My Lords, I beg to move that the Commons amendments be now considered.

Moved accordingly, and, on Question, Motion agreed to.

commons amendments

[The page and line references are to HL Bill 75 as first printed for the Lords.]

After Clause 16, insert the following new Clause—

"Intervention: England

Before section 57 of FHEA 1992, insert—

"56A Intervention: England

(1) This section applies if the Learning and Skills Council for England is satisfied as to one or more of the matters listed in subsection

(2) in the case of an institution in England within the further education sector; and it is immaterial whether or not a complaint is made by any person.

(2) The matters are—

(a) that the institution's affairs have been or are being mismanaged by the institution's governing body;

(b) that the institution's governing body have failed to discharge any duty imposed on them by or for the purposes of any Act;

(c) that the institution's governing body 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 any Act;

(d) that the institution is performing significantly less well than it might in all the circumstances reasonably be expected to perform, or is failing or likely to fail to give an acceptable standard of education or training.

(3) If this section applies the council may do one or more of the things listed in subsection (5).

(4) If the council does one or more of those things, it must at the same time give the institution's governing body a notice stating—

(a) the matter or matters listed in subsection (2) as to which the council is satisfied;

(b) the reasons why the council is so satisfied;

(c) the reasons why the council has decided to do that thing or those things.

(5) The council may—

(a) remove all or any of the members of the institution's governing body;

(b) appoint new members of that body if there are vacancies (however arising);

(c) give to that body such directions as it thinks expedient as to the exercise of their powers and performance of their duties.

(6) The directions that may be given to a governing body under this section include a direction requiring a governing body to make collaboration arrangements (within the meaning of section 166 of the Education and Inspections Act 2006) with such bodies and on such terms as may be specified in the direction.

(7) Directions may be given to a governing body under this section despite any enactment making the exercise of a power or performance of a duty contingent on the body's opinion.

(8) The council may not direct a governing body under subsection (5)(c) to dismiss a member of staff.

(9) But subsection (8) does not prevent the council, where it considers that it may be appropriate to dismiss a member of staff whom the governing body have power under their institution's articles of government to dismiss, from giving the governing body such directions under this section as are necessary to secure that the procedures applicable to the consideration of the case for dismissal of that member of staff are given effect to in relation to that member of staff.

(10) A governing body must comply with any directions given to them under this section.

(11) An appointment of a member of a governing body under this section shall have effect as if made in accordance with the instrument of government and articles of government of the institution concerned.

56B Intervention policy: England

(1) The Learning and Skills Council for England must—

(a) prepare a statement of its policy with respect to the exercise of its powers under section 56A,

(b) keep it under review, and

(c) if it considers it appropriate in consequence of a review, prepare a revised statement of its policy.

(2) When preparing a statement or revised statement of its policy, the council must—

(a) undertake such consultation as it thinks appropriate;

(b) consider any representations made to it about the policy to be set out in the statement.

(3) The Secretary of State may give the council guidance in relation to the exercise of its functions under subsections (1) and (2), and in particular in relation to the form and content of the policy.

(4) It is the duty of the council to have regard to any guidance given to it under subsection (3).

(5) The council must send a copy of the statement or revised statement prepared by it to the Secretary of State.

(6) If the Secretary of State approves it he shall lay a copy of it before each House of Parliament.

(7) The council must publish—

(a) the statement of its policy approved by the Secretary of State;

(b) where the Secretary of State approves a revised statement of its policy, the revised statement.

(8) The council must have regard to the statement most recently published under subsection (7) in exercising, or deciding whether to exercise, any of its powers under section 56A in relation to an institution.

56C Directions

(1) This section applies if—

(a) the Secretary of State is satisfied as to one or more of the matters listed in section 56A(2) in the case of an institution in England within the further education sector, and

(b) the Secretary of State is satisfied that the circumstances are such that it would be appropriate for the Learning and Skills Council for England to do one or more of the things listed in section 56A(5) in relation to the institution.

(2) In such a case the Secretary of State may give to the council such directions as he thinks fit as to the exercise of the council's powers under section 56A.

(3) Where the Secretary of State gives the council a direction under this section, he must at the same time give the council a notice stating the matter or matters listed in section 56A(2) as to which he is satisfied.

(4) The council must comply with any directions given to it under this section.

(5) Where the council does a thing listed in section 56A(5) in relation to an institution in compliance with a direction under this section—

(a) the council must give the institution's governing body a copy of the relevant notice under subsection (3), and

(b) the requirement to give a notice under section 56A(4) does not apply.""

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 1. I shall speak also to Amendments Nos. 2, 4, 6, 7 and 8.

The powers of intervention provided for in these amendments are essential to achieving reform in the further education system. We share a determination in England and Wales to improve the quality of further education for learners and employers. To do that, we must have clear intervention policies in place which set out unequivocally our expectations of the system and the actions that the LSC in England and Welsh Ministers in Wales will take to ensure the quality of provision and safeguard the interests of learners. It is simply not good enough that, in spite of continuing improvement, some 40,000 publicly funded learners in colleges in England today are not receiving a high enough standard of education or training.

Although there are currently no failing colleges in Wales, it is anticipated that the enhanced intervention powers may be needed in future to ensure the rise in standards. If anyone is under any misapprehension about the Government's determination to ensure the highest standards in FE and to ensure that those who do not meet them are dealt with robustly, they should bury that misapprehension now.

The need for provision on interventions in this Bill is clear. It is provision that has been developed as a result of discussions in this House, another place and more widely. I know that the Minister responsible for further and higher education is very grateful for the contributions that have been made, as am I. As a result of those discussions, the provision before the House today has been improved compared with what was considered previously.

The area that has been modified concerns giving the LSC and Welsh Ministers powers to direct the governing body to dismiss senior post-holders. We have listened very carefully to the debate on this issue and have made explicit provision that the Learning and Skills Council or Welsh Ministers may not direct a governing body to dismiss a principal or senior member of staff; instead, where the LSC and Welsh Ministers consider that it may be appropriate to dismiss a senior member of staff, they can issue a direction to the governing body to initiate dismissal procedures in respect of a senior post-holder. I make it clear to the House that this can apply only where the governing body has the power under its articles of government to dismiss that member of staff.

