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Lord McIntosh of Haringey: Perhaps I may make an immediate response to the first point made by the noble Lord, Lord Lucas, about numbering. I learnt only this week that a new system of numbering had been introduced towards the end of last year. I have already entered my protest, which is exactly that of the noble

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Lord, Lord Lucas. It seems to me that we had a numbering system which, although complex, was profoundly rational in that one could always find an amendment in its place in the Bill. We have now introduced a system in which the time of the tabling of the amendment becomes a significant factor in the numbering. I can assure the noble Lord that the Government Front Bench will take up the issues that he has raised.

Baroness Blatch: I, too, am very grateful for what the noble Lord has just said. It may also be convenient to deal with the tabling of amendments. The truth is that we spend a long time looking for our amendments and reporting back to the office that they are not there only to be told through a telephone call that they are there. That adds a great deal of time to our handling of the Bill, particularly when we have a group of amendments such as this, which is a very large batch of technical amendments.

I wish to ask the noble Lord, Lord Whitty, some questions on Amendment No. 257Y under Clause 132 relating to articles and instruments of government. I am decidedly unhappy about that. If I read the notes properly, it is designed with an eye to the position of GM schools from Easter through to September and that somehow it will be at variance with the GM articles of government. I see no reason whatsoever why the GM articles of government cannot continue until the school formally becomes a foundation school. I see no reason at all for Amendment No. 257Y.

My other point relates to Amendments Nos. 168D and 168F. I join with my noble friend Lord Lucas on the points he made about these amendments. I have worries about the schools acting as agents and not principals. My understanding is that GM schools have been principals and not agents. Even so, under the new system--and this is another bit of autonomy that will be removed--they will become agents and not principals. If that is the case the school spends the money and the LEA collects the VAT. Is the VAT then reimbursed to the school? If it is not then the LEA receives a nice little pot of money. I hope to have that clarified.

I also take this opportunity to say that it is helpful to have the explanatory notes in advance. It gives us the opportunity to see what the amendments are about. But the letter I received was copied only to the noble Lord, Lord Tope. My noble friend Lord Pilkington received a "Dear Lord Tope" letter and my noble friend Lord Lucas received no letter at all. Given that we are now seasoned participants in these debates, when letters of this kind are sent out, which are meant to help everyone in the House, anyone participating in the debates should receive copies of the letters. It is not only me who is interested but everyone in the Chamber.

Lord Lucas: Perhaps I may add that it is very helpful, when faced with a small desk and a pile of junk mail, if envelopes containing important documents have

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"ministerial/urgent" stickers on them. Such stickers help one to identify which envelopes to open first. I confess that my copy may be lying unopened on my desk.

Lord Whitty: I note those points. We shall attempt to ensure that the Front Benchers participating in these debates receive copies. Frankly, it is impossible for us to predict which other noble Lords are likely to participate in any debates. The question of misaddressing mail is slightly different, and I apologise for that. However, we managed to anticipate that the noble Lord, Lord Lucas, would be participating in this debate though, unfortunately, not early enough or clearly enough to ensure that he received the note.

The noble Lord's main concern relates to the justification for the Secretary of State having the power to remove a delegated budget. We would not see that power being used on a whim, as the noble Lord implied, but that is the only provision which allows the Secretary of State to suspend the delegation of a budget if the governing body has been guilty of financial mismanagement. That is the reason for that provision. I think that I am right in saying that these amendments do not alter that provision, which has been there throughout.

With regard to the point raised by the noble Baroness about Amendment No. 257Y on the overriding of instruments and articles of government of GM schools, we do not imagine that that provision will come into play extensively. It is designed mainly with an eye to the position of a GM school which finds itself without a delegated budget in the transitional period--that is, between April 1999 and August 1999--before the new regime is operating. In that event, we intend that staffing matters at the school should be governed by the rules which will apply to aided and foundation schools from September 1999. That would be at variance with the pre-existing articles, and it does not seem sensible to deal with the conflict by producing an amended set of articles which would be valid for only a few weeks. That is the reason for that provision.

