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Baroness Ashton of Upholland: My Lords, that is slightly wide of the Question before me. The relationship between Church of England and Church schools and the way in which the Government take forward education policy is a critical factor. I am happy to pursue that with the right reverend Prelate and with the right reverend Prelate the Bishop of Portsmouth in his role as chairman of the Church of England Board of Education.
Baroness Miller of Chilthorne Domer: My Lords, I declare an interest as a Somerset county councillor, although I make it clear that Somerset has no failing schools. What is the rationale employed by the
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Government in enabling someone to take over, for a proportionately small sum of £2 million, a multi-million pound school building and a subsequent school running project, especially as it seems that it will be free from government control? What rationale are the Government following?
Baroness Ashton of Upholland: My Lords, that is not the most accurate description of the way the academies programme will work. I should be happy to give the noble Baroness a more lengthy description. This is about bringing in creative, entrepreneurial aspects to enable schools such as those I have indicated, which have had a succession of failure, to offer something different to help our children to succeed. There is a funding agreementI have placed a copy in the Library of the Houseto ensure that the Government play a key role in ensuring that such schools are run effectively and properly. The academies are inspected, and we have advisers working with them. We have very high aspirations and we expect them to achieve.
Baroness Ashton of Upholland: My Lords, I do not believe that we have had any representations. I shall write to the noble Baroness if I discover that we have. The academy programme is run in schools in areas of highest deprivation, and therefore provides a new asset for schools. The academies which are open and those which are about to open have received many applications from parents who wish their children to attend. We hope that the academies will succeed in providing a first-class education for our children.
Baroness Carnegy of Lour: My Lords, can the Minister confirm what I believe about city academies; that is, that the secret is not just setting free leadership but enabling the leadership of the school to set free the professionalism of staff in the school to run things in the way they want? I wonder whether the Minister is as sorry as I am that the Liberal Democrats are not keen on that.
Baroness Ashton of Upholland: My Lords, I understand all political views in your Lordships' House and I understand that people may feel nervous about something new in the system. However, we know that uniformity is not always the best approach for our children. We have some very good schools in our system and some excellent teachers. However, over the years some schools have consistently failed our students. We have to ensure that we bring to bear all of the best in our society to support them. The academy model is but one part of the toolkit available to the department to try to support children in all settings.
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The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord McIntosh of Haringey): My Lords, there are provisions included in PFI contracts that are specifically designed to safeguard the public sector against situations such as contractor insolvency. Where a private sector party cannot meet his obligations, it is the responsibility of other shareholders or credit providers to replace him. In the last resort, the Government have the right to terminate failing PFI contracts with substantial losses to the consortium concerned.
Lord Newby: My Lords, does the Minister agree that if a major PFI contractor such as Jarvis were to go under, some combination of government and other public bodies would have to pick up the pieces; for example to secure the completion of student halls of residence currently under construction for the next academic year? Does that not demonstrate that in reality the Government continue to bear much of the risks of those contracts?
Lord McIntosh of Haringey: No, my Lords. If Jarvis or any other contractor were to fail in its obligations, it is, as I said in my Answer, the responsibility of the other members of the consortium to, as the noble Lord said, pick up the pieces. Of the schools contracts which Jarvis has, only one is Jarvis alone. That is for only three schools and is worth £19 million. All the others have at least Barclays behind them. I do not think that the noble Lord, Lord Newby, will suggest that Barclays will not be able to take up the responsibilities which are imposed on it by the PFI contracts.
Lord St John of Bletso: My Lords, are not most PFI contracts through special purpose companies, which, if properly managed, should isolate 90 per cent of the problem if the contractor becomes insolvent?
Lord McIntosh of Haringey: Yes, my Lords. But it is not 90 per cent; it is 100 per cent. The worst that could happen is that if one member of a consortium became insolvent, there could be delays before the other members of the consortium took up his obligations, which they must do and which is in their interests. The purpose is that all the shareholders in a special purpose vehicle, to which the noble Lord, Lord St John, refers, have the incentives to complete on time and to adequate quality built in upfront in the contract.
Baroness Noakes: My Lords, given that the number of contractors involved in major PFI contracts is
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relatively small, do the Government have procedures for monitoring their financial health so as to be ahead of the game? If not, why not?
Lord McIntosh of Haringey: My Lords, value-for-money analyses are made. I see the point behind the question of the noble Baroness, Lady Noakes. It is true that in previous years we had a public sector comparator which was an assessment of the kind the noble Baroness seeks. But that was brought in rather late and therefore it was not the kind of evaluation for which she rightly asks. The value-for-money studies which are now carried out, and which continue to be carried out by the National Audit Office, give exactly the assurance the noble Baroness seeks.
Lord Oakeshott of Seagrove Bay: My Lords, in view of the widespread public concern about the financial position of Jarvis plc, can the Minister tell us what, on a look-through basis, is the total exposure of the public sector to Jarvis plc contracts?
Lord McIntosh of Haringey: My Lords, it would not be appropriate for me to comment from the Dispatch Box on the finances of Jarvis Plc. On the issue of public exposure, my answers have made it clear that the exposure is of the other members of the consortiums, rather than of the public sector.
Lord Bradshaw: My Lords, is the Minister really satisfied that the refinancing of PFI deals, which is quite common, amply safeguards the public sector, and that it receives a fair share of the better refinancing, which is available when a scheme is completed?
Lord McIntosh of Haringey: Yes, my Lords. The financing of a private finance initiative contract is a matter of legitimate risk. They are about risk management and those who undertake such contracts undertake a risk. If they can then lessen their risk by refinancing, it is legitimate that they should take some part of the benefit of that. But the contracts that have been in place since 2002 ensure that the public sector takes 50 per cent of the benefit of any refinancing.
Lord Selsdon: My Lords, how many PFI projects have been successfully completed and how many have failed? May I remind the Minister that the Government have done a good job because they have succeeded in what we would call "risk transfer"?
Lord McIntosh of Haringey: My Lords, I am grateful for the final remark of the noble Lord, Lord Selsdon. If I were to give the detailed answer to his question, I would keep the House for a very long time. The answers are available on the Treasury website.
Moved, That it is expedient that a Joint Committee of Lords and Commons be appointed to consider and report on any draft mental health Bill presented to both Houses by a Minister of the Crown, and that the committee should report on the draft Bill by the end of March 2005.(Baroness Amos.)
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