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We have had some very helpful discussions with HMRC, and I am glad to pay tribute to officials there for their work. We are confident that we can manage the administration involved. There is no question but that having access to tax information in order to make assessments will make the management of future cases much more straightforward.

Business

4.16 pm

Lord Grocott: My Lords, just before the Second Reading debate, there is a change of business. The last debate for today, on the European Union Committee report, will now no longer take place. The usual channels—flexible and accommodating as ever—have decided that the business is likely to run rather late if that debate continued, so with general agreement it will not take place.

This means that there is now rather more time for the Further Education and Training Bill. I originally suggested eight minutes as an advisory speaking time for Back-Bench contributions; there is now room for 10 minutes. That is advisory and it does not mean to say that everyone has to take 10 minutes. It is optional, but I thought that I needed to advise the House of the position. There is just the Second Reading debate and 10 minutes is the advised time.



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Further Education and Training Bill [HL]

4.17 pm

The Parliamentary Under-Secretary of State, Department for Education and Skills (Lord Adonis): My Lords, I beg to move that this Bill be now read a second time.

This is a vital period for the development of further education, as we take critically important steps to raise skills levels in our society. The FE sector has made tremendous progress in meeting the needs of learners and employers, but more needs to be done and this Bill represents the next stage in a reform programme designed to equip our people with the skills necessary to succeed in life and to compete in the global economy.

I need hardly emphasise to the House the scale of the skills challenge we face as a nation. Asia now produces more than Europe. China alone manufactures 50 per cent of the world’s computers and textiles and 60 per cent of digital cameras and mobile phones. By 2020, the G7’s share of global growth will fall to just one-third. The structure of Britain’s workforce is undergoing equally dramatic change. Today, there are 6 million British adults without basic skills, yet jobs for only 3 million of those people; by 2020, in all likelihood, there will be just half a million unskilled jobs.

These are sobering economic statistics, but equally powerful social imperatives are at stake. Young people and adults should have every opportunity not only to increase their value in employment, but to seek self-improvement, to take courses for pleasure and to build self-esteem. In a civilised and democratic society, education, including further education, is an end in itself and not just a means to an end. While we are determined to meet a major economic challenge, we are equally convinced that further education is a path to personal fulfilment and that it must continue to be so.

It may assist the House if I explain the Bill’s main provisions. Part 1 reorganises and streamlines the Learning and Skills Council, which I shall now call the LSC for short. Within a new regional infrastructure, the LSC will operate more effective local partnerships with businesses, education providers and other stakeholders. Clause 1 reduces the minimum number of LSC members from 12 to 10. Clause 2 establishes regional committees, to be known as regional learning and skills councils. We intend that there should be a network of nine regional learning and skills councils. The clause allows the Secretary of State to make provisions for the regional councils, including appointment of their members. It also sets out the functions and duties of the regional councils and the guidance which the LSC must prepare on their behalf.

Given the creation of the nine regional councils, Clause 3 removes the 47 local learning and skills councils and the related statutory provision. Clause 5 removes the requirement for the LSC to have statutory committees for young people and adults, while Clause 8 aligns the LSC’s planning year to the

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academic year used across the sector. Part 1 also establishes in Clause 4 a new duty on the LSC to respond to skills and training strategies developed by other organisations, as requested by the Secretary of State. In particular, Clause 4 enables the creation of the London Skills and Employment Board, chaired by the Mayor of London, and the development of an adult skills strategy, which the LSC will implement. When implementing the strategies of the London board or other designated organisations, the LSC must still comply with its existing duties. If the LSC proposes not to implement a strategy it must refer the matter to the Secretary of State.

