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Further Education Bill Lords

Volume 82: debated on Monday 1 July 1985

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Order for Second Reading read.

12.12 am

The Parliamentary Under-Secretary of State for Education and Science
(Mr. Peter Brooke)

I beg to move, That the Bill be now read a Second time.

It gives me particular pleasure to bring to the Commons a Bill on which Government and Opposition in the House of Lords have worked with remarkable unanimity of purpose to achieve what was described as a -high degree of consensus" as the Bill left the upper House.

The House will be well aware of the Government's concern to ensure that the education service makes the maximum possible contribution to the vital business of wealth creation for the country. In relation to higher education, the recent Green Paper on the development of higher education to the 1990s made this theme its leitmotif. It was a theme that, in relation to further education, ran through the Government's White Paper on training for jobs.

To this end, the central contribution of the education service is through the provision of appropriate courses of education and training and, at the higher education level, in undertaking associated research of high qualify. But the education system also has the capacity — and I would go as far as to say the responsibility — to apply its intellectual expertise and specialist facilities more directly to the business of wealth creation, particularly by working in collaboration with industry and business enterprises.

It is already open to universities, as autonomous institutions, to do that. It is the principal purpose of this Bill to remove the legal barriers which at present prevent their counterparts in the local authority sector from doing the same, and to enable them to engage in commercial activities which arise out of their primary educational and research functions. The restrictions arise because most polytechnics and colleges of further education have no separate legal existence from the local education authority that maintains them. Local authorities are restricted by statute in the commercial activities that they can undertake; their polytechnics and colleges are currently automatically caught by the same restrictions.

The Bill also repeals section 28(b) of the Sex Discrimination Act 1975. At present, colleges are legally permitted to run single-sex PE courses for prospective teachers. In 1975, when the Sex Discrimination Act was passed, there were several such courses, but over the years they have been supplanted by mixed courses, and there are now no segregated courses in England and Wales and only two in Scotland, both of which it is planned to integrate in the near future. Meanwhile, the Commission for the European Communities has issued a reasoned opinion to the effect that the exemption made in section 28(b) of the 1975 Act contravenes the EC equal treatment directive 1976. The Government have not accepted that opinion, but have decided that there would be little point in defending before the European Court of Justice a provision the original purposes of which have almost entirely disappeared in practice. The Government are therefore taking this opportunity to repeal section 28(b) but without making any other changes to the Sex Discrimination Act.

I return now to the main business of the Bill. It has been widely held for some time that ready use should be made of the facilities and expertise in higher education institutions. That was underlined in 1983 by a report of a joint working group of the Advisory Council for Applied Research and Development and the Advisory Board for the Research Councils chaired by Sir Alan Muir Wood on "Improving Links between Higher Education and Industry". Among other things, the report recommended that the law be changed to allow polytechnics to negotiate contracts and undertake consultancies. The Bill fulfils that recommendation.

As universities have shown, there are a great many opportunities that can be profitably pursued by education establishments in co-operation with business. They range from sponsored or joint research projects through the exploitation of inventions to consultancy and the scientific testing of equipment and materials. Clause 1 defines the scope of those activities by reference to the normal educational activities of teaching and research. Clause 2 empowers local education authorities to enter into agreement for the supply of those byproducts of educational activities, using further education establishments' facilities and the skills, expertise and ideas of their staff and students. It may well be — indeed it is the Government's expectation — that LEAs and their institutions will feel that setting up limited companies will in many circumstances afford the best channel for their commercial activities. Accordingly clause 2 empowers LEAs to lend money for that purpose to companies in which they hold a significant stake — 20 per cent. or more of the voting shares. It is not necessary for the Bill specifically to empower local authorities to establish or hold shares in companies, since they already have that power under section 111 of the Local Government Act 1972.

Engaging in commercial activities, however, necessarily entails being subject to commercial disciplines, and having to make the same hard choices as face business enterprises. The Government have been particularly anxious therefore that local authorities and their institutions should, in engaging in commercial activities, be subject to an appropriate financial regime that does not enable them to engage in unfair competition with private sector enterprises. Getting the balance exactly right, I acknowledge, is not easy; and the Government have been happy, in the light of persuasive arguments advanced in another place, to introduce a number of amendments relating to that aspect of the Bill.