We would expect any governing body that received such a direction from the LSC or Welsh Ministers to commission a thorough investigation to gather and weigh any evidence in considering the merits of the case. The governing body alone would be responsible for the outcome of that process.

In this House and the other place, we have been told that there is no evidence to suggest that poor performance of colleges, where it occurs, is generally attributable to inadequate leadership. Let me provide that evidence. In its 2005-06 annual report, Ofsted said:

"There is a close link between the quality of leadership and management and the overall effectiveness of colleges. In all but two colleges inspected in which overall effectiveness is good or better, leadership and management are also good or better. In all but one of the colleges judged inadequate overall, leadership and management are also inadequate".

I can also confirm that in all but one of the cases where the LSC is now working to support improvements in colleges which are currently graded inadequate, the action being taken includes addressing problems in management and leadership.

Similarly, the Welsh Assembly Government's commitment to continuous quality improvement requires that Welsh Ministers can intervene in relation to the leadership of a college. So while the intervention powers are a backstop, they must be there to provide for those rare occasions where a college fails to improve satisfactorily.

In past debates, some have said that because the Secretary of State has not used these powers there is no need for the provision in the Bill. That is wrong for two reasons. First, it is wrong to say that the Secretary of State has never made use of his powers. In the past, the threat of intervention has been a vital tool in addressing the worst cases of failure. In 1999, for example, the Secretary of State's threat to intervene in a college precipitated the dismissal of the principal and vice-principal and the resignation of the governing body. Those responsible for the failure of that college did not wait for the umpire's finger—they walked. Secondly, the fact that the powers have been used to good effect by the Secretary of State does not mean they cannot be used to better effect in future. We should always be prepared to take the opportunity to improve.

In the past there has been no clear strategy for intervention. The rules of intervention lack transparency and apply only in cases of severe failure or mismanagement. They are also slow and cumbersome. We do not have the luxury of holding on to students for three, four or five years while the provision is made good. Students are with us for just one or two years and we must make sure that no cohort of students suffers from poor provision just because the intervention system is too slow to remedy a problem. However, the widely supported aspiration set out in our White Paper goes beyond this. We aim not just for no college to be failing but for all colleges to be good or improving. We aim that no student should ever have to be educated in poor provision.

The 157 Group, which represents the country's largest colleges, is adamant that,

"the guidelines on intervention mean that well managed colleges where governance is effective and appropriate have nothing to fear".

That is the attitude we are seeking to embed across the sector, and that is the explicit view among the colleges most likely to achieve foundation degree awarding powers. Currently, however, 10 per cent of colleges are graded unsatisfactory by Ofsted. Thirty-seven per cent are graded satisfactory but of those some 17 per cent are not improving compared with the previous inspection round; and some 9 per cent have actually got worse. We expect the LSC to address this underperformance through challenge, through support and, should it be necessary, by being in a position to intervene.

The intervention policy for which we are making provision is transparent and arguably more accountable than is currently the case. It is right to transfer intervention powers to the LSC and to vest it with new ones, as the entity legally responsible for funding post-16 provision other than higher education in England. The House will know that in future we shall transfer the funding for 16 to 19 learners to local authorities' ring-fenced budgets. However, we estimate that there will be at least three full academic years before we will be able to give effect to the full legislative changes that follow from this announcement. As the LSC remains legally responsible for the allocation of funds, it remains right to continue with our plans to transfer these powers of intervention to the LSC so that we can sustain our progress on improving standards.

We have been grateful to the Association of Colleges, the organisation which represents colleges, as it has worked with us to develop the intervention policy. The AOC has been a valiant lobby for further education generally throughout the passage of the Bill and it is now clear that it is sensible to transfer these powers to the LSC. The AOC notes that the power to dismiss governors,

"provides protection for the public in extreme circumstances".

It also says that the LSC,

"has a legitimate role in ensuring college provision is of a satisfactory standard".

The LSC is already directly accountable to the Secretary of State. New Section 56C provides that the Secretary of State may direct the Learning and Skills Council in the exercise of its duties under proposed new Section 56A, and he may also direct the Learning and Skills Council generally in the exercise of its powers. As the AOC has pointed out, the LSC can also be held accountable in the courts via a judicial review. I can therefore tell the House that there is neither a real accountability gap nor a legal gap.

The LSC will not be carrying out these processes behind closed doors. Where a college has been identified as underperforming, the LSC will consider whether it has the capacity to improve and whether it can do so within an acceptable timescale. In undertaking this consideration, the LSC will consult as appropriate with local stakeholders. This might include the local authority, employers, learners and other interested parties, such as the sector skills council, if the failing provision falls within a key industry footprint in the area. My honourable friend the Minister for Further and Higher Education will be asking the LSC to develop its detailed proposals for this as part of its consultation on the council's policy for exercising its intervention powers. He will also extend his practice of writing to local MPs when a college is identified as inadequate as a result of an Ofsted inspection. In future, he will also write if underperformance is identified through other routes, such as where a significant proportion of a college's success rates fail to meet the minimum performance level or a college's performance against the new framework for excellence is inadequate.

During earlier debates the noble Baronesses, Lady Walmsley and Lady Sharp, raised the important matter of the interpretation of new Section 56A(2)(d), which refers to an institution which is performing significantly less well than it might in all the circumstances be reasonably expected to perform, or is failing or is likely to fail to give an acceptable standard of education or training. The LSC's judgment about a college's performance will not be subjective. The LSC will have evidence provided by an inspection by Her Majesty's Chief Inspector of Education, Children's Services and Skills as well as other evidence provided against the criteria, which I will return to in a moment, set out in the LSC's intervention policy statement. Before it comes into effect, this statement will be subject to consultation in accordance with Cabinet Office guidelines and to approval by the Secretary of State. To strengthen the learner's voice in the improvement of further education, we intend that the national learner panel will be consulted specifically as part of the consultation. To strengthen the input of providers, the LSC will involve the further education sector-led practitioner panel or its successor body under a self-regulating system in the development of the first and subsequent versions of the statement. The consultation arrangements will include an interactive forum. The LSC will have to consider any representations made on the policy.

