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Lord McIntosh of Haringey moved Amendment No. 61:
The noble Lord said: In moving this amendment, I shall also speak to Amendments Nos. 62, 62A and 257M.
Amendments Nos. 61 and 62 require education action fora to send their accounts to the National Audit Office and for the NAO to report on them to Parliament. It is important that the fora which run action zones are subject to financial scrutiny. That is why, as well as being sent to the Secretary of State, accounts should also be available to the Comptroller and Auditor General. In
this way, reports on the use of funds in education action
zones will be available to both Houses of Parliament.
Amendments Nos. 62 and 62A propose exempt
charitable status for those education action fora. An
important aspect of action zones is the partnership
between the public and private sectors. We know from
discussions that contributions from the private sector are
more likely if the action fora are charitable.
Increasingly, private sector contributions will improve
the value for money of the programme. Action fora
should be exempt charities, which means that they are
free of some of the powers of the Charity Commission
and the Charities Act 1993 because they are already
accountable to the Secretary of State, and, through
Amendments Nos. 61 and 62, already open to inspection
by the National Audit Office. I beg to move.
Baroness Blatch: I wish to ask the noble Lord two
questions. First, whether it is making money or making
a profit, how does charitable status fit with a surplus
being made from the fee that is paid for taking on an
action zone? It is important to consider that point.
Perhaps the noble Lord can throw a little more light on
the technicality of how charitable status would work.
For example, as I understand it, there are bodies that
are likely to be part of the partnerships that set up the
action zones. But equally, the same bodies are likely to
receive funds for providing services to the action zone.
If they are already part of a consortium and are receiving
funds from the consortium for providing services to the
group of schools, will they receive money as though
they were charities? How will that interrelate?
Lord McIntosh of Haringey: Exempt charities are
outside the supervision of the Charity Commission
because they are considered to be adequately supervised.
But they are still subject to the legal rules generally
applicable to charities and a few of the provisions of the
Charities Act 1993. For example, they must meet certain
accounting guidelines, but these are less stringent than
we would expect from education action fora in any case.
They do not have to be submitted to the Charity
Commission.
The fiscal benefits of exempt charity status are the
same as those for registered charities. They have relief
from income tax, corporation tax and capital gains tax.
They have exemption from inheritance tax and relief
from business or non-domestic rates. They are not
VAT-exempt as a class but some of their activities are.
That leads me to the second part of the noble
Baroness's question. As she knows, many charities
which are themselves unable to make a profit--and the
education action fora will not be able to make a profit--
are able to have trading arms which are companies
usually in charitable circles limited by guarantee.
Alternatively, they are private companies to which the
charities contract to perform a service for them as could,
for example, the Prince's Trust. Those private
companies can make surpluses on the fees they charge.
I hope that that answers the questions put by the noble
Baroness. I should be glad to go into more detail if she
needs it.
Baroness Blatch: No, I am grateful to the noble Lord
for that answer. However, if the companies are part of
the consortium and provide services to it and they are
allowed to make profits for the services they render to
the consortium as members of it, they will be making
profits from schools within the consortium.
Lord McIntosh of Haringey: Unfortunately the
noble Lord, Lord Rix, has left the Chamber. He has been
advising me on this matter and is a great expert on it as
the Committee knows. As my noble friend Lady
Blackstone said in response to an earlier discussion,
what happens is that the trading part or private
companies who are carrying out contracts on behalf of
the fora can charge fees. Part of those fees can be a
profit, but the fora, because they will be exempt
charities, will not be able to make a profit.
Baroness Thomas of Walliswood: I understand the
explanation which the noble Lord gave about charitable
status. I welcomed the first two amendments. If
I remember correctly, at Second Reading my noble
friend Lord Tope referred to the desirability of involving
the Auditor General. I am happy to see the two
amendments.
I am much less happy about the charitable status
element of the group for a much more general reason
than the reasons given by the noble Baroness, Lady
Blatch. It seems to me rather curious that in education
some organisations have charitable status and some do
not. Private schools have charitable status. I think I am
correct in saying that grant-maintained schools have
charitable status. I believe I am also correct in saying
that in this Bill foundation schools, which are the
successors to grant-maintained schools, will have
charitable status. But ordinary maintained, about to be
called community, schools do not. That is quite
indefensible. Either all education establishments ought
to have charitable status or none of them. I urge the
Government to think carefully because the matter of
Lord McIntosh of Haringey: The noble Baroness is
tempting me way outside the scope of these
amendments. They are about the charitable status of
education action fora. If the noble Baroness wants to
have a debate on charitable status for schools, let us
have it at some decent time of day.
