can continue to run. I think it is very important that the Committee appreciate the importance as we steer down these new priorities that colleges take these opportunities. We had evidence from a Mori opinion poll that showed that learners and the community out there do say they expect we say a 50 per cent contribution towards the cost of a new course, actually most people do not even know they are going on courses which are heavily subsidised to the tune of 75 per cent or 721/2 per cent already. When this is explained and talked about and comparisons given people say, "Well fair enough, we should be paying more as a contribution towards courses." They may be short courses for people's leisure learning or courses of that kind, the opinion poll definitely showed it is reasonable to expect a higher contribution. The challenge for the colleges is to carry on running those courses at higher fee levels or, indeed, full cost recovery levels by going out to the community to explain the value that the courses have and the funding requirements for them.

Bill Rammell: Can I add one word to that. There is about £100 million at the moment nationally that colleges forego in terms of fees that they could raise. One would imagine, given that figure, that there would be a link between - for want of a better phrase - between the socio-economic level of prosperity within a local area and a lower level of fees contribution. In fact, if you look at the evidence across the country that is not the case. I think part of this is a real determination on the part of the college to proactively go out and sell and communicate its fee strategy. The Brighton College example is a very interesting one. They have doubled their fees at the same time as year-on-year increasing significantly their learner numbers. They have done it through going out into the community, actively consulting and actually making real comparisons with, for example, things like water charges and the amount of money that an individual pays to a further education course. I think if the college is determined you can make this work.

Q584 Chairman: We will be coming back to those in a moment. It is interesting that none of your reactions in terms of the broader picture mention Leech at all, either the intermediate report or what might be the point of having Leach reporting after the White Paper came out or before legislation. How does Leech fit into it all?

Phil Hope: In way, Chairman, it is the difference between supply side and demand side, if I can put it that way.

Q585 Chairman: Yes.

Phil Hope: The White Paper is primarily around the supply side of that. How we make FE ready to be able to respond positively to what I think Leech is going to be talking about, has already talked about in his interim report, but when his final report comes out later this year about the skills challenge, frankly the skills mountain that we have, both in terms of skills gaps and shortages in this country, and the graphs that we all know about plus comparisons with what is happening in France, India, China, the United States, that would be the demand side measures that we expect to flow from what Sandy Leach is going to talk to us about. The importance about the FE White Paper is can we put further education into a position where it is the engine room for delivering that skills agenda? Is it fit for purpose and what do we need to do to make it more fit for that purpose? As I said earlier, the importance of colleges being able to engage with employers and respond positively to what employers will demand through the new funding mechanisms for courses that are relevant, that are at a time and place when those employers need them and are delivering the kinds of skills and qualifications that their workforce require, having built a platform of employability through the focus we have on the 16-18s and on the Level 2 qualifications through the entitlement to Train to Gain, if we get that supply side right when Sandy Leach's second report comes out, I think we will see how the supply and demand side meet together.

Q586 Chairman: Will you have a White Paper Mark II?

Phil Hope: Whether we have a White Paper in response to Sandy Leach is not for me to be able to say at this moment in time.

Q587 Chairman: There is a logical consistency that might have argued you have a report on the supply side and the demand side and then you write a White Paper.

Phil Hope: All I would say to you is we know we have a skills mountain to climb, the interim report has told us that. We wanted to make sure we had the supply side in good order with these changes to raise quality, to put the focus of government spend where government spend needs to be, on skills for life, on Level 2 qualifications, on the employability of the workforce in a good position, so that when Sandy Leach's report comes out the sector knows the direction of travel, the role it has to play in raising the skill levels of this country.

Bill Rammell: I think as well, Chairman, it is one of these situations where you are damned if you do and damned if you do not. If we had said "Okay, we are going to hold back on the FE White Paper until the summer when Sandy Leach brings forward his very important report" I think we would have then been open to criticism, "It has been since October last year that Andrew Foster had come forward with his report and the Department is silent". Sometimes you cannot get it right.

Q588 Chairman: Does the Department have an historic memory?

Phil Hope: In what respect?

Q589 Chairman: A memory of the recent history. When the Dearing Report came out, which if you remember was about FE and HE, the principles were right, were they not, that the contribution should come - we argued this as much in terms of HE, top up fees and all that - from the individual who benefits from education, it should come from the employer and also from the state representing society. Some of the early pilots that are coming in Train to Gain are almost suggesting, on the one hand, you are charging people more money as individuals to do courses that do not lead to qualifications and, on the other, you are replacing the funding that the employers were paying for training in the first place. You are substituting state money, Government money for what employers were putting in in the first place.

Phil Hope: No, that is absolutely right. So in the roll-out of the pilots into the full Train to Gain that started in those 20 areas from 1 April already and will roll-out nationally on 1 April, the lessons we have learnt from the pilots about ensuring we minimise that dead weight, which I think is what you are referring to, Chairman, are absolutely critical. The important point here is that we need to engage with two groups that we were not engaged with before. The first are employers who have not traditionally trained at all, the hard to reach employers, and the new brokerage system as a result of learning from the pilots is giving specific and clear guidance about how they go about doing their business to engage with those hard to reach employers. Moreover, for employers who are already engaged in training are we reaching the hard to reach employees, those employees that those employers currently training are not reaching either. Those are two major priorities that are out in the guidance to the brokers as we roll-out the Train to Gain programme to eliminate the problem that you have described. What is crucially important about the whole picture of that is just getting more employer investment into training. We think the brokerage system, the Train to Gain, the offer for the Level 2, it is right that where there is market failure at Level 2 that is where government subsidy should go but Train to Gain is not just going to be about Level 2, I have to say, it is a training service to employers to raise their whole game, whether it is apprenticeships, Level 3 indeed as well as Level 2, to really capture and gain employer investment in training their own staff and to realise the benefits to sell, market, understand the benefits that training your own workforce can deliver. Train to Gain is not just about Level 2, it is a complete service to employers to raise that total investment across the piece. I am hoping Sandy Leach will see and reinforce the importance of those kinds of programmes and the importance, indeed, of public and private sector employers investing more in their workforce.

Chairman: Thank you for that. Let us drill down a bit more on adult learning. Gordon.

Q590 Mr Marsden: I want to keep the focus on adult learning not least because we have taken a very strong evidence base not just from NIACE, who were referred to earlier, but also from the Association of Colleges, the Association of Learning Providers and others who are really quite deeply concerned - and I stress it is the unintended consequences, there is no criticism of the intention of Government - about the unintended consequences of your funding priorities perhaps being too narrowly focused on young people. What I would like to explore with you is, you have already said today about the expectations about the changes in the funding elements between employee, employer and the individual. Those are very broad percentage figures. They are not going to be replicated in the same way in the same places on the same courses and yet the implications of getting that wrong in terms of courses laid off never to be recovered, significant groups of people on the edge of social exclusion, dropping out of the system equally, perhaps, never to be recovered are profound. What I would like to ask is what are you going to do if some of the forms of adult learning that concern has been expressed about do tail off and tail off very rapidly and adults are either unwilling or unable to make greater contributions? Do you have any form of contingency plan for dealing with it?

Phil Hope: First of all, I would disagree that there is such a thing as a too narrow focus on young people. This is not about either/or, it is both/and. We both have to stem the flow into the workforce of under qualified young people, young people without basic skills, indeed young people without the equivalent of a Level 2, five good GCSEs going into the workforce. I think that is absolutely critical and we have to raise participation rates for 16-18 year olds from the 75 per cent we have at the moment, which I think is unacceptable, up to a target of 90 per cent. It is a big challenge, and that is what we have to do. Indeed, we have to make sure that there is not that cliff when they leave at 18, and that is part of the Level 3 entitlement for 19-25 year olds, so we get a 16-25 entitlement where young people can see real pathways of learning right the way through. I have to say expenditure on adult learning is something around £2.8/2.9 billion and has been rising and, therefore, a significant part, just under 50 per cent of the budget goes on adults. The question is what is the focus of that budget. We have made very clear what we think the focus of the budget should be for adult learning, the priorities for that being a full Level 2 qualification. There is that Level 2 entitlement and there is the Train to Gain that will roll-out to deliver hundreds of thousands of level 2 qualifications in the workforce to meet employers' needs. Your question is, okay, if that has that effect, what is the effect on other adult learning courses that are being delivered? We made the point earlier that we believe those courses, if they are valued by learners and by employers, can continue because they can be run by colleges and other providers at a higher fee level or it can be a full cost recovery level for those employers. There is, of course, full fee remission for those particular individuals in the community who are on income related benefits, and we know that is a very important part for the kinds of communities you are referring to, Gordon, around the individual communities and their needs. There is another group of course --- I am sorry if I am answering at length, Chairman, but I think it is important we understand the importance of this.

