Nadine Dorries (Mid Bedfordshire, Conservative)

I beg to move amendment No. 345, in page 18, line1, leave out from beginning to end of line 21 on page 18 andadd—

‘(2) A foundation mayonly be removed from a foundation school with the agreement of thatfoundation, and a reduction in the number of foundation governors mayonly be made with the approval of the present foundation governors andthefoundation.'.

Frank Cook (Stockton North, Labour)

With this it will be convenient to discuss thefollowing amendments: No. 39, in page 18, line 7, after‘governors', insert

‘, whichshall not be less than 50 percent,'.

No.40, in clause 24, page 18, line 24, at end insert—

‘(1A) No regulations may be madeunder this section to refer any of the decisions, other than matters inrelation to section 25, to theadjudicator.'.

No.389, in clause 25, page 19, line 34, leave out from ‘section' toend of line 35 and insert

‘shallrequire the governing body to pay to the foundation or trustees of thefoundation such sum representing the expenditure incurred as may beagreed between the foundation and the governingbody.'.

Nadine Dorries (Mid Bedfordshire, Conservative)

Clause 23 contains powers to remove thefoundation altogether from a foundation school and/or to reduce thenumber of foundation governors, such that they would no longer be themajority. If a Secretary of State really wants independent schools andfor City livery companies, corporations and charities to sponsorfoundations, she cannot be given the power to override the foundationand the foundation governors if she wants to change the school. Shecannot have her cake and eat it. If she wants sponsors to come forwardwith finance and to become charitable trusts to take on schools, whydoes she need thatpower?

Why would theSecretary of State want to override the governors and change the statusof a school? What situation does she envisage that could bring aboutsuch  a situation? Once they have been made independent and the governors arelooking after the school, is that not what we want them to do? Do notwe want them to be independent and self governing? Does the Secretaryof State really want the power to take that away? How would itencourage schools to take on the foundation status if she had thatoverridingpower?

Nick Gibb (Shadow Minister (Schools), Education; Bognor Regis & Littlehampton, Conservative)

The clause deals with the rules and regulations thatwould apply in circumstances where a foundation school with afoundation wishes to remove that foundation. It deals withcircumstances where a foundation school with a foundation, and whichprovided for the majority of the governors to be foundation governors,wanted to change those provisions so that the foundation no longerprovided the majority of the governors.

There are two ways in whichsuch propositions can be initiated. The first is for the governing bodyof the foundation school to pass a motion to that effect in accordancewith its rules of procedure. That is the provision in subsection (2).The draft regulations circulated by the Minister add a furthersafeguard. Regulation 3 says that such a decision taken by thegoverning body will have to be reaffirmed by the governing body at asubsequent meeting, which must not be less than 28 days after theinitial meeting. That is an important cooling-off period for a decisionthat is important for a school and its future. We agree with thatapproach.

The second wayin which a proposal can be initiated is for a smaller group ofgovernors, referred to in clause 23(3) as a “prescribedproportion”, to require the governing body to publish itsproposals for the removal of a foundation or a reduction in the numberof foundation governors that would put them in the minority. Regulation4(2) says that the prescribed proportion should be one third. If wecould amend that regulation, we would. Instead, amendment No. 39 wouldamend subsection (3) to make the prescribed proportion of governors 50per cent. Although there is a safeguard provision that the procedurescan be used only once every seven years, giving a one-third minority ofgovernors such an important power could entrench conflict and encouragethe politically and ideologically driven to involve themselves in aschool only for the purpose of such votes. Changing the requirement tohalf of the governors would minimise thatrisk.

Amendment No.389 relates to the compensation to be paid by a governing body to afoundation when it is removed from a school and has incurred capitalexpenditure on land being used by the school. It would make therequirement to compensate the foundation a compulsory element of anyregulations made under clause 25. It would also ensure that anycompensation received must be agreed by the foundation. The Bill statesthat regulationsmay

“require thegoverning body to pay any part of the value of the transferred land tothe foundation.”

