Clause 2 - Designation of employer representative bodies

Skills and Post-16 Education Bill [Lords] – in a Public Bill Committee at 11:30 am on 2nd December 2021.

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Photo of Toby Perkins Toby Perkins Shadow Minister (Education) 11:30 am, 2nd December 2021

I beg to move amendment 43, in clause 2, page 3, line 27, leave out “as the Secretary of State considers appropriate” and insert—

“, including—

(a) the requirement for the local skills improvement plan to give due regard to relevant national and regional strategies, including in respect of the Decarbonisation Strategy,

(b) a requirement for employer representative bodies to publish a conflicts of interest policy for all those involved in approving plans or allocating funds which records actual or perceived conflicts of interests, and

(c) anything else the Secretary of State considers appropriate.”

This amendment sets out conditions for employer representative bodies. The amendment would require that employer representative bodies publish a conflicts of interest policy and give regard to national strategies (including the Decarbonisation Strategy).

It is a pleasure to serve under your chairmanship again, Mr Efford. We will try not to give you any unpleasant surprises this time.

This is a relatively small but important amendment, which has three aspects to it. Given the exemplary cross-party work undertaken in another place on local skills improvement plans and climate change, we believe that the Bill can go further to ensure that, as a nation, we meet our commitment to the natural environment. It is therefore crucial to ensure that LSIPs give due regard to the decarbonisation strategy and that employer representative bodies produce plans with due diligence given to committing to ensuring that we have green skills for the future across local labour markets.

If we are to meet the UK’s emissions target of net zero even by 2050—we already know that to be a challenging and potentially insufficient commitment—it is essential that green jobs are created and that that is a key focus of the local skills improvement plans in every single area across the country. One reservation expressed in our previous debates is that the different chambers of commerce and employer representative bodies will have different priorities. The amendment, in the first paragraph, seeks to ensure that, whatever the priorities of the chamber of commerce, it addresses the decarbonisation strategy. If it does not have the expertise itself, it needs to avail itself of that to ensure that the plans move us towards net zero. Once again, this demonstrates the need to align skills policy with national strategies across Departments—in this case the Department for Business, Energy and Industrial Strategy—so that LSIPs do not become silos.

The second paragraph of the amendment would require employer representative bodies to publish a conflicts of interest policy for all those involved in approving plans or allocating funds, to record actual or perceived conflicts of interest. This is an incredibly important proposal, because the Bill places responsibilities and duties on—predominantly, we expect—chambers of commerce in a statutory fashion. I think that is unlike anything we have expected them to do before—unless the Minister wants to draw my attention to something. Chambers of commerce are not statutory organisations, but they are now taking on a role that appears to have statutory status.

Many people at senior levels are involved in chambers of commerce. They are in there because they want to make their local economies better and to improve the opportunities for businesses in their local area. It is also perfectly possible, however, that they will have an agenda about the industry that they are in or represent. Therefore, if they are to take on a more statutory-looking role, it is important that we are aware of what their conflicts of interest might be. If a local skills improvement plan suddenly features policies to do with a certain industry, we need to know who put the plan together so that we can consider why they might have done so. It would therefore be basic best practice for a local skills improvement plan to include a declaration of any interests or potential conflicts of interest.

Photo of Rachel Hopkins Rachel Hopkins Labour, Luton South

It is appropriate that I declare an interest again: I am a vice-president of the Local Government Association and a governor of Luton Sixth Form College. Many local authorities have third-party declarations, where councillors have to declare any potential conflicts of interest regarding the funding decisions that they are making, even if a partner works for a charity that is getting a council grant. It should be the same with regard to employment representative bodies and their members, so that we have a clear and transparent understanding of where funds may be allocated, and where there are potential or perceived conflicts of interest.

Photo of Toby Perkins Toby Perkins Shadow Minister (Education)

Precisely—I could not have put it better myself. In fact, I do not think that I was putting it better myself. If a chamber of commerce has, for example, a tree surgeon as its chair, and the local skills improvement plan has policies on attracting skills in tree surgery and no other does, people might consider that an agenda has been driven. There are all kinds of other examples. There is nothing negative about tree surgery—we all know how important it is—but people would need to understand why it was in the policy and whether there were any other factors to consider. In recent weeks, there have been real concerns about the allocation of Government funding, who was getting it and on what basis, who was talking to who, who was donating to who, who was signing up to who, and who was the best pal or a publican of a friend of who. In that context, it is important to ensure that local skills improvement plans are not mired in the murk that we have seen from the Government recently.

