Education Bill

Public Bill Committee, 18 December 2001.

Standing Committee G

Education Bill

Stephen Timms (Labour, East Ham)

On a point of order, Mrs. Adams. It has been drawn to my attention that I undersold my case to the Committee last Thursday. We discussed who should be liable for the employer's pension contributions where a school has earned autonomy. I have written to Committee Members about that, and I want to put on record that contrary to what I said on Thursday, the employer's pension contribution will be taken from the school's budget share. There is therefore no question of a school increasing an LEA's pension liability after earning greater autonomy, which was the concern of several members of the Committee. I am sure that hon. Members will welcome that correction. The employer's contributions will come from the school's budget share and not the other part of the LEA's budget.

Graham Brady (Conservative, Altrincham and Sale West)

Further to that point of order, Mrs. Adams. We are grateful to the Minister for that clarification, but since he was not sure of the position on employers' pension contributions in regard to variation in pay and conditions, can he assure us that a local education authority will never incur liability as a result of decisions taken by a school?

Stephen Timms (Labour, East Ham)

I said earlier that the cost of changes to the software system, for example, would be low. I cannot say that there will be no liability whatever but I am not aware of any significant liability that will fall on the LEA budget.

Chris Grayling (Conservative, Epsom and Ewell)

Further to that point of order, Mrs. Adams. Will circumstances exist in which a school could rewrite the terms of an individual's pension arrangements or are they rigidly subject to the authority's pension fund provisions, so that they cannot be varied?

Stephen Timms (Labour, East Ham)

The terms of the teachers' pension scheme are clearly laid down. A school could enter into a different kind of pension arrangement with a teacher, but in such a case the LEA would not be liable to make contributions beyond those to the teachers' pension scheme. I have considered that possibility but, although the avenue is open, it would not place liabilities on the LEA beyond those that I have mentioned.Clause 10 Powers of governing bodies to form or invest in companies to provide services etc

Clause 10 - Powers of governing bodies to form or

Stephen O'Brien (Conservative, Eddisbury)

I beg to move amendment No. 22, in page 7, line 28, at end insert-

' ''prescribed description'' means in accordance with the Memorandum and Articles of the Company.

''prescribed person'' excludes-

(i) the Secretary of State; and

(ii) any member or officer of a local education authority.'.

I add the warm appreciation of Opposition Members at seeing you here, Mrs. Adams. Our sympathies are with you; we have all suffered from the queues to the car park.

The amendment seeks to add two definitions to subsection (8)-the definition of ''prescribed description'', which appears in clause 11(3)(a), and ''prescribed person'', which appears in clause 11(4). In our previous discussion, it became clear that at the heart of the series of amendments on chapter 3 is the lack of clarity and specificity about the nature of the corporate entity that it is intended will come into being with the encouragement of the Secretary of State or under the other powers conveyed under the chapter.

Clarity and specificity must be put in place because we are dealing with risk. Wherever there is a corporate entity, directors have a duty to assess risk. They have a fiduciary duty, not only to the board and the company but in terms of their authority in committing the company to risks and liabilities. The commitment that they give each time they contract with any supplier or provide any service to customers must be undertaken on the basis that those treating with the company know its assets and the level of liability that can be met, and can therefore judge risk. We need to probe in detail what corporate entities the Government envisage. It would be helpful to have a set of pro forma regulations as we deal with this chapter. So much is left in airy-fairy terms that it is difficult to know whether the Government are aware that the regulations would deal with a raft of matters that we will be discussing later. The amendments, some of which are probing, are appropriate.

In vain, I have searched for help in the explanatory notes, which I thought might have been some of assistance. However, they do not help in the slightest. I hope that I am wrong, but the Government appear to believe that if one calls something a company, all will be in rosy in the garden. No one with corporate experience would believe that.

In using the phrase ''if regulations so provide'' in clause 11(3)(a), the Government are maintaining a discretion not to issue regulations, which makes my points all the more germane. The Minister said earlier that regulations will be promulgated, and although he could not commit to having them available this morning, he hoped that they would be before the Bill went to the other place. It would be exceptionally helpful if they could be available before the Committee progresses, as they are critical to so many points. If the regulations were satisfactory, it would curtail the time required to consider the Bill.

Clause 11(3)(a) states:

''The company must, if regulations so provide-

(a) be prohibited by its constitution from admitting to its membership any person who is not of a prescribed description''.

The amendment would ensure that that ''prescribed description'' means in accordance with the memorandum and articles of any company. One might expect that to be axiomatic and that regulations would provide for it, but in their absence it is necessary to make that point. A cursory understanding of company law clarifies that anything of a prescribed description not encompassed within the memorandum and articles of association-under table A in former days as the pro forma type of memorandum and articles-would technically be ultra vires. We must ensure that we do not pass law that has the potential to make regulations forcing any company-not just ones limited by guarantee-to conform to requirements at odds with its memorandum and articles. We must ensure that we are not creating the potential for ultra vires measures. We have discussed lawyers' charters in the past, but any judge who had to make a decision based on the Bill would rightly be critical of a Committee that did not highlight this issue and get a satisfactory answer from the Government.

I turn to the critical issue of ''prescribed description'' being in accordance with the memorandum and articles of association of the company. There is always a section in the articles about the rights, duties and, indeed, capacity of directors. While the articles do not have to define in detail the type of person the director is, the overall duties of a director, in particular the producing duties, where they are owed, must be defined. Given that we are talking about companies which will provide services and facilities to schools, and that the Government have already admitted that they can easily be expected to own assets which might well be owned by the LEA or by the school itself, to whom are the primary duties owed: shareholders, employees or customers?

The facile answer frequently used by the Government in rhetorical utterances-which has even become the fashion in the City of London-is the stakeholders. That is a convenient way of saying, ''I do not have to give you an answer at present. I am waiting to see which way the wind will blow and I will try to create a sense of partnership with everyone and try to be all things to all people.'' In corporate life strict duties are owed to shareholders for the capital employed, in customer service and above all, as a company director, to employees and staff, the terms and conditions pertaining to their employment and, increasingly, their well-being, under a raft of regulatory and further statutory provisions.

It is not clear whether, unless persons are vetted under the term ''prescribed description'' in accordance with the memorandum and articles before a company can be approved, there would be a duty to pupils. I aired my greatest concern in my debate with the hon. Member for Harrogate and Knaresborough (Mr. Willis) on the previous clause-it is a matter to which we will come and I had to beg his indulgence to wait for further amendments. When such companies come into existence, I would be staggered, and I dare say so would the Government, if there was not rapid consolidation of the market within a five-year view. There will be takeovers and corporate activity. At that point, where are the pupils' interests protected? As regards borrowing money, if a company is at risk of financial difficulty, the greatest danger is faced by the pupils. That is notwithstanding the fact that they have had to earn the right of being an LEA-approved facility, which can be trusted because it has demonstrated a good track record. These things can often go in cycles; they depend on individuals and particularly on the head teacher at the time. Who is to say that there will not be a failure? Will the pupils be at great risk if the company suddenly becomes at risk? In those circumstances the Secretary of State is meant to have powers to intervene and there are various probing amendments on that matter.

The Bill should contain a provision suggesting that the ''prescribed description'' is in accordance with the memorandum and articles of the company. I am by nature a deregulatory person, but if regulations are to be issued, one of the prerequisites for such a company should be that in the memorandum and articles heed must be paid to pupils' interests. Squaring that with the responsibility to shareholders would be a matter of judgment. In the case of unexpected financial difficulty in the company, pupils going through a school will therefore not be the victims. At the moment there is no such protection. This amendment is intended to flesh out that necessary priority. We as a Committee have a common interest in ensuring that pupils' interests are not at the mercy of the risks of corporate life.

Stephen Timms (Labour, East Ham)

I reaffirm the commitment that I made to the Committee last week that we will set out the policy that underlies the proposed regulations before the Bill leaves the House.

Amendment No. 22 would remove part of the system that we want to put in place to protect school companies. Restricting ''prescribed description'' to mean in accordance with the company's memorandum of articles would remove the ability to prevent certain bodies from joining companies, which we want to retain. We want companies to operate with as much flexibility as possible, but we still want a basic framework of protection that will cover who can join companies. Membership of a company will be significant to its operation, so we want the power to protect companies, when necessary, from having certain bodies as members. The amendment would impede that.

Such protection would be necessary where there was a clear conflict of interest. A stationery company might want to join and so become the sole supplier of stationery to the school company, which would be likely to limit the freedom of the school company to select the best deal for its members. We want to exclude potential conflicts of interests, and the regulations would allow us to do that.

We also want to exclude unsuitable individuals, such as those who have been barred from teaching or those with certain criminal records. The amendment would prevent us from making such exclusions. I hope that the hon. Member for Eddisbury (Mr. O'Brien) will think that it is right that amendment No. 22 should not be accepted.

We also want to protect companies by prohibiting them from borrowing money without permission. The best protection from running up large debts would be to require permission to borrow from those in a position to make a decision and to give advice based on the company's financial health. The amendment to ''prescribed company'' would prevent the Secretary of State, or an LEA, from exercising that power. Before we finalise the regulations, we want to consult widely on where that power should rest. The best organisation is likely to be the LEA, which the amendment would exclude. On reflection, the Committee may want to ensure that that power remains. In the light of that explanation, I hope that the hon. Gentleman will decide not to press the amendment.

Stephen O'Brien (Conservative, Eddisbury)

I thank the Minister for trying to address my concern, and I accept that I may not have explored the definition of ''prescribed person'' as fully as I should have in my opening remarks. We suggest that it should exclude:

''(i) the Secretary of State; and

(ii) any member or officer of a local education authority.''.

The Minister probably made a slip of the tongue when he referred to a ''prescribed company'', rather than a ''prescribed person'', as intended.

The Minister addressed the purpose of the amendment, which is to delve more deeply into the nature of the intervention, or the interference, especially in the case of a school that has qualified to go down that route and has been trusted to have a delegated budget. Where is the element of trust in the relationship between the school, the company, the Secretary of State and the LEA? Is it just a means of retaining control and not giving corporate freedom, as intended? If one sets up a corporate vehicle, one intends to have the benefit of incorporation, which means that the entity can be assessed by its track record and merits and enter into contracts. It is a legal entity in its own right, as a person is, and stands or falls on the basis of its performance. Either it is to be trusted as a mechanism to deliver better services, economies of scale and all the benefits to which the Government have alluded, or it is a halfway house, over which the Secretary of State and LEAs intend to exercise tight control.

Based on the regulations that are implied by the Bill, I am concerned that the companies will not have much freedom of discretion and activity. That begs the question, why have the corporate entity structure? Would not it be better to accept that the entity is a convenience, or a halfway house? Some might interpret it as no more than smoke and mirrors, or a disguise by which the Secretary of State is able to retain centralised control.

That goes to the heart of a complaint that the Opposition have about the Bill. During the recent general election campaign, about which I do not want to go into too much detail, there was wailing and gnashing of teeth by Government Members about the Conservative party's free schools policy. It is difficult to imagine how that policy could have been implemented by any measure other than this one, except that our measure would not have allowed the same level of interference. However, we cannot be sure about that, because the regulations have not been published.

It is fair to say that history has been significantly rewritten. The Labour party has forgotten what it complained about in the past. Autonomy was precisely what made the Conservative's policy on education-if not on other issues-right and popular. It is right to seek economies of scale for things such as bus services, accountancy and legal support and the provision of school meals.

I am concerned that the Bill does not address that tension and that the Minister avoided answering my point about ultra vires issues. I am not satisfied that a ''prescribed description'' would be constrained by the memorandum and articles. During the by-election campaign, which I won, the Labour party sought to denigrate me by saying that I was on the board of directors of 273 companies. That was absolutely true; I am the group company secretary of a UK FTSE 100 company. Thus, I am familiar with all types of corporate entity in the UK and in 35 other countries. My experience leads me to believe that a level of ignorance has crept into this measure. Articles can be amended and made specific to purposes. A memorandum of association carries the overall architecture and intent of a company and defines its vires, whereas the articles of association outline the operational aspect of the company. That was germane to our discussion of the Limited Liability Partnerships Bill-I was honoured to sit on that Committee.

The Minister has not satisfied me on the issue. I am disinclined to press the amendment to a vote because it is futile to press something that might be addressed by the regulations, which are not available to us. This probing amendment gave us an opportunity to put our concerns on the record. If the Government are not able to provide clarification when the Bill is considered in another place-assuming that it moves beyond Committee stage-they will rightly be condemned for trying to slip the measure through without having thought about its implications for the quality of education. As I said, I am not prepared to press the amendment to a vote, but it would be helpful to have an answer about the ultra vires point before I withdraw the amendment.

Stephen Timms (Labour, East Ham)

I am happy to provide a little clarification. We want companies to have maximum freedom, but we also want some basic protections in place. The amendment would change the provisions about membership of companies and borrowing, which we view as an important part of the available protections. I will argue later that the hon. Gentleman's proposals are unduly onerous in view of our concern that companies should be as free as possible.

I was grateful to the hon. Gentleman for reminding us of the free schools policy, but I was hoping that he would tell us whether that remains the Conservative party's policy. We certainly look forward to clarification on that.

On the issue of ultra vires, company law will apply to all companies, so there is no question of them being able to contravene any aspect of company law. The general framework of company law is highly likely to address the hon. Gentleman's concern. We may return to the same issues when we debate later amendments, but I presently see no danger on that front.

I was impressed by the research capabilities at Millbank, which established that the hon. Gentleman is on the board of 273 companies. I look forward to the Committee gaining from the expertise that that accomplishment provides.

Stephen O'Brien (Conservative, Eddisbury)

I thank the Minister and assure him that I was paid in respect of only one job, and that the rest were gratis. The Minister has acknowledged that, in terms of ultra vires, companies would have to operate within company law, particularly the Companies Act 1985, but there remains the danger of shareholders raising issues at annual general meetings. I am attempting to envisage what I believe will be a rapid consolidation in this market once it gets under way. Within five years, other companies will spot opportunities where there have been ultra vires actions because the constraints are not set out effectively in the articles. Directors of companies have ostensible authority-not to mention board resolutions-and there is a danger that ultra vires issues could lead to damage and liability falling on those directors, resulting in takeovers and other forms of administration, which need to be seen as part of the overall risk. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Stephen O'Brien (Conservative, Eddisbury)

I beg to move amendment No. 23, in page 7, line 31, at end add

'and the freedom to raise finance secured on the assets of the company'.

The Minister touched on these issues earlier. The amendment would add a provision to subsection (9) to provide a company with the freedom to raise finance or borrow money secured on that company's assets. It is always possible to borrow money without assets, but the amendment would provide some recourse in the event of a default.

Paragraph 66 of the explanatory notes states:

''Companies may not borrow money without consent.''

I hope that clause 11 and the anticipated regulations, which are becoming gloriously embroidered as we move forward, will provide some opportunity for companies to borrow money. At present, it is not clear. The difficulty is that the quality of teaching, the certainty of directors, the ability for a more entrepreneurial spirit to capture the synergies and economies of scale necessary to release funds more for education than just support services will mean that there is a danger that companies will run into cash flow problems, irrespective of whether they initially intended to borrow money.

Later amendments deal with the issue of not unreasonably delaying decisions or withholding consent. Under the Bill, it is possible for consent to be withheld or for decisions to be delayed, which could throw a company into cash flow difficulties. Support services and facilities and even the provision of assets could be put at risk-not because of an intention to default on a loan but because of cash flow problems. Do the Government want such a company to have to gain consent, in already difficult circumstances, in order to be allowed to borrow money, or does the Secretary of State view it, under the regulations, as a company limited by guarantee? We all know that such companies are limited in terms of the amount of the guarantee. For charitable purposes, they are often limited to £1 for each member of the company.

The Government response will be interesting. What is the intended level of guarantee and who will be the guarantors? Do the Government or the LEA intend, by regulation or other means, that the public purse will be the indemnifier of the shortfall in a cash flow crisis where there is no immediate prospect of recovery and when the guarantors in a company limited by guarantee have insufficient funds to continue with the provision of education?

Cash flow problems can result from a customer's failure to pay, which could be the result of delay, or because of a company's obligation to pay its staff on the due date in accordance with its terms and conditions on remuneration and expenses. Who will suffer in a cash flow crisis? Will it be the guarantors? If the guarantee is not enough, will it be the indemnifiers under the definition of the public purse?

It could be that we are talking about a school whose budget has been delegated and is to be trusted. If so, we are entering a much riskier world for education-that could be the concept behind the Bill. Is it a mechanism through which financial difficulties-the Bill contains provision for the monitoring of the condition and performance of any company and some prescriptions for reporting-can be dealt with?

We have noticed the Government's difficulties-to many people's woes-with Railtrack. That company was put into administration because of a perception of financial difficulties. We now find that Railtrack's declared and audited profitability was such as to beg the question whether administration was justified. I am not in a position to judge whether the expected amount was reasonable, but there was a proper expectation that the public purse would continue to provide a proper level of funding in support of Railtrack's operations. The amount and the purposes to which the money was put are obviously being disputed, but the reasonable expectation was clear. The sudden stop forced a crisis and, apparently, justified the Government's decision to place a major infrastructure operator of our nation into administration. They now have a major problem on their hands, as indeed have all of us who have at heart the national interest in transportation.

What a disincentive for entrepreneurs. Does it beg a duty for directors that is not in the Bill? Initially, the companies will be quite small, but within five years, after consolidation across the nation, they could be huge. Will directors be under a duty to warn the Secretary of State, irrespective of when the regulations are issued, that there is a remote possibility that a company could be at risk if there were to be a delay or some kind of interest rate upheaval in the economy? They may not have borrowed money, but they may be dependent upon trust fund income. Plenty of endowment trusts are geared to certain schools.

If there were a crisis affecting the return on that trust is there a duty upon the directors, beyond the normal fiduciary duties set out in the memorandum and articles, to warn the Secretary of State and the LEA that it could be in financial difficulties so as to provide the LEA with enough time to ask the Secretary of State to step in to stop pupils' education being put at risk? Under normal corporate procedures, by the time the financial stress is apparent, it is often too late to stop the processes of administration or financial crisis affecting the customer, supplier or services provision base. Paragraph (xv) of amendment No. 61, which we will come to later, is intended to try to flesh that out. Presenting the case is awkward, as many of the amendments have to cut right across chapter 3.

I do not think that I have deliberately misunderstood, but the Bill is deeply confusing about the Government's motivation. Do they anticipate intervening early enough so as not to prejudice educational services? If so, what are the duties of the directors in the absence of the regulations or indeed any of the amendments that we have just discussed? If it is a company, there should be trust placed in it to enable the process to be free from the Government's control. If that is the case, it must face up to the fact that, in corporate life, not everything will continue as planned. Major jerks and hiccups can take place in all corporate life because cash flow is everything to corporate survival.

The duties of directors have become increasingly unclear. The purpose of amendment No. 23 was to establish the true freedom of a normal corporate entity under the Companies Act as specified in the clause. Incomplete qualifications are set out in the Bill. Under the Bill, money can be borrowed because it may be needed to continue the provision. It may be a duty of directors to seek to continue the survival of the company in the interests of shareholders, customers, suppliers and, above all, staff and pupils. If it is a question of borrowing money on the assets, who has the lien on the assets? If it is a company limited by guarantee, the assets may be far more valuable than the combined value of the guarantees, in which case do the Government have a right of lien by way of indemnity if they accept that there has to be some liability to ensure that the provision of education continues? Is it to the degree guaranteed, or is for the total value of the assets over time?

If directors have a duty to forewarn at an early stage, at what point do their duties in relation to fraudulent trading come into play? I am concerned that directors could be guilty of fraudulent trading if they try to continue the uninterrupted education of the pupils, without having a duty to warn the Government when there is a remote financial risk, which anyone could define in theory. It might be necessary for them to warn the Government so that they can step in to intervene through the Secretary of State's powers as set out in clause 12. Anyone who trades within six months of a company going into receivership is at risk. Every director knows that. It is rightly of deep concern to any director. One reason why people feel that they can trust companies and trade with them is that directors dare not put themselves into that position by seeking to trade when they are insolvent.

Those are the questions that the amendment seeks to flush out. There is deep confusion at the heart of the Government's thinking, and I look forward to the Minister's response. I hope that he will accept the amendment for all the reasons that I have tried to outline.

Stephen Timms (Labour, East Ham)

I do not think that there is the confusion. As I said earlier, we want companies to operate as flexibly as possible but with several basic safeguards to offer protection. Those safeguards include preventing schools from borrowing money without permission. The hon. Member for Eddisbury asked several reasonable questions about the borrowing abilities of the company, and I should perhaps point out first that we envisage two types of company. One is formed to undertake procurement activities on behalf of several schools, and the other is a service provider company in which several schools come together to provide services to either themselves or other schools. There is a distinction between the two. Local education authorities will be liable for some of the debts of procurement companies, but not for those of the service provider companies.

The hon. Gentleman asked about limited liability companies. That will be set out in the policy statement that I promised the Committee. It is likely that many purchasing companies will be limited by guarantee, but much less likely for service delivery companies. If we decide that companies should be limited by guarantee, my expectation would be that the liability would be limited to a nominal amount-£10, or along the lines that the hon. Gentleman suggested.

To reclaim VAT, which a company providing procurement for schools would need to be able to do, such companies will be deemed to be acting as agents of the LEA, which is why the LEA becomes liable in those circumstances. That does not arise with service provider companies. Purchaser companies will be spending their member schools' budget share; service delivery companies will not-they will be charging for their services. We will introduce a system through regulations whereby LEAs can monitor companies and act appropriately on that monitoring. Regulations will provide for the supervision and auditing of companies, which may involve designating a supervising LEA. Companies will be required to make financial information available to LEAs, so that risk can be minimised. If a company is financially mismanaged, regulations will provide a warning mechanism and, should it be necessary, arrangements for schools to leave the company or for winding up the company.