As now amended, therefore, the Bill requires local authorities to price all contracts at the open market value, and to use their best endeavours to ensure that the separate revenue account that they will be obliged to keep in relation to their commercial activities shows an annual surplus. Such accounts will also have to show the full cost of the commercial activities, including attributable overheads. The intention here is to put polytechnics and colleges as nearly as possible on to the same footing as any other business enterprise. The only exceptions to that rule are supplies arising as an integral part of teaching, where the predominant purpose is to train the student, and the product arises only incidentally to that; and supplies to research councils or other specified public bodies.

Clause 3 lays down the financial and accounting framework, within which the commercial activities must take place. It provides for the Secretary of State, after consultation with local authority representative bodies, to set minimum interest rates for the loans which authorities may make to companies. The purpose of the Bill's accounting arrangements is to provide a consistent approach between one authority and another and, as I have explained, to ensure fair and open competition. I assure the House that in practice those obligations will be kept to the minimum consistent with their purpose. The Department is already engaged in consultations with the local authority associations and the Chartered Institute of Public Finance and Accountancy about what form the accounting arrangements should take. The accounts of limited companies set up by authorities and their institutions will obviously be subject to company law, rather than to the provisions of the Bill.

If hon. Members have any more detailed points which they wish to raise on the Bill's provisions, I shall be happy to answer them during its passage. In conclusion, I should like to remind the House of the Bill's underlying objective. It is to release the innovative talent, which we believe exists abundantly in polytechnics and colleges throughout the land, so as to bring rewards — financial and otherwise — to LEAs and their institutions, to the innovators themselves, to their partners in industry and to the nation as a whole. The Bill merely provides the framework. It is up to LEAs, their institutions and lecturers to make it happen.

The Bill deserves the support of hon. Members on both sides of the House, and I ask for that support.

12.20 am

The Minister has offered us some fine words about his hopes. I hope that he will admit that in many colleges and polytechnics those hopes have already been achieved. Whether or not that was legal, those colleges already have a successful record in doing what the Government seek.

The Minister also said that he was glad that there was so much accord in the other place when the Bill was finally debated there. I suspect that that was because it was slipped through in the dinner interval. I also suspect that the Government hoped to slip the Bill through at our breakfast interval, but fortunately we are debating it a little earlier than that. Nevertheless, the Government seem to want to slip it through without much national debate, claiming that it deals with practical problems. We suspect that they are again moving towards privatisation, and want to hive off some of the public higher education sector. The Bill should be more fully debated than it will be this evening.

All hon. Members are aware of how difficult it is to draw the line between corruption and misuse of public resources, and good common sense. Many of us have come across lecturers who have become consultants for private companies within their college area, and who have eventually been offered a place on the board, shares, free trips abroad or some other benefit, while the college gets no fee or benefit. It is only right that the college and sponsoring authority should benefit if lecturers carry out work within the college's time.

It is difficult to work out how much a lecturer uses college facilities and time and how much he uses his own to advise and help local businesses. It is difficult to draw clear guidelines.

Moreover, almost all colleges with catering establishments offer training restaurants, and those with hairdressing courses often offer hairdressing facilities.

That raises the question of what the charge to the general public should be, how far it should be related to competing establishments outside where there is no training, and how far it should be reduced because the students are in training. In car maintenance courses, the car of the principal or senior lecturer is normally repaired, which also raises questions. Those are difficult areas, but most colleges have managed to tiptoe through them correctly. Nevertheless, there must be some control and consideration of those areas.

I hope that the Government will not push too many services into becoming purely commercial operations, especially training restauraunts and hairdressing services which benefit pensioners who are prepared to come at inconvenient times.

The Government should also be careful about insisting that fees be charged for other services to the community, especially to groups who are not in a position to pay for them. We should accept the basic principle that our education institutions are a resource for the whole community, not just for a small minority. Tenants' associations, environmental groups and the like often seek advice and expertise from such institutions. It would be unfortunate if they were denied that opportunity in the future because they could not pay for those services.

