Clause 2

Further Education and Training Bill [Lords] – in a Public Bill Committee at 10:30 am on 12th June 2007.

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Regional councils

Photo of John Hayes John Hayes Shadow Minister (14-19 Reform and Apprenticeships)

I beg to move amendment No. 21, in clause 2, page 2, leave out lines 42 to 48.

We move now to the meat of the Bill, the first part of which deals with changes to the structure of the Learning and Skills Council, in that it proposes that the LSC be regionalised and its local offices come to an end. I know that hon. Members will want to debate the matter at some length, because it was aired on Second Reading in the House and discussed in the other place, where the Bill originated. There are contentious financial, organisational and administrative issues associated with that proposal.

The clause places the LSC under a duty to establish a regional LSC in each area of England specified by the Secretary of State, and to specify functions for those regional councils. Indeed, the regional LSCs will be able to exercise powers and functions outside their areas. This is a probing amendment to draw attention to that provision, because it is not clear what is meant by it. What kind of functions will be exercised outside the areas of the regional LSCs? In what circumstances might those functions apply? How would that be determined? What reporting and accounting would there be for all that process? Does the Minister perceive this matter to be a matter for all regional LSCs? Are all LSCs likely to operate outside their areas, or is this something that he anticipates will only take place in particular parts of the country, perhaps where there is an obvious overlap between responsibilities? It may be that a regional council that is focused around a conurbation may feel that it needs to operate in the suburbs beyond that conurbation. That could be the type of thing that the Minister has in mind andthat the Bill intends, but there is not a clear understanding, certainly among Opposition Members and I suspect across the whole Committee, of precisely how that process will work.

Amendment No. 21 is essentially designed to determine why these regional LSCs need powers outside their area and also to test the legitimacy of  those powers. One might argue that there is a certain type of legitimacy in regional offices, and that there is a certain level of regional representation. I do not want to go down the road of considering regional government and all that that embodies, Mr. Atkinson, because you would not let me. The Opposition believe in proper democratic accountability and therefore, frankly, we are suspicious of bogus structures that offer no real legitimacy. However, notwithstanding that, it is important that the Minister makes it absolutely clear how this particular aspect of the Bill is likely to work in practice. To that end, I am delighted to move amendment No. 21, which stands in my name.

Photo of Sarah Teather Sarah Teather Shadow Secretary of State for Education

With your permission, Mr. Atkinson, I would like to make just a few comments relating to the clause to enable us to speed through our debate.

The Liberal Democrats are largely in support of the idea of moving to a regional structure, but originally we envisaged that process as being coterminous with regional government, which would have given those regional councils some type of democratic accountability. Of course, that gap is still there within the Learning and Skills Council, regardless of how we reorganise it.

With reference to amendment No. 21, I wonder whether part of the point of the amendment is to allow organisations based around cities, which may fall across regions. I wonder whether the Minister will comment on that issue. I can imagine a situation where there are regions, but there may also be a city that draws people for employment purposes from outside that particular region. In that situation, one would need to ensure that the planning of skills training is appropriate for people who live within a separate region. I wonder whether that is part of the point of the amendment.

I also wonder whether the Minister will say something about the representation of college principals or college governors in the new regional council structure. That issue has been raised with me by the Association of Colleges, which is concerned.

Finally, I wonder whether the Minister will explain how the regional structure will work with the national structure for the organisation of higher education.

Photo of Tim Boswell Tim Boswell Conservative, Daventry

May I begin, Mr. Atkinson, by welcoming you to the Chair? We have engaged on a number of important Bills in the past, and I hope that you will indulge me as I make what might be termed a substantive speech on this issue, which will preclude my doing so in a clause stand part debate or possibly at a later stage of the proceedings.

Before I go on, may I welcome the ministerial team, one of whom, the Minister for Higher Education and Lifelong Learning, I have already had discussions with on other matters this morning? I am also delighted to see the Under-Secretary of State for Education and Skills, the hon. Member for Corby, back in the team. I recognise the genuine contribution that they both make. May I also say, proleptically to later clauses, that I welcome the Under-Secretary of State for Wales, the hon. Member for Carmarthen, West and South Pembrokeshire? Although it would be apparent to anyone who has even the most limited knowledge of  accents that I am not Welsh, I have a Welsh wife and certain Welsh educational interests. If nobody else raises Welsh matters, I may feel the need to do so later on.

Regarding the specific issue of regional councils, there is only one point in the Minister’s opening remarks this morning about which I have some reservations. It is a characteristic—a sad characteristic—of the present Labour Government that they tend to suggest that no social advance took place before 1997 and that everything good has taken place since.

I hope that we do not have that kind of discussion; indeed, knowing the Minister, we will not. I readily and happily concede that Ministers have made efforts in recent years, in some cases successfully, to improve what I hope is a common objective—to recognise, celebrate and develop our further education.

