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Lord McIntosh of Haringey: My Lords, we are at Third Reading. We have to accept that there is one speech after the Minister has spoken.

Baroness Blatch: My Lords, I have been here for some time and my understanding is that if I wanted, for clarification, to ask questions, that was in order. I shall be advised by the Clerk. If I cannot, I cannot.

Lord McIntosh of Haringey: My Lords, the noble Baroness opened her speech by asking further questions. I do not think that this is in order. If she had stood up before the Minister had sat down and had asked a question, that would have been in order. However, she is now making her wind-up speech and we must be satisfied with that.

Baroness Blatch: My Lords, I said that in the light of what the noble Baroness said, I had two questions. I shall be advised by the Clerk. If I cannot ask them, I will not ask them.

Lord McIntosh of Haringey: My Lords, paragraph 6.122 of the Companion states:

that is, the noble Baroness, Lady Blatch—

    "speaks after the minister on report except for short questions of elucidation to the minister or where the minister speaks early to assist the House in debate".

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My understanding was that short questions could be asked by anybody but that they should be asked before the Minister sits down. However, I am sure that my noble friend Lady Ashton will answer two short questions for elucidation on this occasion.

Baroness Blatch: My Lords, I have no intention of asking the questions if that is outside the Standing Orders. I ask for the advice of the Clerk about whether I am allowed to ask questions in light of what the noble Baroness said on my amendments.

Lord McIntosh of Haringey: My Lords, the advice comes from the Clerk through me. I have read out the rules. I am sure that my noble friend the Minister will answer two short questions for elucidation.

Lord Carlisle of Bucklow: My Lords, does the Minister agree that what he said indicated that my noble friend Lady Blatch would be in order if she asked questions to clarify what the Minister had said?

Lord McIntosh of Haringey: My Lords, I have just said that. I have just said that it would have been better if the questions had been asked before the Minister had sat down but that, in these circumstances, if there is any misunderstanding or possibility of misunderstanding, I am sure that the Minister will answer two short questions for elucidation.

Baroness Blatch: My Lords, I was looking for the statement that my questions were in order. My questions were not relevant questions before the Minister had responded to the amendment; they arose from what she said. My understanding is that I am in order. If I am in order, I shall ask my questions.

The noble Baroness said that the procedure that would be put in place would suffice. My question on procedure is: what will the procedure be, and what will the authority be, for the criteria? My other question relates to the figures of 30 per cent for secondary schools and 60 per cent for primary schools. Are there to be percentages? The Minister said in her response that we were getting away from percentages.

Baroness Ashton of Upholland: My Lords, I shall take the second question first. I was trying to convey a shared desire with the noble Baroness that we did not have percentages. I believe that she made that point in Committee with great force and I listened to her with great care. She said that we would somehow be saying that once one hits the barrier of 10 per cent in that context, if one happens to be the school to which the 11 per cent figure applies, one would not be able to receive earned autonomy. That is where the noble Baroness's original problem lay in this regard. I agree with her in saying that this is not about percentages. On Report, when I referred to the figures of 30 per cent and 60 per cent plus, I sought to indicate how far we have moved in our thinking and that those were the right kinds of numbers. I am not saying that when we

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hit 30 per cent, that is the cut-off point. We are saying that when looking at the criteria that we have put together, which we have said are appropriate, we believe that there will be about 30 per cent of secondary schools and 60 per cent of primary schools which will, within that fifth wave, have that applied to them. The figure may be 32, 29 or 64 per cent; we were seeking to demonstrate how far we had moved and to address the specific point that the noble Baroness raised in Committee. I hope that that is clear.

The position on the procedure is that that is done through negative resolution.

Baroness Blatch: My Lords, I am grateful for the clear answer about the use of negative resolution. I do not see that as satisfactory for the House because it will not have a proper opportunity to consider the detail of the criteria.

