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Lord Davies of Oldham: My Lords, will the noble Lord forgive me? We are restricted to seven minutes each in this debate.

Lord Hannay of Chiswick: My Lords, I am so sorry. I shall draw to a close if I may.

The point that I am making is that the new sector of the universities as a service industry is worth nurturing. I noticed that in an article in the Observer 10 days ago the right honourable gentleman the Prime Minister said:

That quotation seems to me to illustrate two key points. One certainly cannot have world-class universities if one is not prepared to pay for them.

Noble Lords: Order!

Lord Hannay of Chiswick: My Lords, I am so sorry. I am on my last sentence if noble Lords will permit me to complete it, but, of course, I shall not complete it if they do not wish me to do so. May I complete it?

Lord Davies of Oldham: My Lords, I believe that the noble Lord has had his time. He has seven minutes—that is all.

5.58 p.m.

Lord Dormand of Easington: My Lords, there are many pleasurable features about being a Member of your Lordships' House. One of the less favourable aspects is to put down your name for a speech, as we have all done today, and then come to the Chamber and find that, out of 22 speakers, you are 22nd. I say that because, as we all know, speeches in this Chamber are of a very high level and one can guarantee that, in the carefully produced speech that one has prepared, the points which one makes will have been dealt with at least six times before it is one's turn to speak.

However, in this case, I am glad to say that the noble Lord, Lord Dearing, who mentioned further education a number of times—a subject with which I intend to deal—at least left me room to raise some of the details. In the few minutes that I have, that is what I intend to do.

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The most neglected sector of the education service is that of further education; that is, for the age range of 16 to 19 year-olds. Nearly 4 million students attend further education colleges in England and, as in other areas of education, standards vary a great deal. My right honourable friend the Minister of State for Lifelong Learning said recently that only half the students going through FE colleges succeed in finishing and passing their courses. Perhaps I should say that some doubt has been expressed about that figure. If it is even anywhere near that figure—I suppose it is—that is a devastating comment on that particular sector of education.

We have to ask how that position could arise. I believe that there are a number of reasons, but I say immediately—I mean this sincerely—that blame cannot be laid at the door of the teachers and lecturers in further education. In my experience in this sector, which is fairly considerable, I find them to be as conscientious and enthusiastic as teachers in other sectors of education. However, I make one comment on that aspect. Staff in further education do not usually receive the training which teachers in other sectors receive. I believe I am right in saying that up until fairly recently some did not have any kind of training whatever, but that has improved. Perhaps the Minister can say something about that when she replies.

It is probable that that training would be somewhat different from other teacher training because of the circumstances in which some, indeed most, FE teachers are recruited. Nevertheless, there are some principles which govern the whole process of learning from infant stage to university of which all teachers should be made aware. Perhaps the real problem with further education is the serious long-term underfunding; an aspect which has been talked about for some considerable time in the field of further education and was frequently referred to in yesterday's lobbying of Parliament by FE teachers and managers. Perhaps some of your Lordships were there yesterday and realise the tremendous impact on the people concerned.

The Association of Colleges claims that colleges receive 20 per cent less funding for every individual who goes through an A-level programme in colleges than schools receive for their A-level students, comparing like with like. If that is correct—I follow these matters fairly closely and think there are grounds for believing it—it is a most serious situation which needs urgent attention from the Government. I am sure that my noble friend will have something to say on that when she replies. It will require a huge sum to redress the balance for FE to that of schools and universities. The Government said that they are spending more. Some of us would like to know exactly how much more.

Can the Minister say why there is such a difference in funding for FE? Presumably the Government feel that there is a reason. FE has long been the poor relation—I hope I shall be forgiven for using that phrase—in the field of education. Now is surely the time to try to correct it. I understand that colleges work on the 1995-96 core funding levels. If that is the

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case, it is inevitable that the quality of their work will be affected. Indeed, it is incredible that they achieve the level of success they do despite the difficulties.

There is all-round praise from the Learning and Skills Council, the annual report of Her Majesty's Chief Inspector of Schools and the National Audit Office. All of those bodies are aware of the basic handicap endured by the colleges. Your Lordships may know that HM Chief Inspector of Schools has been inspecting FE colleges since April 2001. Obviously, findings show that there are weaknesses, as is usual in all inspections of education establishments, but I give two of the inspectors' findings:

    "The level of academic and personal support offered to students is high, and priority is given to ensuring that students are well prepared to progress to higher level courses".

That sentence is of great importance. One of the basic aims of which the colleges are proud is laying the foundation for higher education. The annual report of Her Majesty's Chief Inspector of Schools states:

    "Teaching and learning were found to be satisfactory in over 91 per cent of lessons".