Q591 Chairman: We did have a bit of trouble with Ivan Lewis with long answers, you are following in a good tradition, Minister.

Phil Hope: I apologise. A final point I want to make is about what I call stepping stone provision. For many of the communities that we are describing it is very important that if individuals start a course, a short course, a literacy or numeracy course, an ESO course, that course leads somewhere. We are quite concerned, I think we say this in the White Paper, that a number of those courses do not add up to a point of progression. People do a course and it does not create for them added-value as an individual. It does not provide them what they describe as a stepping stone, it is not a stepping stone on to progression on to Level 1 or, indeed, Level 2 qualifications. Now that is part of the change that we want to see happen, either through the way the PCDL might be developed but also through the development of the foundation learning tier that we talk about in the White Paper which provides - and that will be built into the framework for achievement of new qualifications - a coherent package so that when individuals begin the course they know that the course develops their basic skills, adapts their needs and also leads on to higher qualifications. There is a genuine vocational pathway on the way through. That is the challenge for all of us nationally and locally.

Q592 Mr Marsden: I think many of those points are entirely reasonable and particularly the stepping stones point. It is, of course, however, the case at the moment that a number of courses which are effectively stepping stones courses are either not marketed effectively as such, or alternatively, in some cases, not recognised as such by the LSC. If you talk to parliamentary colleagues they will give you numerous examples from their own casework of those sorts of situations. Under the new dispensation that you are outlining, what are you going to do, first of all, to make that assistance and, if you like, to have a dialogue with the LSC to make sure that stepping stone courses do lead somewhere and, secondly, to make sure that the LSCs themselves are flexible enough in their recognition of what are enabling courses to get people who have been on the social margins or people who have been out there back into that progress? One of the things which concerns me is that we are talking time lag here. This funding mechanism is to some extent a super tanker, it is very difficult to turn it around. You have to get it right as early as possible because what you will get to start with is the perception that all these courses are going and there is nowhere to sign up for them and all the rest of it. Once those courses have gone it will be very difficult to get them back in the frame even if they are marketed effectively at that stage. There needs to be some early intervention, does there not, to make sure that courses which are genuinely stepping stone courses are not lost from the mix because of the increased fees?

Phil Hope: I think I would agree with that, Chairman. I think the issue is quality, a judgment by the LSC of the quality of the courses that have been delivered to know that they are doing what we all would agree is required, that these courses are genuine, that they do add up to a coherent package that provides people with qualifications which when accumulated together arrive at and can help towards that magic key of the full Level 2 equivalent qualification. It is that job at a local level. Now I believe that is where we have to do a whole lot of work to ensure that at a local level we do challenge providers to demonstrate that is what those courses are delivering within local communities. I think that the way that courses are developed and marketed and link together is a challenge for the providers and the LSC to work at a local level. That is a matter of judgment, Chairman. I will not deny we cannot make that judgment necessarily from the centre but what we can do is create the foundation learning tier framework which provides the opportunity for people at a local level to see how in terms of the national framework they can develop the provision and the service particularly for those people, perhaps not those who qualify for fee remission - although it is a major marketing job to ensure those people do take up those courses - but those who are just above fee remission levels to ensure that they see the actual value for them and their progress both in their personal lives and also in the opportunities to get jobs that pay better because they have undertaken these courses.

Bill Rammell: Can I just add a word to that. I do take your point about the danger of unintended consequences and politically over the last year, as this process has been going through, one of the things we have held very firmly to is the need to rationalise and sort out what happens below Level 2. I have consistently been making the argument that has been going up and down the country that if you properly map provision against the national framework then it gets funded. What one begins to recognise is that there is both good and bad both within the framework and outside of it and we do need a much better system to determine what really does lead to progression in terms of the stepping stone provision through to Level 2. What we set out for the first time in the White Paper is a commitment, overtime and resources allowing, that we would turn that into an entitlement. If we can achieve that I think that is a really radical step forward.

Q593 Mr Marsden: The White Paper talks about the LSCs having negotiated income from fee targets with colleges to make sure that fee income is raised rather than learning opportunities cut or simply under-funded. Obviously that is a laudable intention. What are you going to expect the LSCs to take if providers do not manage to meet their agreed income from fee targets? Are you just going to allow those providers to cut those courses?

Phil Hope: Frankly the market will work in that way. If the college does not raise the fees it will not have the income to run the courses. The pressure will be from the LSC to say, "Live up to your targets" but actually if they do not get their targets for raising the fees they will not have the money and that will be the key that will drive those colleges to either do better at marketing to raise their fee income and to make choices about which courses they offer. It will be the very fact that they are not getting their fee, it will not be the LSC, "you have not reached your target that is going to be the pressure", it is going to be if they have not raised the cash from fees that will be the pressure and change the performance and behaviour of the college.

Q594 Mr Marsden: You have accepted the analysis of the City & Guilds and others about the impact of the demographic gap on skills certainly in the next ten years, let alone the next 15 years. Are you confident again that the structure you outline in the White Paper and the priorities you outline in the White Paper will give you enough wiggle room over the next few years to be able to meet that skills gap from a larger and larger percentage of older, lesser skilled or, in some cases, unskilled people?

Phil Hope: We have some very challenging PSA targets to achieve on exactly that point, particularly in terms of those achieving Level 2 qualifications. Now by 2010 we are expecting 500,000 individuals to be getting a Level 2 qualification, that is a very big target. We are on target for that at the moment but I think we will have to look very carefully, which is why we are focusing and ensuring that Government expenditure is increasingly delivering that Level 2 outcome. It is that employability that is absolutely critical because the more they get to achieve their Level 2 qualification, firstly people have got a Level 2 qualification, they are better employees, they are more productive, they are more profitable, if I can put it that way, and they are making more money themselves; secondly, they are into learning and the possibility of them wishing then to go on to Level 3 qualifications and to carry on developing their skills in the workforce is much more likely. Achieving that Level 2 target is an absolutely critical part of what we are trying to achieve. In terms of demography, in terms of young people, of course, even though the demography means there will be fewer young people coming through, we want to increase the participation rates.

Q595 Mr Marsden: Of course.

Phil Hope: And we think that will roughly balance off.

Q596 Mr Marsden: Presumably an important part of that strategy for older learners over the next five to ten years is going to be encouraging them to take part in their own funding. Obviously the White Paper has talked about the trialling of the new learner accounts and we know the history of that but I think most Members of this Committee would welcome the fact that you have returned to that as an initiative. I think the initiative, and the principles behind it, speaking for myself, were extremely laudable and sound. Obviously the devil is in the detail and everyone is going to be looking at the detail. Are you in a position today to give us any indications as to what a learner account is going to look like and how will payments be made to individuals and how providers will draw down the money?

Phil Hope: We cannot give a lot of detail at this moment, Chairman. Certainly we are going to take it very carefully so we do not repeat the mistakes of the past. A number of lessons have been learnt from how the old ILA system was operating to ensure that we do not fall into those traps, if I can put it that way. We are going to be piloting the Level 3 learner accounts in two regions - and we have not yet chosen the regions before that question gets asked, Chairman - to make sure that we do this in a way that engages learners. You are absolutely right to suggest that if we give individuals, in the way that we know from the past, an account and a feeling that this is theirs to spend on their development we know that raises demand. We have chosen Level 3 because that is where we know the information is coming to us that the next demand for skills in the economy is going to be required. We will choose two regions, we have not chosen them yet, to pilot this in so we can ensure that it comes through individual learning accounts. We have not designed all the detail yet but it is not going to be cash in a bank account that they spend in that way, it will be money that they know is theirs to spend on their learning. The critical thing is whether we can maximise all the opportunities so that not only is there that learner account money that is theirs, a proportion to spend on their Level 3, but other resources that are around as well can be added, things like adult learning grants and so on, so that an individual can really see what they have available to them that really will unlock the opportunity for them to engage in Level 3 learning.

Q597 Mr Marsden: When do you expect to be able to say something more about the pilots and the details? It would obviously be helpful to the Committee in finalising its report to be able to say something further in that respect. I wondered if you could give, not a timetable that we would hold you to, but any broad indication?

Phil Hope: We are looking at it actively now, Chair, as you can imagine, so this autumn is when we are hoping to be able to publish more details about how we expect the pilots to look and how we will go about delivering so we really capture both the full benefit that the learning accounts can bring, as well as safeguarding against the potential abuse we have experienced in the past.

Q598 Mr Marsden: Have you made any decisions yet about how learner accounts are going to be operated? We know of course that the original ILAs were administered by Capita; can we take it that Capita will not be administering the new scheme?

Phil Hope: I think we can say we have not made any choices yet, Chair, about how we are going to do it but we are not going to repeat the mistakes of the past.

Bill Rammell: It will be the tried and tested payments system that we have at the moment, and not a new bespoke system, which was the mistake that was made under ILAs.