Photo of Kim Johnson Kim Johnson Labour, Liverpool, Riverside

As we know, eight trailblazer ERBs were set up in July this year, with £4 million. Does my hon. Friend agree that we need to find out how beneficial they have been before we decide to roll them out and have chambers of commerce leading on them?

Photo of Toby Perkins Toby Perkins Shadow Minister (Education)

My hon. Friend makes an excellent point. It is feature of the Government’s approach, particularly to skills, that they set up pilots and then reach a conclusion before it is completed, as we saw on T-levels. We are debating the creation of something when the pilot is still at a very early stage. It was commented on, on social media and elsewhere, that the Minister said on Tuesday that it does not have to be a chamber of commerce; it could be any kind of organisation. When I asked him how many other organisations there are, he said, “Well, none.” It is better if we are straight and honest about what we are talking about. The anticipation is that chambers of commerce will do it in the vast majority of cases. Other organisations may come forward, and we look forward to seeing that emerge, but clearly the legislation was written with chambers of commerce in mind, and they are taking on the trailblazer role. My hon. Friend makes a valuable point. Why not find out how these things are working before we rush ahead and do them?

Photo of Matt Western Matt Western Shadow Minister (Education)

To amplify that point, I am sure that Members on both sides agree that we need greater transparency. All we are asking for is openness in the process, so that people cannot seek to influence decisions. To take one simple example, not very far from me there was a local enterprise partnership, the chair of which happened to be a huge landowner who was seeking to steer future business decisions towards that parcel of land. That is why this is really important. Of course, it could come from any direction; I just happen to use that example. Whether it is the cronyism that my hon. Friend referenced earlier, or the chair of the Office for Students, these things have to be out in the open and as transparent as possible.

Photo of Toby Perkins Toby Perkins Shadow Minister (Education)

Absolutely. That is particularly important because organisations such as local enterprise partnerships, the Office for Students and others operate on a statutory level, with expectations around that. From a governance perspective, they are kind of arms of Government. The chambers of commerce are independent of Government. The Government are outsourcing responsibility for a function that they have created. It will be delivered as a function of Government, but they are expecting a private organisation to deliver it. It is therefore important that that private organisation operates in a way that a statutory organisation would.

Photo of Rachel Hopkins Rachel Hopkins Labour, Luton South

My hon. Friend is making a very interesting point about transparency and the outsourcing of a Government function to a private entity. Does he agree that, given that a freedom of information request cannot be placed on a private entity, this is another reason why it is vital that these conflicts—or potential conflicts—are raised early doors and up front for transparency?

Photo of Toby Perkins Toby Perkins Shadow Minister (Education)

My hon. Friend makes another incredibly important point. It is something that people should naturally accept. I will be very interested to hear the Minister’s response. That was another important intervention from my hon. Friend, and I appreciate the interventions both she and my other colleagues have made—if any Conservative MPs want to involve themselves in the debate, they would be very welcome to do so. It is important that everyone gets to know what is being said, who is saying it and on what basis it was said. That is the reason for the amendment. We do not need to continue describing it, but I am very interested to hear what others have to say on it.

Photo of Alex Burghart Alex Burghart The Parliamentary Under-Secretary of State for Education

It is a pleasure to serve under your chairmanship again, Mr Efford, and I look forward to making even more rapid progress today, as we continue with clause 2 of our 39-clause Bill. I rise to speak to amendment 43, tabled by the hon. Members for Chesterfield and for Warwick and Leamington, regarding specifying certain conditions for the designation of employer representative bodies. It is obviously right that a designation may be subject to terms and condition, such as the terms and conditions that the hon. Member for Chesterfield has set out. However, the precise terms and conditions need to be flexible, and may change over time in the light of wider circumstances. They also need to be tailored to the specific employer representative body in question. That is why the specifics should be set out by the Secretary of State in a notice of the designation, which can be modified from time to time, rather than in the Bill.

