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In his vision of the FE colleges of the future, Sir Andrew Foster, in his report Realising the Potential, sees colleges as vital—indeed, he says it should be their primary purpose—to improve employability and skills in their locality. He says that they should work effectively with their local LSCs, helping them to develop and implement strategies. How will that work? How will this vital element of localism be captured with the abolition of local LSCs and a move to regionalism? The Minister has explained the move from local to regional councils as a considerable saving against waste and bureaucracy. That remains to be seen. This is the fourth reorganisation of the LSC in five years. I cannot help but be reminded of the quotation, frequently ascribed to Petronius, that,

When the Bill that gave birth to the Learning and Skills Council was debated in your Lordships’ House on 17 January 2000, my much-missed friend Lady Blatch said that the proposals in the Bill were bureaucratic, would result in duplication and were costly and confusing. How very right she was. If the Government truly wish to reduce inefficient waste and bureaucracy, why does the Bill not mention the 17 bodies that have an oversight role over FE colleges? Why do they continue to make grand statements, set impressive targets and then refuse to give FE colleges the autonomy with which to realise them—especially as the Foster review called for less centralisation and moves towards greater self-regulation?

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FE colleges, quite rightly, must be given the freedom to innovate and excel with the light-touch, understandable and simple structures that they so desire. That inconsistency between what the Government say and do is repeated throughout the Bill. In marked contrast to the extraordinary raft of increased powers for the LSC to axe college principals and governors, the only increased power the Government are giving FE colleges is the opportunity to award foundation degrees, ending the reliance on higher education. Others in this House will no doubt wish to speak in greater detail about that. For me, it emphasises the dichotomy of the Government's approach: on the one hand to give more independence, on the other to tighten control. Colleges must be allowed to mature to own their qualifications, but rigour should be maintained and good partnerships and good relationships retained.

In his report, the noble Lord, Lord Leitch, states that,

It is compelling and urgent for employers and potential learners alike. A recently published survey by Lloyds TSB shows that skills gaps are the greatest concern of businesses, greater even than the threat of a terrorist attack. Some 48 per cent said that they had experienced difficulties in recruiting qualified workers. At the same time, UK unemployment continues to rise, climbing by 27,000 to 1.71 million in the three months to September—the highest level in seven years. A total of 1.3 million young people between the ages of 16 and 24 are not in education, employment or training, an increase of 29 per cent since 2001. Of course, in failing so many Britons, Britain is on course to fail.

The Further Education and Training Bill will do little to meet these challenges. Remarkably, in the Queen’s Speech debate, Alan Johnson, the Secretary of State, suggested that the Leitch review was of little relevance to the Bill. In the other place he said:

The Government are not bringing forward a system driven by employers and learners as the noble Lord, Lord Leitch, advocates. Instead, they are entering a supply-driven system of the very type that the noble Lord says has failed. Ministers have imposed a rigid system unresponsive to the needs of employers and learners. There is a danger that the weight of central direction and control is stripping FE professionals of a clear sense of vision and purpose. This danger is accentuated by the Bill, which would give the Learning and Skills Council draconian new powers to sack college principals, managers and governors, despite the fact that FE colleges receive some of the best Ofsted reports in the public sector. It is clear that the Government do not have a coherent strategy. Why bring out a Bill that is seen by many in the sector as a technical and tidying-up process? Why are the Government in such a hurry to legislate? Why is this a Bill with no vision?

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In contrast, Conservatives are clear-sighted about our belief in vocational education. As the shadow Minister John Hayes, whose contributions to this debate were recently praised by the chief executives of the Association of Colleges and the Creative and Cultural Skills Sector Skills Council, said, a Conservative strategy will be shaped by the “elevation of the practical.” He added that Britain must be the best it can be but that we are failing to fulfil the nation's promise.

The Bill fails to address five key areas. First, investment in skills training: how much the Government should spend, where business should contribute, and what individuals should pay. The Bill says nothing about these issues, even though the noble Lord, Lord Leitch, concludes that we need to invest far more. We should look for ways to encourage individuals and businesses to invest in their future. Individuals and businesses will spend more only if they are confident that training will deliver the skills they need. We need a much better match between supply and demand, and between provision and need. We must develop a system driven by the choices of learners and the economic needs of business.