The amendment would grant governing bodies of member schools and companies the ability to borrow money secured on the company's assets, without having to seek permission. That would reduce the effectiveness of the basic financial safeguards that I described. Our proposition is that schools must seek permission to borrow because, in the circumstances that I outlined, liabilities could arise on an LEA. If the schools have permission, they will be able to secure the borrowing on the assets of the company. There is nothing to prevent that, and it might be appropriate.

It is worth noting that the companies are unlikely to be asset rich. For example, the land and buildings of the individual school members will not transfer to the company, so no loan could be secured on them. Ownership of land and buildings depends on the category of school in the framework. No maintained school would be free to transfer them. The LEA owns the land and buildings of community schools; trustees, which are subject to charity law, own the land and buildings of voluntary schools; and the governing body of a foundation school, which is also subject to charity law, owns the land and buildings of foundation schools.

Graham Brady (Conservative, Altrincham and Sale West)

The Minister's reply is helpful, as my hon. Friend the Member for Eddisbury will agree. In the instance of a governing body establishing a company to provide an educational service, which might be operating a school, possibly in an area where another school has failed, it would presumably be possible for that company to purchase assets, schools buildings and so on, in order to carry out its functions.

Stephen Timms (Labour, East Ham)

I am grateful to the hon. Gentleman for intervening on that point, as we do not envisage companies running schools. It will remain the governing body's task to run the school. Companies will be established to provide services to support the governing bodies in that work. Given that construct, the circumstances that the hon. Gentleman described will not arise. Indeed, his hon. Friend the Member for Eddisbury expressed anxieties about education being put at risk. The Committee should not worry about that; education will continue as normal. The school budget share is separate and will continue to be so. We do not envisage the companies running schools but providing services to support governing bodies in the work that they carry out.

Stephen O'Brien (Conservative, Eddisbury)

The Minister shed some light on the nature of the ownership of assets, which was not clear from the Bill or the explanatory notes without having the regulations or the policy statement. The amendments are important in flushing out what the Bill intends, as it lacks clarity.

For example, under existing law and regulations, a private company has offered a high school in my constituency-one of the top five in the country-an information technology centre. The school has been exceptionally positive in wanting to accept it, but the LEA, which takes its responsibilities seriously, took a long time to negotiate the form of support and the contract. In this case, the assets are not land and buildings but the services being provided by the private company for the pupils.

Information technology assets tend to depreciate rapidly, which is an accounting issue, but, none the less, they are assets and in the early days before depreciation bites, they could be of great value. Have the Government taken account of the fact that assets are not just land and buildings?

Stephen Timms (Labour, East Ham)

I do not have details of the hon. Gentleman's example. He is right; there could be computer assets. It is unlikely that people would want to borrow on those assets, although that must be considered. I agree with the hon. Gentleman that it is helpful for questions and answers on what I accept are probing amendments to be placed on the record. There would be serious concerns if significant land and buildings were involved; I hope that I have reassured the hon. Gentleman that that is not the case.

Andrew Turner (Conservative, Isle of Wight)

I assume, when the Minister says that companies will not be allowed to run schools, that he means they will not be able to take the place of the governing body, which is the legal entity, but that otherwise the delivery of services to schools is more or less unlimited. That may be with the exception of clauses 34 and 35, relating to the provision of staffing, which is perhaps the most important service that a school can require. Have I understood the Government's approach correctly?

Stephen Timms (Labour, East Ham)

Yes, the hon. Gentleman is right. We envisage that governing bodies will continue to have their current role and will not be replaced. There could be models in which a company replaced a governing body, but it is important for the Committee to recognise that we do not envisage such a model in this respect.

Stephen O'Brien (Conservative, Eddisbury)

I noted the Minister's explanation that an LEA would be liable for some of the debts of a procurement company, because it would be acting as the agent of the LEA. I was not sure where the definition of ''some'' would come. I hope that I heard him correctly. That situation will need to be explored. Although that is intended to be the use of a budget, a crisis will be caused when the money has been spent, the budget used and there is an inability to recover a payment. There will be such failures, because we do not live in a perfect world.

It would be inappropriate to delve into the detail, but the conceptual difficulty has been placed on the record. I very much hope that the Minister and his Department will reflect on it and that we shall hear more later, whether in Committee or in another place. In the light of our discussion, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 10 ordered to stand part of the Bill.

Clause 11 - Limits on powers conferred by section 10

Andrew Turner (Conservative, Isle of Wight)

I beg to move amendment No. 97, in page 7, line 35, leave out-

'(a) with the consent of the local education authority, and'.

Irene Adams (Labour, Paisley North)

With this we may discuss the following amendments: No. 24, in page 7, line 35, after 'authority', insert

'(which shall not unreasonably be withheld)'.

No. 25, in page 7, line 37, at end insert

'(which shall not unreasonably be delayed in being allocated and delegated)'.

No. 56, in page 8, line 31, leave out 'may restrict' and insert 'shall make clear'.

No. 59, in page 8, line 32, at end insert

'(where such refusal cannot be exercised unreasonably)'.

Andrew Turner (Conservative, Isle of Wight)

The justification for amendment No. 97 rests very much with the Government's failure to provide information on their thinking beyond that in the explanatory notes on the conditions under which a local authority may be permitted to intervene to prevent a governing body from establishing a company of the relevant kind. I am sure that Government Members realise from our decision not to oppose clause 10 stand part that we broadly agree with the proposal.

Why should the local education authority have the opportunity to prevent a governing body from entering into the creation of such a company? Many local authorities are effective; some are utterly ineffective. I realise that the Government are struggling-I congratulate them on their struggle and, in one or two cases, on their achievements-to turn round those LEAs. I think that one LEA is now the subject of a third intervention, of a different shape from the previous two. I am not sure why that LEA, for example, should be entitled to intervene to prevent what may be an effective school from deciding to go down the road for which the Government have provided. That is a question of competence.

There is also the question of political will. Some LEAs may conclude that it is inappropriate politically for schools to take advantage of the legislation. I am sure that they would not be Labour-controlled local authorities and I am pretty sure that they would not be controlled by the party of which I am pleased to be a member. However, there may be local authorities, if not in England, perhaps in Wales, with a rooted political objection to the involvement of governing bodies in private companies.

The Government have not said why they believe that local authorities should have a role in preventing schools from taking such decisions where those schools believe them to be appropriate. The only clue is again in the explanatory notes, which state that

''Regulations will set out the basis on which an LEA may refuse consent.''

Subsection (7) also gives some indication, in that it empowers the Secretary of State to restrict consent by regulation.

One would be much happier if the regulations were an indication of the Government's thinking. Why are the Government establishing another hoop? If they have the power to foresee circumstances in which it will be appropriate for an LEA to be permitted to intervene, why give that power to the LEA? Why not simply restrict the powers of the governing body in certain circumstances? For example, the regulations may state that an LEA can refuse to allow a governing body to participate in a company only where the school is operating under special measures, or has serious weaknesses. If the Government believe that, why do they need the LEA to be in the loop? Why must the governing body jump through another hoop?

The Government seem to have a reasonable understanding of the danger of local authorities taking perverse, unnatural decisions for political reasons, or simply because of incompetence or stretching out the time to take those decisions. The Government are handing the decision to a subordinate authority, instead of making the decision themselves. I want to understand why that is the case.

Stephen O'Brien (Conservative, Eddisbury)

I shall speak to amendments Nos. 24, 25 and 59. Amendment No. 27 was submitted in due time, but was not selected. It might have been, were there not a typographical error on the amendment paper. The amendment, as I wrote it, stated:

''after 'requirements', insert '(which must be specific and certain)' ''

and not:

''after 'requirements', insert '(which must be specific and contain)' ''.

That would have made sense. I am sorry to see that error, and that the amendment was not selected. I do not know what procedural opportunities may be open to me to table the amendment again, or whether you have the discretion, Mrs. Adams, to enable me to cover the point. May I have guidance?

Irene Adams (Labour, Paisley North)

It is reasonable for the hon. Gentleman to speak to amendment No. 27 as well, given the correction.

Stephen O'Brien (Conservative, Eddisbury)

I am grateful, as it hangs together with the other amendments. I wanted to give the Minister notice that I was also speaking to that amendment, and I hope that he will give a happy and instinctive response.

It would help if the regulations already existed for us to study, but they do not. Amendment No. 24, which my hon. Friends and I tabled, follows on from amendment No. 97, which my hon. Friend the Member for Isle of Wight (Mr. Turner) discussed. However, they are mutually exclusive, in that my hon. Friend's amendment would leave out clause 11(1)(a), so that the LEA's consent would not necessarily be required. If the Minister is not minded to accept that amendment, I hope that he will find it reasonable and practical to accept amendment No. 24, which would amend the clause so that a local education authority could not unreasonably withhold its consent to a governing body of a maintained school exercising any power conferred by any of the subsections (1) to (4) of clause 10.

It could be argued that a local education authority would never-shock, horror-act unreasonably and that the amendment is therefore otiose. On the contrary, all hon. Members, irrespective of party affiliation, have witnessed-only, I hasten to add, outside our own constituencies-apparently extraordinary decision-making on the part of LEAs that would not pass Lord Denning's famous test of what the man on the Clapham omnibus would think reasonable. We must insist on trying to prevent such unreasonable decision-making, not just because it is wrong in itself-that would not be a strong argument for acceptance of an amendment-but because of the arguments that were made for previous amendments. Although those amendments were withdrawn, they have a major impact on unreasonable decision-making and time delay-factors that are at the heart of amendment No. 25-that could put some companies, particularly service provision companies, into a cash-flow crisis. That could be critical for children at a school in receipt of those services.

It is therefore important to demonstrate that no dogma will be attached to any of the decision-making. I would be extraordinarily surprised if any member of the Committee had not seen, at some time in their political experience, evidence of local decisions that are informed by dogma. Labour Members have often levelled that criticism at Conservative Members, and we have not infrequently levelled it at them. It is a fair point. LEAs could engage in deliberate stalling and be determined to prevent the mechanism. The Secretary of State seeks general powers to intervene, but such override powers can be politically inconvenient and dangerous; all the political responsibility would fall to him and no Secretary of State could say that his hands were clean.

Chris Grayling (Conservative, Epsom and Ewell)

My hon. Friend may not have noticed that there is a further intriguing dimension to this: under clause 12, the Secretary of State has the right to invest in any company that is to carry on such activities. That opens up the intriguing possibility of a school setting up a company, the Secretary of State agreeing to support it and the LEA deciding to veto or delay it to make it impossible to set up. That would obscure the dividing line between where responsibility starts and stops.

Stephen O'Brien (Conservative, Eddisbury)

My hon. Friend makes a precise and valuable point. It is not light-hearted; it is deeply serious. If we do not accept the amendment, the only safeguard against dogmatic and unreasonable behaviour would be the exercise of power by the Secretary of State, which, in the nature of things, will not necessarily always be politically convenient. It may therefore affect the exercise of that decision and intervention.

Amendments Nos. 24, 25 and 59 apply to subsection (7):

''regulations may restrict the circumstances in which a local education authority may refuse to give any consent applied for under subsection (1)''

Such a refusal may not be exercised unreasonably. All the amendments are consistent and are designed to inject a clear expectation that dogmatic, unreasonable behaviour will not influence decisions by local education authorities. One would patently expect that from the Secretary of State. I have not even bothered to pursue that, because any Secretary of State would seek to act reasonably.

Secretaries of State know that their decisions may be subjected to judicial review. That is equally the case when so much that flows from the Bill will be in secondary legislation. It is more difficult to seek a judicial review of decisions taken under secondary legislation. Because the power set out in clause 12 is under primary legislation, any decisions that follow are open to judicial review. A local education authority could be open to review through the ombudsman, and ultimately the courts, because the grounds for an application for judicial review would be clear: the reasonableness test would be applicable, and would have to be justified.

Without amendment, the Bill will be seriously deficient. It will become a hollow call to an entrepreneurial and exciting form of providing services and facilities for education. Although it may be a bumpy ride, it could be valuable if implemented correctly. However, dogma may get in the way, not making the Bill a mere damp squib, but deliberately undermining it. That would thwart the will of Parliament.

David Laws (Liberal Democrat, Yeovil)

I am pleased to take part in the debate in the absence of my hon. Friend the Member for Harrogate and Knaresborough, who will rejoin us in his robust way for this afternoon's exchanges.

The amendments are important, and I hope that the Government will accept several. I shall speak to amendment No. 56, which is designed to clarify the circumstances in which LEAs may be able to deny governing bodies the exercise of powers. We have already discussed amendments Nos. 97, 24, 25 and 59. I support the latter three, which create a sensible presumption that LEAs that deny governing bodies those powers should do so for good reason. I support the amendments tabled by the mainstream Conservative party, but I cannot go as far as the Isle of Wight branch in denying the LEA a role altogether.

The hon. Member for Isle of Wight raised two objections to the element that he seeks to delete. The first was that a specific LEA might have a political presumption against granting powers to a governing body. Amendments Nos. 24, 25 and 59 address that concern. The hon. Gentleman raised a legitimate point about the Government's intentions in restricting the powers, and I hope that amendment No. 56 will shed light on them. It is reasonable to give LEAs some power in circumstances where there may be serious doubt over whether schools and governing bodies can exercise those powers. I imagine that the number of cases would be small. It is reasonable to give LEAs the power to prevent governing bodies from entering into those arrangements for a period of time.

There is a strange anomaly in the Government's thinking. They seem relatively happy to give a great deal of flexibility to schools to set up such companies, yet at the same time they envisage that earned autonomy will be available to only about 10 per cent of schools. There seems to be a tension in the amount of power the Government are willing to allow individual schools to exercise.

Sharp-eyed members of the Committee will have noted that the wording of amendment No. 56 is not perfect in terms of what it seeks to replace, so I may not press it to a vote, but amendments Nos. 24, 25 and 59 are important and I hope that the Government will accept them.

Stephen Timms (Labour, East Ham)

The provision for regulations under clause 11 will restrict the circumstances where an LEA may refuse to give consent to a governing body applying to form or join a company. We intend that those regulations will go further than amendments Nos. 24 and 59, in that they will prescribe the circumstances in which consent can be refused. Both amendments refer to unreasonableness-that local education authorities are required in general law to act in a reasonable way. Because the regulations will prescribe the circumstances in which consent can be refused, the reasonableness points in amendments Nos. 24 and 50 will be covered.

In contrast to the views of the Isle of Wight branch of the Conservative party that the hon. Member for Yeovil (Mr. Laws) has just described-that local education authorities are best placed to make decisions on school membership of companies-amendment No. 97 would remove the need for schools to obtain consent from their local education authorities to join companies.

The hon. Member for Isle of Wight asked some entirely reasonable questions about the circumstances in which we would envisage LEAs being able to withhold their consent. There will inevitably sometimes be an element of judgment. It will not always be a question of meeting an objective test. There will be only limited circumstances in which the regulations will allow an LEA to refuse permission. We shall consult on them, as I have said. I envisage, as the hon. Gentleman suggested, that a weak or failing school would be one criterion; a second would be where the financial circumstances of the school are weak; and a third would be if the leadership of the school was weak. An LEA will not have to refuse in such circumstances. A weak school might sensibly join a company in order to gain the benefits of partnership with a stronger school. However, it would be appropriate to permit LEAs to refuse permission if any of those three circumstances prevailed. There is inevitably a measure of judgment, not in the first set of circumstances to which the hon. Gentleman referred, but in the other two, where the judgment necessitates obtaining permission.

Graham Brady (Conservative, Altrincham and Sale West)

Will the Minister explain why he thinks it necessary to have the LEA's consent to form a company, whereas the LEA's consent is not required in chapter 1 for exemptions for innovation, or in chapter 2 for earned autonomy?

Stephen Timms (Labour, East Ham)

As I said earlier, in some circumstances with the procurement companies, the LEA's budget could be at risk if things go wrong. The LEA must have a say about whether it goes ahead and, in the circumstances that I outlined, it may need to withhold its consent.

Graham Brady (Conservative, Altrincham and Sale West)

Is the Minister saying that when a firm is a service provider company-the Minister confirmed earlier that the LEA would not be liable for debts or financial liabilities-the LEA will not be able to deny consent?

Stephen Timms (Labour, East Ham)

No, I am not in a position to say that at this stage. Before the Bill leaves the Commons, we will set out in a consultation document the precise circumstances in which that would happen. However, in some circumstances, for example if a school or its leadership was weak or failing, it might be inappropriate for it to enter a certain kind of service provider company. The hon. Gentleman is right to suggest that the major financial risk to the LEA arises with the procurement companies, but I cannot say at this stage that I would exclude the possibility of the LEA withholding permission for service provision companies.

On amendment No. 25, clause 11(1)(b) requires that only schools with a delegated budget can form or join companies, so the amendment would require that LEAs do not unreasonably delay the allocation and delegation of a school's delegated budget. The principle of the amendment is entirely fair-schools should not be deprived of a delegated budget-but it does not add anything to the carefully constructed provisions of the School Standards and Framework Act 1998, under which a new school must be given a delegated budget not later than its opening date unless the LEA has obtained special permission from the Secretary of State to postpone delegation beyond that date. In practice, many LEAs allow new schools to have delegated budgets prior to opening, which is to be welcomed. However, there is not a sufficient case for bringing forward the statutory deadline for delegation. The LEA is under a strict duty to delegate budgets to existing maintained schools, and regulations under section 49 of the 1998 Act provide that the amount of a school's budget share must be determined before the start of the financial year.

If delegation has been suspended, schedule 15 requires the LEA to review suspension annually and allows for more frequent reviews if the LEA so chooses. If delegation has been suspended on the ground of financial mismanagement, the school may appeal to the Secretary of State against the suspension. I think that those measures provide sufficient safeguards. In any event, the amendment simply requires LEAs to act reasonably, but they are under a general duty to do so anyway. Any safeguards that the amendment would provide are already available under general law.

Given my explanations and reassurances, I hope that hon. Gentlemen will not press the amendments to a vote.

Andrew Turner (Conservative, Isle of Wight)

If I may recapitulate, I understand the Minister's assurances to mean that under the limited conditions by which the local authority is entitled to withhold consent, they shall do so if the school is weak or failing and they may do so in the other two circumstances that he set out. If that is the Minister's reassurance, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Stephen O'Brien (Conservative, Eddisbury)

I have listened carefully to the Minister. Yet again, this is difficult without having the pro forma regulations in front of us, but the exercise of decisions ''reasonably'' is critical to ensuring no gamesmanship in statute. We hope that gamesmanship will not be encouraged, but it is conceivable. Experience teaches us to think carefully about what we put on the statute book.

The Minister has sought to be constructive and has said that the yet unpublished regulations may well be stronger than the wording in amendments Nos. 24, 25 and 59. In the absence of those regulations, however, it would be irresponsible for the Committee not to demonstrate the seriousness of these issues, which are germane to the operation of the Bill's underlying concept. We are dealing with the mechanics and architecture of the Bill to ensure its effectiveness.

Government Members have given an attentive hearing to our arguments. Heaven forfend the suggestion of a whipped vote. I hope that, before the Bill leaves this House, hon. Gentlemen will join me in pressing for the Government's feet to be held to the fire. If the regulations turn out not to be stronger, the subject of the amendments would be a proper matter for further debate. The amendment should be accepted and the Government's intentions kept honest. I shall press for a vote on amendments Nos. 24 and 25, and I also intend to press amendment No. 59.

David Laws (Liberal Democrat, Yeovil)

I shall not press the excellent, but marginally flawed, amendment No. 56, but I am pleased that other amendments in the group are being pressed to a vote.

Amendment proposed: No. 24, in page 7, line 35, after 'authority', insert

'(which shall not unreasonably be withheld)'.-[Mr. Stephen O'Brien.]

Question put, That the amendment be made:-

The Committee divided: Ayes 6, Noes 11.

Stephen O'Brien (Conservative, Eddisbury)

I beg to move amendment No. 28, page 8, line 2, after 'guarantee', insert

'or a limited liability partnership under the Limited Liability Partnerships Act 2001'.

I touched briefly on this subject in a previous discussion. The amendment would add the possible alternative of a limited liability partnership under the Limited Liability Partnerships Act 2001 to the definitions and opportunities that exist for the companies that will be registered under clause 11, if regulations so provide. My concern is that, in the absence of regulations, it may be presumed that it would not have to be a company limited by guarantee. I think that I understood the Minister to say as much.

We are working on the presumption that there will be regulations, and the more we explore the chapter, the more it is clear that the regulations will be detailed and all encompassing. Those who want genuinely to scrutinise and understand the Bill are naturally disappointed. As the regulations are well developed, perhaps the Bill could have been a little more detailed and less of a blank cheque for the Secretary of State.

The opportunity that the Government rightly provided by the introduction of the Limited Liability Partnership Act had been recommended for some time by bodies outside the House, and was driven through against the wishes of several Government Back Benchers who took a somewhat hostile view to the accountancy profession. In the end, the Government prevailed, and that provision is now on the statute book. That move was driven primarily by the large accountancy partnerships, which have consolidated in recent years. We have limited liability partnerships because it became unreal in today's world to expect partners to be liable to the extent of the shirt on their back when operating in a professional environment with liabilities well beyond what anyone could reasonably expect, and for which insurance cover was becoming increasingly difficult or expensive to provide.

Stephen Timms (Labour, East Ham)

I acknowledge the hon. Gentleman's expertise on this matter. Will he confirm that the Limited Liability Partnerships Act was passed in 2000 rather than 2001, as the amendment suggests?