Secondly, I hope that I can be forgiven for the confusion about percentages. The noble Baroness's own words were:

    "Under the criteria that we propose, we expect that 30 per cent of secondary schools and 60 per cent of primary schools will qualify".—[Official Report, 17/6/02; col. 533.]

In her answer to me, she said that we wanted to get away from percentages. I was trying to ascertain from the Minister whether that was a new move, that percentages will not feature as the target and that the schools that qualify will qualify under the criteria. That is why we would like to see the criteria. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 11 [Powers of governing bodies to form or invest in companies to provide services etc.]:

Lord McIntosh of Haringey moved Amendment No. 6:

    Page 8, line 8, leave out from second "company" to end of line 9 and insert "registered under the Companies Act 1985 (c. 6) as a company limited by shares or a company limited by guarantee"

The noble Lord said: My Lords, we had full discussions on what are now Clauses 11, 12 and 13 in Committee and at Report. As a result of that useful debate, we have, as we promised, brought forward amendments which, I hope, deal with some of the concerns that were expressed.

Amendment No. 6 places on the face of the Bill a requirement that we originally intended to include in regulations; namely, that school companies will be required to register under the Companies Act as companies limited either by shares or by guarantee. We believe, on reflection, that that requirement is better stated on the face of the Bill to provide greater clarity. That responds to concerns that several noble Lords expressed, notably the noble Baroness, Lady Sharp. We believe that different types of company activity may be better suited to different company structures. For example, we would envisage purchasing companies being limited by guarantee, with service delivery companies more likely to be limited by shares. With service delivery companies, outside partners—I refer to the restricted definition in the Bill—might be brought in. However, we do not

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want to impose that on companies, so we have decided to give companies the freedom to decide which company structure to adopt, while ensuring that they must have limited liability status.

It is important to mention that both shares and guarantee offer limited liability status, giving companies financial protection. The size of the guarantee or the value of the shares issued will be for companies to decide, but in both cases the amount could be as little as 10. The financial liability that a governing body would have for the debt would be limited to that amount.

I reiterate the assurance I gave on Report that being limited by shares cannot invite hostile takeover; shares will be sold only if the members of a company agree. The companies will remain private companies and shares will not be publicly available. Amendments Nos. 8 and 9 are purely technical. They tighten up the requirements for companies to operate only in accordance with the requirements set out in regulations.

Amendment No. 10 places on the face of the Bill the requirement that only those specified in regulations may join companies. That was to be contained in regulations, but again we are placing that safeguard "upfront" to give a more visible degree of protection to companies and reassurance to those who were concerned. I am sure we all agree that the list of those allowed to join companies must remain in regulations. The list may need to be updated from time to time based on feedback from schools using these powers. Such amendment would have to be done by amending regulations rather than by primary legislation. I beg to move.

Baroness Blatch: My Lords, I have read and re-read the amendments and find it difficult to distinguish between "has ceased to satisfy" and "fails to satisfy", and between "any applicable requirements of regulations under subsection (3)" and "the requirements set out in subsection (3)". The notion that this is tightening up fails to convince me. I do not understand the amendments. However, I shall not oppose them. If the Minister says that this is tightening up—he clearly has had a good briefing to that effect—I have to accept that.

I have two questions. First, paragraph 8, which has been amended by the Minister, refers to "voluntary school". I assume—I do not know— that "voluntary school" subsumes "voluntary aided" and "voluntary controlled" in the interpretation of what is a main school. Secondly, I am not sure whether Amendment No. 10 was tabled because of my reference at a previous stage to undesirable characters who will see schools as an easy target to become involved in commercial activities. I gave the example of someone who was, indeed, undesirable. Had the school been unwise enough to engage in any kind of commercial activity with that person, it would have ended in tears.

I find it difficult to begin to understand how one describes the kind of person to whom we refer. By nature, confidence tricksters are manipulative,

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convincing and easy to be taken in by. How can a set of regulations specify such undesirable or unsuitable people for the purposes of becoming a member of a company? Perhaps in his reply the Minister can give examples of how the kind of person referred to in Amendment No. 10 will be described.

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