Q599 Mr Marsden: Can I ask about groups of people that particularly need to be reached. There is the welcome initiative in the White Paper, and you referred to a pilot scheme of £5 million, which will be operated across eleven districts, particularly addressing the needs of women learners. If those pilots proved successful, will you want to roll that principle and that target group of women out at a fairly early date to a much broader group of people?

Phil Hope: There is a total of £20 million that has been allocated to some of the recommendations that came out of the Women and Work Commission report, Chair. Obviously, if a pilot is successful, then we will want to see ways that we can learn the lessons from that and roll it out more widely. Obviously, questions of resource come into that, but it is vital that we get more women coming in to training, and, I have to say, into non-stereotype, non-gender specific forms of training, skills and employment. That is part of the real challenge that we want to make some real progress on.

Q600 Chairman: It sounded like half-hearted hope just now, though, Minister! Many of us understand why the Government is flirting with using a quasi market system, and we are not criticising that; but when you say "if they do not get the money" - it is very different. If Jeff Ennis was here from Barnsley, he would say it is very difficult to raise that money in the social and economic environment of Barnsley, compared with the social and economic environment of Kensington. Are we not, surely, you and I and Labour members of the Committee, concerned that in some areas many of these broader courses will perish because there will not be the market there and the ability to pay? Is that not the case?

Phil Hope: I visited Barnsley just recently and met a number of adult learners who were in a school, taking part in an adult learning centre that had been set up in the school. A very good learning network has been set up across Barnsley. Initially, adults are brought in to do things like first-aid courses and craft courses, but integrated into their initial - "that is what got them there" - were good life skills courses, literacy and numeracy; and they were moving on from - and it was a "right from the start" part of the process - doing those kinds of courses into doing level 1 and level 2 qualifications. There were people who were taking time off from work to go in, as well as people who were unemployed, and mums and dads who were returning to the classroom.

Q601 Chairman: So you are not taking the first stepping-stone away.

Phil Hope: That was an excellent example of stepping-stone provision, where they really thought through the point of how you do not just do a craft course - "thanks very much, I am not back into learning"; you do a craft course that is linked to other learning and progression into other forms of literacy, numeracy, or other qualifications; and which would indeed take you on to further qualifications. That is an excellent example of what we were describing earlier about good-quality stepping-stones; and it has genuinely got a progression for the individual which really does give added value to their experience.

Bill Rammell: Also, Chair, there is an issue about priorities here. This is not a government that has penny-pinched with regard to FE; we have seen a significant expansion over the last nine years. However, if we are to spend more on the really important priorities that we set out - and when we came forward with the skills white papers and talked about the National Employer Training Programme, nobody was saying, "that is the wrong thing to do". If you were spending that much more on those key priorities, there is not as much relatively for those other issues, and we have to find different ways to fund them. If you look at the international comparisons, then the amount that an individual contributes towards their further education in this country, compared to others, is less. I do think that we need to have a better balance of contribution.

Q602 Chairman: If the stepping-stone is not LSC funded, the stepping-stones will disappear: you have said that in your evidence so far.

Bill Rammell: Which is why we are establishing the foundation learning tier. At the moment there is both good and bad inside and outside the national framework. We have to get it right to demonstrate what really does lead to progression; and then we are committed over time, as the money is available, to create that as an entitlement. I think that will be a very positive step forward and will tackle some of the criticisms that are coming forward today which we pick up all the time as we go up and down the country.

Q603 Helen Jones: Can I return to this idea, because it is something that concerns the Committee a lot. You have talked about the foundation tier. I think what concerns us is that many of the courses that bring people back into learning - exactly the things Bill was talking about in Barnsley - are already going because of the funding decisions that have been made. We understand the reasons for those funding decisions, but the fact is that those courses are going, and the people who are being hit hardest are not those who do leisure learning, for which I have a great deal of respect, but those who have had a bad experience in education in the past and want to do the sort of courses that are not threatening, which do not necessarily lead to a qualification immediately; but get them back into enjoying learning. Many of the courses in my area, parents access in schools. What are we going to do if those courses disappear, because starting them up again is a mammoth task, is it not?

Phil Hope: I want to distinguish between the PCDL courses. This is the £210 million that we have ring-fenced and maintained to ensure that those courses that are funded in that way are not - we deal with the quality, but that there should be this kind of learning that gets people back into learning for the first time who have had a bad experience of education. Critically, those courses might not lead to a qualification; those are the courses that will -----

Q604 Helen Jones: Indeed, because if they did it would put them off.

Phil Hope: I think it is both and not either/or here; in other words courses that are offered through PCDL that will not necessarily lead to a qualification, to get people back into learning, to do with active citizenship and regeneration. Those kinds of activities are absolutely critical to some of the poorest communities. What I do know about that expenditure is that it is very patchy across the country, and very different from one place to another. It has grown out of particular enthusiasms by different authorities and different individuals who champion these things in different ways. We would like to see that delivered in a much more coherent way across the country, so that it is meeting the needs of those people who need it most, and so that it does capture not just that £10 million but also other resources that are providing this kind of learning and capturing people back into learning for the first time, delivered by the local authority, funded by the local authority, funded by voluntary organisations, and indeed as I mentioned to an earlier question, delivered by the Health Service, which can see learning for better health behaviour as being partly what they deliver at a local level. At the moment, all of that happens, but it happens in a fairly unconnected, unco-ordinated way. That is why we have asked the learning and skills councils to go out and lead new partnerships at a local level, to ask: "What can we get going on here? How can we make the most of this? How can we ensure that there is not overlap between two courses being provided in two different places but doing the same thing; that others are being captured and others are not being lost?" There is a whole positive strategy, which I am very enthusiastic about, and which we need to drive forward to ensure that at local level those courses do not get cut. I do want to distinguish between that and courses outside of PCDL, which are adult learning courses which are under pressure; perhaps they are courses that do not lead to a qualification and do not lead to progression. If those are to be funded, we need to get the fee level balance right so that it can either be run through - these are not the courses I know you are referring to, but if people are doing Spanish because they want to go to their second home in Spain and they want to take that course - and the Mori poll tells us and other people tell us that it is reasonable to expect those individuals to pay a higher contribution towards the costs of those courses, which are not the courses that are concerning you at the moment.

Helen Jones: Two things arise from that. My question was: if these courses disappear, as some of them are doing, certainly in my area, are we not giving ourselves a mammoth task in building them up again? The second point is about the adult and community learning. I understand what you are saying about people who are doing Spanish to go to their second home, but the consequence of that in areas where there is a low-wage economy is that it actually restricts the amount of learning available to people, and therefore increases the social division in learning, does it not? How are we going to tackle that? I pose the question bluntly: why can our bin men not learn Spanish, if they want to, for their holidays?

Chairman: Probably employed by a Spanish company.

Q605 Helen Jones: If you would fund someone to go to university to learn classical Greek, as we do - which has many values but is not immediately skills for employment - what is the philosophical distinction?

Phil Hope: I think the distinction I would make would be that if the individual is going to go on to getting a level 2 qualification - if there was progression for those individuals, if we could make a judgment that by taking part in these courses it would help their employability either to get into work or to be a more productive person in the workforce, and from there lead on to other training and -----

Q606 Chairman: Come on, Minister; you and I know there is a certain sort of arrogance about this in the sense that - how do you know and how do we know what sparks - most of us round this Committee would say there are many people in our constituencies who we would be delighted if any course brought them through the door of somewhere where they started learning. It is a certain sort of arrogance where we say, "Oh, but not for that sort of course."

Phil Hope: I would argue, Chair, that we do want people to be attracted into learning, but we want them to be attracted into learning that takes them somewhere, not learning that -----

Chairman: That is the arrogance; knowing when -----

Helen Jones: Minister, we do not say that in HE, do we?

Q607 Chairman: No.

Bill Rammell: But the individual in HE does contribute significantly towards the cost of their education, and that is part of the debate that we are having here.

Q608 Helen Jones: And earns more, as you tell us!

Phil Hope: Yes, and indeed if people did get a level 2 qualification, we know that they will earn more and they will have the potential of going on to level 3 and indeed level 4 qualifications in due course.

Q609 Chairman: In higher education, Phil - surely, hearing you in a different circumstance you argue passionately that what we are trying to do in HE is to make those people from poorer backgrounds able to embark on any course they like free - and indeed with bursaries.

Bill Rammell: Not free because they will ----

Q610 Chairman: Well, free in effect.

Bill Rammell: No, no.

Q611 Chairman: If they get a bursary and they get all the backing! I have heard you say: "That is what we want to do." Why do we not do it in FE?

