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Noble Lords will be interested to know that at least eight Bills mentioned in the loyal Address have the potential to affect the higher education sector in one way or another. They range from the Climate Change Bill, through Bills on employment and healthcare, to the Pensions Bill. To me, that is a clear indication of the centrality of universities to our economic, social and political welfare and of their scope and diversity in today’s world. Apart from their vital role as institutes of learning, they are employers of 1.2 per cent of the whole UK workforce and generated £43 billion of output in the economy. They are key suppliers of employees to every other sector, including business, industry in general, creative industries and the health service.

Today I shall speak on just two Bills mentioned in the loyal Address—the Education and Skills Bill and the Sale of Student Loans Bill, and briefly to touch on health-training matters in conclusion. I declare my interest as chief executive of Universities UK.

The Education and Skills Bill will see the age for compulsory participation in education and training raised to 18. As the Secretary of State for Children, Schools and Families has said, this is one of the biggest changes to the education system in more than 50 years, and I agree with him. There is an economic imperative to raise the level of skills in our young

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people. We need to increase participation in higher education to levels that match our international competitors. China and India are racing ahead in the globalised economy and highly qualified young people are either graduating in those countries or coming over to the UK to complete their studies in ever-increasing numbers. If we are to remain globally competitive, we cannot afford to waste the talent that we have in this country. There is also a moral imperative, which says that each young person should have the opportunity that enables them to unlock their potential. These moral and economic drivers are, of course, entwined. This is exemplified in the new diplomas, which will come on-stream in 2008 and have been developed explicitly to help to maintain interest in education by expanding the range of opportunities available to the post-16 generation and to marry the theoretical and practical worlds.

Raising the participation age to 18 is not the full story, however. From 2011, there will be a demographic downturn, whereby the number of 18 year-olds will decrease quite substantially. There is even more to be done in training and retraining the existing workforce, as highlighted by the noble Lord, Lord Leitch, in his report on skills. It is salutary to note that 70 per cent of the 2020 workforce is already working; much of the upskilling and reskilling will take place in part-time or bite-sized courses, from HND or foundation degrees to first, second or even third-degree level. Those will be delivered in responsive and flexible fashion by our colleges and universities, even as they too continue to raise awareness of opportunities offered by higher education.

Our universities have an increasingly important role to play in this agenda, offering courses that students want to study in the way they want to study them. While more members of the population are reaching the level of higher education qualifications—that is, level 4 and above—we cannot ignore the rapidly changing needs of our workforce. The higher education sector is committed to further growth and will respond to these changing patterns of demand. In addition, universities and colleges will continue to sow the seeds of interest in higher education as widely as possible. They already work with schools to raise awareness among their students to the opportunities available to them, and I can give your Lordships an amusing example. At Liverpool University, a Professor Fluffy—a cuddly character who is indeed fluffy, as she is a fluffy ball topped by a mortar board—visits primary schools in greater Merseyside to teach the very youngest children about student life and the possibilities ahead for them through higher education. In fact, so successful has she been that the then DfES used this as part of its wider Aimhigher campaign. Of course, more needs to be done by schools themselves. Improved school performance needs to be combined with high quality comprehensive information, advice and guidance to young people on the range of options that they can choose. Better careers education is required, which will grow into future university applications.

The second piece of legislation to which I wish briefly to refer is the Sale of Student Loans Bill, in which the Government hope to realise around £6 billion from the sale of the student loans debt.

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Perhaps as an aside, I could urge my noble friend to spell out how safe and indeed circumscribed this sale is. While it has been done previously—in 1995 and 1997—I suspect that the current turbulence in the money markets might raise unnecessary anxieties about this approach. It seems a sensible and prudent approach but it leads me to ask wider questions about the financing of the higher education sector.

I commend the Government on committing themselves to maintaining the unit of public funding for teaching in the recent spending review. I welcome their continuing commitment to university research, as well as the additional funding for the higher education innovation fund. However, the financial climate is increasingly volatile and an investment backlog still remains; the higher education sector needs stability to plan for the future. It would be heartening if the Minister could assure me and other noble Lords, as well as the higher education sector, that at least some proportion of the money raised by the Sale of Student Loans Bill, when enacted, could be reinvested in higher education.

