The Minister for Lifelong Learning, Further and Higher Education (Bill Rammell): I beg to move,

I commend the regulations, which were laid before Parliament on 14 November 2007, to the Committee. This debate provides an opportunity to discuss the regulations and completes the parliamentary reform process that was set in train by the passage of the Further Education and Training Act 2007, which made provision to restructure the Learning and Skills Council. Section 2 inserts provisions in the Learning and Skills Act 2000 to require the LSC to establish a regional learning and skills council for each area of England specified by the Secretary of the State; and those regional councils will replace the 47 local councils that are being abolished under section 3 of the 2007 Act. The regulations make provision for the regional councils of the Learning and Skills Council for England. They relate to matters such as regional council membership, the appointment of members, the delegation of regional council functions and regional council proceedings. These are the first regulations to be made under the power in section 18A(2) of the 2000 Act, as inserted by section 2 of the 2007 Act.

The case for change was debated and made during the passage of the 2007 Act. Since its creation in 2001, the LSC has found it increasingly necessary to operate at a regional level or in a regional context. In response, it has set up nine regional offices as part of its executive structure, which are supported by informal regional committees established under paragraph 1 of schedule 3 to the 2000 Act. The regulations make provision relating to regional councils as a statutory part of the LSC structure. The regional councils will have boundaries that match the geographic areas of the nine Government office regions.

Let me set out the benefits of such an approach. The proposals form one strand of an overall package of measures to streamline the LSC’s accountability structure. They aim to introduce consistency between the non-executive structure and the new internal staffing structure that the LSC has put in place. Importantly, they also aim to bring about savings of £40 million, which will be redirected to front-line services. Those changes to the LSC’s executive and non-executive structures will strengthen its capacity, with its partners, to commission the learning and skills infrastructure that is needed across the regions, and to meet our aspirations to improve the skills of the population and ensure that we genuinely move towards a world-class skills base by 2020.

Peter Bottomley (Worthing, West) (Con): I am sorry to interrupt, but the Minister is dealing with the cost savings, and it would be helpful if he could answer one point, either now or later. Some of the savings might come from cutting the number of non-executives on the present 47 local councils by 80 per cent., but the Committee will find it difficult to believe that that will account for £40 million. Where will most of the savings come from?

Bill Rammell: There will certainly be a reduction from 750 to 150 non-executive directors, but I am in no sense suggesting that that is the major driver of the efficiency improvements. Those will result from the general restructuring that has been taking place under strand 7 of the LSC’s agenda for change, which will result—I will clarify the position if I get the figure wrong—in a reduction of about 11,000 posts across the LSC as an organisation. That will be the major driver of the savings.

I should highlight one other issue. We are rightly continuing with our plans in the light of the recent machinery of government announcement on 16-to-19 funding and the Education and Skills Bill, which is currently passing through Parliament. The decision to transfer 16-to19 funding to local authorities signals a major change of direction for the LSC, and it will take time to implement such a change, but the LSC will remain responsible for funding all forms of post-16 education and training outside higher education for some time to come. We therefore look to the LSC to build on its achievements and to play a key role in ensuring that a wide range of skills provision is available to support business needs. To do that, it must have a strong and robust accountability structure in place to enable it to work effectively with partners to ensure that the system continues to deliver on the new and challenging targets that we have rightly set for the LSC.

During the past few months, we have also published the LSC grant letter that sets out our priorities for the next three years. A strong executive and non-executive LSC structure is required to maintain delivery. The grant letter made it clear that the LSC needs to operate strongly at national, regional and local levels to achieve our overall objectives. For example, the grant letter identifies as a top priority delivering an expanded Train to Gain service through closer working with regional development agencies. In short, the changes are necessary. They are ones that we have signalled very strongly during the passage of the Bill, and I commend them to the Committee.

Mr. John Hayes (South Holland and The Deepings) (Con): My parliamentary career thus far has been found wanting only in the respect that I have yet to serve under your chairmanship, Mr. Taylor. I am delighted that that has been put right this afternoon. I apologise to both you and the Minister for being a moment or two late for the start of the Committee.