The Minister made a point about further education that I thought was somewhat inaccurate. Not only is he beginning to rewrite the history of the past—of the pre-Labour Government period—but he is beginning to elide the history of the present Government. He might have a bone to pick with the Minister for Science and Innovation, who was Under-Secretary of State for Education and Employment when the House considered the Learning and Skills Act 2000. My hon. Friend the Member for South Holland and The Deepings, who was a member of the Standing Committee that considered the 2000 Act, will recall that it passed through the House at some length, with more than 30 sittings in Committee, and I had the privilege of leading on the matter. The 2000 Act was rather important for further education, even if it was not confined to that subject.

I promise the Committee that there will be no further instances—if there are, I invite hon. Members to put me down—of my speaking as a former shadow Minister and saying, “We told you so at the time.” However, I start with one instance. The Minister will, of course, be aware of the 2000 Act, but it would be a self-indulgent to assume that he and his officials have read in full the transcript of that Standing Committee. However, I am sure that he will know about the amendment that I moved at 10.30 am on 9 May 2000, seven years ago, to clause 19. I invited the then Minister to accept this amendment:

The Secretary of State may, by an order subject to affirmative resolution in both Houses of Parliament, after consultation with such persons as may seem to him to have an interest, (a) amalgamate, (b) divide, or (c) vary the area of operations of one or more of such local learning and skills councils.”—[Official Report, Standing Committee F, 9 May 2000; c. 309.]

I am afraid we went down to a resounding defeat on that occasion—it was three votes to 11—but had that provision been embodied in the 2000 Act, we would not have needed half of the present Bill, because Ministers could have moved the pieces around the chessboard. I say that in passing, but if the Minister cares to read that debate—I had not reread it until a few moments ago—he will see some interesting exchanges about the balance between central and local, and those exchanges will continue whatever form is used.

Without prejudice to the future of the Learning and Skills Council—I do not want to engage in that debate now—it is at least arguable or defensible to move to a regional structure, and the Minister will seek to justify that in Committee. However, I have reservations—some precise ones that I shall deal with in a moment and some general structural ones. It is not the first time that the LSC has been reorganised, but every time it happens—in this case it is being done formally by moving to a regional structure—there are other changes. We tend to be promised less bureaucracy, fewer committees and a general reduction in cost to the taxpayer.

The Minister will know that the reorganisation of the LCS is already under way internally, and, in a sense, that does not depend on and is not confined to the regionalisation agenda. Other changes are being made to the way in which the LSC operates, and they probably need to be made, if only to reduce costs, although that is not without difficulty, including for constituents of mine who work for it. However, the Minister needs to say clearly how much money will be saved by the move to regionalisation, by how much bureaucracy will be reduced in the interface with users of the LSC’s services and whether the arrangement can be sustained. I say that because, whatever aspirations Ministers may have had over the seven years since 2000, things have been subject to revision and change. That is my main point. I therefore invite the Minister to say that the present changes will be substantive, helpful and money-saving changes that will deliver a better and more flexible service.

I want the Minister to consider three specific points in relation to that. First, if he looks up that transcript, he will find some exchanges about function, and we persuaded Ministers of the day to change their minds slightly on the matter. There is the question of what might be termed home authorities for particular businesses. For a national employer—let us say Sainsbury for the sake of argument—it is clearly very important to have a relationship with the learning and skills council that will handle its needs and activities. The LSC will have an idea of the employer’s training needs, and it will want to discuss them with someone and to see that they are delivered—of course, the train to gain initiative will kick in to some extent. In future, will that be conducted at a national level by a designated officer within the LSC, or will it be done regionally to meet the needs of employers at that level? It is extremely important that that should happen, and Ministers need to comment on it.

There have sometimes been uneasy tensions, and one of the paradoxes about having a bigger regional structure, rather than a structure of 47 local councils, is that it will be less unequivocal about where to start. A company will have one head office and that is fairly easy to pin down in one local LSC area, but it may operate in each of the regions—for example, it may have its head office in one region but more of its activities in another. I would like the Minister to tell the Committee a little about how such arrangements with national level employers would work.

Conversely, the second area concerns small and medium-sized enterprises. Whatever else one says, we have had some good support in Northamptonshire built on the experience of the old training and enterprise councils structure, where we had an integrated chamber  of commerce structure—we will not reopen that argument. At least if we had local employment needs, there was somebody available locally to talk to and—if one can use the phrase—broker with. Individual local employers have been able to make approaches at a local level.

I frequently become paranoid about not the concept of regional government, but its delivery and practice as it affects my constituency. Not only do I have the most south-westerly constituency in the east midlands—it is not far away from that of the Under-Secretary of State for Education and Skills, the hon. Member for Corby—but it is a substantial distance away from the constituency of my hon. Friend the Member for South Holland and The Deepings, who is also an east midlander. Conversely, my hon. Friend the Member for Rugby and Kenilworth is just over the border from me, and some of my people go to his schools, for example. However, that is a different region. When one is looking at SMEs, in particular, one is looking at dispersed rural areas—it is 100 miles to Nottingham, which is a long way to go to get a service. The Minister needs to give assurance, not least in terms of relations between the regional LSC structure and the local county structures, for example.

Photo of Angela Watkinson Angela Watkinson Opposition Whip (Commons) 10:45 am, 12th June 2007

In Havering, we have an excellent business education partnership, which is a member of the local chamber of commerce and has direct links with local employers and the local FE and HE college. Does my hon. Friend see a role for business education partnerships in feeding into the learning and skills councils?