Stephen O'Brien (Conservative, Eddisbury)

I remember serving on the Standing Committee in 2000, but I had thought that it had taken longer to gain Royal Assent. It seemed an inordinately long time, and I am grateful for the correction. I hope that, as we discuss the amendment, we can treat that as a typographical slippage. My pen did not quite make the full circle of the final zero.

The Minister commented earlier that the Government envisage that companies will be set up to procure services and facilities and to provide services directly. Some of those companies may well provide professional services. Although they may not be accountancy practices or law firms, such companies are developing and embracing the corporate entity known as a limited liability partnership. Many of the management consultancy services that they offer, in addition to audit work performed by accountants, are very much the sort of services that can be provided collectively to schools to achieve economies of scale. Such firms offer legal or accounting expertise, which will increasingly be needed as the number of companies grows. Even if the hon. Member for Yeovil is right in saying that only about 10 per cent. of schools will be subject to the corporate mechanism, that could run into billions of pounds of turnover, and there would be potential for consolidation.

If companies draft in professional expertise, a company limited by guarantee may not be appropriate, and we should perhaps consider the use of limited liability partnerships. The flexibility that the amendment would engender is important, particularly if professional expertise is being offered. The limited liability partnership may be the appropriate corporate mechanism for obtaining the necessary professional indemnity liability insurance.

A school contracting accountancy services may be anxious about whether a corporate entity providing such services has the wherewithal, if it is limited by guarantee, to indemnify it for acting on inappropriate advice. Therefore, the school would look to the insurance cover that professional indemnity insurance would provide, and that would be much more appropriate under a limited liability partnership, as envisaged under the Limited Liability Partnerships Act 2000.

I know from my experience as the director of a limited liability partnership in California that such entities operate successfully. They are increasingly used not only in manufacturing, which I was concerned with, but in the provision of more general services, such as bus transportation. The amendment would offer appropriate flexibility. In the absence of regulations, we do not know whether we are dealing with a chimera or something that will be so prescriptive that companies will not be free to operate independently. With the consolidation that it is envisaged will occur in the marketplace, it is important that the Government accept the amendment as an indicator at least.

Stephen Timms (Labour, East Ham)

I am pleased to be able to trade expertise with the hon. Gentleman in the finer points of company law. Amendment No. 28 would provide that companies may be formed as a limited liability partnership rather than as a company limited by guarantee. Through regulations, we will require that companies are formed in a way that will maximise their ability to manage their own affairs. However, in order to prevent unnecessary risks to company members, we will require a company structure that limits risk. That is why we suggested companies limited by guarantee. As I said, we will consult on that before finalising our decisions.

The limited liability partnership would not be an appropriate vehicle for the companies that we envisage. Under the 2000 Act that the hon. Gentleman referred to, persons entering the partnership do so with a view to profit. He will recall that requirement under section 2(1)(a) of the 2000 Act. In reality, many persons entering the companies that we envisage will not have that aim. Groups of schools forming companies for the procurement of goods and services, so as to benefit from economies of scale and organisational support, will not be formed with profit in mind.

There are other difficulties with the rules about limited liability partnerships. That vehicle is essentially aimed at individuals grouping together to do business rather than corporate bodies. I am not saying that it cannot be used by corporate bodies, because of course it can, but the framework in the legislation has been designed for individuals coming together rather than corporate bodies. That leads to rules that make the vehicle inappropriate for the type of company that we envisage in the Bill. The rules relating to agency and the prevention of partners from leaving the partnership without reaching agreement with the other partners, which is a feature of the 2000 Act, mean that that structure would not be suitable for the companies that we envisage in this part of the Bill.

We do not want to be too prescriptive in the Bill. We want maximum flexibility. Companies formed with the aim of developing effective public private partnerships or private finance initiatives through joint venture companies would not be limited by guarantee. We would expect them to be limited by shares. As companies established with different aims-PFI or PPP as opposed to purchasing or service delivery companies-may require different structures, we have not specified details at this stage. I hope the Committee will recognise that we need to be flexible to enable the establishment of different sorts of company. We will consult fully on the options. I hope that the hon. Gentleman will therefore withdraw his amendment.

Stephen O'Brien (Conservative, Eddisbury)

I am grateful to the Minister for seeking to elaborate on an apparently early joust in the consultation process. Apart from making the obvious point that, although his remarks were intended to be helpful, they demonstrate how many aspects of the Bill have been brought forward prematurely, let me say that the Government seem to know what they intend to achieve with the Bill. However, we cannot scrutinise it because the intention is not recorded in writing either in the Bill or in available regulations.

I listened to the Minister carefully when he said that members might join procurement companies without a view to making a profit. While he may be correct, the Bill does not proscribe such members coming together for profit. Schools that have demonstrated that they can be trusted with a delegated budget and are seen to be good performers may take advantage of that mechanism. The governing body or the head teacher may be particularly good at managing, motivating and bringing out the best in their staff. They are likely to be completely comfortable with the idea that, to the extent that they can lever that expertise into the economies of scale for the benefit of the children, there may well be an incentive for some form of profit.

If the Government are determined not to accept the fact that profit is a natural incentive if one is introducing corporate entities, I cannot see why they have gone to all the trouble of going down the corporate entity route. Of all parties, the Labour party must be most familiar with the co-operative movement, which would appear to be the ideal vehicle to exercise purchasing power. A number of Labour Members also stand in the name of the Co-operative party, and they have access to the co-operative movement. That is not necessarily through companies that are limited by guarantee. A number of corporate entities and structures enable the co-operative movement to be a not-for profit organisation that benefits its members. At the same time, it can have legal responsibilities that enable it to satisfy its duties.

The Minister's response was helpful, but it is still unclear why the route has been chosen in the absence of any regulations or greater consideration of the Bill before it was published. What the Government appear to be talking about is no different to what the Monopolies and Mergers Commission, as it was then, sought to do to Milk Mart, which was broken up so that farmers no longer had the opportunity to use their collective purchasing power to ensure that the farm-gate price was not squeezed. Distributors and supermarkets could therefore greatly reduce the value of farmers' produce. The co-operative movement has always been able to exercise purchasing power, but on the basis that it is for the benefit of members, which is how co-operative collectives for farmers operated.

We are looking for economies of scale that will benefit schools intending to be members and that will be sustainable, so that by accessing the competitive marketplace, money can be saved and applied to existing educational budgets. It is therefore difficult to see why a company is proposed that is limited by guarantee, when the co-operative movement would have served the purpose better and has a much better track record.

In the absence of regulations, it would be facile to press the amendment to a vote, although, as one can tell from my lengthy riposte to the Minister, I believe that the Government's thinking is muddled. I am glad to put on the record that I will not press the amendment to a vote, as the Minister rightly wants consultation on the clause, which I hope will be wide ranging. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Stephen O'Brien (Conservative, Eddisbury)

I beg to move amendment No. 26, in page 8, line 5, at end insert-

'(iii) a satisfactorily completed process of due diligence, absence of conflict of interests, due process and the taking of references.'.

Irene Adams (Labour, Paisley North)

With this it will be convenient to take the following amendments: No. 61, in page 8, line 5, at end insert-

'(iv) maintaining an asset register,

(v) making provision for the conversion of the company to a corporate entity under the Companies Act 1986 (c. 6) other than either a company limited by guarantee or a limited liability partnership under the Limited Liability Partnerships Act 2001,

(vi) making provision for the flotation of any company resulting consequent to subsection (v) of this clause,

(vii) making provisions for the limitation on the company in the event of an acquisition, merger, split and disposal of the company,

(viii) preventing the diversion of revenues and assets of the company,

(ix) making provisions for the distribution of profits of the company by way of dividend or otherwise,

(x) making provisions for compliance with best practice for the nomination and remuneration of directors of the company,

(xi) the provision of annual reports and statutory filings in accordance with the Companies Act 1985 (c. 6),

(xii) the provision of audit reports, including interim audits, of the company, and in relation to the initial financial period of the company provision for 3-monthly interim audits of the company until the first statutory annual return is made,

(xiii) the winding up of the company,

(xiv) the provision of guarantees, indemnities and discharge of liabilities without prejudice to the interest of staff or pupils of the maintained school or schools to which the company is providing services, facilities, functions, arrangements or facilitation under section 10,

(xv) notification of the local education authority and the Secretary of State of any event or circumstance which, within 3 months from the date of such event or circumstance, carries the possibility in the judgement of the directors of the company of any risk of financial or other difficulty likely to place the company in a position where it cannot meet its obligations, where such obligations may be financial or in the educational interest of the staff or pupils of the maintained school.'.

No. 62, in clause 12, page 8, line 39, at end insert-

'(c) intervene to place upon a company a scheme of arrangement or to order divestment of assets with due fair market value compensation and release from contractual obligations where a company has notified the local education authority and Secretary of State under section 11(c)(xv) or otherwise, or on the initiative of the Secretary of State acting upon reliable information where a company is at risk of failing to meet prescribed requirements'.

Stephen O'Brien (Conservative, Eddisbury)

If I am tired of my voice, everyone else must be doubly tired of it. I apologise for what appears to be a string of my amendments.

Amendment No. 26 would insert sub-paragraph (iii) at the point where the prescribed requirements are identified in clause 11(3)(c)(ii). Sub-paragraph (iii) would provide that those requirements would have to show satisfaction with

''a satisfactorily completed process of due diligence, absence of conflict of interests, due process and the taking of references''.

By any test, that is the obvious and common-sense nature of engaging in risk. One would expect best practice and a good track record that has generated a higher degree of commercial confidence than before, when commercial matters were not as transparent as they are today in corporate life. All too often, however, there is a justified accusation that obvious due processes are ignored by the ignorant or the greedy when engaging in corporate or commercial risk. I do not seek to over-regulate, but the amendment would make a sensible addition, as the restriction is not set out in regulations.

The Minister's response may be that what the amendments propose will be set out in the regulations. I do not want to rehearse yet again my deep frustration at the lack of regulations, but even pro forma, or privately drafted, regulations would help to give confidence and guidance as to what process we can expect by which the freedoms and controls will interplay with the incentives to set up corporate entities that will affect the ability to provide educational services. That is why it is important to debate these amendments.

We touched on the other aspect of the issue under the previous group of amendments. Without the references in amendment No. 26 to due diligence, absence of conflict of interests, due process and the taking of references, there is the presumption that it will be more difficult for someone who feels aggrieved to apply for judicial review. If the Government, public servants or local government have not followed basic processes in making decisions, people should always be allowed to challenge them. The amendment would also aid all those involved in decision making by providing a handy checklist to ensure that they could not be challenged at a later date.

As we reach amendment No. 61, I see some crestfallen faces around me, as there is quite a lot of wordage. The extra sub-paragraphs (iv) to (xv) are intended to demonstrate the degree to which we, and all those who come after us, need to know the expected risks, opportunities, responsibilities, liabilities, and potential guarantees and indemnities. We also need to know about the ability to service a business that will make the procurement or service provision available in the interests of education and schools, who will carry the benefit and who is responsible for the burden of those corporate responsibilities.

I do not apologise for the fact that the amendment is something of a shopping list of things that occurred to me as I read the Bill and wondered where certain provisions were. Having some experience in the corporate world, I expected to see those provisions and duties set out clearly in the Bill.

Under the Companies Acts and memorandums and articles of companies, there are obligations such as the first one in the amendment: to maintain an asset register. That should be made explicit in the Bill because those who will operate the legislation will not have had the benefit of sitting in Committee, riveted, as we are, by the Minister's answers and knowing that the provision does not necessarily mean that schools can own land and buildings. An asset register therefore becomes all the more important. It identifies the assets that those who are contracting with companies, particularly those exercising purchasing power, can enforce against.

Under a previous clause, the hon. Member for Harrogate and Knaresborough asked about the potential for the takeover of companies, and I told him that he needed to be patient until we reached these amendments. Unless I am mistaken, which I readily admit I could be, nothing in company law forbids a company that is limited by guarantee-that which is envisaged, subject to consultation, under the Bill-from being subject to takeover or a bid. Indeed, the shareholders might be happy to be on the end of an attractive offer. What director facing heavy mortgage payments would not be glad to accept such a bid? I well understand that individuals will make their personal decisions as and when that comes about, and shareholders and directors would expect to do the same.

The point of sub-paragraph (v) is that there must be provision

''for the conversion of the company to a corporate entity . . . other than a company limited by guarantee or a limited liability partnership''.

I tabled this amendment because I anticipated, somewhat woefully, that the Government would readily accept my limited liability partnership amendment. That little bit is now otiose, given what has just taken place.

Sub-paragraph (vi) deals with the ''flotation of any company'', and sub-paragraph (vii) deals with

''provisions for the limitation on the company in the event of an acquisition, merger, split and disposal of the company''.

Purchasing power arrangements for bus services, school milk and other services, which the Minister has rightly identified as being among those that the Bill is intended to include, are inadequately expressed in the wording.

In the past, take-or-pay contracts put the gas companies under stress because of the need to extract North sea gas on a sustainable basis, and they were lumbered with liabilities. What would prevent companies from entering into a five or seven-year contract for bus services? That may be beneficial, but in the absence of such provisions there may be risks. Of course, such measures may be subject to regulations longer than the Bill, if it becomes an Act. It is important, subject to the laws that apply to such corporate activities, that long-term contracts should protect the interests of children and educational quality.

The amendment is designed to trawl around a huge field of potential corporate activity. The marketplace will rapidly consolidate; five schools in my constituency could choose to take advantage of the powers under the Bill for combined services. The Conservative party argued for that in the general election and I am glad to see it rightly adopted as Government policy. We should not waste taxpayers' money if economies of scale can be secured, especially for support that is not direct classroom provision. If five schools combine, it is easy to imagine five counties working together. Distance is not a factor, as is demonstrated by the power of the distribution companies that supply supermarkets throughout the country.

Only 20 years ago, if a brick were made in Throckley factory in Newcastle, it would not be sold in Sussex. One can now obtain bricks made in Newcastle more cheaply than those made down the road in Pevensey Bay. The economics of distribution have shifted to the point where providing services across five counties will be cheaper. Economies of scale require an understanding of takeovers, flotations, splits and disposals, and how companies can operate without prejudice in the interests of educational provision.

I am concerned that the provisions have not been thought through. Unless the Minister says that a prohibition against such corporate activity will be in the regulations-in which case it should be in the Bill-rapid consolidation will occur because the economies of scale will quickly become national.

The Minister has already indicated the restrictions. Proposed new sub-paragraph (viii) would prevent

''the diversion of revenues and assets of the company''

The Minister said that that should be subject to regulation and suggested that the companies he has in mind would prevent it from happening. We hope that by setting it out as part of the prescribed requirements provision, it can be addressed explicitly.

I noted that the Minister was careful to say that not all companies would be driven by profit. Some, and in time, the vast majority, will be mindful of the excess to running costs that they generate. It is a matter for them if they choose, for politically correct reasons, not to call that a profit. For the benefit of the audit trail, they will find that their accountants will refer to a profit and loss account whether they like it or not. Proposed new sub-paragraph (x) makes provisions for:

''best practice for the nomination and remuneration of directors of the company''.

That is a requirement under the Companies Act 1986, but given our discussions about potential company members, it is necessary to have best practice in terms of nominations for due diligence and to ensure that the right opportunities are created for those of talent, expertise and relevance to the board of the company that will deliver the services. If the Government are concerned about proper motives, they can at least ensure through the nomination procedure and the remuneration of those directors, be they non-executive or executive, that those appointed are highly motivated in terms of public service, and are not necessarily motivated by the company's profit in the hope of benefiting themselves.

Proposed new sub-paragraph (xi) is probably gilding the lily in requiring the provision of annual reports, as that is already a legal requirement. Proposed new sub-paragraph (xii) raises a concern about the initial start-up phase. A number of companies will have no track record. In previous answers, the Government made it clear that borrowing would be restricted by commission only. As the new companies will not go through the discipline of presentations to bankers when seeking to borrow money, interim audited reports should be provided in the initial financial period. That is why I seek to put that protection in place. I hope that the Government will find that an attractive way of imposing early controls on the companies.

We have touched on the winding up of companies. While the Government are learning lessons from the Railtrack administration debacle, directors risk not knowing their duties in cases where there is a potential funding shortfall and a necessity to wind up the company, but where service provision must be continued so as not to prejudice children's education. We have already dealt with the provision of guarantees for the discharge of liabilities.

The most important issue is contained in proposed new sub-paragraph (xv). I urge the Minister to look carefully at it, because it goes to the heart of the matter. Reference to Railtrack might seem provocative, but it is a live example of a company being forced into administration by an entity outside the board. What duties did Railtrack directors have to enable someone from outside the board to affect the company's activities? The amendment would show that companies operating under the Bill might well affect the continued provision of education, and the quality required and expected. If the directors do not have some form of duty in addition to that expected of them under current law, children's education could be prejudiced.

Clumsy as that provision is, it is intended to convey an important point, which I hope the Government will consider carefully. Amendment No. 61 is grouped with amendment No. 62, which seeks to require the Secretary of State to

''intervene to place upon a company a scheme of arrangement or to order divestment of assets with due fair market value compensation''.

I hope that the Minister recognises that there are lessons to be learned from the Railtrack experience. This is not a substitute for refusing to admit that there has been a dogmatic discussion about nationalisation or privatisation of these services. Where corporate identity exists and someone causes an event to take place which forces a company either into administration or to face potential winding-up, assets and obligations are owed to a number of what would be described in these politically correct times as stakeholders, be they customers, suppliers or shareholders.

It cannot be said that shareholders are evil, because the Government will look for shareholders to create the companies in the first place. They should not say, ''Thanks, we'll have your money now, but when things get tough and go wrong, you're the first we're going to drop''. That will be the case unless amendment No. 62 is put in place to recognise that shareholders take a risk. They do not expect to be taking such a risk if the Government are to sponsor and encourage the acceptance of a corporate feel to the marketplace, allowing them to release money for public services, as we all wish to see.

The Government must take responsibility when they choose to affect the future of corporate entities. They must not fail to pay fair compensation to the shareholders on whose money they relied to get the scheme off the ground in the first place. Amendment No. 26 makes a serious point: if the Government do not accept it, a powerful disincentive may be created and the mechanism will fail to deliver the benefits that we all want.

Stephen Timms (Labour, East Ham)

Our approach is that, subject to basic safeguards, companies should be as free as possible to manage themselves. Companies should have the flexibility to decide the most suitable management arrangements for themselves. School companies will have the protection of the Companies Act 1985 and be fully consulted on the framework put in place by the clause 7 regulations.

The additional restrictions in the amendment are unnecessary. The amendment would require companies to complete processes of due diligence and due process, the nature of which has not been specified. We propose to regulate at a sufficiently detailed level to make such a provision bite. Companies would be required to ensure an absence of conflict of interest, but that is standard practice for company directors under company legislation. It is not clear why we should want to go further here than elsewhere. The general drift of the hon. Gentleman's remarks has been an expression of concern about placing unduly onerous restrictions on companies: the restrictions in the amendment are unnecessary.

Stephen O'Brien (Conservative, Eddisbury)

I shall try to highlight without referring to the particular case. Potential directors and members of the company could be current LEA members-they might have retired from the LEA to join the company. It is quite possible to envisage that. Let us suppose that a foreign-owned company applies to place an incinerator in a local community, and that officers and councillors are involved in the decision. If they step down as councillors, they could become directors of the incineration company. That sort of conflict of interest does not arise under current best practice. Potential political conflicts of interests do not usually arise in corporate life. The Bill should specify that such conflicts of interest should be examined.

Stephen Timms (Labour, East Ham)

I am not clear exactly how that example applies. Schools will not join companies to establish incinerators. The existing framework of company law covers the hon. Gentleman's concerns. I am resistant to placing in the Bill further layers of restriction that are unnecessary elsewhere. The satisfactory taking of references is another aspect of standard practice.

Amendment No. 61 would add a great deal to the regulations. We intend to consult fully on those regulations. Interested parties will have an opportunity to say what should be included. If it is felt that particular points in the list should be reflected in the regulations, there will be an opportunity to argue that case. Company law prescribes the responsibilities of directors. Directors appointed to represent schools, LEAs and the Secretary of State will have a legal duty to promote the good management of the company as well as a responsibility to their own public body. It is not necessary for the Secretary of State to have further powers to intervene in the running of individual companies. The company's memorandum and articles will specify the rights of shareholders to receive information and make decisions.

In moving the amendment, the hon. Gentleman noted that several of the points are already in the Companies Act, most obviously proposed new sub-paragraph (xi), which says simply that companies should comply with the Companies Act 1985. However, companies will have to comply with all the requirements of that Act anyway, and there is no value in picking out a list of points and reminding everyone that the companies will have to comply with them. The point about an asset register is covered by that, as are several other points.

The Committee will agree that governing bodies will make sensible decisions about the operation of companies in the framework of protection that I described. It would undermine the Bill's intention to impose unnecessary red tape or unnecessarily lengthy regulations. I should comment on proposed new sub-paragraph (xv), on which the hon. Gentleman spent some time, and amendment No. 61, which is related. He made a fair point about the LEA needing to be aware of problems down the line or potential financial difficulties. That is already covered by subsection 11(5)(d), which provides that where an LEA is

''for the time being so designated the company shall provide prescribed information relating to its financial affairs''.

He makes a fair point about the LEA needing to be aware of that information, but it is already covered in the Bill. I hope that the Committee agrees that the amendments would not strengthen the Bill, but weaken it.

Stephen O'Brien (Conservative, Eddisbury)

The speed of the drafting has meant that the amendment is not perfect. Given its length, it was unlikely to be. I shall not press it to a Division because that would be inappropriate, but the points have been made. It is important to ensure that the regulations are detailed and available at the earliest possible opportunity. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Graham Brady (Conservative, Altrincham and Sale West)

I beg to move amendment No. 19, in page 8, line 5, at end insert-

'(d) meet the requirements of education legislation'.

