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Lord Addington: The Minister's answer was not unexpected. It is one that will have to be studied and, indeed, studied by my noble friend when he sees the report of today's proceedings. We may well return to this subject in the light of those studies after further discussions between myself and my noble friend. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Carmichael of Kelvingrove moved Amendment No. 20:

Page 11, line 16, leave out ("persons") and insert ("local authorities").

The noble Lord said: For the convenience of the Committee I do not propose to move Amendment No. 21 but I shall speak to Amendments Nos. 25, 29 and 31. Like most people nowadays, I am strongly in favour of expanding the provision of pre-five education in Scotland. Indeed, many education authorities have made considerable progress in expanding pre-school provision in their area. I must stress that very often it was in partnership with the private sector and with the voluntary organisations. As we move through the Bill, it is important to show that there is no antagonism to the private sector as such, it is just that we believe that by and large there is a better spread of education if the local authority plays a major part in its provision.

We welcome that pre-school education will be given a higher profile and we welcome the proposals for its expansion. However, as was made clear at Second Reading and at every stage--I remember the evidence in Glasgow--many associations within the education world are opposed to the voucher scheme and do not believe that vouchers are an appropriate means of providing a high quality and equitable system of pre-school education. The voucher approach is unnecessarily complicated, bureaucratic, expensive and is likely to create serious problems in monitoring and attaining high standards of provision. My noble friend Lord Sewel spoke earlier of the possibility of fraud and no-one would doubt that the more diffuse the idea of vouchers becomes in the community, the more likely the risk that there could be fraud involved in it.

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I move to Amendment No. 25 which inserts the provision that: Section 1(2) of the 1980 Act (which makes provision that the duty of an education authority to secure that there is made for their area adequate and efficient provision of school education and further education shall not include the provision of school education in nursery schools and nursery classes) shall cease to have effect. We want the education authorities to be the important people as regards the provision of pre-school education--not the only people, but the important people.

Amendments Nos. 29 and 31 stress the importance that we place on local authorities being involved in the provision of education. We seek to amend the legislation to ensure that the Secretary of State can only delegate the arrangements by undertaking any of the functions relating to the making of grants; these must be done through the local authority.

I find it difficult in view of the lack of trust. We had some of it in Glasgow recently and on Second Reading. Underlying everything there is a feeling of a lack of trust in the local authorities, and yet the local authorities are probably more examined, not just by government organisations, but by the users of the service themselves. No one demurs from going to their councillor and objecting to what their local authority is doing. It is much more difficult to object to a small nursery unit when your child is involved in it in a personal way. I have tried to point out that local authorities have encouraged, where possible, voluntary organisations, private organisations and private individuals to take part in nursery school education and under-five education but I believe strongly that local authorities should be the ones handling the basic finances in this area.

Baroness Carnegy of Lour: These amendments are designed to channel all the money through local authorities. The noble Lord says that there is no antagonism in local authorities towards the private sector and, of course, he is quite right; we know that. I am sorry, have I misunderstood the amendment?

Lord Carmichael of Kelvingrove: Local authorities work hard and more and more are encouraging private education and voluntary organisations in partnership.

Baroness Carnegy of Lour: I am sorry, but that was what I was trying to say. I appreciate that point because I know that local authorities have worked very closely with the regions and worked very closely through voluntary organisations. However, we should not look at the proposed voucher scheme entirely through the eyes of the providers and, particularly, entirely through the eyes of the local authorities.

It is interesting to see the different perceptions of the possibilities for the scheme when one talks to local authority people and to people on the ground who are interested in getting an increase in nursery education, particularly, I have found, in the rural areas near where I live. Various nursery schools, nursery units, have been started privately and are trying to do a cost effective job. However, it is not possible to get enough children to come in from the local area because people are paying and there are not enough people who are prepared to

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pay. It is pretty obvious to me that if people have a voucher in their hand and it is a voucher adequate to secure for them a place in a school which somebody has started nearby and which would, of course, have to meet the criteria for the voucher scheme, provision would arise which, at the moment, the local authorities cannot imagine would happen.

This is where the thinking is a little narrow and where it would be even narrower if this amendment were adopted. The noble Lord, Lord Sewel, is again looking at me as if I do not know what I am talking about. He may be right but I have been discussing the possibilities with a number of people who are in this position and they see possibilities which the local authority has not yet envisaged. Should this amendment be adopted, it seems to me that one would cut off all those possibilities. We know that the local authorities know a great deal about nursery education. No one is a greater admirer than I am of what has been achieved. But there are further possibilities. We need expansion, particularly in rural areas where we have heard in the evidence that there is very little provision.

This amendment would be a mistake. It would limit the scheme very much because it would make it possible only to do that which the local authority envisaged. If the statutory requirement on local authorities was to provide the whole thing the cost would be very great. That is a different point.

The Deputy Chairman of Committees (Lord Brougham and Vaux): There is a Division in the House and so we shall adjourn for 10 minutes.

[The Sitting was suspended for a Division in the House from 5.40 p.m. to 5.50 p.m.]

