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It is essential that we listen to what learners and employers tell us that they need, and that we put public
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money to best use by designing provision accordingly, instead of implementing what the Government or FE colleges think that employers and learners need.

Sarah McCarthy-Fry (Portsmouth, North) (Lab/Co-op): I held an event at Highbury college in my constituency last year, which was attended by the Under-Secretary of State for Education and Skills, my hon. Friend the Member for Corby (Phil Hope). We brought together employers, FE providers and young people, but there seemed to be something of a mismatch between what the college was providing and what the employers wanted. Highbury college is very much in favour of being able to award its own foundation degrees. I am sure that my right hon. Friend will come on to that later, but does he think that that will be a key element in making sure that we get that correlation right?

Alan Johnson: I do, and the interesting fact that Foster pointed out—in a report that I am proud to say I commissioned when I was Minister of State in this Department—was that 80 per cent. of employers never go anywhere near an FE college. That shows that awareness of what employers need is crucial to the future of FE colleges.

We need to ensure that we are providing what colleges and employers need. That is why we have included a duty in this part of the Bill that the LSC must have regard to guidance on consulting employers, learners and prospective students, as it oversees further education provision in a system that is increasingly led by the demands of learners and employers.

Further measures in this part seek to clarify the power of the LSC to form and invest in any type of company in the provision of education and training, with the consent of the Secretary of State, and to design, develop and operate support services on behalf of individuals and educational institutions, again with consent.

Sarah Teather (Brent, East) (LD): On the point about diversity, does the Secretary of State envisage this being about diversity of providers or diversity of courses?

Alan Johnson: It is obviously about both, providing that we keep to the basic tenet of the Foster report and the White Paper that we are looking to prioritise those skills that are necessary to the future of individuals and the economy. In that sense, there is a huge diversity in provision and courses.

Gordon Banks (Ochil and South Perthshire) (Lab): Coming from an industry background, and as a former member of the board of management of Clackmannan college, which is now part of Forth Valley college, I understand what the Secretary of State says about the need for employers to play a bigger role in determining the skills that employees need. However, we are moving into an ever-changing and faster-moving economy, with faster-moving skills and demands. Can we ensure that flexibility is built into the provisions he is discussing so that the educational system can respond with the speed that the economy needs?

Alan Johnson: That is an absolutely crucial point, which is why, in this part of the Bill, we are including
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the provision to form and invest in any type of company in the provision of education and training. Other measures throughout the Bill are particularly and precisely aimed at flexibility and the need to respond to changes. My hon. Friend is absolutely right: with the challenges of globalisation, we cannot set out something now based on what we believe the situation will be in 10, 15 or 20 years’ time. Even in terms of Lord Leitch’s report, we have to have the flexibility to change and adapt.

A further duty will be placed on the LSC to implement the skills and training strategies developed by other organisations, at the Secretary of State’s request. In particular, the London skills and employment board will be created—chaired by the Mayor of London—and an adult skills strategy will be developed and implemented by the LSC. That does not change the LSC’s obligation to comply with existing duties, unless I or my successors give express permission for the LSC not to implement a particular strategy.

The clauses in the second part of the Bill relate to further education institutions themselves. One of the most striking reforms—it is mildly controversial—will enable the Privy Council to grant FE institutions the power to award their own foundation degrees, which must currently be validated by a university.

Helen Jones (Warrington, North) (Lab): My right hon. Friend will know that some of us have reservations about that because the point of foundation degrees was that they should be not merely stand-alone qualifications but part of a system that allowed people to come in and out of higher education. How will he ensure that the curriculums of foundation degrees granted by FE colleges are sufficiently matched with the curriculums of honours degrees to allow people to go on to shortened honours degree courses if they wish?

Alan Johnson: If my hon. Friend will forgive me, I will come on to that precise aspect in a second. However, I would just stress that, as I am sure she agrees, although it is important to have progression routes, we must ensure that if people do a two-year foundation degree and are content just to do that, we do not somehow devalue that. I know that my hon. Friend agrees with that. I will come on to the issue of progression.

This reform will make a huge difference to an individual’s ability to advance in his or her chosen career. Increasingly, employees need higher education qualifications to make progress; senior jobs are open only to graduates, and people without such qualifications are denied advancement. Foundation degrees provide a broad knowledge base and a multitude of career options for learners ranging from school leavers who prefer to work while they study, rather than begin a full-time degree, to adults returning to education or training. They are important qualifications in their own right, but—here I come to the point raised by my hon. Friend the Member for Warrington, North (Helen Jones)—they must also allow learners to move on to more advanced studies, including full degrees, should they choose to do so. We believe that 100,000 people will be taking foundation
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degrees by 2010, which will be a huge success considering those degrees did not exist before 2001. The Bill will make that aim a realistic possibility.