Phil Hope: Absolutely - sorry. If we are drawing the analogy correctly, they will still be contributing to the cost of their higher education and they will still be paying it back post-graduation. This comes back to a debate about priorities. I have some sympathy with the views that are being put forward, but there is significant protection for the poorest people. Those on means-tested benefits will be exempt from the fees approach. Second, above and beyond that, through things like the level-2 commitment - and we are now doing trials at level 3 which will move beyond that - we have just moved in terms of the 19-25 entitlement. We are doing what we can within the resources that are available, which is significantly more resources than were there in the past. But you cannot do all of it at all of the time at the stage you would wish.

Q612 Helen Jones: Does that not still leave us with a problem; that you can have exemptions for people on means-tested benefits; you may increase fees for those who are able to pay them; but people who are caught in the middle of that are those that are employed but not on particularly high wages. Have you done any profiling of people undertaking FE to see exactly who is benefiting from it and who is missing out?

Bill Rammell: I can give you one statistic, which I think is quite telling. From some research we did in 2002 or 2003, 90 per cent of people with incomes over £31,000 a year took part in learning at some stage within the previous three years. For those with incomes of £10,000 or less, the figure was around 50 per cent. That was before any of this fee-charging regime came in. The point I am making is that by directly targeting those poorer members of the community - if you are a means-tested benefit you are exempted, or through the entitlement - 19‑25 or the level 2 entitlement - that is a very effective way of ensuring that those people on lower incomes do get access to further education.

Q613 Helen Jones: Can I look at the adult and community learning? The Foster report recommended that some adult and community learning would be dealt with through local authorities or voluntary organisations. How do you envisage that being funded? Are authorities going to get any more money if they take on responsibility for organising and running such courses, or will they be expected to do it out of their existing education budgets?

Phil Hope: Different local authorities have different track records about delivering adult and community learning, as we know, and that is part of why I want us to roll out new partnerships at a local level between the LSC, between local authorities and indeed between others who have an interest in providing this kind of work. There are a number of targeted funds that the Government has had for communities that experience most deprivation and that are most disadvantaged that also could be better co-ordinated and captured at a local level to ensure that we attract and engage with those learners, at whatever age, in developing their personal and vocational skills, and that we target it on the kinds of courses that deliver what we have just been describing, genuine opportunities for progression. That is the roll-out of the PCDL with local authorities at a local level. That is a challenge over the next two or three years, and will be happening in a way that we describe in the White Paper.

Q614 Helen Jones: I may be being a bit dense this afternoon, but I am not sure whether that was a "yes" or a "no".

Phil Hope: The answer is that different local authorities spend different amounts on adult and community learning because they are entitled to do so; it is their decision about what they do with their resources. We would want to encourage local authorities to see the value in investing in adult learning, along with other partners like the LSC, like the voluntary sector, like the health sector, in new partnerships at a local level. If we take the total money available for all the different agencies that are there to serve the needs of local communities, how can we do that better and make sure that the quality is good and leads to progression, so that everyone plays their part so that individuals are not missed out in some way and so that particular areas of learning are not missed out in any way?

Q615 Helen Jones: A lot of this work is to involve voluntary organisations and charities. How will you ensure that the people delivering the learning are sufficiently well-qualified to deliver it? Again, we could - I am not saying we would - end up with poorer communities getting poorer quality of learning unless we put the appropriate systems in place.

Phil Hope: You raise a very important point about quality of delivery of courses, particularly in terms of adult basic skills. This is something we have paid a lot of attention to in the Skills for Life Strategy. We are now insisting that those people delivering Skills for Life Strategies have a minimum level of numeracy and literacy themselves, obviously, but also up to a level 4 qualification, to ensure that in the delivery of, in this case numeracy and literacy courses, they are suitably qualified so to do. From memory, from September 2002 we have insisted that the new trainees coming in must develop their level 4 qualification in order to deliver Skills for Life courses. I think you have put your finger on an important point about quality. By 2010 we would expect all the workforce delivering Skills for Life courses to be properly qualified to be able to deliver those courses.

Q616 Helen Jones: The level 3 entitlement for 19-25 year olds - none of us are entirely sure whether that allows you to achieve level 3 in stages, or whether you have to take all of it together. Can you enlighten us?

Phil Hope: We have not got to a point yet - although we are trying to do so with the Framework for Achievement - whereby individuals can take units of study that accumulate up into a full level 2 and level 3 qualification. At present we are describing the level 3 entitlements to a full level 3 qualification, so individuals would need to join up to and take part in a full qualification as part of their learning; so it is the former, not the latter. We have an aspiration towards the way you are describing it, because it suits learners' needs as well as employers' needs to unitise learning in that way.

Q617 Helen Jones: That is exactly the point; it is not the way most adults learn, is it? Do you agree that we do need to allow them to learn in stages to fit their learning around employment and so on?

Phil Hope: Yes, I do very much agree about that. It is a challenge to deliver that, but that is in essence where the Framework for Achievement task is taking us so that we can have a clear framework with units where people understand the value of the unit, the credits they need to accumulate and then -----

Q618 Chairman: Can you answer Helen's question, to be clear? When will we know?

Phil Hope: We have pilots running out at the moment, Chair, this year, to try and pilot the way that the units might look. When we have done the learning from those pilots - and I had a steering group around the committee looking at all the very complicated issues between awarding bodies, the QCA, providers and so on about what it might look like. I am hopeful that next year, once the pilots have been trialled, we will be in a better position to roll out the new framework for achievement following that. I cannot give you exact dates until we see the results of the trials and the pilots this year.

Q619 Mr Chaytor: The White Paper states there are 44,000 19-25 year olds carrying out a full level 3 qualification now; but surely of that 44,000 the majority must either be exempt from fees automatically because they are in receipt of the relevant stage benefits; or their fees must be paid by their employer; or they must be sufficiently comfortably off to pay the fees themselves! How many new students would you expect to be attracted by the level 3 entitlement for the full course, and who will they be; and why would their fees not already be paid by their employer or their families or the state by exemption -----

Phil Hope: The difficulty is that most colleges taking on a 20-year old will not charge them the fee, even though they should be charging them a fee so to do, which would be 25 or 27.5 per cent. It is because we are increasing the fee assumption to 50 per cent that we were very concerned that it would have a totally unintended consequence of expecting 19-25 year olds to pay 50 per cent of their fees and they would not take part in the learning if they were asked to do that. This means that those colleges will receive the full amount for the courses they are providing for 19-25 year olds, when they should be collecting fees now; and secondly it means employers will not have to pay a contribution to their fees because they can claim their full level 3 entitlement. We reckon that around 45,000 students will qualify for the full ‑----

Q620 Mr Chaytor: Is this not a mechanism likely to increase the number of students taking level 3 -----

Phil Hope: It might well do so, and that will be -----

Q621 Mr Chaytor: ------ and it is a means of softening the blow for the existing cohort as a result of the increase in the proportion of the fee to be paid by the student.

Phil Hope: What we did not want to do is to expect students who had got their level 2 by the age of 19 but hadn't moved on to a level 3 qualification, but then had realised the value of a level 3 qualification, to be disadvantaged, to be dissuaded from going back into learning at level 3; and this entitlement which starts from September 2007 will do that.

Bill Rammell: I think you may get some expansion as a result of this policy change, and we will have to deal with that; but this is a real issue in disadvantaged communities where arguably people progress at a slower rate, go out of the system and come back. I think that through this change, which is significant, we have made it that much easier for people in those circumstances to do that.

Chairman: We will move on to Quality, Competition, Responsiveness; and Stephen and Nadine are going to lead on this.

Q622 Stephen Williams: Minister, the White Paper states that the Learning and Skills Council will get a new remit to promote diversity, choice and specialisation and provide competition in the FE market. Foster also said that failing departments and failing colleges should face a contestability review to see whether a new provider could provide a better service. It seems to me that there may be two scenarios where there might be a new entrant into the FE market, either to take over an existing provision where it is deemed that the existing college is failing or to provide that choice that a new entrant absolutely would be coming to the market. What is the mechanism by which you are going to attract in these new providers; will it be a competition or a tendering process?

Bill Rammell: Certainly in certain circumstances there will be a competition, but let me set out the three ways in which new providers can - and when we talk about new providers it does not necessarily mean people who are currently outside of the system; it may be another FE provider from elsewhere in the country - but certainly it may be in the case of failure, where we are having a more robust intervention regime with colleges that are failing. Secondly, there will be a responsibility on the Learning and Skills Council every five years to conduct a review. That is not competition for its own sake. If things are working well, then there is not a necessity to have a competition; but if the LSC does identify that there is a need for improved quality, a need to promote innovation or to expand provision, then it will run a competition, and that will be advertised, and providers will be able to come forward and make a proposition. Thirdly, under the core and commissioned element of the LSC's agenda for change, 10 per cent of the budget is going to be kept back each year for open competition between providers, and that is something that is now built in to the system. All of that, I think, if we get it right, can lead to an environment in which we drive up quality and responsiveness through that process.