Lord Sewel: If I have understood the argument of the noble Baroness, Lady Carnegy, correctly, it is that there may be small groups of nursery aged children in rural communities whom the local authority does not see as being sufficient in number for nursery provision to be made available but that under this scheme the private sector may be able to move in and make such provision. I believe that that is the gist of what the noble Baroness said.

The difficulty is that the voucher is pitched at a level of £1,100 which covers the recurrent costs for a 50 per cent placement; indeed, much of the criticism we heard in Glasgow was that this does not provide for the capital costs of entry into the scheme. The difficulty is that new providers would be unlikely to set up nurseries in rural areas for a small number of children given the low value of the voucher. One of the benefits of the amendment is that local authorities could use the voucher value to build on their existing primary provision without the capital costs involved.

The Earl of Lindsay: I am grateful for the able manner in which the noble Lord, Lord Carmichael, moved the amendment and for the response by my noble friend Lady Carnegy. My noble friend is right when she says that the thinking behind the amendments is somewhat narrow and that they are possibly too provider-oriented rather than being oriented towards the recipients or the

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beneficiaries. However, the central point I wish to make to the noble Lord, Lord Carmichael, and to the noble Lord, Lord Sewel, is that we have a very high regard for the provision that local authorities currently make in terms of education. Their record stands well; we fully acknowledge that. When this Bill is enacted the role of the local authorities will continue to be central, be they acting by themselves or in partnership with the private sector or, indeed, the voluntary sector.

At present, local authorities have a power to secure the provision of pre-school education but they are not under obligation to do so. We believe that this amendment seeks to impose an obligation upon local authorities. It is based upon the Opposition's commitment to expand pre-school education predominantly through local authority provision. The Government, on the other hand, are committed to encouraging diversity and parental choice in expanding pre-school education. We believe that all providers of pre-school education have an important role, whether they are from the public, private or voluntary sectors.

The voucher system will not discriminate between pre-school centres, other than on the basis of quality. Only those centres which convince Her Majesty's inspectors of schools that they have the capability to deliver a good quality of education will be permitted to enter the system. Once centres are members of the system, parental demand, enhanced by vouchers, will encourage growth. This will be growth across all sectors, offering parents real choice; that is, the public sector, the private sector and, indeed, the voluntary sector.

None of this means, however, that the Government underestimate the importance of local authorities' involvement in this initiative, as I have already stated. Their role will continue to be extremely important. Local authority provision is widely respected and appreciated, and deservedly so in very many cases. It would be surprising if many parents with vouchers deserted good quality provision in the public sector. The noble Lord, Lord Ewing, and I live in a region with a very high standard of education.

Local authorities' responsibility for meeting special educational needs will also continue. Noble Lords will be interested to know that the funding presently received by them for this crucial area will not be affected by the voucher initiative. I accept that it can be argued that the effect of the proposed amendment would not be to make authorities the sole or predominant providers, but merely to give them responsibility for securing adequate provision, which could be achieved by contracting with other providers in the private and voluntary sectors. I do not find that persuasive. The Government's firm belief is that parents, through the exercise of choice, should influence the volume and distribution of places across the various sectors and that authorities should not be in a position to shape the market in which they already have a substantial stake as providers.

The amendment would result in authorities having either an exclusive or a controlling interest in the provider market. Neither outcome is consistent with our vision of a diversified and customer-responsive market.

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On either outcome, parents' freedom to choose where their children should receive pre-school education would be restricted. For that reason, I am unable to accept the amendment.

The Government are committed to encouraging diversity and parent choice. Amendments Nos. 20 and 21 would confine the proposed arrangements to specified local authorities and reflect the Opposition's commitment to expand the interests of local authorities rather than those of parents and children. As I have stressed on more than one occasion, we want the provision to be recipient-led, consumer-led, rather than producer-led.

I turn to Amendments Nos. 29 and 31. The Government's policy is that the issue and redemption of vouchers will be handled by a single agency, and for the pilot year a firm has already been contracted. Substantial economies of scale are likely to be available from such an arrangement. The noble Lord, Lord Carmichael, suggested that the system would be complicated and bureaucratic, that it would not deliver quality and would be open to fraud. We take fraud extremely seriously and I have already explained to the Committee the efforts that we will be making to counter that. We will make every effort to make this as simple a system as possible.

On the accusation that it will be too bureaucratic, we are certain that the cost of running the system will be about 2 per cent. of the value of the vouchers, and we believe therefore that it will be a very cost-effective system.

On the allegation that the quality will suffer, I do not believe it is sound. It certainly could not be substantiated before the evaluation comes in. As I have said, Her Majesty's inspector will be checking the quality of the education and local authorities are involved in licensing childcare. There are therefore various means by which quality will be maintained.

If the Bill is enacted it will be the Government's intention to delegate to the voucher management agency the payment of grants and perhaps other functions such as the maintenance of a register of persons eligible for grants. Economies of scale would be lost by confining such an important function to local authorities. In any event, it would be inappropriate for functions under Clause 23 to be delegated generally to local authorities since they are likely to be one of the major recipients of grants.

For all those reasons we believe these to be unsatisfactory amendments and, given the serious assurances that I have given on some of the points, I would urge the noble Lord to withdraw the amendment.

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