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I hope that I can give the noble Baroness, Lady Walmsley, some reassurance, too. She asked whether we could put right some of her concerns. I hope that, if I can make some of the tweaks that she mentioned, I can look forward to her support in taking forward the new shape of the clauses that would flow from those tweaks.

I am delighted that there is a perception that middle-class children are attending academies, but I want to remind the Committee that academies have a higher proportion of children who are entitled to free school meals. They serve, as the noble Baroness, Lady Perry, explained so eloquently, some of the most deprived and challenged communities. We strongly support the work of the Harris academies, to which she referred. I repeat that there is nothing that we are doing that would inhibit the great contribution that academies have made and will make in the future.

I believe that I can offer the reassurances that noble Lords are looking for. As we have heard, the provisions in this Bill are designed to help us to move forward towards our target of 400 strong, high-performing academies. We are committed to preserving all those innovations in academies and the autonomy that has made them so successful in delivering better outcomes for pupils. We do not believe that the proposals will undermine that success. I want to explain how they will, in fact, strengthen the academies programme and enhance the support that we are able to offer academies.

These provisions are enabling. They allow the Secretary of State to make academy arrangements with the YPLA; they do not require him to do so. We know that some sponsors and principals have doubts about how the arrangements with the YPLA will work in practice, particularly, as we heard from the noble Baroness, Lady Verma, in connection with the commissioning of sixth-form places. I understand that we have to provide reassurance at this stage. I accept that this a new way of operating. However, we are strongly committed to consulting academies on the details to make sure that we get this right.

Over the past few months, we have held a number of consultations and meetings with those concerned and will continue to do so. We have established a reference group of academy sponsors and principals-it has already met and is scheduled to meet again tomorrow-which will focus in particular on sixth-form commissioning and funding. We will also consult widely with sponsors, particularly those running a number of academies where their particular expertise has a lot to offer. We want to hear their specific concerns so that we can address them and clarify any uncertainties.

I can commit to providing, by Report, an outline of what we plan to include in the Secretary of State's policy guidance to the YPLA in relation to academy arrangements. That outline will also set the key principles that should govern the way in which the YPLA operates

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in relation to academies. I would expect those principles to include absolute respect for the autonomy of academies that noble Lords have spoken about.

In the other place, both the Conservatives and the Liberal Democrats said that the current way of working was unsustainable-we have also heard that today-and would not ultimately serve the long-term needs of academies. We have heard in detail about that. Sponsors also agree. Dan Moynihan, the chief executive of the multi-sponsor Harris Federation, said in the oral evidence sessions, as many noble Lords will have read:

"It makes sense for the Department to have an agency to take care of academies. Clearly the Department was never meant to be a local authority, so we are perfectly happy with that".

There is common ground among us that the department should not end up being the biggest education department in the country.

6 pm

Simply removing Clause 75, as in some ways we are debating now, would leave us in the current position, which academies and others both agree is not suitable. Ultimately, that would risk the quality of the education that pupils receive. The question, as the noble Baroness, Lady Verma, posed, is: what is the right agency? I understand the position of those who argue for a separate stand-alone agency to undertake academies' functions, but that approach would be misguided at this stage. Such an agency would be relatively small, but it would still carry all the overheads of establishing a separate organisation. We estimate that having such a separate agency, rather than the YPLA, would add costs in the region of £900,000 per annum. The noble Baroness, Lady Verma, asked whether we had considered this and we have.

I will set out what the YPLA can offer and how we can build on what we have already put in place to reassure academies. We intend that the YPLA will continue to provide the same sort of funding, challenge and support services to academies as the department does now. Peers were very generous about the contribution that DCSF staff have made to developing and working alongside academies. We have every intention of creating absolutely the right environment for the change so that those people can remain and will choose to move to the YPLA. As the programme grows, we see scope to enhance that service, with the benefits that critical mass will bring. That will be achieved through a regional network of YPLA offices which will allow much better awareness of the local context, particularly around the quality of local provision across the board, but also around local demographics and learner trends. We very much want to learn from the multi-academy sponsors about how they work with their academies in school improvement. There is much to learn there. We are very mindful of the need to ensure that academies are properly represented in the governance structure of the YPLA.