The LSC will have other responsibilities to engage more effectively with learners and employers. Clause 6 establishes a new duty requiring the LSC to ensure greater opportunities for learners and employers to influence not only what gets studied, but how and where. Clause 7 requires the LSC to consult these groups, which, critically, includes canvassing the views of potential learners. Clause 9 clarifies the LSC’s ability to participate in a range of organisations providing educational opportunities, including charities. Part 2, Clause 20, and Part 4, Clause 25, clarify the ability of further and higher education corporations to do likewise. Finally, Part 1 authorises the LSC to deliver services on behalf of other publicly funded partner organisations. Clause 10 would enable the LSC to provide services to partners, such as shared accommodation, and Clauses 11 and 12 enable the LSC to offer career development loans.

Part 2 concerns further education colleges. Clauses 13 to 16 transfer the powers to incorporate and dissolve further education corporations from the Secretary of State to the LSC. It also establishes an effective process for intervention where FE provision is found to be unsatisfactory, mismanaged, or not improving. In Clause 17, intervention powers are transferred from the Secretary of State to the LSC, making sure the council has the statutory authority to act in such circumstances, including a new power to direct the governing body of an FE institution to dismiss its principal and senior staff. The Bill bolsters existing provisions which allow the LSC to withdraw funding from or to close a failing FE institution.

Clause 19 concerns foundation degrees. At present, an FE institution wishing to award foundation degrees needs to enter into an arrangement with a university or other higher education institution with degree-awarding powers. Clause 19 will allow high- performing further education institutions to award their own foundation degrees, removing their dependency on higher education institutions for validation in respect of foundation degrees. I should stress that this provision applies to foundation degrees alone; it does not apply to honours degrees, which will remain the sole preserve of higher education institutions. Higher education institutions will also continue to be able to award their own foundation degrees.

This provision has stimulated a great deal of interest in the House and outside, so I stress to your Lordships that, to exercise this power, FE institutions will need to meet stringent quality criteria. The

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Government will consult on these criteria once the Bill is enacted. We will also publish detail on the range of criteria to be consulted on while the Bill is before Parliament. The acid test will be that students taking foundation degrees awarded by further education institutions should not receive a lower quality of experience than those taking foundation degrees awarded by higher education institutions. We expect that only a minority of FE colleges will wish to exercise this power and that many FE colleges will continue to embrace foundation degrees awarded by universities.

Part 2 of the Bill establishes other duties relating to FE institutions. Clause 21 requires colleges, like the LSC, to consult learners and employers, including young people in the NEET category—not in education, employment or training. Elsewhere, Clause 22 creates regulations concerning the qualifications of college principals, to ensure further improvements in the management and leadership of the FE system.

In Part 3, we wish to amend an existing anomaly within the Industrial Training Act 1982. Clause 23 enables the industrial training boards to consult a wider range of employers than legislation currently allows, to demonstrate consensus for their levy proposals. Clause 24 proposes to reduce the bureaucracy surrounding this process by expanding the duration of the levy period from one to three years.

Finally, Clause 26 in Part 4 gives the National Assembly for Wales new powers to take action regarding its own further education sector.

I shall now explain how the Bill fits into the Government’s long-term vision for further education.

The Bill builds on our longstanding commitment to the FE system. Since 1997, government investment in FE has exceeded £55 billion. Spending this year is 48 per cent higher in real terms than in 1997. Over the next two years, funding for FE participation will increase in cash terms by more than £300 million. The LSC budget will rise to £11.2 billion in 2007-08, up from £10.5 billion in 2006-07.

That investment means steadily better prospects for individuals. Since 2001, for example, 4.5 million people have benefited from our basic skills programmes which had their origin in the important 1998 report by the noble Lord, Lord Moser, on adult basic skills. In that same period, a quarter of a million people have undertaken modern apprenticeships and 50,000 people have taken foundation degrees. Every year, the FE system caters to well over 5 million people who complete around 12.5 million courses.

At the same time, FE institutions work closely with employers: on apprenticeships alone, they have collaborated with more than 130,000 businesses. They deliver the vast majority of adult level 2 qualifications: almost three-quarters of adults are now qualified to at least level 2. Success rates have risen across the FE sector as a whole, with sixth form colleges leading the way and general FE colleges rapidly improving.