As a former Chief Inspector who has had to deal with many HMI reports, perhaps I may say that that is high praise indeed and something which we should not forget. That is not to say that there are not shortcomings; there are, but they measure slightly against what I have just said.

I see that my time is up. I know that we shall receive detailed replies from the Minister on the points I have raised.

6.6 p.m.

Baroness Sharp of Guildford: My Lords, we have had a good debate today, even if there have been occasions when I thought that we had been carried forward to next week's debate on universities. I join others in paying tribute to the noble Lord, Lord Dearing, for initiating the debate, which, with the forthcoming Comprehensive Spending Review in July, is extraordinarily timely.

As everyone knows, since 1992 the Liberal Democrats have put a great deal of emphasis on the concept of investing in education. We have deliberately used the term "investing in education" because we have always felt that spending money now reaps rewards later. In terms of considering the rewards from spending resources on education, a number of Members of your Lordships' House, including the noble Lords, Lord Dearing, Lord Bragg and Lord Puttnam, emphasised what I call the competitive element. As the noble Lord, Lord Bragg, said, the future lies in using our brains. We can no longer compete by brawn; we have to compete by brain. We must invest in those brains if we are to remain competitive with other industrialised countries.

However, in putting emphasis on investment in education, the Liberal Democrats think not just in terms of being competitive. We on the Left still feel that education is a vital route to equality of opportunity, and that equality of opportunity is still a

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good objective. In new Labour-speak it is a question of overcoming poverty and social exclusion. We also feel that education is a vital route to self-fulfilment of the individual. Paddy Ashdown used a term which I did not like: empowerment of the individual. I much prefer the term self-fulfilment. One gets much more enjoyment out of life if one can read. Education opens many doors.

We have heard much about statistics. There is no doubt that somewhere in the region of 5 per cent of our GDP currently goes into education, broadly defined. GDP is currently about £1,000 billion. Therefore, 1 per cent of GDP is £10 billion, and 0.1 per cent is £1 billion. We are talking of annual figures. If we can raise the amount of money that is put into education from the current 5 per cent to somewhere in the region of the OECD average, which is currently about 5.8 per cent but by 2005 is more likely to be 6 per cent, we are looking at an annual injection of about £10 billion per year.

I make a plea to the Minister for better statistics on what is being spent on education. From the Budget Red Book one cannot find out that information because the figures are mixed up. We cannot get the figures from the Blue Book because we do not know whether what is stated is in terms of financial years or calendar years. May we have a good and consistent set of statistics on precisely how much is being spent in each sector of education? Noble Lords may know that in the financial year 2000-01, there was, indeed, an underspend of £1.5 billion on the education budget but we do not know where that £1.5 billion came from. Perhaps the Minister can tell us. That is a great deal of money. As the noble Baroness, Lady Carnegy, said, it is vital that we spend money on those whom the system has failed so often. It would be marvellous if we could use that £1.5 billion in that way.

The debate has concerned the question of whether we have the necessary resources in order for the Government to fulfil their targets. The targets that they set in their manifesto relate primarily to the secondary school and further education sectors. They concern improving the quality of education in secondary schools; increasing the participation rate after the school leaving age of 16; and—we have heard a great deal about this—achieving a 50 per cent participation rate in higher education, particularly among social classes 4 and 5.

One of the problems is that we cannot achieve that latter target unless we improve the former. There are not enough people in social classes 4 and 5 with the requisite qualifications coming forward to go to university. It is therefore absolutely vital that we improve the quality of teaching in secondary schools.

I return to a point that I have made time and time again. I do not understand why the Government are putting around £500 million into specialist schools, most of which serve middle-class areas and the middle-classes, rather than putting that money into the schools that need it the most. More than 30,000 children each year leave school with no qualifications. That occurs particularly in the inner cities, although I

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know that the Excellence in Cities initiative is helping a great deal. But other schools that are regarded sometimes as failing schools also need more money.

The average amount that is spent on secondary school pupils in this country is £2,600. In private schools it is £6,000. We should be spending £6,000 per pupil in those failing schools. It is those pupils who need this money, not often the middle-class children. I make that plea from my heart because I feel very strongly about it.

Perhaps I may also pick up the question of teacher recruitment raised by the noble Baroness, Lady Warnock. There are currently 5,000 teacher vacancies in secondary schools in England and Wales. Having on average, as we do, 30 pupils per class, that means that 150,000 pupils are currently without teachers.

I should also like to refer to the Roberts report on science and engineering. Are noble Lords aware that 60 per cent of those teaching physics at key stage 4 have no degree in physics; that 30 per cent do not even have an A-level in physics; and that 50 per cent of those teaching chemistry do not have a degree in that subject? That is a terrible indictment of our secondary schools system. The Roberts report makes it quite clear that more resources are needed.

