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We are moving ahead with some speed now, but, none the less, it is important that we hesitate to say a word or two about amendment 239, which stands in my name and that of my hon. Friends.
The purpose of the amendment is to probe the Government on the character of the Young Peoples Learning Agency. By that I mean that it is the Oppositions view that the arrangements for the funding and management of skills should be as consistent and coherent as possible. To that end, the amendment removes the words:
there is to be a body corporate known as the Young Peoples Learning Agency for England and replaces them with the words:
there is to be a body which is part of the Skills Funding Agency known as the Young Person Learning Agency for England.
The arguments for that change are set out more clearly in the debate that we are bound to have on clause 58. Essentially, we are attempting to ensure that the YPLA and the SFA work in a coherent and effective manner, and that the SFA provides an overall strategic vision while the YPLA provides the funding. The aim is to minimise the bureaucracy, the confusion, the convoluted arrangements and the incoherence that is likely to dog the Bill in its current form. We look forward to what the Minister has to say. As I have said, this is a probing amendment.
I want to speak to amendment 105, which is tabled in my name and that of my hon. Friends. Clause 57 creates the Young Peoples Learning Agency as part of the range of quangos replacing the Learning and Skills Council. As the National Union of Teachers so pithily put it:
We are concerned about the creation of a plethora of new agencies, with the Skills Funding Agency and the Young Peoples Learning Agency. We are in danger of exchanging the bureaucracy of the LSC for two new agencies.
The Governments answer to more bureaucracy is another bureaucratic reorganisation. They are going to replace the Learning and Skills Council with the Skills Funding Agency...and a sub-quango, the National Apprenticeship Service, as well as with another quango, the Young Peoples Learning Agency.[Official Report, 23 February 2009; Vol. 488, c. 47.]
I fear that that reorganisation may lead only to greater bureaucratic overload.
My hon. Friend the Member for Havant (Mr. Willetts) described this as
a good example of a Government running out of steam and having to reorganise their own reforms...They inherited the Further Education Funding Council, which they abolished in 2001 in order to create the Learning and Skills Council. In 2008, the 47 local learning and skills councils were abolished and replaced by nine regional bodies and 150 local partnerships. In 2010, the Learning and Skills Council that this Government created is to be abolished and replaced by the Skills Funding Agency, the Young Peoples Learning Agency and the National Apprenticeship Service. This is an example of endless reorganisation.[Official Report, 23 February 2009; Vol. 488, c. 115.]
The LSC employs 3,300 staff. 1,000 of them will transfer to local authorities, 500 will transfer to the YPLA and 1,800 will transfer to the SFA. In an evidence session, the Under-Secretary of State for Innovation, Universities and Skills, the hon. Member for Birmingham, Erdington (Mr. Simon), in answer to a question put by my hon. Friend the Member for South Holland and The Deepings about the cost implications of this reorganisation, said:
The cost is already set out in the impact assessment; we have not memorised it. It is on the record.
Again in response to my hon. Friend, he went on to say:
This change is not a cost-saving exercise; that is not why we are making it. In the immediate term, it will be cost-neutral; in the long term, my expectation is that the new structures will be more efficient and cost-effective than the LSC.
The Minister for Schools and Learners said:
For claritys sake, the administrative cost of the new system, including staffing and on-costs, will be met...by the LSCs current staffing budget. We expect that to be revenue-neutral, but there will be some additional transitional costs. Savings will be made by operating from a smaller estate of office premises...the SFA will require fewer premises...Sharing will be facilitated by the fact that the SFA and YPLA head offices will be located together in Coventry.
When my hon. Friend asked again what the transitional costs would be, he was, alas, referred again to the impact assessment. As the right hon. Gentleman said in the same evidence session:
That is certainly set out in full in the impact assessment. We can obviously return to that during our debate.[Official Report, Apprenticeships, Skills, Children and Learning Public Bill Committee, 10 March 2009; c. 179-180, Q427, 428 and 429.]
Here we are, returning to it during our debate.
I have the impact assessment here. On page 33, under a heading of Transition costs, it states:
Although on-going costs of the new system will be revenue neutral there are likely to be transition costs relating to premises and pensions and, potentially, the transfer of the people from the LSC to their new employers. There will be assets that can be realised to offset these costs, such as the premises, though the current economic climate will make the calculations more complex. Work on calculating these is on-going and will proceed alongside the development of the designs for the Young Peoples Funding Agency and Skills Funding Agency.
The YPFA appears to be another quango that we are not aware of, unless there is a typo in the impact assessment, because I thought that it was called something else.
So we now have another agency, or it is a typo in the impact assessment. However, the key point about this impact assessment is that, regarding these costs:
Work on calculating these is on-going.
