I wish to bring to the attention of the House a sad and disturbing story of a fine company based in my constituency, responsible for many jobs both locally and elsewhere in the United Kingdom, which has been dealt a devastating financial blow through no fault of its own, because of bureaucratic bungling and intransigence of the worst kind.
I shall begin with a summary. The company in question, Plymouth Ocean Projects Ltd., which trades as Fort Bovisand Underwater Centre, is owned by a constituent of mine, David Welsh. It entered into various arrangements in August 1996 with two colleges of further education to train students in diving. All was well until confusion arose between the Further Education Funding Council and the two colleges over whether such courses should be funded. By this time, the training was well in progress and the company carried on the training.
As a result of the confusion, which remains today, the company, although it has incurred all the overheads involved and has continued to train young people for their future careers, has not been paid since November 1996 and is threatened with insolvency. Job losses have already occurred through no fault of the company, and further job losses will occur unless the matter is resolved. I am glad to see the Under-Secretary of State for Education and Employment, the hon. Member for Pontypridd (Dr. Howells) in his place and I welcome him to his position. My argument tonight is that the Secretary of State has the power to intervene to direct the funding council to confirm that the courses should be funded. At the conclusion of my remarks, I will urge the Minister so to intervene.
It might be helpful if I flesh out the sequence of events in slightly more detail so that the House is aware of the full horror of the circumstances. Fort Bovisand Underwater Centre is the largest diving school in Europe. It has been established for 27 years and has a worldwide reputation for quality. It uses many subcontractors to carry out its training work and, in all, about 300 jobs are directly related to the existence of the company.
Last August, the company entered into a contractual arrangement with South Devon college, based in Torbay, and the Mid-Kent college, based in Chatham, to carry out a series of 10-week courses. The arrangement with South Devon college amounted to 50,000 units of training, and with the Kent college to 100,000 units of training—a substantial investment by the diving centre.
The courses began in August and all went well. Overheads were incurred, staff were paid and students were trained. In November and December 1996, problems began. In correspondence between the Further Education Funding Council and the two colleges, the council intimated that the courses might not be appropriate for funding and that funding might not be forthcoming.
The funding council's attitude was that it was for the principals of the colleges to decide whether to continue the courses. The colleges understandably took the view that they could not possibly pay for the courses unless they were reimbursed by the funding council, and they were not able to obtain funding from outside the funding council route. Therefore, a stalemate arose and it largely remains today.
The funding council relied on a circular from early 1996 in which, it said, it made it clear that such courses could no longer be funded. The colleges—in my view, rightly—said that the circular made nothing clear and that the situation was extremely confused. The confusion continued from November 1996. From that date, no more payments to the company were made, although it rightly continued to train young students and to honour its contracts. It continued to train to the same high standard. It is now owed the staggering sum of £562,000 as a result of the confusion and the lack of funding by the funding council. It is clear that the company is in a severe financial position.
My constituent began to lobby his then Member of Parliament and the then Government to intervene to break the logjam so that the company could continue to train students and be paid for it. He saw the then Minister in April 1997 and a great deal of correspondence took place. Legal advice was sought and much paperwork generated, but action came there none.
Since the general election, I have been in contact with the Department for Education and Employment, which was waiting for legal advice. I can tell the Minister that the Further and Higher Education Act 1992 seems to give him the power to intervene. Section 57(3) states:
If the Secretary of State is satisfied, either upon complaint by any person interested or otherwise, that—
The explanatory note to the section states:
have failed to discharge any duty imposed on them by or for the purposes of the Education Acts, he may make an order under this subsection.
This section enables the Secretary of State to intervene, on the recommendation of the Further Education Funding Council, in the event of mismanagement of an institution. It also provides for intervention where there has been a failure—either by the Council, or by the governing body of an institution within the further education sector—to discharge a duty.imposed upon them, or unreasonable action on the part of such a governing body.
I would say that that entitles the Minister to intervene and direct the funding council to confirm that the courses should be funded.
I am glad that the hon. Lady intervened. I am concerned to learn about the institution in her constituency. Many institutions and organisations throughout the country are awaiting funding because of these circumstances—many of them are subcontractors to Fort Bovisand Underwater Centre. She is right to call for a general review of the way in which the council carries out its duties in that regard.
We are still waiting for a definitive answer from the Department for Education and Employment. My constituent was told that we would have an answer on 17 June about the legal advice received by the Department, but sadly we are still awaiting the outcome. In the meantime, jobs have been and will continue to be lost. Indeed, more than 100 people have lost their jobs as a result of this bureaucratic bungling and the jobs of more than 100 more are on the line.