I echo the words of the noble Lord, Lord Quirk. Are there not ways in which we could bring in mature people from other careers to help? For example, in my own area—Guildford—many people with draftsman skills were made redundant by British Aerospace. They could be brought in to teach some of the subjects. There is a crisis. We need to do something about it.

I was delighted that the noble Lord, Lord Dormand, mentioned further education. The 14 to 19 year-old sector is crucial. The big skill gaps are not in degree level qualifications but in level 3 qualifications—the A-level equivalent in vocational subjects. It is in this area that year after year we have failed. We must now succeed. I echo the words of the noble Lord, Lord Dormand. I think that our further education colleges do a great job and need to be encouraged. But they need more resources. We need to have a look at their teachers' salaries. Many jobs have been casualised. Often staff receive salaries which are little above the minimum wage.

Teachers in secondary schools who cover the same area—there is a good deal of overlap at A-level—are receiving more money. Their salaries are higher than those in further education colleges. There is currently a leaching of resources from further education colleges. One is paid more teaching in a primary school than one is in a further education college. There is a great need for more resources to go into those colleges. These vocational qualifications are vital to us. Very shortly I shall stimulate a debate on the shortage of plumbers. Unless we train these people, noble Lords may ponder on the issue of who will do one's plumbing in future. Currently, we have fewer than 6,000 people training to level 3, which is the A-level equivalent in plumbing. There is an enormous problem.

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I was going to talk more about the university sector, but we have heard a good deal about that. I have been a university teacher. I declare an interest in that I think I am still a member of the Association of University Teachers. The work is terribly paid. Again, we are paying our schoolteachers more than we offer young people, of whom we demand a doctorate, to work in our universities.

As a woman, the universities have totally failed to implement the Bett report. I know what the Minister will say. She will turn around to all of us with an interest in universities—I know because I have asked so many Questions in this House—and say to us, "It is nothing to do with me, my Lords. Each university employs its own people. It is up to the universities to pay what they wish to pay". That is precisely what the Government say. They know perfectly well that the universities cannot pay this money unless the Government put more money into them.

Our university system is in danger of collapsing unless more money goes into it. We have an excellent science base. Again, that is in danger of collapsing unless we put more money into it. All your Lordships' pleas are utterly right: let us have more investment in education.

6.16 p.m.

Baroness Blatch: My Lords, I, too, congratulate the noble Lord, Lord Dearing, on initiating this debate. The noble Lord, as we all know, brings to this House many years of public and private sector experience and in particular is renowned for the Dearing report on higher education and his close involvement with national curriculum issues. The noble Lord has focused today on the need for high-quality skills education. He has posed the question: are the resources sufficient to support teachers and students in order to meet the Government's policies for education and skills? The noble Lord visited the past and the present. He took a look forward to the future with energy and his usual passion for the subject. We thank him for that.

I want to touch on a number of reforms which have made a contribution to raising standards. The introduction of the national curriculum, even with some early teething problems, brought to an end the ability of schools to allow children to leave school without having studied—for example—a science, a language, history or geography, and, all too frequently, without any meaningful qualification.

The introduction of systematic assessment and testing and the setting up of Ofsted under its first chief inspector, the noble Lord, Lord Sutherland, made it possible for Ministers, teachers, parents, students and for the wider community to know just what was being achieved by children in our schools. Also, more information was provided about the performance and the management of schools.

The Government have added to that by introducing the inspection of the performance of local authorities. We welcome that. The problems resulting from the bureaucracy that accompanied the introduction of the

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national curriculum and the need for greater flexibility, particularly at key stage 4, was addressed by my noble friend Lord MacGregor as Secretary of State for Education and further refinements were carried out by his successors.

Additional choices for the 14-16 year age group were introduced through the development of national vocational qualifications and general national vocational qualifications which incorporated a more applied and vocational approach to learning.

City technology colleges were introduced by my noble friend Lord Baker of Dorking. These paved the way for the introduction of specialist schools with an emphasis on subjects such as science and technology, the arts and music, languages and sport.

The devolution of management to schools through the grant-maintained school system and greater financial autonomy for all schools resulted in better decisions being taken at the school level, consistent with school-based priorities.

There was also a revolution in the rights of parents and the public to receive information. As a percentage of GDP, as stated throughout the debate, funding for education during the five years up to 1997 exceeded that of the five years since 1997.

The number of students entering higher education was increased from one in eight to one in three. Students from poorer families received up to 50 per cent of their maintenance costs through government grant and did not have to pay tuition fees. The Government, since coming to office, have retained and even built upon many of those reforms. Unfortunately, self-management of schools was reversed. That has led to a high degree of central control which will increase yet further if the current Education Bill going through this House is passed in its present form.