Let me return briefly to the criteria. We have made an illustrative draft of the policy available and I can today indicate to the House that the consultative draft of the document will, for the sake of even greater transparency, include suggestions for specific initial thresholds that might be set as triggers for intervention. These include, for example, the outcome of an Ofsted inspection, such as where a college was awarded grade 4 for overall effectiveness and is hence deemed to be inadequate; where a college had been repeatedly awarded grade 3 for its overall effectiveness and was awarded grade 4 for its capacity to improve; where a college's performance levels were unsatisfactory, such as when 25 per cent or more of long-course provision failed to meet the LSC's minimum performance level; where there were problems with the financial health of a college, such as when the LSC auditors or auditors commissioned by the council have reported that financial stability rated category C; and, once the framework for excellence is fully operational, where a college's performance against it indicated unsatisfactory performance through an overall performance rating of Grade 4, which is inadequate.

I have already described to the House how the LSC will ensure that the further education system is fully involved in the development of the council's intervention policy. We are also determined to ensure that the system plays its full part in implementing that policy. The Minister for Further and Higher Education will therefore be asking further education colleagues to work up proposals for the self-regulation of further education, specific proposals for how the system itself could provide help and support to institutions so they are able to avoid being in receipt of a notice to improve from the LSC, and proposals to provide help and support for those that have been issued with a notice to improve.

These amendments make provision for interventions in England and Wales. We need them to secure effective intervention regimes in both nations. Our proposals take full account of representations made by this House and by the sector. The proposals are fully supported by the Association of Colleges for England and fforwm in Wales and they are explicitly supported as an appropriate compromise in all the circumstances by the 157 Group, which is plainly uncomfortable with any assertion that misrepresents its position. The provision is needed to safeguard the interests of learners and other stakeholders. There is consensus that further education plays a vital role in equipping individuals with essential life and vocational skills. It helps them play a full and active role in our society and can help them to achieve personal prosperity and well-being. Given that, we cannot, we will not and we should not tolerate inadequate or failing further education provision. These amendments will build on the Secretary of State's current powers to enable us to achieve our goal of eliminating unsatisfactory provision by 2008. I commend them to the House and beg to move.

Moved, That the House do agree with the Commons in their Amendment No. 1.—(Lord Triesman.)

rose to move Amendment No. 1A, as an amendment to the Motion that the House do agree with the Commons in their Amendment No. 1, leave out "agree" and insert "disagree".

My Lords, I shall also speak to Amendments Nos. 2A, 4A, 6A, 7A and 8A. First, I welcome the Minister to his new role. He is much admired in your Lordships' House and was highly respected for his dedicated work at the Foreign and Commonwealth Office. I am sure that he will bring the same skills and qualities to his new brief, which is of great importance to the future economic success of our country.

When the Bill passed through this House a few months ago, your Lordships successfully removed a clause that gave the Learning and Skills Council considerable new powers to intervene in the running of a college. The amendments that we are now discussing reinstate almost all those powers, with some noteworthy limitations. I thank the Government for working so hard from the start to address many of the concerns about the clause. In particular, the Learning and Skills Council no longer has the power to remove members of a college's governing body.

The Government have printed a 10-page draft policy statement that lays out the intended stages of the intervention process and it includes an impressively complicated flowchart showing the different routes that such intervention could take. All this is immensely helpful. It is now clear how the Government intend the LSC to use these powers and the process is much more transparent than when I first read the original clause. However, it is a damning indictment of the provisions that such an extensive document is necessary to explain the simplest facts about their implementation. Such a complicated process makes it highly unlikely that such powers will ever be used. Does the Minister really believe that any intervention will progress to the end of stage 4 and the ultimate threat of the Learning and Skills Council considering strategic options? If he does not, why does he think that these provisions are necessary? It is certainly not a good strategy to give punitive powers that are not needed.

Improvements notwithstanding, we on these Benches still disagree entirely with these amendments. Many of our concerns were indeed caused by lack of clarity and the potential for inappropriate use. However, those concerns are dwarfed by our principled objection to giving an unaccountable and unelected organisation increased powers of intervention over the decisions made by a college's governing body.

The Government have often attempted to justify their decision to award the LSC these powers by comparing the powers to those wielded by LEAs over schools or even by policing boards over local forces. These comparisons are simply not accurate. The LSC is in no way comparable to the LEAs or local police boards. The latter are elected and directly accountable to the families and children who use the schools and the communities that they police. Quite bluntly, the LSC is neither democratic nor accountable to the wider public. I would question whether it is even accountable to the employers who we hope will employ the students.

The comparison with the LSC and LEAs also highlights the Government's assumption that it is a good thing for colleges to become more like schools in this respect. Why they choose to reduce the FE sector's powers in this part of the Bill while simultaneously expanding them enormously in Clause 17, where they allow foundation degree awarding powers, is mystifying. On these Benches we have no such inconsistency. We hope that colleges continue to expand in size, expertise and responsibility. We would rather that the Government took higher education institutions as their model rather than schools, with all the associated powers of self-regulation and the responsibility that that implies. I beg to move.

Moved, as an amendment to the Motion that this House do agree with the Commons in their Amendment No.1, leave out "agree" and insert "disagree".—(Baroness Morris of Bolton.)

My Lords, we support the Conservative Party in its objection to the Amendment No. 1. In doing so, I welcome the Minister to his new position and accept that the Government have moved considerably in bringing forward amendments to these proposals. Our main reasons for opposing the inclusion of the amendments and supporting the Opposition's Motion is that the Minister began by saying that these amendments are necessary if we are to maintain powers of intervention.

The Secretary of State, under Section 57 of the existing act, the Further and Higher Education Act 1992, already has reserved powers of intervention. The Minister made that clear. For the past seven years, the Learning and Skills Council has used the possible threat of intervention, via these reserved powers, to effect substantial changes within the college sector. The Minister, in fact, instanced a number of occasions when these have been used to date very effectively. We recognise that, but the threat of intervention powers stand behind that.

In debate on Report in the Commons, the Minister for Higher Education and Lifelong Learning said that,

"I strongly believe that clause 17"— the amended clause, if we accept the Government's amendment—

"is an essential component of our reforms of the FE system in England. It is vital if we are to be able to deliver our promises to eliminate inadequate provision by 2008".

In other words, "We want it now because otherwise we cannot effect the reforms that we want to make". That was the point made by the Minister. However, the Minister in the Commons went on to acknowledge that substantial reforms had been achieved. He said,

"We have made real progress. Nevertheless, where there is real and fundamental failure, it is right that we retain these powers of intervention".—[Hansard, Commons, 12/7/07; col. 1647.]

