[Sir Edward Leigh in the Chair]
I beg to move,
That this House has considered further education colleges in the North East.
It is a great pleasure to serve under your chairmanship, Sir Edward. I requested the debate after a meeting that north-east MPs had with the further education colleges in our region. We believe that the quality of education that young people get in FE colleges is central, not just to them and to their life chances and futures, but to the economy in our region, and we therefore have a number of questions to put to the Minister, which I hope he is able to answer.
The economic needs of the north-east are clear. We have the largest proportion of our economy in manufacturing, and it is very good manufacturing. We are the only region outside London to have a balance of payments surplus, because we are extremely successful exporters, and we want to build on that platform.
In preparation for the debate, I contacted the North East chamber of commerce, because it does fantastic work in our region, and it alerted us to where the skills needs and shortages are at the moment. It told me that according to the Office for National Statistics the proportion of adults in the north-east qualified to national vocational qualification level 4 was 7% below the national average; meanwhile the North East local enterprise partnership’s strategic economic plan highlights that by 2020 a staggering 120,000 more jobs will need a level 4 qualification.
The latest quarterly economic survey conducted by the chamber of commerce found that 71% of businesses in the service sector and 83% in the manufacturing sector were experiencing difficulties in recruiting staff, and the UK Commission for Employment and Skills’ employer skills survey reports that 18% of employers face a skills gap—the largest of any English region.
We know that there will be an increase in demand for skilled workers in contact centres, warehousing, manufacturing, construction, customer service, sales and food production and that it will be compounded by the demographic changes that our region faces. We know that 3,500 construction jobs will be created each year between now and the next general election, but we also know that the total population growth in the north-east is less than a third of the national average. We know that many people with skills are retiring—in engineering, the average age of welding machine operators is 50. The skills shortages are completely predictable, and it is absolutely straightforward and simple for us to know that, even to continue as we are, we need to train more people. That is why we are extremely concerned by the prospect of reviews that destabilise and threaten the FE colleges.
The FE colleges in the north-east are much better than those in the rest of the country. According to Ofsted, 95% of them are either good or outstanding, compared with a national average of 79%. Consequently, they are educating 200,000 young people. Bishop Auckland College is absolutely typical of the colleges in our region. It teaches technology subjects, such as construction, along with skills that are needed in the automotive industry, which are even more important now that we have not only Nissan but the new Hitachi plant in Newton Aycliffe. Also, everyone knows we need more skilled workers in childcare and in health and social care, and the college provides courses in those skills, too. It has approximately 900 full-time students and the number of apprenticeships has gone up to almost 1,000.
I am sorry to say that the policies that this Government implemented in the last Parliament and also seem to be proposing now give Bishop Auckland College the feeling that it is being destabilised. What are the Government’s policies? The first thing they did was to cut the education maintenance allowance. The Minister, when he went to Winchester, Oxford and Harvard, might not have needed the support of an education maintenance allowance, but many of my constituents do.
According to National Audit Office figures, there have been real-terms cuts in the sector of 27% since 2010, and although the funding settlement announced by the Chancellor before Christmas was flat in cash terms, it represents another 10% real-terms cut, and I ask the Minister why that is. Why does he believe that it is okay to spend £9,000 per student on university tuition, but only £3,000 per student in FE? That is not a sign of a country that takes its technical skills base seriously, and I urge him to look at the experience on the other side of the North sea—at what is happening in Germany—and say, “We were lagging behind in this area 120 years ago and we are still lagging behind.” Alison Wolf found that in her nationwide survey.
I also ask why the Minister has instituted area-based reviews. Obviously, if there are failing FE colleges in some part of the country, he can review them all he likes, but that is not the situation in our region. The hon. Member for Berwick-upon-Tweed (Mrs Trevelyan) smiles and nods, because she knows I am not making a political point. I am making a point about the quality of education in the north-east. When the Minister made the announcement about the reviews, he said that he did not want any arbitrary boundaries, but we have arbitrary boundaries. The Tees valley review is under way, but the north-east one has not yet started, yet constituents of mine are educated both in Darlington and Stockton and in Bishop Auckland and Durham. That seems very arbitrary to us. What will the Minister do to resolve different possible upshots from the reviews? We have been told that there is slippage, so we would like to know when he expects the north-east review to take place.
When the Minister announced the reviews, he said that he expected policy options to include rationalising the curriculum and considering opportunities for specialisation, merger, collaboration and closure. Improving the curriculum is always a good idea, as is collaboration, but closure is unacceptable and particularly problematic in a rural area.