The question posed by this debate must be considered against the background of concern on the part of teachers, parents and governors. The issue of teacher shortages remains serious. There are fewer applications to fill each school vacancy—especially, as has been said, in key subjects such as maths, science and languages. An unacceptable number of temporary supply teachers is employed in our schools and too many teachers are now teaching subjects for which they were not trained. All of that will impact on the quality of education.

On Radio 4 today, the concerns of the headmaster of a highly successful comprehensive school in Fareham that had lost 38 teachers during the year, 15 of whom—all of them young teachers—had left teaching completely, were dismissed as atypical and unnecessary whinging by a Labour Member of Parliament, Mr Barry Sheerman. His reaction was breathtaking in its complacency. There is also real concern about the increasing level of indiscipline in the classroom, against which teachers have few sanctions and little defence. Truancy rates are unacceptably high.

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Head teachers and governors are concerned about core funding for their schools. That concern is shared by the Association of Colleges, representing further education colleges, which, like the school sector, argues for a greater proportion of funding currently held back and controlled by central government to be allocated direct to schools and colleges. There is an irony when the Secretary of State accuses local authorities of not passing funding to schools. The Government are more culpable of that charge and would do well to heed their own advice.

It is a widely held view within schools and further and higher education institutions that the level and cost of bureaucracy is far too high. The bidding process for the increasing number of government-controlled initiatives is time-consuming, wasteful and costly.

Nick Seaton, of the Campaign for Real Education, has done excellent work on a soon-to-be-published pamphlet exposing the way in which the system allows government at national and local level to eat away at core funding. Perhaps the Minister can tell the House—if not today, by letter—exactly how many centrally funded initiatives have been announced and at what cost in each year since 1997.

As has been said, the proposed flexibility, allowing for a better match of aptitude and ability with additional high-quality vocational options, planned for 16 to 19 year-olds, is to be welcomed. However, the proposals raise expectations. I know that it is stating the obvious to remind the Government that schools and colleges will require additional support if they are to deliver effectively. Greater vocational options will require high-quality syllabuses to be with teachers in good time. More training and more up-to-date equipment and materials will also have to be provided.

On an administrative but important point, the logistics of transporting secondary school pupils, especially those in rural areas, who may be time-tabled for classes partly in school and partly in the workplace and/or in a further education college, will be complex and expensive. Who will be responsible for the arrangements and must the costs be met from schools' budgets?

The introduction of individual learning accounts, which was designed to improve technology training, turned out to be a costly disaster. It failed miserably because the Government's scheme was flawed from the outset. We know that genuine learning providers have been badly let down—not to mention the lost opportunities for potential students. What has been the cost of learning providers' losses? How much money has been lost due to fraudulent activity under the ILA scheme and when will the replacement scheme be announced?

Turning only briefly—due to time constraints—to higher education, I agree with the noble Lords, Lord Moser, Lord Sutherland and Lord Layard, about university salaries. Unless that issue is addressed, the quality of higher education staff will be affected, especially at the doctorate level. I must declare a vested interest as the mother of a doctorate researcher in a scientific field. It is only family embarrassment that prevents my telling the House precisely what he is paid.

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The Government's target of 50 per cent of young people entering university has been seriously queried. Recent attempts by the Minister for Lifelong Learning and Higher Education in another place to suggest a system of social engineering to force universities to meet government targets are frankly risible. If the Government are serious about more young people from poorer backgrounds having access to university, improving their educational qualifications at school to equip them for entry is the answer.

It was the Government themselves who disadvantaged students from low-income backgrounds. Having given categoric assurances during the 1997 election campaign that they had no plans to introduce tuition fees or to abolish maintenance grants, within days of coming into office they turned down the excellent proposals of the noble Lord, Lord Dearing, abolished maintenance grants completely and introduced tuition fees. We now await new proposals with baited breath.

To punish universities that refuse to compromise standards to indulge in social engineering is wrong. More than that, it is patronising to the very young people whom the Government purport to help.

The final sting in the tail for education is the imposition of a 1 per cent national insurance levy on employers as well as on individuals in work. Local authorities will have to find a further £300 million, the bulk of which will have to be paid for out of the cash grants to schools announced in the Chancellor's Budget.

Education is a liberator. Its purpose is to pass on knowledge and to deepen the intellect as well as to develop applied skills. I do not doubt for a minute the Government's intention to raise standards and to raise the aspirations of those in education. Those are honourable aims concerning the quality of education for all. However, to make them a reality, much of the wise counsel that has emanated from this debate should be inwardly digested.

