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As regards the noble Baroness's question about profit, the school or trust must be non-profit making. As now under existing legislation, a school can subcontract to a provider of a service, which, if a commercial operation is providing that service, will charge what it needs in order to make a profit and a living. As now, the school cannot make a profit. There is nothing here which will enable free schools to be profit-making schools.

As the noble Baroness will understand, parental demand, and the Secretary of State's breakfast, is work in progress. We have made clear that a demonstration of parental demand might be, for example, a petition. An interested party can make the application and then work with an official in the department who will work up the detailed application. As part of that process, some of the noble Baroness's fair questions on how these things will be demonstrated will be worked through.

On premises, revised planning guidance will be issued by CLG in due course, which should free up and remove a lot of the bureaucratic systems that currently make the establishment of a school for anyone extremely difficult to countenance. The noble Baroness's point about precisely what the requirements will be needs to be worked through.

On the role of local authorities, I have somewhere another letter-we in the department are busy writing letters at the moment-written by the Secretary of State to local authorities specifically on the free schools announcement, which is subsequent to the previous letter to which the noble Baroness referred. It makes clear that part of the process under which he will judge the criteria for whether an application to be a free school should be able to go forward will include consultation with the local authority.

The admissions code for free schools will work just as the code for academies because the free schools will be set up under the academies legislation. All the safeguards and requirements that were put in place for academies will apply to free schools. That remark also applies to the noble Baroness's final and extremely important point about vulnerable children. All the safeguards, particularly with regard to vulnerable children and SEN issues, which will be discussed at greater length as we go forward with the Academies Bill, will be in place.

4.40 pm

The Earl of Listowel: I thank the Minister for the Statement and welcome the Government's general thrust, reflected in their announcement, of giving head teachers much more control over the environment that they teach children in. If I may say so, that is a very good direction to be moving in. But can he offer me a reassurance on the issue of stratification? There is some risk that if a significant minority of schools opts neither for academy nor free school status, many teachers will vote with their feet and go to work in

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these good schools. That might mean that pupils who would most need and would benefit from good teaching will actually be denied the best teachers because they will be in these other schools.

Elsewhere, the Government have proposed the introduction of independent social work practices in the style of GP practices and legal firms. Although this has been warmly welcomed by social workers who like the idea of running their own business and not being interfered with by local authorities so much, a respectable and experienced director of social services pointed out to me that if there is one service only for children with care orders, there is a danger that all the best social workers from the surrounding fields will want to work in that area and would be creamed off. We need social workers to support families where the children are not taken into care.

My second question is brief. Can the Minister assure the House that the complexity of taking forward these new measures will not distract him from maintaining a strong focus on the continuing professional development of our teachers and introducing the master's in teaching and learning? This point was stressed by the right reverend Prelate the Bishop of Leicester.

Lord Hill of Oareford: I am grateful to the noble Earl and hope I can give him the reassurances he seeks. On the broad point about fears of stratification-which I am sure we will come back to as we debate the Academies Bill more generally-I understand the anxiety, but I think that quite a lot of it is misconceived. I say that because on Friday, when the department made the announcement on free schools, I was lucky enough to meet beforehand a number of the teachers and teacher groups who are most interested in taking free school status forward. I have to say that those teachers could not in any way be characterised as people who are looking for a quiet life and want to teach in a leafy suburb, or who want to turn their back on vulnerable children. They formed an extraordinarily impressive and passionately committed group of people whose reason for going into teaching-some through Teach First and some through the Future Leaders programme which, much to their credit, were set up by the previous Government, who I will load with laurels as often as I can as regards those two wonderful programmes on which we want very much to build-arises out of a strong sense of social commitment. I found it immensely reassuring that those teachers see this legislation as enabling them to do more for the neediest, most vulnerable and most left behind children.