I am sure that the Committee is grateful to my hon. Friend, and I can reflect only that, had that weight of expertise from the corporate and legal world been brought to the assistance of the taxpayer in the normal commercial environment, it would have cost a considerable amount of money. It is just one example of how the public receives such a great service from Members of this House.

In moving amendment No. 19, I am conscious of the time and the fact that, due to the repressive, restrictive timetabling under which we are operating, we are unlikely to complete consideration of all clauses. [Interruption.] Someone on the Labour Benches said that we agreed to it. If the Government are prepared to suspend their majority on the Committee before we move into the next sitting of the Programming Sub-Committee, we may put that to the test. Regrettably, we are operating under an arbitrary timetable, and some important aspects of the Bill might get no consideration whatever.

I am keen to give a brief airing to an important concern that relates to clauses 10, 11 and 12, but is summed up in amendment No. 19. In our examination of aspects of clause 11 so far, the Minister has confirmed by implication that, because some people who form or become involved in companies may not have a profit motive, others may have that motive. In essence, the Government want to establish a framework for what could be characterised as a purchaser-provider split in educational services that sees the creation of companies, whether by a school's governing body or the Secretary of State, to provide services or to purchase goods or services. As the Minister confirmed, the governing body remains responsible for the provision of education but, in the Bill's terms, the governing body may not be directly responsible for providing that education.

We have here the bones of a dramatically radical change in the way in which education policy may be delivered in this country. I make no criticism of that and we may be on the verge of providing for an extremely exciting new environment that provides scope for new ideas for the benefit of education. We are, however, contemplating a very dramatic shift, the measure of which is, as the Minister said, that the motivation of those engaged at the public's expense in the provision of educational services may be to make a profit. I have no philosophical difficulty with that, and if the end result is an improved provision of services, that is to be welcomed.

What amendment No. 19 seeks to do, however, is constrain the environment within which a commercial operator may practise by seeking to ensure that these clauses do not also become a means of avoiding normal responsibilities under education legislation.

Earlier in our proceedings, the Government sought to provide for removing controls from schools to allow exemption from education legislation and the requirements thereof in certain circumstances. Yet here, particularly in clauses 10 and 11 but also in clause 12, what the Government seek to do is provide a framework within which any educational provision could be made by a corporate entity and not be subject to education legislation.

In many ways, that exemption goes far wider than those that have previously been discussed. For obvious reasons, I shall not speak to amendment No. 18, but the same theme applies to it as to amendment No. 19: that the principal purpose of those entities must be educational, not purely corporate and commercial.

We seek to establish that a company set up by a school at public expense to provide an educational service must observe education legislation requirements. Where a company operates within a school, the use of facilities for corporate purposes should not be allowed to impinge on the normal expectation of educational activity.

Amendments No. 18 and 19 are absolutely central to the Bill. I have not been able to spend sufficient time on this matter to do it justice, and the Minister, in two minutes, will not be able to give an adequate response, but I am anxious to allow him what time there is to reply.

Stephen Timms (Labour, East Ham)

Education legislation does not apply directly to companies; it applies to schools, LEAs, colleges and pupils. The amendment would have little, if any, practical effect.

The misunderstanding may go back to our earlier exchange. Governing bodies will retain their existing duties under education law. Nothing in the Bill sets those aside. Where a company carries out services under contract on behalf of an LEA, the contract will need to impose the same duties and standards on the company as apply to the LEA, ensuring that the LEA fulfils its legal obligations under existing education legislation.

Other types of company-companies purchasing goods and services, and PFI companies-carry out commercial functions related to education, rather than directly providing education. In those types of commercial arrangements, education legislation is not relevant and normal company contract and employment law will regulate the companies' activities. Nothing further is needed. It is meaningless to seek to make those companies subject to education legislation.

The concern that the hon. Gentleman has expressed is already fully met by existing provisions, including the fact that governing bodies will retain their current duties under the law.

Graham Brady (Conservative, Altrincham and Sale West)

I am not satisfied by the Minister's statement that the governing body will retain its existing obligation. The company will not-

It being One o'clock, The Chairman proceeded, pursuant to Sessional Order D and the Order of the Committee [11 and 13 December], to put forthwith the Question already proposed from the Chair.

Question put, That the amendment be made:-

The Committee divided: Ayes 5, Noes 12.

Part I]

Education Bill

Stephen Timms (Labour, East Ham)

I beg to move,

That the Order of the Committee [11th December] relating to programming as amended by the Order of the Committee [13th December] be amended as follows—

in paragraph (1) ''Thursdays at five minutes to Ten o'clock'' is omitted and ''Thursdays at half-past Nine o'clock'' is inserted; in paragraph (4) after ''time'' there is inserted ''or times''; in sub-paragraph (5) ''on any earlier sitting'' is omitted and ''at any earlier time'' is inserted; in the Table the entries for the 6th to 16th sittings are omitted and the following words inserted:

6th(afternoon)Clauses 13 to 177 p.m. 6th(evening)Clause 18, Schedule 1, Clauses 19 to 249.55 p.m. 7thClauses 25 to 35, Schedule 2, Clauses 36 to 38, Schedule 31 p.m. 8thClauses 39 to 437 p.m. 9thClauses 44 to 48, Schedule 4, Clause 49, Clause 50 11.25 a.m. 10thClauses 51 to 53, Schedule 5, Clauses 54 to 56, Schedule 6, Clauses 57 to 615 p.m. 11thClauses 62 to 65, Schedule 7, Clause 66, Clause 67, Schedule 8, Clause 68, Schedule 9, Clauses 69 to 71, Schedule 101 p.m. 12thClause 72, Clause 93, Clause 73, Clause 94, Clauses 74 to 76, Clauses 95 to 97, Clause 77, Clause 79, Clause 98, Clause 100, Clause 85, Clause 106, Clause 78, Clause 99, Clause 80, Clause 101, Clause 81, Clause 82, Clause 102, Clause 103, Clause 83, Clause 84, Clause 104, Clause 105, Clauses 86 to 91, Clauses 107 to 112, Clause 92, Clause 113, Clause 1147 p.m. 13thClauses 115 to 126, Schedule 12, Clauses 127 to 131 11.25 a.m. 14thClauses 132 to 144, Schedule 135 p.m. 15thClauses 145 to 148, Schedule 14, Clauses 149 to 151, Schedule 15, Clause 1521 p.m. 16th Clauses 153 to 1707 p.m.

I welcome you to the Chair this afternoon, Mr. Griffiths. The resolution of the Programming Sub-Committee, which met after our deliberations this morning, has been circulated. It proposes that we reach clause 17 by 7 pm and clause 24 by 9.55 pm and then makes further changes to reflect that proposal. We have responded to the concern that has been expressed repeatedly that more time is needed for the early part of the Bill. I urge the Committee to support the motion.

Mr. Graham BradyÌ (Altrincham and Sale, West): I beg to move, as an amendment to the motion, after ''Clauses 13 to 17'' leave out ''7 p.m.''.

I do not propose to detain the Committee for long but merely wish to put on the record that, although the Opposition hope that we can complete our discussion up to clause 24 by 9.55 this evening, we believe that the inclusion of a guillotine at clause 17 at 7 o'clock is a needless and unhelpful constraint on the flexibility of our discussion. We support the rest of the motion.

Stephen Timms (Labour, East Ham)

At the hon. Gentleman's instigation we discussed that point at the meeting of the Programming Sub-Committee this morning. There are many amendments to clauses 18 to 24—significantly more than to clauses 13 to 17. I hope that the Committee will agree to leave in the 7 o'clock guillotine to ensure that, as well as having ample discussion on clauses 13 to 17, we have the opportunity to pay adequate attention to clauses 18 to 24. The 7 o'clock guillotine allows an adequate balance of discussion between those two important parts of the Bill.

Chris Grayling (Conservative, Epsom and Ewell)

The Opposition are expressing concern about the guillotine because we believe that a sophisticated and substantial piece of legislation is being rushed through Committee far too quickly. We fear that artificial guillotines will prevent discussion of important measures such as clause 12(1)(b), for example, which permits the Government to invest in companies without Parliament's sanction. It is extraordinary that that clause has not been discussed by the Committee.

Stephen Timms (Labour, East Ham)

The 7 o'clock guillotine allows us to pay adequate attention to clause 18. If we take it out, we might have lengthy discussions about earlier and less important matters and thereby neglect clause 18. We are anxious that members of the Committee should have adequate time to debate it. My proposal will have the opposite effect to what the hon. Gentleman fears.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

On a point of order, Mr. Griffiths. If the Committee reaches clause 17 early, may we go on to clause 18 or must we stop at that point?

Win Griffiths (Labour, Bridgend)

We may carry on to clause 18.

John Heppell (Labour, Nottingham East)

I did not intend to say anything at this stage because hon. Members want to get on with discussing the Bill. However, it is worth putting on the record that under the original programme motion we were due to finish

clause 17 after the third sitting. We did not achieve that despite the fact that we effectively added two extra sittings. We offered extra time on another evening, which the Opposition did not take up. Our intention was to finish clause 43 by 10 pm today. We have pushed that back to clause 24. We have made enormous concessions to the Opposition to try to ensure that they have adequate time.

The Opposition have a responsibility in Committee to allocate their time to the things that they think require most discussion. At the Programming Sub-Committee, the Opposition Front Bench spokesman pointed out that the two important clauses were clause 13 and 18. By heaven and knife at 7 pm we will ensure, not only that we have time for adequate discussion of clause 13, but that we will start our evening sitting with clause 18. There are 32 amendments to be dealt with after 7 pm and only 16 before then. We would end up with a problem similar to what we have had in the past if we agreed to the proposed amendment.

Graham Brady (Conservative, Altrincham and Sale West)

I am bemused to hear the Government Whip defend what the Government are trying to do by saying that it is the Opposition's responsibility to manage their time effectively in Committee. That is precisely what I propose. He is seeking to restrict our freedom to exercise responsible judgment as to when we debate which clauses. He is trying to insert a knife into the proceedings to prevent us from exercising our responsibility in that way. The Minister is anxious that we have adequate time to debate clause 18, schedule 1 and clauses 19 to 24. I am happy to make a magnanimous gesture. If he wishes to extend the timetable for consideration of that on to our seventh sitting, the Opposition will accede to that. In the meantime, I am firmly of the view that we should not have the guillotine at 7 o'clock this evening.

Stephen O'Brien (Conservative, Eddisbury)

The Government Whip has said that the Opposition have a responsibility to ensure that the Government are held accountable for their proposed legislation. While we discuss the programme motion, it is worth placing on the record that nothing could go further to divide us and ensure a less constructive approach. Opposition Members have tried to examine in detail those areas where there is either a need for clarity and exposition or at least some probing discussion. It is tendentious for the Government Whip to suggest that we have not carried out our responsibilities.

The Committee should heed my hon. Friend the Member for Altrincham and Sale, West (Mr. Brady) who made a perfectly fair and valid point that the knife falling at 7 pm carries more risk of us not reaching the clauses that need to be discussed. If it is of any assistance to the Committee, the Opposition remain open to suggestions about not considering the Bill in the order that is on the timetable. There are a number of clauses to which amendments are not so profuse, and, while there may be some problems, most hon.

Members would be prepared to skip a couple of clauses to ensure that we reached the necessary parts. We could return to other less contentious clauses later.

Question put, That the amendment be made:—

The Committee divided: Ayes 6, Noes 10.

Win Griffiths (Labour, Bridgend)

I remind the Committee that the revised list of amendments, showing the new programme motion, is available in the Committee Room.Clause 13 Power of Secretary of State and National Assembly for Wales to give financial assistance for purposes related to education or childcare

Clause 13 - Power of Secretary of State and National Assembly for Wales to give financial assistance for purposes related to education or childcare

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

I beg to move amendment No. 211, in page 9, line 10, at beginning insert

'Subject to section (1A) below'.

Win Griffiths (Labour, Bridgend)

With this it will be convenient to discuss the following amendments: No. 139, in page 9, line 11, leave out

'give, or make arrangements for the giving of, financial',

and insert

'by order make a scheme or schemes for the provision of financial'.

No. 170, in page 9, line 13, at end insert—

'(1A) Any arrangement under this section which applies in England will be subject to approval by order under the affirmative resolution procedure.'.

No. 212, in page 9, line 13, at end insert—

'(1A) Before exercising any power under subsection (1) above, the Secretary of State as regards England shall issue a statement setting out the proposed financial assistance, and lay a copy before each House of Parliament.

(1B) If, within a 40-day period, either House resolves not to approve the proposed financial assistance, the Secretary of State shall take no further steps in relation to the proposed financial assistance.

(1C) If no such resolution is made within the 40-day period, the Secretary of State may make arrangements for giving the proposed financial assistance.'.

No. 140, in page 9, line 29, at end insert—

'(j) A scheme made under subsection (1) shall set out criteria for eligibility to apply for financial assistance, the means by which applications shall be made, and the criteria against which allocations of assistance will be made.'.

No. 174, in clause 15, page 10, line 15, leave out from 'as' to end of line 17 and insert

'shall be specified in an order under section 13(1)'.

No. 237, in clause 13, page 9, line 21, at end insert

'subject to such financial controls as may be approved by affirmative resolution.'.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

I apologise to the Committee for not being here this morning.

Amendments Nos. 211 and 212 should be considered together, because 211 is consequential on 212. Once we start to examine the clauses in part 2, we see that, like many other clauses, they are extremely significant. I must congratulate the Government on the way in which the Bill has been presented. They have hidden many things that we cannot understand until we start to get under the skin of the Bill.

There is a seduction about the title of part 2, which is ''Financial assistance for education and childcare''. The clauses were sold on the need for more imaginative funding arrangements for childcare and its providers, which the Liberal Democrats accept and support. Our amendments try to curtail the powers of the Secretary of State. If we take the clause literally, it says that the Secretary of State can, by sleight of hand, switch some £23 billion or £24 billion that is currently spent by the Department for Transport, Local Government and the Regions to the Department for Education and Skills. That is the reality of the powers provided by the clause. Although clause 17 contains some provisions for giving up powers, including specific examples, clause 13 gives the Secretary of State the power to fund education from her office.

It may be that that is the Government's intention and that, with the reform of local government funding, it wants to ring-fence education funding and send it directly from Sanctuary house. If that is the case, it is a legitimate objective for which they can argue their case. To be fair to the Government—I always try to be fair—it was the Conservatives' policy at the previous election to fund education directly from the centre, with local authorities having no responsibility. The free schools proposal would have done exactly that, and the Conservatives may want to support these proposals.

From 1958 onwards when the revenue support grant was introduced, an important principle was established. Through various Departments, which have now become the Department for Transport, Local Government and the Regions, the Government have distributed a block grant, so that local authorities can mix and match funding raised locally with that of the grant to provide services, including education. That has worked reasonably well; even after the reforms of 1974 and the introduction of standard spending assessments, that has not been attacked other than by the charge capping of the previous Government and the increased ring fencing of the present one.

The clause gives powers to the Secretary of State, who does not have to be accountable for the way in which he or she distributes the grant. The amendment would allow the Secretary of State those greater powers, but he or she would be accountable for the

way in which the grant was distributed. The amendment would establish a process, through an affirmative resolution of both Houses, whereby the Secretary of State was held to account for the large sums of money distributed. If my Machiavellian thoughts on the clause are wrong, the Minister will accept these simple amendments in the spirit in which they are offered, and I will go home a happy man.

Andrew Turner (Conservative, Isle of Wight)

Amendments Nos. 139 and 140 have the same broad objective as that of the hon. Member for Harrogate and Knaresborough (Mr. Willis), but instead of requiring post hoc approval, they require more notice from the Secretary of State in advance of the terms under which he will offer assistance.

One of the great difficulties that people have in dealing with Departments is that they feel that they are operating in a fog of uncertainty. That fog is not lifted by some elements of the Bill. Indeed, this clause is one of the foggiest of all, because it is so broadly drawn. The Secretary of State should set out by order what the schemes are, so that they could be considered in more detail. Any scheme should set out criteria: how financial assistance is applied for, the means by which applications can be made and the criteria against which allocations of assistance will be made. I accept that that reduces the Secretary of State's discretion, but it also reduces his capacity to behave arbitrarily. It requires him to be clear about his objectives and to set out testable criteria for judging whether they have been achieved. That is a matter of good management. It certainly would be in the private sector, and I see no reason why it should not be a matter of good governance in the public sector.

The amendments would not put the Secretary of State in a straitjacket. They are designed to assist those seeking support from the Secretary of State, and to ensure that he does not devise a scheme so carefully that it will only suit one applicant. If the criteria for a scheme must be set out in advance, the Secretary of State can entertain any number of applicants who come forward on a fair, free and equal basis, rather than dream up a scheme and hand over money to the applicant for whom the scheme may have been dreamt up in the first place.

Graham Brady (Conservative, Altrincham and Sale West)

I am pleased to comment briefly on the first group of amendments under clause 13, particularly amendments Nos. 170 and 174. I think that my hon. Friend the Member for Isle of Wight (Mr. Turner) was driving in the same direction with his amendment.

The import of all the amendments is to try to give back to Parliament an element of control over the process and over the enormous freedom that Ministers seek to disburse public funds for educational purposes. With amendment No. 170, we seek to make that subject to affirmative resolution. Amendment No. 174 states that such expenditure

''shall be specified in an order under section 13(1)''.

Similarly, amendment No. 139 suggests that that should be done by order.

It is clear that all hon. Members who have spoken, including the hon. Member for Harrogate and Knaresborough, are deeply concerned about the degree of latitude that Ministers seek under the clause. They have the ability to expend public money in virtually any way connected in whatever tangential manner with education not only in the United Kingdom, but wherever in the world they wish. The proposal is dramatic, effectively removing the ability of the House of Commons to keep any control over the Government's expenditure on education matters. They can do almost anything. We shall discuss those matters in greater detail when we deal with later amendments, but it is clear that a future Secretary of State, of whatever party, may use the clause to drive education policy in a very different direction from that to which we have been used in the past.

For that reason, the Minister must first give some detail about how the Government envisage that money being spent using powers taken under the clause. Secondly, I urge him strongly to consider ways in which Parliament can be given a say and some control over the proposals. Looking to the future and a Conservative Secretary of State for Education and Skills, I might welcome the purposes to which the clause may be put; the Minister might not. I hope that we agree that in the event of a Secretary of State's seeking to use these wide powers to spend public money in whatever way, the House should be able to scrutinise what is being done and should have some right to approve whatever policy is being undertaken.

The Minister is listening intently. I hope that I am striking a chord and that, rather than all power to spend public funds in this respect being taken as a matter of discretion, he will agree, on reflection, that there is a way to bring proper democratic control and accountability to clause 13.

Stephen O'Brien (Conservative, Eddisbury)

On a point of order, Mr. Griffiths. May we have some guidance? A feature of the Bill—I do not understand how this came about—is that rafts of it were printed using italics rather than the normal typeface. We would have tested that if we had had a chance to discuss clause 12, but it is clearly germane to clause 13. There was an instruction on the manuscript copy of amendment No. 17, which relates to clause 12, to leave out the italics. That has been translated on the Order Paper as ''leave out subsection (1)(b)'', as though the whole subsection was intended to be left out. That was not the Opposition's intention, and it will pertain to later amendments.

The purpose of the amendment was to probe whether the italicised typeface means anything. If it does not, were the Government in such a rush to publish the Bill that they could not get the typing correct? If I can use this point of order, that may explain the earlier sotto voce and rather cheap comment from a Government Member that suggested that Opposition Members had not talked to each other properly. I respect the independence of Back Benchers in scrutinising legislation, but the speed with which amendments have to be tabled so that they are in order

meant that it was not possible to have a full series of meetings that might have helped to avoid the problem that I have just cited. I would appreciate your guidance, Mr. Griffiths.

Win Griffiths (Labour, Bridgend)

Italics are printed in the Bill where there are expenditure implications, not because someone has made a mistake or has a fancy to do something different. So the hon. Gentleman's amendment to leave out the subsection in italics—

Stephen O'Brien (Conservative, Eddisbury)

To remove the italics.

Win Griffiths (Labour, Bridgend)

Yes. That amendment is not in order. I hope that that puts the hon. Gentleman's mind at rest.

Stephen O'Brien (Conservative, Eddisbury)

That is an interesting point. I had not come across the use of italics to signify an expenditure commitment. Is that common practice?

Win Griffiths (Labour, Bridgend)

Apparently it is.

Andrew Turner (Conservative, Isle of Wight)

Further to that point of order, Mr. Griffiths. I am concerned that we have not dealt with clause 12(1)(b), which is in italics and cannot now be scrutinised in the other place. If I had known that we were to be the only Members to scrutinise clause 12(1)(b), I might have paid it more attention when we debated the programming motion on Thursday. Can you make any arrangement, Mr. Griffiths, to ensure that we properly scrutinise at least those aspects of the Bill that cannot be scrutinised in another place?

Win Griffiths (Labour, Bridgend)

At this stage, the knife is well and truly buried in my back and I cannot take the discussion back to clause 12 when we should be discussing clause 13. The House of Lords can examine the clause, although it cannot amend it, and it can raise issues that can be considered when the clause comes back to the House of Commons. So that does not mean that the clause has been lost and forgotten. Now that the revelation about the italics has been made, hon. Members can return to the Committee next year in an even better state that they are in now.

Eleanor Laing (Conservative, Epping Forest)

Further to that point of order, Mr. Griffiths. I am grateful for the explanation about the italics. I do not speak for my hon. Friends who know about things, but I am never too proud to admit ignorance. I had no idea until you explained to us a few moments ago, Mr. Griffiths, that italics in a Bill are used where there are expenditure implications. That is very important. Can you tell me, Mr. Griffiths, if I should have known that or found that out somewhere, as a Member of Parliament, before your explanation a few moments ago, which arose only as a result of a point of order, because my hon. Friend the Member for Eddisbury (Mr. O'Brien) and I were concerned about not having considered clause 12 at all?