The YPLA board will reflect the partners, sectors and young people it serves, including academies. As noble Lords know, this is set out in Schedule 3, which ensures that, in appointing a member, the Secretary of State or YPLA must have regard to the desirability of appointing a person who has relevant experience in any of the YPLA's functions. In addition, and subject

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to the successful passage of the Bill and the approval of the Commissioner for Public Appointments, we expect Les Walton to become the chair of the YPLA. Les brings a wealth of experience to the role with his close links to the academies programme and extensive experience in education. I can confirm that we have established through the LSC a YPLA committee to advise the LSC and the DCSF on setting up the YPLA, and on any transition issues that the new arrangements require. This committee already has significant representation from academies in the form of David Wooton, principal of the Grace Academy in Solihull, and Pete Birkett of Barnfield College, sponsor of two academies in Luton.

In addition, the YPLA will be recruiting and appointing a director of academies who will report direct to the chief executive. This person will have credibility with academies and the expertise to be able to champion them. I know that concerns have been raised about the extent of the YPLA's involvement in new academies, and some of the amendments that we are debating seek further to clarify the position. Let me reassure noble Lords that under these arrangements, academies will continue to enter into, and be governed by, funding agreements with the Secretary of State; there is no intention for the YPLA to enter into funding agreements. Therefore, to close the loophole that the noble Baroness, Lady Walmsley, talked about, we are prepared to bring forward on Report a government amendment which will prevent the YPLA entering into a funding agreement to create an academy.

As the noble Baroness, Lady Verma, says, we also know that there is nervousness about post-16 commissioning but, as I have said, the Secretary of State will continue to make decisions about new sixth forms in academies, having consulted the local authority. Nothing is changing here, compared to where we are now. We appreciate that sponsors and principals are concerned about potential disagreements between the academy and the local authority over additional places in an existing academy sixth form, as described by the noble Baroness, Lady Verma. We expect such disagreements to be unusual, since academies would be playing a full role in shaping local provision alongside other providers in local 14 to 19 partnerships. The YPLA will play a full role in helping to facilitate such agreements, but it will do so as the agent of the Secretary of State. We believe that academies and local authorities will agree the appropriate level of provision between them in the majority of cases, but even here the YPLA must ratify agreements as the decision maker.

I am drawing to a close. The bottom line here is that, under the proposals in the Bill, the YPLA will be the body responsible for funding academies and will therefore make the final decision about the number of places to be funded. The YPLA will be the agent of the Secretary of State and act under his guidance. Please note that the Secretary of State's continuing legal responsibility for academies would mean that any interested party could complain to the Secretary of State about the YPLA, and he would have to look into whether or not the YPLA had acted reasonably in the circumstances of the case and rectify any problems. We are prepared to consider, after further discussions

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with academy sponsors and principals, and the opposition parties, whether we could table on Report any further government amendments that would make these arrangements clear in the Bill, including those in relation to the complaints mechanism that I have just described.

Turning briefly to the government amendment, given our concerns, last week we tabled Amendment 169. It clarifies that the YPLA will not have the power to take responsibility for making subordinate legislation in relation to academies. We do not intend that the academy functions carried out by the YPLA will include the making of regulations, as I am sure noble Lords would expect me to say, having heard my remarks so far. The amendment clarifies this by excluding academy functions from the definition in the Bill. In speaking to Amendment 169, I hope that noble Lords will feel able not to move Amendments 155B, 162 and 168. As I have said, we are prepared to consider tabling further government amendments on Report to provide further reassurance on what we believe to be the concerns underpinning the amendments that we are debating now. I look forward very much to further discussions. I have spoken for rather a while and am aware that there are a few points that I have not addressed. I am happy to follow those up in writing if necessary.

Viscount Eccles: May I ask just one question? How can it be right to say that the YPLA will be the chosen agency for academies, which I think is what the noble Baroness said, and not have it in the Bill?