Finally, this is a debate on health as well as education and social affairs, and it would be remiss of me not to highlight the higher education contribution to the health service. The noble Lord, Lord Darzi, will be aware of this great contribution from his work at Imperial College. The higher education sector trains the vast majority of doctors, dentists, nurses and other allied health professionals in this country. However, the past financial year has not been easy; universities are still feeling the pinch from strategic health authorities cutting their education and training budgets, which has placed further training places in jeopardy. Can the Minister offer assurances to the higher education sector that the Government will look at returning to the situation in which the education and training budgets for nursing and allied health professions are ring-fenced and properly protected, and perhaps even look at placing these budgets with the funding council? That is already the case with medical and dental training and would prevent a recurrence of the boom and bust approach to workforce planning in our health service.

To conclude, it is clear that the higher education sector continues to be integral to the fabric of this country and to its social, economic and cultural success, as well as making a vital contribution to the personal lives of all our citizens. I look forward to the passage of the Bills mentioned in the loyal Address to ensure that that success is taken forward.

3.09 pm

The Earl of Listowel: My Lords, I give the warmest of welcomes to the Children and Young Persons Bill and the Housing and Regeneration Bill. I hope that the first will prepare the time when children taken into public care can expect at least as good an education as their peers and can expect to stay with the same social worker and foster carer throughout their care experience and beyond, when they move back into their families. I hope that the second will reduce the number of children coming into public care as their parents are relieved of the pressures of

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temporary accommodation, which is often overcrowded and long distant from the support of their relatives and community.

In the interests of keeping within my time, I hope that on this occasion I may read from a script. I warmly welcome the prospect of many more homes and, in doing so, declare my interest as a landlord. The youth homelessness charities, Centrepoint and Foyer, point out that the lack of move-on accommodation prevents them settling significant numbers of their hostel residents. This means that the 16 year-old young black woman who finds herself in a wholly inappropriate bed-and-breakfast accommodation, lacking locks on the bedroom doors and shared with older men of whom she is afraid, is denied the support of a Centrepoint hostel because there is not the room. It means that the young black man who is ready for an apprenticeship in a carpentry shop is denied the support that Foyer could give him to make this happen because there is not the room. Barnardo’s Families in Temporary Accommodation Project points out that the level of homelessness compels families to accept damp, overcrowded, unhygienic, often privately rented accommodation which can be several bus journeys away from their relatives or communities and deepens the debilitating sense of isolation that such families can experience, especially those with one lone parent.

Shortage of affordable housing erodes our efforts to recruit and retain social workers and teachers. Not so long ago I was speaking to the head of a primary school in Camden, north London, who was lamenting the loss of one of her best teachers because that teacher could not get on the housing ladder in London. Care leavers—young people who have been in public care—are deeply concerned at the lack of suitable accommodation for them. Foster parents can be discouraged from fostering because of the lack of space in their homes. Shortage of housing can cause the bitterest resentment against immigrants and the sharpest community divisions. I warmly welcome the prospect of 3 million new homes and congratulate the Government on bringing this forward.

As regards the Children and Young Persons Bill, it is gratifying to see the Government produce further legislation specifically to meet the needs of children in public care. The very process of bringing forward legislation will prioritise these children on the agendas of schools and local authorities. There is very much to welcome in its specifics.

I wish to consider the principles on which such a Bill should be based and, I trust, establish the matters on which we can agree. First, it is enormously wasteful of public money, and harmful to children, to neglect social services as we have done over so many years. If early intervention is our ambition, intervening when social workers are almost totally demoralised, when foster carers are impossibly difficult to find and when the most vulnerable children have been placed in residential care with the least well equipped and valued carers for many years, should never be repeated. I am deeply grateful to Her Majesty’s Government for beginning to address this long neglect.

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No wonder the Government seem to have had so little return on their £1.9 billion per annum on children in care and their investment in social care training. Contrast this with reports from Ministers and Members of Parliament who have visited Denmark. What they see is a vastly higher quality of provision at a similar or lower cost. Instead of supporting foster carers, social workers and residential childcare workers to deliver excellent care, we have had to invest hugely in checks—we have a new regulatory body forthcoming—to prevent those carers doing harm to those they care for. We have been on the back foot when we should have been pushing forward. The best safeguard for children is an environment of overall excellence, as Sir William Utting, chairman of two reports on safeguarding children, put it. I hope that we can agree that this Bill can be only one of those several first steps that Her Majesty’s Government have been taking. Sustained funding for social services must be secured, as so many of your Lordships stated this afternoon. I ask the Minister: are current arrangements right where elected councillors must make spending decisions knowing that their electorate prize good roads and efficient rubbish collection well above the invisible services of foster care and social workers? What steps is he taking to ensure that there is the long-term, consistent investment in the social services that is required? The noble Baroness, Lady Barker, and the right reverend Prelate the Bishop of Leicester referred to this.