Photo of Tim Boswell Tim Boswell Conservative, Daventry

I thank my hon. Friend for that intervention. Clearly, I do not want to caricature the position of Ministers. Ministers do not want everything to happen at the regional level, and they know that education and skills delivery will be local, but the important thing is how the links are articulated. My hon. Friend the Member for Upminster has eloquently mentioned education business partnerships, and I know that one or two of those have operated at a county level.

Employers’ organisations are also important. I used to be involved with the National Farmers Union. It tends to operate at a county level and also at a three-county level—it is clear that the Under-Secretary of State for Education and Skills, the hon. Member for Corby has some sympathy with the points that I am trying to make. We all agree that we need local delivery. We want to strip out as many layers of bureaucracy as we can, but we need to feel that there is some local ownership.

My final point concerns cross-boundary arrangements. Because of the geography of my constituency I take a particular interest in this. I have already mentioned that some of my constituents travel to the constituency of my hon. Friend the Member for Rugby and Kenilworth for schools, college and further education. It is very important that anomalies donot prevent the application of perfectly sensible arrangements for families—dad should be able to drop off a teenager at a particular college on his way to work, for example.

In conclusion, we can always play games in this area. We can devise ideal structures and they may not work. We can have ramshackle structures and, given good  will, they may work. I am not caricaturing what the Ministers propose as one or t’other. We want the structures to work, and what has happened in the past has not been ideal. I am prepared to give a fair wind to what Ministers are now proposing, and I hope that it works. It is important that they are aware of the sensitivities and the history of debates on the matter. I would be grateful if Ministers were to consider the relationship with national level employers.

As I did not mention it earlier, perhaps I can also chuck in the issue of specialist or heritage skills. In my constituency, for example, there is a stonemason who has a very good operation and who takes on about three apprentices. That is difficult to deal with at a local level, because there is a small national need for such skills. Perhaps Ministers will add that to the list.

To summarise, my concerns are national employers, specialist skills, the relationship with SMEs and the way in which one achieves outreach to contact them however far from the regional centre of government they may be, and, finally, an assurance on cross-boundary issues. I have nothing but good will for the Ministers, if they can get this right and if they can simplify things. I hope that they will remember the maxim, which I quoted in those exchanges seven years ago, about Occam’s razor: it is unwise to multiply entities beyond the necessity for doing so. The less bureaucracy and the more delivery we have, the better.

Photo of Bill Rammell Bill Rammell Minister of State (Lifelong Learning, Further and Higher Education), Department for Education and Skills

This has been a helpful exchange to get to the heart of some of these matters. I listened with interest to the enthusiasm of both the hon. Members for South Holland and The Deepings and for Brent, East for formalised, regional, democratically accountable structures. I do not seem to recall that enthusiasm when we had a debate about elected regional government some time ago. [ Interruption. ] If I have misrepresented them, I apologise. However, there are structures to ensure that there is democratic accountability.

The hon. Member for Brent, East asked me a specific question about the role of both FE and HE colleges within the revised and reformed regional councils. We confirmed in Grand Committee in another place that

“we would expect all LSC regional councils to be business-led, drawing employers from the priority skills sectors in the region concerned.”—[Official Report, House of Lords, 23 January 2007; Vol. 688, c. GC329.]

We also stated that membership would include those with backgrounds in the trade unions, local authorities, college providers and higher education. In that way we will ensure that councils have a good understanding of the skills needs of the local communities that they serve.

I shall respond directly to some of the comments by the hon. Member for Daventry. His implied criticism was that the Government do not recognise that any social advance took place before 1997. I refute that: I recall that there were some social advances between 1974 and 1979—there were also social advances between 1945 and 1951 and between 1964 and 1970. More seriously, of course, there have been advances in the past under Governments of all parties.

In response to my statement that this is the first substantive further education legislation since 1992, the hon. Member for Daventry mentioned the Learning  and Skills Act 2000. The 2000 Act affected further education, but it did not focus fundamentally and exclusively on further education, as this Bill does.

The hon. Gentleman asked me to recall his intervention seven years ago at 10.30 am, but I cannot exactly recall what I was doing on that occasion. However, I take his point that the Learning and Skills Council has achieved a significant success, but as the learning and skills landscape changes, it can and should evolve. No one seriously says that we do not need an intermediary body to fund learning and skills providers on the ground, but how the Learning and Skills Council undertakes that operation has, rightly, evolved and should continue to evolve further.

Photo of Jeremy Wright Jeremy Wright Conservative, Rugby and Kenilworth

The Minister is right. The structure must evolve, but as my hon. Friend the Member for South Holland and The Deepings has said, we expect the Government’s response to the Leitch review imminently. What happens if that response indicates that the Government intend to go for a sub-national arrangement that is not regional? How will that tie in with what the Bill proposes?

Photo of Bill Rammell Bill Rammell Minister of State (Lifelong Learning, Further and Higher Education), Department for Education and Skills 11:00 am, 12th June 2007

I will not pre-empt the Government’s response to Lord Leitch’s comprehensive report. [Interruption.] No, the Bill does not pre-empt it. There is a clear consistency and consensus between this Bill, which focuses on the supply side, and the arguments advanced by Sandy Leitch.