It is not question of retaining powers of intervention: the powers are already there. What we are looking at is actually a subtle extension of the powers of intervention on behalf of the LSC. On the one hand, under Section 56A(6), we have the power to direction collaborations. Collaborations are extremely important, but whether directed collaborations are the right way forward is a moot point.

More substantial is the question of intervention. Under the original legislation the Secretary of State could intervene, and one of the triggers for intervention was when the Ofsted or ALI report said that the college was in serious weakness or failing to provide an acceptable standard of education. The new powers given to the LSC—as the Minister indicated, they were debated both in Committee and on Report in this House—apply when an institution is performing significantly less well than might in the circumstances reasonably be expected. The new draft guidance that has been issued spells out a little those obscure phrases to tell us what they mean. Paragraph 14 refers to underperformances identified by Ofsted through an inspection judgment of overall inadequacy; and by the LSC where a college has failed to meet its published minimum levels of success rate or performance, and in relation to financial health and control.

All the discussion of the need for the LSC to be able to intervene to carry through the agenda of reform for colleges stems from the proposals under the Leitch and Foster reports. Within the college sector, there is already a substantial move towards self-regulation. Every college has to produce a self-assessment report each year. The process is that the LSC sets targets for the colleges and monitors them closely. The draft framework makes it clear that, where there is underperformance, there will be what Foster called a "staged approach to intervention". In the first place, the LSC would then issue a notice to improve to the college, and support would be given from both the LSC and the Quality Improvement Agency on how the college might improve its performance. The college leadership and governors would also be helped to take action to identify and resolve any problems. The LSC could reinforce the governing board and appoint new governors to help to address the inadequacies. It is only where insufficient progress is made under all those measures that any intervention is needed.

The draft guidance tells us that, if intervention is needed, the LSC will write formally to the college board, giving it 30 days to respond and possibly requiring the dismissal of a named individual. Again, it is consulting the board of governors, as the Minister made clear. If after 30 days' consultation the LSC decides that it needs to proceed with intervention, the matter then goes from the local or regional LSC up to the national one, where the decision is taken. The Secretary of State would then be required to be formally notified about intervention.

Lengthy processes are proposed which already exist within the college sector. If the Government feel the need for them to be clarified—there is a need for clarification and transparency here—they can be set down perfectly well in guidance. Much of this follows from an LSC document issued in January last year called Identifying and Managing Underperformance.

I shall go through our basic argument. Under present legislation, the local LSC identifies poorly performing colleges and works with them to improve performance. Often that means a merger or collaboration with a better performing institution; collaboration is a frequently used mechanism. If the college fails to come up to scratch, the LSC can withdraw funding and put that provision out to competition. In the last resort, the LSC may ask the Secretary of State to use their powers of intervention, and it has clearly done so on one or two occasions, although it has never proved necessary for the Secretary of State to issue a formal direction of intervention.

The only difference between the current situation and what is being proposed is that the national LSC takes the decision and issues the intervention notice instead of the Secretary of State. Why do we oppose that? The national LSC is an unelected and unaccountable quango. The Secretary of State is answerable directly to Parliament. There must be some element of democratic accountability. Given that the power is not used very much, the democratic element is vital.

On top of that, it is clear from the statements issued earlier this month on further education and subsequently in response to the Leitch report that new legislation is coming down the pipeline fairly soon to implement the proposals of the Foster and Leitch reports which will change substantially the role of the LSC. In particular, 16 to 19 education and training in further education colleges will be transferred back to local authorities, with the respective funding stream also being transferred back. The LSC will remain only a conduit for finance for post-19 education and training, with decisions on provision of courses for post-19 being transferred on the one hand to employers through Train to Gain and, secondly, to individuals through the proposed new learning accounts.

On Report in the other place, the Minister said:

"I estimate that we will not be able to give effect to the full legislative changes until the academic year 2010-11".

The Minister here said that it will be two to three years before we get there—

"In the three full academic years between now and then, the LSC will retain the legal responsibility for securing and funding all forms of post-16 education and training outside higher education. In particular, it will retain the duty to secure the proper facilities for young people aged 16 to 19".—[Hansard, Commons, 12/7/07; col. 1638.]

We accept that, but we maintain that for the past seven years the LSC has had that duty under a regime in which the reserved powers of intervention have resided with the Secretary of State and that the regime can perfectly well continue for a further three years.

My Lords, I rise to comment on the amendments coming from the other place. The Bill left this House in considerably better condition than when it arrived. It has now returned to this House in a condition that I regard as satisfactory. That means that I cannot support the amendment tabled by the noble Baroness on behalf of the Opposition. I report that my noble Lord Dearing cannot be with us today. Appropriately, he is giving a keynote address at a conference celebrating the 10th anniversary of the Dearing report. He could hardly absent himself from that. We discussed this in some detail earlier today, and I can reasonably say that I speak also on his behalf.

There are two issues of principle in the amendments as they have come back; one concerns intervention and one concerns progression. I agree with the Minister that, in the case of intervention, poor college effectiveness is almost always related to inadequate leadership. There are good teachers, staff and administrators out there. If a college is ineffective, the direction in which it is moving is almost always the problem, although there will no doubt be exceptions. If that is so, the Government must properly take account of it. Intervention was in the original Bill. It was a matter of significant concern, and it led to an exchange of letters between me and the Minister then responsible, the noble Lord, Lord Adonis. I am grateful to him for the trouble that he took over that correspondence.

The amendment from the other place proposes a change that embodies, for me at least, a significant point of principle. Perhaps I diverge from the noble Baroness on the Liberal Democrat Benches here, because it is rather important to get the Secretary of State out of this position. I would not want a politician to be intervening in the local management and administration of an individual college. To have a buffer between the Secretary of State and that college when matters get serious is a good principle to follow.

I have also seen a case in which a candidate for a vice-chancellorship in a university was turned down at a late stage of the process following a sotto voce telephone message from the then University Grants Committee. When a public body wishes to intervene in such an important and delicate matter, I would much rather have a transparent, public process that can be challenged openly—whether by judicial review or whatever. Of course, that example was from before the appointment; I am instancing it as an example of what has happened to my certain knowledge. I am sure that in other ways similar hints have occasionally been given after appointment.