With regard to clause 4 and the sex discrimination provisions, it seems logical to carry out the directive and to remove the waiver from the legislation. I understand that in practice the exception applies to just two colleges in Scotland — Dunfermline and Jordanhill — and to a minor extent in Northern Ireland. I understand that we are still awaiting the outcome of an inquiry into the provision of physical education courses. How far does this legislation prejudge the outcome of that inquiry? Will the two courses in question simply remain but both become mixed courses or do the Government intend to push through a merger of the two Scottish institutions?

I should also like an assurance from the Government that this is not a major new departure for education institutions but an attempt to make it clear beyond any doubt that what the better polytechnics and colleges of further education are already doing is perfectly legal and that institutions which raise additional resources in this way will not have to hand them over to the local authorities and that the charges imposed will take account of the groups who use the services. In relation to the fair return provision in clause 2, I hope that account will be taken of the fact that for services such as training restauraunts and hairdressing members of the public have acted as willing guinea pigs for a very long time and that the charges will not be set too high.

Finally, perhaps the Government will consider deferring the Committee stage to allow for a little more probing and a wider debate outside the House before the Bill completes its passage.

12.28 am

I wish to deal only with clause 4, which relates to the Sex Discrimination Act 1975. My comments will relate particularly to Dunfermline college of education and to the Scottish school of physical education at Jordanhill college of education.

I should make it clear at the outset that I speak for the Association of Lecturers in Colleges of Education in Scotland but in an entirely honorary, unpaid capacity. As a former chairman of the association I am expected to raise matters of this kind.

It is astonishing that in almost a throwaway remark in the dead watches of the night a Minister with no responsibility whatever for Scottish education should announce a major policy change in relation to Scottish colleges of education. I am glad to see that the Under-Secretary of State for Scotland with responsibility for education in Scotland has now arrived but he was not present when the change of policy was announced.

The Minister said, "Since 1975 things have changed. In England and Wales there are no longer any colleges that are not open to both sexes." He then said that only two Scottish colleges were affected and that these would merge in the near future. That is news to the Scottish college of education system, which did not know that those two colleges would merge in this way. No announcement has been made by the Scottish Office, and the only information that has been given relates to the implications of this clause, reference to which was made in correspondence with the principal of Jordanhill. That states:
"Clause 4 of the Bill seeks to repeal Section 28(b) of the Sex Discrimination Act".
That has already been said. It adds:
"I should also explain that it is not the Secretary of State's intention to bring Clause 4 into effect until such time as the Department has considered the STEAC Report on the framework of higher education in Scotland as a whole".
That committee has been looking at the nature of higher education in Scotland for some time, and I gather that it will report in the autumn. Quite rightly, the Secretary of State is saying that he wishes to wait until he knows the outcome of that inquiry—[Interruption.] From a sedentary position the Minister responsible for Education in Scotland agrees with me. But that is not what the Parliamentary Under-Secretary said in his opening remarks. He said that these colleges were to merge in the near future. I hope that we shall get some clarity on this point, because there seems to be a major shift in intention.

I cannot disagree with the thrust of the legislation. It is right that these colleges should take in students of both sexes. Given present numbers in Scottish colleges that train teachers of physical education, it would not be night to take on students of both sexes and divide them up. In some ways it make sense to take the Scottish college of physical education of Jordanhill and merge it with the Dunfermline college. That makes more sense than closing down completely the facilities at Dunfermline college and moving them to the much larger complex at Jordanhifl. I hope that that is how the Minister's thoughts are moving.

That should have been done through a Scottish Office statement or by legislation relating directly to Scotland, rather than have it thrown into a basically non-controversial Bill that in the main relates to England and Wales. There is a separate method in this House for dealing with Scottish matters, and it is not right that we should have a major change in the way in which Scottish colleges of education operate by means of a throw-away remark at a late hour by a Minister who is not responsible for Scottish education.

12.33 am

I intervene very briefly to welcome the Bill and the principles that it enunciates, because they are long overdue.