The Government—in particular, the Secretary of State for Education and Skills—should let go the reins by reducing central government control and freeing up professionals to teach. They should cut red tape and bureaucracy; they should resist the temptation to announce initiatives by the week; they should consider a radical reduction in the size of the department; and they should pass on the resultant savings directly to schools and colleges.

That would be welcomed by teachers, governors and parents alike, and it would go a long way to achieving the aims underlying the question posed by the noble Lord, Lord Dearing, at the beginning of this excellent debate.

6.27 p.m.

The Parliamentary Under-Secretary of State, Department for Education and Skills (Baroness Ashton of Upholland): My Lords, I thank the noble Lord, Lord Dearing, for initiating this debate. Indeed, I am always thanking him; he so eloquently makes the case for investment in education. I am also grateful to all other

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noble Lords for their contribution to what has been a stimulating debate, especially the reminiscence of "The Goon Show" from the noble Lord, Lord Sutherland of Houndwood. Of course, I heard the programme only in repeats, not in the original broadcast.

I agree with much that noble Lords have said, and apologise that speed must be my guardian; I shall answer as quickly as I can. I agreed with much of what the noble Baroness, Lady Blatch, said and pay tribute to her for the role that she has played in developments in education.

I begin by re-affirming the Government's commitment to the education and skills of this country. That remains a top priority. To quote the noble Lord, Lord Dearing, we believe in "bold decisions". We know that to be a successful country competing in the global marketplace we need a better educated and more highly skilled workforce. Demand for skilled workers is growing and estimates show that by 2004 we will need about another 150,000 information and communications technology workers alone. By 2010, about 55 per cent of new additional jobs will require a degree. As the noble Lord, Lord Dearing, and my noble friend Lord Puttnam said, we must succeed by competing successfully with the new or existing economic tigers—and do so by raising our game.

There are also wider issues. In society as a whole, education helps to reduce crime rates, improve health, lower infant mortality and increase social tolerance. As the noble Baroness, Lady Sharp, said, it is also about self-fulfilment.

The past five years have witnessed improvements in education. Our commitment was to raise standards and lay the foundation for a world-class education system. We have begun to succeed.

Like the noble Lord, Lord Dearing, I am aware of many international comparisons and I am wary of trying to compare unlike systems. We have heard many statistics and figures today. The noble Lord, Lord Dearing, quoted the noble Baroness, Lady Sharp, who was of course accurate, but her figures include both public and private expenditure. Noble Lords will know that in Germany and the United States, in particular, private expenditure is especially high. That expenditure was on institutions and excluded expenditure on student support. Spending as a proportion of GDP is 4.9 per cent for the UK, 5.1 per cent for the United States, 6 per cent for France and 4.6 per cent for Germany.

In the past three years, education spending in the UK has risen faster than in France or Germany. As noble Lords have said, the proportion of GDP is set to rise to 5.3 per cent in 2003-04. Most importantly, we must have a reality check: what do those figures mean for pupil funding in schools? They mean that pupil funding has risen by £670 per pupil in real terms.

The noble Baroness, Lady Blatch, asked about centrally funded initiatives. We have set targets for LEA resources. Some 87 per cent of the resources should be delegated to individual schools. I will write

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to the noble Baroness with the details. The noble Baroness, Lady Sharp of Guildford, asked for the figures for the consistent spend in the department. The annual report is due to be published on 16th May and will have all the detailed figures in it. If she can wait that long, I commend it to her.

There are three basic principles behind the underspend in the department. First, there is slippage, which, last year, included the implementing of the teachers' threshold. There is also reorganisation, under which responsibilities have been moved between departments, and initiatives that have been ring-fenced but have not yet been able to spend their resources. The noble Baroness, Lady Sharp of Guildford, and other noble Lords will be aware that Sure Start is one of the initiatives in that category.

Capital funding has more than quadrupled since 1997. It is up to £3 billion this year. We aim to ensure that school buildings are fit for the teaching and learning needs of the 21st century. We want to make sure that they have the most positive impact on pupil and community achievement. We are making £6.5 billion available over the next two years, including £1.7 billion of PFI credits. In the Budget, the Chancellor announced £85 million additional capital funding. I say to my noble friend Lord Dormand of Easington that FE colleges will receive an equal proportion of that amount.

The noble Lord, Lord Dearing, talked about the plight of the 20 per cent of children whom society fails at school. We know that getting a good education is the key to breaking free from the cycle of deprivation. We must equip everyone with the education, skills, support and equality of opportunity that they need to succeed and avoid the risk of exclusion. In doing so, we will create the social and educational inclusion that the right reverend Prelate the Bishop of Portsmouth spoke about. He said that his experience in the Isle of Wight demonstrated the importance of support for children with special educational needs. I agree wholeheartedly with him.

