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Lord Roper: My Lords, we on these Benches feel that, although there are some issues in the regulations which could be questioned, overall they make a useful and necessary contribution, particularly for the reasons adduced by the noble Baroness, Lady Miller. We therefore support the passage of these regulations.
Lord McIntosh of Haringey: My Lords, I am grateful to both noble Lords for their support for the regulations. I can reassure the noble Baroness, Lady Miller, about shareholders. Unless it was a slip of the tongue and she meant to refer to directors, the present position is that shareholders are not required by company law to file their home addresses at Companies House. In the same way that these regulations provide
for directors, shareholders can give a service address, an accommodation address or the name and address of a nominee—for example, their solicitor or accountant. They can give the address of the company, if the company agrees. The only requirement is that they have to be able to receive shareholder communications. These regulations concern only directors who do not have that protection and who are covered by companies and limited liability partnerships legislation.On Question, Motion agreed to.
Limited Liability Partnerships (Particulars of Usual Residential Address) (Confidentiality Orders) Regulations 2002
12.34 p.m.
Lord McIntosh of Haringey: My Lords, I beg to move.
Moved, That the draft regulations laid before the House on 7th March be approved [22nd Report from the Joint Committee].—(Lord McIntosh of Haringey.)
On Question, Motion agreed to.
Limited Liability Partnerships (No. 2) Regulations 2002
Lord McIntosh of Haringey: My Lords, I beg to move.
Moved, That the draft regulations laid before the House on 7th March be approved [22nd Report from the Joint Committee].—(Lord McIntosh of Haringey.)
On Question, Motion agreed to.
Companies (Competent Authority) (Fees) Regulations 2002
Lord McIntosh of Haringey: My Lords, I beg to move.
Moved, That the regulations laid before the House on 7th March be approved [22nd Report from the Joint Committee].—(Lord McIntosh of Haringey.)
On Question, Motion agreed to.
Limited Liability Partnerships (Competent Authority) (Fees) Regulations 2002
Lord McIntosh of Haringey: My Lords, I beg to move.
Moved, That the draft regulations laid before the House on 7th March be approved [22nd Report from the Joint Committee].—(Lord McIntosh of Haringey.)
On Question, Motion agreed to.
Contracting Out (Local Education Authority Functions) (England) Order 2002
12.35 p.m.
Lord Davies of Oldham rose to move, That the draft order laid before the House on 7th February be approved [20th Report from the Joint Committee].
The noble Lord said: My Lords, the contracting-out order is made under provisions in the Deregulation and Contracting Out Act 1994. I am pleased to have the opportunity to debate the order.
The main purpose of the order is to allow local education authorities greater flexibility in the delivery of services. LEAs need this flexibility for two main reasons. First, LEAs are tasked with securing high quality services to the schools, parents and pupils in their areas. They are key to delivering many of the improvements that we want to make. But local education authorities may not be able to deliver these improvements on their own. They will, in most cases, need to work in partnership with others.
We cannot expect all LEAs to house within one organisation all the skills and expertise necessary for their wide-ranging responsibilities. We need to build the capacity of LEAs through effective partnership working. Many LEAs are already using partners to deliver back-office functions but there are also significant capacity issues for LEAs trying to deliver high quality front-line services such as those covered by this order.
Secondly, our policy of best value obliges local authorities to review their services and to consider whether the service needs to be provided and, if so, who is best placed to provide that service. Local education authorities are currently limited in the range of services they can deliver in partnership with others. Whether or not they are the organisation best placed to provide a service, they are obliged by statute to undertake many education functions in-house.
Tasks such as drawing up a school organisation plan, making arrangements for statementing SEN pupils and enforcing school attendance orders currently have to be undertaken by an officer of the LEA. The order will allow LEAs, if they wish, to contract with private or voluntary bodies to deliver services such as these which require the exercise of discretion in individual cases. So the order will give LEAs greater flexibility in securing the most effective delivery of their services.
LEAs will remain ultimately responsible and accountable for all contracted out functions. LEAs will continue to set the direction and the strategy. They will ensure that the implementation of that direction and strategy is reflected in their contracts. While a contractor may carry out functions on behalf of the authority, the authority will retain overall control and ultimate accountability.
