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Lord Ewing of Kirkford: Before my noble friend Lord Carmichael responds, did I correctly hear the Minister say that the private firm to run the voucher agency scheme had already been contracted? If that is so, how long is the period of contract that has been given to the company and why on earth have a pilot scheme if the Government have already made arrangements to put the whole scheme into being?

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The Earl of Lindsay: All that has been contracted is 12 months of a pilot operation.

6 p.m.

Lord Carmichael of Kelvingrove: This is something that we shall certainly want to go into on Report. Two per cent seems quite a bargain. I do not know how many grants they will be giving out to make a living from 2 per cent., bearing in mind the other overheads as well. I think it will be considerably more unless it is to be a second-rate business.

I should like to ask the Minister a question. The noble Baroness, Baroness Carnegy, spoke about parental choice and the lack of provision of nursery education in certain areas of the country, but said that in some areas it is beginning. Can the noble Baroness give us any idea of the private nursery places in her area, the ones with which she is now familiar? One of our suspicions is that there is always private nursery education available if one pays enough for it, but the vast majority of parents are not able to pay anything like what a private nursery school costs. As far as I know in my area, which is a city centre, for lots of people it is right out of their budget; they could not possibly do it. Many people have said, and most people believe, that with the £1,100 voucher all that will happen is that the fees will go up. There may be a slight reduction in the fees as against now, but it will still be much more expensive than most people can afford.

Before I withdraw the amendment, can the noble Baroness give us any idea of the sort of cost of nursery schools? I understand that Fife, as the Minister said, has a very good reputation and I understand it reckons it is costing between £2,400 and £2,600 per year per child at a nursery school. I wonder if that is the sort of figure that the noble Baroness is thinking of?

Baroness Carnegy of Lour: I am sorry I cannot give the noble Lord chapter and verse because I do not know about the costs. I believe that the Scottish Consumer Council in its original submission said that it thought the effect of a scheme of this sort would be to drive down the costs of nursery school provision. It may be right about that; I do not know.

We had an exchange during the collection of evidence and I cannot remember with whom I discussed the question of why it would be wrong to have a nursery school in a private house. I know various people south of the Border who do this and have very good nursery classes in their own houses and in their own gardens, and it does not have to be a big garden or a big house. I was interested that when we were collecting evidence there was an assumption that this would not be a wise thing to do. It of course reduces the cost enormously if that is the way it works, and certainly one of the units that I was discussing was in a private house. However, I am sorry that I cannot give chapter and verse; I wish I could.

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The Earl of Lindsay: It might just help the Committee if I touch on the value of the voucher and the additional provision for capital expenditure as regards the local authorities, which noble Lords opposite have mentioned. The voucher value will not cover the full cost of the high-cost places and it was never designed to do so. It is nevertheless a generous contribution by the taxpayer, and parents or local authorities who go for higher cost places can indeed top up the cost themselves.

However, a recent Audit Commission study of the position in England and Wales confirms that the voucher value enables the taxpayer to meet either the whole cost, or nearly the whole cost, of provision of all kinds. The study shows that the voucher value more than meets the average cost of playgroups and nursery classes, and most of the expense even of relatively high-cost, part-time nursery school places.

I would also say a word on capital expenditure. In the private and voluntary sectors, any capital needed for expansion will, as ever, be raised commercially. Now with the support of voucher income, education authorities set their own priorities for capital expenditure and voucher income can be used to meet loan charges. In addition, of course, there are also the new-found freedoms under the private finance initiative for local authorities. That may give some assurance on the issues raised by noble Lords opposite.

Lord Carmichael of Kelvingrove: The Minister has given us a great deal of information and it is something we will be able to look at with care and get advice on, but we will certainly be raising it at the next stage of the Bill when we go back into the House. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 21 and 22 not moved.]

Lord Ewing of Kirkford moved Amendment No. 23:

Page 11, line 22, leave out subsection (2) and insert--
("(2) Grants under this section shall be payable for a limited period in order to evaluate their effectiveness and shall be additional resources over and above that which would otherwise have been available.").

The noble Lord said: Amendment No. 23 gives the Minister an opportunity to clear up what has become a major issue in relation to this legislation. Before I speak to the amendment perhaps I may make it clear that in discussion on Clause 23 stand part I shall return to three of the points the Minister has just made; first, about the value of the voucher; secondly, about the ability to top up the voucher; and, thirdly, about the ability to use the value of the voucher against borrowing. Certainly two of those three issues do not apply to local authorities. I shall come back to those points on clause stand part.

Amendment No. 23 relates to the pilot scheme. When at Second Reading we discussed the whole question of the Government injecting new money into the old scheme, the Minister chided me somewhat for saying that the scheme would not cost the Government a penny piece, and that all the money to run the scheme would

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be taken from the local authorities and would be redistributed through the voucher scheme. The Minister chided me and said that the Government were putting in,

    "£30 million of new public money"--[Official Report, 11/12/96; col. 1143.]

I quote his own words from the report of the proceedings at Second Reading.

At almost exactly the same time as the Minister was saying that, a report appeared in the Scotsman of 12th December. It was written by a reporter called Elizabeth Quigley and headlined "No extra money for nursery voucher scheme". Although the comments are not attributed directly to the Education Minister, Raymond Robertson, he certainly makes no mention of any additional resources, either for the pilot scheme--that is what the amendment deals with--for the voucher scheme itself. What this amendment seeks to ensure is that the money to finance the pilot scheme--and the four areas for the pilot scheme have already been announced--will be new money and will not be money taken from the education budget and redistributed. I need not go any further on that. All we want with this amendment is an assurance that the money to fund a pilot scheme in the four local authority areas where it is to be operated will be new money, additional to the money for education that is presently allocated. I seek that assurance from the Minister.

The Earl of Lindsay: I can assure the noble Lord that £3 million of new money is being made available for the pilot year. Just to set out clearly how the financing of the main implementation of the nursery voucher scheme will work--because I remember as well as the noble Lord does that we had some interchange about this at Second Reading--we expect the initiative in Scotland to cost some £70 million in a full year once it is up and running. Part of the funding of the initiative in broad terms--some £40 million of the £70 million--will come from re-applying part of the education authority funding for pre-school children. To the re-applied local authority funding, the Government will add some £30 million of new funding each year once the pre-school initiative has been extended nationwide. Both in the pilot year, and indeed in a full year once it is up and running, we are making a substantial investment in this with new money.

Lord Ewing of Kirkford: I am grateful for the assurance that, in relation to the pilot scheme, it will be absolutely and totally new money, and no local authority will have money withdrawn from it in order to fund or finance a pilot scheme. As regards the issue of additional resources, which both the Minister and I touched upon, 1998-99 is the earliest it is anticipated that this scheme could be extended nationwide in Scotland. We are talking about some time in advance, which, at present, is irrelevant. I accept the assurances that the Minister has clearly given, that, in relation to the pilot scheme, it will be totally funded by the Scottish Office centrally. On that basis, I beg leave to withdraw the amendment.

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The Earl of Lindsay: I accept that £3 million of new money is being made available for the pilot scheme starting this August. We anticipate that the total cost of running the pilot scheme will be in excess of £4 million. If I understand the information I have correctly, just over £1 million will be recycled among those local authorities who will be involved in the pilot scheme. Approximately £3 million will come from the Government and the Scottish Office in the form of new money, and just over £1 million will come from the local authorities who are involved in the pilot area.

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