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Lord McIntosh of Haringey: My Lords, I am grateful for the support in principle for the order expressed by both speakers and for the specific welcome that they gave to the Government's support for the country-of-origin approach to financial regulation.

I shall deal first with the points made by the noble Lord, Lord Newby. I am glad that he has received a letter from the Financial Services Authority that explains the inevitably different and nuanced points of view of the FSA and the Financial Ombudsman Service. I agree with the noble Lord that, inevitably matters will appear in due course that will need to be resolved.

The noble Lord's first question was about redress for consumers in a case in which the person who is the subject of a complaint is in another country. There is a system, called Fin-Net, for addressing such issues at a European level. The Government are working to enhance and develop that system. It is worth repeating that the Government are handling the current transition period in such a way that UK consumers continue to benefit from core standards of protection. That underlines our policy on the use of the consumer contract derogations. Ruth Kelly referred to the issue in the House of Commons.

The noble Lord's second and more specific point was about progress elsewhere in the European Union. We understand that three other member states—Germany, Luxembourg and Austria—have completed implementation and that France and Ireland have implemented only partially. We are some way down the list but we are by no means at the bottom. The noble Lord made the valid point that a substantial volume of legislation from Europe was hitting the financial services industry. I do not know whether I am obliged to agree with the phrase "tidal wave", but the general point is valid.

The noble Lord raised a particular point about resources dedicated to implementing European Union directives on financial services. Over the past four years, the Treasury has established a dedicated team and increased resources by about 400 per cent. We believe that those resources are adequate, but we keep the resources devoted to all those tasks under review. The Treasury continues to take a consultative approach to the implementation of directives to ensure that those affected have the opportunity to comment.

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The implementation of the e-commerce directive with which we are dealing tonight, is a good example of that.

The noble Lord said that generally the FSA letter was satisfactory about the issue of splits but that it could be confusing for consumers. The categories in the letter—those with execution-only and prospectus sales, those who have advised sales and the various issues relating to investment management firms that are responsible for managing trust assets or marketing associates of such firms—are complicated for us because we must cover all the possibilities. However, I do not think that it is complicated for individual consumers. They know what category they fall into.

I had hoped that the noble Lord would be pleased that the FSA was investigating the circumstances surrounding the problems with split capital investment trusts. I hope that he is reassured that the ombudsman service can adjudicate the channels through which retail investors are likely to have invested in split capital trusts. After all, it is not unusual for consumers to have to apply to the Financial Ombudsman for an adjudication.

The noble Lord, Lord Kingsland, eschewed the mellifluous tone of Mr Howard Flight's interventions on the subject and made what I understand to be more general points. His particular concern related to what he called "derogations"; in other words, exemptions which are not limited to UK recipients. He asked: why should we not make the financial promotion restriction apply unmodified where the recipient is in the European Economic Area but outside the United Kingdom? I suggest that that is a misunderstanding of the requirement of the directive.

Article 3.1 requires us to apply UK national provisions, including exemptions, to outgoing electronic commerce communications. In other words, recipients throughout the European Economic Area will be in the same position as regards communications made from establishments in the UK. To display the exemptions would be to go beyond what the directive requires and would mean that UK-based firms would face a stricter regime for promotions into other EEA states than they would for promotions limited to the UK. We do not believe that that result would be consistent with the directive and we believe that it would be a significant and unnecessary constraint on UK business.

With those short responses to the points helpfully made in debate, I commend the order to the House.

On Question, Motion agreed to.

Baroness Farrington of Ribbleton: My Lords, I beg to move that the House do now adjourn during pleasure until 8.47 p.m.

Moved accordingly, and, on Question, Motion agreed to.

[The Sitting was suspended from 8.12 to 8.47 p.m.]

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Education Bill

Consideration of amendments on Report resumed on Clause 13.

Lord Peston moved Amendment No. 31:

    Page 9, line 39, after "include" insert "educational provision distinctive of any particular denomination and"

The noble Lord said: My Lords, I wish to speak only to Amendment No. 31 because I believe that the noble Baroness, Lady Blatch, has decoupled her Amendment No. 32, itself an interesting technical amendment, from the grouping.

I am proud of Amendment No. 31 in one way. Everyone said that it would be impossible to construct an amendment that would enable one to move that there should be no more religious schools. Whatever else may be achieved—I fear that I may achieve virtually nothing—at least the technical problem has been cracked, which is something that honourable Members in the other place did not manage.

Perhaps I may refer to two items of history, the first of which concerns why Amendments Nos. 30 to 32 were grouped together; namely, they can be interpreted as being concerned largely with capital expenditure. Anyone looking at the history of taxpayers' support for religious schools, certainly with regard to the 1944 Act—although I think that history would show that such support began much earlier—would be aware that the support had nothing to do with doctrine or religious schools; it turned on the desire of the then Secretary of State for Education to bring those schools within the system. His method, to use as crude an expression as I can, was to bribe them by providing capital to mend leaking roofs and so forth.