The average distance travelled by the 16 to 18-year-olds who go to Bishop Auckland College in my constituency is 8 miles each way each day, and for those over the age of 19, it is 14 miles. If the college was closed and they had to go to Darlington and Durham, some of those young people would have journeys of 28 miles. It is not just the time and distance that are the problem; it is the cost. The bus fare from Barnard Castle to Darlington is £7 return—a £35-a-week bill—and for a young person living in Cockfield and going to Durham the cost would be £11 a day, or £55 a week. Those amounts are simply unaffordable. The Minister must know, notwithstanding his own wholly different educational and personal experience, that that would put some young people off doing what was best for them and for the country. Their whole future life possibilities will be limited by extortionate fares and excessive travel times.
When the Minister announced the reviews, he also said that any changes should be funded by the local enterprise partnerships and the local authorities. I was absolutely astounded by what he meant by that. Durham County Council is having to undertake cuts of 40% between 2010 and 2020. Against that massive reduction in the available resources, I simply cannot see how the council can be expected to take on new responsibilities for financing FE.
As I said earlier, Bishop Auckland College is facilitating 1,200 apprenticeships. In fact, I have an apprentice in my office—my third apprentice—and I have had extremely good experiences with them. They have improved the efficiency of the office no end. When I talk to the college, it says that the key logjam in increasing the number of good-quality apprenticeships is not what goes on in the colleges, but finding the placements with the employers.
I was interested to hear the questions that the chamber of commerce had about the apprenticeship levy. The first point it asked me to raise was whether the Minister intends to wrap up the apprenticeship arrangements under the Construction Industry Training Board with the apprenticeship levy. The construction industry has a good scheme that is working well. Everyone is happy with it. Rather than asking for it to be closed down and for the industry to get involved in something new, would it not just be simpler to let the industry carry on doing something that works well and to exempt it from the new arrangements? If it ain’t broke, don’t fix it.
The second point that the chamber of commerce made was that its members want longer-term funding, with agreements of at least two years to tie in with the fact that apprenticeships last for two to four years. That point was reiterated by the colleges. On numerous occasions in recent years, decisions about funding have been taken after they had begun to recruit for the following academic year, because the academic year and the financial year do not coincide. They are calling for three-year settlements. That proposal seems perfectly sensible, and I would like the Minister to consider it.
The thing that is really unclear is how the levy will be distributed. Which sectors will receive the money, and how will the Minister ensure that it reaches small and medium-sized enterprises? As the chamber of commerce pointed out, it is important that we prioritise current skills shortages and future skills shortages that we can predict from economic forecasts and how the regional economy is training. It also said—this seems completely reasonable—that we should prioritise those employers who already have a good training record.
The colleges and the employers are united in wanting a good inspection regime. It could continue to be Ofsted, but that good regime is vital to maintain the quality and, with that, the confidence that people have in apprentices. A recent survey for the UK Commission for Employment and Skills found that 18% of employers in the north-east offer apprenticeships and 37% of employers wish or intend to do so. That is the highest level in the entire country. They are showing their commitment, and they, the colleges and we wish to see that matched by the Government with resources and stable frameworks for policy and delivery.
It is a pleasure to serve under your chairmanship, Sir Edward. I begin by congratulating my hon. Friend the Member for Bishop Auckland (Helen Goodman) on securing this debate. She outlined what is self-evident to many of us in the north-east: we have a good network of further education colleges.
I do not have a further education college in my constituency. My learners access Derwentside College in Consett and New College Durham. They also travel further afield to Newcastle and Sunderland and to other colleges in the region. As my hon. Friend outlined, some go to Darlington and Teesside. The colleges are an asset to our region. It is clear to anyone who speaks to or visits any of them that they are not inward-looking institutions—they are dynamic and forward-thinking. Derwentside College has a good liaison with local engineering companies, both large and small. It not only engages in recognising and understanding what further training is needed, but actively takes part in encouraging young people and adult learners to think of a career in engineering.
New College is an outward-looking institution that sponsors two academies: one in Stanley in my constituency and one in Consett, which is in the constituency of my hon. Friend the Member for North West Durham (Pat Glass). That initiative was spearheaded by John Widdowson, who is the chief executive of the college. He is working well to build the link between the school sector and the FE sector. He is giving great opportunities in Stanley to many young people. In addition, New College has 200 international students from across the world who come to study there.
I had the privilege last year of visiting Newcastle College’s new railway engineering academy. That initiative came from the college, which recognised that there is a skills shortage in the rail sector. It is now providing well-qualified people for jobs—in some cases, those jobs are highly paid—in the rail sector. That college is taking the initiative. In the north-east, we have colleges that are not just allowing the world to pass them by; they are taking the initiative to understand what the business community and their local communities require.
While my hon. Friend is acknowledging some of the work across the region, will he pay tribute to Middlesbrough College’s work on its remarkable new science, technology, engineering and maths centre? That was launched recently, very much with the involvement of local employers, the manufacturing base and the supply chain.