Photo of Toby Perkins Toby Perkins Shadow Minister (Education)

I thank the Minister for that very brief response—the Opposition have heard it. It is important that there is clarity about where people are able to find these conditions. We are once again being asked, “Vote for it now, and we will let you know what it means tomorrow.” It sounds almost like the coalition agreement. I believe that a commitment at this stage to having those aspects in the Bill would have been useful. I do not believe the Minister touched upon decarbonisation at all in his response, which seemed quite an omission, but we are of the view that a decarbonisation strategy should play a central role in these LSIPs. For that reason, we will seek to test the mood of the Committee by pressing the amendment to a vote.

Question put, That the amendment be made.

Division number 8 Skills and Post-16 Education Bill [Lords] — Clause 2 - Designation of employer representative bodies

Aye: 6 MPs

No: 8 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

The Committee divided: Ayes 6, Noes 8.

Question accordingly negatived.

Question proposed, That the clause stand part of the Bill.

Photo of Clive Efford Clive Efford Labour, Eltham

With this it will be convenient to discuss new clause 3— Report on the performance of employer representative bodies—

“(1) Within six months of the passing of this Act, and every twelve months thereafter, the Secretary of State must publish a report on the performance of employer representative bodies and lay it before both Houses of Parliament.

(2) Each report must contain a statement setting out—

(a) the role of employer representative bodies,

(b) the accountability of employer representative bodies,

(c) the cost of employer representative bodies,

(d) the number of employer representative bodies in England and the areas covered,

(e) the number of employer representative bodies that have been removed and the reason why.

(3) Each report must contain an independent assessment of the impact of each employer representative body on—

(a) the development of local skills improvement plans, and

(b) local rates of participation in further education.”

This new clause requires the Secretary of State to publish and lay before both Houses of Parliament an annual report on employer representative bodies to allow for scrutiny of their role and performance.

Photo of Alex Burghart Alex Burghart The Parliamentary Under-Secretary of State for Education 11:45 am, 2nd December 2021

Clause 2 is important for placing employers at the centre of the local skills system, shaping post-16 technical education and training so that it is more responsive to local labour market skills needs. It gives the Secretary of State the power to designate genuine employer representative bodies to lead the development of local skills improvement plans, working closely with employers, providers and local stakeholders. Employer representative bodies will be well placed to give a credible articulation of local skills need and drive greater employer involvement in local skills systems.

The Secretary of State will designate employer representative bodies based on criteria. They must be satisfied that a body is capable of performing the duties of developing and keeping under review a local skills improvement plan in an effective and impartial manner, and that it is reasonably representative of employers in the area. The body must also consent in writing to being designated. Designated bodies should draw on the views of a wide range of employers of all sizes, as well as other relevant employer representative and sector bodies, to inform the development of those plans. This should ensure it is as easy as possible for employers, especially small employers, to engage and have their voice heard. The success of the plans will depend on sustained and effective engagement between employers, convened and represented through the designated bodies, and providers.

Clause 2 requires the Secretary of State to provide written notice of the designation detailing the designated body, specified area, effective date, and any terms and conditions the employer representative body will be subject to. Introducing this power to designate is crucial to ensuring there is an effective employer-led body in place that is capable of leading the development of a robust local skills improvement plan for an area, working closely and in co-operation with relevant providers and stakeholders.

New clause 3, tabled by the hon. Members for Chesterfield and for Warwick and Leamington, is concerned with the performance management of employer representative bodies. It proposes a requirement for the Secretary of State to periodically

“publish a report on the performance of employer representative bodies”.

We agree that employer representative bodies need to be accountable for their leadership of local skills improvement plans, and the Bill already provides a framework for this. The Secretary of State must be satisfied that an eligible body is capable of developing a local skills improvement plan in an impartial manner before they are designated. The Secretary of State can then specify terms and conditions to which a designation is subject and modify them as necessary. In its role, the designated employer representative body will be accountable to the Secretary of State, and the Department for Education will monitor and review its performance.

If a designated employer representative body does not have regard to relevant statutory guidance—as we were discussing last time—or comply with any terms or conditions of its designation, or if it ceases to meet the criteria for which it was originally designated, the Secretary of State may well decide not to approve and publish the local skills improvement plan, and has the power to remove its designation. If that power is exercised, the Secretary of State must publish a notice, which must include the reasons for the removal. The Secretary of State is already accountable to Parliament, and Members can of course raise questions on this issue if they wish.