Thedraft School Organisation (Removal of Foundation and Reduction inNumber of Foundation  Governors) (England) Regulations use the same wording as our amendment.I am not sure which came first, but I suspect that it was the draftregulations. Theystate:

“Wherethe foundation has incurred capital expenditure in relation to thetransferred land or other lands, the proceeds of which were used toenhance the value of the transferred land, the governing body shall payto the trustees such sum representing the expenditure incurred as maybe agreed between the foundation and the governingbody.”

We can see noreason why that requirement should not be put into the Billitself.

John Hayes (Shadow Minister (Vocational Education), Education; South Holland & The Deepings, Conservative)

I assume that my hon. Friend’s intent is notsimply to deliver justice and make the system fair, but to avoid thedisincentive that might occur if people felt that they would notproperly be reimbursed for any investment that they havemade.

Nick Gibb (Shadow Minister (Schools), Education; Bognor Regis & Littlehampton, Conservative)

Absolutely. My hon. Friend has taken the nextparagraph from my notes. He is right; the amendment would prevent therisk of such injustice from occurring. It would place an additionalsafeguard on the rights of foundations who see their control of aschool removed. The better the safeguards, the more likely it is thatgroups and individuals will want to set up a foundation and contributecapital assets for the benefit ofeducation.

Sarah Teather (Shadow Secretary of State for Education and Skills, Education & Skills; Brent East, Liberal Democrat)

It is important that I reiterate the point that Imade earlier when discussing the right to move back to being acommunity school. A governing body must surely have the ability todecide its future. That might include getting rid of a foundation, butif a governing body contains a majority of governors appointed by thetrust, it seems extremely unlikely that they would ever vote to removethe foundation.

If wewere to accept the amendments there would be a situation of almostcomplete self-interest in a governing body. There would never be adecision to move away from an existing foundation. I assume that thatis why a one-third vote is required rather than a majority. As wediscussed in earlier sittings, I would rather there were not cases inwhich a majority of governors had been appointed directly by the trust.I would then support a majority vote, as the Conservatives haveproposed, but in the current situation I cannot possibly support whatthe Conservatives have advocated.

Jacqui Smith (Minister of State (Schools and 14-19 Learners), Department for Education and Skills; Redditch, Labour)

The intention behind amendments Nos. 39 and 40, asspelt out by the hon. Member for Bognor Regis and Littlehampton,appears to be to place restrictions on the ability of a governing bodyto remove a trust. The hon. Member for Brent, East was right that thismay be because his amendments do not recognise the two potentialdifferent scenarios under which the removal of a trust might beconsidered. I hope that I will be able to reassure the hon. Gentlemanthat we are providing for circumstances both where a trust has amajority of the governing body, and where it doesnot.

I should like tostart with amendment No. 345 proposed by the hon. Member forMid-Bedfordshire (Mrs. Dorries). I should like to reassure her aboutthe intentions of the clause. She referred to the Secretary  of State wanting to make a decision to remove a trust. There is nothingin clause 23 or in the Bill that gives the Secretary of State the powerin the circumstances she described to remove a trust. The clause setsup a process through which the governing body itself is able to come toa decision about removing a trust. Her amendment would prevent agoverning body from removing a foundation without thefoundation’s approval, by providing that the approval of thefoundation governors, as well as of the foundation itself, is requiredbefore there is a reduction in the number of foundationgovernors.

The impactof that would go against what the hon. Lady argued. It would representa shift in power from the school’s governing body to the trustitself. We have always said that decisions about a school, including onthe acquisition and, where necessary, the removal of a trust, rightlyrest with the governing body, but that there should be an importantsafeguard of allowing the governing body to remove the trust in theevent of concerns about its performance. It would be unlikely in thosecircumstances that the trust itself would agree to its removal.Therefore, insisting that it had to agree would effectively prevent thegoverning body from being able to make thatdecision.

Of course itis right that the trust should be consulted if the governing body weremaking that sort of decision. The regulations under clause 24 make itclear that there is a requirement for the governing body to consult thetrust when it is considering removing its relationship with the trust.I hope that the hon. Lady is reassured that this is not about theSecretary of State’s power, but about a reasonable ability forthe governing body of a school to be able to make a decision about itsfuture relationship with thetrust.