Baroness Morgan of Drefelin: I think it is in the Bill. The concern that noble Lords are voicing is that academies and academy sponsors are looking for a fuller explanation of how the relationship between the Secretary of State, the YPLA and the academies will operate, and more clarity about, for example, how matters would work if there were disagreements between the various parties.

Viscount Eccles: My Lords, I think that the noble Baroness said that it was on the face of the Bill in the form of an enabling possibility. I think that she went on to say that enabling means enabling; it does not necessarily mean that it will take place. Parliament may well normally expect enabling legislation to come forward in some way in the future, but for a matter as important as this it would be much better if, by Report, some flesh was put on the bones of enabling legislation so that we could see what was intended statutorily.

Baroness Morgan of Drefelin: My Lords, I am trying to be extremely helpful and accommodating. I am sure that the work that we will do between now and Report will be as helpful as possible. I hope very much that I will be able to satisfy the noble Viscount. I am very happy to discuss the matter further with him before Report to ensure that that is achieved.

Baroness Verma: I thank all noble Lords for their contributions. The noble Baroness, Lady Walmsley, obviously supports the academies' success. We all share her concerns about the schools that are still

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underachieving. That is why we on these Benches believe that all schools should be able to free themselves from local authority control. However, we should remind ourselves that some academies serve underachieving communities and have raised educational attainment in some communities. My noble friend Lady Perry set out fluently the difficulties that academies have faced and the situations that they have managed to turn around in some of our most deprived areas. My noble friend Lord Elton mentioned the difficulties that some academies are already facing in respect of sixth-form provision. As ever, my noble friend Lord Eccles raised the serious technical points that the Bill seems to overlook.

I listened very carefully to the noble Baroness's response. I find it incredibly difficult to understand why the Government believe that academies have to be delivered through the YPLA. I am pleased that the Government will meet representatives from the academies movement tomorrow and I look forward to hearing about the outcome of that meeting. However, I remain thoroughly unconvinced that the Government's response meets our concerns. I shall read very carefully what the Minister has said but I assure her that if we do not find the government amendments satisfactory we shall return to the relevant amendments on Report. I do not think that anyone on this side of the Committee is convinced by the Government's arguments. I beg leave to withdraw the amendment.

Amendment 155B withdrawn.

Clause 64 agreed.

6.15 pm

Clause 65 : Intervention for purpose of securing provision of education and training

Amendment 156

Moved by Baroness Sharp of Guildford

156: Clause 65, page 46, line 21, leave out "YPLA" and insert "Secretary of State, upon receipt of a recommendation from the YPLA,"

Baroness Sharp of Guildford: I move Amendment 156 and speak to Amendments 157, 158, 159 and 160. There are, so to speak, two separate sets of amendments within these four amendments, and I wish to speak separately to Amendment 160. Amendments 156 to 159 pick up the theme that I developed when we discussed the YPLA on Monday. Essentially, we talked then about the YPLA being a more friendly consultative body, but it is, of course, an appointed body. At the moment it is appointed largely by the Secretary of State although, as we indicated, we would like to see a wider representation in the membership of that body. The fundamental question behind this issue is whether an appointed body, the YPLA, should have the power to issue directions to elected local authorities. Our amendments seek to ensure that the YPLA is not a dictatorial body but is a consultative, friendly organisation working in partnership with local education authorities. If it needs to issue directions, as distinct from guidance, it must work through the Secretary of State. An elected Minister can tell an elected body what to do.

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Amendment 159 deals with complaints. Complaints should be directed to the Minister, who can then take action. The purport of these amendments is to make clear that directions should come from the Secretary of State, not the YPLA.

Amendment 160 falls into a completely different category and comes from the Association of Colleges. The new system of funding for 16 to 19 provision by local authorities, via sub-regional groups and the Young People's Learning Agency, could potentially be very complicated and increase the likelihood of delays occurring or genuine mistakes being made. The overall aim of the system must be to ensure that colleges and schools can plan and provide education and training for their students in an efficient and timely manner.