Q623 Stephen Williams: Where do you think these new providers are going to come from? I heard you say to the Chair that some of it may be from the existing sector; now you are effectively saying that if Blackpool College were in trouble that the City of Bristol College could bail them out. That does not seem very logical to me - or are you anticipating there will be new providers from the private sector mainly?

Bill Rammell: I think it will be a combination. The CBI is very keen to see that opportunity for new private sector providers to come in to the market. I also think - and this is where it is important that we get the language right in describing this - there are real opportunities for highly-performing existing further education colleges as well, either to go into a competition directly to put forward a proposition that that FE college will make that provision, or we might be talking about individual departments through the process of saying that there is a 12‑month intervention process. That is not necessarily a judgment just on the whole institution; it might be a particular department, and you then might be looking for a neighbouring FE college to take on that responsibility. There might as well be a greater use of federations between successful FE colleges and ones that are struggling, so there will be a variety of ways of taking this forward.

Q624 Stephen Williams: I was not aware of what the CBI had said. Clearly, in A level tuition there is an established private market in private schools and colleges, but in skills provision is there really slack out there in the market? Are there people that want to come into the market to train people in place of existing FE provision? I know that in some parts of the private sector that works, and I was trained in the private sector to get my professional qualification. People learn English as a foreign language in the private sector rather than in the state sector; but in the sort of services provided by FE colleges, do you think there are people out there who are willing to enter the market, which might be quite a risky market in terms of attracting students into it?

Bill Rammell: Certainly the indications, talking to people like the Association of Learning Providers and others, is that there is a willingness and an interest in expansion. In terms of the risks associated with this, they are not coming into a stagnant market; over the next few years we are going to be expanding the number of places by about 50,000. On top of that - and I do not want to overstate it because by and large colleges are doing well - through the focus of that small number of failures you may well get opportunities from that point of view as well. There certainly are providers who are willing to come in and take on this proposition; those will not exclusively be from the private sector; there will be real opportunities for public sector providers as well.

Q625 Stephen Williams: Will the Government be providing assistance for some people to enter the market, for example capital assistance?

Bill Rammell: The capital regime for existing providers - I referred earlier to the levelling of the playing-field; that if you are a successful existing provider you will have a means to get access to additional capital. We are not going to be going out to external providers and saying "come in and we will pay for you to set up your institution".

Q626 Stephen Williams: Moving to powers of intervention, there are a couple of places in the White Paper, at paragraph 5.7 and 7.26, where you are proposing to give the Learning & Skills Council new powers to direct a governing body to dismiss a principal or to "eradicate poor provision", which was the phrase in the White Paper. Presumably, going back to the ping-pong that the Minister had with Rob Wilson earlier, that will require legislation at some point: is that the case?

Bill Rammell: It will, yes.

Q627 Stephen Williams: So you cannot do any of that until you have got your bill, and you do not know when that will be.

Bill Rammell: No. We can clearly set out the direction. I think within this White Paper we have made a very sound case, notwithstanding the processes that have to go on inter-departmentally. I think we have a very strong case for legislation, and I would hope to see that come forward as quickly as possible.

Q628 Stephen Williams: The White Paper is in danger of giving the Learning and Skills Council the twin approach of being a friend and mentor of colleges, but also this organisation is going to recommend they do some pretty awful things. Is there a danger that there is going to be a good cop/bad cop relationship here? An article I perused earlier, written by our colleague Gordon Marsden in the Manchester Guardian says that there is a danger of having a hybrid funding organisation and Ofsted together. Would you like to comment on that?

Bill Rammell: I think we are trying to get a combination of both self-regulating, developing institutions that are performing well; and in those circumstances, frankly, the LSC will be intervening far less, both from its own point of view and from the inspection regime as well. We are expecting over time that if you are doing well, the average number of days in the second inspection cycle will be about a 50 per cent reduction compared to the current picture. I think that that message is very warmly welcomed within the sector; that if you are doing well and achieving your targets, if you are delivering through the inspection regime, then, frankly, people get off your back and you get on with it. We are setting out some propositions that in those circumstances, where providers are doing very well, we might move to three-year financial budgets; we might move to a single data return each year, with much less intervention from the LSC. There is a real goal there for good providers. You may characterise this as good cop/bad cop, but I do not think that is quite accurate; but at the same time as that, where there are real instances of failure, where it is not working and not serving the needs of the community, you need a tough approach where you do say, "this is a serious situation; here is an improvement notice; on average you have 12 months to turn that round". There are then a variety of ways with external support, through an improvement advisor, through the QIA, to help the college deal with that situation. It is only in extremis, when they have gone through that process and it has failed that you might see the closure of the college and someone else taking over. I think it is possible for the LSC to manage both those approaches through its relationship with colleges. What will help is the much more localised focus that the LCS will deliver through the development of the 148 local teams across the country under strand 7 of the Agenda for Change.

Q629 Stephen Williams: One of the keys to high standards will be the quality of the workforce. Sir Anthony Foster recommended there should be a workforce review, and he recommended that it should be done by the Department. In the White Paper you have recommended various things to do with continuing professional development, and that is fine, but you also appointed Lifelong Learning UK to undertake the detail of this review, rather than doing it within the Department. Why is that?

Bill Rammell: If you look at the Department's five-year strategy, we took the view that as a general rule we wanted to set the overall policy framework and strategic goals, but the detailed implementation was much better done by others, by intermediary bodies. It was in that context that we took the view that that focus on workforce quality should be undertaken by LLUK. That does not mean that we will just say, "there it is; get on with it" and have no dialogue with them. I think this is a really important initiative. You have highlighted the commitment to continuing professional development. That 30 hours per year, which will be a responsibility for the individual, their line manager, and will be built in to the inspection framework for the college, is a very important way, alongside professionalising the workforce, as we have made the commitment to do by 2010, to continue the progress that has been made and drive up quality across the board.

Q630 Stephen Williams: One of the factors that affects the quality of anybody's workforce is the pay they are offered. Paragraph 4.33 of the White Paper states that you were aware of the concern about pay as one of the reasons why colleges are not able to offer such attractive salaries for people teaching the same subjects as some schools, because of this funding gap that other people want to come in on. You have made a commitment to start narrowing that funding down: when will it be eliminated?

Bill Rammell: This issue has been around for some significant time, and the criticism I have heard from the sector is that there have been warm words from government, but there has never been a timetable to deal with it. My sense within the sector is that the announcement that Ruth Kelly made at the Association of Colleges Conference last October has been very positively received. That gap was identified as being 13 per cent. We have made a commitment and we will deliver by 2006/2007 a reduction to 8 per cent; the following year it will reduce to 5 per cent. You can only give commitments within the framework of the CSR, but we are committed over time to eradicating that. In terms of the pay that is available for staff, we are working within a context in which there has been a significant increase in funding to FE colleges - 48 per cent in real terms. Compare that with the 14 per cent real-term cut that took place in five years running up to 1997! The overall financial framework is better, but I acknowledge - and I have regular dialogues with NATFE - that there are continuing concerns. We recently conducted some consultancy research through York Consulting that analysed the views of FE lecturers across the board, and pay was not - there were questions, but it was not the paramount concern that it is sometimes depicted as being. That does not mean that I would not hope that over time we cannot do more on pay, but it has to be within the financial resources that are available.

Q631 Stephen Williams: Acknowledging that extra funding has gone into FE, why are local sixth-form colleges, as have lobbied you recently - they acknowledge they are getting extra funding from one budgetary year to another, but they have also been successful in attracting more and more students, and the increase in their budget has not caught up in the increase in the number of students, so the funding per head has been diluted. Do you think that is a common experience around the country?

Bill Rammell: We moved a year or so ago to plan-led funding, which at the time was welcomed by FE colleges because it brought stability. Previously you could lose funding in year if you either under-performed or over-performed. The system we now have is that you agree the plan in terms of the learner rates and volumes with the LSC, and it is not adjusted in year. That sometimes means that you pick up additional numbers that are then open, through negotiation, to be built into the following year's financial plan; but there are more people who work on the stability year on year that has been brought by the existing system, as compared to those who say, "we have over-performed and in year we need an adjustment". I know that when he gave evidence to you, Mark Haysom was very insistent upon this issue that we need to get that planning mechanism more effectively correct so that we are not having that in-year turbulence.

Chairman: here is a lot of interesting stuff coming out of this session, so we are enjoying it. It is a pity we are not on television today. Perhaps the BBC cannot afford, with Terry Wogan's salary, to cover parliamentary business any more! Never mind, we will carry on. I did say when meeting some of you last week that as soon as we talk about skills we are not reported in this Committee, so we should flag that up.