Amendment No.39, as the hon. Member for Bognor Regis and Littlehampton outlined,refers to the circumstances in which a third of governors would be ableto publish proposals for the removal of the trust. The difficulty withthis amendment is that it would introduce two conflicting provisionsabout the mechanism for removing a trust or moving from a trustappointing a majority of the governors to a trust appointing a minorityof the governors. As I suggested, our proposals are designed to dealwith two different scenarios: one where the trust appoints the majorityof the governing body and one where it does not. Under our proposals,the majority of the governing body can already publish proposals at anytime for the removal of a trust or for the trust to cease to appoint amajority of the governing body. That is provided for in subsection (2),which the hon. Gentleman’s amendment does not seek tochange.

At firstglance, however, it would appear that amendment No. 39 simplyreplicates that power for the majority of the governing body to publishproposals. It relates to subsection (3) of the clause, a subsectionthat covers the second scenario. The hon. Gentleman proposes that thecondition that the prescribed proportion should not be less than 50 percent. of the governors is inserted into the provisions that apply inthose circumstances where the trust has appointed a majority of thegovernors. The intention underlying the subsection is that it should bepossible for a minority of the governing body—the hon. Gentlemanis right that in regulations we have said that that should  be a third—to require the governing body to publish proposals forthe removal of a trust, or to move from a situation in which the trustappoints a majority of the governors to one in which it appoints aminority. That is precisely because, as the hon. Member for Brent, Eastcorrectly said, when a trust appoints a majority of the governing body,it is unlikely that a majority of the governing body would vote for thetrust’sremoval.

There is justas much need for safeguards in such cases as there is when a trustappoints only a minority of governors, and amendment No. 30 wouldremove the safeguards. As I said, we propose that one third of thegovernors should be able to require the governing body to publishproposals for the removal of the trust under clause 23(3). Unlesstwo-thirds of the governors then vote to keep the trust, it will beremoved That is one situation in which a two-thirds vote isappropriate, because of the specific circumstances that apply in thatsituation.

Thetimescales to which the hon. Gentleman referred are relevant in that wehave placed conditions on the ability of a minority of governors totrigger the removal of a trust or move from the trust appointing amajority of the governors to the trust appointing only a minority. Theycan do that only after a trust has been in place for seven years and noless than seven years after any previous proposal forremoval.

The amendmentwould make those provisions unworkable. Effectively, it would producetwo separate circumstances in which a majority of the governing bodycould publish proposals, and it raises questions as to whether themajority would then be able to publish proposals at any time, andwhether the majority would have to abide by the conditions and timeconstraints in subsection (4), which are intended for particularcircumstances in which a minority publishes proposals because the trusthas a majority on the governing body. I hope, therefore, that the hon.Gentleman will be reassured by my outline of the two differentscenarios with which the two approaches are meant to deal, and willfeel able to withdraw amendment No.39.

The effect ofamendment No. 40, which refers to procedures in clause 24 for removinga trust or removing the right of a trust to appoint a majority ofgovernors under clause 23, is that it would not be possible to resortto the adjudicator in such circumstances. The provisions, however, areintended to deal with a practical and important matter arising when atrust is removed, which is the question of what happens to theschool’s land and assets, and what happens to any capitalexpenditure that may have been incurred in relation tothem.

When a trustholds publicly funded land, the land will transfer to the governingbody if the trust is removed. Land may not be transferred, however,when it was originally provided by the trust, rather than by the localauthority or the governing body. When land that forms part of schoolpremises transfers to the governing body, but the trust has previouslyincurred capital expenditure on the land, the governing body may berequired to pay compensation to the trust. Conversely, when land thatforms part of the trust premises is not transferred to the governingbody because it was originally provided by the trust, but the governingbody or local authority has incurred  expenditure on the land, the trust may be required to pay compensationto the governing body or localauthority.