The transfer of the powers from the Secretary of State to the Learning and Skills Council will certainly benefit the sector. I would not have thought that the Secretary of State would want to be involved in such a detailed discussion of staffing in an individual college. Were he to be the focus of such powers, it implies, too, that there is some inadequacy or flaw in the governance structures. If there is, it should be dealt with much more directly than giving the Secretary of State a reserved power. The Government have moved, and in ways that at least two of us who debated this in some detail in Committee and at other stages feel is adequate, possibly satisfactory. There is a significant distinction in Ofsted judgments between those two terms. Let us say satisfactory. The Government have moved in ways that we find acceptable.

Progression, which comes up in this context, was again of considerable importance to many of us. The context is that, in extending the powers for FE colleges to give such an award, there is then an issue of the brand of the UK higher degree system and the kinds of degree offered in this country. The protection of that brand was central to our concerns in the discussions. The noble Lord, Lord Dearing, thought up the rather elegant and eloquent way of dealing with this by insisting that there should be evidence of possible progression from the courses in FE colleges to courses in other HE institutions, including universities. He thought this should be built into the condition of the FE college being given powers to make such awards. This effectively means that the current higher education system will be involved in the quality assurance process.

Finally, the actual drafting says that the Privy Council must consider that the proposals for progression are satisfactory and are likely to be carried out. I wish that this was put even more strongly, but perhaps certainty in this area is an unattainable goal. I take it that there is a safety net in the six-year review of any powers so granted. The reservations I expressed have been met in a satisfactory way and I am happy to support the Bill.

My Lords, for a variety of reasons, I have not had the opportunity to participate in earlier consideration of this Bill. I chaired the Hamlyn Foundation National Commission on Education, which reported in 1993. Many of the provisions were taken up by the Dearing committee, which reported some 10 years ago. Among our recommendations was the establishment of learning and skills councils with powers similar to those now enshrined in this Bill. The noble Baronesses, Lady Sharp and Lady Morris, made the point that the learning and skills councils are not elected bodies, but in public life there are a huge number of non-elected, appointed bodies with authority to carry out the same kind of procedures enshrined in this Bill.

I was, I confess, concerned about the earlier stages of the Bill and some of the powers enshrined in it. The noble Lord, Lord Triesman, who has taken on the poisoned chalice of looking at the whole further education and training sector, has completely persuaded me with the points he made about the amendments that have been introduced and the changes to the Bill. I also support the points that have been made by my noble friend Lord Sutherland, and for that reason cannot support the amendments proposed by the Conservatives and Liberal Democrats on this occasion.

My Lords, I, too, am concerned that the Conservative and Liberal Democrat Front Benches have chosen to continue with their opposition to intervention. When the amendment was sent back to the House of Commons, a powerful argument was made on all sides that the Association of Colleges, the powerful national representative body of colleges of further education, had serious reservations about intervention. These issues were well debated, and this House expressed the strong view that this needed to be considered. The amendment went back to the House of Commons, which gave it due consideration, and we hear today that the Association of Colleges is now happy with the Government's proposals. That should satisfy this House that, because of our work on these issues, they have been dealt with adequately.

I hope that this House will now feel, as the Association of Colleges does, that justice has been done and that we should give the Bill a fair wind. This legislation can then go forward to improve the lot of colleges of further education and those 3 million students in further education who need the support of this House and the House of Commons.

My Lords, I do not think that anybody is challenging the principle of intervention. My noble friend Lady Morris is challenging the extension of the powers of intervention and their delegation to the Learning and Skills Council. As the Minister for Lifelong Learning said in another place,

"in extremis, when all else fails, there has to be a back-stop power of intervention".—[Hansard, Commons, 12/7/07; col. 1650.]

That was the Minister's justification for the amendments.

I do not think that anybody is challenging the backstop power of intervention; instead, it is proposed that it should remain with the Secretary of State, contrary to the belief of the noble Lord, Lord Sutherland. I feel that that is the right place for it. The provisions go far further than dealing with something "in extremis"—a backstop position. As pointed out by my noble friend Lady Morris, there can be 61 steps on the route to intervention. No doubt that is a very sensible set of procedures for the Learning and Skills Council to have. However, throughout the Bill's progress, there have been questions about whether it is sensible to increase the powers available to the LSC. It remains difficult to agree that it is either stable or confident enough to be entrusted with the proposed power of direction.

In another place, the Minister indicated that further legislation would be needed, perhaps within three years. The LSC is also continuously being reorganised. There is recent evidence of this. Although the chief executive signed its report and accounts early in July last year, the LSC told me just today that it did not have a date on which the 2006-07 accounts would be available. That is surely a sign of change, instability and a lack of confidence. It would not be wise to delegate this important power to make directions to the LSC, so I support my noble friend's amendment.

My Lords, I thank the noble Baronesses, Lady Morris and Lady Sharp, for their good wishes. I shall certainly do my best. I also thank the noble Lords, Lord Sutherland, Lord Walton and Lord Bilston, for making the point that we have moved significantly in our discussions. That is acknowledged. The question, of course, is whether we have moved far enough. I shall be as factual and objective as I can in my assessment.

The noble Baroness, Lady Morris, quite rightly pointed to the detail of the flow chart. When I read it, I wondered for a moment whether my eyesight had failed or whether it was as complex as it appeared. It is complex; as the noble Viscount, Lord Eccles, said, there are very many steps in it. However, I realised, and I ask the House to recognise, that the discussions among all the interlocutors, perhaps most especially with the Association of Colleges—I will not accuse it of being a trade union for heads of institutions; none the less, it plays a very strong and, in its way, vital role in ensuring that their interests are properly regarded—have ensured that the intervention steps embody not only the kind of judgments that are needed about failure of quality but all the steps required in employment law.

I say that with some feeling, having drawn up both agreements and flow charts that have all the steps of employment law in them. No doubt your Lordships know that that results in a pretty complex document. It is no easy matter to get around that. None the less, there it is. It is full because it is thorough, and unless significant parts of employment law had been left out it would never really have done the required job. That job was summed up very well by the noble Lord, Lord Sutherland, who, with his huge experience of running one of the beacon universities in the United Kingdom, offers a very important insight into the quality of leadership that institutions need to achieve the very high standing that we want from them.