Q632 Mrs Dorries: Can you tell me why you described Essex Local Education Authority as "the Taliban"?

Bill Rammell: I think we are on a different subject.

Q633 Mrs Dorries: We are not, actually, no; it will lead on.

Bill Rammell: As a constituency MP, within the framework of special needs education - and I think we have got the right approach at a national level - I have historically taken a view through my own constituency experience that the kind of choice that exists within the national framework has not always been delivered by Essex LEA, and those were the concerns that I was representing.

Q634 Mrs Dorries: Are you happy then that Essex LEA provides government advisors to the Government and has appointed two recently to the Government in the past few months, to work as advisors at the DfES?

Bill Rammell: Essex LEA covers a whole range of functions, and I am very pleased that they have a relationship with the Government. Just as you are a constituency MP, I am a constituency MP, and I do robustly make representations to my local authority on behalf of my constituents, and I am not going to apologise for that.

Q635 Mrs Dorries: I probably agree with you in terms of your analysis of Essex LEA - there are LEAs across the country that one may not describe in such terms, but there are a lot of good LEAs. Do you think therefore the reason why the LSC exists is because you do not trust the local education authorities? Is the purpose of funding going to the LSCs to fund FE colleges because you can control it and you can trust the LSCs, and that is why they were established, rather than the local education authorities?

Bill Rammell: No, I do not think that is the case at all. Within the White Paper we have made clear that there is a significant role for local authorities in terms of delivery for the 14-19 agenda, taking the strategic lead, pulling the partners together. However, I started this evidence session by talking about the importance and role of the LSC and comparing it to what went previously, prior to 2001, where there were different funding bodies, whether it was the Further Education Funding Council, the TECs, or local authorities. I think that by pulling that together - I have very robust exchanges with the LSC, I can assure you, about their performance; but in terms of what has been achieved we have brought coherence to that overall environment through the LSC. The focus that the LSC has enabled - the spotlight on the skills agenda, and bringing the employer voice within the system has been very significant, and that would not have happened if there had been local authorities managing in that way.

Q636 Mrs Dorries: Why not? Do you not think that if funding went to local education authorities - not that I want to happen - but if you, as the Government, put the funding through the local education authority do you not think we would see a greater parity and equality of funding between those aged 16 and 19 attending comprehensive schools and those who go into colleges and further education?

Bill Rammell: No.

Q637 Mrs Dorries: They are the poor relatives of education, are they not?

Bill Rammell: I have just set out in some detail the way in which we are rectifying that problem. When we talk about poor relatives, the issue of the funding disparity has been driven by the significant increase in investment that this Government has brought to education across the board, where there has been a significant increase in FE funding and certainly a significant increase in schools funding as well. The reason that I made the point that I did - you said should we simply not hand it over to local authorities - the key difference is through the LSC mechanism, particularly through the Council structure. We have brought the employer voice directly into the shaping of provision up and down the country; and that has brought a significant benefit that would not have been there, arguably, if had just been done through local authorities. However, one of the issues that we are grappling with across government at the moment is the need to ensure that local authorities are very coherently involved in this. In the ODPM initiatives of the city regions there are consultations. There are eight major cities at the moment, each of them in their different ways, that are looking to see how external partners can be involved in the skills debate and the skills agenda; and local authorities will be key within that.

Q638 Mrs Dorries: In relation to the measures you have spoken about today, some of us have been asking questions about the disparity of funding for that particular age group since we arrived last May. We do hear lots of words of encouragement, but a year on since we first came to the House, certainly a year since I first asked my questions, still we are hearing words and there has been very little action. What is the timetable? When will 16-19 year olds in FE colleges, who are usually children from lower socio-economic groups and socially deprived areas, be receiving the same funding as children in community schools do?

Bill Rammell: I wholly refute the accusation that all that has been happening is warm words. Since you came into the House there has been a very concrete timetable to reduce that gap. The financial year we are in at the moment - the gap as estimated by the Learning and Skills Development Agency is 13 per cent; next year that will reduce to 8 per cent and the following year it will reduce to 5 per cent. Those are not warm words; that is a big change and a big difference in the funding gap between schools and FE. My sense, going around colleges up and down the country, is that whereas in the past we might have been accused of warm words, there is recognition that we are moving on it.

Q639 Mrs Dorries: Will there be parity of funding after 2008? Will 16-year olds be receiving the same level of funding as in community schools, and will teachers teaching within FE colleges be receiving the same as those within community schools?

Bill Rammell: Our commitment, as resources allow - and the reason for that formulation - is that we only can commit in the three-year spending review period; but we would hope to move beyond that position of a 5 per cent gap by 2008 to eventually eradicate that gap. The gap is important, but I would make a broad point that the funding base in further education colleges is substantially better today than it has been in the past because of the significant boost in investment we have delivered over the last nine years.

Q640 Mrs Dorries: Why would you not - not, why have you put the money with the LSC -put it with the local education authorities? I know you said it is one monolithic structure, but why not, because LEAs look after every community school in the country and have done in the past? Why not put it with the LEAs.

Bill Rammell: I think you need more than just the LEA focus. The needs of employers, the employer focus, I do not think, given the LEA structure in this country, are delivered through that route. I do think that that is what the LSE additionally has brought to the table. You have to bear in mind that you would be going back on the incorporation of FE colleges, which was brought about in 1992. I just say: go and talk to some FE principals about whether they would welcome going back.

Chairman: She is suggesting it happened under a Tory administration!

Q641 Mrs Dorries: Would not FE principals prefer the money to go direct to them from government and cut out the LSC altogether - take away all that funding and give it direct to them? Surely they know how to liaise with employers; surely they are doing it at the gritty edge all the time? Why go through the LSC - this huge monolithic organisation?

Bill Rammell: Within HE education, which, as the Chairman pointed out, we have -universities are at pains to constantly reassure me that they welcome that intermediary body, and they do not wish to be funded directly from the Department. If you do not have an intermediary body, then you do have the Government constantly micro-managing. Whilst at one level there might be some attractions to some colleges, when it is reflected upon long and hard I think that being directly managed from the centre in that way is not a recipe for total success.

Q642 Mrs Dorries: Is that what is going to happen to trust schools then; are they going to be micro-managed? Why can they not operate in a similar way to the White Paper proposals for new trust status for schools?

Phil Hope: Bill is right; they have to operate within the context of the National Curriculum; but trust schools, I think, are a very positive development to enable external providers, very much building on the success we have had within specialist schools, to come in and promote innovation and drive within schools that can help within the most disadvantaged communities.

Q643 Mrs Dorries: What about local organisations, employers?

Phil Hope: Local organisations are important. To take your question directly, I have not had one college principal in the last year who has said to me "do away with the LSC and let us be funded directly from the Department".

Q644 Mrs Dorries: Is he likely to say that to you, do you think?

Phil Hope: College principals lobby me about all sorts of things all the time, and if that was on their agenda I am fairly confident they would be pushing for it.

Q645 Mr Chaytor: Minister, can I ask about the focus on skills as the base for the new FE mission. Paragraph 19 of the White Paper states: "This economic mission does not mean narrow vocationalism." If it does not mean that, what does it mean?

Phil Hope: Because the colleges will still be delivering A levels and the new diploma; but also, as we discussed earlier, they will be delivering what Sandy Leach described as the skills gaps and the skills shortages. They will need to focus on responding to that need out there, but in doing so will be delivering a broad base, including, I might add, courses for level 1 skills, and PCDL will be playing their part in that as well. However, the priority, the drive, the core mission being around skills is that that will be a major focus for them, particularly responding if we roll out the Train to Gain funding as well. It will be a new opportunity for them to fulfil that mission by going out to the market place and offering employers the training that they know they can provide at a quality that employers need.

Q646 Mr Chaytor: What will go?

Phil Hope: It will be a matter for each individual college to determine locally their priorities, but clearly responding to the skills needs of their local communities is a critical part of their core mission as we are laying it out. They will be responding to that core mission - that is where we want them to respond to be delivering. It does not necessarily mean things will go, but at a local level people will be making their own choices and deciding priorities within the funding envelope that they are given.

Q647 Mr Chaytor: If the impact of the new demand-led funding system, which will move to 60 per cent of the total budget eventually being demand-led - the impact of that and the impact of the introduction of the brokering system for Train to Gain significantly shifts the provision of skills training from colleges to private providers. Will it be open to a college to diversify out of the narrow vocationalism in order to survive, or would you expect the college then to close or merge?

Phil Hope: I think there are huge opportunities under Train to Gain for FE colleges. At the moment some 28 per cent of employers choose to use colleges to provide their training for them, and those that do provide that training - they get 80 per cent saying it is satisfactory or very satisfactory.

Q648 Mr Chaytor: So would you expect that percentage to increase?

