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The noble Lord said: My Lords, I shall also speak to Amendments Nos. 20, 45, 46, 56 and 57. These are technical amendments relating to Clauses 9, 20 and

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25, which concern the powers of the Learning and Skills Council and further and higher education corporations to form certain bodies corporate.

Clause 9 amends the Learning and Skills Council's current power to form companies as set out in Section 18 of the Learning and Skills Act 2000, to make it clear that it can form companies limited by guarantee as well as those limited by shares, subject to the Secretary of State's consent. Similarly, Clauses 20 and 25 amend the powers of further and higher education corporations to make it clear that they can form companies limited by guarantee as well as those limited by shares. Clauses 9(4), 20(6) and 25(4) make retrospective provision.

These technical amendments make it absolutely clear that the retrospective provision is only required until immediately before the amendments come into force. Once they are in force the retrospective provisions are no longer required, as the amendments themselves provide that the Learning and Skills Council and further and higher education corporations will have the power to form companies limited by guarantee. The clauses as drafted provide that Clauses 9(4), 20(6) and 25(4) relate to the period ending on the date that the remainder of Clauses 9, 20 and 25 come into force. I am informed that there is therefore an overlap of one day. The amendment shortens the period so that it ends immediately before the rest of Clauses 9, 20 and 25 commence, so that there is no overlap. The second amendment to each clause is purely a grammatical change. I beg to move.

On Question, amendment agreed to.

Lord Adonis moved Amendment No. 20:

On Question, amendment agreed to.

Clause 16 [Publication of proposals]:

[Amendments Nos. 21 and 22 not moved.]

5 pm

Clause 17 [Intervention: England]:

Baroness Walmsley moved Amendment No. 23:

The noble Baroness said: My Lords, I shall speak also to Amendments Nos. 24, 25, 26, 36, 37 and 39 in this group, all of which refer to Clauses 17 and 18. All my amendments, save Amendment No. 39, are the same as those laid in Grand Committee, and I am afraid that my views have not changed, despite the Minister’s careful reply on that occasion.

Amendment No. 23 would remove the reference to,

as we believe that this is an intervention too soon, too far and too woolly. Amendment No. 24 would allow the council to give the corporation of a college advice but not directions. Amendment No. 25 would remove the power for the LSC to require a governing body to dismiss a principal or other senior member of staff.

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Instead, Amendment No. 26 would insert a statutory procedure through a model similar to that which applies to schools that are failing, whereby a written report of the LSC’s concerns would be sent to the governors and the principal, and the governors would have to reply to the LSC with their plan of action. Frankly, if this procedure were in place, I could not envisage any need for the LSC to use the powers that the Government want to give it. Indeed, I believe it is only right that such a procedure should be laid down in statute. Amendments Nos. 36, 37 and 39 would insert the appropriate similar amendments into Clause 18, which relates to Wales.

We believe that these powers are neither appropriate nor needed in the hands of an unelected body whose job is to fund and organise the provision of further education. Despite the Government’s amendments, which state that the LSC and the Welsh Assembly Government must, after consultation, publish statements on how they plan to use the new intervention powers and lay them before the Secretary of State and Parliament or the Welsh Assembly as appropriate, we are still not happy with the extent of these intervention powers. We have therefore sought in this group of amendments to modify the worst of them.

We acknowledge that the Government have made clear the circumstances in which the LSC might direct a governing body to dismiss a senior member of staff. However, there is no evidence that in these circumstances governing bodies would not act by themselves without needing the LSC on their backs. College governing bodies take these matters extremely seriously, and there is no evidence that a college has not acted decisively when it has needed to. In a sector of around 400 institutions, it is inevitable that some will perform less well than others. Around 70 principals leave their post each year, but most leave to take up a post elsewhere or to retire. A small number are asked to leave by their governing body. In cases of serious mismanagement or college failures, governing bodies work with the LSC and an interim principal until a new person can be appointed.