FE institutions must also have regard to guidance on the consultation of employers and learners, including potential learners, which mirrors the duty on the LSC under part 1 of the Bill. The Government are committed to an approach that builds services first and foremost around learners’ needs. All parts of the system must adopt that approach for this to work effectively.

Kelvin Hopkins: My right hon. Friend will be aware that there is concern among the so-called modern universities—members of the CMU universities group—about permitting further education colleges to award degrees. Is he suggesting that the market will be so large in the future that the provision of universities will not be undermined by further education colleges expanding their degree courses?

Alan Johnson: I certainly am suggesting that. If 40 per cent. of jobs are to be filled by graduates and we have an ambition for 50 per cent. of 18 to 30-year-olds to be in higher education—not at university but in higher education, which will include taking foundation degrees in FE colleges—we can certainly reassure CMU universities about the concerns that they have rightly expressed.

This part of the Bill also aims to facilitate the way in which services are designed and delivered. It clarifies the powers of FE institutions to form or invest in companies providing FE training, or to form charitable incorporated organisations. In addition, powers to establish further education institutions or to dissolve FE corporations will be transferred from the Secretary of State to the Learning and Skills Council. Such measures are designed to encourage the use of new and innovative delivery models, such as federations, trusts and mergers, as part of our goal to broaden and diversify choice.

Along with a focus on the external influences on delivering FE reform, institutional leadership is vital. Provision is included for the Secretary of State to require college principals to achieve a stipulated leadership qualification before taking up a new post. We are working with partners to facilitate this. CEL—the Centre for Excellence in Leadership—has developed a new programme that, from September this year, all newly appointed FE principals will be expected to complete before they take up a post. Meanwhile, Lifelong Learning UK has published new standards for FE teachers, tutors and trainers and a specification for the role of FE principal. The Quality Improvement Agency has established a forum to allow practitioners and providers to share best practice.

Quality assurance is also essential. Excellence must be delivered as a matter of course, and when that is not happening, fast and effective intervention will be necessary. Members of the House of Lords; sorry, Members of the other place. A junior speech writer, I fear —[ Laughter. ] Some training will be carried out at a nearby FE college.

Members of the other place expressed concerns about some of our original proposals on interventions, especially the provision to enable the Learning and
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Skills Council to instruct an FE college to dismiss its principal if such an action were deemed necessary. I have listened to their concerns and we will shortly be publishing new proposals.

We will hold firm to our original intention to take action in instances of underperforming colleges, because without that power we do not believe that we can put forward these proposals with the necessary reassurance. While that intention remains— including instigating the removal of a principal, should that be warranted—in response to the concerns expressed in the other place, we will make sure that the intervention is scrupulously fair, transparent and legally robust.

Mr. Hayes: I am grateful to the Secretary of State for giving way a second time. He is extremely generous. So that the House can be best informed about this aspect of his thinking, can he tell us how often the Secretary of State has found it necessary to use the existing powers, which include the removal of a principal? That would give us some feel for the legitimacy of the position that he is adopting by extending and enhancing those powers.

Alan Johnson: I do not think that we have used the powers—I will check—but having the provision available is a necessary means of ensuring that it never has to be used.

The remaining two parts of the Bill are shorter and more technical in content.

Gordon Banks: May I take my right hon. Friend back a moment to FE institutions and foundation degrees? Does he agree that the ability of FE institutions to provide foundation degrees will address some of the difficulties associated with rurality throughout the UK and allow a more equal spread of opportunity through delivery by the FE colleges?

Alan Johnson: I agree. That is a central feature of our proposals, to which I shall return.

Andrew Miller: I understand the powers described by my right hon. Friend as being necessary to serve as the ultimate deterrent, but will he confirm that that does not alter the fact that the college is the legal employer, not the Learning and Skills Council?

Alan Johnson: Yes, since incorporation that is exactly the case. I hope my hon. Friend will look carefully at our proposals. We have genuinely tried to address the legitimate concerns that he and others raised.

Part 3 of the Bill deals with industrial training levies. It seeks to amend the Industrial Training Act 1982 by modernising and streamlining the process that industrial training boards must go through to demonstrate support for a levy proposal among employers in the relevant industry. The measure will simplify the process, and reduce bureaucracy for all involved.

Some of the principles contained in part 2 are covered in part 4, in relation to higher education institutions, including clarification of their power to form and invest in companies, and a new power to form charitable incorporated organisations to encourage new delivery
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models. These powers are contained in a separate part, as they seek to amend different legislation. The fourth part of the Bill will also enable the Welsh Assembly to introduce FE reforms as it completes its current review.