I shall deal with the key arguments made. First, it is suggested that the proposed intervention mechanism is less democratic than keeping the powers with the elected Secretary of State. The current reserved direction powers of the Secretary of State do not provide for directions to be given to deal with unsatisfactory senior post-holders. They cannot deal with the principle, and they cannot be used on the basis of the existing reserved powers. It would therefore be a mistake to believe that we can simply fall back on a mechanism that is already there and is entirely satisfactory.

The reality, as the noble Lord, Lord Walton, made very clear, is that the country has a very long and proud tradition of having professional and other bodies that are not elected by the public but which we expect to do a significant job in the public interest. We have bodies that set standards and oversee performance—bodies in which the public have invested their trust—and we rely on them to earn that trust properly. Indeed, the public are entitled to expect from them a service that is assured for quality. I shall give a few examples of those bodies, because the point made by the noble Lord is so important: the General Teaching Council, the General Medical Council, the Financial Services Authority, the Office of Fair Trading, the Competition Commission, the Charity Commission and the Bank of England. A mixture of different kinds of bodies, they provide a variety of services, but not one of them is elected by the public or a body on which we do not rely for its good sense and proper judgment in matters that are absolutely vital to the public. It would not be right to claim that it is unusual or novel to give powers of oversight and regulation to bodies other than the Secretary of State. That would be an assertion without foundation. Democracy, in that sense, cannot be the issue for the administration of a great deal of our important public life.

On the points made by my noble friend Lord Bilston, we are bound to consider what the professionals working in this area have to say. They are clear and the AOC has said that the LSC is best placed to exercise the powers, which go more widely—as the noble Baroness, Lady Sharp, said—precisely because it is important to get a holistic take on this and to ensure that all the things which we need done are done properly. The AOC is clear, and I think that the 157 Group is also now absolutely clear. All I ask is that the House takes this decision not on the basis of suppositions but on the evidence of what the professionals have said is good for the sector.

The other big advantage, in the view of those two key professional groups, is that the powers that they wish now to see with the LSC—which would be deleted by the opposition amendments—provide a much better platform on which we can build our shared ambition of a self-regulating sector. The AOC and the 157 Group recognise that the mechanism is much better in that respect than one that the Secretary of State could have in a thoroughly centralised and dirigiste model. Indeed, any successor body—and there will be those, because this sector will always change and, because education always moves on, it will never have a simple, settled solution—including a self-regulating body will have a much better chance of success based on the proposed model, which is firmly rooted in the further education system. That is the underlying point, which those groups are right to make by drawing on their expertise in running that sector.

This is the platform for the future; it is robust, transparent and fair. I ask the House to judge on the evidence. It is not a matter for anecdote or supposition, but one of saying how this sector can work best in the view of those who are going to make it work, and how that will be the platform for the future. The balance we have in these amendments gives the House the opportunity to take that decision today in a way that will be applauded around the sector, and will hasten these new foundation degrees. We will return, in Clause 4, to the progression question that the noble Lord, Lord Sutherland, raised. This gives the basis for a sector that is improving all the time, and full of ambition to do the job that we expect of it.

My Lords, I thank the Minister for his full and frank reply. When I made my opening remarks about the Minister transferring his notable skills to his new role, I had in mind his skills at the Foreign and Commonwealth Office, not as a former general secretary to the Labour Party. He certainly knows how to pull the levers. All I can say to noble Lords who have spoken is that universities would not put up with such powers of intervention. Despite the Minister's undoubted powers of persuasion, we remain unconvinced.

In his excellent review, the noble Lord, Lord Leitch, did not mention the Learning and Skills Council until page 71. It was not mentioned at all in the recent Statement on world-class skills, so I wonder very much about its future. As my noble friend Lord Eccles said, we are not soft on underperforming colleges, but the power to intervene should remain where it currently resides, with the Secretary of State. This, in our view, is completely unnecessary, unhelpful legislation and is a classic case of Parliament doing too much, which is hardly surprising given that this Government pass a new law every three hours. For that reason, I wish to test the opinion of the House.

On Question, Whether the said amendment (No. 1A) shall be agreed to?

Their Lordships divided: Contents, 159; Not-Contents, 157.

Resolved in the affirmative, and amendment agreed to accordingly.

After Clause 16, Insert the following new Clause—

"Intervention: Wales

(1) Section 57 of FHEA 1992 (intervention) is amended as set out in subsections

(2) to (4).

(2) In subsection (2) (conditions for intervention), for paragraph (d)

substitute—

"(d) they are satisfied that the institution is performing significantly less well than it might in all the circumstances reasonably be expected to perform, or is failing or likely to fail to give an acceptable standard of education or training."

(3) After subsection (5) insert—

"(5A) The directions that may be given to a governing body under this section include a direction requiring a governing body to make collaboration arrangements (within the meaning of section 166 of the Education and Inspections Act 2006) with such bodies and on such terms as may be specified in the direction."

(4) After subsection (6) insert—

"(6A) The Welsh Ministers may not direct a governing body under subsection (5)(c) to dismiss a member of staff.

(6B) But subsection (6A) does not prevent the Welsh Ministers, where they consider that it may be appropriate to dismiss a member of staff whom the governing body have power under their institution's articles of government to dismiss, from giving the governing body such directions under this section as are necessary to secure that the procedures applicable to the consideration of the case for dismissal of that member of staff are given effect to in relation to that member of staff."

(5) After section 57 of FHEA 1992 insert—

"57A Intervention policy: Wales

(1) The Welsh Ministers must—

(a) prepare a statement of their policy with respect to the exercise of their powers under section 57,(b) keep it under review, and(c) if they consider it appropriate in consequence of a review, prepare a revised statement of their policy.

(2) When preparing a statement or revised statement of their policy, the Welsh Ministers must—

(a) undertake such consultation as they think appropriate;(b) consider any representations made to them about the policy to be set out in the statement.

(3) The Welsh Ministers must lay before the National Assembly for Wales a copy of any statement or revised statement prepared by them under this section.

(4) The Welsh Ministers must publish any statement or revised statement prepared by them under this section.

(5) The Welsh Ministers must have regard to the statement most recently published under subsection (4) in exercising, or deciding whether to exercise, any of their powers under section 57 in relation to an institution.""