Yes, I will. It is a good example of how local colleges are taking the lead, not by just putting on courses that they hope people will come to, but by working with employers to ensure that the courses they offer are needed by young people and adult learners and by local businesses. This might be an old-fashioned thing, but in our region, the colleges and the education sector are raising awareness that careers in engineering and manufacturing are a way forward and not a thing of the past.
My hon. Friend raises an important point: further education colleges in the north-east already work together and are forward-looking. Newcastle College is engaging with new industries, such as the aeronautical industry and the energy industries. Does he share my concern that the area-based reviews may take the focus away from what is best for our industry and our young people? Too much time may be spent focusing on how to respond to the review. I would like to see more work on adult education in the north-east, particularly given the cuts to local services.
I agree with my hon. Friend, because one of the important points is collaboration between colleges. Looking back, one of the problems in the further education sector was where we had competition between different colleges. That network of working together, which provides opportunities for young people and adult learners, is important. Speak to anyone in the industry and they will say that the 16-year-old leaving school today is unlikely to be in the same job when they retire at 65 or 67 or whatever the retirement age will be when they come to retire. They will need constant on-the-job training and will need to re-access the education system, so the further education sector is vital.
I chaired a meeting last night at an event organised by the Industry and Parliament Trust to talk about the aerospace sector, which has huge potential for growth not only in engineering skills, but in the soft skills of process management and other areas as well. All our colleges, certainly in Durham, are encouraging not only engineering apprentices, who are vital, but the growth sector of tourism in the north-east. I know that Houghall college and also Northumberland deal with land skills and agriculture, which people might think are industries of the past, but they are very important to rural communities in the north-east, and certainly the tourism sector is a growth area across the north-east.
I understand that the Government will want to tackle bad performance, and I support that. If a college or any institution is failing its learners, it needs to be dealt with, but I am not sure how the review will fit in with the rest of the education system. For example, I have already mentioned New College’s sponsorship of two academies, because it saw a clear need to link back into education. The sector is not separate from the rest of the education system, so I want to know how local schools and suchlike will be involved in the process.
My hon. Friend the Member for Bishop Auckland mentioned travel, which is a stark issue in my area and many rural areas. Many young people have to travel quite long distances to access courses. It might be easy in large cities such as London or Birmingham where there is a choice of providers close together, but in my constituency and in hers—for example, in Northumberland—people have to travel long distances, so the issue is not just about the number of colleges, but where they are. I totally agree with her that the abolition of the education maintenance allowance had a huge effect on young people’s ability to access courses.
Does my hon. Friend recognise the problems in Northumberland? Northumberland College in my constituency is 60 miles from the Scottish border and 20 miles from the nearest fantastic city of Newcastle. Northumberland College has got fantastic results with 1,000 apprentices and £2.5 million invested in a new STEM centre. We have got fantastic results like we have never had before and a good rating by Ofsted. If there is any reduction in financing, or rationalisation, mergers or closures, does my hon. Friend agree that Northumberland could not be a part of that?
I agree, but that is where the problem lies. I sympathise with the Minister. Having been a Minister myself, I accept that civil servants sometimes look at things through a London—not even a south-east—prism and think that if something is not happening in London or the south-east, it cannot be happening elsewhere. The idea that my hon. Friend has an outstanding college in Northumberland is perhaps something that they cannot comprehend. Any changes need to be right. One size will not fit all. We have a dynamic group of colleges. The issue is not about competition. That would be a retrograde step back to the bad old days when people were literally competing. That is not a good use of resources and not good for the learners themselves.
Another aspect that is important for the further education sector is to raise aspirations. If we are going to get people into engineering or hospitality and tourism, one thing that the north-east needs more than anything—the further education sector has a key part to play—is to raise aspirations. Sadly, in my own constituency, and in other constituencies as well, we have the problem of—it is a horrible word—NEET: not in education, employment or training. It is difficult to find out the numbers. There are individuals now who are not included in any statistics anywhere. They are not in the education statistics; they are not claiming benefits; and they do menial, part-time, casual work. That is okay while they are young, but they are missing out on the opportunities to get the qualifications that they need for the future, and in many cases they put themselves at great risk working on building sites or in conditions with no health and safety provision or any care for those individuals. Those are the people we need to reach. Sometimes, when the school system has failed them, the further education sector is a good way to access them.
I want to address two other points and how other Departments’ policies impact on the further education sector. Just outside my constituency, in the City of Durham constituency, is Finchale Training College. It was set up in 1943 for the rehabilitation and retraining of ex-servicemen. It does fantastic work with veterans who have mental health problems and physical disabilities. It has a long tradition of retraining them and getting them ready for work. It has also done other training work in the wider further education sector. It was a residential college until 2015 when the Government changed the rules in a move away from residential colleges, and we can argue the pros and cons of that.