On the issue of CPD and the master's, as the noble Earl knows, we will have further legislation coming forward later in the year. This comes back to a point made previously by the noble Baroness, Lady Morris, but I do not think that the choice is between structures and teachers. Sometimes it is caricatured that people who want structural change are crazed ideologues who do not understand people, but that is not my view at all. My view, which was confirmed by meeting those excellent teachers, is that the structural change can give them the freedom to enable them to do more for the neediest children, about whom I know the noble Earl cares most strongly.

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The Lord Bishop of Lincoln: My Lords, does the Minister agree that it would be churlish for the Church of England, in particular, to object in principle to what is being proposed? We enjoy relative freedoms in some of our schools and we would encourage those freedoms being shared more widely. However, as the Minister will recognise and the noble Baroness, Lady Morgan, has indicated, we will need to see the workings.

In relation to accredited providers, am I right in understanding that any parents or community groups seeking to establish a free school will be expected to work with an accredited provider? If that is the case, will the Minister welcome an assurance from the Church of England and other faith groups that we will make available all the experience we have as quite long-standing providers in the field of education? If accredited providers are required to co-operate with such groups, will he bear in mind the readiness of the church to co-operate? Perhaps I may go further and suggest that any prospective group of parents might be encouraged to co-operate with an accredited church provider. There will always be one near to where they are.

Lord Hill of Oareford: I am grateful for those observations. I would be very keen to discuss further the role that the Church of England can play in this. The general approach to providers currently is to make the system as open as possible. However, I shall follow that up further in the future.

Baroness Morgan of Huyton: My Lords, I declare an interest as chair of Future Leaders. I share the Minister's position on the enthusiasm displayed by many teachers who are interested in setting up free schools. I also share his belief that they are passionate about trying to deliver for the most disadvantaged children.

My question is about money. We have heard about the changes in the planning rules, but that does not answer the money question. When will we get real details about the setting-up costs of these new schools, particularly in relation to capital? I am clear how the running costs will be met but, particularly where there is a shortage of school places and there are not obviously empty old school buildings, there is a real challenge about finding suitable building space and meeting the capital costs. We need facilities to deliver a decent curriculum, particularly for older children taking GCSE and A-level sciences, and I am anxious to know when we will have a little more detail.

Lord Hill of Oareford: I am grateful to the noble Baroness, in particular for the work that she does for Future Leaders. On the issue of detail, that is work in progress and I shall keep her informed and posted. We made the announcement about the outline shape of the process on Friday, and we recognise that we have to provide this kind of detail. I shall keep her closely informed.

Lord Lucas: My Lords, can my noble friend give me comfort on two aspects? First, will he reassure me that the existence of surplus places in the vicinity of a proposed free school will not be a bar to the establishment

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of a free school? Secondly, can he tell me whether virtual schools may be established under this legislation-that is, schools which are to ordinary schools as the Open University is to universities?

Lord Hill of Oareford: I can certainly give my noble friend Lord Lucas the reassurance that he seeks on his first point. I shall need to write to him on the second point.

Baroness Farrington of Ribbleton: My Lords-

Baroness Walmsley: My Lords-

Lord Wallace of Saltaire: My Lords, there is time.

Baroness Farrington of Ribbleton: My Lords, I welcome the Minister to his post. Can he be more specific on the issue of the creation of surplus places by the development of one of these free schools? I still bear the scars from dealing-in Lancashire County Council many years ago-with the issue of surplus places. It is no good saying that there will be the same per capita per pupil for existing schools, because if there are surplus places, the per capita will have to go up to protect the curriculum.

Can the Minister also be a little more forthcoming about the relationship between the teachers, who he says have very good motives in setting up these schools, and potential conflicts with parents? Major parts of special educational needs in our schools are to do with behavioural problems. In my long experience of governing bodies where parents served, the parents would quite frequently wish to exclude the children with behavioural problems. This could totally wipe out the aims of the teachers whom he has described.