The essence of the instrument is clearly set out in the documents that we have studied. Before I move to my prepared notes, may comment on what the Minister said about 16-to-19 funding, because it is significant? Further education colleges in particular have considerable doubts about the transfer of funding because they feel that they have been left out of the picture. That is highly relevant to the matters before us. I urge the Minister to clarify, over the coming weeks and months, exactly how the further education sector will be affected because, as he knows, there is some uncertainty about the implications of the shift in funding. He rightly said that the shift will not happen immediately, and he gave the Committee reassurance, which, I imagine, should be broadcast more widely. This is an important matter, and the Minister’s reassurance shows that he thinks so, too.

The Further Education and Training Act 2007—the passage of which both the Minister and I had something to do with—provided for the abolition of local learning and skills councils and their establishment in a regional format. Essentially, what we have here today is a statutory instrument to achieve that. It does not set out the responsibilities of those new bodies, because that was dealt with in the legislation, but it does specify their composition. The Government have shifted toward local learning and skills councils in spite of the recommendations of Sir Andrew Foster. Before the 2007 Act was passed, Sir Andrew produced an important study on further education, which had been commissioned by the Government. I noted the Minister shaking his head when I said that the Government are now contradicting Sir Andrew’s recommendations. I thought it might be useful for the Committee to hear Sir Andrew’s words, so I have them to hand. He said:

In the statutory instrument, we are moving from a local to a regional structure. However, it can be argued that businesses tend to be very local or very large; there are regional businesses, but they are not typical. A regional structure therefore does not match the typical composition of British business. I think that is why Sir Andrew Foster made clear his view that local learning and skills councils reflected the profile of commerce that I have described, and could best perform their function when rooted in a locality.

The establishment of a new regional tier was the first indication that the Government were distancing themselves from the Leitch review of skills. Lord Leitch’s report, which came after Sir Andrew Foster’s, recommended a demand-led system to meet the skills needs of the nations. I shall quote myself here—when in doubt, it is always as well to quote oneself. In May last year, I said in the House that Lord Leitch

By reinforcing the role of the Learning and Skills Council in the management and funding of skills, the Government are not only kicking against the Foster report, which said that those matters should be handled very locally, but they are flying in the face of the Leitch report, which said that the system should become more responsive, more demand-led and less bureaucratic.

My judgment is that the composition of the regional bodies will reinforce some of the weaknesses inherent in the Government’s approach to skills. I think that the Minister is a basically decent chap. I have said that so often that that it has become tedious, which is a big admission in the House of Commons. People are beginning to disbelieve me because I have said it so often; they are starting to think worse of him now. It is almost as though I must doubly emphasise the point to make people believe me, but I think that the Minister is basically a decent chap and that the Government are sensitive to some of the criticisms that have been made about the management and funding of skills. However, I do not think that he has the clout or that the Government have the will to introduce the radical reforms to structure that are necessary to respond to that criticism.

Let us be honest: radical reform is never easy. I have no doubt that there are always pressures on Ministers, regardless of party, to stick with the status quo; change is never the easy option. The trouble with these regulations is that they do just that: they stick in broad terms to the status quo—they rearrange the deckchairs as we head towards the iceberg. That is a tired metaphor; I ought to work that up a bit better in the future. I am not doing you justice, Mr. Taylor.

The regulations make provision for the salaries of the chairmen and other members of the regional councils. I have a few questions, which perhaps the Minister can deal with in his no doubt lengthy response to this short debate. Can he confirm that each of the nine regional directors will be paid between £115,000 and £140,000? Those figures relate to the LSC annual accounts. That means that, even on a generous estimate, the wage bill for the regional directors alone, not accounting for expenses and pension contributions, is in excess of £1 million per year.

If that is not enough to satisfy Committee members, who always look at such matters in immense detail and demand the close scrutiny that I know you at least would welcome, Mr. Taylor, will the Minister tell the Committee the average total wage bill for each of the regional committees? I ask that because some of the regions may be planning to spend a great deal more than others. There may be disparities between regions. It may be that the east midlands is not doing as well as it ought to in these things, and we want to know because, of course, we put our constituents’ interests at the forefront of our consideration of these matters.