Secondly, meeting the needs of learners and businesses means breaking down the rigidity between further education, higher education and schools. If the new specialised diplomas are to succeed, they must be taught by the best teachers with the best facilities, regardless of whether this happens to be at a school, the local FE college or the university campus. Thirdly, to drive the system forward, learners and employers must have confidence that vocational qualifications will meet their needs. This means looking at accreditation—the esteem and rigour of qualifications. We need a coherent system of qualifications that is well understood and which fits together. Fourthly, the system needs to be driven by the choices of learners. We need a careers service that provides learners of all ages with the information they need to make the right choices. Fifthly, on bureaucracy and regulation, we must address the opportunity missed by this FE Bill to give colleges the freedom necessary to innovate and excel, and to meet the needs of businesses and learners.

Surely these issues go beyond party concerns. In that spirit, we urge the Minister to seize the chance the Bill offers to address the profound challenges highlighted by the noble Lord, Lord Leitch. We urge the Government to grasp this opportunity to table amendments that address the five points that I have made and to take steps to empower FE to meet the challenge and to bring new hope to those whom the system has failed.

4.50 pm

Baroness Sharp of Guildford: My Lords, I also thank the Minister for setting out the purpose and aims of the Bill so clearly. I declare an interest as a member of the corporation of Guildford College.

When we first saw the Bill, we thought that we would have very little difficulty with it. We saw it as a relatively uncontroversial Bill that was tidying up a number of rough edges around the sector. There are

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aspects of the Bill with which we have no difficulty whatever and which we very much welcome, such as Clause 7, on listening to the voices of learners and students; Clause 22, on the training of principals; and the parts of the Bill that relate to the industrial training boards. We welcome those and think they are clarifications of the present position.

There is a big question about why we have the Bill before us now. The Minister basically pointed to the Foster report and said that the Bill is carrying through the report’s proposals as set out in the White Paper last spring. In many senses that is true, but the Foster report was accompanied by the first tranche of the Leitch report and it was very clear that there was going to be a subsequent report. I confess that we on these Benches thought that the Bill would not be published until after the second Leitch report and that it would incorporate many of the proposals from that report. It is a great shame that the Government did not wait, because there is a discontinuity between the proposals put forward in the Bill and the proposals in the Leitch report.

The Leitch report is effectively separating out 16-to-19 further education and adult further education. In many senses it is putting the money not in the hands of the LSC but into the hands of the adults themselves through the proposed learning accounts, and into the companies through the Train to Gain programme. Therefore, in many senses the LSC will have much less purchase on the FE sector in future if the Leitch proposals are carried forward. There is also—not in Leitch but put forward by the Government—the notion that the school leaving age should be raised to 18. Again, we shall need legislation for that. Why do we have this Bill now? Why not leave it until later?

If and when those ideas are implemented, we shall need to have another Bill. We need to have a debate on the balance in training young people between 16 and 19 and training adults. One of the parts of the Bill that I regret is the one that does away nationally with the committee that deals with both adults and young people. When we put the Act through in 2000—the noble Baroness, Lady Blackstone, will remember this—great emphasis was put on the need to have that adults committee, because we were worried about the preservation of that part of adult learning, leisure learning, which is now being totally sidelined. I am sorry to see that going.

If we are going to have a broad debate, why is it that the further education sector remains the Cinderella sector? Why is it that further education colleges receive £200 less per student in A-level studies than schools do? The unfairness to the further education sector still exists and has not been sorted out. The Bill does not aim to do that.

Why do we have the Bill? The main reason seems to be to provide legislative cover for the reorganisation of the LSC which has already half been put into effect. As Parliament, our job is to hold the Executive to account. Why are they already doing things for which they do not have legislative cover? As for diversity and choice, that is the old agenda of supplier diversity, not so much diversity of the curriculum.

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It ignores, for example, some very real problems of the inclusion agenda in the FE sector. My noble friend Lady Walmsley will discuss that at greater length in her later contribution. Intervention is the old agenda of sounding tough about poor performance, but is it really appropriate to hand over the powers of the Secretary of State to the LSC at this time?

The big surprise in the Bill—a surprise we gather even to the Bill team until a week before the Bill was presented to us—is the inclusion of the right for further education colleges to accredit foundation degrees. That is not the way to make legislation—there was no consultation whatever. The Minister said that there will be consultation, but that is not the way to legislate.