Lord Hill of Oareford: I hope that I can give the noble Baroness some reassurance at least on her second point. The provisions which we will be discussing in the Academies Bill, particularly in regard to vulnerable children, and which will be delivered through the funding agreement and will give these children broadly the same protections as are delivered through maintained schools, will also have to be delivered by free schools, which will be set up as academies and governed by the same safeguards. A free school could not decide to take an approach towards vulnerable children-statemented children-that is different from the approach of any other kind of school.

On surplus places, it was recognised as long ago as the 2005 White Paper that one of the effects of the policy was that, in some places where there was not parental demand, there would be surplus places. The whole point of the policy is to try to create something new for parents where there are surplus places.

Baroness Walmsley: Will the new free schools be eligible for funding under the financial assistance provisions in Clause 1(2)(b) of the Academies Bill, which in turn looks to Section 14 of the Education Act 2002?

Perhaps I may also ask the Minister about the New Schools Network. Interested groups are directed by the website to contact the New Schools Network. Does the Department for Education have any contractual arrangement with the New Schools Network? Are there any alternatives for groups of people who wish

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to set up a new school, or do they have to go through that process? If so, are there any financial considerations that the House should know about?

Perhaps I may also press the Minister a little more on local authorities. Whenever a new school is set up, it will have an effect on other schools, as no school is an island. Will the Secretary of State publish the criteria for the weighting that will be given to various consultations with the local authority, and the points that the local authority makes to him when there is an application for a new school?

Lord Hill of Oareford: I shall respond to my noble friend's questions in no particular order. The funding mechanism can apply to all academies; it could well apply to free schools. The point of having a grant rather than a seven-year funding arrangement is that, particularly with a free school, which is a new and untried school, the Secretary of State might not want to be bound into an agreement for seven years and might prefer something that gives him greater flexibility. The department has entered into a contractual arrangement with the New Schools Network to provide support and advice. I will happily send to the noble Baroness the letter that sets up that arrangement. Forgive me, but I have forgotten the third point.

A noble Lord: Local authorities.

Lord Hill of Oareford: As I said earlier, the Secretary of State has made it clear that he sees local authorities having a role in shaping his thinking. We will need to reflect precisely on the criteria, how we set them out and what is then done with those criteria.

Baroness Whitaker: My Lords, I apologise for missing the beginning of the proceedings, but I do not think that anything has been said so far about design standards. The Minister will know very well that the impact of the environment in which children study is extremely important from an educational point of view. What guarantee can he give that free schools will conform to acceptable design standards?

Lord Hill of Oareford: One point of the policy is to give schools greater freedom and flexibility over where schools are set up and in what kind of building. Overall, the department intends to look at the whole set of regulations around buildings for all schools because our view is that they are expensive and bureaucratic and the process of building schools takes too long. Some of the regulations do not seem to serve any particular purpose while others serve an extremely good purpose. We will look at them all and, as part of that, we will obviously need to take into account important points about design.

Lord Greaves: My Lords, I want to pick up the point about planning. Is the Minister saying, in a technical sense, that the Government will issue a new planning policy statement referring to schools? Will that therefore apply to all schools, since planning clearly has to be neutral with regard to the question of who applies for a particular type of planning permission? Is it not the case that when the Victorians built a large number of new schools-first the churches and then the state-they discovered that setting up schools in odd corners of mills, factories, barns and other buildings

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was entirely unsatisfactory and that schools actually needed purpose-built new premises designed as schools, with playgrounds, playing fields and all the other facilities that schools need? Is that not still the case?

Lord Hill of Oareford: The overriding imperative in this policy is to attempt, where there is poor provision, to give teachers' groups and parents the chance to improve the quality of teaching as rapidly as possible. Our starting point in this is that every year that passes is another school year that has been missed out and another generation of children who are falling behind. I understand entirely the points that my noble friend Lord Greaves makes. However, in the balance between perfect provision, carefully planned, and giving groups greater opportunity to start the urgent work of improving the teaching for children who need it most in areas of greatest disadvantage, we come down on the side of more flexibility over premises rather than going for the full, perfect Monty.