All that it would take for the matter to be resolved is for the funding council to confirm that the courses, which were entered into in good faith by all the parties, will be funded. It saddens me to think that people in secure jobs in the funding council in Coventry, who understand the threat to the livelihoods of more than 200 people—many of whom are my constituents—will not do more to be flexible, exercise discretion and common sense, do what is right and recognise that a genuine misunderstanding arose and that they can intervene and resolve matters.
I urge the funding council tonight, as I have urged it in correspondence, to reconsider and confirm that the courses will be funded, which would remove the logjam. I am asking the council not to create a precedent or to open the floodgates, but to recognise that an honest misunderstanding has arisen and that it has the ability to resolve the problem. My constituent, Mr. Welsh, is an innocent victim and he does not deserve to be treated in this way.
In conclusion, having dealt with the funding council for the past three months on this problem and felt the cold indifference of its response to date, I am not optimistic that it will change its mind. That is where I come to the Minister, whom I know to be a good-hearted man, even though he is Welsh. I urge him to act and to use his powers under the 1992 Act to direct the funding council to exercise common sense. At the stroke of a pen, he can resolve this issue. On behalf of my constituents, I urge him to do so.
I will not keep the Minister or the House long.
The implications of this affair go much wider than Plymouth, or indeed Liverpool. In my constituency, I have a company called the Scubadoo diving centre. It has appealed to me and to my hon. Friend the Member for East Surrey (Mr. Ainsworth), who has taken a close interest in the matter as some of his constituents work for Scubadoo.
The implications of the matter seem to be extensive, ranging across a number of companies throughout the country. The hon. Member for Thurrock (Mr. Mackinlay) is making noises from a sedentary position. Perhaps he is speculating why a diving centre is located in Croydon, some 50 or 60 miles from the sea. The answer is that, being a good, middle-class, prosperous, Tory-voting constituency, it contains people who want to go diving for recreation and so it seems a logical place for a diving school.
Through the Mid-Kent College of higher and further education, Scubadoo was a subcontractor to Plymouth Ocean Projects, providing services under contract. It describes itself as a satellite company. I am not sure what the contractual relationship is, but it was providing services in Plymouth for Mid-Kent college and expecting to be funded by the Further Education Funding Council. The company was astonished to be informed in March that funding had been withdrawn from August.
A small company is now owed about £19,000. There have been redundancies, and four divers' jobs are at risk. I hesitate to use the word bungle, but there has certainly been an administrative and bureaucratic oversight. We are talking about people's jobs and lives; it is not a question of people who should have known better than to enter into a contract: they were led to believe that they were serving the nation by providing educational facilities.
Like my hon. Friend the Member for South-West Devon (Mr. Streeter), I have always respected the Minister. I am delighted that he is on the Front Bench, as he has always behaved in a courteous and logical manner for and on behalf of his party. I hope that he will be able to say something constructive about a human situation that needs attention.
The hon. Member for Croydon, South (Mr. Ottaway) seemed somewhat bewildered by my interest in the debate. Like him, I have a satellite or subcontracting company, Rhino Divers, in my constituency, so I came as, I hope, a diligent Member of Parliament. I was also approached, fairly and appropriately, and asked to attend the debate, by the desperately anxious constituent of the hon. Member for South-West Devon (Mr. Streeter).
I share hon. Members' deep concern and anxiety for people who have contracted in good faith to provide services and find that they are not being paid and are consequently financially embarrassed. The situation is clearly wholly unsatisfactory and shambolic. I look forward to what my hon. Friend the Minister has to say, but it seems to me that both the college and the Further Education Funding Council deserve serious criticism for the mess that they have created.
My hon. Friend the Minister will have the same difficulty that existed for the previous ministerial team. I understand that the previous Secretary of State, the right hon. Member for South-West Norfolk (Mrs. Shephard), expressed sympathy, but said that it was not a matter for her; however, that is not set in tablets of stone, so I look forward to what my hon. Friend will say. I know that he will do all that he can to help people who have been substantially disadvantaged, including those in both the substantive company to which the hon. Member for South-West Devon referred and the sub-contractors.
I fully endorse the concerns expressed by other hon. Members, but I am also here to say that it would be quite wrong for it be inferred that the new Labour Minister has a magic wand to wave that was not available to the previous Secretary of State.
