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The noble Baroness said: My Lords, I thank the noble Baroness for her birthday wishes. I can think of better ways of spending a birthday. I also thank her for a tentative invitation to take a glass of champagne with her. I have taken a glass of champagne today and it would be unwise to take any more, but I deeply appreciate working with the noble Baroness and her kind wishes.
I want to take this opportunity to say that yesterday in debate I named Don Foster as the person whom I quoted. That was wrong and I was not quick enough to sort the matter out with Hansard. I meant Phil Willis and I hope that that will be accepted as an apology both to Don Foster and to the Liberal Democrats.
In our previous debate today, much was said about the image of this House. The other place left this Bill largely undiscussed. I believe that this House has acquitted itself brilliantly not only on this Bill but on many others. This Bill has been much improved by the assiduous way in which this House has worked and the other place is only now forced to consider more aspects of it because of pressures from this House.
The noble Baroness addressed the issue of what we are being asked to agree to tonight, stating that forming companies is simply a matter of forming a single identity. If that is what the noble Baroness thinks, it is the most naive of thoughts. Forming a company is not simply forming a single identity.
The Minister in another place, Mr Miliband, said today that he wants to give schools the same freedom—note the words "the same freedom"—as private individuals and private companies. Let me repeat what I said yesterday:
Mr Miliband also said that the gainers would be pupils. I, and I believe the Liberal Democrats, say that that is not guaranteed. Nothing in the clauses provides that the pupils will be the primary beneficiaries.
My honourable friend in another place, Mr Cash, using a quote from Alice in Wonderland, said that words mean what they want them to mean. I am afraid that at every stage of the Bill when debating the formation of companies, Ministers have said what they believe can be achieved by the clauses. However, they have not faced up to the realities and the Pandora's Box of possibilities, liabilities and culpabilities. None of those issues has been addressed by Ministers in either place.
Ministers talked about schools sharing expertise. They already do so. They say that there will be safeguards but there are no comprehensive safeguards for our schools. The question was asked: can the company sell goods into the private sector? For the first time we saw the Minister in another place looking slightly wrong-footed when he tried to cope with the issue.
My honourable friend in another place talked about grounds maintenance, about outward-bound courses and about selling such services to other bodies. The issue is not one simply of developing a CD or educational services but of selling others. Where in the Bill would a company be prevented trading with other bodies? There is nothing in the Bill which prevents that. School companies would be able to do so.
It was said that schools can benefit from economies of scale. They do so now. For years, there have been corporate purchasing arrangements and co-operative arrangements between schools whereby they have benefited from economies of scale without having all the complexities of forming companies.
The other issue that was not addressed—I shall not deal with it in detail—was the interaction between Clauses 2 and 20 and these clauses. Mr Miliband was at a complete loss to know what to say about that. Whenever government Ministers are giving examples—and more have been given today—they usually choose inoffensive, pro-educational examples. We have heard examples relating to developing curriculum materials and CDs. But other things are not outlawed by the Bill: for instance, the provision of school uniforms and equipment; grounds maintenance; catering; minor maintenance; and outward-bound services.
As regards outward-bound services, Members scoffed at the possibility that there may be a libel claim or a law suit against the company providing such services which somehow go wrong. That was pooh-poohed as being fanciful. I am afraid that it is not fanciful. If a company sets up such services, it accepts all the liabilities that go with that.
We have been told that borrowing would have to be approved by the LEA. No private company would have to go to a third party for that. It would be governed by the laws that govern private companies.
Mention has been made of disreputable persons. School companies would provide a wonderful safe haven for a private company seeking to do business with school corporate bodies where, if it goes wrong, the tab is picked up by a local education authority—no risk. Where is the risk in that? It is risk-free because the LEA, according to Ministers in both Houses, picks up the tab if the company goes belly-up.
It was said that we will give our schools the same freedom as private companies. Private sectors do not have that kind of third-party intervention. The honourable gentleman, Mr Phil Willis, in another place talked about individuals taking profit out of a company. It was said—and we should all like to believe, and I suspect in most cases it would happen—
The governing body could not bring in wholesale teaching. That was said in our debate yesterday by the noble Baroness, and referred to again today in another place. The matter was raised by the noble Baroness, Lady Sharp, from the Liberal Democrat Benches. There is nothing in the Bill to prevent it. We would probably concede the point that governing bodies go on governing, but there is nothing whatever in the Bill to stop a whole staff being replaced under the company arrangements. These are key concerns; they have not been answered.
It is a perfectly reasonable proposal—the wish to give schools more commercial freedom—if only it can be made to work. This proposal would not. It spawns over-regulation. We heard again today of yet more regulation, yet more guidance, yet more for every school to worry about. As the noble Baroness and the Minister in another place have said, "Well, we do not expect many schools to partake of this". But, because potentially any school could partake, every single school in the land will receive all this bumf. We tried yesterday to limit the bumf. The Government said they were with us in spirit. The Bill does not support that.