The noble Earl, Lord Listowel, spoke eloquently—as he has, importantly, often done in your Lordships' House—about the plight of looked-after children. He made some really important points. We have designated teachers for such children. We believe that that will make a difference, and we recognise that the target for their educational achievement is low. It is a beginning, not an end. I work closely with the Minister of State at the Department of Health, Jacqui Smith, in a group that we have convened to look across government to see what more we can do to support such children.

The noble Lord, Lord Northbourne, talked about the crucial early years—from nought to three—in the development of children. He eloquently made the case for the involvement of parents and of government resources. Through programmes such as Sure Start—I thank my noble friend Lady Massey of Darwen for her support for the programme—we seek to improve the health, development and well-being of young children. We know that, by improving the social and

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emotional development of our disadvantaged young children, as well as their ability to learn, we will give them the best possible start in life. That is the kind of joined-up thinking referred to by the noble Baroness, Lady Walmsley.

The National Childcare Strategy, currently being reviewed throughout government under my chairmanship, has created 484,000 new childcare places. It, too, is concerned with how we make sure that we join up our thinking, something referred to by the noble Baroness, Lady Walmsley, and the noble Baroness, Lady Howe of Idlicote. We want to ensure that, by 2004, every lone parent who wants to go to work is offered a childcare place.

I am grateful to the noble Baroness, Lady Howe of Idlicote, for her support for our work in nursery education. There is funding for nursery education for every four year-old whose parents want it, and we are on track to provide funding for every three year-old whose parents want it by 2004. All those initiatives are geared to giving the under-fives the best possible start in life.

One of the most resounding and tangible achievements of the Government has been the improvement in standards and achievement in our primary schools. In 1997, almost half of 11 year-olds were leaving primary schools without the ability to read. The investment of £200 million a year in literacy and numeracy has paid off. Three out of four 11 year-olds are up to speed in English, and seven out of 10 achieve the required standards in maths. There is more to do. We have challenging targets for the future because we understand how important it is that every child reaches secondary school able to access the curriculum. To help children learn more effectively, we have invested to take 500,000 children out of overcrowded classes and put them into classes of 30 or fewer.

I can say to the noble Baroness, Lady Walmsley, that only 331 infant classes have 31 children or more. Of those, 249 exceeded the target for permitted reasons—for example, the children may have moved in-year. In small schools, for which administrative costs are proportionately high, we have invested £240 million for the next three years.

My noble friend Lady Gibson of Market Rasen talked about the teaching of modern foreign languages. We have debated that in your Lordships' House. I say categorically to her that we are developing a strategy to ensure that, within 10 years, it will be an entitlement for every primary school age child to learn a modern foreign language. I am happy to write to the noble Baroness or discuss the details with her at any time.

I also thank my noble friend Lady Massey of Darwen for her support for the National Healthy School Standards. She is right that it promotes a whole-school approach to health.

We want to build on the excellent work in primary schools to raise standards in our secondary sector. Our specialist schools will not be found only in middle-class

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areas but are part of a range of ways in which we hope to improve the sector. We are making the commitment that the noble Baroness, Lady Warnock, seeks.

We wish to see more 16 year-olds staying on at school, getting better GCSEs and going on to higher education. Although 50 per cent of pupils now achieve five good GCSEs, 50 per cent do not. The noble Baroness, Lady Carnegy of Lour, made some important points about the consequences of our failure to deal with that issue. The challenge is to raise participation and support the retention of young people in post-16 education.

Estimates have shown that, at key stage 3—the middle years, 11 to 14—two out of five pupils fail to make the expected progress in the year following their transition from primary school. The noble Baroness, Lady Carnegy of Lour, may find that that explains some of the figures that she gave for those two schools.

I hope that your Lordships will consider it fair if I say that, in the past, our pupils were sometimes expected to fit the education system, rather than the system being designed to fit their needs. We know that all children are different; they learn in different ways and at different paces. For our 14 to 19 year-olds, we want to introduce new pathways to learning and a revised curriculum. We want to give as much credibility to vocational as to academic routes and provide guidance and advice services. Those measures are all part of a package designed to transform that phase of learning.

I could not agree more with what the noble Lord, Lord Trefgarne, said. Industry needs diverse skills, and vocational GCSEs are an important part of that. The Connexions service has an important part to play in supporting pupils and helping them to understand industry. It is because we believe that it is an important area that we have put £25 million into education-business links, including the opportunity for work experience.