The noble Baroness also asked about VAT. These amendments seek to make clear the position with regard to VAT payments which will normally be reimbursed. The removal of doubt as to that provision should enable a more favourable VAT arrangement to apply to schools as well as to LEAs.

With those comments, I ask the Committee to accept Amendment No. 167A--

Lord Lucas: Although the noble Lord's comments are much appreciated, they did not answer my question on sub-section (3) of what will be new Section 4A, under Amendment No. 259D. The basic powers for suspending delegated budgets are contained in Schedule 15. I refer to the continuing power which the Secretary of State or a local authority or whoever--it is principally the local authorities--has under various other pieces of legislation. We are looking at the transitional provisions that will apply as the Bill comes into effect. It is not clear to me that there is any necessity for this as a transitional provision. It is drawn

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extremely widely and, unlike the other powers under Schedule 15, it is not controlled by way of requiring there to be prior evidence of suitability.

Can the noble Lord give an example of the sort of circumstances in which this provision will be required? I do not wish to deprive the Government of this provision if it is clearly required to deal with some massive crisis. However, if it is merely a matter of a safety provision to a safety provision, which is the way it looks, it is drawn far too widely for us to regard it as a reasonable provision for the Government to have.

Lord Whitty: Schedule 15 will apply to LEA maintained schools. It would be needed to stop a GM school getting a delegated budget on entry into the new framework if during the transitional period there occurred an impropriety, or whatever, in relation to which the Secretary of State would normally intervene. Again, this reflects the transitional provision. Without it, the school would move immediately into the new framework, under which it would be entitled to a budget.

Lord Lucas: Perhaps a short letter with an example and some dates would be the best way of handling this.

Lord Whitty: As this provision will arise later perhaps we may deal with it then. In the meantime, I shall let the noble Lord have some further information.

Baroness Blatch: If a school does not have a delegated budget between May and September, what on earth does it have? Is the noble Lord suggesting that this applies only to a GM school that has failed to manage its affairs, has been formally decreed by the authorities to be incapable of self-management, has had its management responsibility taken away and is without power to manage a delegated budget? If that is so, I understand the position. I would find it helpful if that was confirmed.

As to VAT, will the noble Lord return to the Dispatch Box and make clear that, where self-governing schools spend money and incur VAT, that will be reclaimed by the LEA merely as a technicality and pound for pound it will be reimbursed to the particular source of the expenditure?

9.15 p.m.

Lord Whitty: On the first point, I believe that the noble Baroness has correctly interpreted the position, but I welcome the opportunity to provide an answer in writing. This relates only to the situation during the transfer period and to financial mismanagement. I shall clarify that matter by way of clause references, if that helps the noble Baroness. As to the question of VAT, that is exactly the regime that we intend should be put in place, and this amendment is for the avoidance of doubt.

On Question, amendment agreed to.

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Lord Whitty moved Amendment No. 167B:

Page 39, line 9, leave out subsections (2) to (5).

On Question, amendment agreed to.

[Amendment No. 168 not moved.]

Lord Whitty moved Amendments Nos. 168B to 168E:

Page 39, line 37, leave out ("Every maintained school other than an existing") and insert ("A new").
Page 39, line 40, leave out ("A school within subsection (6)") and insert ("Such a school").
Page 40, line 12, at end insert--
("(8A) Any amount made available by a local education authority to the governing body of a maintained school (whether under section 49 or otherwise)--
(a) shall remain the property of the authority until spent by the governing body or the head teacher; and
(b) when spent by the governing body or the head teacher, shall be taken to be spent by them or him as the authority's agent.
(8B) Subsection (8A)(b) does not apply to any such amount where it is spent--
(a) by way of repayment of the principal of, or interest on, a loan, or
(b) (in the case of a voluntary aided school) to meet expenses payable by the governing body under paragraph 3(1) or 3(2) of Schedule 3 or paragraph 14(2) of Schedule 6.").
Page 40, line 13, leave out subsection (9).

On Question, amendments agreed to.

Clause 48, as amended, agreed to.

Clause 49 [Effect of financial delegation]:

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