Phil Hope: I would; I would expect the colleges to become far more responsive to employers' needs and to deliver the kind of training, funded through Train to Gain - and indeed, as employers get captured, as it were, through the Train to Gain, to deliver apprenticeships and other vocational qualifications for the existing workforce, so this is a big opportunity for colleges to develop. I know that colleges are now already looking at the invitation to tender that was published today by the LSC to see how they are going to take part in making their presence felt so that the brokers, when they are advising employers, can clearly see what FE colleges have to offer.

Q649 Mr Chaytor: Later in the White Paper it states that: "As general FE colleges increasingly focus on the core economic mission, local authorities and launch providers may focus on the wider personal fulfilment and community programmes." Is that an imperative? Is that Government policy, or is that going to be a matter for local determination?

Phil Hope: It should be a matter for local determination, but we are charging the LSC to establish new local partnerships with local authorities and others - voluntary organisations and others - to audit what is being provided at a local level, to find out where those gaps are and then to maximise all the resources locally to make this happen. In fact, they may be led by a local authority. The LSC in fulfilling that task may say to the local authority, "Let us bring this partnership together and make this happen". It is not happening at the moment.

Q650 Mr Chaytor: Will there be an incentive in the funding system to segregate out the adult and community programmes from the strictly skills-based, professional programmes?

Phil Hope: There is the ring-fencing of that PCDL budget. That is what we are referring to, and that is in itself an incentive. We have written in the grant letter to the LSC that this is a task that they need to do and that this money is ring-fenced.

Q651 Mr Chaytor: Will that budget be shifted to the local authority?

Phil Hope: No. I would anticipate the partnerships - everybody bringing what they are doing t the table, sharing it, and then perhaps changing and developing what they are delivering at a local level. Now they have had that dialogue, had that discussion, had that assessment, and saying, "It is daft that you are funding it and I am funding it and we are both funding the same thing, and we are both not meeting the needs of the community; why do we not look at what we are doing and find ways of using that resource more creatively at a local level?" I would hope that they would be innovative in their way of going about doing that. It might be that the college is around that table, in that partnership, with a proud tradition and history, as it were, of delivering this and carrying on doing so. It may be that in other areas that has not been the position for that FE institution, and they will not be. That will be a matter for local partnerships to develop.

Q652 Mr Chaytor: So there would be nothing to prevent colleges that currently have a broad range of provision and have strengths in the adult and community work maintaining ----

Phil Hope: Certainly there will not be anything to prevent it at all; in fact we would want to see them creating better partnerships to ensure that what they are doing compliments what the local authorities and others might be doing, because at the moment the evidence is that that is not happening off around the country - that kind of working-together partnership delivering that kind of learning in local communities.

Q653 Mr Chaytor: Can I ask about the development of the specialist element in colleges? I understand the analogy with the specialist schools programme, but is it an exact analogy, because, clearly, within a given area, even in a large conurbation, there are far fewer colleges than schools and therefore it is less likely that students will move around college to college because of its specialism because it would be further to travel. So is this a curriculum improvement programme, or is it a device to encourage greater exercise of choice and requiring student to travel greater distances to get to the provision that they are looking for?

Phil Hope: The network of centres of vocational excellence that we have already has proven its worth in terms of raising the quality of vocational training that is being delivered, both 16‑19 year olds but also to employers who can make use of that facility. We are raising the bar on the quality of that network, and those CoVEs are going to have to go through a quality improvement process to ensure that they then qualify for that status. We are building in the national skills academies, as you are aware, as a new element; that is to say the first four are being planned at the moment. We want to have 12 of these, and eventually one per sector skills council, to be at the apex of - underneath a range of CoVEs under the particular sector skills council. All of that will be to drive up the quality and standard of training as well as the volume of training that is delivered; and for a particular college that takes on a CoVE or has a CoVE already, there are two things we expect: one is that they will become very good at what they do and better at what they do; second, not only is it an automotive code - not only does that have the ability to develop and train better training in that specialism, but we do expect it to have the effect it has had in schools, which is to raise the overall performance of the college; that the college gains reputation and it has that impact on the wider delivery of training by the college as the CoVE is seen to be so successful for that particular college.

Q654 Mr Chaytor: Would you expect there to be a CoVE in every area of the curriculum within a given travel to study?

Phil Hope: No. We have a combination, do we not, of sector skill requirements and different local requirements; so the skills base of Corby or of Newcastle and the skills needs and the manufacturing versus the service sector and so on, is very different from one area to another. It will be for the college, with the LSC to discuss locally that which meets the needs of that community. As we described earlier, if you get a particularly good college, good at a particular thing, it might want to confederate or be delivering that kind of training speciality in another area, or working with another college in another area, to raise the quality of that training in that other area.

Q655 Mr Chaytor: Is that model equally applicable to rural areas, where one college may serve a hinterland of hundreds of square miles?

Phil Hope: Yes, I think the challenge there is to be able to deliver different sorts of vocational skills training to very sparsely populated area. When it comes to delivering the level 2 and level 3 diplomas, we have to have ways of delivering that which are outreached to employers in local communities. We have good examples of doing precisely that, but we need to build on that across the country because it is not sufficiently replicated elsewhere.

Q656 Mr Chaytor: Can I finally ask about the review of reputation that the Foster report argued for and which has now been established. Can you tell us who is in charge of it and when they are going to report?

Bill Rammell: It is being driven across the LSC with the sector and with ourselves. I think this is a really important piece of work. I would anticipate it reporting by the back end of the summer, the autumn. It is a really important piece of work, to get champions at a local and regional and national level; and to get real advocates within the system. One of the ongoing debates that I have with the Association of Colleges is about the need to recognise that within the FE sector sometimes the glass might be half-full instead of being half-empty. There are challenges, and the sector needs to challenge us about what needs to happen; but actually, if we are constantly talking about the problems within the sector, whatever they may be, we send a message outside about how well or not the FE sector is doing, which is not in the best interests of the sector and does not reflect the progress that is being made.

Chairman: We are working you well tonight, but let us move to Oversight and Management. You ought to get some sort of honour for being so patient!

Q657 Dr Blackman-Woods: Before asking about oversight and management, can I ask a question about employers, because it is not that long since I left this sector. One of the things we had real difficulty with was employer engagement, and although I fully applaud the focus that the White Paper has on employment issues, I am just wondering how confident you are that you are going to get the employer engagement. Indeed, do you see employer engagement as the way forward, or are you happy to deal with proxies like sector skills councils or chambers of commerce; or do you actually want it to be employers? There are so many different ways in which you want to engage -----

Phil Hope: There are two things about this. For an employer who just has a workforce and says "I want to train my workforce" - frankly, they do not need to know or worry about what I call the wiring of sector skills councils, regional skills partnerships and the rest of it. They go to their broker and say they have a particular training need under Train to Gain, and they get that training need met quickly with a good training provider. Many employers of course - and we want them to do this - engage with the structures we have created to ensure that we create, with the sectors skills councils, sector skills agreements that map out the training needs and the training gaps and see how in partnership they can work together, maybe contributing to a national skills academy as we develop the specialism within the sector. I think different employers will be engaging in different ways. In terms of at the local level for the FE college engaging with employers, it is critical - and I am confident that FE colleges will respond really positively to this - and we have models like that in the Sussex colleges where they have looked at how they operate, how they behave, how they engage with employers, and completely transform the way that they go about doing their business, to such an extent that it is one of the bases for the quality marque that we will be developing for the years ahead. I think that this is a great opportunity for FE colleges to become much more engaged with employers in a whole variety of ways at a local level to meet those employers' training needs. With the demand-led funding, the funding system drives them in that direction as well. That is different from the infrastructure that we created to ensure that those training needs that we develop are fully thought through and developed in the sector skills councils and all of that area of structure.

Q658 Dr Blackman-Woods: Moving on to implementation, the Foster report said there should be an implementation unit within the DfES and then a kind of user group, presumably so that that group could monitor what was happening in terms of implementation. You seem to have gone for this ministerial standing group that brings in users and people who are involved in the direct delivery of FE. Can you explain why you went for that model?

Bill Rammell: There are two levels to it. Firstly, there will be a programme board of officials internally within the DfES, chaired by Stephen Marsden, who is the Director of Lifelong Learning and Skills. That group of officials - their responsibility will be to track the proposals, to track the implementation, to liaise with the external bodies to ensure that is happening. Also, we do want a body that will look at the relationship between colleges and the LSC and the Department, but also monitor the implementation of the proposals within the White Paper. That is the body that will be meeting within the next month or so for the first time. It will be chaired by myself. Phil will be there as well. It will bring all the key stakeholders together, as well as some of the trade union representatives, as well as some of the college representatives. One of the things that we did very proactively in drawing up the White Paper was to go out and establish sounding boards with different groups of principals and providers across the country, to get their input. Some of those will be represented on that body, so you will have the official group, and you will then have the group that is chaired by myself. However, I am keen to see that extended beyond that so that we keep some of that interaction directly with groups of providers on the ground and keep the dialogue going. That is the most effective way to recognise the consensus we have established and make sure we drive the changes through.