However, I would have thought that they were set out in full in the impact assessment, which both the Minister for Schools and Learners and the Under-Secretary of State for Innovation, Universities and Skills assured us about during the evidence sessions. Therefore, I hope that the Minister for Schools and Learners will be able either to explain his comments in the evidence sessions or perhaps he could write to members of the Committee, setting out what those Transition costs are, which we were assured have been calculated, so that they can be put on the record.
As for costs in the long run, the impact assessment says:
We expect ongoing costs of operating the new system to be revenue-neutral compared to the current system in the short term, with savings and efficiencies through a more integrated service at local authority level in the medium to long term.
Amendment 105 says:
The YPLA is not permitted to employ more than 500 people.
That is the number of LSC employees that will be transferred to the YPLA. Now, I have just read out the statement from the impact assessment that
We expect ongoing costs of operating the new system to be revenue-neutral in the short term.
Therefore, this prohibition should not be a problem for the Minister. Furthermore, the impact assessment says that it is expected that there will be
savings and efficiencies...in the medium to long term, so 500 staff will be more than the YPLA is expected to employ
in the medium to long term.
It would help the Committee if the Minister could set out not only his estimate of the transition costs but an estimate of the declining costs that he expects over the medium term, as the efficiencies start to yield savings. It would help if that was put in terms of staff numbers as well as money.
The fear of most commentators on the Bill, including the NUT, the Association of Colleges and my hon. Friend, is that the reorganisation will create more bureaucracy, more bodies for colleges to deal with, more meetings, more consultations, more costs and more distractions. This is the Ministers opportunity to set out the facts and figures against which the implementation of the reforms can be judged in the short, medium and long term. If he cannot provide the numbers, we will know that the expectations set out in his evidence and in the impact assessment are nothing more than assertions based on hope.
It is a pleasure to join the debate as we start the scrutiny of part 3. I do not want to detain the Committee for too long just as we have started to make some swift progress over recent clauses.
I will touch on amendment 105, which the hon. Member for Bognor Regis and Littlehampton has commented on. He raised many important issues that we aired during the evidence sessions. As the hon. Member for South Holland and The Deepings said, we will return to many of the issues raised by amendment 239 under later clauses. However, this is the obvious time at which to raise the concerns that the hon. Member for Bognor Regis and Littlehampton touched on in relation to amendment 105.
Amendment 105 initially has the appearance of a probing amendment, but it raises two fundamental issues about many proposals in the Bill, including the YPLA. First, are the Governments cost estimates realistic and serious? Secondly, what is the scale of the YPLAs role expected to be and will that change over time? According to the Government, the academies programme is growing rapidly. That will surely have implications for costs and staffing at the YPLA.
As the hon. Gentleman mentioned, we had an interesting series of exchanges with the Minister during the evidence session on whether there will be cost savings from the reorganisation, the abolition of the LSC and the establishment of the YPLA and other agencies. The Under-Secretary of State for Innovation, Universities and Skills admitted that there would not be net savings, but that there would be broad neutrality apart from the set-up costs. Whenever a Minister admits that there will be no cost savings, many people immediately suspect that the changes could end up costing much more than the Government suggest.
During one exchange in the evidence session, the Under-Secretary of State for Innovation, Universities and Skills indicated that at the least there was a lack of clarity over whether the existing savings that are assumed by the LSC and perhaps by the Department are embedded in the cost estimates that the Government are proposing in relation to the Bill. In other words, does the neutrality in the cost of these changes, including the YPLA, take into account the proposals and measures already in place to reduce the LSCs estate and staffing? Those have been significantly reduced over recent years. I understand that those changes are expected to continue over the next couple of years, not just in the rather unclear period after the existing spending review, but between now and the end of the existing spending review in 2011.
The hon. Gentlemans interesting remarks follow from the discussion of these matters in the evidence session. The implication is that the savings might be counted twice: once in the Learning and Skills Councils estimates, and again by Ministers, who want to emphasise just how reasonable the changes are. Surely the Minister would not be responsible for such double counting.
I am reassured that not only has the hon. Gentleman spotted the point, but that he is clear that this Minister would not tolerate such double counting. I hope that the Minister will assure us in a moment that his partner Department is engaged in no such double counting. Both hon. Members to whom I have just referred will know that there are serious concerns about whether the Governments cost estimates are realistic, and whether the additional agencies that are being established with their regional presence will involve an additional cost that the Government are masking by trying to bank the savings that are already in place from scaling down the LSC and setting them off against the additional costs that will arise from the changes.