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 2.

Moved, That the House do agree with the Commons in their Amendment No. 2.—(Lord Triesman.)

rose to move, as an amendment to the Motion that this House do agree with the Commons in their Amendment 2, leave out "agree" and insert "disagree".

My Lords, I beg to move.

Moved accordingly, and, on Question, amendment agreed to.

3: Clause 17, page 11, line 38, at end insert—

"( ) After subsection (2A) (as inserted by subsection (4)) insert—

"(2B) Where the Privy Council is considering whether to make an order

under subsection (1) above specifying an institution as mentioned

in subsection (1)(b) above, the Privy Council may not make the order unless—

(a) the institution gives the Privy Council a statement setting out what it proposes to do as regards making arrangements for securing that any person granted an award under or by virtue of any power that would be conferred on the institution if the order were made (other than the power described in subsection (4A) below) has an opportunity to progress to one or more particular courses of more advanced study, and

(b) the Privy Council considers that the proposals are satisfactory and are likely to be carried out.""

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 3.

This amendment fulfils a commitment given by my noble friend Lord Adonis when the Bill was last before this House. My noble friend acknowledged that the issue of foundation degree graduates progressing to higher-level study is such an important matter that it deserves to appear in the Bill, and that is what the Government have sought to provide through the amendment that is now before your Lordships.

Amendment No. 3 provides that in order to grant foundation degree-awarding powers to an FE institution in England, the Privy Council must first have received a statement from that institution setting out how it proposes to secure opportunities for progression to at least one course of more advanced study for any person awarded one of its foundation degrees. The Privy Council will also need to consider that these proposals are satisfactory and are likely to be carried out before it can grant foundation degree-awarding powers. When considering whether to make an order granting foundation degree-awarding powers, the Privy Council will take advice from the Quality Assurance Agency, (QAA).

In practice, it is expected that the statement about proposals for ensuring progression would form part of a "critical self-analysis", which all institutions applying for degree-awarding powers are asked to carry out. This self-analysis will also be the basis for any application for foundation degree-awarding powers. Therefore, Amendment No. 3 does not place any substantial new burden on applicant institutions.

To maintain standards and safeguard the interests of the learner, it is vital that we strive to preserve the flexibility and potential for innovation that have already made the foundation degree such a popular and highly valued qualification. Institutions, the courses they offer and the needs of employers and learners can and will change over time. With this in mind, Amendment No. 3 has been drafted so that the proposals are to cover not just progression arrangements in respect of foundation degree courses being contemplated at the time of the initial assessment but how the college plans to ensure progression arrangements as it introduces new foundation degree courses over time.

The amendment deliberately avoids creating an entitlement for foundation degree graduates to a place on a course of higher-level study. This is consistent with the commitment made by my noble friend Lord Adonis when the Bill received its Third Reading in this House. Admissions policies and procedures remain the prerogative of individual institutions, and the amendment is framed so as not to infringe this.

The amendment is not prescriptive about how a college should approach the question of progression. There is already diversity of practice, and we would not want to stifle that. It will be for the awarding institutions themselves to determine how they go about achieving progression opportunities for every person awarded a foundation degree, and it will be for foundation degree graduates to decide whether they wish to take up the opportunities for progression that are presented to them.

Progression need not always be to an honours degree. The published draft guidance states that progression is expected to be to at least one bachelor's degree with honours, with an expectation that this should not normally exceed 1.3 years for a full-time equivalent student in England, or to an appropriate professional or other qualification at level 6 in the National Qualifications Framework.

I am sorry that the noble Lord, Lord Dearing, is not in his place, but I know that he is at a conference which is analysing the 10 years since his quite exceptional report. He has written to me suggesting that the wording of paragraph 12 of the draft guidance be amended slightly to reflect more closely the wording of paragraph 30 of the foundation degree benchmark statement—included as Appendix 2 of the guidance—which also addresses progression.

I undertake that we will incorporate the noble Lord's suggestions in the next version of the guidance, which will be issued as a working document to the QAA, following completion of the Bill's passage. At the end of the first sentence of paragraph 12, we will insert the following form of words, which will replace the second sentence of that paragraph:

"Progression routes should be established when Foundation Degrees are validated, and identify the link(s) between the Foundation Degree and other qualification(s). Such links may be to qualifications awarded by higher education institutions and/or by professional and other educational bodies. Institutions awarding Foundation Degrees will normally guarantee progression to at least one bachelor's degree with honours, with the expectation that this should not normally exceed 1.3 years for a full time equivalent student in England. Alternatively, progression may be to an appropriate professional qualification or other qualification at level 6 in the National Qualifications Framework".

I also take this opportunity to thank the noble Lord, Lord Dearing, for his valuable contribution to the development of the proposals on foundation degree-awarding powers throughout the passage of this Bill. His helpful and constructive suggestions have informed several improvements made by the Government, both to the provisions in the Bill and to the non-statutory guidance and criteria. I look forward to continuing working with the noble Lord, Lord Dearing, and other noble Lords who have assisted with this and with whom other government colleagues have worked.

Returning to Amendment No. 3, the applicant institution's statement needs to be forward-looking, setting out the institution's strategy for securing progression routes from foundation degree programmes which it might establish in future as well as from those it has already established and developed.

In determining whether an applicant institution's proposals are satisfactory and likely to be carried out, the Privy Council might also consider whether the institution's academic management is sufficiently strong to ensure that progression routes are and will be established. In making its determination, the Privy Council may also wish to consider what the applicant institution proposes to do about renewing progression arrangements or seeking new ones, if the old ones should lapse. If necessary, with the help of a third party organisation such as Foundation Degree Forward.

A mechanism needs to be in place that can monitor whether, once a college has been granted foundation degree-awarding powers, it continues to act in accordance with the statement it made at the time of application. Failure to do so and, more generally, a failure to secure opportunities for progression for its foundation degree graduates, would be a grave matter.

A lapse in progression routes from any foundation degree would be picked up by the QAA, whether through its regular audits of HE provision in FE institutions or through its procedure for handling causes of concern in institutions providing higher education.

A cause for concern can be declared at any time. There is no need to wait until the institution's next audit to investigate whether there has been a transgression and, crucially, to make the necessary intervention if that is required. If, on investigation, the cause for concern is established and substantiated, swift and proportionate action can be taken to rectify the shortcoming.