Clause 25deals with such questions of land and compensation in more detail.Those are important question to get right, particularly in relation tothe difficult circumstances that would apply when a decision on suchmatters was being made. Normally, however, we would expect questionsabout compensation to be resolved between the governing body and thetrustees. If they cannot agree, clause 25(5) provides for regulationsto enable such questions to be referred to the schools adjudicator fordetermination. The power of the schools adjudicator is relevant also inthe context of clause 24, as subsection (3) allows the governing bodyto ask the schools adjudicator provisionally to determine questionsrelating to compensation before the governing body decides on theproposal to remove the trust. In considering that decision a governingbody might well want its implications to be made clear, in the matterof compensation to be paid to, or received from, the trust.

With those points inmind, we may see that amendment No. 40 would not alter anything. Itwould not, and indeed should not, prevent regulations made under clause24 from enabling a governing body to seek from the schools adjudicatora provisional determination about compensation before it made adecision about removing a trust. It is difficult to understand therationale for the amendment, or what it would achieve, but I hope thatI have provided some background to the matter, and persuaded the hon.Gentleman not to pressit.

I think thatthe hon. Gentleman spoke rather more to amendment No. 389, which alsorelates to those questions of compensation. It would remove theprovision under which regulations under clause25

“may authorise orrequire the governing body to pay any part of the value of thetransferred land to thefoundation”

and replaceit with a provision under which regulations would require the governingbody to pay relevant sums to the foundation or trustees.

My concern about the amendmentis not, as I have said, that I do not think there will be importantcircumstances in which the adjudicator may rule that compensationshould be paid by the governing body to the trust; it is more that theamendment treats questions of compensation payable by the trust to thegoverning body differently from questions of compensation payable bythe governing body to the trust. As I have outlined, there may becircumstances in which compensation could pass in either direction, butthe amendment, and the hon. Gentleman’s comments, seem to relateonly to circumstances in which compensation would be payable to thetrust.

If under theclause the Secretary of State had to make regulations requiring thegoverning body to pay compensation to a trust as agreed between thetrust and the governing body, the trust having incurred capitalexpenditure on land to be transferred to the governing body on theremoval of the trust, the  provisions for such cases would be stricter than those for cases inwhich the trust needed to pay compensation to the governing body. I amsure that the hon. Gentleman does not intend that there should be anyinequality between the two sets of circumstances, but that would be theeffect of the amendment.

What we propose is clear,consistent and equitable. Our draft regulations already deal with theintentions behind the hon. Gentleman’s amendment, and I urge himand other hon. Members not to press theiramendments.

Nick Gibb (Shadow Minister (Schools), Education; Bognor Regis & Littlehampton, Conservative)

I listened carefully to the right hon. Lady’s comments on my amendment, and I fully understand that the purpose of the one-third rule is to enable a minority of governors, where the majority of the governing body is controlled by the trust, to initiate the process of removing the trust. The problem with giving a minority such powers, as I said in speaking to the amendment, is that it creates the potential for conflict. As the right hon. Lady knows, there is deep ideological division in this country, in certain sections of society, about education and the way in which it functions. It would be unfortunate if the structure of the governing bodies almost invited such political debate and involvement in the governing body of a school.

I am aware of instances from the time, in the 1960s, when grammar schools were abolished of people getting involved with schools simply with a view to removing their grammar school status, and never being seen again once comprehensive status had been introduced. It is to avoid activity of that kind that I consider it important to remove the one-third element. However, the point has been made, and I do not intend to press the amendment to a Division. The issue has been highlighted and is on the record.

As to the compensation issue, I am delighted that we agree that fair compensation needs to be paid to foundations that have supplied assets. I take the Minister’s technical point that because the amendment would remove the requirement to make regulations, it would therefore remove from the regulations all the other provisions that are important and safeguard the making of payments.

The Minister might take my point that statutory instruments can be amended easily, especially on a negative resolution. A charity putting vast sums into a school, such as are involved when land and buildings are given, would feel more reassured if those assets were protected in primary legislation that could not so easily be amended. It would also have much greater notice of any amendment and would therefore feel more confident in contributing assets. The issue has been aired effectively and the Minister has been full and frank in her response, so I do not intend to press the amendment.

Nadine Dorries (Mid Bedfordshire, Conservative)

The Minister’s reply has been detailed, and I am reassured and educated by it. I beg to ask leave to withdraw the amendment.