The hon. Member for Daventry raised issues concerning reform of the Learning and Skills Council and costs, which we will consider in detail later in our proceedings. I reflected long and hard on some of the statements made on Second Reading, and on the wholly extraordinary and erroneous claims by the Conservative party about the proportion of administration expenditure in the LSC’s overall budget. I hope that at the end of our debate some of those accusations will be withdrawn, because the proportion of expenditure on administration under the LSC has reduced from 4.6 per cent. to 1.9 per cent. of overall expenditure.

The hon. Member for Daventry asked me explicitly what savings the current restructuring exercise would deliver. The current restructuring will engineer savings of up to £40 million per annum. That needs to take account of all the changes, including the removal of the 47 local LSCs. On the non-executive side, through these changes we will reduce non-executive participants from 750 to 150, which will put things in much better shape.

Photo of John Hayes John Hayes Shadow Minister (14-19 Reform and Apprenticeships)

The Minister is right. There were exchanges on Second Reading about costs. I want to be absolutely clear and candid about that, as I am sure that the Minister does, too. Is he saying that there will be an immediate saving as a result of the measure he just described, or that that saving will accrue once the reorganisation is in place? How much of that saving has already been announced? He would not want to be in the business of double accounting, any more than we would.

Will the Minister clarify what was meant by what the Secretary of State and others said on Second Reading about the savings only kicking in after some time?

Photo of Bill Rammell Bill Rammell Minister of State (Lifelong Learning, Further and Higher Education), Department for Education and Skills

A combination of changes is taking place through the existing Learning and Skills Council strand 7 of the “Agenda for Change” and the changes taking place as a result of the measures in the Bill, which will generate savings of £40 million per annum. I ask the hon. Gentleman to reflect on the claims made by Conservative Members on Second Reading that the Learning and Skills Council was spending £1.8 billion on administration and expenditure.

Photo of Bill Rammell Bill Rammell Minister of State (Lifelong Learning, Further and Higher Education), Department for Education and Skills

As the Under-Secretary of State for Education and Skills, my hon. Friend the Member for Corby has said, that claim is complete nonsense and without foundation.

Photo of Tim Boswell Tim Boswell Conservative, Daventry

On that point, I have had a most satisfactory correspondence with somebody whom I know at the LSC. I am satisfied that at least some aspects of the figures might have been overstated, but that does not mean that there is not a concern about bureaucracy. The Minister has said that he will cut the number of non-executive directors as part of the reform, which may slightly reduce costs. Can he assure the Committee that there will still be the same involvement at local level? It is important that people who are active locally in the business community are able to input to the LSC.

On the requirements for flexibility, from a cursory look at the Bill—I have not sought to amend it—it seems to me that the rigid structure that we criticised seven years ago will now be transferred to regions. If Ministers ever wanted to make things more flexible or to vary them, they would not appear to have the opportunity to do so through the Bill. Will the Minister consider whether that is worth re-examining?

Photo of Bill Rammell Bill Rammell Minister of State (Lifelong Learning, Further and Higher Education), Department for Education and Skills

I will discuss the specifics of that issue later, but the hon. Gentleman has made an important point. If we are reducing the number of non-executive directors from 750 to 150, what continuing contribution can those individuals, who have given significant service, make to the overall learning and skills landscape? There are a number of ways in which they can contribute. First, they can do so through direct contact and involvement with further education providers on the ground. Secondly, although we are—rightly, in my view—moving from 47 area councils to nine regional councils, we will also have150 partnership teams on the ground, so we will get both a regional and a localised interface, which is lacking from the current structure.

My experience as a constituency MP is one of the things that has convinced me of the need for change. Under the system of the 47 learning and skills councils, the council for my constituency covers the geographical area of Essex, which is as large as some countries in terms of both size and expenditure. The idea that there is the necessary degree of localisation in those circumstances is not borne out by the evidence.

Photo of Jeremy Wright Jeremy Wright Conservative, Rugby and Kenilworth

I want to take the Minister back to costs and savings and ask him to provide a bit more clarity. I refer him to the Learning and Skills Council’s annual report and accounts for 2005-06, in which Ray O’Dowd, whom he will know as the LSC “Agenda for Change” champion, described the changes that the LSC was making at that time:

“we will be working with providers in a more strategic, hands-off way. Working like this will need about 1,300 fewer staff, which will free as much as £40 million a year for investment at the front line. In the past year we have set out the reorganisation and staff changes that we need, and these should be in place by late 2006.”

I want to be clear that the savings of £40 million that the Minister has said will result from the proposals in the Bill are not the £40 million to which Ray O’Dowd referred in that document—Mr. O’Dowd suggested that the savings would be achieved by measures taken by the end of 2006.

Photo of Bill Rammell Bill Rammell Minister of State (Lifelong Learning, Further and Higher Education), Department for Education and Skills

I was talking about a combination of the LSC’s strand 7 and—[ Interruption . ] That is not a surprise; it is what I said about five minutes ago. I am talking about a combination of the strand 7 measures and the changes that will result from the Bill. I can update the Committee: through the strand 7 “Agenda for Change”, we now estimate that 1,100 net posts will be removed. Combined with the measures that we are debating, such as the move from 750 to 150 non-executive directors, that will create an overall annual saving of £40 million.

