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Lord Monkswell: In a previous debate, our noble colleague from Essex--I regret that I forget his name--

Lord Henley: I believe that the noble Lord refers to my noble friend Lord Dixon-Smith.

Lord Monkswell: I thank the Minister. The noble Lord, Lord Dixon-Smith, suggested that the nursery voucher scheme was an example of subsidiarity. A rather better example of subsidiarity is the mechanism put forward by this amendment. We need to recognise that while there may be some advantages for individuals receiving nursery vouchers, there will be disadvantages in terms of the withdrawal from local education authorities of funding which is currently spent on nursery provision. We need to recognise that factor. We need to recognise, too that local people should be able to judge the balance of advantage and disadvantage.

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The noble Baroness, Lady Young, spoke of everyone wanting to become grant-maintained but being prevented from doing so by adverse propaganda, pressure and so on. I do not believe that anything could be further from the truth. I suggest that one of the reasons why there have been no opt-outs in, for example, Manchester, is that the local population has considered the balance of advantage and disadvantage and made a judgment locally that it is better off within the local education authority provision rather than opting out. To argue that it has been coerced is absolute nonsense. People make a judgment locally.

While the Government provide the facility for individual schools to opt-out of local education authority administration within the area--effectively going from LEA administration to national administration--it is surely only right that the local community should be able to make that judgment about the provision of nursery education within its area--whether it should be funded and provided through the LEA or through the voucher scheme. Surely it is only right that the Government should allow that sort of local discretion. It would enable the local community to accommodate the situation that will pertain in the local area.

Perhaps I may give two examples of how that situation might be variable. At one end of the spectrum a local education authority, having received the revenue support grant funding for nursery provision which the Government are intent on withdrawing, may make up that funding from other areas within the budget: from the council tax or by diverting funds from other areas of revenue support grant. At the other end of the spectrum the perspective could be completely different. Not only will the situation vary from one local education authority to another; it will also vary over time. Among other provisions, this amendment would enable those who will be subjected to the regime to make a decision, probably year by year, which on balance will be to their advantage. I hope the Committee will recognise that as a very sensible and logical provision to make within the Bill.

Baroness Hayman: I support the amendment. I see it as a way of limiting, at least in some cases where parents participate in these ballots, the transaction costs that worry me in relation to the implementation of the scheme. I share some of the concerns expressed on the Benches opposite in relation to ballots of parents; namely, that a particular group of parents at a particular time will shape policy in their area for the future. This issue has been of particular concern in relation to grant-maintained status. As the noble Earl, Lord Baldwin of Bewdley, said, there is the difficulty of going back when perhaps a different group of parents concerned with the same school take a different view about how they want the school organised.

My anxieties about the transaction costs involved in the nursery voucher scheme are such that I believe we ought to take any opportunity to limit those costs. As I said at Second Reading, I have had the bitter experience of working in the health service, and seeing the introduction of markets and pseudo-markets in the provision of a public service. I have seen the costs that

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come with that. I have two concerns in relation to this particular scheme. The first was argued by the noble Baroness, Lady Farrington. It relates to the number of layers of transaction costs that will be involved in recycling the money back into the local education system where the majority of nursery education is being provided. I should much prefer to see a scheme whereby local education authorities were able simply to provide, with targets set for them, the most suitable and necessary education in their particular areas through whatever providers--voluntary, public or private. It is a waste of public money to enter into the sort of transaction costs that are proposed.

The other issue is whether schools and local education authority nursery schools will be able to reclaim the money owed to them, as it were, for the pupils whom they already have on their books. The noble Baroness, Lady Farrington, referred to the difficulties involved.

We underwent a similar exercise in the National Health Service, when we changed from funding provider units directly to a system of capitation funding through purchasers. It was called the "template" exercise. The object was to look at what hospitals were doing, see where the patients came from, see what every treatment cost, and then divide up our budgets. The money would then be reallocated to all the purchasing authorities for them to provide a purchase service on behalf of patients and come back to the hospitals through a different route. That was to be called "steady state"; and there was to be no difference in the funding. Seven years on, we are still arguing about the inaccuracies in the template as it was first set up. It makes me extremely wary that this scheme will simply plough back to those already providing the service the funds necessary to do so. For those reasons, I very much support this amendment.

Lord Sewel: The Bill and the amendments provide an interesting example of the tensions between individual decision-making and collective decision-making. It could be reasonably argued that individual decision-making is an appropriate form of decision-making where there is a clear alternative, and collective decision-making relates to either something or nothing at all.

In the scheme before us, people do not have the opportunity anywhere in the elaborate decision-making process into which they are almost entrapped, of saying, "No, we don't want a voucher scheme". They can make a choice as to whether to go down the public or the private route thereafter. But that choice is already open to them, and will remain open to them under any circumstances. The difficulty is that the Bill does not give the individual a choice in terms of saying yes or no to the voucher scheme per se. My noble friend's amendment tries to achieve an opportunity for parents to say, "No, we don't want a voucher scheme. We will exercise our choice between different forms of nursery provision, completely separate from a discussion about provision through vouchers".

