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Clause 141

Amendments made: 478, in clause 141, page 80, line 12, leave out ‘respect in’ and insert ‘qualifications in respect of’.
See Member’s explanatory statement for amendment 479. This is a drafting amendment consequent on that amendment.
Amendment 479, in clause 141, page 80, leave out line 13 and insert—
‘(b) the forms of those qualifications which are awarded or authenticated by it,’.
This amendment ensures that where an awarding body is recognised in respect of a qualification Ofqual is under a duty to include on the register details of each particular form of the qualification which the body awards or authenticates.
Amendment 480, in clause 141, page 80, line 15, leave out ‘such qualification’ and insert ‘of those qualifications’.
See Member’s explanatory statement for amendment 479. This is a drafting amendment consequent on that amendment.
Amendment 481, in clause 141, page 80, line 17, leave out ‘the qualification’ insert
‘each form of the qualification awarded or authenticated by it’.—(Sarah McCarthy-Fry.)
See Member’s explanatory statement for amendment 459. This amendment is consequent on that amendment and amendment 462.
Clause 141, as amended, to stand part of the Bill.

Clause 142

Review of activities of recognised bodies
Question proposed, That the clause stand part of the Bill.
Mr. Gibb: The clause seems to give Ofqual the duty to keep under review any connected activities of an examination awarding body. It defines connected activities in subsection (2)(a) and (b). The concern is that the word “connected” seems very loose. Will the Minister provide reassurance that her intention in using the word “connected” is not loose but that the activity is to be directly and materially connected to the examination side of the awarding bodies?
Sarah McCarthy-Fry: Are we discussing amendment 531?
Mr. Gibb: No.
Sarah McCarthy-Fry: The intention under connected purposes is to allow Ofqual to keep under review any activities which may impact on the credibility of the qualifications offered or the effective or fair operation of the qualification system.
Question put and agreed to.
Clause 142 accordingly ordered to stand part of the Bill.
Clause 143 ordered to stand part of the Bill.