I know that we will return to this issue. We are looking for precision and clarity. I welcome the acknowledgment from the hon. Member for Daventry that what he and other Opposition Members said on Second Reading was without foundation. The claim was that the LSC’s administrative expenditure was£1.8 billion, and one can reach such a figure only by including learner support and capital expenditure, for example.

One of the things that I am very proud that this Government have done in the past 10 years is significantly to expand our capital expenditure. In 1997, not one penny was being spent in the mainstream capital budget; today, £500 million per annum is being spent. If that is administrative expenditure, frankly it is the type of administrative expenditure that people on the ground have been crying out for over an awfully long period.

The hon. Member for Daventry also asked whether the transfer of responsibility from local to regional LSCs will make it harder for SMEs to be involved in skills planning and delivery. I genuinely do not believe that that will be the case. Employers will make up more than 40 per cent. of the membership of the LSC’s national and regional councils, while at the local level, as I said earlier, the LSC’s 150 or so local partnership teams will work with a much wider range of stakeholders, including employers, to ensure that local learning and skills needs are properly identified.

I want to discuss the specific details of the amendment. It may be helpful for the Committee to recall that the Learning and Skills Council is the Learning and Skills Council for England. In that sense, it is a single, unitary body and I believe that that is one of its key strengths, enabling it to work at national, regional, local and sectoral levels. As we set out in the 2006 White Paper, we are strengthening both regional  and local tiers of the LSC. The LSC has to be sufficiently flexible to work across regions, sectors, city regions, areas and cities, and also to engage with partners, employers and learners at every level.

The amendment that the hon. Member for South Holland and The Deepings has tabled seeks to remove the provision mirroring section 20(2) of the Learning and Skills Act 2000, which applies to existing local LSCs. That provision reconfirms, for the absolute avoidance of doubt, that the LSC has flexibility to secure commissioning and delivery of learning and skills in the most effective way possible.

So, for example, a regional council will be able to contract with and fund a learning provider operating anywhere in England, or indeed fund an institution that attracts students from outside its own specific area. A practical example of where that would be necessary would be in the event of a merger of two colleges in neighbouring regions. The legal entity would be in one region, but the LSC regional council for the neighbouring region would need to engage with that provider. That is notwithstanding the fact that the provider’s legal base would be in the area covered by a different regional council, possibly securing provision across regional boundaries. I think that that was the issue that the hon. Member for Daventry was driving at.

The amendment tabled by the Opposition would explicitly prevent that type of activity, as well as removing the ability of a regional council, where specified by the council, to undertake activity on behalf of the council for the whole of England. Although we intend that the regional councils will be underpinned by statute, I believe that the sub-regional structure needs to be flexible and responsive. The LSC will improve engagement through the 150 or so local partnership teams that I have already referred to, and there will be about one team per local authority area. I believe that those partnership teams will be much closer to local communities than the current 47 local councils, and therefore they will be better placed to ensure that the needs of learners are being identified and met.

Those local area partnerships, as flexible internal executive arrangements, are not specifically provided for in the Bill, but their job is to work directly with local stakeholders, including employers, local authorities and local colleges, schools and independent providers, to identify and meet the learning and skills needs of each area.

The LSC will have to consult learners and potential learners, as well as employers. It will also—rightly, in my view—work with the national learner panel and other learner networks to ensure that the voice of learners is genuinely heard. That is a very important issue and therefore we intend that the LSC will recruit and appoint a learner to the national council in due course, possibly this autumn. We also expect each LSC regional committee to include a learner as well. That is an important change and, allied with the other responses that I have given, I hope that the exchanges on this particular amendment have introduced some clarity, and I am grateful for having had the opportunity to contribute to that process.

The need for the regional councils to exercise functions that are delegated to them by the national council, both within and outside their area, is clear.  These are sensible provisions that will enable the LSC to continue to operate flexibly and effectively. I therefore ask the hon. Gentleman to withdraw the amendment.

Photo of John Hayes John Hayes Shadow Minister (14-19 Reform and Apprenticeships) 11:15 am, 12th June 2007

The Minister is a good and diligent Minister, and I am delighted that we will hear from him at length over the coming hours, days and weeks. May I also take this opportunity to welcome the Under-Secretary of State for Education and Skills, the hon. Member for Corby, who will no doubt be assisting the Minister with his usual skills? However, the beginning of this Committee has been a disappointment. Ihave been disappointed with his combination of obfuscation, rhetoric and assertion. We have also had some smear from the Minister about the record of the previous Conservative Government and about the content of speeches that were made on Second Reading. We need a little more accuracy in the way in which we deal with these affairs.

My hon. Friend the Member for Rugby and Kenilworth has made a revelation in the course of this debate, which is that the savings that the Minister reported at the beginning of his speech were a combination of savings already made and savings expected to be made. Given that my hon. Friend made it clear that the savings already anticipated as aresult of the reorganisation that he mentioned were£40 million, one wonders what contribution the new savings will make to that combined total, as £40 million plus zero comes to £40 million, does it not? £40 million plus another amount would come to something more than £40 million. We are not absolutely sure where those savings come from, how much more we expect to save, and what the LSC budget will be like at the end of next year as a result of these changes. We have had more heat than light from the Minister on that subject.