The essential test for all public services is customer satisfaction, and, here again, the FE system is delivering. More than 90 per cent of learners say that

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their institutions have provided the teaching that they had sought. These achievements speak volumes for the talent and effort of all those working in the FE system—not least the 400,000 teachers engaged in professionalising this country’s workforce.

However, we have rightly developed an ongoing agenda that commits us to creating and sustaining world class further education.

In doing so, we have drawn heavily on Sir Andrew Foster’s report, published in November 2005, which sought to raise the capacity of the FE system: to improve employability and skills, to support economic growth and to foster social inclusion. It challenged leaders and staff to deliver high quality teaching across the board.

To implement the Foster report, our recent FE White Paper promised new incentives for colleges and independent providers to develop their own distinctive specialisms, as well as developing closer relationships with higher education institutions. It required that robust intervention methods be devised to tackle unsatisfactory and mediocre provision and it undertook to invest more in the professional development of the FE workforce, to reduce bureaucracy, and to reinforce the LSC’s strategic influence at the local level. This Bill contributes to all these elements of reform set out in the Foster report and the subsequent White Paper.

A further important contribution to the debate on the future role of FE came last week with the report of my noble friend Lord Leitch. My noble friend’s report highlighted the task facing us over the next 15 years in terms of skills competitiveness: the 7 million adults who still lack functional numeracy and 5 million who lack functional literacy; the 35 per cent of the working age population who still do not have full level 2; and the 36 per cent qualified to intermediate—level 2-3—compared to 50 per cent at the equivalent level in, for example, Germany and New Zealand. The report also noted that by 2020, although the position will improve, on current projections we will still lag behind significantly.

Taking forward my noble friend Lord Leitch’s recommendations is a task which extends well beyond this Bill. However, the Bill is firmly rooted in my noble friend’s analysis: that further education is the responsibility not only of the state but of employers and individuals and that it must teach the skills on which individuals, employers and the wider economy all rely, but that this should not be interpreted as narrow vocationalism. It must include the general education that employers value and which provides an essential basis for learners to prepare for flexible working and career development in the fast-changing and demanding economy of the future.

The development of foundation degrees is a case in point. I pay tribute to my noble friend Lady Blackstone, who, as Minister, took the bold decision to create foundation degrees, spanning further and higher education. Her decision has been amply vindicated in the past five years, as the number of foundation degrees has expanded tenfold in that period. Substantial further growth lies ahead: our

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target is 100,000 foundation degree students by 2010, an expansion that is badly needed to meet the skills demands that the country faces. For those 100,000 foundation degree students we believe that there will be enlarged opportunities for universities and colleges, working together collaboratively as appropriate.

Motivating more young people and adults to engage and invest in further education will require colleges to offer flexible courses whose benefits are transparent. Learners and employers must be empowered when it comes to determining what courses are funded and how they are delivered. For this reason, the Bill imposes new duties on the LSC to monitor the availability, choice and diversity of learning opportunities as well as further duties on both the LSC and FE institutions themselves to consult widely over their provision.

There is an important workforce dimension in our proposals. World-class skills can be guaranteed only through an FE system which employs excellent teachers and managers. The Bill introduces regulations requiring FE principals to have achieved or be working towards a recognised qualification, putting them in this respect on a par with school head teachers, who for some years have had such a requirement. Besides this current legislation, the Government are investing in new measures to support the FE workforce through mandatory continued professional development.

I am glad to say that cases of poor or unacceptable provision in the FE sector are few and far between, but there needs to be a proper system for tackling poor and unacceptable performance. This Bill will create the statutory basis for intervention, for which responsibility will lie with the LSC. Intervention should, of course, be in inverse proportion to success. Whenever intervention is necessary, the LSC’s actions must be both transparent and effective, with the safeguard that the Secretary of State can step in, should he consider that the LSC has failed to discharge its duty in the proper manner. When provision is poor, the Bill also allows new entrants to compete for replacement services, with the LSC expected to promote diverse approaches to teaching and learning to meet the needs of learners and employers.