To reflect this, we have excluded from the order a number of key strategic decisions that we believe an authority should not contract out. For example, the
approval of key plans, such as the authority's education development plans and early years and childcare development plans; setting local policies, such as school admission policies, and reviewing arrangements for children with SEN or behavioural difficulties; putting forward proposals for new schools or to close schools; determining the education budget and the budget share schools receive. These decisions remain for the LEA to determine—decisions for which the authority should be directly democratically accountable.The order has been the subject of consultation with the local authority associations, local education authorities, trades unions and other interested bodies. We have taken their views into account in drafting the order. LEAs that responded to the consultation have broadly welcomed the flexibilities offered by the order.
I should also stress that this is not a privatisation agenda. The contractor need not be a for-profit commercial company. It could be a voluntary or not-for-profit company, or a company formed as a partnership, or a joint venture between a local authority and a commercial undertaking or voluntary body. LEAs will also be able to take advantage of the new freedoms on trading activity proposed in the recent local government White Paper in order to provide services for other LEAs where they wish. What matters is that the services are provided by the organisation that is best placed to provide the highest quality service, be it in the public, private or voluntary sector.
The order is an enabling measure. It will allow local education authorities to secure better value services for their schools and for the local community. It will remove legislative barriers to partnerships between the public, private and voluntary sectors, trying out new and better ways of delivering services. Whether to contract out is entirely for LEAs to decide, in line with their obligations under "best value". The order has been welcomed by the LEA sector. I commend it to the House. I beg to move.
Moved, That the draft order laid before the House on 7th February be approved [20th Report from the Joint Committee].—(Lord Davies of Oldham.)
Baroness Blatch: My Lords, I am grateful to the noble Lord for setting out and explaining the order. Like him—even on Maundy Thursday—I am pleased to have the opportunity to debate the matter.
The Government are committed to modernising local authority services. As with so many well-intentioned ideas of the Government, implementation invariably means greater complexity, some confusion, certainly more bureaucracy, and greater cost.
I support greater flexibility for schools and local education authorities, and I support more innovation and enterprise in the provision of services. In principle, all of that is a good thing. However, the way in which local authorities are required to go through the "best value" process is cumbersome; and it is costly. Looking at the three schedules to the order, I am bound to ask: will not the best value testing process be
so time-consuming and costly that the ultimate operational and financial benefit will be diminished, if not eliminated?I noted that in presenting the order the Minister referred to a number of areas that would be outside its provisions: education development plans; early years planning; admissions arrangements; special educational needs and educationally behavioural disordered young people; new schools; merger schools; and budget. He said that the reason was that local authorities should retain the accountability for those services. My understanding of the order is that local authorities will retain accountability for all the services, including those set out in the three schedules. I shall come to that point later.
I want to press the Minister on the issue of local authorities retaining accountability for services that are contracted out. I understand that, if the volume of contracted-out services is to increase significantly, it follows that cost and bureaucracy will increase too, and the areas of activity will be more complex—that is, not simply contracting for teaching or provision of direct services but to involve third parties in, for example, the area referred to in paragraph (y) of Schedule 1:
- "section 406 (prohibition on political indoctrination in maintained schools)".
On the issue of the schedules, perhaps I may refer at random to a few examples. Perhaps the noble Lord will be able to offer some clarification as to how, in practice, these provisions will work. For example, paragraph (hh)(ii) of Schedule 1 relates to Section 441 functions under the Education Act 1996:
- "choice of school; child with statement of special educational needs".
- "Functions conferred by or under the School Standards and Framework Act 1988",
- "section 26(1),(2), (3) & (4) (duty to prepare a draft Schools Organisation Plan and consult on it)".
- "section 28(5) and paragraph 5, Schedule 6 (consultation on proposals to establish or alter a community or foundation school and implementation of approved proposals".
Paragraph (h) of Schedule 2 refers to:
- "responsibility to fixing dates of terms and holidays and times of sessions".
- "section 70 and schedule 20 (requirements relating to collective worship".
My final example is paragraph (bb) of Schedule 2:
- "section 105 (duty to provide information in relation to grammar school ballots)".