Turning to the two other matters of substance that have been debated, the Minister has made a good case on why, in certain circumstances, a regional LSC might need to act outside its area. That is the issue at the heart of the amendment, and I anticipated that to some degree—the hon. Member for Brent, East said the same—when I said that it was likely that in city areas one could understand that the employment base might not be coterminous with the regional structure, and that it would therefore be necessary to have some flexibility in the way that the organisation operated. To that end, the amendment has done its job, and as a result of probing, we have discovered what we need to be assured of. However, the other point that the Minister raises about the exact nature of these regional organisations and their relationship to localities gave cause for concern once again. If we are going to have this panoply of local bodies sitting beneath the regions, we may be reinventing the structure that we are now reforming. I can see a burgeoning of organisations and individuals that fill the gap that has been created by the very change to regionalisation that the Bill proposes. Is it not really the case that what is required here is a root and branch reform of how we fund and manage matters of the kind that the Leitch report recommends, and to which the Government will no doubt respond.

I recommend to the Committee—the Minister may not have had the chance to see it and it is highly relevant to this part of the Bill—the report published today by the Opposition’s economic competitive policy group, chaired by my right hon. Friend the Member for Wokingham (Mr. Redwood), on skills training for a more competitive economy. In that document, hot off the press, a case is made that is rather similar to that made by Sandy Leitch, that we need a fundamental rethink of how we fund and organise the management of skills, rather than this re-arranging of the deckchairs as we head for the iceberg that the Minister has articulated, and I am being generous by saying “articulated”. I shall withdraw my amendment because I do not want to start the Committee in an unnecessarily antagonistic vein. However, I hope that some of those matters will be clarified as the work of Committee develops, because I am still very concerned about the financial and organisational effects of some of the proposals that we have begun to tease out this morning.

Amendment, by leave, withdrawn.

Photo of John Hayes John Hayes Shadow Minister (14-19 Reform and Apprenticeships)

I beg to move amendment No. 22, in clause 2, page 3, line 8, leave out ‘and local authorities’ and insert

‘, local authorities and sector skills councils’.

Photo of Peter Atkinson Peter Atkinson Conservative, Hexham

With this it will be convenient to discuss amendment No. 25, in clause 7, page 6, line 38, after ‘employers,’, insert—

‘(ba) sector skills councils, or’.

Photo of John Hayes John Hayes Shadow Minister (14-19 Reform and Apprenticeships)

The subsection that amendment No. 22 would amend specifies that the LSC must consult regional development agencies and other local bodies on guidance to regional councils. However, it does not specify that the LSC should have a duty to consult sector skills councils. Given the greater role envisaged by the Leitch review for such councils, and their significance in articulating the needs of employers and working with training providers to ensure that what is offered matches those needs, those bodies should at the very least be consultees.

Sandy Leitch—I make no apology for mentioning him again, because the Minister started by referring to the Leitch report in relation to the Bill—and the official Opposition would like sector skills councils to have a much bigger role. The report that I mentioned earlier, which I know will be on the Minister’s bedside table tonight, makes precisely that case. The sector skills councils should be the principal conduit for identifying need, explaining that need to the Department and working to accredit courses that meet that need with training providers in FE colleges and elsewhere.

That is not the Bill that we have before us; it is the Bill that we expect to see in the next Queen’s Speech, when the Government respond to the Leitch review and the new Prime Minister is at the helm. However, in order to reflect the importance of the sector skills councils, they should at least be consulted. Amendment No. 22 provides for that—it would make the sector  skills councils statutory consultees in the process. Let me flesh that out for a moment. The Leitch review says at paragraph 4.25 that

Sector Skills Councils (SSCs) are beginning to effectively engage employers. Over three fifths of employers who have had dealings with their SSC think that SSCs have had a positive impact on skills development in their sector. Nearly two thirds of employers who deal with their SSC are satisfied. This includes those employers who operate across a number of SSCs with different business and occupational areas. The evaluation shows that there are significant variations by sector in performance.”

However,

“employer satisfaction with the labour market information provided by their SSC” is generally good.

In my judgment, the Government also recognise the importance of sector skills councils and are likely to do so all the more when they respond to the Leitch review. I cannot see why, therefore, they should reject the amendment; given the importance of SSCs, it would be perverse to resist it, and I know that the Minister will be eager to accept such a positive contribution tothe Bill.

Amendment No. 25 deals with the duty of the LSC to secure the provision of facilities for education and training. It would provide for the LSC, in performing that duty, to act with a view to encouraging diversityin education and training, and to increase the opportunities for individuals to exercise choice by consulting SSCs in line with the FE White Paper. Paragraph 3 states:

“Alongside learners, employers are the major customers of FE....We have now established a full network of 25 SSCs, led by employers to ensure that their needs and priorities for the skills that will support productivity are both articulated through SSAs and met through more responsive provision.”