Q659 Dr Blackman-Woods: I think there is a degree of consensus that rationalisation may not have gone as far as it could go. I wondered whether that was something that we shared, and if it was something that the implementation group could keep on board, so that they could keep looking for opportunities to rationalise. I know the FE sector is always complaining about the number of accreditation and awarding bodies they have to deal with - inspection, and employers and employers' organisations; and I just wondered if that was something you had thought about keeping in your sight.

Bill Rammell: Certainly there are elements of rationalisation within the White Paper, and those will be driven forward. In terms of the accreditation bodies, that is something that Phil has been working on.

Phil Hope: There are two things: there is the whole quality improvement - and Phil mentioned earlier how that is being brought under the umbrella of the QIA; and there will be a clear simple system for giving support for quality improvement, which will bring together a lot of bodies that so far have been playing a part in that. On the question of awarding bodies and accreditation, the work we are doing around the framework for achievement is a critical part of the landscape here. I will not say it is not challenging, because there are a lot of very important vested interests taking part in this, but it is something we are determined to do. We are clear about where we want to get to, and that is the work of the trials and the pilots that are going at the moment, to ensure that we can know that what we are about to put into place works. What is critical is that you move from one system to another. You do not, as it were, lose things along the way, which is why - I know there is an urgency about this but in conducting it in an urgent way we do not make mistakes because there is so much at stake in terms of the credibility and robustness of the qualifications and the awarding bodies that deliver them.

Q660 Dr Blackman-Woods: I am conscious that we are running out of time, so I will follow that up a written question. The last point - and I am sorry to say this again, because I know I say it every time I see the two of you, but we do have a really excellent FE college in Durham that I hope you manage to come to see some time. Can you summarise briefly the three main differences that this White Paper is going to deliver for that FE college to help it address the challenges of the next ten or twenty years.

Bill Rammell: One is greater clarity of mission. One of the things that has bedevilled the FE sector over the years is that because it has had to pick up so many different responsibilities and duties, which it has done very well, it makes it somewhat difficult in the outside world for people to understand what it is doing; so a greater focus on the core mission of skills for employability. Second, the new entitlements that we have created both the 19-25 entitlement and, if we can get there - and we are determined we will - the foundation learning is here to ensure that we are properly identifying those things that lead to progression. I think that will be a key driver of reform. The third thing I would identify coming out of the White Paper is a much better balance so that we free up self-regulating, self-developing institutions that are moving forward and improving their performance. In those circumstances there will be much less intervention, but for those that are struggling there will be a greater oversight.

Phil Hope: I absolutely agree. I would voice the same thing: an improved quality of teaching and learning and, critically, a responsiveness to learners and employers, a real step-change in that. In regard to Durham, of course it is an excellent institution. We are trying to look at the best practice around in terms of teaching and learning, and responsiveness around the country, so that not one college but every college is delivering that kind of thing.

Q661 Gordon Marsden: On the relationship between FE and HE: I know in the White Paper you acknowledge that the role of FE in delivering HE is becoming more and more important, and we understand that. You also talk about LSC being a much more strategic body. Is there not a crucial role for the LSC, particularly in the regions, particularly when looking at regional skills strategies, to act as a chivvier, a bringer-together where there are good regional university clusters, with the RDA, to deliver the increased amount of FE going through into HE and to address some of the skills shortages that we are going to have?

Phil Hope: In terms of regional strategy you are absolutely right - through you, Chair. I wrote recently to the regional skills partnerships to ensure that the engagement with HE in each region was of a quality and of a regularity that ensured that this was the case. Bill mentioned the new partnerships at the city regional level - people at a local level looking at the needs. The engagement of HE in those city regional partnerships is absolutely critical if we are going to get complete - from basic skills right through to the higher level skills needs analysed and met within a region requires that kind of working. I think we have made a huge amount of progress on that in recent years, but it is critical that we use that infrastructure, the regional skills partnerships and the sub-regional partnerships to drive that forward.

Bill Rammell: I wholly agree with you. In areas where there is not necessarily a higher education institution, you need the LSC to be working with the Higher Education Funding Council to deliver that. We have already got 10 per cent of people doing degrees doing it through the FE sector. Those are people who arguably would not have done it if there had not been that opportunity through an FE college. I think that that is an area for expansion.

Q662 Mr Chaytor: On strategic planning for 14-19 you slipped in, in a very modest way, to the White Paper this change of policy that local authorities will now have the lead role for strategic planning. How can they have that strategic leadership role if they do not control the funding?

Phil Hope: What is critical here is that the collaborative partnerships - and we are learning from the pathfinders that we have established already and that are proving so successful - you have two funding bodies, local authorities and LSCs covering 14-16, 16-19; and they need to work, and have a duty to work collaboratively - and the bill reinforces that, if we ever get these clauses in the bill. However, we felt that there was still that possibility of a lack of the joined-upness despite that - so to reinforce the importance of creating a clarity that one organisation takes responsibility in a strategic way, an overall way, for the whole partnership that is operating; and that is the role that we describe in the White Paper. There will still be two funding streams but there is an important for the local authority to ensure that that is all working together at a local level. The LSC will still commission 16-19 provision, but will do so within a joint strategy, broad responsibility for which will be the local authority.

Q663 Mr Chaytor: the local authority will be able to determine the overall direction of funding.

Phil Hope: I think it will be a partnership at a local level.

Q664 Mr Chaytor: It says here that they have got strategic leadership.

Phil Hope: Indeed. It is their job to ensure that partnership, the 14-19 collaboration, is working effectively and to be accountable for that.

Bill Rammell: That strategic leadership - and it is important to be precise - is to develop, prepare and review the plan for delivering the 14-19 agenda and convening the partners. Just as we are saying no one school and no one college can deliver the 14-19 agenda on their own, similarly no local authority and no LSC on their own can do it; it has got to be a partnership.

Q665 Chairman: Ministers, this has been a very good session. One of the themes that seems to have been running through it - and there is an irony is there not that, as Bill Rammell said, the effect of that is an enormous amount of money has gone into FE over the last nine years, and that is good. You have also said that people are reasonably content with the money in terms of salaries. How do you square that then with the fact that there still is evidence of a lack of good morale in the FE sector? We pick up from the main players, the AOC and others, that there still is that feeling. Is it the LSC? Is it not the Government, but the LSC that is to blame for this? Would you identify the LSC as getting in the way of real achievement in terms of raising standards and participation? Is the LSC that you are too worried to tackle?

Bill Rammell: No, I genuinely - I mean, come on! People criticise the regime within any environment, and the LSC is the funding body and it will from time to time be criticised. I am certainly not one of these people who says that there is not a need for a further refinement, an evolution of the role of the LSC. It is changing and it will continue to change. But when you talk about morale within the FE sector - and I choose my words carefully because it is a debate I have had consistently with the Association of Colleges - I think some of the campaigns that are run by the AOC that focus on all the negatives and not on the positives, are not in the best interests of the sector. It is very interesting when you look, for example, at the development of the 157 group of colleges, who took a very different view towards the FE White Paper and the progress that has been made, as compared to the standard AOC line. I have found a significant disjuncture between what the AOC has said about the FE sector compared to my experience going up and down the country, talking to FE principals - all of whom can make particular criticism about the LSC, the Government and the environment within which they are operating; but it is far more often more positive than negative. We have all got a responsibility within this sector to really promote those positives, whilst acknowledging the difficulties. I firmly believe that the FE sector is probably more life transformational than either schools or universities in terms of where it is taking people from and where it is moving them to. As well as all the other challenges we have to face, we have a selling to job on behalf of the FE sector.

Phil Hope: Can I add my own take on that question, Chair? I do not think that we celebrate success enough in this sector. We do not celebrate the achievements of individuals, who achieve astonishing transformation of their personal lives, nor of individual teachers and lecturers who perform extraordinarily well. I have met people who are teaching plastering - they want to take you into a room and show you just how good their personal skills are that they are transmitting to those young people - and you see a fantastic piece of work that they are doing. We do not celebrate when they do well at their skills at competitions, and I am going to plug the world skills championships bid that we are making, Chair, if you do not mind, because I think that is a way of raising morale of learners and of those providers, to demonstrate that we are delivering world-class skills, and if we are not that we are putting in place mechanisms by which we could do so in the future.

Chairman: Excellent last words, Minister! Thank you. It has been a good session. We have enjoyed asking you questions, and have received some very constructive answers. Thank you for your time.