The hon. Gentleman misunderstands me. I did not intend to introduce a note of partisanship. I wanted to say only that the matter had properly been referred to the previous Secretary of State, who was unable at that stage to help the hon. Gentleman's constituents. I wanted to flag it up that if the new Minister had found some way to overcome the impediments I would say hip hip hooray. I hope that the hon. Members for South-West Devon and for Croydon, South would join me.
It should not be inferred that the problem is down to the Government, when they have demonstrably inherited it. The previous Secretary of State was not lacking in good will, but had difficulties that were conveyed to the constituent of the hon. Member for South-West Devon in a lengthy letter.
I thank the hon. Member for South-West Devon (Mr. Streeter) for giving me the opportunity to make several points on this issue and to set the record straight. I assure him and other hon. Members who have spoken that I intend that this mess should be cleared up as soon as possible. His advocacy for the jobs that are at stake was passionate. I shall certainly try to ensure that the jobs are preserved because they are to be found in some of the most difficult parts of the country in terms of unemployment. They are valuable and we need them.
Essentially, Mr. Welsh, managing director of Plymouth Ocean Projects, has made a complaint to the Secretary of State against the Further Education Funding Council. The complaint is being considered by the Department, and has been for some time, as the hon. Member for South-West Devon pointed out. It is being dealt with urgently but properly. Officials are not yet in a position to provide advice to the Secretary of State. I am very surprised about that because it is clear from letters from the former Secretary of State, the right hon. Member for South-West Norfolk (Mrs. Shephard), that this thing has been dragging on. It should not have dragged on as long as it has. When officials give that advice, the Secretary of State will come to a decision and communicate it, with reasons, to both parties.
Let me recount the history of the complaint, which was made in the last days of the previous Government. Lord Henley, in one of his last actions as Minister, wrote to Sir Robert Gunn, chairman of the Further Education Funding Council—which I shall refer to as the FEFC, even though I hate such abbreviations—enclosing Mr. Welsh's complaint, identifying what seemed to be its main elements and seeking the council's views. Before turning to the complaint, it may be useful if I set out the legal framework for handling it.
Under section 57(3) of the Further and Higher Education Act 1992,
If the Secretary of State is satisfied, either upon complaint by any person interested or otherwise, that—
The hon. Gentleman referred to that power, which is very important.
have failed to discharge any duty imposed on them by or for the purposes of the Education Acts, he may make an order under this subsection".
The following subsection states that
an order under subsection (3) above shall declare the council or the governing body, as the case may be, to be in default in respect of that duty, and may give such directions for the purpose of enforcing the execution of that duty as appear to the Secretary of State to be expedient".
The Secretary of State also has the power under section 496 of the Education Act 1996 to prevent the funding council from acting unreasonably. This is important. That section states that
if the Secretary of State is satisfied (either on a complaint by any person or otherwise) that a body to which this section applies have acted or are proposing to act unreasonably with respect to the exercise of any power conferred or the performance of any duty imposed by or under this Act, he may give such directions as to the exercise of the power or the performance of the duty as appear to him to be expedient".
It is obvious to me from the reply of the hon. Member for South-West Norfolk to an earlier letter from the constituent of hon. Member for South-West Devon that she did not consider it to be clear and expedient to act in that way. I want to explore how we might be able to act in that way.
When considering the exercise of any of these powers, the Secretary of State is acting in a quasi-judicial role in the general public interest, because public law may have been breached. The Secretary of State is not acting in the private interests of the complainants who have brought the matter to the Department's attention.
I should note that the meaning of the word "unreasonable" has been defined by the courts in the context of the exercise of the power. To fall within this expression, the conduct of the body must be conduct that no sensible body acting with due appreciation of its responsibilities would have decided to adopt. The interpretation of the word "unreasonable" imposed by the courts is therefore much more constrained than common usage implies. I assure the hon. Member for South-West Devon that I do not say that to make an excuse for the lack of resolution of the matter. To justify the Secretary of State's intervention, a decision has to be "unreasonable" to the point at which no sensible person in possession of the facts could possibly have reached it.
Mr. Welsh's complaint is that the Further Education Funding Council is refusing to fund training courses in diving that his company has provided, through a contract that he has with two FE colleges—Mid-Kent and South Devon. I am glad that the hon. Member for Croydon, South (Mr. Ottaway) spoke on the matter. He and my hon. Friend the Member for Liverpool, Riverside (Ms Ellman) have made it clear that the decision on this case goes much further than the decision on Fort Bovisand Underwater Centre, the company involved, and its associated companies.