In conclusion, this is an enabling Bill. It will enable a restructuring of the Learning and Skills Council, generating around £40 million a year in savings for service provision.

Mr. Brian Jenkins (Tamworth) (Lab): On restructuring, my right hon. Friend will have carried out some analysis on the last restructuring of the learning and skills councils and the problems faced by local FE colleges following incorporation. Will he make available to us the risk assessments that were undertaken and tell us what he sees as the advantages and disadvantages of his proposed scheme before we vote on it?

Alan Johnson: We published a regulatory impact assessment. We made various pieces of information available as the Bill progressed through the other place. We will do likewise as the Bill goes into Committee in this place. If my hon. Friend is making a bid to be a member of the Committee, I am sure the usual channels will have picked that up. [Interruption.] I am being unusually nice to my side at the moment.

The Bill will enable a restructuring of the Learning and Skills Council. It will enable learners and employers to convey their views to those who plan and operate services. It will also enable greater choice and diversity by establishing new duties on the LSC to create greater opportunities for learners and employers, and enable better FE management and leadership.

FE is undergoing the most radical reform in its history. That reform is initiated by Government, but driven by the sector. We want to create a system that leaves no one behind. It is not acceptable to target our efforts solely at those who want to take up provision and discard the rest. Often it is those who are unwilling actively to seek out services who need them the most.

Sarah McCarthy-Fry: I thank my right hon. Friend for giving way. I think we agree that raising aspiration is crucial. It is crucial in my constituency, which suffered 18 years of under-investment under a Conservative Government.

I notice that the hon. Member for Henley (Mr. Johnson) is not in his place on the Opposition Front Bench. He recently paid a flying visit to my constituency, and said that it was a drab city on the south coast that was full of obesity and under-achievement, and too full of Labour MPs. I do not think that raising aspiration is done by denigrating our young people; it should be done by trying to raise their aspirations and encouraging them. As the shadow Secretary of State for Education and Skills is my next door—

Mr. Deputy Speaker (Sir Michael Lord): Order. I think that the hon. Lady has made a sufficiently long intervention, and her point as well.

Alan Johnson: My hon. Friend makes an extremely good point. There are not many places in this country that the hon. Member for Henley (Mr. Johnson) can
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revisit at the moment. If he were making a flying visit to Hull, I would advise my constituents to take cover.

The imperative is clear. We must insist on the same high standard of provision that we would expect from schools, universities, hospitals and all public services. The Bill will empower FE institutions, help the LSC to support them and provide the right balance of interventions in the system from Government and elsewhere. This is the key to making a success of Project Leitch: a strong economy, fulfilled employees and the UK one of the leaders in world skills. I commend the Bill to the House.

Mr. Deputy Speaker: I say inform the House that Mr. Speaker has selected the reasoned amendment standing in the name of the Leader of the Opposition.

4.57 pm

Mr. David Willetts (Havant) (Con): I beg to move, To leave out from “That” to the end of the Question, and to add instead thereof:

We welcome this opportunity to debate the future of further education in this country. Although we have reservations about the Bill, we can indeed take pride in a lot of what has been achieved by further education colleges in our country. They do particularly well in Ofsted inspections, with 63 per cent. of FE colleges assessed as good or better. Students report high levels of satisfaction; 67 per cent. are either very or extremely satisfied with their experience of FE colleges. Of course, of those employers who use FE colleges—sadly, many do not use them—82 per cent. report themselves satisfied.

We are proud of what many FE colleges achieve, and we on the Conservative Benches trace that achievement back to crucial legislation that we passed in 1992—the Further and Higher Education Act 1992, which gave FE colleges their freedom from local authority control and set them on the path to the success that they now enjoy. Indeed, in the report that the Secretary of State so proudly says he commissioned, Sir Andrew Foster says:

We take pride in what those colleges have achieved in the years since they were incorporated. However, we regret that the Bill is a missed opportunity to tackle the problems facing the FE sector now. Those problems and challenges have been identified in two very useful Government reports, the first of which, by Sir Andrew Foster, listed no fewer than 17 different regulatory and inspection bodies that were crawling over the activities of FE colleges. We would have liked to see those reduced. The report says:

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When we talk about the burden of red tape, a classic example is provided in the list of the regulatory burdens facing FE colleges contained in Sir Andrew Foster’s report. Sadly, the Bill contains no measures that would reduce those burdens on colleges.

The second challenge that the Bill fails to address is that presented by Lord Leitch’s report on skills. Lord Leitch is frank on the scale of the skills crisis facing our country. The Secretary of State quoted from the report and I agreed with the quotation that he cited. However, he did not go on to cite some of the other points in Lord Leitch’s report; for example, that

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