Let us look at the three most important parts of the Bill. The first is the reorganisation of the LSC, in Clauses 1 to 4, and the move to nine regional bodies instead of 47 local learning and skills councils. This Bench welcomed such a change back in 2000. We argued very strongly that we did not need 47 local learning and skills councils and that they ought to be aligned with the new regional bodies, the RDAs, which were being created.

The difficulty now is that if Leitch is followed through, all the work on regional strategies may be unnecessary, since this post-19 provision will be employer led, and the strategies will be led by the sector skills councils. It is not clear in the Bill how London fits into all that, although it does make it clear that London is a special case. My noble friend Lady Hamwee will deal with the London issue.

With the exception of London, the big hole in the Bill is the linkage between the regional and local levels. The LSC will play, and does play, a major role in the 14-to-19 agenda, the development of specialised diplomas, in expanding sixth-form provision and in raising the school-leaving age to perhaps 18. The LSC is the funder for all that provision. Why then is there no mention or emphasis in the Bill on the 148 local area partnerships which will play a vital role in developing these visions? Why is there this inconsistency between this Bill and the local government Bill, where so much emphasis is put on local area agreements within which priorities for local areas are to be agreed between central and local government and other key players? Does all the stress on regional strategies not open the door to conflict and tension between local and regional objectives? Does the Bill not need to give greater weight to working in partnership with lower tiers of government?

I move now to the second part of the Bill, Clauses 13 to 18. On the face of it, the transfer of powers from the Secretary of State to the LSC—except in Wales where the powers go from the Assembly to the Minister—seems fairly sensible. The LSC has the local knowledge of the sector and, where appropriate, it should take action. We have very little problem with Clauses 13 to 16, which transfer powers to establish and dissolve FE institutions to the LSC. However, we should retain in Clause 15 the requirement that any such action should be taken only after due consultation on the proposals.

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The key problem we have is with Clause 17, particularly with new Section 56A(2)(d), where intervention is justified because,

Clause 17 as a whole transfers to the LSC the Secretary of State’s powers to intervene or to remove some or all of the governing body, to appoint new members of the governing body, and to issue a direction to the governing body, including a direction ordering that body to dismiss a principal or other members of staff. The Secretary of State will, incidentally, retain powers to intervene as a last resort.

So how reasonable is this transfer of powers? Various issues arise, the first of which is accountability. At the moment, the Secretary of State has the ultimate power to intervene but has never used that power. But, if the Secretary of State did intervene, at least he or she would be a representative of an elected Government. The LSC is not elected—it is an appointed body—and there is a real accountability issue. The argument for transferring the power to the LSC is that it is closer to the action. Therefore, are we expecting the LSC to intervene more often than the Secretary of State? If so, as I said, there is an issue of accountability. If not, and action is only in extremis, why bother to transfer the powers at all?

Secondly, further education colleges are set up as private corporations. As I declared at the beginning, I am a member of the corporation of Guildford College. Governors are appointed as directors of that corporation and they have ultimate responsibility for its functioning. Paragraph 7.39 of the White Paper says:

Part 4 of the Education and Inspections Act, which recently went through this House, gives powers to the LSC well beyond those given to the LEA to intervene in failing schools, and, again, the power of the Secretary of State to intervene as an ultimate sanction is retained. If the LSC steps in and, for example, dismisses a principal, what happens if there is a suit for unfair dismissal? Who bears the cost? Who pays the compensation, if it is awarded? Does this provision not totally undermine the whole concept of the independence of the board of the corporation?

Thirdly, is it really necessary for the LSC to have powers of intervention? Further education colleges, under their corporate governance, are the one sector of education—the Minister made reference to this—that have improved their performance and met all their performance indicators. Why single out further education when the Government are not taking comparable powers to intervene in universities or schools with sixth forms? Fifty per cent of the LSC funding goes to schools with sixth forms. Ofsted and ALI have together usefully prodded the laggards in

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this sector. As the Minister said, governing boards have acted, principals have been dismissed or, more frequently, have been persuaded to leave, and under-performers have been taken over by stronger colleges. That trend is likely to increase with fiercer competition in the sector. Behind Ofsted has been the ultimate sanction that the Secretary of State could intervene if necessary, but, as I said, he or she has never done so. If this is so successful a model, why is it now necessary to change it?