I turn to accountancy and legal expertise. What happens in liquidation when the company goes bust? What about seizure of assets? None of those points has been dealt with. Something must be said for giving schools more freedom, but the manner in which these proposals will work is unacceptable. At the end of the day, when schools are strapped for funds, when there is a dearth of teachers—both retention and recruitment—and when we have an unprecedented number of teachers teaching subjects for which they were not trained, are we really asking them, out of the precious teaching time of our children, to indulge in some very ill-thought-out proposals? I think not. I beg to move.
Moved, as an amendment to Amendments Nos. 12D and 12E, Amendment No. 12F.—(Baroness Blatch.)
Baroness Sharp of Guildford: My Lords, I do not wish to detain the House for long by saying too much. I start by wishing the noble Baroness, Lady Blatch, a very happy birthday and to say, as she said, "There are better ways to spend a birthday than this".
We have debated this issue many times and at considerable length. I want briefly to say why from these Benches we continue to oppose these clauses standing part of the Bill. First, and primarily, we believe that head teachers, teachers and school governors should concentrate on running schools and not running companies. Neither they nor the LEAs,
Secondly, we share with the Official Opposition the feeling that these ideas have not been thought through properly. We are, for example, extremely worried about what liabilities local education authorities might incur as a result of these provisions. We have been given multiple assurances time and again. We understand that these companies are set up on the one hand to purchase materials and on the other to provide services where LEAs will only have to underwrite the purchasing activities. The other companies, which are Companies Act companies, are limited liability companies. Basically, if they make a mess of things and go into liquidation their own debts are their own debts. But I do not understand why there should be this distinction.
Why, if a company is a purchasing company, should the local education authority have to underwrite it? There is still a great deal of uncertainty around these provisions. I share very much the feeling that there are liabilities here. Here we have school governors and teachers who are not used to running companies and may get themselves into deep water. They may incur liabilities. As the noble Baroness said, where do these liabilities end? Who accepts them? At the end of the day it is public money which is at stake here because one is looking at school resources which may be needed to bail out silly mistakes.
Thirdly, in spite of assurances, we are still not clear that there is not a hidden agenda behind these proposals. We have had mixed and contradictory messages about these companies once they are set up. We are told that they cannot run schools. That is the job of the governing bodies. Supposing the governing body wants to contract out the teaching at the school? Is it or is it not allowed to do that? It was clear from the answer given in the other place in Committee by the Minister, at that time, Mr Timms, that he thought that the bodies could do this. We then had a contradictory answer saying that they could not. It is all extraordinarily unsatisfactory. We do not really know where we are.
Lastly, we have argued that the provisions are unnecessary. We have been told time and again that the main purpose is to enable schools to exploit new ideas jointly with other schools. We constantly come back to this idea of developing a CD-ROM. A number of teachers have developed teaching materials and either shared them with other teachers or have set up companies of their own, which they can do perfectly well. They can go into business with printing companies or with CD-ROM stamping companies. They can take the profits or they can put the profits back into schools. There is no need for school governing bodies to have to do it.
The Minister in another place—and I see Mr Miliband standing at the Bar. I am delighted to have you with us, Mr Miliband—ended his speech by saying
It is very much like the internal market which was introduced into the health service by the Official Opposition during their years in government. It did not work in the health service and the internal market will not work in the education services. We do not like these provisions and we do not think they should be in this Bill.
Lord Dearing: My Lords, I congratulate the noble Baroness on the extra sparkle that the champagne has given her remarks. May we join her?
There has been much concern on the Opposition Benches about the provision. I do not share that concern. The provision is about schools doing things together through a specific vehicle—a company. It is clear, and we have been given many assurances, that there will be no coercion on schools to form confederations or federations. It will be voluntary. The issue of forming a company will be voluntary. No one can require a company to be formed by a school.
Our concerns turn, therefore, on whether the companies will make a mess of it or whether it is a diversion of energies. I cannot envisage many schools wanting to form a company. But I should have thought that the main energies would come through the use of the time of members of the company who I assume would be members of the governing bodies. The noble Baroness said that these companies are different from ordinary companies. She contrasted the position with that described by Mr Miliband in another place. I welcome the fact that they are different. I welcome the fact that the provisions for regulations have been made mandatory rather than optional and that the local authority will have a supervisory role.
If the Government decide to use their powers to make a regulation under Clause 11(7), I hope that the local authority will be consulted even though it may be thought that the proposal lies outside its scope. The local authority can satisfy itself, as a potentially supervisory body, that there are adequate prudential arrangements, that the memorandum and articles are satisfactory and that the composition of the company board is satisfactory. Subject to that clarification, I hope that the House will support the Bill as now amended.
12Fleave out from "House" to end and insert "do insist on their Amendment No. 12".
"I know of no [private] company that has to seek the equivalent of local education authority approval to be set up in the first place. I know of no [private] company that has the equivalent of a local education authority as a supervisory body with powers of intervention. Similarly, I know of no [private] company that has the equivalent of a Secretary of State also with powers of intervention".—[Official Report, 23/7/02; col. 229.]
I add to that statement that I know of no private company that requires permission to borrow. In addition to all those layers of interventionary powers, the companies, as free-standing companies under company law, would be subject to the full panoply of supervision and regulation under company law. Therefore, this is not about giving schools the same powers as private companies.
9 p.m.
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