When we discussed the first group of amendments this afternoon, we talked about the complications that will arise from the number of bodies that a further education college will have to deal with in terms of the YPLA, local authorities and others. However, colleges already deal with a large number of authorities. They deal with the HEFCE and employers with regard to apprenticeships, so they are dealing with a large number of different funding streams, and I greatly admire the way in which they do so. However, over the past few years the main funding stream for most further education colleges was undoubtedly the LSC. There have been problems with LSC funding because the colleges' academic year starts in September but the financial year runs from August to the following August. Therefore, by the end of July, you need to have your budget in place for the following financial year. The aim has always been to get the final figures from the LSC by the end of March or the beginning of April. However, over the past few years these figures have not come through in many cases until the very end of July. Even when colleges are dealing with only one funding authority, the LSC, they are experiencing great difficulty in getting their future budgets agreed. Negotiations often continue right through to 31 July.

The new system will be even more complicated. To date, colleges have negotiated only with the LSC. I have received a letter from the chief executive of the Association of Colleges. The letter states:

"To remind you this is the process through which funding will reach Colleges".

It is a seven-step process. The letter continues:

"The YPLA will help local authorities to carry out their new responsibilities by developing a national framework to support planning and commissioning, ensuring coherence of plans, managing the national funding formula and providing strategic data and analysis.

Each local authority will assess supply and demand for 16-19 provision in their area.

Each local authority will then take this assessment to one of the sub-regional groups of local authorities, of which it will be a member. This group will agree the commissioning plans for their sub-region.

The plans will then be agreed by a regional planning group which will scrutinise the local plans and ensure they are coherent, can be funded within the regional budget and will deliver the 14-19 entitlement.

Regional Government Offices 'will contribute to discussion of regional priorities and support local authorities in undertaking

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their new responsibilities. They are, and will continue to be, a conduit for information to flow from sub-regional groupings ... to DCSF'".

That came from a parliamentary Answer on 18 December last year.

"They will also have a role in assessing performance of local authorities.

The YPLA will check these plans to ensure that they cohere and are affordable and then fund local authorities appropriately. The local authorities will then pass the funding to Colleges".

That is the seventh step.

Whereas to date you are negotiating with the local LSC and it is finding it difficult enough to agree your budget for the coming 12 months, in the future you are not only going to have to negotiate with your local authority, you are going to have to go through the local authority to the YPLA, the YPLA is going to have to go to the sub-regional groups, the sub-regional groups are going to have to go to the regional groups and the regional groups are going to have to cohere with the government offices. They are then going up to the YPLA and will have to be checked at the YPLA, and then it all comes back down to local authorities.

When I was teaching economics, one of the courses I taught was about the Soviet Union and the Soviet economy. It was in the old days of the 1970s and 1980s, and there was an organisation known as Gosplan. One of the problems that the Soviet Union faced in those days was that every decision taken locally had to go all the way up to the top at the Moscow office of Gosplan and then come all the way down again. The process took a very long time. Perhaps one sees this today in some of the consultants who are around in the further education field. There were a lot of fixers, whose job it was to speed the process along and to try to make sure that these things actually worked in the end. We all know that the Soviet Union collapsed partly because of the sheer inefficiency of its economy. It is quite reasonable that colleges should wish to have some way in which, if they are not getting the information that they need out of their local authorities, they can go directly to the YPLA. Amendment 160 says precisely that:

"A further education college may inform the YPLA if it is satisfied that a local education authority is failing, or is likely to fail, to perform its duty under section 15ZA of the Education Act 1996".

That is really saying that it should be able to talk directly to the YPLA rather than necessarily waiting until the local authority comes back.

The Government must recognise how difficult it is for organisations such as further education colleges, which do not have assurances. The Government have given the university sector a three-year forward assurance on its funding. The further education college does not have these assurances. It has to negotiate its funding, because it is being commissioned by a lot of different organisations. The core 16-to-19 function will now come from local authorities, and they will be the key commissioning agents. This will be a huge block of money for the college sector. The rest of the sector, which is demand-led, is totally uncertain. It comes through employers and individuals who decide whether they are going to attend courses at that college. There is gross uncertainty about that, and the college has to

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make best guesses as to how much it will be attracting people to courses in the following year. Colleges are enjoined to break even, as are all public sector organisations. It is very difficult to break even in those circumstances.

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