Win Griffiths (Labour, Bridgend)

I am not aware of a particular place where one can look that up. I can only reassure the hon. Lady that it has been the practice in the House of Commons for many years. I do not know whether a special adviser suggested that that might be a good

way of doing things. At least we all know now what the italics mean. I correct myself on one point: the House of Lords can make amendments to the words in italics, even though there are expenditure implications. You can rest assured that the clause will not go unexamined or even unamended in the Lords.

Stephen O'Brien (Conservative, Eddisbury)

I am grateful.

Stephen Timms (Labour, East Ham)

I respond first to the concern raised by the hon. Member for Harrogate and Knaresborough. In introducing this consolidated power to provide financial assistance there is no intention of moving away from the current situation where the great bulk of support for schools and LEAs—the £22 billion to which he referred—is directed through the local government finance system. That arrangement will remain in place. The White Paper on local government published last week confirmed, as the hon. Gentleman already knew, that we plan to reform the system from April 2003. We shall not remove education funding from the local government system as part of that review. We are engaging in discussion with local government to agree the right formula for the future distribution of education funding.

As a result of the local government finance review we hope to be able to fund more education through general funding for local authorities and less through grants paid under the proposed new power, reflecting our commitment to reduce the level of ring fencing, which, as the hon. Gentleman is aware, is a current concern in local government.

The new power allows us to provide the support already in the pipeline which Parliament has voted for the Department for Education and Skills, but in a less burdensome way by streamlining administrative procedures and removing some restrictions on the use of funds by schools and LEAs. We have already simplified the standards fund as far as possible under current legislation. This clause will allow further simplification and additional flexibility for schools.

The matter has already been raised during our deliberations, but most Members of the Committee will have heard from schools that obtaining funding through the standards fund is a particularly onerous process, with a great deal of associated bureaucracy. We have made some simplifications, and this change will help further. The overall cumulative effect will be a significant work load reduction for schools and LEAs. That has been a theme of our discussion; we need to be sensitive to work load implications. This clause is especially good news in that respect. The ensuing work load reductions will be particularly welcomed.

Other financial aspects of the Bill, in particular the reserve power over local authorities' education projects and the introduction of schools forums, are not under discussion today and are not affected by this clause. We will deal with issues arising from those proposals later. The purpose here is to provide a single, simple power to provide financial support across the full range of education and childcare.

Chris Grayling (Conservative, Epsom and Ewell)

Does the clause permit the Government to overhaul the arrangements for student finance without bringing new funds to the House of Commons?

Stephen Timms (Labour, East Ham)

No, it does not. I can reassure the hon. Gentleman. The intention is to reduce bureaucracy and unnecessary administration, particularly for schools. Let me give examples of the difficulties that arise under the current arrangement, where we have to use many different powers to provide financial assistance, all hedged about and qualified in rather different ways, each with its own restrictions and obligations. We have had to set up a new funding stream through which to pay teachers' threshold pay grant rather than use the existing standards fund mechanisms. That process has added to schools' work load; it is a different administrative procedure. We have had to limit the scope of virement in the standards department rather than give schools freedom to vire the money for any use within the school that best raises standards. That means that despite the improvements we have made the use of the money is still somewhat restricted; schools still need to operate some otherwise unnecessary accounting procedures for the standards fund.

A good example of problems with the current system is that we were unable to use education funding powers to support the threshold pay cost of teachers employed by local authorities working in care homes. The reason is that they were employed by social services departments rather than education departments and, therefore, the powers available to us did not extend to paying their extra salary costs.

Obviously we have no desire to treat such teachers differently from those working in schools. It is hard to think of any reason why they should be treated differently for salary purposes, but we were forced to set up an entirely separate payment mechanism for them because of the limitations in the existing legislation. I think that, on reflection, the Committee will accept that it should not be like that. There is no reason for those teachers, in comparison with any others, to be disadvantaged because of historical accidents and arbitrary distinctions made in a series of regulations over the years.

By amalgamating all the existing powers into a single new power with no unnecessary obligations written into the legislation we will be able to remove difficulties of the kind described, saving schools and LEAs considerable time, both in accounting for funds and also in understanding the funding system. Members will have repeatedly heard concerns about the complexity of all the different regulations through which funding is provided. I accept that this is a significant change, but it will allow us to remove a great deal of that complexity.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

I am genuinely encouraged by what the Minister says. Before he finishes his remarks will he say how Parliament will scrutinise the new powers that the Secretary of State is taking, answering the point made

by the hon. Member for Isle of Wight, particularly whether there would be any regulations that the Secretary of State would have to observe?

Stephen Timms (Labour, East Ham)

I shall come to that point shortly.

The power needs to cover many different payments and grants. From the substantial sums paid to LEAs through the standards fund or the grant in aid that supports, for example, the National College for School Leadership, right down to one off, individual payments to a private company, a school or perhaps to a company to provide a particular service such as a training programme. So there is a wide range of types of payment that the power needs to cover.

Under the Bill—I believe this covers the point just raised by the hon. Member for Harrogate and Knaresborough—Parliament will agree the broad framework under which grants and other financial assistance will be provided. Further, Parliament will, of course, continue to control the support provided under this power through the normal process of voting the funds. That is rightly a matter of parliamentary interest. However, that the detailed terms and conditions under which grants and other financial support are made are fundamentally administrative matters. They do not merit the detailed scrutiny that would be provided if they were set out in secondary legislation as has tended to be the case in the past.

This is a significantly deregulatory proposal. In bringing in this new power, members will see from clause 17 that we propose the repeal of 13 individual powers in all. Of these 13 powers, 11 currently demand their own set of regulations to bring them into effect, none of which would be required in the future.

Graham Brady (Conservative, Altrincham and Sale West)

The Minister has just said that, under the Bill, Parliament would retain control over the way in which grants and other expenditure may be made. I may be failing to detect the relevant passage in clauses 13 to 17, but I cannot see any such requirement or reference, perhaps he would be good enough to point out the phrase in question.

Stephen Timms (Labour, East Ham)

The clause that we are addressing sets out the purposes for which the payments can be made, that is what I mean by the broad framework under which grants and other financial assistance will be provided. That is subsection (2) setting out the purposes

Mr. Brady rose—

Stephen Timms (Labour, East Ham)

Let me just carry on for a moment. Beyond that, Parliament will continue to control the support provided under this power through the usual process of voting the funds. Regulations would not add anything to the scrutiny of the amounts involved. Currently, the standards fund comprises about £3.6 billion, and the regulations do not mention the amounts attached to the powers. Although I understand the hon. Gentleman's concern, he should be more relaxed about it. If he allows me to continue,

I may be able to reassure him further. We can dispense with 11 sets of regulations with a significant beneficial impact for schools.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

A few sentences ago, the Minister said that the procedure is fundamentally administrative. I posit a scenario based on what he said last Thursday. If a local education authority placed its schools in the hands of a single company, which it could do under existing legislation, and the Secretary of State gave the company a grant under clause 12, there would be no need for any parliamentary scrutiny. All that would be scrutinised is the amount of money and the annual estimates. Does the Minister agree that that is serious?

Stephen Timms (Labour, East Ham)

As the hon. Gentleman explained, he was not able to be with us this morning. We debated companies and schools, which caused some confusion, and I emphasised that we do not envisage companies taking over schools. Governing bodies will continue to have responsibility for managing schools. They will be able to call on companies to help them in that role. I hope that that reassures the hon. Gentleman.

Under existing powers, Parliament cannot fully scrutinise the payment of a sum to a party. Once that power is in place, it can be used for ever and a day to make those payments. The situation that applies at the moment is not much different from that under the new arrangement. The provisions are not that different from those that apply elsewhere. In particular, we are following closely the example of section 2 of the Employment and Training Act 1973, which has operated successfully for nearly 30 years. That provides similar broad powers to support training programmes, and I know that my hon. Friends will be interested to know that that power made possible the establishment of the new deal. If a broad power had not been available, it would have been necessary to go through a whole procedure before the new deal was introduced. As Members know, we were able to establish the new deal quickly. I am not aware of problems that have arisen because of the availability of that power since 1973. Similarly, the powers under which the Higher Education Funding Council and the learning and skills councils are funded do not require secondary legislation either.

The proposals in the Bill are not without precedent. About 60 per cent. of all education funding in England flows through standard spending assessments into the local government finance system. About 25 per cent. of that funding is for higher education and the learning and skills councils, which is paid without the need for secondary legislation. The remaining 15 per cent. of the Department's budget goes on direct support for schools, pre-school education and child care—approximately £5.5 billion rather than the much larger sum mentioned by the hon. Member for Harrogate and Knaresborough. The change brings that sum into line with our support for education at the 16-plus level. The power thus puts a major strand of support for education on the same footing as that already agreed by Parliament elsewhere.

Relying on secondary legislation leads to complexity and delays in the Government's ability to provide financial support, especially when a precise need cannot be anticipated and existing regulations do not allow for a particular payment.

Graham Brady (Conservative, Altrincham and Sale West)

May I remind the Minister that at an earlier stage in our deliberations he said that it was precisely the Government's policy to shift from primary legislation to secondary legislation? Now he claims that even secondary legislation imposes too great a burden of scrutiny on the Government, and he wants to move from secondary legislation to a simple sweeping power for Ministers to do precisely as they please. Will he be consistent, work out what level of scrutiny is appropriate when public money is being spent, and not befuddle the Committee by suggesting that secondary legislation is adequate one day and an impediment to proper government the next?

Stephen Timms (Labour, East Ham)

The answer is that primary legislation is appropriate in some circumstances and secondary legislation in others. In the circumstances described here, I argue that arrangements under the Employment and Training Act 1973 are appropriate for the payments requisite under the clause. My argument—that we need significantly to deregulate in several sectors and that these powers will assist us to do so—is completely consistent.

Apart from the complexity—its removal will be welcome—delay is another concern. It would be an obvious consequence of the amendments proposed by the hon. Member for Harrogate and Knaresborough—particularly the 40-day period. Delays can make it difficult to respond to urgent requests for support, not because such support is outside the scope of primary legislation but because secondary legislation needs to be amended and agreed. We must be able to move quickly to provide support where it is needed. A further advantage of avoiding regulations will be the simplifying and streamlining of funding structures for schools and governors.

We are all aware of the concerns of governors—who are, after all, volunteers—about the complexity of the regulations through which they have to apply for funding for their schools. We will replace existing regulations with a simpler, more comprehensive system governing the funding that they receive under a single set of rules and procedures. That will further reduce the work loads of those managing our schools.

Andrew Turner (Conservative, Isle of Wight)

I was struck earlier by the idea, ''Physician, deregulate thyself'' when the Minister was applauding himself for deregulating. He says that the provisions are necessary because of the need to act urgently. Can he provide some examples of where the absence of these provisions from the statute book has caused real harm or injustice?

Stephen Timms (Labour, East Ham)

I gave a good example to the Committee earlier, and that was the delay in paying threshold payments to teachers working in care homes because they had to be employed in social service departments rather than local education authorities. There is no

justification for that delay: it was a consequence of the arcane, byzantine regulatory framework in which payments have to be made. I believe that the hon. Gentleman would accept that that is not how things should be.

There was a suggestion in his amendment that all payments should be subject to a published scheme. If a payment is made to a single body, which might not always be the case, for an amount agreed with that body, we should not be required to publish a scheme setting out who can and how to apply for funding. However, most payments would be made under a clear, published financial framework that sets out precisely who is eligible, how they can apply, how their funding will be determined and the conditions that apply to recipients.

Such frameworks already exist for the standards fund, school standards and teachers threshold pay grants, for example. We will continue to publish such information in the future, since it would be impossible to administer those grants without it, although some rationalisation may be possible. However, we should not stipulate in the Bill that schemes must be set out for all payments. In some circumstances, that would not be necessary.

I hope that the Committee agrees that the measure will improve the Department's ability to support education and child care efficiently while reducing the burdens on schools and LEAs, which have rightly been of concern to the Committee. Over a long period, we have developed a large, complex regulatory system. However, if one is determined to provide a payment to a particular institution, it is usually possible to find a regulation that allows it to be made, although it might involve a great deal of complexity. I believe that the Committee will recognise that greater simplicity, which will follow from clause 13, will be valuable not just to Government but to schools and LEAs.

Chris Grayling (Conservative, Epsom and Ewell)

The Minister should recognise that we are raising concerns about not only this clause but clauses throughout the legislation because, while the Minister makes right-sounding comments about his desire to deregulate and streamline, deregulation appears to be de facto giving the Secretary of State the power to do anything that he or she wants. One could replace the entire Bill with a single clause that gives the Secretary of State the power to do anything whatsoever in respect of education.

If we had seen evidence over the past five years that the Government are deregulatory—that their natural instinct is not to introduce additional hurdles—the Minister's reassurances might be more credible. Instead, endless streams of new regulations have made public servants' lives more difficult, not just in education but right across the public sector. The measure does not include clear signposts to remove hurdles but vaguely phrased and swingeingly powerful clauses that allow the Government to take decisions without reference to anyone else.

The nub of our concerns is that the legislation is vague. We are hearing plenty of reassurances from the Minister about guidelines that will be published and documents that will set out the Government's plans,

but there is nothing tangible to get to grips with. I would like to be certain that the Minister's comments symbolise a major change of direction for the Government and that in the next few years we will see a deregulatory rather than a regulatory Government, but I will believe it when I see it.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

This has been a useful debate. The record will show that the Minister has made a number of powerful comments about deregulation and simplifying the present bidding culture that has put huge burdens on to schools and LEAs. The trouble with bidding cultures is that not everyone wins. An enormous amount of time and energy is spent bidding for funds, first through the standards funds and then other grants.

I have a lot of sympathy with the hon. Member for Epsom and Ewell (Chris Grayling). Since 1997 the standards fund has increased from roughly £500 million to £3.7 billion. While latterly the number of categories has declined, a huge resource is kept to the Secretary of State. While the Minister made it clear that he does not envisage the Secretary of State taking on greater and greater resources from local government and will ensure that the opposite is the case, clause 13 gives the Secretary of State exactly the powers that I outlined earlier if she wants to use them.

The Committee has simply asked for a way in which that can be scrutinised. The Minister said that they will need to make instant decisions, but he could not give an example where a decision should be so instant that it could not be made within 40 days. If we are talking about giving small sums of money to individuals, the Secretary of State should not be involved. Those decisions should be taken as locally as possible. Why cannot some of those powers and resources be devolved either to local authorities or to the learning and skills councils? The Minister made appropriate reference to the powers that the learning and skills councils have to hand out large sums of money without a great deal of parliamentary scrutiny. Once they have their budgets, the money is handed over and there is no democratic scrutiny of those resources at all. The same is true in higher education although clearly the Bill does not refer to higher education.

I welcome any deregulatory effects of the clauses. Most schools and LEAs would welcome greater control over baseline budgets. They would like to see much of the £3.7 billion that is currently held in the standards fund distributed through the block grant so that schools could plan ahead and have control over their budgets rather than having to wait for the Secretary of State to hand out the next goody. This power can be used disproportionately before a general election. This is a wonderful opportunity for a Secretary of State to buy votes. The Lady Porters of this world—sorry, I should not mention her. I should wash my mouth out. [Hon. Members: ''It is sub judice.''] Nothing is sub judice in this Committee.

I shall not stray too far down this road, but generous settlements have often been made before general elections. The clause gives the Secretary of State

tremendous powers to do all sorts of things. It has been an interesting debate. We have had good assurances from the Minister, and we will hold him to them. It is rather sad that he does not feel that deregulating to the Secretary of State should not carry a greater level of scrutiny.

Graham Brady (Conservative, Altrincham and Sale West)

Unlike the hon. Member for Harrogate and Knaresborough I was not remotely persuaded by what the Minister had to say. I rather suspect that the Minister was not persuaded either. Quite remarkably, he suggested that there is not much difference between the powers set out in clause 13 and what has gone before on the ability to spend money, make grants and disburse public funds in different ways. There is a vast difference between what has gone before and what the Minister wants to do in clause 13. The Minister added that there was adequate opportunity for parliamentary scrutiny of the way in which funds might be spent. When I challenged him to point out where that provision was in the Bill, he was able to say only that the scrutiny is happening now.

Therefore, this sitting is the only opportunity for the House of Commons to scrutinise what any future Secretary of State may do under the clause in spending funds on the provision of any educational services, payment to any person engaged in their provision, payment for the provision of child care services or education anywhere in the world, providing for maintenance, the promotion of learning or research, and provisions relating to teacher training or the retention of teachers. It could be anything that is envisaged in the subsection (2), including

''the remuneration of, or provision of other benefits to, teachers or non teaching staff.''

Any payment can be made using the powers in clause 13, and the Minister thinks that an hour and a half or two hours—whatever we had this afternoon—is sufficient scrutiny for perpetuity.

The logic of the Minister's position is that the only worthwhile act of scrutiny that the House of Commons will ever perform will be the annual finance Bill. He says that we will have an opportunity to vote money or not. Yes, we can decide whether to vote money to the Secretary of State to run the Department and the maintained sector, but we cannot scrutinise in detail what is done with it in the ways that are set out in the clause. Parliament is not something that sits once a year anymore to approve blanket, unlimited powers for the Executive before going away to put its feet up. The logic of the Minister's remarks is to render pointless everything done by the House of Commons.

We have heard a great deal about Henry VIII clauses in the Bill; I am tempted to observe that this would be more of a Charles I clause. He seems not to believe that Parliament has any purpose in the scrutiny of legislation. If we allow the Minister to take such massive powers, which Parliament has not granted to the Executive in recent history, no Member of any party in the House of Commons will have the right to

express a view or preference about how the Government choose to disperse funds that are voted to it for educational purposes.

This has been a worthwhile debate. I would not press the amendments on the use of affirmative resolutions, but the Minister should understand that I am deeply unhappy about what the clause would do. It is wrong and something that Members on both sides of the House will come to regret in the future. I hope that he contemplates the scale of the powers that he is trying to take.

Stephen Timms (Labour, East Ham)

Let me say to the hon. Member for Epsom and Ewell that the Bill is unquestionably deregulatory. The clauses in part 2 are deregulatory, especially clause 17, which sets out the regulations elsewhere that are repealed. I welcome the initial points made by the hon. Member for Harrogate and Knaresborough. I draw his attention to clause 16, which allows the power to provide financial assistance to be delegated. That addresses one of his points.

To answer the points made by the hon. Member for Altrincham and Sale, West, it would be hard to argue that Parliament did not scrutinise the new deal; it undoubtedly did through Select Committees, debates on the Floor of the House and parliamentary questions. It would wrong to say that regulations to permit the establishment of the new deal were not considered by a Committee and to deduce from that omission that there was no parliamentary scrutiny, that the House of Commons did not know what was going on and that it was not given an opportunity for debate. The hon. Gentleman needs to consider the range of ways in which the House, rightly, undertakes parliamentary scrutiny. Those methods will continue to be available under the clause.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

The hon. Member for Altrincham and Sale, West may have given the wrong example, so perhaps the Minister will apply his mind to the threshold payments, which were introduced without debate in the House of Commons. It was not until after the National Union of Teachers had taken the Government to the High Court and won that we had an affirmative resolution. We prayed in aid against that and had a 10-minute debate around 11.30 one night. The issue was never brought back. If that is what the Minister means by parliamentary scrutiny, he has picked the wrong topic.

Stephen Timms (Labour, East Ham)

I gave the example of the new deal, which stands up well to that consideration. I am not sure what point the hon. Gentleman is making about teachers' threshold payments. I should have thought that hon. Members on both sides of the Committee would have thought it right that those extra salary payments should be made to teachers. Such an arrangement should not be taken before the courts, and I regret the fact that it was.

Graham Brady (Conservative, Altrincham and Sale West)

I fear that the Minister's example of the new deal was little better. I speak as a member of the Select Committee on Education and Employment in the last Parliament, which was intimately involved with scrutiny of that measure. The difference between

the scrutiny that the House has a duty to apply to legislation and the scrutiny that the Select Committee could apply to a scheme such as the new deal is that one enables a scheme to move forward, whereas the other is retrospective.

The Select Committee could not scrutinise the establishment of the new deal. We could consider it only in hindsight to establish the lessons of one and two years on. When the right hon. Member for Dulwich and West Norwood (Tessa Jowell), who was then a Minister responsible for employment, came before that Committee, she did not even know whether the cost of the new deal at that point was £750 million or £900 million. That is not adequate scrutiny; it is not a substitute for proper scrutiny during the legislative phase of a scheme's establishment.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Graham Brady (Conservative, Altrincham and Sale West)

I beg to move amendment No. 239, in page 9, line 12, after 'assistance' insert 'or other payment'.

Win Griffiths (Labour, Bridgend)

With this we may discuss the following: Amendment No. 153, in page 9, line 29, after 'staff.', insert—

'(2A) The Secretary of State (in relation to England) or the National Assembly for Wales (in relation to Wales) shall make a scheme to give an education credit to any person in the circumstances mentioned in section [Education Credits].'.

New clause 1—Education credits—

'(1) In this section and section 13 ''education credit'' means the entitlement to a sum of money of a person in circumstances mentioned in sub-section (2) and calculated in accordance with subsection (3) which may only be used at an independent school in consideration of the education of a child in respect of whom the credit is provided;

(2) Those circumstances are—

(a) that the person is the parent or guardian of a child of statutory school age;

(b) that the person has, in respect of the child, expressed and given reasons for a preference as to the school at which he wishes education to be provided for that child;

(c) that a local authority or governing body has not complied with such preference;

(d) that the child has been admitted to an independent school or will be admitted subject to the availability of an education credit; and

(e) that the child has not been educated in an independent school, other than when his parent or guardian is entitled to an education credit, for more than six months in the preceding three years.