In essence, our amendments reflect our determination to ensure that employer-led organisations are at the heart of the process. I hope that the Government will accept them in the spirit in which they are offered. Should the Minister be resistant to my pleas, at the very least I hope that he will take this opportunity to explain what role he sees sector skills councils playing in this consultative process and how he sees them interacting with the newly structured Learning and Skills Council.

Photo of Sarah Teather Sarah Teather Shadow Secretary of State for Education

Liberal Democrat Members are very supportive of these amendments. They seem perfectly sensible. If Sandy Leitch has recommended that post-19 provision needs to be employer-led, it seems sensible that the regional councils should be required to consult with the sector skills councils. I shall be curious to hear the Minister’s response to the amendments, but we are very supportive of them.

Photo of Jeremy Wright Jeremy Wright Conservative, Rugby and Kenilworth

May I belatedly welcome you to the Chair, Mr. Atkinson? I rise to speak in support of amendments Nos. 22 and 25 moved by my hon. Friend the Member for South Holland and The Deepings. I should say from the outset that the sector skills council that deals with the land-based industries, Lantra, is based in my constituency. Partly as a result of the work that it does, it is particularly important that these amendments find their way into the Bill. I, too, hope that the Minister will view them sympathetically. One of the reasons for that is that it is apparent from my  discussions with Lantra that the sector with which it deals is specific in its requirements and very unusual in many respects. Whenever policy is formed and guidance and advice is constructed the land-based sector should therefore be included.

I hope that the Minister can help me with one particular issue and offer me some reassurance. If there is to be a regional structure, a case will inevitably be made for regional centres of excellence. In land-based engineering, for example, there is probably enough demand to justify five centres of excellence nationwide. With nine regions, each region will wish to compete for one of those centres. There will not be enough to go around and it would be inappropriate to create nine centres simply to meet that requirement. I hope that the Minister can reassure us that if we are to have a regional structure, there will be a mechanism for resolving those sorts of issues to ensure that the sector—the land-based sector in this case—is properly served with these centres of excellence and that there is a national overarching view to go along with the regional structure proposed in the Bill.

Photo of Tim Boswell Tim Boswell Conservative, Daventry

It will not have escaped the Minister’s attention that the two amendments bear on two slightly different bodies: one is in relation to the duty or obligation of the regional councils to consult and the second relates the council itself. In a sense that has been brought out in what has already been said. In addition to the other tensions we identified earlier there is also a tension between the council and sector skills councils and the operation of the relationship, such as it is, and whether it should be at a national, regional or local level.

The Minister owes the Committee some explanation of how that should work. Sector skills councils will have an important continuing role, but they need to have the right consultation mechanisms. My judgment is that they should be at both regional and national level. As my hon. Friend the Member for Rugby and Kenilworth pointed out, some facilities cannot operate below the level of the region and may need to have only a small number of centres of excellence. I mentioned the example of stonemasonry, although I do not think that that needs to be exclusive, but certain minority, albeit important, skills may need a single centre of excellence nationally. Those links need to be carefully deployed.

Some of my earlier scepticism about sector skills councils is being dissipated in the event. I am pleased about that. They are beginning to bed down. There was a hurry to move into a national structure. Ministers were rather pressing ahead with it, sometimes beyond the capacity of those centres. Those of us who know the area well will be aware of the strengths of organisations such as SEMPTA and Construction Skills, in the latter case based on a training levy, although we will not debate that issue today. They had some substance before they started. I have been impressed, in my recent work in connection with Pitcom, on the response to e-skills. There are other favourable cases: even Lantra, which I have known man and boy in my professional, as well as my policy, capacity, has now established itself and has a major contribution to make.

In terms of what the Government are proposing, and what Conservative Members are saying, there is a very important role for sector skills councils. They need to have the right relationship with the Learning and Skills Council as it operates nationally and regionally and the Minister should explain to the Committee how that will work in practice.

Photo of Bill Rammell Bill Rammell Minister of State (Lifelong Learning, Further and Higher Education), Department for Education and Skills 11:30 am, 12th June 2007

The hon. Member for South Holland and The Deepings set out his enthusiastic support for sector skills councils, which I welcome, as they are at the heart of the Government’s agenda in responding to the skills challenge.

The hon. Gentleman also said that according to the Leitch report, to which we will respond shortly, the sector skills councils will take on a more substantive role. He also alluded to the fact that Sandy Leitch recommends that we move even further in a demand-led direction. I agree with both those propositions and nothing in the Bill contradicts that approach. If hon. Members could identify what in the Bill stops us moving in the direction of the Leitch report’s recommendations, I would better understand their concerns. Ministers throughout the Department, especially my hon. Friend the Under-Secretary, regularly meet the sector skills councils.

Photo of Tim Boswell Tim Boswell Conservative, Daventry

Will the Minister accept that if legislation specifies certain bodies as consultees and excludes others, whatever his good intentions and however much he may wish it to happen in practice, there is different pressure to conduct consultations on those that are specified and those that are not? That is at the root of our concerns on the matter.

Photo of Bill Rammell Bill Rammell Minister of State (Lifelong Learning, Further and Higher Education), Department for Education and Skills

I will address that concern directly, as it is explicit in the regulations that we expect that engagement to take place with the sector skills councils.

