Education Bill

First, my Lords, we accept the Government amendments which have been tabled. As the Minister set out in his letter to me, they correct what ended up being an unintentional consequence of previous legislation, as it affected voluntary sixth-form colleges. On the presumption that these amendments have been the subject of consultation with the Catholic Education Service, which raised the concerns in the first place, if it is now content with the proposed changes, we echo that contentment. Secondly, going back to the intent of the changes set out in Schedule 12, I have a number of concerns which I want to share with noble Lords today. First, on the issue of promoting economic and social well-being in their areas, I agree with the points made by the noble Baroness, Lady Sharp—there is a strong argument for sixth-form and FE colleges to play a role in their wider communities, and to link with local youth services. I was very interested in her concept of colleges as a dynamic nucleus in the community, a concept which I think is worth exploring. As she identified, one of the lessons of the recent riots is surely that those areas with the strongest embedded youth provision, providing positive alternatives to gang culture—something in which colleges can play a part—can be the most resilient to unrest and destruction, as they were over the summer. FE colleges have worked hard in recent years to develop robust partnerships with employers in their areas, knowing the local employment market, and tuning the curriculum offers to the needs of local employers. As the noble Baroness, Lady Sharp, says, a number of them already do that, but if we start to remove this provision of promoting economic and social well-being, there is a danger that we will be sending the wrong message: rather than encouraging that development, it will become a licence for colleges to turn inward and insular again, instead of embracing that new role. Furthermore, on acquiring land and borrowing money by using existing property as collateral, while I would not claim to be an expert on the issues that the noble Baroness, Lady Sharp, was raising, I do have concerns about some of the provisions set out in Schedule 12. I am concerned about the consequences of some of these new freedoms. It is not absolutely clear to me where the demand for this is coming from. It seems to me that the managers of FE colleges have many skills, but intervening in money markets is probably not one of them. My fear is that some well meaning college leaders will quickly find themselves out of their depth. I shall make an analogy. I happen to chair a housing association and we constantly borrow money on the financial markets—we take out bonds and such like and have a dedicated treasury team that does that sort of work—but then we lend money against our housing stock and use the money to build more properties so that we can expand the amount of social housing in the market. That is our core business. The core businesses of FE colleges, though, is providing education, not becoming experts in property and land. There are some issues that flow from that. Will there be lending against property that is essentially owned by the public sector, and what happens to the land or property if they then default? Who will be held accountable for those financial dealings? The most obvious stark spectre is that some colleges could go bankrupt. What would the consequences of that be? However, the more likely commonplace scenario is that they would just make less than optimum—mediocre or poor—commercial decisions. How would they be held accountable for those relatively poor decisions? Will this be part of the Ofsted inspection in future? Again, I am not quite sure where the impetus for this initiative is coming from. We need to be clear where the proper checks and balances are to ensure that they will exist in any subsequent system. My noble friend Lord Knight cannot be here so I am moving Amendment 122C, which again raises the issue of intervention by the Secretary of State, not the local authority. This is becoming a bit of a hardy annual, which we have debated in a number of other contexts throughout this Committee. Once again, this is about the conflict between national and local power. We believe that local authorities are best positioned to intervene when colleges have cause for concern. They are likely to be one of the first bodies to become aware of any issues that arise because of their local knowledge and connections, they will have the means and accessibility to act quickly if necessary and they will have the local credibility and accountability to justify their actions. It is still not clear to us whether the Secretary of State will have the resources to monitor effectively the performance of colleges nationally or the staff to intervene. A possible result of this is a fall in standards rather than an increase. We are not convinced that parts of the reforms in this schedule concerning the management and governance of colleges are justified, the risks have been properly assessed and the consequences properly thought through. We hope that the Minister will take these issues away and reflect on them further.