(3) The education credit shall be calculated each year so far as reasonably practicable to reflect the amount by which the budget share of a school maintained by that local education authority would be adjusted were a child of that age to be admitted to that school;

(4) The local education authority shall make arrangements

(a) to publish information on the value of the education credit for children of each year of statutory school age;

(b) to pay to each independent school at which a child in receipt of an education credit is educated a sum equivalent to the value of that education credit not more than six months after the child has completed each term at the school.'.

Graham Brady (Conservative, Altrincham and Sale West)

Amendment No. 239 is a probing amendment. My hon. Friends and I seek to include after the term ''assistance'' the phrase ''or other payment'' to draw out from the Minister the true scope of clause 13, whether it be funded by income tax and other legitimate Government revenues or by ship money, following an analysis that I proposed earlier.

The scope of the clause is such that financial assistance can amount to virtually any type of payment. That is confirmed in clause 14(1), which states:

''financial assistance under section 13 may be given in any form.''

To put flesh on the bones, subsection (2) goes on to say that assistance may be given by way of

''(a) grants,

(b) loans,

(c) guarantees,

(d) incurring expenditure on the provision of equipment for the benefit of the person assisted, or

(e) incurring other expenditure for the benefit of the person assisted.''

Subsections (a) to (d) could almost be deleted because subsection (e), in a manner typical manner of the Bill, encompasses anything. As the clause is phrased, financial assistance can mean any payment for the benefit of any person.

Amendment No. 239 seeks to make the Bill more explicit. Instead of financial assistance being perceived as the occasional grant or a little help for child care for somebody who might not otherwise be able to take advantage of educational opportunities, the Bill should be more explicit and state that financial assistance can mean any disbursement of public funds for any educational or child care purpose.

The Bill, because of its enormous breadth, effectively provides a framework within which the Minister and his colleagues can take a wide spectrum of actions without coming to Parliament for approval or scrutiny of what is proposed. The expenditure of public money for educational purposes could be widely interpreted. In my maiden speech in 1997 I opposed the Government's first piece of legislation abolishing the assisted places scheme. When I first read the Bill, I realised that should this clause ever become law, the Secretary of State would effectively have the power either to recreate the assisted places scheme in its old form or to create a scheme somewhat similar in its effects. There are, of course, many admirable schemes on the table.

For example, the Minister will be aware of the Oasis proposal, which has been put forward by the Independent Schools Council. That scheme seeks to propose a way forward for the partnerships that the Government has rightly and admirably sought to foster in the maintained and independent sectors—a partnership involving private and charitable money, and voluntary and Government funds; a perfectly sensible proposal, not a detailed proposal, which the Independent Schools Council has made clear it is prepared to debate with the Minister to discover the best way forward to deal with Labour Members concern that the original assisted places scheme did not always go to the most deserving. It was a genuine attempt to deal with those concerns. Under clause 13,

the Secretary of State would be able to take up its proposals and introduce such a scheme without any consultation with the House of Commons, any further legislative process or even secondary legislation, or any attempt or need to inform hon. Members of the Minister's intentions.

Other schemes could also come into the frame, such as those of the Sutton Trust, which has partnerships with the Government and which does some admirable work, notably funding places in the Belvedere school in Liverpool. Peter Lampl of the Sutton Trust, a great educational philanthropist, has been prepared to put a considerable sum of his own money into helping people, especially from disadvantaged backgrounds, to gain access to some of the best schools in the country.

The Government have existing partnership arrangements with the Sutton Trust, and I applaud that. Under clause 13, we could see such partnerships taken much further. The Sutton Trust's proposal that leading academic independent schools should be made available, on an open-access basis, to anyone, regardless of their means to pay, might well appeal to the Minister or the Secretary of State. Clause 13 would allow them to take that idea forward.

We could also examine some of the Government's work in such matters. We could look at their discussions on partnership arrangements between independent and state schools. We could look at the splendid DFES document published in November 2001, ''Building Bridges for the New Millennium''. It even has an unfortunate picture of the millennium bridge, which I think might be the wobbly one, but I am sure that the Government do not intend to draw any analogy between their policies on partnership between the independent and maintained sector and their wobbly millennium bridge.

David Miliband (Labour, South Shields)

The hon. Gentleman mentioned the millennium bridge. I am sure that he would not want anyone north of Watford to think that he did not realise that the real millennium bridge is between Gateshead and Newcastle. The imitation over the Thames should not be put in the same category.

Graham Brady (Conservative, Altrincham and Sale West)

I am grateful to the hon. Gentleman and I am delighted that he has had the opportunity to visit that bridge, as have I. The bridge was not entirely clear in the picture, although I am sure that it is a splendid picture. I might add that, as I am married to a Geordie, I am very keen on the city of Newcastle and I think that the millennium bridge there is splendid. As one would expect, it is infinitely better than the southern effort in London, which does, indeed, wobble.

The Government's response to the proposals contains all the recommendations and whether they are accepted or not. Recommendation one, that the partnerships between independent and maintained schools should be expanded and embedded,

''with the eventual aim of reaching all schools''

is accepted. Recommendation two, that the Department should

''explore and seek to provide what partnerships need to become sustainable in the longer term''

is accepted. Recommendation three is accepted, the document stating:

''We are committed to continued support for partnerships between the two sectors. We are determined to see through the changes that we have begun, embedding them fully in the system, and we will continue to invest in them to ensure that this happens.''

Recommendation four, that there should be

''a permanent mechanism for bringing together independent and state school representatives, alongside other bodies''

is accepted, with the comment that the composition of that will be discussed, and so on.

I make no criticism of any of that; it is absolutely the right policy. The Government are beginning to explore ways in which the skills, knowledge and expertise, and sometimes facilities, of the independent schools sector can be harnessed for the benefit of schools in the maintained sector. That is all well and good and appropriate.

The question is exactly how far the Government see such partnership arrangements progressing. The arrangements that they have made between maintained schools and independent schools, their partnership with the Sutton Trust and the various other proposals that have been put on the table could all have been done, to almost any extent, under clause 13. Those powers will enable Ministers to provide for places to be purchased at independent schools inside or outside the United Kingdom. There may be specific reasons why Ministers see it as appropriate to purchase places at independent schools outside the United Kingdom, perhaps for diplomatic or service families.

Amendment No. 239, by making it explicit that Ministers will have the scope, without recourse to Parliament, to spend money in any way they want for educational purposes, seeks to draw out the Government's exact intentions. We may see some exciting changes as a result of the powers in the Bill regardless of whether they are implemented by the current Government or a future Government. We may see more open traffic between the independent sector and the maintained sector. Indeed, looking at the other things that the Bill seeks to do, most notably the measures under an early clause that enable the provision of education through companies by schools, we may see that the division between independent, state and maintained schools disappears. The seeds of that are in clause 13, and it will be exciting to see what will be done with these powers.

I tabled amendment No. 239 in a spirit of inquiry as a probing amendment seeking to elicit some comment from the Minister about how far he or the Secretary of State want to go in experimenting with new ways of spending public money for educational purposes, and I look forward to his response.

Andrew Turner (Conservative, Isle of Wight)

I was interested in my hon. Friend's description of a picture of a bridge that he could not recognise as a good picture. His amendment is good, and it was not until he explained it in more

detail that I realised how good it is. The passage of his lead amendment would render my amendment unnecessary. Indeed, it may be that the Bill already renders unnecessary my amendment and new clause, but perhaps the Minister could tell me why my amendment is unnecessary.

Amendment No. 153 would require the Secretary of State to make payment of an education credit in certain circumstances, but the bulk of my ideas are contained in new clause 1. The modest amendment and new clause seek to deal with a problem that many parents, perhaps more than we realise, face: many parents in my constituency do not achieve their first choice of school for their children, and many more parents face that situation in other constituencies. Only two out of the five high schools in my constituency are oversubscribed so we are rather fortunate, but many parents are disappointed because they do not achieve their first choice of school. Many more are disappointed because they dare not ask for their first choice of school for fear that if they fail to achieve it they would not be able to get into their second choice of school because by the time that their application was considered it would be full of first-choice applicants.

My amendment and new clause seek, in a small way, to remedy that problem. It may be that parents do not chose a school because they do not think that it is good enough, or it may be that they do not choose it for entirely different reasons with which we do not sympathise. Perhaps they want a place at a church school, but there is not sufficient space. We may not consider attending a church school important, but they might.

There are only three options for parents who fail to achieve a place at the school of their choice. First, they can suffer in silence—or otherwise—their child's being sent to a school that is not their first choice. Secondly, they can go private, an opportunity which is not open to many people. Thirdly, they can set up a school of their own, an avenue which is open to even fewer people, but which my cousin pursued in the 1960s when his son was not admitted to the school of his choice. Last year, the hon. Member for Southwark, North and Bermondsey (Simon Hughes) did likewise in response to the London borough of Southwark's failure to provide sufficient places at popular schools. Indeed, many of his constituents refused to accept a place in some of the more unpopular secondary schools in the borough.

As I said, going private is a limited option. Not many people can afford a private education, even at some of the less expensive schools. Suffering in silence cannot be good for a child who has to attend a school that is not his parents' first choice. In seeking to assist those who want to set up a school of their own, or who want to go private, the amendments would not help everyone, but the Government will be pleased to hear that they would not cost much. If anything, they would result in a saving to the public purse.

Under new clause 1, to which I want to refer in some detail, the Secretary of State would be required to pay an education credit to anyone who complies with certain requirements. The first requirement is that the person concerned is the parent of a child of statutory age. Secondly, he must have gone through the process outlined in sections 86 and 87 of the School Standards and Framework Act 1998, and the local authority must have been unable to offer a place at his preferred school. Thirdly, the child must have been admitted to, or will be admitted to, an existing independent school, or to a school established especially for the purpose, such as that with which the hon. Member for Southwark, North and Bermondsey was involved. Moreover, to ensure that there is no dead-weight cost, the provision would apply only to those who have not been educated in independent schools for more than six months in the past three years. There is clearly an argument against using public money to fund those who, because they could afford a place in an independent school, have already secured one.

The new clause sets out how the value of the education credit will be calculated. The calculation is based, in rather elongated form, on the value of the age-weighted pupil unit that would follow the child, were he educated in a school in the local education authority area. The calculation therefore does not include any of the local authority's central overhead costs. Local authorities would publish information on the value of the education credit, and would have an obligation to pay the credit to the school at which the child was educated, after the child has received the education.

The provision would help the many people who are dissatisfied because they have not been allocated the school of their choice. Of course, it would help them only if they want their child to go to an independent school, and only if the school is sufficiently inexpensive for the education credit to cover the cost, or if the parent is able to make up the difference. The cost of educating an 11-year-old child for one year in two of three independent schools in my constituency is £2,805 and £3,090 respectively. That is very much in line with the age-weighted pupil unit for an 11-year-old. It does not cover it entirely, but it is quite close, and parents can afford to top up the education credit if necessary to take advantage of an independent school education for their children. I know of parents on modest means who pay to send their children to such schools already, because they are not satisfied with their local provision.

There are many other examples. The Minister may be aware of the John Loughborough school in Haringey, which was an independent school until it was accepted into the maintained sector. It is an inexpensive school for parents of modest means. We are not talking about a subsidy to Eton, Harrow or Rugby; we are talking about a modest scheme to assist parents whose children do not get into a school of their choice to use an alternative to the second choice, which may not be to their liking.

Caroline Flint (Labour, Don Valley)

The amendments sound seductive, but in reality they would drive a coach and horses through the maintained sector. The provisions are the assisted places scheme by another name. They are similar to the disastrous nursery vouchers scheme, which did nothing to build on nursery education provision and caused chaos in the system.

Politicians of all parties—I have mentioned this before in the Committee—should be careful when talking about choice. The reality in my constituency and many others is that most parents' kids attend their first-choice school. The parents choose the school that is closest to where they live, even if they are not entirely happy with how that school operates. That is why we should not be distracted by attempts to pump money into the independent sector. Instead we should focus on putting resources into the maintained sector and ensuring that every school provides a standard of education of which every child and family can be proud.

The Bill gives schools the opportunity to innovate, experiment and join in partnership with others in a productive and co-operative way, and allows us to build on the achievements of the maintained sector. The amendment of the hon. Member for Isle of Wight offers none of that. It offers diversionary activities and division and does nothing to meet the needs of the vast majority of children, who attend maintained schools.

Ivan Lewis (Labour, Bury South)

It is a particular privilege to make my ministerial debut with you in the Chair, Mr. Griffiths. I have felt, during the last few sittings, like a footballer awaiting his debut, only to remain on the bench. It was not the Government's decisions but the time-wasting tactics of the Opposition that led to that situation.

It is appropriate for me to begin my contribution to the debate by discussing these particular amendments. I echo the sentiments of my hon. Friend the Member for Don Valley (Caroline Flint). The amendments are effectively a denial of history. We talk about democratic accountability and accountability through the House, but we also need to remember accountability to the electorate.

In 1997 and 2001, the British electorate voted for education policies that drew a line under the kind of divisive policies contained in the amendments. The Government made it clear in their offering to the British people in 1997 that they would phase out the assisted places scheme and use the money to reduce class sizes for five, six and seven-year-olds. The Government put a clear choice before the British people and they voted accordingly.

The British people also, when asked about the Government's great successes, repeatedly express respect for and concur with the view that we need to create a British education system that provides opportunities for all. We must move away from an education system that educates an elite, which has created a structural skills and productivity deficit and

significant problems of social division and social exclusion in this country. We have not, as a country, focused on the vast majority of children and young people who are educated in the maintained sector. Rather, we have focused on a small minority educated in the independent sector.

The Government have no problem with the concept of parents choosing to send their children to independent schools, but the Government do not believe that it is the state's responsibility to target what will always be finite resources on the independent sector. Amendment No. 153 and new clause 1 would simply reintroduce the assisted places scheme. It would be interesting for the Committee to know whether that represents official Conservative party policy or the view of the Isle of Wight branch of the Conservative party, but it provides another example of how the Conservative party is cut adrift from the mainstream British electorate. As long as that remains the case, the Conservative party will remain unelectable, which will not worry Labour or Liberal Democrat Members.

I cannot accept that the proposed scheme would represent a saving to the taxpayer. The sums do not add up and it would require some extremely creative accounting to demonstrate any saving. We would also run the risk of creating a situation in which parents would make an application to a school, although they knew that their child had little chance of being accepted, and then, having been unsuccessful in their first choice of school, become eligible for an education credit. The long-term consequence of accepting the amendment would be that the Government would end up funding all independent places. Furthermore, the calculation made by the hon. Member for Isle of Wight, in terms of the transfer of resources from the maintained sector, underestimates the cost of places in most independent schools. Therefore, only those parents who could top up that amount would be able to exercise the option that the hon. Gentleman claims to be making available to a wide range of parents.

Graham Brady (Conservative, Altrincham and Sale West)

One thing that inhibits debate in this interesting area is that the Government have always been reluctant to publish the cost per place in a maintained school for comparison with the cost in the independent sector. The cost per place that is quoted for the maintained sector is usually a revenue cost and no attempt is made to include a capital element. Will the Minister undertake to put that right and to publish details of the cost of a place in the maintained sector, including the capital element?

Ivan Lewis (Labour, Bury South)

The Government have been gradually moving towards a far more transparent process of funding education. We will change the nature of the standard spending assessment from next April and we are increasing significantly the proportion of funding delegated to individual schools. The inevitable consequence of creating a fairer financial regime and changing the SSA system, set up under the Conservative Government to such inequitable effect, will be to make the cost of providing places far more transparent.

Graham Brady (Conservative, Altrincham and Sale West)

I welcome the Minister's commitment to greater transparency, but instead of waiting for the SSA to be reformed—an interminable process—will he publish an assessment of the cost per place in the maintained sector, including the capital element?

Ivan Lewis (Labour, Bury South)

I can assure the hon. Gentleman that the SSA system will be completely overhauled and the new system will be put in place from 1 April 2003. That commitment was made by the relevant Cabinet Ministers and we intend to honour that commitment. So far as I am aware, all the expenditure—revenue or capital expenditure—in the maintained sector is in the public domain, as is the number of pupils. With some imaginative research facilities, to which I am sure that the hon. Gentleman has access, it should not be too difficult to identify the sum that we spend in relation to the number of pupils in the maintained sector.

Andrew Turner (Conservative, Isle of Wight)

I am sure that the Minister is trying to help my hon. Friend the Member for Altrincham and Sale, West, but the value of sites occupied by maintained schools is not in the public domain. An independent school has to meet the notional rent payable on those sites. A maintained school does not meet it openly, although, of course, it is met. I think that my hon. Friend sought that information.

Will the Minister explain why new clause 1 would be the recipe whereby the Government fund all places in independent schools? The sum of money is not sufficient to fund a place in many independent schools, and new clause 1(2)(e) suggests that a parent will not be eligible for a credit if

''the child has . . . been educated in an independent school . . . for more than six months in the preceding three years''.

Ivan Lewis (Labour, Bury South)

It would take considerable time to reach that point, but that is the logical long-term consequence of the amendment tabled by the hon. Member for Altrincham and Sale, West. In promoting new clause 1, he acknowledged that, depending on the fee rate of the independent school, a top-up from parents would be required in many, if not most, circumstances.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

I welcome the Minister to the Committee. I had thought that he had a bad throat. Will he confirm that the clause makes the amendment irrelevant, because it gives the Secretary of State the power to give a direct grant to any private school that he chooses, so that it can fund whatever it wants? Yes or no?

Ivan Lewis (Labour, Bury South)

I assure the hon. Gentleman that the Government have no intention of using the powers in that way. I ask him to consider not the words, but the actions of the Government since our election in 1997. We have made it clear that we welcome partnership between the independent and maintained sectors, but we do not believe it appropriate for the state to fund the small minority of young people educated in the independent sector. We should target finite resources on the majority of young people who are educated in the maintained sector.

It would be disingenuous of the hon. Gentleman to suggest that the Government would turn on its head not only the words and rhetoric post-1997, but every action that we have taken on education policy post-1997. We want the education of the many, not the few. We are ensuring that all individuals have the opportunity to fulfil their potential. We are targeting resources on areas with a culture of low aspiration, where for far too long, young people have not been given opportunities to fulfil their potential. Such policies form the part of the Government's track record of which we are most proud.

Andrew Turner (Conservative, Isle of Wight)

Disingenuousness is not limited to the hon. Member for Harrogate and Knaresborough, if it is present in him at all. The Minister is being disingenuous. The Government have taken many actions that no one expected them to take in 1997, such as introducing tuition fees, and also introducing the Bill. Having piled an increasing amount of legislation on to schools in the past four years, they are now trying in their feeble way to deregulate.

Ivan Lewis (Labour, Bury South)

I naturally do not accept the hon. Gentleman's comments. We need a clearer view of where the Conservative party stand on important matters of education policy, as they sometimes seem inconsistent. There seem to be at least two, and possibly three, factions in the parliamentary Conservative party with respect to major issues of education policy.

I turn to amendment No. 239, tabled by the hon. Member for Altrincham and Sale, West. I—along with other members of the Committee, no doubt—am at a loss to understand the practical effect of the additional words that he wants to insert. I cannot understand how inserting the words ''financial assistance'' would change the clause. He accepted that it was a probing amendment, which would bring the Bill into line with the views of the hon. Member for Isle of Wight, as he focused exclusively on the possibility of the Government supporting various independent school initiatives, such as the OASIS—open access to schools in the independent sector—proposals or the Sutton Trust. His suggestion did not seem to have a more general application relating to the use of additional powers not legislated for in the clause. He was interested purely in the independent sector.

The Government are proud of the fact that we have encouraged partnerships, where appropriate, between the independent and maintained sectors. We are committed to that, because we believe that it significantly benefits children and young people, but in no circumstances would we contemplate returning to the days of a divisive education system, in which the state concentrated its resources and policies on a small minority of children and young people. That had disastrous effects in terms of social division and is one reason why our economy was held back for many years.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

I was not going to respond to the amendments, but the Minister deserves a response. The amendments distract from the main issue that the Committee and the House should be considering. They have been allowed to become a distraction because the Bill restores the very powers that the former Secretary of State, the right hon. Member for Sheffield, Brightside (Mr. Blunkett), took away in his first piece of legislation in the House. The Bill restores the right to assisted places, and the Minister has admitted that the Secretary of State may fund any private school that he wishes to fund. I accept what the Minister says when he tells us that that is not the Government's intention, so I am not being disingenuous. I believe that it is purely coincidental that millions of pounds have been provided for the Secretary of State to support initiatives with private schools. I fully understand that that is a by-product, not the Government's intention. The Ministers are conferring on that issue, but the reality is that over the past 12 months, we have heard through press releases—not through the House—of millions of pounds going to support private schools. If the Minister wants to tell the Committee that that is not so, let him do so.

I am sure that no one believes the Minister when he says that he wants no more divisive education systems. I am surprised that a man of such intelligence and integrity would purport to present that as Government policy. There is nothing more divisive than what the Government are doing in the Bill in terms of secondary schooling; nothing more divisive than saying that 50 per cent. of our schools can be specialist schools by 2006, so that the other 50 per cent. will not. How does that not divide those that get the money from those that do not, those that have the extra kudos from those that do not, and those that attract the additional teachers from those that do not? If that is not divisive, I do not know what is. I should like to see every school receive extra money and have special status, and every one of them have to state their special ethos and to develop that ethos. That is a laudable objective for Government—[Interruption.]