What specific interface with the new regional LSCs will local business have in terms of the constitution of the new bodies? What are the structural relationships in those terms? It seems to me important that we establish that, even if the Government are not going to go the whole way with a demand-led system, the new structure will at least have sufficient responsiveness built into it to deal with some of the critiques as well as the criticisms that I have raised and that have been published by Lord Leitch, Sir Andrew Foster and others.

The next thing to do is to set the regional LSCs in the context of an overall analysis of the future of the Learning and Skills Council. There are those who argue that as far as the LSC is concerned, there is only one difference between the Government and the official Opposition: the official Opposition would reform it quickly; the Government are letting it die slowly. That is not necessarily the position that the Minister would adopt, but there are those who believe that the LSC is likely to face major reform in the not-too-distant future. Indeed—I choose my words carefully—that can be inferred from some of the things that have emanated from the Government.

If we are to establish the new structure, it is right that we should know its context. Does the Minister perceive a long-term or even a medium-term future for the LSC, or does he see substantial further reform of the council, as Lord Leitch argued would be necessary? If so, we should have an open and frank debate about what the alternatives might be. The Learning and Skills Council has to have a structure or some form, so perhaps it is right that we should have that debate—or at least that it should begin today. There should be a proper public policy debate among parliamentarians and other interested parties about which direction the Government are taking. As I say, there are doubts about their long-term commitment to that body, and thus whether it will deal with the future management and funding of skills.

I look forward to hearing what the Minister has to say before deciding whether the regulations will become highly contentious, or whether we can move ahead with at least a degree of agreement.

Stephen Williams (Bristol, West) (LD): I have served under your chairmanship before, Mr. Taylor, and it is always a pleasure to do so. I am sure that you and the Committee will be relieved to hear that my few words will genuinely be few, unlike those of the hon. Member for South Holland and The Deepings.

This is the third reconstruction of the Learning and Skills Council during its short life. From what the Minister said earlier, and given that some of its existing functions are to be transferred to local government, we cannot be sure that we will not have to consider yet another reconstruction in future. Today, however I shall speak about the regional aspects of the regulations and about accountability.

Paragraph 2(1) states that

Although I generally welcome the reduction of quangocracy around the country from 750 members to 150, I wonder whether 16 people will be enough in some regions. I refer specifically to the region of which I represent a part—the south-west of England, which stretches from the Scilly islands off the west coast of Cornwall up to the Cotswolds and down to Bournemouth. It is probably the most ludicrously constructed region that the Government have forced upon the people of England. Within the region, we go from the tourism constraints of Cornwall to Airbus in Bristol. Any body concerned with skills or with any other matter has to grapple with a huge number of issues, and I wonder whether 16 members will be sufficiently representative of the diverse interests of the region.

On accountability, the Prime Minister, in what I think was his first statement to the House, promised that regional Select Committees would scrutinise all the regional bodies that work in our name. The LSC will be another such body, joining the South West of England Regional Development Agency, South West Arts and all the other regional agencies across the country. Those bodies sometimes take decisions with which we might not agree, but we have no way of scrutinising them, calling them into question or reviewing them. The only level of accountability mentioned in the regulations is accountability to the Secretary of State for Innovation, Universities and Skills. What mechanisms will be put in place to ensure that regional Members of Parliament will be able to scrutinise the work of the regional LSC, given that we do not seem to be getting anywhere with the setting up of the regional Select Committees promised by the Prime Minister in July 2007?

Peter Bottomley: There is a tribute to my hon. Friend the Member for South Holland and The Deepings in the booklet celebrating 40 years of the all-party disability group, which is having a party downstairs for Jack Ashley. That is linked because the booklet is sponsored by Royal Mail, which has said that it is trying to employ more disabled people and finding that, by having a common person to link with rather than having to go through learning and skills councils or their equivalents around the country, it can become less bureaucratic and the system that it is dealing with can be likewise. I pay tribute to Mary Fagan and the others who are ensuring that that happens. Dedicated teams can achieve a great deal.