We know from the notes that the Government have circulated that they anticipate additional costs when, for example, the YPLA is set up and some of the responsibilities of academies are transferred from the Department to the YPLA. Indeed, in the notes on the transfer of academies under the section on finance and staff, the Government acknowledge that moving the finance team to separate locations will lead to loss of economies of scale. There is a further acknowledgment towards the end of the notes on this section that the regional presence of the YPLAfor example, in the oversight of academieswill involve an additional cost, which is estimated at £670,000 specifically for this narrow area of the YPLAs remit. I hope that the Minister will give us a cast-iron assurance that there is no double counting, and that the Governments estimate of net neutrality in the cost of the changes in the Bill does not already count the reductions in the number of staff and the size of the estate, which would have taken place from 2009 to 2011 anyway.
I also hope that the Minister will tell us whether he can provide reassurance about the future scale of the agency. Amendment 105 not only seeks to constrain the up-front costs of establishing the YPLA and the other machinery of Government changes, but it presumably also intends to cap the size of YPLAs staffing for the foreseeable future. Does that sit happily alongside the Governments future role for the YPLA, which we will discuss on some of the later clauses? In particular, is it consistent with the Governments plans to increase the scale of the academy programme, which will apparently involve more staffing for the YPLA, and presumably more than would have been the case if the functions had remained within the Department, for the reasons relating to the higher regional costs that are set out in the Governments assessment of the cost changes? Amendment 105 is useful, and I hope that it will flush out some interesting data and comments from the Minister.
As we have heard, amendment 239 would make the Young Peoples Learning Agency part of the Skills Funding Agency, effectively recreating the Learning and Skills Council. Going down that road would confuse the distinct roles of the two bodies and dilute their focus and effectiveness. The focus of the Skills Funding Agency will be completely different from that of the YPLA, because it is an adult learning agency, and will have a clear brief in that regard. It will allocate funds to colleges and providers according to the purchasing decisions of employers and individuals through Train to Gain and skills accounts. Learning choices will reflect the specific circumstances and skills needed by the employer and individual concerned within a wider framework of national skills priorities. Crucially, collegesI have heard the concern expressed about bureaucracy and/or the confusion for collegeswill have a single account, which will reduce the conversations and commissioning that they currently have to undergo with the Learning and Skills Council.
That approach to adult skills does not fit with the arrangements needed for young people. Setting up the YPLA as part of the Skills Funding Agency would not deliver the transformation in services that we want for either group. Colleges will have a single conversation with local authorities, so what are at present multiple conversations with the Learning And Skills Council will be replaced by two conversations: one with the SFA and the other with local authorities. The hon. Member for Bognor Regis and Littlehampton worried that we were adding quangos. He will correct me if I am wrong, but his partys policy in respect of academies and expansion, with the example of the Swedish model, would involve the establishment of new schools with a new licensing authority, which would have to be set up. It sounds as if it would perform fairly similar functions to the academy functions performed by the YPLA. I do not really understand why he makes that criticism when it is his own party policy.
The YPLA will support local authorities in fulfilling their new duties to secure enough suitable learning places for all 16 to 19-year-olds in their area and ensure that the £7 billion budget that is being transferred is properly managed. It is an enabling body. It will provide funding for local authority provision of 16-to-19 learning, ensuring national budgetary control and making sure that plans are consistent with the concept of the 14-to-19 entitlement. It will consult on and provide a national commissioning framework. We are planning next month or soon after to publish the first framework for consultation that will help local authorities commission provision. It will provide data on participation, attainment and economic progression in local, sub-regional and regional areas, preventing the need for that to be done repeatedly at local level.
We need funding and administrative frameworks that are suitable for the circumstances of the two distinct sectors while ensuring co-ordination and progression between them, and setting out the YPLA and the Skills Funding Agency as separate organisations achieves that. It is fundamental to the fulfilment of what we set out in the Education and Skills Act 2008 about raising the participation age that we should have local authorities for ages 0 to 19, or up to 25 for those with learning difficulties, commissioning decisions supported by the YPLA, separate from the SFA as an Executive agency of the Department for Innovation, Universities and Skills.
Amendment 105 seeks to limit the number staff at the YPLA. I accept that at one level, it is a device to ask a series of important questions, and I will seek to address them as best I can. As a non-departmental public body carrying out these functions, it is appropriate that the YPLA has the flexibility to allocate administrative resources as its board determines appropriate. The pay, terms and conditions for that body will be accounted for to the Secretary of State and hence to Parliament. Its funding will be accounted for in the Departments expenditure plans. The YPLA, like other NDPBs, will be audited by the Comptroller and Auditor General.