The consequences for a foundation degree-awarding college that fails to ensure progression from its foundation degrees are set out in the QAA's published procedure. In all cases, the QAA will discuss the outcome with the institution concerned and request an action plan, with targets for rectifying the shortcoming. HEFCE will be informed of the action to be taken in the case of institutions it funds. The department will be informed of this action in all cases. The QAA will monitor and sign off all action plans and decide whether the institution's next scheduled audit should be brought forward.

The substantiation of a cause for concern carries a serious reputational risk to any provider of higher education and it would have a negative impact on that institution's ability to recruit new students. QAA intervention is a real deterrent to serious lapses in standards, which is what a failure to ensure progression would amount to. The QAA has commented:

"The recommending of an institution for foundation degree-awarding powers would be on the assumption that an FE institution would operate its powers in the manner anticipated when its application was assessed. The failure to ensure progression routes would be a serious matter and might constitute grounds for QAA intervention. The review of the cause for concern would look at the issue of persistent failure and make recommendations accordingly".

We have brought forward a sensible, robust package of statutory and non-statutory measures, which signal clearly the continued centrality of progression to the foundation degree qualification. A strong, effective mechanism is in place for monitoring the performance of foundation degree-awarding institutions and intervening where this is not satisfactory, not only at the time of application for the new powers but on an ongoing basis. I therefore urge your Lordships to agree to the amendment.

Moved, That the House do agree with the Commons in their Amendment No. 3.—(Lord Triesman.)

My Lords, this amendment was brought forward in another place to address concerns raised in your Lordships' House—especially by the noble Lord, Lord Dearing—regarding the Government's intention to give colleges the power to award foundation degrees. I thank the Minister for appreciating the depth of feeling on this issue and for taking such a constructive approach to the debate surrounding these degrees. The guidance published by the Government and the assurances given by the Minister have done a great deal to reassure those concerned that the powers will be implemented judiciously. I look forward to seeing foundation degrees continue to grow in popularity and provide a route for many more students to gain a credible qualification that leads naturally to higher education. I am therefore pleased to welcome the amendment.

My Lords, it is well known that we on these Benches had some reservations about granting powers to further education colleges to award foundation degrees in the first instance, but we have been reassured by the concessions that have been made in this House and the other place and carried through into the Bill. In particular, we very much welcome Amendment No. 3, which goes some way towards guaranteeing routes to progression and endorsing the comments made on Report by the noble Lord, Lord Dearing.

In particular, I very much endorse what the Minister has agreed to do in the guidance. I am pleased that the much more explicit statement in paragraph 30 of Appendix 2 will be incorporated into the text at paragraph 12 so that it is stated much more clearly that routes for progression should be in place.

I hope that it is in order for me to ask the Minister a question about the guidance concerning the power to award foundation degrees, although I do not know whether he will be able to reply. As he knows, colleges of further education span a great many different areas, and only a few of them pretend to offer higher education qualifications. It is clear that, when the colleges go for foundation degree status, they seek the power to award those degrees in areas where they currently offer higher education qualifications, and the quality assurance procedures are geared to that. On pages 15 and 16 of the draft guidance concerning scholarship and pedagogic effectiveness, it is made clear that the applicant organisation will be required to provide evidence that all teaching staff engaged in the delivery of its higher education programmes have the relevant academic qualifications and so forth. Can we assume that exactly the same requirements are to apply if a further education college, having attained the power to award foundation degrees, moves into awarding those degrees in other areas where it is does not currently offer higher education provision?

Perhaps the Minister would like to write to me on this issue. I realise that it is a red herring in relation to the Commons amendments. It was the first time that I had seen the draft guidance. In going through the draft guidance, it was an issue that occurred to me. These Benches retain, as does Universities UK, some reservation about all the procedures, but we are glad now that we have moved forward to granting these powers. We look forward in particular to seeing how they operate in practice.

My Lords, I will take up the offer to write to the noble Baroness. It would be ill judged for any institution to believe that it could move from no presence in a higher education area into a position where it could conceivably offer degree level. That would need the most careful scrutiny before anyone thought that were possible. But I express here my sentiment about the requirements for quality in the general sense. That can no doubt be filled out properly in writing. I shall ensure that both leaders on the Front Benches have that information.

On Question, Motion agreed to.

: Clause 30, page 20, line 8, at end insert—

"( ) Section (Intervention: Wales) comes into force in accordance with provision made by the Welsh Ministers by order."

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 4.

Moved, That the House do agree with the Commons in their Amendment No. 4.—(Lord Triesman.)

rose to move, as an amendment to the Motion that this House do agree with the Commons in their Amendment 4, leave out "agree" and insert "disagree".

My Lords, I have spoken to this amendment with Amendment No. 1A. I beg to move.

On Question, amendment agreed to.

Clause 32 page 20, line 29, leave out subsection (2)

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 5. This is the privilege amendment.

Moved, That the House do agree with the Commons in their Amendment No. 5.—(Lord Triesman.)

On Question, Motion agreed to.

Schedule 1 page 22, line 23, at end insert—

" (1) Section 57 (intervention) is amended as follows.

(2) In subsection (1), after "an institution" insert "in Wales".

(3) In subsection (2)—

(a) in paragraph (a), for "the Secretary of State is" substitute "the Welsh Ministers are";(b) in paragraphs (b) and (c), for "he is" substitute "they are".

(4) Omit subsection (3).

(5) In subsection (4), for "the Secretary of State" substitute "the Welsh Ministers".

(6) In subsection (5)—

(a) for "He may" substitute "They may";(b) in paragraph (c), for "he thinks" substitute "they think".

(7) In the heading, after "Intervention" insert ": Wales"."

: Schedule 2, page 23, line 26, at end insert—

Schedule 2, page 23, line 39, at end insert—

My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 6 to 8.

Moved, That the House do agree with the Commons in their Amendments Nos. 6 to 8.—(Lord Triesman.)

rose to move as an amendment to the Motion that this House do agree with the Commons in their Amendment Nos. 6 to 8, leave out "agree" and insert "disagree".

My Lords, I have spoken to these amendments with Amendment No. 1A. I beg to move.

On Question, amendment agreed to.