On Question, amendment agreed to.
Lord McIntosh of Haringey moved Amendment
No. 62:
On Question, amendment agreed to.
Lord McIntosh of Haringey moved Amendment
No. 62A:
Page 104, line 31, after ("State") insert ("and to the Comptroller and Auditor General").
Page 104, line 39, at end insert--
("( ) The Comptroller and Auditor General shall examine, certify
and report on each statement received by him in pursuance of this
paragraph and shall lay copies of each statement and of his report
before each House of Parliament.").
Page 105, line 11, at end insert--
. An Education Action Forum shall be a charity which is an exempt charity for the purposes of the Charities Act 1993.").
On Question, amendment agreed to.
Schedule 1, as amended, agreed to.
12.30 a.m.
Clause 12 [Functions of Education Action Forum]:
[Amendments Nos. 63 and 64 not moved.]
Lord Skidelsky moved Amendment No. 64A:
The noble Lord said: I am sorry to return to a subject
we started two hours ago. We just have to continue
with it.
The aim of Amendment No. 64A is to use the
machinery of the forum which Clause 12 of the Bill sets
up for a rather more flexible purpose than envisaged by
the clause. I move the amendment in a constructive
spirit. I would have moved exactly the same amendment
had I been on the Benches opposite and I hope that the
Minister--I do not know which Minister is to reply;
perhaps I should say the ministerial zone--treats it no
less sympathetically because I am here rather than there.
The amendment seeks to give effect to what I believe
was the main idea behind the action zone concept; that
is, to give the worst performing schools new leadership
and fresh ideas. That is what Mr. Blair proposed in his
Action zones are defined as clusters of schools up to
around 20. Not all of those schools will be failing. No
doubt the whole zone might benefit from what the
Minister called improvements across the zone. That is
not in dispute. But seriously failing schools may well
require special treatment--often a different school
ethos; often a different, special kind of stimulus for that
specific school which might in turn light the way for
other schools.
Mr. Stephen Byers talked about beacon schools.
Schools such as those I am proposing might become
beacon schools--beacons to others throughout the
land--and the amendment is designed to make that
possible. Why should not groups of teachers, parents or
other educational bodies be allowed to bring their
enthusiasm and energy to bear on the task of raising
standards in schools which, year after year, defy the best
efforts of local education authorities to do that? We
know that that can happen.
We have heard of the spectacular successes of the
charter schools. There are now 1,000 charter schools in
the United States; it is the largest growing educational
reform movement in that country. We have seen what
can be done by dedicated groups of teachers in East
Harlem. In all those cases, school district boards have
been courageous enough to say to the proposing group,
"We think your ideas are worth a try. Here are your
targets. You have three to five years to achieve them.
Get going." But that movement could not have got going
with this legislation.
The trouble with the present legislation is that no
educational trust, no groups of parents and no groups of
teachers can ever get into the bidding system. They
cannot apply for a charter to run an individual school
as they can in the United States. I am appealing to the
Government to be bold enough to allow a charter school
movement to develop in this country out of the idea of
the education action zone. There is a great deal to be
said for studying how charter schools in the United
States deal with the difficult problems of pay and
conditions, which were raised earlier in our debates.
My amendment has roughly the same purpose as
Amendment No. 49 moved by my noble friends
Lady Blatch and Lord Pilkington, but with this
difference, which I want to stress. My leased out schools
will be inside the action zone forum framework set up
by the Bill. The individual school will be in the zone
and responsible to the forum. It would be the job of the
forum to decide which of its schools to put out to tender
and on the terms and conditions of the charter, if I may
call it a charter. The school will be responsible to the
forum for its results but it will not be managed by the
forum. It will be the proposer's task, and the proposer's
task alone, to make a success of the job, and the
proposer will be accountable to the forum for results but
Page 11, line 25, at end insert--
("(7) A Forum may lease out any school in its zone designated
by the Chief Inspector for England as failing to an approved
educational body on such terms and conditions as it may specify.
(8) A school leased out under subsection (7) above shall remain
accountable to the Forum but shall not be subject to its direct
management control.").
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