In September 2015, the Department for Work and Pensions introduced the specialist employment service to help individuals who need extra help because of disabilities or other training needs. They would have gone into the residential system, but are now—I think positively—in the community. The system set up to deal with this is not only bureaucratic, but it has a detrimental effect on colleges such as Finchale. Contracts were issued nationally and large organisations such as the Shaw Trust, Remploy and others got the contracts. They have sub-partners and Finchale is a sub-partner for the Shaw Trust. The pathway for the people who need extra help into the system is via the disability employment advisers in local jobcentres. There are only two full-time disability employment advisers in the entire north-east; the rest are part time, and there is a problem. Access is gained through a computer-based system. On the first working day of each month, a number of places and contracts are put out. The employment advisers then have to match people to those.
In theory, there is a regional cap, so there should be 18 for the region, but that does not work in practice. So Finchale, which would have expected 70 students over the last period, has only got two, because as soon as a jobcentre in Croydon or south Wales logs on and gets in early, it can upload all its applicants to fill the places. So the idea that Finchale will access learners from south Wales or Croydon is not the case. There are an estimated 200 people in the north-east who need help.
Will the Minister ask his Department for Work and Pensions colleagues to change the system? The system needs to have a regional cap and to allow for people at least to access it, because at the moment it is having a detrimental effect on colleges such as Finchale.
Finally, I would like to hear the Minister’s thoughts on regional devolution. We are told that post-16 further education will be devolved to the new regional body, whatever that will be. Will he guarantee that, if that happens, any cash will be ring-fenced or immune from cuts? When the public health budgets were devolved to local government, the first thing to happen was that they were top-sliced. One of my fears, I think rightly, is that the devolution agenda being pushed by the Government is more about devolving responsibility—without the cash to go with it—and then the blame when the new local authorities have to make the cuts. I am interested to know the Minister’s thinking.
We have world-leading colleges and further education institutions in the north-east. The Minister needs to work with them and not to try and implant in the north-east some blueprint that might look nice on his civil servants’ spreadsheets. If something is not broken, why try and fix it?
It is a pleasure to serve under your chairmanship, Sir Edward. I thank my hon. Friend the Member for Bishop Auckland (Helen Goodman) for securing the debate.
Further education colleges in the north-east are important engines of economic growth and prosperity in our local communities, as well as significant drivers of social mobility. By 2022 the Tees valley will require 127,000 jobs in key sectors, but only 278,300 people out of a working-age population of 417,000 are in employment. The skills mismatch is incredibly important, and FE colleges can fill the gap.
Hartlepool, for a relatively small town, has a remarkably diverse range of post-16 provision. We have a sixth-form college, Cleveland College of Art and Design, and two schools with a sixth form. Hartlepool College of Further Education is the biggest provider of apprenticeships in the Tees valley and the second biggest provider in the north-east for 16-to-18 apprenticeships. It has a fully functioning aircraft hangar, with two jets and a helicopter, and we have real skills, expertise and quality in STEM. The college’s apprenticeship success rate was 86.4%, when the national rate was 70.3%.
As my hon. Friends have indicated, there are concerns that the Government’s reforms are pushing FE colleges to adopt significant changes in their business models, which will put their viability at risk.
I am grateful to my hon. Friend and neighbour for giving way. Yesterday in Education questions the Minister dismissed my concerns about the cost of area reviews, which I am led to believe could result in millions of pounds of extra banking fees being incurred as loan agreements are ended and new ones created. Does my hon. Friend agree that any real financial benefit to colleges might be lost unless the Government step in and decide what will happen with those additional costs?
My hon. Friend makes a fair point, but I would go further, because I worry about the area-based review in the Tees valley. May I ask the Minister why the review includes FE and sixth-form colleges, but not school sixth forms, 16-to-19 free schools or university technical colleges? If a comprehensive review of post-16 provision in an area is being undertaken, why include only certain providers? The 10 FE colleges in the Tees valley subject to the review account for only about 60% of provision, so how can a proper evaluation take place? The process seems opaque, and no one has been able to demonstrate to me clear and transparent criteria for how the area-based review is being conducted. Will he use this opportunity to do so this afternoon?
Furthermore, given that colleges are autonomous organisations, it is difficult to see how any conclusions of the review can be implemented unless the Government starve colleges of funding until they agree to the conclusions. Will the Minister respond to that point and confirm that colleges in the north-east that refuse to accept the findings will not experience disproportionately harsh cuts to their funding?