I hope that the Minister will not mind if I air a general criticism. Since 1997, the Government have spent time on process and structure, but I believe that altering the culture and maintaining commitment could have achieved as much, more easily. I do not make my next point, which is financial, as a criticism, but as an observation. If the change will cost £55 million, clearly, the economic return after a year and a quarter will be worth while—I understand that. However, I believe that a lot of the cost could be cut out anyway if people who are doing their present jobs did not to have to go around saying ,“Can I get one of the new jobs in the new superstructure?” or, “Can I go down to one of the 150 local partnerships?” The Minister did not mention those in his speech, but they are mentioned in the explanatory notes.

I was a Minister for six years. That is as surprising to me as to my friends. Many thought that they had given up too early when they read about me, or they thought that the then Prime Minister did not have a sense of humour and then realised that they were wrong. My determination in the Department of Employment, where I had responsibility for disability issues—I did not have responsibility for the Employment Service—was that I would change no structure or process; instead, I would give more commitment to make the existing system work more effectively. As we heard from the hon. Member for Bristol, West, the regulations deal with the fourth significant change during the relatively short life of the Learning and Skills Council. We have seen what has happened to community health councils and in many other areas in which the Government have repeated decided to make changes. The number of reports and the number of people who have to implement those changes is legion, and I pay tribute to those who manage to do the job, but I often think that it might be better not to start on such processes in the first place.

The Minister made a straightforward case for the regulations. I did not take part in the debate on the primary legislation and, in a way, I am glad that I did not. However, let me make a local point. Worthing, which covers most of my constituency, does not have sixth forms or their equivalent in schools; rather, it has Worthing college, which brings people in the 16-to-18 or 19 age group, plus other, older people. Northbrook college, which is almost the equivalent of a university college without quite the same status, offers further and higher education. I have not, however, noticed a change in what they or local employers have said to me in the past 10 or 11 years of change.

I do not challenge the commitment or good intentions of the Government—that goes for the Minister and his predecessors. However, I often wish that we had kept a Department of Employment and a Department of Education. We should say to people outside the civil service who help in learning, skills and training that we will give them backing and resources, but we will not spend our time changing how the system is organised. The system should be run, not constantly reorganised.

Bill Rammell: We have had a short debate, but we have set out some of the issues, to which I shall respond.

The hon. Member for South Holland and The Deepings said that there were doubts within the further education sector about funding as a result of the machinery of government changes. For the record, I should say that in the past 10 years funding for further education has increased by something like 52 per cent. in real terms. That is in stark contrast to the 14 per cent. real-terms cut that took place in the five years before 1997. Any process of change creates a degree of uncertainty, which is why the Secretary of State and I have been having meetings with further education college principals and leaders of private training providers up and down the country. We want to engage them in the process of change. During those discussions, I have not detected any opposition to the changes that we are proposing; instead I have rightly and naturally faced questions about how the changes will work and how principals can be reassured. That is the process that we are going through at the moment.

Regarding the abolition of the local LSCs, one of the problems with the 47 local LSCs that were established by the Learning and Skills Act 2000 was that they were neither large enough to impact on a regional basis, nor small enough to be genuinely local. For an example, I think of my own learning and skills council area, which is Essex: the council does some good work but Essex is the size of some countries in terms of its reach. The idea that a council covering that area can provide a sufficiently customised and localised reach is not necessarily the best or optimum way to proceed. That is why we are moving to the approach of having regional councils that can genuinely interact on a regional basis, while at the same time establishing 150 local LSC partnership teams at a much more local level.

The Conservative spokesman argued that we were distancing ourselves from Lord Leitch’s demand-led approach, but I must say that I simply do not recognise his description. Look at the expansion of the Train to Gain programme, which is a genuinely demand-led initiative: we will be spending more than £1 billion through that route by the year 2010-11. We are also rolling out skills accounts, and £500 million will be spent on that scheme by 2010-11. In no way, shape or form are we not moving in a much more demand-led direction. If the hon. Gentleman has any doubt about that, I urge him to go and talk to some further education college providers, who sometimes feel nervous about the pace of change towards a demand-led system.

