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Lord Northbourne: My Lords, can the noble Baroness put me right on a question of fact? The nature of a company limited by guarantee is that in effect it has little or no equity. That substantially increases the risks for any creditors. Normally the problem is addressed by the company limited by guarantee being a charity. It is then supervised by the Charity Commissioners and an annual report has to be produced. Similarly, any substantial borrowings must be approved by the commissioners. Can the noble Baroness say whether the companies, if they are to be limited by guarantee, will be supervised by the Charity Commissioners?
Lord Dearing: My Lords, I had no intention of speaking to the amendments because I could not see what was at issue. But having listened to the debate, I
am beginning to understand that there is an issue here; namely, that of doubt about the Government's intentions. It is important for the Minister to clarify the Government's intentions.As someone who has been a school governor more than once, given that this is to be a voluntary power, I would guess that only relatively few governing bodies would wish to take advantage of it. Perhaps there will be a few occasions when there is a point to them, which I shall illustrate. A former schoolteacher called me the other day to say that she had been engaged in developing an educational CD-ROM for general sale to schools. Unfortunately, she did not have the capital resources to develop the idea and a considerable sum would be needed to produce a series of suitable CD-ROMs.
I can imagine that a cluster of schools grouped together in a federation, combining their very considerable IT resources, might think that they too could develop certain high quality learning materials. However, once again they would have neither the capital resources nor the marketing skills to develop them into products that could be made available successfully to a group of schools. I can see the advantage to such a group of schools of forming a company in order to exploit their intellectual capital in partnership with a private sector organisation. Recent experience has demonstrated a possible need for that kind of activity.
I turn to the point made with regard to the LEA being the "fall guy". My limited understanding of the position would suggest that, so far as concerns purchasing consortia, there is no change from the present position where the LEA would pick up the pieces. However, for the provision of services, the LEA would not be exposed provided that it was a limited liability company. I should be most grateful if the Minister could clarify that point for me.
I attach considerable importance to the safeguard of the LEA having, "the power to deny". Perhaps I may say that I thought that the noble Lord, Lord Kingsland, made a good point when he asked for clarification of Clause 11(7). However, the central issue to consider here is the purpose of the clauses. If they are those as described by the Minister, then I cannot see that they have the implications that we have supposed.
Baroness Blatch: My Lords, I am most grateful to the noble Lord for giving way. With regard to his comments to the effect that the LEA might be the fall guy, would he accept from me that if the LEA forms part of the consortium, then of course the LEA must take its share of the responsibility. If, however, the school forms part of the consortium, then the school would be on its own.
Baroness Ashton of Upholland: My Lords, we have had a debate with new voices, which is good. It has given me an opportunity to listen to the noble Lord,
Lord Kingsland, and to raise my own voice in the debate, having left much of the preceding work to my noble friend Lord McIntosh. Perhaps I may address some of the serious points made by the noble Lord. In so doing, perhaps I may turn back a little in order to describe where the proposition comes from.It is important to understand that the Government do not seek to do anything that would force anyone to set up a company. It concerns enabling schools to achieve things for themselves. One of the most important roles of any government is to think ahead and to exercise their duties responsibly. Furthermore, our schools must understand that they too need to think ahead about their role in the 21st century as they seek to educate our children to the best of their abilities.
They need to do something more. Noble Lords have agreed on many occasions that the expertise and experience which exists within our schools should be released for the benefit of the wider community and especially for other schools. This proposal—small though the noble Baroness, Lady Sharp, says it is in the context of this large Bill—is an important step on the way to doing that. We allow private sector companies to sell to schools; this is about allowing schools to come together among themselves, or to come together with other partners, in a way that limits their liability and enables them to do that. That is the backdrop to our discussions and it is important to see the issue in that context. There is no secret hidden agenda. It is about enabling schools to do that.
The picture painted by the noble Lord, Lord Kingsland, was not one I recognise. In Clause 20(1) we are quite clear that the conduct of a maintained school should be under the direction of the school's governing body. Nothing in Clauses 10 or 11 changes that. It would not be possible for any company to assume responsibility for running a school. A school company cannot do more than any other company.
I recognise that the noble Baroness, Lady Blatch, is keen to have clarity on the record. I shall quote from a written reply to the honourable gentleman, Graham Brady, who asked whether the relevant part of the Bill allows governing bodies to form a company to manage or operate a school. The reply was given by my honourable friend, Mr Miliband, the Minister of State for School Standards. He stated:
- "As a matter of law, the conduct of a maintained school must be under the direction of a school's governing body. That duty is re-enacted in clause 20 of the current Education Bill ... It would not therefore be possible for a company or any other body to 'take over the running of the school', because the governing body cannot contract out the duty to conduct the school".
5.30 p.m.
Lord Kingsland: My Lords, I am grateful to the Minister for giving way. How does the noble Baroness square that remark with the provisions of Clause 10(1), which states:
- "The governing body of a maintained school may form, or participate in forming, companies . . . to provide services . . . for any schools"?
Baroness Ashton of Upholland: My Lords, we have discussed this all the way through the Bill. This is not about the running of the school. As the noble Lord is aware, a school is run by a governing body, which may decide to buy in services. We have discussed on many occasions in your Lordships' House the kinds of services that might be brought in—for example, ICT services. A school might bring in a company working on ICT for developing software programmes or maintaining hardware programmes. But those are services. The running of the school is different.
Baroness Blatch: My Lords, it is a discourtesy that my honourable friend in another place, Graham Brady—who is standing at the Bar of the House—has not received the answer that the Minister has read out to the House.
- "could a governing body subcontract out the entire management and educational management of its school to a more successful school?",
- "The scenario is possible—subsection (1)(a) makes this clear—because we are considering services provided to schools by other schools".—[Official Report, Commons Standing Committee G, 13/12/01; cols. 157-158.]
I am describing the difference between the running of a school and the provision of services. Nothing in the Bill gives governing bodies greater powers to enter into contracts. By virtue of Schedule 10 of the School Standards and Framework Act 1998, governing bodies already have the power to enter into contracts, which may include elements of the operational management of the school. Clause 10(1)(a) gives groups of schools the power to form companies to deliver services to other schools. Thus Clause 10(1)(a) empowers a governing body to contract with a school company on the same basis as other bodies. However, the conduct of the school must remain under the direction of the governing body. I hope that that explanation addresses the issue.
Baroness Sharp of Guildford: My Lords, I am grateful to the Minister for giving way. The noble Baroness said that nothing allows the governing body
to sub-contract the conduct of the school, but could it sub-contract the running of the school to a services company?
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