The Government’s key objective in skills policy is the target of 3 million apprenticeships by 2020. The apprenticeship levy has been proposed as a means to ensure that firms pay for training. I appreciate that core funding for 16 to 19-year-olds and adult skills will be maintained in cash, if not real, terms as a result of the spending review. However, the Minister knows that there remains acute pressure on college budgets. The Skills Funding Agency has suggested that about 70 colleges throughout the country could be deemed financially inadequate by the end of 2015-16.
A devastating impact on FE colleges in the north-east is possible. Will the Minister reassure the House, without referring to specific institutions—doing so might undermine confidence—that colleges in the region will have suitable resources? Will he explain how he anticipates that the combination of his main priority, apprenticeship expansion, with other FE college activities will complement one another, rather than the former being seen as a substitute or alternative for the latter?
I mentioned that FE colleges in the north-east are drivers of social mobility. For people in the north-east in their 20, 30s or 40s who have been made redundant—sorrowfully, we have had far too much of that in the north-east recently—or who may not have worked hard at school but now want to put their lives back on track, and yet are not in a position to take on an apprenticeship place, how does the Minister anticipate that FE colleges will be able to provide them with the necessary basic skills to make something of their lives?
I turn to the apprenticeship levy and, in particular, something that the Minister said when giving evidence to the Sub-Committee on Education, Skills and the Economy yesterday. About 2% of firms in England will be liable for the levy, and the Tees valley figure is broadly comparable to the national proportion—2.2% of our employers are large firms. In Committee I asked the Minister whether the Government position was that the levy will be a ring-fenced fund to be drawn on only by levy payers to fund apprentice training. The Minister said that large firms would have “first dibs” on the money raised from the levy.
That response prompts a number of questions. If that is the case, how will the 98% of smaller firms receive funding for apprenticeship training through the levy if they are waiting for scraps from the table? Will firms be able to carry the levy forward to subsequent financial years, so that if a large firm does not want to draw on it in year one, it will have that possibility in year two? Again, how will that help smaller firms? How will the system help FE colleges provide suitable financial planning? Will the “first dibs” approach be allocated on a national, regional or sub-regional basis—will it be large firms only in the Tees valley, or only in Hartlepool? How will the levy work?
As the Minister understands, the considerable uncertainty is undermining the ability of colleges in the north-east to plan and to provide their existing excellent further education provision. I hope that further detail will be provided this afternoon, so that colleges can get on with the job of ensuring that we can transform our regional economy and that people’s lives in the north-east are made better.
Thank you, Sir Edward. I will do my best, although I am less practised than my colleagues.
Northumberland is one of our largest counties geographically, covering more than 2,000 square miles, but with a population of only 320,000. More than 50% of the population live in the small south-east corner of the country, where our excellent Northumberland College is situated, in the constituency of the hon. Member for Wansbeck (Ian Lavery). For students in the Hexham or Berwick constituencies, the travel times and distances from local towns such as Alnwick, Hexham, Haltwhistle or Berwick are enormous. From Berwick the journey is more than 50 miles each way. The need for an excellent college to offer courses that the local school cannot is vital.
Northumberland College, under the fantastic leadership of Marcus Clinton, ably supported by a brave and determined board of governors, aims to provide a world-leading college for our students. A network of highly specialist centres is being built to provide a regional centre of excellence for hospitality, for tourism and for land-based training. A technology park, a STEM centre and a wind hub in conjunction with the Port of Blyth are also being created. Northumberland College wants to ensure that every student can access the training that they need in their chosen field, but my constituents face a challenge in even getting to the college.
Since our Labour county council stopped funding post-16 transport some years ago, the college has had to pick up the bill so that no student is lost. It is vital that there is stronger careers advice in our high schools, and that the sixth forms and colleges work together. Unlike in other parts of the country, in rural north Northumberland the pressure on schools is not too many pupils but too few. The schools are therefore keen to persuade their pupils to stay on for A-levels to help their cash flow, even though the college might be the better choice for a pupil. I ask the Minister, as the hon. Member for Hartlepool (Mr Wright) did, why the area review is not looking at provision in sixth forms as well as colleges and encompassing the whole post-16 sector. It is a small sector in Northumberland, but vital if we are to make the best use of resources and get the best for our students and for the future economic benefit of Northumberland.
A student who wants to specialise in construction, engineering or IT in our new STEM centre, or in land-based studies, which are so important to rural Northumberland, may be better off going to Northumberland College than remaining in a school setting, but that will be a problem as long as the battle for funds is an issue. Our college could not do more on rationalisation and working with local businesses to build apprenticeship programmes, but sparsely populated communities present real challenges, which I hope the area review and the Minister will shortly consider closely.