The hon. Gentleman also lamented the fact that a radical structural approach was not being proposed. However, I did not hear him articulate what alternative form of radical structural approach he had in mind. Frankly, until he is prepared to do that, his arguments will ring somewhat hollow.

Mr. Hayes: I do not deny for a moment that the Government pay lip service to the idea of a demand-led system. However, the Minister will know that last week the Government published their new plans for apprenticeship, the national apprenticeship service. In those plans, it is set out that the role of NAS includes:

That is the implementation of a national strategy, not a response to local need. Therefore, perhaps the Minister can tell us whether or not the NAS will have a relationship with these new regional bodies.

Bill Rammell: Yes, it will. We need both national and regional direction, and a genuine response to business. I simply state for the record that, for example, the Government are channelling more than £1 billion by 2010-11 through the Train to Gain route, which is a genuinely demand-led initiative. To try to describe that investment as not moving towards a demand-led system is something that I find difficult to comprehend.

The hon. Gentleman said that we are rearranging the deckchairs on the Titanic. Further education college success rates in the last five years have gone up from 59 per cent. to 77 per cent. In apprenticeships, we have gone from a completion rate of 24 per cent.—

The Chairman: Order. May I bring the Minister away from his peregrination to the main part of our debate, which is the regional council membership as covered by the statutory instrument?

Bill Rammell: I accept your guidance, Mr. Taylor. I was simply responding to the critique that had been put forward by the Conservative spokesman.

Mr. Hayes: I have read the regulatory impact assessment and there is no role set out in the structure of the new bodies for sector skills councils. Why is that?

Bill Rammell: There will be a relationship with the sector skills councils. Clearly, we want a dialogue to take place at all levels between the learning skills councils and the sector skills councils, which are the identifiers and the drivers of business needs when it comes to the further education system.

The hon. Gentleman also asked me about the structure of the regional councils and whether they would be business-led. I assure him that that will be the case—indeed, we envisage that 40 per cent. of the members of the regional councils will have a business background. He also asked me about the future of the Learning and Skills Council. We have made it very clear that we shall shortly consult on the pre-19 and post-19 structures. However, any further changes to the LSC will require further legislation and are unlikely to take place until 2010-11. It is therefore essential that a proper accountability structure should be put in place, to drive and continue to build on the improvements in performance that the LSC has delivered in recent times. That is why the changes are significant and important.

Mr. Hayes: In the regulatory impact assessment, to which I just referred, the Minister says that the regulations respond to the Foster report, rather than implement its recommendations. Is that correct? One tends to respond to criticism; when one agrees with something one goes ahead and implements it. Is there a difference there, or is it just clumsy wording?

Bill Rammell: I do not think that in substantive or ideological terms there is any difference between the general thrust of policy direction that Andrew Foster put forward and what we have encapsulated in the further education White Paper, and are implementing through the Further Education and Training Act 2007. There is a train of continuity between those different policy positions that shows significant consistency.

The Liberal Democrat spokesman, the hon. Member for Bristol, West, asked a serious question, and I take his point about the size of the regional councils. It is, I think, a matter of balance. If we move much beyond a body of 16 members, that will become more of a legislative chamber than a proactive, focused, business-led organisation determined to ensure that the system responds to the needs of business. We have, therefore, set a maximum figure of 16. It is a matter of balance, and it should be possible to meet the relevant needs of the hon. Gentleman’s region and others.

On the hon. Gentleman’s point about accountability, the proposals to establish the regional councils are made within the context of the unitary structure for the national council of the Learning and Skills Council, and all the learning and skills councils’ activities are directly accountable to Ministers. There are ample and regular opportunities for hon. Members of all parties to scrutinise and challenge the work of the LSC.

Question put and agreed to.

Resolved,

Committee rose at three minutes past Five o’clock.