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The Lord Bishop of Blackburn: My Lords, perhaps I can write to the noble Baroness on behalf of the National Society to spell out the situation. I would like someone more knowledgeable than I am on this subject to respond.

Baroness Blatch: My Lords, I am grateful for that. One cannot spirit 40 million plus out of the air. It has to be paid for. There will be a continuing liability to meet the cost of securing 40 million plus. I would like to know what is better, cheaper and easier under that arrangement than they would be under PFI arrangements or under the normal catalogue programme arrangements. The right reverend Prelate spoke of the likelihood of replacing 20 or more primary schools for 40 million. That cannot be done under the present arrangements, so given that we are still talking about large sums of money, most of which have to be funded in some way, what will make that happen?

I am interested in what the Minister has to say about limited guarantees. When companies go belly up somebody somewhere loses a lot of money. Are we saying that the LEAs do not pay, that the schools do not pay, and that the company members are not liable, except perhaps for 10 liability? Who will go to the wall? Who will pick up that liability? I do not understand that, so it would be helpful to have an explanation of the involvement of the National Society. I do not want to be a party-pooper. If there is

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a solution to capital programmes I believe that we should support it, but I want to know precisely to what we are agreeing.

The Minister said that the difference is that groups of schools can become companies as opposed to single schools becoming companies. But so far all the examples that we have been given show that they can come together corporately. The Minister made the point about buying power and suppliers need a single point of contact to ensure that the bills are paid. It is simple. Groups of schools come together; they all look at the catalogues that the suppliers make available; they all give their corporate order, which goes in; the schools pay into the pot; and the goods are distributed around the schools. The savings will be enjoyed by all the schools because they will buy books, pencils, computers and so on at a cheaper rate. The suppliers are willing to work in that way. If there is a sale they will be happy to ensure that it is concluded.

I am very sceptical about what the Government say about the supervising authority. In this Bill the supervising authority has a number of obligations under the law which the Minister spelt out in detail. They cannot possibly exercise that supervising obligation without knowing what is going on. They can only know what is going on either by the information provided to them by the company or by going into the company. If something goes wrong, it is important not to find out too late. The supervising authority should provide a guiding hand to the company so it needs to be involved.

Perhaps I can take a moment in trying to be unequivocal. I can remember a governing body of which I was a member. A certain character came to that governing body. Whenever we were talking about, for instance, school uniforms, he would say, "You want school uniforms? I can get school uniforms". Then we would talk about something else and he would say, "You want that? I can get it", and that went on. He turned out to be a really bad lot and the school was well rid of him when he left. Perhaps as an after-dinner speech I will describe the manner of his going; it was very interesting.

But it was not amusing. Under these clauses, that sort of person could serve on a governing body and say, "Look, all we have to do is become a company. We can provide school uniforms. We can do this and that". I am in the business of making sure that whatever we do and whatever we agree to legislate for, the protection is there for some very innocent people whose job it is to see that the school is run well, that teachers teach and that children learn. At the end of the day it is right that we should be devil's advocate with some of the questions we pose.

There does not appear to be any requirement that the activities of the companies need necessarily be educational. We have talked about third parties who have no educational interest whatever being part of the company. Again, having been involved with charities over many years, I recognise that schools are also charities. These companies will not be charities. Laws govern how charities spend their money; they have to

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spend it for the benefit of the charity. But in company law there is no such requirement governing where a company's profit should be spent. I want to know what it is that legally obliges the company to spend its profits in the interests of education.

I am sorry I have taken up the time of the House. These are important questions. If, we are to legislate in this way, we should ensure that all the safeguards are in place so that the schools benefit and the education of our children is not disrupted. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 11 [Limits on powers conferred by section 10]:

[Amendments Nos. 25 to 27 not moved.]

Clause 12 [General powers of Secretary of State in relation to companies]:

[Amendments Nos. 28 and 29 not moved.]

Clause 13 [Power of Secretary of State and National Assembly for Wales to give financial assistance for purposes related to education or childcare]:

Lord Peston moved Amendment No. 30:

    Page 9, line 13, at end insert—

"( ) Financial assistance provided for education or education services to a school or local education authority must relate to an objective need of the school or local education authority."

The noble Lord said: My Lords, I rise in an extremely bad mood. I had very much hoped that my noble friend on the Front Bench would have moved the adjournment of the House during pleasure so that this serious subject would not be rushed through. I pause for a moment in the hope that he might still do that.

Lord McIntosh of Haringey: No, my Lords. The procedure in this House, which is recognised by all parties, is that we stop at the end of the group which is being debated at 7.30 p.m. That does not mean that we are restricted to seven minutes' debate on this group of amendments.

Lord Peston: My Lords, my experience of this House is that sometimes courtesy is extended to noble Lords on important matters. I know of no hard and fast rule and therefore I repeat my extreme ill humour at this matter.

I now go on to make another remark. I have the right to ungroup my amendments and I now propose to do just that. I shall therefore speak only to Amendment No. 30 at this stage and come back to Amendment No. 31 at a later stage of the evening. That does not get rid of the ill humour. It is simply my strategy for at least not being messed around.