Lord Henley identified four main elements to the complaint: first, that the FEFC should have accepted the open water and advanced open water courses as eligible for schedule 2(d) funding. Section 3(1) and schedule 2 to the Further and Higher Education Act define the courses for which the FEFC has a duty to secure adequacy of provision for part-time students aged 16 and over and full-time students aged 19 and over. Schedule 2(a) consists of courses leading to a vocational qualification approved by the Secretary of State. Schedule 2(d) consists of courses that prepare students for entry to courses in schedule 2(a). The FEFC is responsible for deciding which courses properly come under schedule 2(d). If I can translate that into English—it needs translation—open water and advanced open water training courses are intended to train people as scuba divers. I have discovered that the word scuba does not come from some exotic Cuban drink, but means self-contained underwater breathing apparatus.
My hon. Friend may have known that, but I did not.
The instructor manual of the Professional Association of Diving Instructors says that the open water diver course enables the student to engage in
recreational open water diving without direct or indirect supervision".
The same manual says that the advanced open water diver course provides the
novice diver with a structured, well-supervised means to gain additional experience".
Diving courses are arranged in the form of a ladder, with an individual needing to succeed at one level before passing to the next. Several diving courses are included in schedule 2(a). The highest rung of the ladder in schedule 2(a) is divemaster. There are three training courses below this level: in reverse order, rescue diver, advanced open water diver, and open water diver. The FEFC accepts that rescue diver, as covered by schedule 2(d), prepares the individual for the next level, divemaster, which is in schedule 2(a). It does not accept that open water diver and advanced open water diver courses should fall within schedule 2(d).
I have described that first element in some detail to provide the background to the other elements of the complaint identified by Lord Henley. The second element is that the FEFC should have accepted the opinions of the college principals involved that the courses were eligible for funding. This bears on the system in place for determining eligibility. The third element is that the FEFC did not make its decisions sufficiently clear, sufficiently well known or sufficiently early. This bears on the way in which the FEFC communicated its views to the sector. The fourth element is that the FEFC did not take action, even though it was aware of colleges' plans to include such courses. This bears on the system of communication between colleges and the FEFC.
I have outlined the complaint. What has happened since? The FEFC has replied to Lord Henley's letter, rejecting the four elements of the complaint in some detail. Departmental officials are considering the matter. In doing so, the FEFC has been asked for clarification on certain points, and the advice of counsel has been taken. In the light of that advice, officials have written to the FEFC seeking its further comments.
Departmental officials and our legal advisers have been aware of the urgency with which this matter should be pursued and they are even more aware of it today. However, the important thing is that it should be dealt with properly. Ministers are being kept informed of progress and are content that the matter is being dealt properly. It should be dealt with now and it is being dealt with now. Counsel advises that it should be dealt with as speedily as the nature of the complaint allows, but it is a complicated issue. We do not think that it would helpful or appropriate for the advice that we have received from counsel to be made public at this point.
Throughout, departmental officials have kept Mr. Welsh informed. We will continue to do so. Officials have also reminded him that he must take his own advice about the merit of pursuing alternative courses of action, in particular, pursuing the colleges in question in court—after all, it is with them that he has the contractual arrangement. Mr. Welsh has pursued this matter with energy and vigour and is in regular written and telephone contact with the Department. He has been kept fully informed of progress and, as I am sure the hon. Member for South-West Devon knows, conversations with Mr. Welsh have been many and there has been a full exchange of information.
I repeat that we are dealing with the matter urgently, but properly. I will certainly interest myself closely in the case and want to assure myself that the matter is being handled with all due speed. However, my right hon. Friend the Secretary of State will consider the complaint only on the basis of advice from officials and that advice will not be offered until it is soundly based. Mr. Welsh will be kept informed of developments.
I give the hon. Member for South-West Devon an undertaking that these matters are proceeding and that they will proceed more quickly. I understand the passion with which he addressed the issue; these jobs are important. I am shocked at what appear to be several instances of a lack of communication and of coherent interaction between the FEFC and the colleges in question. I am more than a little shocked by the way in which these matters generally are inspected and monitored. This is one of several cases that show that there should be much more careful monitoring of what contracts are allowed and of the interpretation and understanding of the legislation involved.
I believe that we can resolve this case. It must be resolved quickly. We have instructed departmental officials to get on with that job and I assure the hon. Member for South-West Devon that we will not relax until resolution has been reached.