We expect about 500 staff to transfer from the LSC to the YPLA to perform the LSC functions, as part of our strategy to ensure that the expertise in the LSC is retained for the benefit of 16-to-19 education and training. As the hon. Member for Yeovil said, we would also have to transfer some staff from the Department to perform the academies functions, and they are currently required to administer the number of open academies that we have at the moment. That number is set to increase dramatically, as we set out at the last departmental questions in the House. We have agreed more than 100 new academies in the past 18 months, many of which will open in September. We will seek to ensure that if the YPLA needs to grow staff, as an efficient organisation it does so on a basis proportionate to need. On those grounds, I do not think that it is appropriate to enshrine this or any other number of staff in primary legislation. That aspect of the functions of the YPLA is set to change and a cap on staff numbers would not allow the YPLA and its board the flexibility to manage its staffing in a responsive and appropriate manner.
When the estates of the National Apprenticeship Service, the YPLA and the SFA are combined, according to the Minister, the new estate is likely to be smaller. He spoke in the evidence session on 10 March about operating from a smaller estate, so collectively will those bodies employ fewer people than the LSC does now?
Across the numbers of those transferring to the local authorities, the SFA and the YPLA, I do not expect a reduction in the head count. I expect it to be neutral. There may be some small variation on the margins, but we are currently agreeing with staff that there will be no compulsory redundancies, and attached to that is the notion that, consistent with cost neutrality, staff will transfer. As I said, we do not want to lose their expertise.
I want to move on to some of the points that were raised in the initial debate, but I shall give way, first, to the hon. Member for Beverley and Holderness.
I would certainly think so, given that a number of staff will be transferring to local authorities.
I am grateful to the Minister for his patience and for the comments that he has made about what he expects to be a neutral staffing position. Just so that there is no doubt about this, because such organisations sometimes tend to grow rapidly if left uncontrolled, how will he ensure that there is not a big increase, and is he confident that a year or so after the bodies have been established we will not find that staff numbers have gone up by 10 or 15 per cent.?
I shall come on to that when I address the questions that have been raised about the impact assessment and my evidence.
To assist the Committee, in broad-brush terms, the LSC currently employs some 3,300 staff. We expect about 1,800 to transfer to the SFA and about 500 to transfer to the YPLA, leaving about 1,000 to transfer to local authorities. That is a substantial difference, to return to the question asked by the hon. Member for Beverley and Holderness.
I am grateful to the Minister for those figures. They cover the number of people who will be transferred to the new agencies but do not specifically cover any plan to hire additional people on top of that. For the elimination of doubt, I thought that I would provide him with an opportunity to put our minds at rest on the matter.
I do not anticipate that the organisations will take on significant numbers of staff beyond those who transfer. Many of the details on staff transfers are being worked through and negotiated at present. There may be some staff who choose not to transfer, whose function may need to be replaced. I cannot put a straitjacket on the bodies. It is important that they perform their function, but it is equally important that they perform them within a restricted cost envelope.
On what is said in the impact assessment and what I said in evidence, it is fair to say that the impact assessment reflects in full where we were at the time that it was written. The picture is ever-changing as we refine costs and get closer to implementation. I commit myself to update the Committee in writing on where we are as the figures are refined, because it is important that it have more clarity about them. When the Bill completes its passage through the Commons and goes to the Lords, assuming that it does, there will be a refreshed impact assessment in which I would want to see much more detail in this regard. If I gave the impression in my evidence to the Committee that there was fuller information in the impact assessment than there is, I regret it.
In that spirit of openness, will the Minister or the Department for Innovation, Universities and Skills undertake to provide the Committee with a note on the Government machinery costs of the new arrangement, compared with the costs of the old arrangement, not only for 2008-09 but projected to 2009-10, and 2010-11 to the end of the spending review? We can then compare what would have happened if the Learning and Skills Council had continued with the cost estimates under the new arrangements.
I want to be as helpful as I can to the Committee, and I will set out something as close to what the hon. Gentleman asked for as I am able. The Committee will understand that since the impact assessment was published, we have been working on issues of staff pensions and the movement of staff to the three bodies, and there is still some negotiation going on. However, I can assure the Committee that the measure will be cost-neutral.
Within the comprehensive spending review period, there are limitations on the size of the budget to be spent for this, and every part of Government will have to make efficiency savings as per the announcements in the pre-Budget report. Furthermore, the Departments accounting rules and the Treasury rules on efficiency savings are being followed and scrutinised externally by the National Audit Office, which puts constraints on us to deliver our promise that the measure will be cost-neutral, as our fulfilment of that promise will be scrutinised. I can assure the Committee that there will be no double-counting, as described by the hon. Member for Yeovil. The measure will be genuinely revenue-neutral. I hope that on the basis of those assurancesto some extent promisesthe hon. Member for South Holland and The Deepings will not press the amendments.