The Association of Colleges has estimated that 25 financially weak colleges were merged with stronger neighbours between 2000 and 2005—a period, by the way, of enormous improvement in the whole sector, matched by no other public service. Only on two occasions in the past 10 years has a whole governing body resigned.

While considering the Government’s proposal to take intervention powers from the Secretary of State and give them to the LSC, it is worth noting that the Secretary of State has not found it necessary to use these powers since they were created by the Further and Higher Education Act 1992.

Noble Lords will recall that another of our concerns about Clause 17 is that it interferes with employment law and the contractual arrangements between a college corporation and its employees. The intervention of the LSC or Welsh Assembly Government could make it more difficult for governors

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to take the appropriate action, and it could certainly open them up to legal action and possible compensation for breach of contract.

The Government’s response to that issue in the guidance is that they,

Any college that has such an evidence base will itself dismiss the person concerned and does not need the LSC to instruct it to do so. If it has not such a base, the person should not be dismissed in any case—either by the college independently or on the instruction of the LSC.

Another concern is that the Bill gives the LSC new powers but does not specify how responsibility for failure should be attributed to the various senior members of staff. The absence of a real appeals process would make it impossible for the college to comply with the statutory disciplinary and dismissal procedure in any meaningful way, as any representations that the individual might make to the college would make no difference. The decision will not be made by the college; it will be made by the LSC.

Much of the money spent by colleges is public money, and none of us condones bad practice or poor quality in teaching or management. Of course the LSC has a role in supporting and advising colleges that are underperforming. In extremis, there are still the powers of the Secretary of State. There is no evidence that we need to transfer those powers to an unelected body. As we are talking about public money contributed by the taxpayer, it is only right that someone who has been elected and can be dismissed by the same taxpayer has the powers of intervention. I beg to move.

Baroness Morris of Bolton: My Lords, I shall speak to Amendments Nos. 34 and 40, but first I wish to say how glad we are that the Government have listened to some of our concerns about the accountability and transparency of the powers that the clauses introduce. Their amendments go some way to provide the necessary scrutiny of such potentially draconian powers and they certainly improve Clauses 17 and 18 in many ways.

We do not feel, however, that those amendments go far enough. They do not even begin to address our concern about the effect that the clauses will have on the relationship between the Learning and Skills Council and further education institutions, of which the noble Baroness, Lady Walmsley, so eloquently spoke. More importantly, they do not disguise the fact that the powers given by the clauses would damage the development of the further education sector as a whole and reduce the independence of individual colleges still further. The government amendments do nothing to change that; therefore, although we are glad that the Government are listening to this House and making a genuine effort to find a middle ground, the amendments are not enough.

As my response to the government amendments may have led your Lordships to expect, we are very sympathetic to the amendments tabled by the noble

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Baroness, Lady Walmsley. They deal with exactly the point that the Government have failed to address: the effect that the clauses will have on the relationship between the Learning and Skills Council and further education institutions. Clause 17 provides for the Learning and Skills Council to take on an enormously powerful role. The Government have made it clear to us that they have no expectation of that power being used at all frequently. As we have heard, it has never been used by the Secretary of State. By their amendments, they have made any use of it much more transparent and accountable not only to Parliament but to the wider public.

None of that makes any difference to the fact that the body that directs much of colleges’ funding, issues guidance and is generally a close and constant presence in the running of our colleges is being given the power to go in over the head of the governing body and sack staff, even to dismiss governors. The Liberal Democrat amendments make it considerably more likely that the powers will indeed be used only as a backstop in the most urgent cases. As such, they are very sensible and go a long way to improve the clauses. However, we do not feel that they can be amended sufficiently to guard against the harm we believe they will do. So, despite the best efforts of the Government to address our concerns, we have tabled amendments to leave out Clauses 17 and 18. We believe that these clauses are a step in entirely the wrong direction.