Amendment No. 30, which stands in my name and that of my noble friend Lady David, and the noble Baronesses, Lady Sharp and Lady Walmsley, is fairly technical but contains material of considerable significance. We ought to start by noting that we are now in the section on financial assistance for education and childcare. Within Clause 13, having referred to

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"financial assistance", subsection (2) gives us a long list of the purposes for which that financial assistance can be given.

I pause immediately because I am well aware that in the context of your Lordships' House, anything to do with the expenditure of public money is something we must treat with great care. We must not overstep the bounds, which now go back 100 years, as to what we are and are not allowed to talk about. I assume that this material would not be in front of us if we were not allowed to say, quite legitimately, "This is a correct way to spend public money", and, "That is not a correct way"; and that we would not in any way be infringing the rights of the other place in making such remarks.

The list in front of us, taken at face value, provides for most of us no problem whatever. Going through it, with one minor exception, I see nothing with which I would not agree. My only exception is that in subsection (2)(e)which refers to, "the promotion of learning"—I like the word "learning"—we would normally expect to see the word "scholarship", not "learning". However, I take the word to mean "scholarship", and that is admirable. My question is: under Clause 13(1), where it refers to the giving of financial assistance to any "person", I assume—I speak not as a lawyer—that "person" includes bodies of all sorts and not just an individual person, otherwise a great deal of what is in this provision cannot make sense. It must include bodies corporate and such things. I hope that my noble friend will be able to enlighten me on that matter.

I say all of that before coming on to discuss Amendment No. 30, which essentially says that financial assistance, if made to a school or an LEA, must relate to an objective educational need of the school or local education authority. I interpret that to mean that if public money is being spent in ways that do not meet that criterion of an objective educational need, that money is being misspent.

That takes me on to the hidden agenda—I now hope to interest the noble Baroness, Lady Blatch, in this matter—namely, the former grant-maintained schools. In practice, when the grant-maintained schools were introduced, they were given extra finance that no one at the time could see had any connection with objective educational need. Indeed, they were given extra finance in order that grant-maintained schools would be a success. But that is not an educational need; it is a political need. Noble Lords who take an interest in these matters will recall that the Public Accounts Committee in the other place referred to the practice of the extra funding of GM schools as "unacceptable". Since that committee had a Conservative majority at the time it reported, I would assume that that report was highly objective.

But times change and new governments come to power. The grant-maintained schools ceased to exist as grant-maintained schools, but they did not cease to exist as schools. What is interesting, and what prompted me to place this matter very seriously before your Lordships, is that earlier this year The Times

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Educational Supplement informed us that the schools that opted out—the former grant-maintained schools—continue to receive the extra funding benefits that they received under their original guise. That cannot possibly be justified on any educational grounds of which I am aware, and certainly not on any objective educational grounds. Indeed, I would argue that we would expect the reverse. We would expect extra funds to be given to those inner-city schools with the biggest educational problems of any schools in the country, not to schools with the easiest task before them, schools that in practice we know, despite their protestations to the contrary, are quite selective.

The Times Educational Supplement article states that the Dunraven School in Lambeth received more than 500,000 in extra funds. The Bishop Thomas Grant School in the same borough received more than 400,000. Three schools in Wandsworth received almost an extra 500,000 each.

My purpose in moving the amendment is to argue that we should use this part of the Bill to prevent precisely such financing. Otherwise, I, for one, feel extreme disquiet about Clause 13. As I said at the beginning of my remarks, when I first read Clause 13, I thought that it contained an extremely good list of things that we should try to achieve, but I must ask: is that actually what special funding is being used for?

My last point, before I ask a question, is that one of the things that the Government seek to promote is diversity. I, too, favour diversity if it is diversity on my terms and not on others'—naturally, I would say that sort of thing. It has never occurred to me that all our schools should be the same; neither has it occurred to me that all our schools were the same. Certainly, when I visited many schools, what struck me overwhelmingly was how different was each individual school and how remarkable schools were in adjusting to the job before them, even though they are often constrained by things such as the national curriculum. So I am not against diversity, but I am in favour of using public money properly. I therefore expect public funds to be used to promote the kind of diversity that corresponds to educational need.

I end with a question: in so far as the state feels that it ought to use funds in a discriminating fashion to improve children's education, does my noble friend agree that that should relate, again in the terms of the amendment, to educational need and not have any connection whatsoever—I use those words in that precise form—with what we may call the status of a school? In other words, the fact that the school has high status provides no logical basis for saying that it should therefore have more money. Indeed, I tend to take the view that if it has high status it should have less money. The schools with a low status are the ones that need the money. I beg to move.

7.30 p.m.

Baroness Walmsley: My Lords, I rise to support the amendment, partly out of curiosity as to what the Government will say about the comments of the noble

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Lord, Lord Peston, but partly because I, too, have a nasty, suspicious mind. I notice that subsection (2)(g) allows for,

    "the provision of any form of training for teachers or for non-teaching staff".

Without the amendment moved by the noble Lord to ensure that the money is used for educational purposes and in accordance with educational need, people could run riot with that provision. We could have singing lessons for maths teachers and goodness knows what.

That is a small point, but a more serious point is that it has tended to be specialist schools located in predominantly middle-class areas—areas in which there may not be a high level of education need—that have received additional money. The principle that a child should not have extra money spent on its education simply because of the accident of which school it goes to is right. For those reasons, I support the amendment.

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