Would it not be possible, however, to draft legislation in more comprehensible terms? In particular, I draw my hon. Friends attention to clause 2(7), which states:
"For the purposes of this Act the open market value of goods or services shall be taken to be the amount of the consideration in money that would be payable for the supply by a person standing in no such relationship with any person as would affect that consideration."
I mention that particularly because legislation that is as important as this should be expressed in terms that can be understood, are comprehensible and stand up to inspection.

The legislation is right in principle. However, legislation such as this affecting colleges of further education, which will have to be communicated to people, should surely be communicated in the Queen's English.

12.35 am

With the leave of the House, I should be delighted to respond to points that have been made in the course of the debate. The hon. Member for Denton and Reddish (Mr. Bennett), in acknowledging that there is broad agreement on the Bill, raised the question of whether such a Bill was necessary, given what has already been done by many polytechnics and colleges. It is worth saying that authorities whose colleges engage in commercial trading do so at present in reliance on section 111 of the Local Government Act 1972, which permits an authority to do

"anything which is calculated to facilitate, or is conducive or incidental to, the discharge of any of their functions".
The difficulty with such widely worded expressions is the risk, particularly when under scrutiny in adversity, that the courts may decide upon a rather narrower interpretation than the authority. I agree with the hon. Gentleman that admirable things are already being done by polytechnics, and the purpose of the Bill is to remove any dubiety at all and to confirm that these actions are undeniably legal.

The hon. Gentleman went on to speak about the arrangements under which those employed by polytechnics and colleges at the moment conduct services in the market place. These matters are essentially for the colleges and authorities concerned, although I recognise the significance of what the hon. Gentleman said, and I am certain that those outside will have noted it.

The hon. Gentleman referred to supplies and the pricing of them — hairdressing charges and training restaurants are good examples. These issues are specifically referred to in the Bill in clause 2(4) as
"goods or services · supplied, in the normal course of any of the educational activities"
and they are excluded from some of the pricing considerations that would otherwise apply. We have good reason to believe that the restaurants and hairdressers that are anxious to employ people coming out of the courses recognise that this is appropriate by-product of the courses.

A certain amount was made about sex disrimination in Scotland, not only by the hon. Member for Denton and Reddish but by the hon. Member for Glasgow, Cathcart (Mr. Maxton), and I was delighted that he joined in the debate. What I said earlier is that
"there are now no segregated courses in England and Wales and only two in Scotland, both of which it is planned to integrate in the near future."
In Scotland, there are two courses, one at Jordanhill for men and one at Dunfermline for women. A report is expected before the end of the year from the Scottish Tertiary Education Advisory council on the framework for higher education as a whole in Scotland. Until that report is available, no decision about the colleges will be made.

I should stress that I was referring to plans to integrate the two courses concerned, and not to merge the colleges, which is a much wider issue. It is intended that moves will be made towards integrating the sexes in PE teacher training in Scotland, as soon as possible after the publication of the report. Because of this potential delaying factor, the Further Education Bill provides for the repeal to be brought into effect at different times in England and Wales and in Scotland. I hope that that reassures the hon. Member.

The hon. Member for Denton and Reddish drew attention to the fact that we were taking the Bill through all its stages tonight. We had understood that it was agreed that that should be done. In any event, it is in the interests of the House and of the further education community to proceed as has been announced, and I hope that the hon. Gentleman will feel able to accept that.

I think that that exhausts the subjects raised in the Second Reading debate, except for the comment of my hon. Friend the Member for Cambridge (Mr. Rhodes James), who drew attention to certain infelicities in the Bill's language. I acknowledge that in seeking to provide phraseology which will remove doubt about the pricing matters with which the Bill is concerned, we may have ended up with wording which is perhaps not the most beautiful that the House has ever had before it.

I should have thought that, in a spirit of co-operation, the Minister would have offered to his hon. Friend the opportunity to table a manuscript amendment so that he could alter the offending language.

My hon. Friend the Member for Cambridge and I are on very warm terms. I do not think that he wanted to press his point quite that far, so it is a dilemma that I think I shall be spared. But I am grateful to my hon. Friend for drawing attention to the matter.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.— [Mr. Neubert.]

Further proceedings stood postponed pursuant to the Order of the House this day.