My Lords, I appreciate that my noble friend the Minister is in a difficult position; I am sure that she is reflecting greatly on the points that noble Lords across the House have made. However, as we are here, I will make a few further points. Some of them might be a bit technical; I apologise if that is the case.
On Clauses 5 and 7, I should say at the outset that, as my noble friend Lord Baker said, when I and my noble friend Lord Agnew were Academies Minister—for
a combined period of seven years—neither of us felt at any stage that we did not have enough shots in our locker or enough in our armoury to deal with difficult trusts. We feel that Clauses 1 to 18 are unnecessary, which is why we have joined our noble friend Lord Baker in trying to strike them out.
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Dealing specifically with Clause 5, which covers the power to give a compliance direction, this can be given if the Secretary of State is satisfied of a breach or likely future breach of any enactment or funding agreement, including a master funding agreement. There is no concept of materiality, which there is in many funding agreements, and no right to make representations. Anyway, it is unnecessary because under contract law, the current regime for academies, if a party breaches or threatens to breach a contract—that is, a funding agreement—the other party can require that party to perform the contract. They can issue a notice requiring them to perform it; if they do not, they can go to court to seek an order requiring performance. The DfE has these powers already, it just needs to use them where necessary.
Also, under the trust handbook, the DfE can already issue a notice to improve. I understand that the DfE says that the compliance direction will allow it to issue notices for minor breaches which may not warrant termination, but Clause 12 then goes on to say that the only consequence of failing to comply with the compliance direction is termination, so this justification is completely invalid. Anyway, as I have said, the department has the ability under contract law to impose what amounts to a compliance notice and to obtain an order for specific performance. Under the handbook, it also has the power to issue a notice to improve. Therefore, again, these powers are unnecessary.
Clause 6, covering notices to improve, can be issued for a breach of a duty under any enactment or under any academy agreement or master agreement. Again, there is no concept of materiality or significant weakness in the proprietor’s governance procedures or management. One could ask whether the DfE is competent to make this latter judgment. The only issue should be educational outcomes, as overseen by Ofsted. I will return to the point made about Ofsted by the noble Lord, Lord Knight, in a minute, but in any case, there is already the power to issue a notice to improve in the academy handbook, which the department can update as it goes along. Why is it necessary to legislate for it when we already have a structure which, as my noble friend Lord Agnew said, works perfectly well and the system understands?
I turn to Clause 7, on the power to appoint additional trustees, which the noble Lord, Lord Knight, has been very powerful about and which I referred to earlier. It talks about interim trustees on the face of it, but it is far worse than that. Under paragraph 2(b) of Schedule 2, if interim trustees are appointed, all existing directors cease to be directors automatically. Therefore, the noble Lord, Lord Knight, need not worry about chairing a board with all these paid people on it because he will not be there anyway.
Clauses 8 to 11 are, by the department’s own admission, unnecessary because they are already in funding agreements. They are not in all funding agreements and, to the extent that they are not, why should they be imposed on people who have negotiated and signed a contract? The department has not shown a necessity for any of this. It also says that a level playing field will be created in this way, which would be helpful. Well, we have a level playing field in the handbook. The department also says that this level playing field will help schools joining trusts to understand the rules of the game. Well, these rules are very clearly set out in the handbook and the model funding agreement, to which all schools are subject on becoming academies.
Clauses 13 and 14 relate to existing powers. Clause 14 directly corresponds to existing funding agreements but goes wider, dealing with any breach of funding agreements or where the Secretary of State considers the standards of pupil performance unacceptably low. This takes us back to the whole argument about standards.
Regarding Clause 15, under contract law there is, as I said, the right to terminate the master agreement for a breach, so the clause is unnecessary.
Turning lastly to the points raised by the noble Lord, Lord Knight, about Ofsted, as a number of noble Lords have said, we were promised a regulatory review, which is frankly far more important to the sector than tinkering with funding agreements and existing arrangements. That regulatory review would presumably look at how the DfE, regional directors, the ESFA and Ofsted all interact with each other. We might well have a consensus that Ofsted inspects MATs but only, I would say, in relation to the educational outcomes, the outputs and the safeguarding, which, after all, we all should be concerned about. I do not think that it is set up to inspect the organisational structure of the MATs operation in the broader sense. That is also not relevant. If we have the outputs, we have the educational outputs, which is exactly why we need a regulatory review—to discuss these points.