Further education institutions need to be given more, not less, independence. They need to be trusted more by the Government, not hedged around with endless rules, regulations and micromanaged targets. The only way for this sector to gain the status and credibility it deserves, and which we desperately need it to achieve, is for the Government to give colleges and the governing bodies managing them the power to develop their own diverse, innovative and locally responsive strategies and direction. Frankly, the Government should know better than to continue with clauses like these. They have commissioned several reviews and reports, most recently the Leitch review, all of which have told them the same thing: colleges need to be trusted with real independence in order fully to achieve their potential. Yet the Government continue with this unprecedented level of interference. There is no suggestion that this degree of control will be appropriate for schools or universities, so why do the Government think it is appropriate for colleges?

These powers will not only prevent the further education sector developing, they will actively damage it, which is why we propose the outright removal of the clauses rather than their modification. Giving the Learning and Skills Council these powers will erode the position of colleges’ governing bodies instead of encouraging governors to continue to maintain a keen and active interest in their colleges. The Government are taking responsibility away from them, for no discernible reason. As I said at Second Reading, the further education sector receives some of the best Ofsted reports. I should, however, make it quite clear that we are not against rigour or driving up standards. We are perfectly happy for these powers

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to continue to reside where they are at present: with the Secretary of State, who is elected and paid to take difficult decisions and is ultimately accountable to the electorate. In Clause 18 the proposed shift of powers to the Welsh Assembly is at least a shift to another body answerable to the electorate, but Fforwm, the Welsh sister body to the Association of Colleges, reports that colleges want these powers to remain with the Secretary of State.

No doubt the Minister will tell me, as he did in Grand Committee, that these powers are very rarely used and are a last resort, but clearly not everyone sees them in that light. The morning after the Queen’s Speech, the “Today” programme said that there was to be a further education Bill to “sack college principals”, and in a press release in response to the Government’s White Paper that heralded the Bill now before noble Lords, the Learning and Skills Council referred more than once to poor provision being “cut out”. You can almost see the Learning and Skills Council salivating at being given this power.

We too want to see the highest standards in our colleges, but if there is a need to intervene to remove a principal or members of the governing body, the power to do so should reside with the Secretary of State. Members on these Benches feel that these clauses are a significant step in the wrong direction and therefore would like to see them removed entirely. When it comes to the appropriate time, I shall seek the opinion of the House.

Lord Walton of Detchant: My Lords, can the Minister identify any other body in the educational sector that is a funding organisation but assumes a regulatory and disciplinary role? Those are two totally different functions that ought to be separated completely. I agree entirely with the views expressed in the last two powerful speeches. These powers should remain with the Secretary of State.

Baroness Warwick of Undercliffe: My Lords, I should like to speak briefly on Clause 17, and I declare an interest as chief executive of Universities UK. Like other noble Lords, I do not see the need for these provisions and do see the very strong arguments against introducing such potentially draconian micromanagement. In my view, governing bodies must retain overriding responsibility for the good management of their institutions, including the appointment and dismissal of senior staff. It is odd and incongruous that the Government should want to introduce the measures in Clause 17 at the same time as giving colleges substantial new responsibilities such as those set out in Clause 19.

Given that the debates about Clause 19 have somewhat polarised opinion in the further education/higher education sector, I want to use this opportunity to stress that, despite opposition among university vice-chancellors to Clause 19, I share their widespread admiration for the work of the further education sector and the contribution it makes to education, including higher education, in the United Kingdom. So I too would like to see Clause 17

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removed and therefore support Amendment No. 34, in the names of the noble Baronesses, Lady Morris of Bolton and Lady Verma. If that approach is not successful, I would certainly support the measures proposed by the noble Baronesses, Lady Walmsley and Lady Sharp of Guildford, in Amendment No. 26 as a sensible compromise.

5.15 pm

Baroness Howe of Idlicote: My Lords, as chair of the National Governors Association I firmly support the amendments.