Baroness Morris of Yardley: My Lords, will the Minister say a little more about parent-led free schools? We all want parents to be involved in the education of their children, because the more involved they are the better, but I see two problems. If parents set up a school, the contract they let to a provider could be as long as seven years. Within that time, there could have been 100 per cent changeover of parents at the school. The further point is that the parents who are the original promoters of the school may not even get their children into the school if an oversubscription criterion of, for example, a ballot were used. So there could be a situation in which the original parent promoters do not have children in schools, and within three to four years the percentage of parents with any say or influence at all over how the school meets its contract is very low. Will the Minister explain his thoughts on that?

Lord Hill of Oareford: I am grateful for the points made by the noble Baroness, Lady Morris. The truth in this, as with a lot of these things, is that the announcement made on Friday kicked off the process. There will be all sorts of important practical considerations that that process will throw up. Officials in the department, assisted by the New Schools Network, will be thrashing through those considerations and coming to Ministers with recommendations on the back of the process. These kinds of points-which are extremely important; I do not belittle them in any way at all-will need to be thought through as part of the process.

European Council


5.01 pm

The Chancellor of the Duchy of Lancaster (Lord Strathclyde): This may be a useful point at which to hear a Statement made by the Prime Minister a few minutes ago in another place. The Statement was as follows:

"I am sure that the whole House will join with me in paying tribute to Trooper Ashley Smith from the Royal Dragoon Guards, who was killed in Afghanistan

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last week. He died serving our country and our thoughts are with his family and friends. We have also heard this morning news that a member of 40 Commando Royal Marines has died from his injuries. He is the 300th member of the British Armed Forces to lose his life as a result of the conflict in Afghanistan.

When such a tragic milestone is reached, we should re-emphasise our support for our Armed Forces, and for all that they do. Inevitably some will question our mission and purpose there, and we are paying a high price. Let me be clear that we are in Afghanistan because the Afghans are not yet capable of securing their own country from terrorists. It is for our own national security that we help them. When they can do it alone, we will leave. In the mean time, we will give our Armed Forces everything they need to get the job done.

With permission, Mr Speaker, I would like to make a Statement on last Thursday's European Council. It was rightly focused on securing the economic recovery, and it was unanimous that this required early action on budget deficits. The Council also dealt with Europe's growth strategy, the need to sort out the problems in the eurozone, and our approach to the G20. It also delivered important progress on Iran.

Let me take each in turn. On deficits, the conclusions could not be clearer. Delaying action would entail 'major risk', and the Council called on member states to meet budgetary targets 'without delay'. Since the last European Council, the problems in Greece and the scale of the sovereign debt crisis have become apparent to almost everyone. That is why there is such unanimity across the EU on early action, and it is why President Barroso paid tribute to the efforts that the UK coalition Government are taking and said:

'Consolidation is necessary for confidence and without confidence there will be no growth'.

On growth, the Council agreed a new strategy called Europe 2020. This follows on from the Lisbon agenda, whose aim was to make Europe the most competitive market in the world. The document has some worthwhile objectives, including raising the level of research and development, and improving education. This should not interfere with national competencies. So I secured explicit agreement that the new strategy must be,

We should be clear that all the strategies in the world should not conceal the fact that EU countries all need to get to grips with the real problems that harm our competitiveness, not by endlessly setting targets but by taking action. This includes action on the extent of our debts, the affordability of our pensions, and on the scale of our welfare dependency.

Europe has never lacked strategies, but European countries have frequently failed to deliver them. We will continue to press for the real stimulus that European economies need-more trade, more international investment and breaking down barriers to business. This means pushing for agreement on Doha, reforming and completing the single market and making the process of trade easier. Even without Doha, there is a huge amount that countries across the world can do to facilitate trade. I want Britain to be one of the driving forces in helping to bring this about.

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