Photo of John Hayes John Hayes Shadow Minister (14-19 Reform and Apprenticeships)

The Minister asked me a question, so I thought I should respond through the Chair.

The critical matter is not what the Bill says, but what it does not say. If the Government’s response to Leitch reflects the principal message in that report, which is to move to a demand-led system with a very different structure—the Learning and Skills Council is not mentioned until 70 pages into Leitch—we anticipate that further statutory change would be needed to facilitate that new structure. We are not arguing that the Bill is necessarily unhelpful in that respect, but that it is a missed opportunity; it does not pave the way for such fundamental change. That is the essence of our point about the Bill.

Photo of Bill Rammell Bill Rammell Minister of State (Lifelong Learning, Further and Higher Education), Department for Education and Skills

That clarification is helpful, but I genuinely disagree with the hon. Gentleman. The critique that usually comes from Opposition Members is that we legislate too often when it is not necessary. To move the system in a more demand-led direction one does not need to legislate; we have already committed ourselves through the “Further EducationWhite Paper to moving to 50 per cent. of provision being  demand-led by 2015. There is a debate to be had about how much further and more quickly we can go in that direction, but it does not require legislation. That is why I said that there is nothing in the Bill that contradicts Sandy Leitch’s recommendations.

The hon. Member for Rugby and Kenilworth talked about the importance of centres of excellence and how they can be recognised within the revised structure. I refer him to the previous debate; it is clear that we have a unitary council structure and there will be a national overview. If we had accepted the amendment, it would have been more difficult to ensure genuine national co-ordination when responding to the issue of centres of excellence. The hon. Member for Daventry raised concerns about centres of excellence. I remind him that we are moving forward with national skills academies, and we are committed to there being 12 by 2008. We also have an excellent network of centres of vocational excellence, which are developing the kind of best practice model that we need to see across the country.

I have made clear the importance that we attach to the work and role of the sector skills councils. They are the key to articulating demand for skills, to identifying priorities and to stimulating increased demand for skills among employers. Hence, they are a vital plank in the creation of a more demand-led system, as we outlined in last year’s White Paper on further education. Indeed, the importance of that role was acknowledged and asserted by Sandy Leitch in his recent report.

We have already ensured that the LSC involves the sector skills councils fully in delivering its functions, including regionally. The LSC works with the SSCs through sector skills agreements, which also bring together employers and other key partners, including the awarding bodies. The agreements set out each sector’s needs and provisions and the action needed on the supply side to meet skills gaps and shortages.

The LSC rightly consults widely with SSCs nationally and regionally through the regional skills partnerships, enabling it to respond effectively on skills priorities. In addition, the new LSC structure will allow it to work much more effectively in partnership with SSCs and employers and its many other partners. The nine regional councils, which will be given statutory underpinning under clause 2, will have a key role in developing strong collaborative relationships with key partners, including SSCs, in order to secure a strong link between jobs, training and skills.

Clause 7 makes it clear that other persons to be consulted may be expressly specified in guidance made by the Secretary of State. We have made available an illustrative draft of the statutory guidance, prepared in accordance with the Bill, to which the LSC must have regard. That draft makes explicit reference to consultation with SSCs and regional skills partnerships. It makes it clear that we expect the LSC to consult with the 25 SSCs and, once it has been established, with the new commission for employment and skills. That genuinely provides the reassurance that hon. Members seek.

Although I agree with the sentiment behind the amendments, I believe that they are not necessary. I would not want to refer in legislation to organisations that are non-statutory bodies. I said earlier that this is the first substantive piece of further education  legislation since 1992. We do not want to pin ourselves down to specific bodies in primary legislation. Such organisations may change, and referring to them in primary legislation could therefore be without meaning. Given that, and given the draft regulations, I hope that the hon. Member for South Holland and The Deepings will feel able to withdraw the amendment.

Photo of John Hayes John Hayes Shadow Minister (14-19 Reform and Apprenticeships)

The Minister assures us that, through guidance, sector skills councils will indeed play a critical role in the consultative process laid out in the Bill. However, there remain concerns. One is the narrowing of the membership of the Learning and Skills Council to 10 members, which was dealt with under clause 1; it will have fewer members than the Higher Education Funding Council, the Qualifications and Curriculum Authority and the Quality Improvement Agency. It seems that 10 is the new minimum. Another is the removal of localities from the system that regional councils will inevitably cause, notwithstanding what the Minister said about other sub-regional bodies. I also have doubts about what I would describe as a sort of bunker mentality, as the LSC comes under increasing pressure following criticisms from independent sources—the Leitch review envisages it withering away—and there are constant concerns about bureaucracy.

Those issues of consultation, liaison and responsiveness become ever more critical. However, I know that the Minister is genuinely committed to ensuring that all interested parties play a part. I hear what he says about the importance of guidance and, furthermore, hear what he says about the risks and dangers of enshrining some of these matters in primary legislation. A Minister of any political colour would take a similar view. Having heard him offer those assurances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2 ordered to stand part of the Bill.

Clause 3 ordered to stand part of the Bill.