The second principle on which I hope that we can agree concerns the importance of stability to children in public care. In launching the Care Matters White Paper, the right honourable Beverley Hughes said, “Stability, stability, stability”, indicating that this was the cornerstone of the Government’s approach. I add to this the vital importance of each child having a long, stable relationship with a particular carer. All our experiences of our own families and all that modern neuroscience has taught us about the development of the child’s brain indicate the imperative of a reliable relationship with a close, long-term, consistent carer—someone who takes a genuine interest, thinks about one when one is not there, remembers one’s birthday, points out when one has overstepped the mark, someone to admire and to copy. Most importantly, one has to have experience of this reliable relationship if one is later to fall in love, have children and a family of one’s own that does not simply repeat the horrors of previous generations. Here we are obliged to consider that most of these children have been let down by the adults they most loved and trusted many times and sometimes in the most horrible ways. Many of these children will be of the firm conviction that adults let one down and that being close to an adult can lead only to disappointment. They will therefore seek out and focus upon any indication—even the smallest unintended one—that they are unwanted. Hitherto, the care system, with many honourable exceptions, has done an effective job of confirming that conviction—that one should trust no one.

The third related principle that flows from this is that social workers, foster carers and residential childcare workers must be allowed to bring the very

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highest level of consideration to the work they do in caring for these children. They have to be allowed the time to reflect and to be able to draw on the expertise of other carers as they manage and sustain their relationship with their children. Does the Minister agree that if we are consistently to maintain the trust of children and young people, those closest to them must have this opportunity for reflection? What is he doing to support such opportunities for reflection? The importance of this was very much highlighted in the Options for Excellence White Paper. The General Social Care Council strongly encourages the Government to implement early and fully the recommendations of that White Paper of October 2006. May I ask a related question? While we know how many placements of children with foster carers break down each year, do we have a reliable figure on how often children have a change of social worker during their time in care, at risk or in need? I think that the noble Lord, Lord Darzi, referred to such a figure. What is the Government’s specific target or aspiration for the number of such changes in future?

That principle of stability is strengthened by a number of measures in the Bill. Local authorities will be obliged to provide a range of suitable placements locally for children. Social workers will be obliged to visit children on a regular basis, including those in the criminal justice system. Young people in care will be encouraged to remain in care until the age of 18, and pilots will be undertaken to give young people a veto on leaving care before the age of 21. The latter could be especially useful for young people at university, as has been mentioned, who need accommodation during non-term times. All of the above, however, raise important questions about resources.

Where are the foster carers to be found to achieve those aims? Vital to retaining the foster carers are the social workers who should support them. The Bill adds considerably to the burden of social workers. Where will the expert social workers be found to meet the need? I acknowledge the significant steps that the Government have taken in recruiting more social workers. Will an obligation to be commissioned locally, except in special circumstances, in some areas encourage the commissioning of poorer quality but more local placements? Will specialist children’s homes be edged out by the insistence on commissioning within a local authority? Some 40 per cent of children coming into care currently do so at the ages of 10 to 15. By that age, a significant number of those will have had enough of families, or will not wish to replace their own family with another. To keep the right balance of residents in a children’s home, there should at best be an aim for 80 per cent to 85 per cent of capacity, so there needs to be some slack in the system. Will the Bill ensure that there is the right supply of good quality residential care in future?

Related to the above is the future of social work. I praise the Government again for the many helpful steps that they have taken to boost social work. The Opposition have recommended in their report on social work that there should be a chief social work officer. I hope that the Government will pay careful attention to that, especially as there is to be a new regulatory body and concern has already been

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expressed that the voice of social work may not be so prominent in it; my noble friend Lady Howarth referred to that.

There is concern about the creation of independent social work practices. I know that the Government see virtue in that, as it may create institutions with a stronger independent focus on the needs of the child. However, I am concerned that this may be a distraction from the fundamentals of the problem that we are facing. I look forward to hearing the Minister’s rationale.

The final principle on which I hope we may agree is that young people in care need to feel that they can achieve. They need the qualifications to land work that they find rewarding, which meets their abilities and pays their rent. This has been spoken about already, and I warmly welcome what the Government are doing in terms of the education of young people in care.