The noble Baroness, Lady Blatch, also referred to the issue of transport. I am in the process of writing to the noble Baroness on the subject, but I will say to her that we are considering pilot schemes to see how we can manage things effectively and ensure that we do not disadvantage young people, while recognising that there are costs involved.

My noble friend Lord Dormand of Easington and the noble Lord, Lord Dearing, and the noble Baroness, Lady Sharp of Guildford, raised the important issue of further education. We value what the further education sector has to offer and are providing substantial increases in further education funding. It is a key part of the 14 to 19 strategy. I agree that it should work in partnership with schools. I say to my noble friend that extra funding of £527 million is planned for further education for 2001-02. In real terms, that is an increase of 12 per cent, with a further increase of 3 per cent this year. The total allocation to the Learning and Skills Council for further education in 2002-03 is £4.3 billion. The noble Lord may, however, be right: not only has further education been underfunded, it has been undervalued.

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My noble friend Lord Dormand of Easington also raised the issue of FE training. From 2001, all new entrants to FE must hold on appointment or acquire within a tight timescale an approved teaching qualification. All costs of training, including supply cover to enable new entrants to acquire a teaching qualification, are covered by the Standards Fund. Some £80 million is available to colleges this year from the Standards Fund to support continuing professional development for staff. That money will provide match funding and will double the impact of the colleges' investment in their staff.

The noble Lord, Lord Dearing, talked of the importance of the Cassels report. We are implementing the main recommendations made by that committee to ensure that all modern apprenticeships meet the highest standards. We have already announced an additional £180 million over the three financial years 2001 to 2004 to support and develop a new generation of modern apprenticeships. And we do indeed support the University for Industry.

The noble Lord, Lord Haskel, made some important comments about workforce education and training. We know that already employers make a substantial contribution to workforce development, but this expenditure is not uniformly distributed. The lowest skilled still tend to miss out and small firms are less likely to offer development opportunities.

There have been many successful initiatives. The Investors in People standard has been one example. In the Budget, my right honourable friend the Chancellor announced an additional £30 million to encourage take-up of this standard, especially in small businesses.

I agree with my noble friend Lord Haskel that the issue of partnership with business is crucial. A number of noble Lords, including the right reverend Prelate the Bishop of Portsmouth, spoke of the need for partnerships between different aspects of government, health, education and the voluntary sector to support our children. I refer to government, local education authorities, schools, HE, FE, adult learning and the excellent challenge of partnership between schools, FE and HE.

We also recognise that there is much to be done with our adults, 7 million of whom lack basic skills. It is a big challenge but the price of failure is bigger. Those adults represent, in a sense, our past failures; the 20 per cent to which the noble Lord, Lord Dearing, referred. As the noble Baroness, Lady Howe, said, some of the children we failed have arrived in our prison system.

The noble Lord, Lord Quirk, spoke of the prisoners' learning and skills unit based in the department. I take on board his points about Level 1 and Level 2 but we have been trying to establish a dramatic improvement in the quality and quantity of prison education and training. The partnership we have established will ensure that all prisoners have access to education and training in prison and that on release they have gained skills and qualifications as well as personal, social and life skills to hold down a job and resettle.

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I take entirely the concerns raised by the noble Lord, Lord Dearing, and the noble Baronesses, Lady Massey and Lady Blatch, about recruitment and retention of teachers. I have said many times in your Lordships' House, and with support from your Lordships' House, that we owe an enormous debt to our teachers. Our education system will only ever be as good as those who work in it. I know that public sector pay has recently been discussed a great deal, but a good experienced teacher is now taking home a salary 30 per cent higher than in 1997 and all teachers have benefited from pay rises above the rate of inflation.

I have always acknowledged that we have teacher shortages and noble Lords will not be satisfied until we have filled the vacancies, especially the noble Baroness, Lady Warmsley, as regards maths and science and in other subjects such as languages and religious education. Golden hellos, training bursaries and the starter-home initiative are all part of the wide package of measures to increase the recruitment and retention of the workforce. They are beginning to work.

I say to the noble Baroness, Lady Walmsley, that in the Budget last week the Chancellor announced £87 million to help cut bad behaviour from the classroom. It is one of teachers' top concerns, a cause of low morale and for some leaving the profession.

We are also supporting teachers in other ways. We have recruited an additional 25,000 classroom assistants; we now have 94,000. We have given more than 100,000 teachers and heads access to laptops and provided funds to reduce bureaucracy—important points made by the noble Baronesses, Lady Blatch and Lady Howe. I know that we need to maintain that momentum and to do all that we can to improve the lot of our teachers.

The good news is that national statistics published by my department today show that teacher numbers are up by 9,400 since January 2001, the biggest single-year increase in more than 20 years. There are also now nearly 500 fewer vacancies in London. The teacher vacancy rate in London is now down to 2.6 per cent from 3.5 per cent.