On apprenticeships, I, like the hon. Member for Hartlepool, would like the Minister to clarify how SMEs, which are the lifeblood of Northumberland—we do not have any large companies, and every company is an SME—will access levy funding to help them take on apprentices. We are struggling to get clarity on that, and I would appreciate having the Minister’s guidance so that we and every SME that wants to be part of the apprenticeship programme can get our heads around the issue.
As the only college in our county, Northumberland College welcomes the recent moves to stabilise funding over the coming period, to introduce 19-plus loans and to support apprenticeship funding—my point about SMEs notwithstanding—and it is keen to discuss that with the Minister. It also welcomes the increase in funding for those studying the land-based industries, and I hope Northumberland will continue to lead the way on innovative and modern thinking about farming practices. Those funding streams are allowing Northumberland College, at Kirkley Hall, near Ponteland—and, soon, I hope, at a satellite campus near Berwick, if we can persuade a local farmer to take on a bunch of students—to maintain a really specialist resource that is important for our agricultural county and for the whole north-east region. I look forward to hearing shortly from the Minister about how we can get some real clarity on that and the other issues I have raised.
It is a pleasure to serve under your chairmanship, Sir Edward. I congratulate my hon. Friend the Member for Bishop Auckland (Helen Goodman) on securing this important debate, and I am grateful for the opportunity to contribute.
I am not opposed in principle to area reviews, and it is right to assess from time to time the post-16 education on offer to young people and adults in any locality. We need to do that now because resources are scarce and colleges have been under immense pressure—more than they have ever been—in the past five years.
As a result of the environment the Government have created in recent years, I have seen some quite sharp practices taking place between colleges. In my area, we have the ludicrous situation that students have been enticed by offers of free travel to study at colleges further from home, when they could just as easily have studied the same courses in their home towns. That is not a sensible use of public money. Colleges are incorporated, but they are funded by the state, and taxpayers would expect such practices to be discouraged. My fear is that area review actually encourages such a lack of co-ordination and collaboration and that, once colleges agree whatever they agree with the area review team, the situation will deteriorate. I want to know what area review will do to cement collaboration between colleges.
I am all for student choice. I have no objection at all to Darlington students travelling further afield to access courses that are not on offer in the town or that are offered to a higher standard elsewhere. In fact, I would encourage that, and a small number of students from my area travel to Hartlepool to study on the courses mentioned by my hon. Friend the Member for Hartlepool (Mr Wright). I am pleased that they do that, and it is great that they can, but the lamentable state of public transport in the Tees valley is becoming an ever bigger obstacle to that happening more often. However, I do not like the gimmicky enticement of students who have not had the benefit of independent, well-informed advice about what is best for them.
College funding mechanisms certainly need to be looked at. Currently, colleges can do well as long as they can attract enough students on to their courses and keep them there, but they are not held to account adequately for the destinations of course leavers. Colleges operate in a market, but that market does not work sufficiently well for students.
My hon. Friend the Member for Hartlepool was absolutely right to refer to social mobility. There is a lack of quality advice and guidance for young people. Students are therefore not savvy consumers able to shape the market in the way that I am sure the Minister would wish. The Social Mobility and Child Poverty Commission put it well:
“There is a jungle of qualifications, courses and institutions which students find hard to penetrate. Quality is variable and there is little or no visibility about outcomes. Nor is the system working as well as it should for the economy with skills shortages in precisely those areas—construction, technical and scientific skills—that vocational education is supposed to supply.”
In the north-east, we have seen thousands of older potential students lose their jobs in the public sector—and now in steel, too. How will area review take account of the needs of older learners? I ask that because I looked at what happened in Scotland, which undertook an area review—indeed, I was expecting a Member from Scotland to be here. The number of colleges in Scotland fell from 37 to 20. At the same time, there was a reduction of 48% in the number of part-time students and of 41% in the number of students aged 25 or over. That is deeply concerning to those of us from the north-east, given the job losses I referred to.
My hon. Friend makes an important point about adult education and the capacity of our further education colleges to meet a growing demand for which there is less support. As the chair of the all-party group on adult education, I hope that the Minister will be able to give us some reassurance that the destruction of adult education will not continue.
My hon. Friend makes an important point. The review could do serious damage if we are not mindful of the impact on older learners, given the experience north of the border.
One of the real problems is the confusion about courses, funding streams and where courses lead. A UCAS-style website could be created for vocational education, so that any learner can see for themselves what progression they are likely to undergo and what employment and earnings opportunities they are likely to have, as a consequence of choosing any course.