In conclusion, I warmly welcome the two Bills and the opportunity that they both offer to provide increased stability in the lives of our most vulnerable children, in their early family life, in public care, if they have to be taken into care, and in their transition from care. I look forward to working on this legislation.

3.21 pm

Lord James of Blackheath: My Lords, the Benches here warmly welcome the appointment of the noble Lord, Lord Darzi. We welcome it so strongly that we would like to think that he can spend his entire time concentrating on the clinical and medical implications of the National Health Service without any distractions from the business around him of the national health in the wider context. At the moment, we find ourselves very confused as to the state of the National Health Service’s finances, largely as a result of the not entirely helpful filing of the year-end accounts at the end of the past fiscal year. As it stands, they are showing a surplus of £515 million, which would be very welcome after a total expenditure of £391 billion in the past six years and aggregate over-runs of £1.419 billion in that time, all of which have been recovered by the Chancellor’s golden rule of recovering against the following year.

However, the £515 million does not quite look to be exactly what it represents itself as. When we go into it, we find that the whole NHS last year was subject to an acknowledged £450 million contingency, which was centrally imposed at the DoH level. The noble Lord, Lord Hunt of Kings Heath, emphasised that clearly to the House on the last occasion that he spoke to us on the forecast, when he was forecasting a £90 million to £115 million surplus for the year. That was very close to the end of the past fiscal year.

In the remaining days that fell to expire before the end of the fiscal year, the figure has gone up from £115 million to £515 million, which represents a going rate of improvement at the EBITDA level of about £6 billion, which would make it the most profitable enterprise ever in the history of this country. At the present level of enhancement, if the noble Lord, Lord Darzi, can continue that for another three weeks, he will have paid for the 2012 Olympics out of his own spare cash. That would be welcome to us all.

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However, that does have a slight credibility problem and one looks back at the numbers that have been filed to see if we can find out how good this £515 million is. We find that, in addition to the £450 million central contingency, something else was not declared to us—a further contingency that is not a contingency of £825 million. This is a strange fish indeed, unlike anything that I have seen before. The £825 million was apparently imposed after deducting the £450 million from the total central funding. It was decided by the Department of Health that a top slice should be imposed on the rest of the budget after the budgets had been allocated and compiled by all NHS trusts. It was decided that that figure of £825 million should be imposed wholly on primary care trusts, and it was taken from them and deposited with the strategic health authorities. This raises huge questions and, frankly, starts every nerve in my body going as a warning signal.

First, where is this £825 million? What is it doing today? How did the primary care trusts manage to function with their budgets deprived of £825 million in the year? What cuts have been made? Apparently, they will get the money back in 2009, and, therefore, they will be without it for two years. They are short not only this year but next year already. If you add the £825 million to the £450 million, you come up with a total contingency of £1.275 billion. Deducting the £515 million from that figure—the surplus—implies that the National Heath Service has used by the end of the fiscal year £760 million more than the budgeted level of the entire trust structure of the NHS at the outset of the year. That sounds to me like a £760 million deficit masquerading as a £515 million surplus. I would seriously like a better explanation of those figures and how they work.

Other questions accompany that. Is the £825 million real money or is it a balance-sheet adjustment? We would not know, because we have never been given a consolidated balance sheet for the National Health Service, which, again, I plead for us to have, backed with a source and application account. Then we might see this matter much more clearly. If the £825 million is real cash, has it been placed effectively on some form of bond or yield, because the interest on that in two years alone would buy at least one or two hospitals and goodness knows how many scanners? If it is on some form of deposit, if I was running the primary care trusts—God forbid—I would immediately go to the strategic health authority to obtain a letter on nice, government-headed paper saying that I owed them £825 million in two years. I would hare off to the nearest bit of the sub-prime banking market I could find, borrow the £825 million all over again and spend it, just to meet my targets for the year. If that has happened, that money is clearly not in the contingency. If it has not happened, is that money securely placed with a triple-A-rated bond yield for the two years to come and will there be money that can be directed back into some other asset?

Meanwhile, what cuts have been made? We know of one big cut made last year, when 22,363 nurses were culled from the National Health Service. If you want a visual image, that is almost exactly the same as

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filling Lords cricket ground on a major test match day with nurses only and telling them at the end of the day to go home and never come back to work again. Thank goodness it was not Wembley—otherwise it would be 88,000. That is an awful lot of nurses to be going without. How does the system function without them?

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