Lastly, why should all the power go to the LSC when it provides a diminishing share of further education college funding? Although the LSC is often the largest funder for many colleges, it is by no means the only one, putting in something like 50 to 60 per cent of the funds. Why should it have the power to intervene? That will be even more the case if Leitch is implemented, as much of the post-19 funding will be transferred either to industry or to individuals. Is it really sensible now to transfer these powers from the Secretary of State to the LSC?

Finally, I come to the big enigma in the Bill: the issue of colleges being able to accredit their own foundation degrees. We have considerable difficulty with that proposal. The key issue is that of collaboration and establishing foundation degrees as a stepping stone to further qualifications within a lifelong learning framework. Those degrees have been slow to take off. The Minister said that he was looking forward to there being 100,000 but, at the moment, there are only 46,000 foundation degrees, with 76 per cent being taught in further education colleges. Sixty-five per cent of the students are over 21, 46 per cent of them are part-time, and 52 per cent are full-time. Such degrees are, and are becoming, a very important route to widening participation. We do not doubt that and we welcome them from that point of view.

Why, then, do we hesitate over the power of colleges to accredit the degrees themselves? It is largely because of some of the unintended consequences and the failure to consult, which I think means that we have not worked our way through those unintended consequences. The first consequence is that, rather than encouraging collaboration, the proposal could—not necessarily will—break up useful collaborations that already exist. Many universities and further education colleges are already working well together. Guildford College has links with Southampton, Surrey and Kingston Universities, and they work very well indeed. If colleges get the right to accredit their own degrees there is a danger that it will become a status symbol and those collaborations will break up as they accredit their own degrees.

Secondly, the proposal raises the question of what a degree is. Should we be using the term degree for a two-year qualification? I have always been one of those who regretted that the Government chose to call these foundation degrees “degrees” rather than to use the old and well-established Higher National Diploma. It also causes enormous difficulties, particularly in the international scene. The UK has spent the best part of 10 years trying to persuade our

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European partners within the Bologna process that our three-year bachelor degrees are worthy degrees and can be regarded as such. The proposal seems to muddy the field yet once again and makes it difficult to make clear to our Bologna partners that we are not devaluing.

Thirdly, it is not clear what degree-awarding powers will mean in this case. The QAA, which will accredit the institution, will accredit the institution but not the individual courses there. We have to recognise that further education colleges, very rightly, provide everything and anything, from basic skills through to higher-level degrees. We should welcome that. However, none of those qualifications is currently accredited by the institutions themselves. They are accredited largely by organisations such as the City and Guilds, Edexcel, AQA, the RSA and other professional organisations. Why are we suddenly giving them the right to award their own degrees? One of the arguments in favour is that the procedures for universities have been far too bureaucratic. However, if the colleges wish to be accredited, they will find it a bureaucratic process to get QAA accreditation. It will take them three to four years to do it. Or is the process too expensive? There have been complaints that the universities have been top-slicing 30 per cent off the funding when they set up and accredit the degrees. However, surely that is an argument within HEFCE. They should go to HEFCE and argue there.

Finally, there is this question of the sheer lack of consultation. The proposal was not in the White Paper or in Foster. It was put into the Bill at very short notice and no one was consulted. As I said, that is not the way to make legislation.

Our conclusion is that this is a little Bill that raises more questions than it answers. We think that its presentation to the House is premature and that the Government should have waited for Leitch and brought us better crafted and better thought-through legislation.

5.08 pm

Lord Low of Dalston: My Lords, I promise to talk about something other than disability one of these days, but I hope that your Lordships will forgive me if I talk about it just once more and focus on the disability aspects of the Bill, in view of the crucial importance of education in combating the disadvantage that disabled people experience in our society.

Consider for a moment, if you will, the following facts. At 16, young disabled people are twice as likely not to be in any form of education, employment or training as their non-disabled peers—the figure is 15 per cent for disabled people as against 7 per cent for non-disabled people. This gap increases to three times as likely by the age of 19—27 per cent as against 9 per cent. Apparently things are getting worse, not better. According to a DfES study published last year, the number of young disabled people not in any form of education, employment or training increased from 11 per cent to 15 per cent between 2000 and 2004.

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