It would be remiss of me not to refer to my two local colleges—Darlington College, which is ably led by Kate Roe, and Queen Elizabeth Sixth Form College, which is led by Tim Fisher. The heads of both colleges are fantastic individuals, but they are both grappling like mad with how on earth to take their colleges forward, given the context that we are likely to see. Colleges in Darlington are really struggling with what Darlington needs to look like in the 21st century. What should the course mix look like? Who are the students of the future? What will they want? What will the skills needs be not just in our local area, but in the region, in the country and internationally? I want students in Darlington to get the same opportunities as students in the Minister’s constituency, because that is not the case now. That is what we are meant to be aiming for. Those are the right questions for my colleges to be asking, and the Government should be focused on helping them to find answers.
Many of our colleges collaborate well, but there are too many examples of competition. I fear that the area review process will cement that counterproductive behaviour between colleges. As well as three-year funding security, colleges need external leadership. Unless we cement in some form of governance change—I do not know whether that should be done through city deals or some other means, but we do need strategic leadership on a wider scale—and force colleges to accept a direction that builds in employers’ needs, it is inevitable, given the likely future funding context and the competition for students, that different institutions will embark on wasteful enterprises and use novelty gimmicks to remain viable. That is in nobody’s interests: it is bad for the economy, bad for taxpayers and, worst of all, bad for our students, who need well-informed advice that is given without prejudice and based on a sound knowledge of the jobs market.
I am afraid that so far area review has been conducted away from the gaze of students and parents, and away from employers. That has to change. The colleges are our colleges. They are vital local employers and community resources, and they undertake a vital task. We all feel great ownership of our colleges and do not want that to be lost. As I have said, I am open to change, as are my colleges, but the Minister needs to understand that the rationale for that change must have the students’ best interests at heart.
I commend my hon. Friend the Member for Bishop Auckland (Helen Goodman) on securing the debate, given the vital role played by further education in our region, which my hon. Friends have amply set out. I am pleased to have the opportunity to contribute, because on Friday I met the new principal of Newcastle College, Tony Lewin, at the college’s aviation academy, which is based at Newcastle international airport in my constituency and ably led by former RAF engineer Tim Jacklin.
The aviation academy is just one of a wide range of world-class facilities at Newcastle College, including the energy, chefs, construction, healthcare, lifestyle and performance academies, as well as the rail academy, which has already been mentioned. I like to think of the aviation academy as one of the college’s flagship operations, not only because it is in my constituency but because the facilities offered to learners are second to none. Students come from across the north of England to undertake FE courses in areas such as airport operations, cabin crew operations, aeronautical engineering, aviation operations and aerospace engineering. Some of them go on to take a foundation degree in aeronautical engineering or even an honours degree in aircraft engineering, operated in partnership with Kingston University.
Many of the courses are run in conjunction with high-profile names from the aviation industry, including Jet2 and Swissport, ensuring that the academy is delivering the skills that industry needs. Indeed, such are the facilities—including the academy’s very own fully functional Boeing 737, and workshops kitted out with latest hydraulics, landing gear, pneumatics and electrical and electronic equipment—that people come from across the world to undertake the courses. Current students come from as far afield as Mozambique, Namibia and the Maldives.
Of course, all that is being provided at a time of great uncertainty for the FE sector, which has too often been afforded very limited time to plan properly or strategically, as a result of budget cuts imposed by the Government over recent months and years at unacceptably short notice. I will not repeat all that has been said in the debate—my hon. Friend the Member for North Durham (Mr Jones) made a powerful case for the innovative approach taken by north-east colleges, as did other hon. Members—but it is worth reflecting on the open letter sent to the Prime Minister ahead of last year’s spending review by 128 FE colleges across the country that stated:
“Late and unexpectedly large reductions in annual funding allocations...make it increasingly difficult to plan ahead with any certainty. Significant funding cuts for the 2015-16 academic year were announced in March 2015 with a further round of cuts announced in July. The cuts applied immediately from 1 August 2015. The uncertainty this creates means colleges cannot invest in their staff, effectively plan their curriculum, and meet the needs of the local economy and communities which they serve. It has become almost impossible to plan ahead and work meaningfully with other agencies and partners who rely on us to deliver their education, training and skills requirements.”
That is a serious concern for any part of the country, but surely more so for the north-east, which continues to have the highest rate of unemployment anywhere in the country by some margin.
Of course, one of the key ways in which the north-east FE sector is supporting our regional economy is through apprenticeships. Indeed, the proportion of the north-eastern colleges’ adult education budget used for apprenticeships is higher—at 41%—than in any other region. I welcome any growth in the number of high-quality, meaningful apprenticeships because, as hon. Members may recall, one of the first things I did after being elected to this place in 2010 was to introduce a Bill to make better use of our public procurement system to deliver apprenticeship places. It was therefore with a wry smile that I read the Cabinet Office’s new procurement policy note, published in August last year, which clearly states that
“central Government procurement contracts with a full life value of over £10 million and a duration of over 12 months should be used to support skills development and delivery of the apprenticeship commitment”—
particularly as I was told again and again by coalition Ministers that what I wanted could not possibly be done because of EU law.