What particularly intrigued me about the remarks made earlier by the right reverend Prelate the Bishop of Blackburn on school companies is that capital expenditure appears still to be very much a live issue so far as concerns religious schools. The right reverend Prelate said that he would write to the noble Baroness, Lady Blatch. I am keen to learn something more, so perhaps he may be kind enough to write to me as well.

It is interesting to note that the Church has espoused private finance initiatives—again I imagine not through any doctrinal interest in PFIs or any belief in the remarks made earlier by the noble Lord, Lord Baker, about free market capitalism, but simply because the Church believes that it might be able to improve its buildings. I do not for a moment criticise the Church on this subject.

Those remarks cover the technical aspect of my amendment. However, noble Lords will be aware that the philosophical point I want to make, which I regard as quite fundamental to education policy in our country, concerns the continued existence of religious schools, in particular the extension of religious schools to other religions.

Apropos a completely different amendment concerning the curriculum which we shall reach on Wednesday, a friend said, "In 1988 you made a rather

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good speech on the subject of the curriculum". I replied that I have never reread later any speech I have made in this House. However, he photocopied it for me and I read it; and in fact I am rather pleased with it. I did make a rather good speech which I may well repeat when we return to discussing the curriculum on Wednesday. However, following my speech, at the bottom of the photocopied page, the noble Lord, Lord Renton, moved Amendment No. 22:

    "subject to subsections (2) and (3) below, Christianity shall be the basis of religious education in every maintained school".

Only 14 years have passed since it was perfectly possible to table such an amendment in your Lordships' House that attracted no shock or horror at discrimination against other religions. Unfortunately I do not have a copy of the subsequent pages, being interested only in my own speech, so I have no idea what was said later. However, what is particularly intriguing is that today I think it would be impossible for a Member of either House of Parliament to stand and remark that Christianity should form the basis of religious education. We are all now multi-cultural and multi-religious. If he chooses to speak, perhaps the right reverend Prelate will comment on that observation.

My position remains that of an unreconstructed liberal. I have no desire whatever to involve myself in other people's religious views. I would regard it as monstrous for anyone to criticise someone else on the basis of their religion, let alone—to address a subject that may well be returning to your Lordships' House in due course—to encourage the hatred of people either because of religion in general or one specific religion. That has never been my view.

My view is rather different. I ask: what is the role of the state in this, what is the role of the taxpayer and what is best for the society in which we live? I have argued to your Lordships before—which is why I shall not carry on at great length—that what the state needs to do is to provide a society in which people are free to practise their religions with no fear of discrimination against them and no fear for their lives, something which occurs in other societies. But it does not seem to me that the state remotely has a role in providing funding, particularly capital funding.

We have above all to bear in mind that if the Government's current policy proceeds and we get many more religious schools, the main burden on the taxpayer will be a considerable commitment to capital funding. That is what the additional religious schools will be about. In my view, if people want their own schools they must have them, but they must find their own funds.

I shall not trouble your Lordships—I can imagine how controversial it would be—with the history of our country and the particular role that Christianity has had in it as compared with other religions. In that context—much as I am a great believer in multiculturalism—all the religions in terms of the history of this country are not on a par, and one has to recognise that. In a way, that is none of my business because I do not care for any of them.

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So that is why I have brought this matter before your Lordships. The other topic, which one or two noble Lords have promised me they will answer, is that I ask why? What is this all about? Is it the case—and if it is I should like to see the research evidence—that having a religious school is productive in terms of educational achievement? I know of no research that states that but I should like to be informed if there is.

Secondly, what is the nature of the demand for religious schools? Who is demanding these places and why? I know—I, of course, did it deliberately—that I very much upset the noble Lord, Lord Alton, when, through your Lordships, I said indirectly to him that my experience is that the demand for places in religious schools has absolutely nothing to do with religion. It is astonishing in a society where people do not go to church because it is inconvenient when they could be at Sainsbury's or Tesco on a Sunday morning, that we are suddenly told that they have devout views and must have religious schools for their children. I should like an explanation for that. I am told that I am going to get one and I look forward to it.

My second question, which I have already asked—I am indebted to the right reverend Prelate the Bishop of Blackburn for allowing me to ask it earlier—is that if it is a matter of freedom of choice, and I can understand freedom of choice, why is there no provision for those of us—and this would certainly have applied to me—who want an entirely secular school? Why does not an Act of Parliament give us that freedom of choice?

The great strength of Thatcherism was that it was built on the economics of freedom of choice. It turned out that there were all kinds of choices that people would like freely to have but they were told, "That does not count". The freedom of choice turned out to be quite limited when it came to the exercise of what was called Thatcherism.

I used to be a serious economist and therefore when I used to teach about freedom of choice I really meant freedom of choice. I meant that people should be free to do what they wanted. But it turns out that we pure economists are the only ones who believe in freedom of choice. Everyone else believes in something slightly different—namely, "freedom of choice, but..."

I have introduced the debate—I notice how full is your Lordships' House with noble Lords eager to participate—and I have put my arguments interrogatively. I should like an explanation. I beg to move.

9 p.m.