The noble Lord, Lord Quirk, spoke of teacher training. The number of people starting teacher training courses has risen by 5 per cent on last year's figures, which were up 8 per cent on the previous year. But as the noble Baroness, Lady Sharp, said, we need to offer more flexible routes to encourage mature applicants; those people looking for a change of career, classroom assistants, experienced teachers without QTS or those with family responsibilities—clear pathways. The Teacher Training Agency is charged with making teaching more representative of the wider community. For example, its corporate plan set the target of increasing the proportion of minority ethnic trainees from 7 to 9 per cent by 2005-06.

My noble friend Lady Gibson raised issues contained in the European Union sub-committee's report, Working in Europe: Access for all. I am advised that Eurostat is looking to improve that data to

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provide consistent data across the EU. Over and above that, I can reassure the noble Baroness that my officials are considering the issue and keeping an eye on its progress.

Higher education is a more mixed picture. I am grateful for the eloquence with which so many noble Lords spoke of that. Our target of 50 per cent of all under 30s to enter higher education is a challenging one, as the noble Baroness, Lady Warnock, indicated. It is one which clearly has complex funding implications; for instance, how to establish the right balance of contribution between state, student and family.

That is why last October we initiated a review of higher education finance. In thanking the noble Lords, Lord Moser, Lord Layard and Lord Sutherland of Houndwood, for their contributions, perhaps I may say that we have included research in the review. I recognise what the noble Baroness, Lady Warnock, said about the combination of training and research, although I will want to read with more care some of her other remarks on widening access.

While recognising that graduates can expect to earn considerably more than non-graduates, we particularly need to show that there are proper support mechanisms for students from poor or disadvantaged backgrounds so that they are not prevented from entering higher education. The good news is that we have a record number of students entering higher education—87,000 more in 2001 compared with 1996-97.

In answer to the noble Lord, Lord Dearing, we are investing in higher education. For the first time in a decade it has risen in real terms. We have provided £1.7 billion of publicly planned funding to universities and higher education colleges over the six years to 2003-04.

Noble Lords spoke of the research assessment exercise which took place. More than half—55 per cent—of research staff now work in departments which contain work of international excellence. I agree with the noble Lords, Lord Bragg, Lord Hannay, Lord Browne, Lord Northbourne and Lord Layard, on some of the issues raised.

The noble Lord, Lord Browne, spoke of the need for our commitment to support excellent research. The Government are doing so. The research funding system always rewards the best funding research wherever it is found. But there is a question of how we look at that in the future spending review.

I also want to point to the issue of academic salaries. In response to the question posed by my noble friend Lord Layard about academic salaries, I confirm that our spending plans—and I will not refer to the Bett report—include £50 million, rising to £110 million in 2002 and £170 million in 2003, to support increases in academic and non-academic pay. The noble Lord, Lord Layard, should answer the young person who asked him whether he should take a job in academia, "Yes".

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I will conclude by saying that the issue of the independent learning account is important. There are no losses on rights or claims and arrangements are in place to pay all outstanding claims. The budget was £271.5 million. I hope that that information will be of use to the noble Baroness, Lady Blatch.

The Government's commitment to education is clear; we have achieved a lot and we are not afraid to admit that there is still much more to do. We have laid the foundations for the next stage of transformation. Again, I thank the noble Lord, Lord Dearing, for initiating the debate. I conclude with a misquote of a quotation: "Let it be said that society's failures in education are that the past was another country. They did things differently there".

6.48 p.m.

Lord Dearing: My Lords, I thank all noble Lords who have contributed to the debate. My 1,000 trillion synapses are amazed at the erudition and the passion that has been shown. I agree so much with the noble Baroness, Lady Sharp, that our concern is not merely economic. It is about developing a human being.

On this occasion, we had in mind the triennial funding review. I am conscious that the Chancellor in reading the debate—and of course he will—might be thinking that we are pitching for more money for education. We are pitching for the wealth of the nation. We are seeking very clear economic objectives.

When I refer to the nation, I want to pick up on the social point; that of one nation. Not only must we invest in those who succeed, but in those whom we have failed. Otherwise they cannot become part of one nation. So this debate has shown as much concern for those who lose out as for those who can become doctoral students. In conclusion, I very much agree with the point that was developed by my noble friend Lord Browne of Madingley, that the wealth of a nation also needs research-rich and powerful universities. We may be reputation-rich, but a reputation will fade unless it is sustained by reality.

I shall now say my final sentence, for I know not what would happen if I did not do so. I beg leave to withdraw my Motion for Papers.

Motion for Papers, by leave, withdrawn.

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