With respect to the hon. Member for South Shields (Mr. Miliband), it might be the Government's policy, but we are talking about half the schools in Britain being specialist in five years' time, and the other half not; half having an extra £0.5 million of resources and the others not. If the hon. Gentleman does not think that that will make a difference to the perception of people in all our constituencies and to parents' choices between schools, he is wrong. Perhaps he should do more work in his constituency to see what differences will exist between schools.

The Minister claimed he did not want a divisive educational system. What will the expansion of faith schools do? Is the Minister conscious of what is happening in terms of some of the faith schools in Britain? The Minister for School Standards said just two weeks ago that his attack on grammar schools was over. Opposition Members might applaud that, but it means that the Government's stated intention when they came to power that there should be no more

selection has been thrown out of the window, and that grammar schools are now acceptable. Grammar schools, specialist schools, faith schools—if that is not creating a divisive education system, what is?

Returning to the amendments, I think that the Minister is right to say that they would be a recipe for funding private schools. That is what assisted places were. All the evidence and research shows that middle-class parents were using the system effectively to have their children transferred to the private sector. The hon. Member for Isle of Wight referred to that, although he saw it as a flawed scheme and was honest enough to say so.

Andrew Turner (Conservative, Isle of Wight)

Does the hon. Gentleman accept that they might have been middle-class parents, but on the whole they were middle-class parents on low incomes? I accept that the scheme will not benefit everyone, but it will benefit some people.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

I did not mention income. I referred to middle-class parents. Successive Conservative Governments have never given a fig for children at the poor end of the spectrum, or cared about whether children living in abject poverty should have an education.

Chris Grayling (Conservative, Epsom and Ewell)

Will the hon. Gentleman give way?

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

No, I want to finish this point. The impact of this must be felt. If, for instance, 100 or 200 youngsters from one local authority were attracted to private schools, that would not just affect the children in those private schools; it would have a knock-on effect for everybody who was left in the system, because it would add costs to the whole system and take out, as did the assisted places scheme, those parents who should be agitating within the system for its improvement.

We have to address the question, which was never addressed under assisted places and is not addressed in the amendments, of how the children are to be chosen. If it is to be purely because they do not get their first choice and they are a bit unhappy, who introduced that system? It was the previous, Conservative Government. To be fair to this Government, they attempt, in the part of the Bill on admissions, to rectify some of the problems of first choice. Will the private schools make the choice? Which children will they choose under the circumstances?

I hope that the Government return to the matter in due course, but one of the most acute admission problems is to be found in London, and it results from the Greenwich judgment. In many London boroughs, children have a problem gaining admission to a school, let alone the school of choice.

Graham Brady (Conservative, Altrincham and Sale West)

I welcome the Under-Secretary of State for Education and Skills, and I am most grateful to him for his support. We grammar school boys must stick together, albeit that he attended a fee-paying grammar school and mine was in the maintained sector. I do not hold that against him, as I know that William Hulme was an excellent grammar school. I

was delighted last year to address the founder's day dinner at that school, and I know that he would have been sorry to have missed it.

He said that, in 1997 and again this year, the electorate had drawn a line under the sort of policy set out in amendment No. 239. He went on to say that there was no difference between what my amendment sought to do and the provisions already in the Bill, but that was precisely my point. I made clear at the outset that this was a probing amendment, and that my purpose was to demonstrate that the words contained in the amendment were otiose. The Minister has kindly confirmed that. However, I would go a little further.

My hon. Friend the Member for Isle of Wight mentioned my saying that the picture on the front of ''Building Bridges for the New Millennium'' was good, even though I did not recognise which bridge it was. I explained that that was the reaction of a father who, as those members of the Committee who are parents would readily understand, might more properly have described it as a lovely picture, even though one could not say whether it was a bridge over the Thames or the Tyne.

My hon. Friend the Member for Isle of Wight tabled an interesting amendment. It may be a policy prescription that my hon. Friends and I would be interested to examine. I suggest that the Ministers and their right hon. and hon. Friends might want to consider it; indeed, they may already be considering it.

Not only was the wording of amendment No. 239 otiose; more tellingly, so was the whole of my hon. Friend's amendment and new clause. As the Minister rightly said when rejecting the amendment, or suggesting that the Committee might be good enough to agree to a request that the amendment be withdrawn, the powers to do what we have discussed would remain in the Bill, completely unchanged. Those include the ability to introduce school vouchers, set up a system of education credits, introduce a form of assisted places scheme, accept the independent schools' councils OASIS proposals, and disburse funds by accepting Peter Lampl's proposals from the Sutton trust. All those powers are given under clause 13. For that reason, this has been a very useful debate.

It was clear from the Minister's remarks, and from the earlier remarks of the School Standards Minister, that as far as the Government are concerned, today's discussion is the end of the debate on education in the House of Commons. This is the last opportunity that hon. Members will have to scrutinise any such scheme that may be put forward by the present or future Governments. The Minister may say that none of that is his intention, nor is it the intention of the current Secretary of State.

Because of the way in which the Government are legislating and the unfettered powers that they are taking under clause 13, this has been an important opportunity to air some of the things that could be done with those broad powers. We shall watch with interest to see what the Government will do, but hon. Members on both sides should be aware that any Government who seek to take such powers while refusing to accept any future parliamentary control on

how they are used, are asking both the House of Commons and the British public to take a huge amount on trust.

Among different Committee members on both sides, I am sure that there are many different pet schemes, projects, ideas and ways in which they think education policy could be developed. It is conceivable that any one of us may, at some future point, be Secretary of State for Education and Skills--[Interruption.]--subject, obviously, in one case, to a bit of fleet footwork and a change of party. The hon. Member for Harrogate and Knaresborough is on his own and I did not want to pick on him.

We must accept that, if the Bill as it stands becomes law, it will give any future Secretary of State the power to do almost anything with our education policy. That is not a good way in which to legislate. It may seem superficially attractive to Ministers in the short term, while they hold their office, but if they do not think again about the scope of the sweeping Executive powers and the absence of any facility for scrutiny or control of those powers, they will come to regret them. I shall not press the amendment to a vote.

Andrew Turner (Conservative, Isle of Wight)

This has been an interesting debate, not least because it has extracted from the Under-Secretary the admission, by omission of the fact, that the Bill provides for the Government to do exactly what my hon. Friend and I are suggesting they will do. I congratulate the hon. Member for Harrogate and Knaresborough on having extracted that admission by omission.

I accept that the amendments do not meet the needs of the vast majority, including the amendments to do with special educational needs. That is not to say that the concerns of minorities should not be considered and met. [Interruption.] The hon. Member for Don Valley murmurs ''in the maintained sector''. I am not sure that the difference between the independent and the maintained sector is significant as far as parents who are looking for a decent education for their child are concerned.

The constituents of the hon. Member for Don Valley may be fortunate enough to get into their first choice of school, although from her description it sounded as if they are so careless that they do not care which school they go to. I apologise if that is not what she meant, but that is exactly how it came across.

Caroline Flint (Labour, Don Valley)

To confirm again what I was trying to say, I believe that our responsibility as politicians elected by constituents is to ensure that we put our heart and soul into the maintained sector. I do not see our job as providing an opportunity—if that is the right word—for a few to go into private education. My responsibility is to the children and families who are, overwhelmingly, in the maintained sector.

Even if the hon. Gentleman's proposals were to help a few to go into private education, the knock-on effect would be to destabilise the maintained sector and further degrade it.

Andrew Turner (Conservative, Isle of Wight)

I thank the hon. Lady for that helpful intervention. She has set out her responsibility. Mine is to the electors in my constituency and to the wider benefit of the electorate in the country—to the people, not to a sector, structure or a particular type of school whether it be maintained or independent. My responsibility is to ensure that they get a decent education. To the Ministers' credit, that is also their objective, and I am sorry that the hon. Member for Don Valley is not so progressive. I share their objectives; I want to ensure the best possible education and to meet the needs of those to whom it is not being provided.

Graham Brady (Conservative, Altrincham and Sale West)

Has my hon. Friend considered the close analogy between what he proposes in the educational world and what Ministers are doing in the Department of Health? His explanation is precisely the justification that the Secretary of State for Health advanced for purchasing hospital places from BUPA in Surrey, for progressing pilot schemes for the purchase of treatment in private hospitals or overseas and for generally providing treatment that people need regardless of means of provision.

Andrew Turner (Conservative, Isle of Wight)

Indeed, it is. I congratulate the Secretary of State for Health on doing that. My constituents will benefit because the scheme for purchasing places overseas—overseas rather than the mainland of Great Britain—will apply to the Isle of Wight health authority. The purpose of the amendment is to deal with a problem, and one that is not under the ownership of a small minority in the Conservative party.

A moment ago, I congratulated the hon. Member for Southwark, North and Bermondsey on trying and succeeding to establish an independent school for the benefit of children in Bermondsey who could not get into their school of choice and whose parents refused to send them elsewhere. To their credit, Ministers assisted the creation of that school, as did the London borough of Southwark, for which I was privileged to work at the time. It created an opportunity for poor parents who do not have the benefits that we may have—I cannot speak for everyone in this place, but I was fortunate enough to have them. I apologise if that is a distraction, but I do not believe it to be a distraction to try to provide for those for whom the maintained sector does not yet provide effectively. My concern to improve the maintained sector is not diminished, and I believe we could do a great deal more.

My hon. Friend the Member for Altrincham and Sale, West referred to a catalogue of things that the Government are doing in an unexpected way. I mentioned that they have reversed their position on tuition fees. They are also reintroducing city technology colleges under the name of city academies, and reintroducing grant-maintained schools, with one or two problems, through the Bill. I congratulate them on being adventurous, and I wish that they would be so with the amendment. It does not set out to create a saving, or to subsidise the independent sector. I happen to believe that it might create a saving, but that

is not its point or purpose. It is meant to provide where there is a need. However, as my hon. Friend the Member for Altrincham and Sale, West does not intend to press his amendment to a vote, and as the Secretary of State already has the power to do the things set out in my amendments, I shall not press them because they are otiose.

Graham Brady (Conservative, Altrincham and Sale West)

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Andrew Turner (Conservative, Isle of Wight)

I beg to move amendment No. 141, in page 9, line 15, leave out ', in the United Kingdom or elsewhere,'.

Win Griffiths (Labour, Bridgend)

With this it will be convenient to discuss amendment No. 142, in page 9, line 17, leave out

', in the United Kingdom or elsewhere,'.

Andrew Turner (Conservative, Isle of Wight)

The explanatory notes are curiously vague, if not entirely silent, on the purpose of the words:

''in the United Kingdom or otherwise.''

I understand what the words mean, but I am unclear as to their purpose. It might have been helpful if the Minister had been able to publish the contents of his elaborately tabulated folder. He may provide a sensible and intelligent response to the amendment. Had he done so before the Committee sat, this discussion might not have been necessary. I shall leave him to say why he proposes that the National Assembly for Wales should be able to make a scheme to purchase places in independent schools in Argentina for the residents of Uruguay.

Stephen Timms (Labour, East Ham)

I thought that this might arise from the hon. Gentleman's concern that we should be able to fund education in the Isle of Wight, but I am reassured that that is not the case. I shall draw his attention to the first couple of lines of subsection (1):

''The Secretary of State (in relation to England) or the National Assembly for Wales (in relation to Wales)''.

That form of words—I accept that it is not obvious—ensures that this power cannot be used for the benefit of the residents of Uruguay. However, we want to extend the power beyond the UK in order to support exchange visits or collaborative work between the UK and abroad. If the power were restricted simply to the UK, we might not be able to provide teaching, support or child care to children on overseas visits, and it would certainly be likely to make arrangements for providing that support more burdensome and bureaucratic. We shall not be making extensive use of the power to support educational provision outside the UK, but the hon. Gentleman will recognise that we shall sometimes do so in relation to overseas trips.

Subsection (1) ensures that the support provided by this power will benefit education in England or Wales, but we do not want to restrict the power because that would make international collaboration more difficult to support.

Graham Brady (Conservative, Altrincham and Sale West)

I do not want to detain the Committee on this point, but I do not accept the Minister's remarks.

''The Secretary of State (in relation to England) or the National Assembly for Wales (in relation to Wales)''

does not, in any sensible reading of the clause, limit the expenditure to those places. He has already accepted that the wording is not entirely clear. Would it be possible for the Government to come up with wording that is entirely clear at a later stage in the Bill?

Stephen Timms (Labour, East Ham)

My advice is that that wording has the effect that I described in ensuring that the powers are used for the benefit of education in England or Wales. I am sure that the hon. Gentleman and his hon. Friend would accept that we will use this power to extend our ability to support teaching on trips overseas. We will not want it to be possible for these payments to be applied only in respect of activities actually within the UK. Nevertheless, subsection (1) ensures that the power is used for the benefit of education in England or Wales.

Andrew Turner (Conservative, Isle of Wight)

Mr. Griffiths, you are looking at me expectantly, and I do not blame you.

Win Griffiths (Labour, Bridgend)

I want to know whether you want to withdraw the amendment or press it to a vote.

Andrew Turner (Conservative, Isle of Wight)

I am undecided because like my hon. Friend the Member for Altrincham and Sale, West I do not accept that subsection (1) is clear and means what the Minister says it does. I should like to know to whom or what the words ''in relation to England'' or ''in relation to Wales'' apply. I had assumed that they applied to the Secretary of State and the National Assembly for Wales respectively, and that the Secretary of State makes rules in England and the National Assembly makes rules in Wales. If the Minister means that the Secretary of State or the National Assembly ''may give in relation to England'' or ''may give in relation to Wales'' respectively, he is saying something entirely different from the construction that might otherwise be put on the clause. Alternatively, it might be ''any person in England'' or ''any person in Wales'' or ''any of the purposes in England'' or ''any of the purposes in Wales''. I can think of at least three interpretations, and I am not being paid for that. Imagine how many a lawyer could come up with.

Stephen Timms (Labour, East Ham)

It is apparent from the beginning of subsection (1) that giving, or making arrangements for giving, financial assistance needs to be in relation either to England or Wales. I accept that that is not the meaning that comes to mind on first reading the subsection, but on reflection the hon. Gentleman will see that that is the import of the words.

Win Griffiths (Labour, Bridgend)

I call Mr. Turner.

Andrew Turner (Conservative, Isle of Wight)

On this occasion, Mr. Griffiths, you kindly called me before I had even risen, let alone caught your eye.

The Minister is saying that the Secretary of State may give or make arrangements for the giving of financial assistance in relation to England, or the National Assembly for Wales may give or make arrangements for the giving of such assistance in relation to Wales. My honest interpretation is that that is not the meaning. What does ''give'' mean? Does it mean that the Secretary of State will give the financial assistance in England? That would not prevent someone from using the financial assistance to buy an independent education in Argentina. It does not even mean that someone could not give money to a Uruguayan to buy financial assistance in Argentina.

Stephen Timms (Labour, East Ham)

I think it is apparent that giving money to a Uruguayan to purchase education in Argentina could not be described as being ''in relation to England'' or ''in relation to Wales''. I have taken skilled legal advice on the point and I can assure the Committee that the provision has the meaning that I have assigned to it.

Andrew Turner (Conservative, Isle of Wight)

On the basis that I may return to the matter later, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Andrew Turner (Conservative, Isle of Wight)

I beg to move amendment No. 165, in page 9, line 18, at end insert--

(6a) The promotion of and provision of courses leading to proficiency in written and spoken English of persons of all ages.'.

Win Griffiths (Labour, Bridgend)

With this it will be convenient to take the following amendments: No. 172, in page 9, line 35, at end insert—

'(c) academic education (including provision of education for highly able children).'.

No. 173, in, page 9, line 35, at end insert—

'(cc) provision of educational services for children with special educational needs.'.

Andrew Turner (Conservative, Isle of Wight)

This amendment was tabled following certain comments by the Home Secretary, but that was not the only reason. I worked for the London borough of Southwark for a while, and one of our problems was the need to educate a wide range of people in the English language. I want to probe the Government on whether they believe that education in written and spoken English for people of all ages is important, and whether the Minister would consider giving assistance for that.

Graham Brady (Conservative, Altrincham and Sale West)

I rise to speak principally to amendments Nos. 172 and 173, which seek to improve the clarity and focus of the provision. They are a complementary couplet of amendments. Amendment No. 172 relates to children with special educational needs because of their exceptionally high ability--known in the jargon as gifted and talented children. Amendment No. 173 refers to the more usual definition of special educational needs. The two amendments seek to make it explicit in the Bill that the clause can apply to those groups.

Ministers may say that the provision is unnecessary, just as they said that it was unnecessary to legislate for the provision of education credits because the Bill already allows for that. Subsection (3) includes certain elements in its definition of education. I assume that the list is not intended to be exclusive, because it defines education as including

''vocational training (including the preparation of young people for employment in general), and . . . social and physical training (including the promotion of the development of young children), but does not include higher education, and 'educational' shall be construed accordingly''.

For the purposes of the clause, therefore, two types of education are included and higher education is excluded. Amendments Nos. 172 and 173 seek to establish whether ''education'' might also include academic education, and the provision of education for highly able children and for children with special educational needs. By partially defining a key term in what is potentially the most important clause in the Bill, rather than going the whole hog and offering an all-encompassing definition, the subsection gives rise to a potential danger.

The amendments attempt to probe the Government's intentions, and I offer them to the Minister in the anticipation that he will say that the matters to which I referred are already dealt with in the definition of education in clause 13(3). If so, I ask him to explain the precise parameters. An intelligible, sensible definition would be for ''education'' to constitute anything relating to children of compulsory school age, or to those in further education. However, to exclude higher education, apart from two specific elements, might lead to the exclusion of other matters, and in that regard I look to the Minister for a little clarification.

Chris Grayling (Conservative, Epsom and Ewell)

I want to raise a couple of related points. In the context of the Bill as a whole, I find the phraseology in the clause completely baffling. It sums up the all too frequent examples of bad drafting that we have tried to point out to the Government. The clause states:

''In this section—

''education'' . . . does not include higher education''.

The title of part 2 is ''Financial Assistance for Education and Childcare'', but as I have said, ''education'' does not include higher education. However, the purpose of subsection (2)(c) is to enable

''any person to undertake any course of education, or any course of higher education, provided by an institution within the further education sector''.

How is it possible for ''education'' not to include higher education when the clause specifically refers to a

''course of higher education, provided by an institution within the further education sector''?

It does not make sense.

If there is no clear answer to that, surely it is an example of poor drafting. When the Opposition, in a constructive spirit—that is how the discussions should be pursued—come up with sensible word changes that are designed to enhance the quality of this legislation,

surely the Government should not refuse dogmatically to consider them and use their whipped vote to resist them.

I should like to commend the amendment tabled by my hon. Friend the Member for Isle of Wight. Our society is becoming more cosmopolitan and we are welcoming more people from overseas. We have a proud tradition of welcoming political refugees to the United Kingdom, and that tradition has certainly been continued in recent years. In order to ensure equality of opportunity for all those who live in our society, from whatever background, it is important to focus on ensuring that we maximise every child's knowledge of the English language and on providing them with the opportunities that they need for the future. [Interruption] As my hon. Friend the Member for Isle of Wight rightly points out from a sedentary position, that should apply to every adult as well. For every citizen in this country, a command of the English language is an essential pre-requisite to academic and professional success.

Therefore, I commend this sensible addition to the legislation. We are simply establishing a signpost for our schools—for our education system—to ensure that equality of opportunity is provided to everyone in this country. No matter what the background or circumstances, we must make sure that we are at least providing a real focus on building expertise in the English language. We must deliver the right kind of opportunity for the future.

Ivan Lewis (Labour, Bury South)

I do not think that we disagree with the objectives of the Opposition's amendments. We share those objectives. I was grateful to the hon. Member for Altrincham and Sale, West for giving the answer as well as the question. He is absolutely right. We do not believe that by being specific about written and spoken English, about academic education of highly able children or about educational services for children with special needs, in any way adds to the definition of education that is covered in the legislation. In fact, there is probably an argument that it could have a perverse affect in that anything not included in the list is regarded as not having the same importance or the same priority as the specific issues that Opposition Members have chosen to include in the list, which is inevitably selective. So, although we do not disagree with the objective, we do not believe that the amendments add any value to the existing legislation.

Graham Brady (Conservative, Altrincham and Sale West)

The Minister makes our case for us. If including something specifically complicates the issue and implies different priorities or that other things that are not listed are not included, is that not then the effect of subsections (3)(a) and (b)? By specifically including vocational training, and social and physical training, the Minister is implying an order of priorities in precisely the way that he described.

Ivan Lewis (Labour, Bury South)

There are specific references there, in situations where there may be ambiguity and confusion. It would not necessarily be accepted as the norm, so where those have been included, it is for that purpose. However, if we move towards extending that

to a selective list of additions, what are we saying about other equally important issues that are not part of the list that Opposition Members have sought to add to the legislation. We simply do not believe that the amendment adds any value to the legislation. In fact, we believe that it poses a risk.

Graham Brady (Conservative, Altrincham and Sale West)

In the few seconds remaining —

It being Seven o'clock, The Chairman proceeded, pursuant to Sessional Order D [28 June] and the Orders of the Committee [11, 13 and 18 December], to put forthwith the Question already proposed from the Chair.

Amendment negatived.

Clauses 13 to 17 ordered to stand part of the Bill.

Sitting suspended.

[Part II]

Education Bill

Clause 18 - Governing bodies

Graham Brady (Conservative, Altrincham and Sale West)

I beg to move amendment No. 240, in page 11, line 36, after 'regulations' insert

'which shall be approved under the affirmative resolution procedure'.

I am beginning to feel that I could move an amendment to this effect in my sleep. [Interruption.] At least one Labour Member is awake or there would not have been that sedentary intervention.