The Lord Bishop of Blackburn: My Lords, I rise as part of the "Friends of the Education Bill" debate to engage once more with the noble Lord, Lord Peston, on this important subject. I am glad that he has found a way for this issue to be debated. I am with him in regretting that there are so few people in the Chamber.

I noticed his modesty about his previous speeches. I was tempted when I spoke to him before the debate simply to say, "Will you read again my speech at

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Second Reading". But I shall try to come to the issue in a slightly different way in order to answer some of the points that the noble Lord has made.

We have to accept the dual system of education whether or not we accept the noble Lord's interpretation of the 1944 Act. I suspect there is a grain of truth in it. I am not ashamed. If you live in the real world you come to compromises in getting the kinds of schools you want in the best way you want. My commitment, such as it is, to PFI—which I do not understand any more than does the noble Lord—is that if it enables schools to have better facilities and better premises in order that education may go on, so be it.

The noble Lord, Lord Peston, made a point about the taxpayers' support. The taxpayers have also benefited. In 1944, the voluntary bodies put up 50 per cent of capital costs. That is 50 per cent that other people were not having to pay through their taxes. That has gradually gone down as the worth of church schools seems to have been established in one way or another. It may not have been established to the satisfaction of the noble Lord, Lord Peston, but it has been established to the satisfaction of a large number of people in this country, and successive governments have actually reduced it, sometimes against the will of some people in the providing churches. Is a 10 per cent contribution sufficient to have the kind of influence that we want to have? There are two approaches; there is also a contribution from taxpayers—modest though it may be.

In answer to the noble Lord's question about the 1988 Act, I believe I am right in saying that it is the law of the land that RE and collective worship shall be "mainly" or "broadly" Christian unless there is a determination by the SACRE. That was carried in this House. Whether such a provision would be carried today is a matter for judgment, but that is the present situation.

We have to address this business. It is a unique partnership which has continued—if we go back to the early part of the 20th century—for almost 60 years, and certainly since 1944. If the fear is that we do not want an extension of this to the communities that represent other world faiths, then terms such as "natural justice" and "human rights" seem to come on to the agenda. We need to think about that.

Secondly, do we really want a situation where, when schools provided by faith communities, particularly, say, by Islam or Hinduism—which are now private, are a law unto themselves and are in no way inspected in the same manner as other schools—want to come into the main system, that wish is resisted? I should have thought that, on the contrary, we want to get the good practices and the assessment that goes with being part of the maintained system into those schools if we can.

It is not difficult to posit a situation where those who have come to this country from other cultures and from other parts of the Commonwealth will be followed by others who may be of the Orthodox tradition or the Roman Catholic tradition, and who

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will in their view need to have schools established in the areas where they are living. It would be a strange thing to accept an amendment to prevent that. We should be doing a disservice to those great world faiths. I am sorry that no members of other faiths are present to support the idea, so I have to do so.

I agree with the noble Lord, Lord Peston, about the idea of "value-added". If he were to read my 2001 Hockerill lecture, he would see that it ends with the desire to see some academic research done about "value-added" or whatever the term is. The noble Lord is right. We get into this kind of anecdotal debate. I had a great deal to do with the rights of access legislation during its passage through this House. If you are a rambler, you think that everyone who wants to walk in the countryside is perfect; if you are a land manager or landowner, you think that every thug and vagabond will take advantage of the legislation. If you start in a secularist position, you are not necessarily looking for the best that the faith schools can provide—I prefer to call them church schools—and if you start on the side of the faith schools, you sometimes overlook some of the weaknesses.

Speaking from the Anglican point of view—the noble Lord, Lord Dearing, will probably want to intervene in this debate—if this amendment is passed, it will prevent the Anglican Church in England from responding to a clear need. There is no doubt that the charge of being elitist because we do not have enough secondary places will be perpetuated. That is why we were delighted when the government White Paper welcomed the things that we were trying to do.

What is the "value-added"? There are people—the noble Lord, Lord Peston, may not be one of them—who do not necessarily embrace a religious faith themselves, but who do believe that faith schools provide the motivation for teaching and learning, and for the pastoral care and discipline which they want their young people to have. As I have said previously, there is a duty on community schools to take a look at what they are providing or are not providing in the spiritual, religious and moral context which make such schools rather attractive to parents who do not belong to a particular Church or religious denomination.

I want to make a point about the secular schools. I say this with a great sense of modesty. I have a feeling that if those people who embrace that approach had been prepared to put up, as it were, the foundation of this kind, then we should be in a position to respond to that. We are here tonight because people of Christian faith and of other world faiths are prepared to put up substantial amounts of capital and invest in teacher training and other resources to ensure that the schools are part of the dual system.

That is my basic response to the remarks of the noble Lord, Lord Peston. I appreciate that he always delivers them in a most gracious way. He is someone with whom one can engage, because he engages in that particular way. He is clear and straight in his objectives. However, I hope that we shall not prevent other world faiths or church communities, where there is a clear need and a clear desire, from being able to

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establish, with the assistance of the taxpayers' money, as the noble Lord describes it, other schools based on faith communities.

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