Clause 144

Power to give directions
Mr. Laws: I beg to move amendment 8, in clause 144, page 81, line 10, leave out from ‘may’ to end of line 11 and insert—
‘(a) direct a recognised body to take or refrain from taking specified steps with a view to securing compliance with the condition, and
(b) direct a recognised body to set the standards in a specified qualification, on a specified occasion, at a specified level.’.
The Chairman: With this it will be convenient to discuss amendment 559, in clause 144, page 81, line 11, at end insert—
‘(2A) A direction under this section may include a direction to the recognised body to pay a financial penalty where Ofqual considers it appropriate.’.
Mr. Laws: I would like to start by talking to amendment 8 which is in my name and that of my colleagues. I hope that the Minister will offer assurances which make it unnecessary to press the amendment to a vote. There was a degree of discussion on this topic in the evidence session we had a couple of weeks ago and there was disagreement between those present as to whether the powers that amendment 8 seeks to give to Ofqual are already contained in the Bill. The Minister will probably be aware of the origin of this amendment. It was suggested by the AQA—Mike Cresswell talked about this issue at the evidence session. In some ways it came out of concerns raised by the experiences of last summer when there was a disagreement between three of the awarding bodies over the grade boundaries for the GCSE science examination. Two of the awarding bodies wished to set the grade boundary at a lower level than the AQA and the AQA felt bounced into agreeing at the last minute to set a lower boundary than it thought right, as a consequence of feeling pressured by Ofqual to accept the will of the majority. Clearly none of us wants such disputes and in a well operating, well functioning system issues of this type would be resolved at a much earlier stage. The AQA feels—and I think it perfectly proper for Ofqual to have this power—that where there are disputes of that kind Ofqual should have unambiguous powers to direct a recognised body to set standards in a specified qualification on a particular occasion at a specified level. Kathleen Tattersall said on the record in our evidence session that she believes that Ofqual already has that power. I believe Greg Watson or one of the other awarding body chief executives present on that occasion also said that he believed that the power was embedded in the Bill but that is not the view of the AQA. It believes that the particular power to give directions under the clause is ambiguous.
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It seems ironic for an awarding body to suggest it, but the commitment of the AQA and others to proper standards and scrutiny means that they want Ofqual to have this power. If the Minister can assure me that the powers are most certainly to be granted under the clause, I will be satisfied. But it is the uncertainty with the clause that caused me to table the amendment.
I would also like to comment on amendment 559, if the hon. Member for Wakefield allows me to do so. I hope that she will not feel that I am pre-empting any of what she will say, but because I am speaking on both amendments, it is only suitable that I make my comments now. In her amendment, the hon. Lady has raised an extremely important issue about whether Ofqual should have a power to fine. That issue was touched on in the evidence session a few weeks ago, when Ofqual asked about that. It indicated clearly—as it did in its note to the Committee—that it would like to have that power. There were a number of exchanges involving, I think, the hon. Member for Barnsley, East and Mexborough, the Under-Secretary of State for Children, Schools and Families, the hon. Member for Portsmouth, North and the Minister for Schools and Learners. The issue was whether the power to fine was necessary.
We have not so far supported such a power, which is partly because, as liberals, we have a natural reticence to giving all sorts of unnecessary powers to the Government and its agencies—we generally think that lighter-touch regulations are desirable. However, we have considered the issues carefully. As you may be aware, Mrs. Humble, there was a letter written to a couple of members of the Committee yesterday—I am not sure whether it was addressed to all members of the Committee—by Kathleen Tattersall of Ofqual, setting out some of its views on the matter in greater detail, which I welcome. That is an indication of Ofqual’s interest in the issues and its independence. I am also grateful to Fiona Pethick of Ofqual for giving me further information about its views.
Some of the reasons to be reticent about granting the power to fine were set out clearly by Greg Watson of Oxford, Cambridge and RSA Examinations in the evidence sessions a couple a weeks ago, who was responding to the hon. Member for Barnsley, East and Mexborough. He said that in an ideal system, fining should not be necessary:
“a regulator that finds itself counting crashed planes and fining people for crashing them is an unsuccessful regulator. The important thing is that effort, power, authority and resource within Ofqual must be devoted to getting qualifications that are fit for use into the system in the first place.” ——[Official Report, Apprenticeships, Skills, Children and Learning Public Bill Committee, 3 March 2009; c. 75, Q198.]
I very much agree with that, and I am sure that Ofqual would as well. Any fining powers should not be used frequently, and if they were, it would be an indication that the regulator and the bodies concerned were not doing their job. As far as I am aware, other public bodies that have such fining powers do not use them on a frequent basis—although it will be useful to know whether the Minister has any information and evidence about the frequency that such powers are used.
Greg Watson also pointed out that since OCR is a charity, a not-for-profit organisation, he has concerns not only about being fined, but about the implications of that on the reputation of his particular organisation. He said that because of those issues with reputation,