The purpose of the amendment is to highlight the Government's regrettable reluctance to allow any proper parliamentary control or scrutiny and to attempt to put it right. Once again I must impress upon the Minister and hon. Members on both sides of the Committee that only by ensuring that these regulations are determined by means of an affirmative resolution can we have some ongoing democratic accountability that will be carried out in a proper and structured way in the House, with a debate if the terms that the Government envisage for the regulations are to be changed.

At least Ministers say that the governing bodies will be constituted in accordance with regulations. In all too many parts of the Bill, they have not offered even that limited safeguard. To suggest that it be done by regulation, but without including the requirement that it should be under the affirmative resolution procedure, gives the House little protection. As the Minister well knows, unless it is under the affirmative resolution procedure, important changes could be made that will affect the composition of the governing bodies of maintained schools without reference to the House.

I have advanced that argument on other clauses, and some Labour Members may think that since it has already been made, it is unnecessary to continue making it. I hope that not only will I continue to make the argument for proper parliamentary scrutiny of the Bill and its subordinate legislation, but that when the Government find themselves on the Opposition Benches, they will continue to do so and will not have forgotten that there is a value and a purpose in Parliament and the House of Commons. I hope that they will have rediscovered a belief that there is a value in what we do here and that it is concerned with making better law and ensuring that there is genuine democratic accountability. It is an important point and it is one that I have made before. I hope that the Minister will accept the amendment.

Ivan Lewis (Labour, Bury South)

It is important to start consideration of this part of the Bill by briefly explaining the objectives of the changes that are proposed. First, we intend that the reforms of school governance should provide scope for schools to tailor governance arrangements to reflect their particular and unique circumstances, to ensure that there are adequate safeguards for representation and accountability and also to free governors from activities that are incidental to their primary strategic role. We want a governance framework that facilitates innovation. It is worth making the point that there has been a significant consultation exercise on the proposals, and it is therefore important that that coherent exercise hangs together and that we do not try to unpick it piece by piece. The proposals are in the public domain and were framed largely by the Way Forward Group, whose members include significant national bodies with an interest in governance.

There was a significant response to the consultation and a generally high level of support. I reiterate to the hon. Member for Altrincham and Sale, West a clear commitment to consult widely on the draft regulations and guidance, and to take account of the views and concerns that are expressed in that consultation exercise.

I hope that the hon. Gentleman accepts that that addresses some of his concerns. We intend to explain the proposed regulations on the constitution of governing bodies and other governance regulations in more detail in a policy statement before the Bill goes to the other place.

Graham Brady (Conservative, Altrincham and Sale West)

That is helpful. Will the Minister also give a commitment that the regulations will be considered under the affirmative procedure? If so, I will withdraw my amendment without further ado.

Ivan Lewis (Labour, Bury South)

I am afraid that I cannot give that guarantee. The broad outline of the proposals is in the public domain, and there will be an opportunity for a public consultation that builds on the consultation that has already taken place. As an additional safeguard, we will make our policy statement on the framework available to hon. Members before the Bill leaves the House of Commons.

Eleanor Laing (Conservative, Epping Forest)

I have a quick question. Would not it have been more sensible for the Government to make such a policy statement available to hon. Members now, so that we could properly consider the question that the Committee should be scrutinising?

Ivan Lewis (Labour, Bury South)

The hon. Lady should have followed the consultation process, which involved a large number of organisations with a specific interest in governance. The process clearly outlined the Government's intentions, to which there has been a response. We have taken account of that response, and we are committed to further consultation on specific regulations that emerge from the process.

Eleanor Laing (Conservative, Epping Forest)

The safeguards are not in place, and Committee Members want them for new laws that are passed by the House. I appreciate the Minister's remarks about wider consultation, which we welcome. However, if the Minister is saying that the regulations could not be published because of that consultation, why was the Committee not delayed until we could have the full information necessary to scrutinise what the Government are doing?

Ivan Lewis (Labour, Bury South)

The safeguards to which I referred should reassure the hon. Lady, but there is another safeguard that should also address her concern. The procedures of the House make it clear that if an Act further provides that an instrument is subject to annulment in pursuance of a resolution of either House, any Member may move a prayer to annul the instrument, or to prevent it from coming into force, within 40 days. Hon. Members may use that opportunity if they have further concerns about the regulations.

There will always be a valid debate about the appropriate balance for prescribing detail in primary legislation, secondary legislation and guidance. We have proposed a package of safeguards and measures that will move school governance arrangements forward in as consensual a way as possible and, most importantly, provide flexibility at local level to enable schools to make governance arrangements that are appropriate to their needs.

Andrew Turner (Conservative, Isle of Wight)

The process is topsy-turvy, is it not? I am concerned that as recently as 1998, in schedule 9 of the School Standards and Framework Act 1998, the Government legislated on the composition of school governing bodies. Three years later, the Government have a new policy on the issue, which they propose to announce before the Bill is enacted. The Minister thinks that it is adequate to wave through unamended clauses. What if he changes his mind again in three, four or five years? Opinions change, and it is the duty of the House to protect minorities caught up in the change process as well as to accommodate those who may be pushing for change.

Ivan Lewis (Labour, Bury South)

We acknowledge that there was some unease and unhappiness about the initial group of proposals. However, we amended them after extensive consultation with key stakeholder groups and have committed ourselves today to consult further on any regulations that we bring forward.

Perpetual change in school governance structures is not in anyone's interest. We have drawn up radical, flexible proposals which, for the first time, will allow schools to create a governance structure that best meets their needs and allows them to fulfil their responsibilities in an innovative and flexible way. Therefore, having produced regulations after extensive consultation, we do not envisage fundamental changes within the foreseeable future.

However, no Minister can say that the Government would not seek further change if it were discovered, for example, that obstacles were preventing the realisation of our objectives. The measure is designed to give governing bodies the strategic power to make decisions in the best interests of their schools. We believe that it is a welcome step forward and that school governing bodies and other key groups support it.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

Will the Minister answer a simple question? If a school is taken over by a private sector for-profit company as a result of an agreement of the governors and with the support of the LEA, can the company appoint a majority of governors to run the new school?

Ivan Lewis (Labour, Bury South)

In that scenario, that school would still have to behave in accordance with the safeguards that apply to the appropriate balance of representation on the governing body. That school would be subject to the balance that we have outlined in the consultation process and which we will clarify in regulations.

Mr. Willis rose—

Win Griffiths (Labour, Bridgend)

Order. I am listening attentively to the debate, as I sat on the Back Benches for the three big education Bills after 1987. We are discussing the affirmative resolution procedure. Although I can see why Members may want to speak on related matters, the next group of amendments, of which there are many, would be a more suitable place to discuss the issue raised by Mr. Willis. I propose that Minister should continue his defence of the Government's position and that any other interventions should relate specifically to the use of the affirmative resolution procedure.

Ivan Lewis (Labour, Bury South)

Thank you, Mr. Griffiths.

As I said, there is a legitimate debate about the appropriate balance between primary and secondary legislation. The various safeguards in the system, which we have explained today, mean that there will be several opportunities for people to express any authentic concern and to influence the regulations that are ultimately produced.

Graham Brady (Conservative, Altrincham and Sale West)

The Minister was speaking about a balance between primary and secondary legislation, but we are not discussing that. We know that the regulations will be a matter of secondary legislation; we are debating whether the Government should guarantee that the House of Commons will be able to debate that secondary legislation. The Minister has refused to give that assurance, so we are left with the assumption that he intends orders to be introduced in such a way that regulations can be made without reference to or debate in the House of Commons. We are not talking about the balance of primary and secondary legislation, but whether hon. Members have an ability and a right to discuss Government proposals.

Ivan Lewis (Labour, Bury South)

I understand the hon. Gentleman's point, but I return to the one that I have been making for a while. The Bill contains sufficient safeguards for adequate scrutiny, involvement and transparency, as well as for our desire to free up governing bodies to make the right decisions in the interests of their schools. We are not simply granting infinite powers with no scrutiny or accountability. We have already demonstrated our willingness to consult, consult and consult again.

Chris Grayling (Conservative, Epsom and Ewell)

I really do have to catch the Minister short on that. The reality is that there is provision after provision throughout the legislation that allows the Secretary of State to take decisions without reference to anyone else. Whatever Ministers may say during the debate—that they will publish consultation, guidelines and procedures, or this, that and the other—the legal reality is that they are taking absolute powers in far too many matters. Does the Minister believe that, as we are in a parliamentary democracy, Parliament has a scrutinising right over key issues of policy?

Ivan Lewis (Labour, Bury South)

Of course we believe that Parliament has that right, but legislation has always featured the balance that I have mentioned. The question is, in the context of the Bill and our objectives, what is the most appropriate way to present the provisions that allow individual schools to make the right decisions pertaining to governance for their pupils and their communities. The Government have not attempted to conceal their intentions or proposals on governance. We have gone out of our way to consult widely, and demonstrated a willingness to respond to the concerns expressed. Before the Bill is passed, we will present to the House a clear statement of principles underpinning the regulations. Additionally, we are committed to further consult on any regulations that are produced.

Several hon. Members rose—

Ivan Lewis (Labour, Bury South)

I just want to make one final point. It has been suggested that hon. Members have no mechanism through which they can secure a debate. That is not the case. If any hon. Member prays against regulations, there could be a debate under negative procedures. That is part of the scrutiny and accountability that exists within the House.

Eleanor Laing (Conservative, Epping Forest)

I believe that the Minister is honest when he says that he wants to be open about the Government's actions and I commend him for asserting that consultation is good. Why are the Government so afraid that they feel they must insist on negative rather than affirmative resolution? The Minister said that any hon. Member could pray against the regulations and secure a debate. If that is so, regulations should be considered under affirmative resolution. If the Government are open about the regulations—which they have not put before the Committee—instead of saying ''Uh-oh, if anyone notices what we are doing, they might ask us about it'', they should accept that regulations should be introduced via affirmative procedure. That is all we ask; we are not preventing the Government from implementing what they want. We are not opposed to consultation or assuming that the regulations will be bad. In a democracy, we should have an opportunity on behalf of our constituents—

Win Griffiths (Labour, Bridgend)

Order. We want interventions, not speeches.

Ivan Lewis (Labour, Bury South)

That was a fine intervention, and an even finer speech. We should consider the procedures available to hon. Members when they have difficulty with regulations. It is general practice in the House that an hon. Member can pray against a regulation and any hon. Member who presses for a debate usually secures one. There are numerous safeguards, and I am not quite sure why the hon. Members are concerned about the Government's intentions—

Eleanor Laing (Conservative, Epping Forest)

We do not know what they are.

Ivan Lewis (Labour, Bury South)

We know what they are because they are outlined in several consultation documents.

Win Griffiths (Labour, Bridgend)

Order. I will introduce the rules of ''Just a Minute'' shortly. I have heard every argument at least four times now.

Mr. Andrew Turner rose—

Ivan Lewis (Labour, Bury South)

I will not give way any more.

There is no mystery about the Government's proposals to free up governing bodies and help them organise themselves in accordance with their needs and in the best interests of the key people in a school and its community. Debate about the detail remains, which is why we are committed to further consultation on regulations. If hon. Members had followed the debate, the work of the group and the consultation process, they would realise that people are not unaware of the Government's intentions. The argument has been exhausted on both sides and, I believe that we should proceed to a Division, if that is what Opposition Members want.

Chris Grayling (Conservative, Epsom and Ewell)

Let me explain the problem that Ministers are presenting to Opposition Members. As we progress through the Bill, Ministers make high-sounding words about clauses that will allow them, in strict legal terms, to take decisions themselves. This clause, for example, is about allowing the Government to set the constitution of governing bodies rather than allowing schools to take decisions in the best interest of governing bodies. The Minister has made all the right noises about the Government's desire to be open, to consult, to take on the views of others and to publish regulations and guidelines. However, let me provide one example of how much credence should be given to such high-sounding words.

A couple of weeks ago, the Minister for School Standards referred to the PricewaterhouseCoopers report on teachers' work loads, which he said was published in an ''open and honest way'' last week. In fact, it was published in the most obscure part of the DFES website and was unfindable by any of the search engines. I discovered its existence only as result of asking a written question. If ever there were an attempt to bury a report, that was it. How can we have any confidence in the Government's protestations of openness about the Bill? It beggars belief that a Government could approach legislation in this way, leaving so many I's undotted and T's uncrossed. The Committee is given promises of guidelines, consultations and so forth before the Bill leaves the House, but why cannot the Government build all these elements into the legislation? Why, as we debate the issues, is it necessary to leave so many avenues unclosed, so many questions open?

Andrew Turner (Conservative, Isle of Wight)

I echo the views of my hon. Friend the Member for Epsom and Ewell and applaud him for searching through the website to find the report.

The Minister's lack of concern was clear when he said that scrutiny and consultation have been adequate. Consultation is not the same as scrutiny. Consultation takes place prior to the drafting of regulations and prior to the passage of legislation. Scrutiny is what happens as the legislation passes through this House. I am amazed that the Minister can come to this Committee with such an inadequate basis on which to rest his case.

Only three years ago in 1998, the Government legislated on the composition of governing bodies. Of course we understand that themes change and we applaud the objective of making governing bodies more suitable for the particular needs of individual schools. However, the Minister seems to believe that the recent consultation is the only one necessary and that the policy document that will emerge in response during the passage of the Bill through this House is an adequate basis for us to approve these clauses. He does not seem to envisage the Government changing their mind or that there may be controversial demands for changes to the composition of governing bodies. If such controversial demands were pushed through by legislation and supported by Government in a change of policy or in regulation, they should be approved by affirmative resolution of this House.

The hon. Member for Harrogate and Knaresborough may have been out of order in saying that the majority of the members of the governing body should be appointed by a private company. The Chairman will tell us whether or not he was.

Win Griffiths (Labour, Bridgend)

I have already ruled that he was.

Andrew Turner (Conservative, Isle of Wight)

Then of course I bow to your ruling.

Win Griffiths (Labour, Bridgend)

Thank you, Mr. Turner.

Andrew Turner (Conservative, Isle of Wight)

The use of an affirmative resolution to confirm that the Government were right to agree that the majority of members of a governing body should be appointed by a private company would surely protect the membership of governing bodies in general.

I am not clear on all the issues because the Government have not yet come up with a statement of policy. Also, forgive me if I have not read every detail of the response to the consultation; I am human like everyone else on the Opposition Benches. I doubt whether the Minister has read every detail. He would be an extraordinary Minister if he had.

Chris Grayling (Conservative, Epsom and Ewell)

He is.

Andrew Turner (Conservative, Isle of Wight)

He is indeed, but not necessarily in that way. We are not clear what the Government's policy is, so how can we be happy to put it into legislation without at least the possibility of affirmative resolution?

Caroline Flint (Labour, Don Valley)

I refer to the report of the Select Committee on Education and Skills from the time when I was on the Education Sub-Committee that considered school governors. One of the difficulties identified in that extensive inquiry, to which the Department for Education and Skills responded, was how bound governing bodies were by inflexible structures that prevented recruitment. It must be recognised that in the course of a year or a term of office, a situation within a community can change. A number of schools in my constituency have difficulty encouraging parents to become governors. There are problems with developing community partnerships which well-off communities are able to take advantage of; for example, with lottery funding—

Win Griffiths (Labour, Bridgend)

Order.

Caroline Flint (Labour, Don Valley)

I am coming to my point. People from under-developed communities cannot take part in community partnerships in the same way. We see this problem applying also to governing bodies.

Win Griffiths (Labour, Bridgend)

Order. This amendment is about the affirmative resolution procedure. Although the hon. Lady's point is interesting and well made, I am still struggling to see its relevance to the debate.

Caroline Flint (Labour, Don Valley)

I take note. My point is that we should seek to deal with the issues raised by the Select Committee—how we can make sure that governing bodies are adaptable and flexible to change to ensure recruitment. I therefore support the Government.

Win Griffiths (Labour, Bridgend)

The hon. Lady is against the amendment?

Caroline Flint (Labour, Don Valley)

Yes.

Eleanor Laing (Conservative, Epping Forest)

I support the remarks of the hon. Member for Don Valley. Flexibility is to be encouraged. The affirmative resolution procedure would be quicker than the negative resolution procedure, which, as the Minister pointed out, allows a 40-day period during which any Member can pray against the regulations. The negative procedure takes longer, so why will the Government not accept our amendment to make the regulations subject to the affirmative resolution procedure? That would be quicker, more flexible and therefore more desirable, as the hon. Lady said.

Graham Brady (Conservative, Altrincham and Sale West)

My hon. Friend the Member for Epping Forest (Mrs. Laing) has blown the Minister out of the water by showing that all his arguments are completely inappropriate and facile. You said that both sides of the argument had been exhausted, Mr. Griffiths, but I am not sure that I have heard any arguments against the affirmative resolution procedure in this respect. The Minister says that everything was outlined in consultation, but that is not the same as outlining matters in a draft regulation. The Government can consult as widely as they wish and are free to draw conclusions that differ from everything that has gone before. He says that stakeholders have been consulted.

The one group that appears not to be a stakeholder in the process is elected Members of Parliament, who represent school governors, parents and children in constituencies throughout the country. The Minister is clearly willing to consult every group except MPs.

If the Minister were prepared to accept the affirmative resolution procedure, we need not have had the debate. He says, ''Of course, we believe in the right of scrutiny'', but he refuses to accept that the regulations should be subject to that procedure. According to the Minister, if any Member prays against a negative resolution, there will almost always be a debate. My experience is that, even if the official Opposition pray against the resolution, there is frequently no debate.

The Minister could resolve the matter simply by assuring us that, if the Opposition prayed against a negative resolution on the matter, we would be granted a debate. I would take his word for that; I do not need the provision to be in the Bill as long as he guarantees a debate. [Interruption.] The representative of the usual channels is chuntering from a sedentary position.

John Heppell (Labour, Nottingham East)

I might like that, as might my hon. Friend the Minister, but I do not think that it is within his gift to grant anyone a debate.

Graham Brady (Conservative, Altrincham and Sale West)

I am grateful to the Government Whip, because we are now getting to the nub of the matter. The Minister's defence is that the affirmative resolution procedure is not needed, because even under the negative procedure, any Member can secure a vote, but now the Whip confirms that that is not the case. In all probability, as with vast swathes of the Government's proposals, the regulations, whatever they say, will be waved through. Regardless of what hon. Members think, there will be no opportunity to debate or vote on them.

This matter is extremely important, but the Minister has not given adequate assurances and is not even prepared to give the assurance that I wanted that, under the negative procedure, we would be granted a debate on the regulations if we sought one. In those circumstances, I have no option but to urge my hon. Friends to support the amendment. If Government Members believe in Parliament's scrutiny function, in what the Committee is meant to be doing and that all MPs should earn their living, they will support the amendment, too.

Question put, That the amendment be made:—

The Committee divided: Ayes 7, Noes 8.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

I beg to move amendment No. 213, in page 11, leave out line 37 and insert—

'(2) A governing body shall consist of—'.

Win Griffiths (Labour, Bridgend)

With this we may take the following amendments: No. 166, in page 11, line 39, after 'school,', insert

'who in the case of a community, community nursery, community special, foundation or special foundation school shall constitute not less than one third of members of the governing body.'.

No. 176, in page 11, line 40, at end insert—

'(bb) persons employed as teaching staff at the school.'.

No. 138, in page 12, line 2, after 'governors', insert

'who shall, except in the case of a voluntary controlled school, constitute a majority of members of the governing body,'.

No. 177, in page 12, line 4, at end insert—

'(g) where a contract for school improvement has been agreed, representatives of the contractor.'.

No. 149, in page 12, line 4, at end insert—

'(2A) Regulations made under subsection (2) shall provide that the persons mentioned in (b) of subsection (2) shall include such numbers of persons employed to work as teachers at the school as may be appropriate having regard to the total number of teachers so employed.'.

No. 221, in page 12, line 4, at end insert—

'(2A) The governing body of a community school shall have—

(a) at least one-third of the membership from persons who are parents of registered pupils at the school at the time of their election or appointment,

(b) no more than one-third of the membership who shall be employees who work at the school,

(c) at least one-fifth of the membership shall be persons appointed by the local education authority, and

(d) the remaining governors shall be appointed as community governors by the existing governors at the time of the appointment.'.

No. 236, in page 12, line 22, after 'bodies,' insert—

'(3A) No person may be a member of the governing body of a school who—

(a) is a member or employee of the maintaining local education authority having executive responsibility for education, or

(b) is a member of the maintaining local education authority having responsibility for scrutinising delivery of education including by that school.'.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

I am grateful to you, Mr. Griffiths, for allowing me this brief opportunity to speak. Given your ruling, I feel chastened, especially after some of the later contributions to the previous debate.

One purpose of legislative scrutiny is to explore the worst, not the best, scenario of a measure. Like other members of the Committee, I have a high regard for the integrity of the Minister for School Standards and his colleagues. We take them on, not to dispute what they say or because we disbelieve them, but to show that the Bill may be used in different ways.

My question is highly pertinent to the affirmative resolution procedure. Let us suppose that a school is given, and uses, the earned autonomy and freedoms in clause 1, and decides to invite a private sector company—or a public school, because that is also an available option—to run the school. Should the company be able to appoint the majority of governors, according to its particular persuasion? The Minister said that the answer was no, but he is being more economical with the truth than he should be. For example, in the case of King's Manor in Guildford, Surrey, when the 3Es company was invited to take over the school—whatever we think of it, it was Surrey county council's decision—the company made it clear that unless it had a majority on the governing body, it would not do it. Is it the desired objective that decisions of such magnitude on a school's freedoms are taken by governing bodies? Do we have to wait for regulations to stop it? If it is the desired objective, it needs an affirmative resolution in the House, but we are not going to get that.

The rest of the debate is in Hansard.