Photo of Toby Perkins Toby Perkins Shadow Minister (Education)

With regard to clause 2, we remain of the view that without amendment 37, which the Committee decided to vote against on Tuesday, the Government will be introducing a good idea badly. As such, local skills improvement plans will not enjoy the holistic representation or offer the breadth of experience they could have done, which is hugely regrettable. I do not propose to repeat all of the arguments we made last Tuesday, or even any of them, but it remains our view that not incorporating amendment 37 in the Bill will fundamentally undermine local skills improvement plans.

New clause 3, which we have proposed,

“requires the Secretary of State to publish and lay before both Houses of Parliament an annual report on employer representative bodies to allow for scrutiny of their role and performance.”

We think it is essential that there is proper scrutiny and oversight of employer representative bodies, that they enjoy the confidence of elected representatives at local and national level, and that local communities, local businesses and, crucially, learners—who are so absent from the Bill—can see how an employer representative body has performed and assess the quality of the plans they have produced. Given that employer representative bodies will control much of the adult education and skills budget and their direction through the formation of these local skills improvement plans, due diligence and accountability will be vital. All we ask for is an annual report to Parliament that will enable Members to analyse the performance of employer representative bodies and ensure they are doing the role they are intended to.

Photo of Alex Burghart Alex Burghart The Parliamentary Under-Secretary of State for Education

I want to clarify a point regarding something the hon. Gentleman just said. It is important for us all to realise and recognise that employer representative bodies will not be commissioners. They do not control budgets; they set out plans that local providers of education then have to respond to. He may not have meant that, but I just wish to clarify that point.

Photo of Toby Perkins Toby Perkins Shadow Minister (Education)

I am grateful to the Minister for clarifying that. I did understand that. When I used the phrase “control much of the adult education and skills budget”, I meant that the direction in which that budget ends up being spent will be informed—in fact, legally, will have to be informed—by those local skills improvement plans. While they might not be writing out the cheques, they will very much be responsible for the pathway that that funding takes. I thank the Minister for his clarification, but I do not think it alters the point that I was making.

Photo of Matt Western Matt Western Shadow Minister (Education)

Clearly, the new clause is quite simply about, as my hon. Friend is saying, ensuring that there is scrutiny of the actions and the role of these bodies and that they are actually serving in the way that they are intended. The change being introduced is quite significant; while we see some of it as being positive—although perhaps not very well formed, as we have articulated previously—that is why it is important that there should be scrutiny. The Government should take interest in that. This is just another example of there not being enough scrutiny in our governance.

Photo of Toby Perkins Toby Perkins Shadow Minister (Education)

Absolutely, and the Government have been accused of treating Parliament with contempt. What we ask for here is an important change that would lead to an annual report to Parliament and ensure that the Secretary of State would come to Parliament and answer to that once-a-year report.

The Minister spoke about the accountability of ERBs to the Secretary of State, but said nothing about the accountability of ERBs to Parliament, or of the Secretary of State to Parliament. It is not good enough to simply say “Well, there will be a responsibility to the Secretary of State, and if you want to ask him a question, you can.”

It is not asking too much to say “Once a year, provide a report. Members of Parliament expect a statement to be produced alongside that report, and any MPs with particular concerns have a tiny section of their parliamentary year to ask questions about employer representative bodies, and at least have those on the public record.” That was the purpose of our new clause 3. I think that it is a very sensible one, and that it would be useful if the Government ensured that they were open to that scrutiny.

Photo of Matt Western Matt Western Shadow Minister (Education)

It is a pleasure to serve under you in the chair again, Mr Efford. I will just add a simple point. I appreciate that it is always difficult in these situations for a Minister, but I would urge him—I am sure my hon. Friend the Member for Chesterfield would agree—to reflect on this very constructive new clause. While it may not be successful today, perhaps in days to come, the Government will reflect on that and look to introduce it at a later stage. I think that would be a very positive thing for the Government to do.

Question put and agreed to.

Clause 2 accordingly ordered to stand part of the Bill.