Lord Tope: Before the Minister replies, I wish to comment briefly on the points made by my colleague, the noble Lord, Lord Bowness, in suggesting that under this amendment the electorate is perhaps drawn a little

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too narrowly. As I am sure he knows, the basis of the electorate mentioned in this amendment is exactly the same as that currently used for grant-maintained schools. If he wishes to argue that the electorate for a ballot to opt out and assume grant-maintained status should include prospective parents, particularly from feeder primary schools in the case of a secondary school, and from neighbouring schools that would be affected if the school were to opt out, I should have much more sympathy for his argument.

The purpose of this amendment is simply to base the electorate on the same basis as that chosen by the Government in dealing with primary and secondary schools that wish to opt out of the system. That is the point. In addition, in this case we are talking about parents and schools having a change imposed upon them which they may feel they do not wish to accept. We are saying that they should be given an opportunity to decide for themselves whether or not they wish to adopt this scheme. In other words, we give them freedom of choice.

Lord Bowness: Perhaps I may respond to the noble Lord on that point. Clearly, he did not understand the difference between the ballot for the opting out of a grant-maintained school and the proposal in the amendment. If parents vote to take the school out of the direct control of the local education authority into the grant-maintained system, free education still exists, whether in the grant-maintained sector or the local authority maintained sector. Parents within the area of the local education authority can put their children, if they feel so strongly about it, into a local education authority directly maintained school.

In this situation, however, if the amendment were carried, parents who could not get their children into local authority maintained nursery education would be denied the right to the voucher, which they might find particularly useful, given that for a number of reasons, not just to do with resources as I outlined in my previous remarks, there may not be sufficient places. Such a vote by such a closed community would deprive a larger number of people of the benefits of a national scheme. With respect to the noble Lord, Lord Tope, there is a significant difference.

5.30 p.m.

Lord Henley: I am very grateful to my noble friend Lord Bowness for making that point. I had intended to assure the noble Lord, Lord Tope, that he was wrong. I shall come to that in due course.

I find this the most extraordinary amendment in many ways, first because we now see the party opposite espousing opt-outs. I seem to remember the one-time Opposition education spokesman in another place, Mrs. Ann Taylor, telling a Labour Party conference, "We oppose opt-outs in principle because it is wrong", but we have seen further changes today.

The reason I find the amendment totally extraordinary is its wording and its wholly defective nature: first, because it does not do what the noble Baroness is setting out to do; and, secondly, because of its extraordinary

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lack of precision or definition. First, the amendment draws absolutely no boundaries for the areas which might opt out of the scheme, merely referring to:

    "any area of the local authority".

How would that be defined? Would that be the parish? Would it be a parliamentary constituency? Could it simply be one borough within the LEA or one district? The matter is not defined at all. Secondly, the amendment specifies that only parents of children attending maintained nursery schools--I emphasise that, and that is what the amendment says--would be eligible to vote in such a ballot. As I think the noble Baroness will be aware, there are some 550 maintained nursery schools in England, but they are not spread evenly throughout the country. There are a number of LEAs with no maintained nursery schools at all. In those LEAs all the maintained nursery provision is made in nursery classes attached to primary schools or in reception classes. They are excluded from the noble Baroness's amendment.

I shall give the noble Baroness a few examples which will be close to home for her and for the others who put their names to this amendment. Lancashire, which the noble Baroness knows well, has more maintained nursery schools than any other English LEA. I am advised that in January 1996 there were 39 maintained nursery schools. Sutton, which the noble Lord, Lord Tope, knows as well as the noble Baroness knows Lancashire, had only two maintained nursery schools in January 1996, although Sutton does make extensive provision for children under five, but in nursery classes, not in nursery schools. Perhaps I can turn to Oxfordshire, although I see that the noble Earl, Lord Baldwin of Bewdley, is not in his place. I regret I do not have the figures for Leicestershire, with which he also has connections. Oxfordshire has some 18 nursery schools but has a relatively low overall participation rate for the under fives. A final interesting example would obviously be Solihull, which the noble Baroness mentioned, and there was much debate in another place, as the noble Baroness will be aware, about that particular LEA. Solihull has no nursery schools at all, so there would be no parents eligible to take part in the ballot because their provision is made not by means of nursery schools but by nursery classes or reception classes.

Thirdly, one has to look at who is being asked to take part in that ballot. I merely ask why parents of children in maintained nursery schools should be able to determine whether or not all other parents in an area should be able to benefit from the new grant arrangements. That certainly is the effect of the amendment as it stands.

We want to give parents of all four year-olds the opportunity to choose the type and nature of the nursery education which best suits their child. When we say "all", we mean all of them and not only those currently fortunate enough to have secured a nursery education place. That is why we believe very strongly in parental choice, and the voucher effectively allows every parent to express his or her view about local provision across the board. If that local provision

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satisfies the parents' needs, the maintained schools and LEAs have nothing to fear and will lose nothing whatsoever. We also want to offer opportunities to those who have not yet secured a place for their children or who would prefer a different sort of place. Let us be quite clear that if a local education authority wants to continue to provide the same number of places to the same children, it will be absolutely free to do so and will not lose out. If an LEA continues to recruit the same number of children in the same pattern, it will be no worse off. I have heard no allegations from the noble Baroness or others that the kind of provision which local authorities are making is not satisfactory and that individuals will not wish to make use of it. Good provision, from whichever sector, that is meeting the needs of the parents has absolutely nothing to fear, and I hope therefore that the noble Baroness will feel able to withdraw her amendment.

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