I find that response unsatisfactory. The Under-Secretary of State for Innovation, Universities and Skills said:
The cost is already set out in the impact assessment; we have not memorised it. It is on the record[Official Report, Apprenticeships, Skills, Children and Learning Public Bill Committee, 10 March 2009; c. 179, Q427.], and the Minister for Schools and Learners said:
That is certainly set out in full in the impact assessment. We can obviously return to that during our debate.[Official Report, Apprenticeships, Skills, Children and Learning Public Bill Committee, 10 March 2009; c. 180, Q429.]
The impact assessment is full of statements that the figures were too complicated to calculate, so the assumption is that the cost is nil. That is an unsatisfactory way to produce an impact assessment. When the House implemented arrangements for impact assessments, their purpose was not to become an obfuscation document that considers things too hard to calculate.
We are talking about replacing one quango with three, and the Committee deserves to know the best estimate of the costs arising from that transfer, the long-term or medium-term costs of staff transfer, as well as the transition costs. I do not believe that those transition costs do not reside somewhere in one of the two Departments. If they do, the Minister should promise today to write to members of the Committee so that we can return to the issue on Report. If the figures do not reside in either Department, something incompetent is going on in the administration of the transition. To transfer 3,300 people to the two bodies and to 150 local authorities and have no idea of the removal costs, the pension arrangements, or the compensation needed for moving people around the country is negligent Government administration. I hope that the Minister will provide us with those figures. He assured us that they existed when he gave evidence. That is the only way out for the Minister in dealing with the inaccurate evidence he gave in the fifth sitting of the Bill.
I am extremely grateful to my hon. Friend for putting the case on amendment 105 so clearly. He spoke in his final remarks like the accountant that he is. He wants detail. He wants things to be specific, and he is right to do so. He speaks for the people of Britain and expects taxpayers to be assured about these matters. We know that when this kind of Government reorganisation happensand they have happened primarily under this Governmentcosts escalate and things get out of control. They swell and mushroom. There is no better example of that than the Learning and Skills Council, which grew as it took on additional responsibilities and additional people, becoming ever more bureaucratic and finding new functions for itself as it interfered in the work of further education colleges and extended its scope and range. I suspect that the new organisations will do the same.
We can say one thing with certainty. The new system will not be streamlined. It is a not a slimmed-down new structure. Indeed, the Minister has finally acknowledged that it will not be any smaller. He said that there will be no compulsory redundancies, but what he probably meant to say is that there will be no redundancies at all, or at least no reduction in staff numbers. I suggest that staff numbers will grow. Although my hon. Friend spoke in firmI will not say luridterms about the matter, I acknowledge the Ministers humility in accepting that he may have got it wrong in the witness session. He said that he regretted giving the wrong impression. At least he is not like Edith Piaf: he does have regrets, and humility too. As Chesterton told us, humility is the mother of giants, for one sees much more from the valley than from the mountain top.
We now need the Minister, having regretted what he said originally, to regret what he has failed to say today and provide the Committee with more information at the earliest opportunity. That would be a fitting and appropriate way to resolve the differences between us. We do not like to disagree; we like to progress with equanimity and good will. I am sure that that good will might be re-established if we receive more detail. It is inconceivable that the detail does not exist in the Department. No responsible Minister would fail to model the costs. No responsible Government would fail to say to their officials, We want some estimate of what is likely to happen as a result of these significant changes. The figures must exist. The modelling must be available. It should be made openly available to members of the Committee.
At the witness session, I pressed the Minister hard for precisely those reasons. I am grateful for the support, both then and today, of the hon. Member for Yeovil and my hon. Friend, who as ever brought his remarkable diligence to these affairs. I hope that we can move on and that the Minister, even at this late stage, will commit to do as my hon. Friend asked and write to the Committee about amendment 105.
Amendment 239 is pertinent to this discussion. I mentioned at the outset that it was a probing amendment, but nevertheless, our mission in moving itit has been our mission throughout our considerations and will ever be thusis to try to make the changes as cost-effective as possible. We want a simpler, less complicated, more responsive, streamlined structure, but my goodness, that is not what the Bill gives us. It gives us ever more cost, ever more complication and an increased likelihood of contradiction and incoherence. It is not just more costly; it will not work, and that is even worse, because it is young peoples futures that we are dealing with, and with which the Minister is toying.
On the basis that the amendment was a probing amendment, I beg to ask leave to withdraw the amendment. I hope that the Minister will do better in future.