Lord Adonis: My Lords, in response to the noble Lord, Lord Walton, there are other bodies in education that have both regulatory and funding functions. Local education authorities, which fund and regulate nearly 24,000 schools in England, are both regulatory and funding bodies for those schools. The powers in these provisions are similar, in respect of objective failure and serious underperformance, to those that apply to schools at the behest of local education authorities in England.

We have had substantial discussions on Clauses 17 and 18—

Lord Walton of Detchant: My Lords, surely the responsibility for disciplining and removing teachers in schools now rests with the general education council?

Lord Adonis: My Lords, where a local education authority exercises its powers to suspend a failing school’s delegated budget, it becomes the direct employer of the staff and can take decisions, including on the employment of teachers. The powers are comparable. However, I cannot stress too greatly, in response to the noble Baroness, Lady Morris, that these are in extremis powers to be used in cases of objective failure and underperformance. The autonomy of governing bodies to sustain failure, which is essentially the noble Baroness’s case, would not be supported by the Government or, I hope, by the noble Baroness on reflection.

We are talking about cases of failure and underperformance that are demonstrated in inspection reports and are objective. We are not talking about any discretionary power to intervene that would undermine the proper autonomy and freedom of governing bodies of institutions that are running well to conduct that institution’s affairs. I hope that the distance between us is narrower than the noble Baroness portrayed. She was presenting a great point of principle that I do not believe pertains. If she were sitting where I am and had to take decisions about institutions that are failing and therefore offering a substandard education to their students, I am not sure that she would see it so much in terms of the absolute principle that she has set out.

I understand that there are strong feelings because the powers, if exercised, are draconian. I would like to reassure the House that they would be used only in extremis. I would also like to speak to our

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Amendments Nos. 27 to 33 and 35 in this group, which, as the noble Baroness generously acknowledged, go some way to meeting the concerns set out in Grand Committee.

My amendments would ensure that the failure policy under which the Learning and Skills Council is operating is approved by the Secretary of State and laid before the House. We believe that there will be proper accountability for the overall policy under which the Learning and Skills Council acts in this area. It is already accountable to the Secretary of State for a comprehensive framework that includes quarterly ministerial reviews and a performance forum that charts progress against annual targets. As I stressed, the amendments that I am moving will, over and above that, require the Secretary of State formally to approve and to lay the statement of intervention policy before each House of Parliament, which will further increase transparency and accountability.

As the noble Baroness, Lady Walmsley, rightly said, cases of outright failure are extremely rare; nevertheless, we want to address more effectively and efficiently any such instances and those of inadequate provision. That is the reason for these powers. However, when it comes to intervening, in all cases the LSC will raise any concerns with the institution’s chair of governors and college principal and agree an appropriate way forward. Regardless of the scale of concern, the LSC will issue a notification to the institution setting out the agreed action arising from the initial discussion and monitor progress against that notification. In more serious cases a formal notice to improve will be issued, specifying the required improvements and a timescale of no more than 12 months to secure them. We believe it is right that providers have the opportunity to improve before any formal intervention takes place. That is another stage that has to be gone through before the formal intervention powers set out in the Bill could take effect.

In cases of outright failure, where insufficient progress is made against the agreed improvement plan, and where the college is unable to demonstrate that it has the capacity and capability to bring about improvement, the LSC could consider the use of powers under Clause 17. Those powers might also be considered in exceptional circumstances where there is immediate and significant risk, such as fraud. The notice will specify any immediate action; for example, a direction to remove the chair of the governing body or to dismiss a specified senior member of staff. I stress, though, that the use of these powers must be relevant and appropriate in the given circumstances. The intervention policy that will be developed to set out the procedures will illustrate the circumstances when it would be appropriate to consider the direction to dismiss a senior office-holder.

I stress again that these powers will not be unfettered. As a result of the government amendments I have just spoken to, the Secretary of State must approve the intervention policy. He will also retain the power to direct the LSC itself, should that be necessary. In addition to these powers, the

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LSC continues to be accountable to the Secretary of State through the comprehensive accountability framework.

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