These areas will now have to come under the best value arrangements. In each of these areas, local authorities will have to carry out a distinct best value exercise, in regard to lists of activities covering pages, in deciding whether or not to contract out. As the Minister said, this is a voluntary activity; nevertheless, a great deal of time and energy will be expended—and time is money.
I have to ask the noble Lord the following question. Would each LEA be required to review each and every aspect of service listed in the three schedules to test for best value? If LEAs are to be exempt from going through that test, why are they not exempt from going through it on any other matter that precedes the order? How time-consuming would all that be, and how costly? There must be a more efficient way of achieving cost-effective and, more significantly, operationally efficient contracted-out services.
Local education authorities are now inspected. That is a good thing. Inspections will cover the degree to which an authority is well managed, and the quality and cost-effectiveness of its services. That is also a good thing. Many of the functions set out in the schedules encroach more and more on the strategic and core functions of local education authorities. The Minister must tell the House how, in contractual
terms, an LEA will retain distinct boundaries between service provision and strategic and core function accountability. Will it require yet more guidance—as if schools do not have enough already?It would also be helpful if the Minister could explain the interaction between the present contracting-out arrangements and relationships between schools and LEAS and commercial or voluntary enterprise, and the proposals for setting up companies as set out in the current Education Bill by the Secretary of State—and by the LEAs and the schools themselves.
A point raised by my honourable friend Graham Brady in another place was the degree to which schools which exercise powers of exemption under Clause 2 of the Education Bill could potentially disregard those provisions if they had applied successfully to innovate in order to raise standards by converting the cost of what would be incurred by conforming to the orders and implementing the provisions to areas of classroom expenditure which could, indeed, provide a better educational return. Does the Minister agree with a comment made by my honourable friend in another place that, under this order, LEAs would be reduced to advising, consulting and implementing the strategy being farmed out, leaving the LEAs as mere contract managers? I ask that question for clarification, as much as anything, about where the Government expect to see local education authorities over the next few years.
The Minister in another place appeared to dismiss the consultation exercise on these measures. A number of points raised by respondents have not been adequately addressed. Like us, the respondents to the consultation exercise broadly welcome the principle of improving the delivery of services by contracting out with the commercial, private and voluntary sectors. However, they were concerned, as, indeed, we are, about the split functions, the quality and the quantity of providers, and, again, the interaction of the proposals in the current Education Bill giving the Secretary of State power to form a company.
An additional, very real issue is the cost of implementing the order. It is disingenuous—almost misleading—to suggest, as the Government have done, that it is cost-neutral. The additional work at local education authority and school levels will cost. Once again, that cost will have to be met by raiding money that should be spent on children in the classroom. For example, a great deal more co-ordination will be required. That is time-consuming, and, as I said earlier, time costs money.
I noted that the Minister in another place, in answer to a question by my honourable friend Graham Brady, concerning the contracting-out of services for identifying children with special educational needs and assessing appropriate provision for them under Section 321 of the 1996 Act, said that it would not present any problems. However, I must ask the Minister a question concerning the case of an aggrieved parent who was critical of a judgment made by a contractor. According to the Minister, the parent would simply appeal to the LEA where the
accountability lay. But can the Minister explain what the situation would be if, in such an event, the LEA was taken to a tribunal for the failure on the part of the contractor not because the contractor was incompetent or inefficient but because the parent disagreed with the judgment made by the contractor? The situation is hardly straightforward and it would cause a great deal of confusion.Many examples given by my honourable friend and by Members on the Liberal Democrat Benches in another place threw up complex and often confusing aspects of this order, especially the area of responsibility for strategic functions and the diffuse delivery of the service. Given the fact that this is Maundy Thursday and that this is the last item of business, I shall not—this may come as a relief—pursue some of those details further. However, I want to raise one point.
The Government claim that the aim of the order is to increase flexibility, to widen choice in the provision of LEA services and to provide better value for money. We support those aims. However, the Government will know that there is considerable disquiet about the practical implementation of these measures and their impact on LEA schools and, more especially, on children. We shall take the Government on trust by not opposing the order. But I hope that the Government will be vigilant in monitoring its effects and will seek to remedy any shortcomings in order to pre-empt any possible adverse, even if unintended, consequences.
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