The LSC has a central role to play in funding, commissioning and reform. However, concerns have been expressed that the LSC is too bureaucratic and, last year, Sir Andrew Foster reported that the FE system was over regulated. Since then, the LSC has sought to simplify its operation and reduce bureaucracy. By restructuring its executive structure, the LSC has reduced by around 1,100 staff, providing savings of around £40 million per annum for investment in learning provision. The Bill will enable further efficiencies to be secured in future.

I conclude by quoting from the powerful opening words of the Leitch report:

That is the challenge before us, and the prize if we meet the challenge. This Bill is essential to this great national purpose, and I commend it to the House.

Moved, That the Bill be now read a second time.—(Lord Adonis.)

4.36 pm

Baroness Morris of Bolton: My Lords, I am most grateful to the Minister for setting out the Bill so clearly, and to the Bill team for its thorough explanation of the clauses and the thinking behind them.

Further education matters because the difference that it makes really counts. The cost of inadequate emphasis on FE and training is borne by the millions who could benefit from the skills they would acquire at college but who are to be found among the growing, sad brigade of NEET. As the Minister mentioned, NEET are young people aged between 16 and 24 who are not in education, employment or training. They are often failed by the system and all too frequently cheated of their chance to prosper.

I hope, as I know do all Members of your Lordships’ House, that this debate and further consideration of the Bill will offer new hope to those young people. It is a pleasure to contribute to today's debate, because I trained to become a teacher at an FE college. That college is now part of a new university, Nottingham Trent. Over the years, we have seen a changing landscape as colleges and polytechnics metamorphose into new institutions. That evolutionary change is taking place in the FE sector. As old industries give way to new ones, colleges and the dedicated professionals who work in them will have to adapt to new challenges.

Last Friday, I had the pleasure of visiting Bolton Community College, which, when I was growing up and being educated in Bolton, was known as Bolton tech. It had a strong emphasis on engineering then, as you would expect from a town with a proud manufacturing tradition that played such a large part in the industrial revolution. In addition to offering these skills, it is now a centre of vocational excellence in construction and health, and one of the leading colleges for work-based learners.

I was very impressed by what I saw, but most impressive of all is how the Ofsted report demonstrates its outstanding capacity to improve its provision. We should hold that ambition for all who are committed to equipping our workforce with the skills for a new age.

The acquisition of skills is important to our national economic competitiveness because of their impact on productivity, so it is critical that we improve our skills base. It is now widely acknowledged that Britain's future will be as a skills- and knowledge-based economy. We could not, and should not, aim to compete with countries such as China in low-end manufacturing. The Secretary of

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State, Alan Johnson, admitted in another place that the number of unskilled jobs will go down from 3.5 million to just over half a million by 2020. This need not be seen as a decline or in negative terms. Instead, the 5 million highly skilled jobs that will be created in the same period present an opportunity as much as a challenge, but it is an opportunity that can be grasped only through a step change in the nation's skills.

Skills are not only a route to a higher wage or a different type of job; as the Minister said, they are also about individual well-being, a means to encourage and enable aspiration and to allow people to take control of their lives to enjoy a more confident lifestyle. The happiness index compiled by City and Guilds shows that vocational workers are the most likely to feel fulfilled by their work. Demographic change means that we cannot rely on the younger generation to fill future employment needs. Our population is getting older and we must learn to stop considering training as the sole preserve of the young.

In the light of the growing consensus about the importance of skills, the Government asked the noble Lord, Lord Leitch, to consider the UK's long-term skills needs. We, the noble Lord, Lord Leitch, and sometimes even the Government recognise the need for FE colleges to become stronger, more flexible institutions, able to respond to local demand, but this Bill places yet more power into the hands of the LSC, which now includes regional councils.


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