“the threat of being shamed is much stronger than the threat of being fined for an organisation like mine.” ——[Official Report, Apprenticeships, Skills, Children and Learning Public Bill Committee, 3 March 2009; c. 76, Q198.]
The Minister for Schools and Learners rightly pointed out that we have many other awarding bodies, including McDonald’s and Flybe, which the Minister cited. It may be the case that not all of those awarding bodies—I am not criticising those two organisations, before their chief executives write to me, or possibly, the Minister; I mean unspecified organisations—have quite the reputation that OCR has, and they will not face such a penalty from naming and shaming. Ofqual has therefore come back and said that it continues to believe that powers of the type contained in amendment 559 should be in the armoury of the regulator, and Kathleen Tattersall stated in her letter of 25 March that that would help to act as a deterrent and as an immediate sanctioning step before the ultimate step of withdrawing recognition from an awarding body. The Ofqual committee therefore confirmed that it supports a final power as a valuable addition to its powers, and it has pointed out that many other regulators possess such powers, including Ofwat, Ofgem, Ofcom and the Office of the Rail Regulator.
As I understand it, Ofqual’s case is that there needs to be something between naming and shaming, which might not be a considerable sanction for some organisations, and the ultimate sanction of removing the recognition of an organisation and stopping it from awarding recognised qualifications, which could of course be devastating to those organisations and do great damage to learners. I find those representations quite convincing, and it seems to me unlikely that a body such as Ofqual, if it had the right staff and leadership, would be likely to use those powers irresponsibly.
Although Greg Watson made some excellent points in his evidence to the Committee, I am neither sure that all of them address Ofqual’s concerns, nor convinced that all bodies would suffer the damage to their reputations, which is so important to OCR, which has obviously been around for many years.
I hope that Ministers will consider giving Ofqual some powers on that matter, but several questions must be asked before they are given. Indeed, Ofqual sent me a note yesterday evening commenting on some of the issues I have touched on, such as whether those powers should be available, whether amendment 559 is right for delivering that and what the scale of fines should be. I am sorry to take time on that, but it is obviously an important issue and I would like to touch on some of those points.
I hope that you will not mind, Mrs. Humble, if I read some of Ofqual’s observations on those points. I asked Ofqual whether it believes that amendment 559 is the right response, and although it supports having a fining power, it believes that the current amendment is insufficient, as the hon. Member for Wakefield, who tabled the amendment, may know. Fiona Pethick stated in that note that she
I hope that that means more to the Minister than it does to me. Ofqual clearly believes that the amendment is a good one, but that there need to be additional safeguards, specifications and consultation on that, and I agree.
I also asked Ofqual what the scale of any fine should be if such a power were given, and it answered that it
“would anticipate that the legislation would limit the scale of any fine to say 10 per cent of the turnover of the relevant part of the awarding organisation’s revenue in the preceding year. So where an awarding body had business that was not related to qualifications this would not be taken into account”.
It stated that
“examples of other income could include income from publishing or from overseas examining. Experience from other regulators suggests that any actual fines would be very much smaller than 10 per cent.”
For us to agree to the additional fining power, we would need not only those earlier guarantees about legal safeguards and consultation about how the sanctions policy was going to work, but to know the scale of fines envisaged. Given that there is already the serious power to withdraw the ability to accredit, we would not want to set the fining power at a level that was likely to disable any of the bodies and make it impossible for them to continue to operate.
The email from Ofqual dated 25 March also addresses whether fines would simply result in higher fees for future qualifications, and states that Ofqual would put safeguards in place using its fee-capping powers if necessary to prevent fines from being passed on. The email clarifies where Ofqual would see the moneys from fines going:
“We would first expect any awarding body to recompense any learner or centre for monies they may have lost as a result of whatever misdemeanour the fine applies to. We would then expect any financial penalty to go to the consolidated fund, this is in line with other regulators and reflects the fact that when it is not feasible, appropriate or economic to recompense all the individuals who lose out as a result of the failure the taxpayers as a whole are the best substitute for the public.”
There are also comments in that email, which was sent to me and, I believe, the hon. Member for Bognor Regis and Littlehampton, about the circumstances in which Ofqual would wish to use the powers. I think that I have touched on those. The final point the email addresses is why the financial penalties would be necessary, over and above the existing powers to name and shame and remove an awarding body’s recognition.
So, I am sympathetic to Ofqual having such a power. We want Ofqual to be an independent regulator, as we have already made clear, but also one that has the teeth to act when it needs to, and powers and sanctions that are proportionate to the offences or problems that have arisen. We therefore hope—I do not wish to anticipate the speech of the hon. Member for Wakefield—that the Government will respond positively, but consider coming back with amendments that allow for some of the powers but with the proper safeguards, and a proper indication of how the powers will be used and what the scale of fines will be.
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