Yet there is further uncertainty for colleges, among others, about apprenticeships. Newcastle College wants to take an active role in the delivery of apprenticeships through the new apprenticeship levy. However, despite the Government’s proposal for the levy to be operational from April 2017, in just one year’s time, the college is concerned about the continued lack of detail on how the initiative will work in practice. One can see why the scheme will be attractive to large firms, which can offset their apprenticeship costs against their levy payment; and, of course, the Government claim that only 2% of firms—those with an annual wage bill of more than £3 million—will have to pay the levy in the first place. So, as my hon. Friend the Member for Hartlepool (Mr Wright) asked, what about those smaller firms who will not pay the levy? How will they access funding for the programme, and will they be able to do so in a way that is not mired in bureaucracy that will put them off? After all, such businesses currently deliver more than 90% of apprenticeships in the country, yet FE Week reported 11 days ago that the Department for Business, Innovation and Skills just cannot clarify the issue.
Other questions remain, including how Ministers will ensure that, instead of a race to the bottom, the new system will create a race for quality apprenticeships—quantity over quality is a big risk—what will happen to potential apprentices who cannot be matched with an employer; what happens to the funding for apprentices where a firm terminates an apprenticeship part-way through; and how the Government will prevent a dip in apprenticeship numbers while firms wait to see how the new plans pan out.
For colleges such as Newcastle, for SMEs and, most importantly, for should-be apprentices across the country, I implore the Minister to make the details of the scheme available without delay, so that colleges and businesses have the lead-in time to plan properly for the changes ahead.
The story of the area reviews is one of a belated and, to be blunt, over-hasty response by the Government to a developing crisis that they should have seen coming over a period of time. I congratulate everyone who has spoken, including the hon. Member for Berwick-upon-Tweed (Mrs Trevelyan). All the contributions were strong and compelling arguments for the vital importance of FE in the north-east. I particularly congratulate my hon. Friend the Member for Bishop Auckland (Helen Goodman) on securing the debate in the first place.
Some of the common themes that have come out of the process have been about the nature of the north-east’s excellence, and the need not to jeopardise that in any way—not just the good manufacturing base, but also the service centre. It is not only for young people that that is important. In view of some of the statistics, such as that the average age of welders is 50, retraining and reskilling older people is crucial. I hope that the Minister did not miss the fact that virtually everyone who has spoken is worried about the unintended—I assume they are unintended—consequences of the over-hasty and rushed process I have referred to.
Is it not time that we cut to the chase? We have discussed Newcastle College, Northumberland College, Hartlepool College of Further Education, Bishop Auckland College, and colleges in Darlington, Durham and Teesside, among many others. All of them provide a brilliant education service to the people in their area. The reality is that we are here because we are extremely concerned that the area-based review will mean rationalisation or merger, which could both mean closure—or that it will simply mean closure. We are really concerned. We want some guarantees from the Minister that that will not happen in an area where the provision is much needed.
My hon. Friend repeats the eloquence that he and colleagues have displayed throughout the debate. Indeed, the questions he puts are essential, because what we have seen from the Government has been a continual process of cuts to funding both in-year and outside of it. An important point was made earlier about the inability to adjust in such a period of time. There has also been a lack of promotional budget for traineeships; cuts in the adult skills budgets, where the Government are still trying to find £360 million of efficiencies and savings; and the scrapping of the education maintenance allowance to which many colleagues have referred.
I am afraid that that theme continues, with the scrapping of higher education maintenance grants for some of the most disadvantaged students, which are crucial to many colleges in the north-east. I have looked at figures that show that will affect 380 students at Cleveland College of Art and Design, 377 at New College Durham and more than 50 at Bishop Auckland College—that is not to mention those at Northumberland, Tyne Metropolitan, Newcastle College and Newcastle Sixth Form College. Therefore a large number of colleges will be affected.
While all of that is going on, we have seen the Minister and the Government set timescales for the area reviews at unrealistic levels. The arbitrary nature of the way in which the reviews are being carried out does not point to a happy outcome, which is why in December the Public Accounts Committee expressed its concern that that will not deliver a more robust and sustainable further education sector. It said that
“The departments appear to see the national programme of area-based reviews, which they announced in July 2015, as a fix-all solution to the sector’s problems. But the reviews have the potential to be haphazard”.
That is rather understating it. On the basis of what we have seen and heard so far today, the words “bull” and “china shop” come to mind.
Colleges across the north-east have done great work to support not just young people, but older people in gaining skills and we have heard how vital they are to the sub-regional economy. That is why we cannot afford to see the Government’s area reviews damaging the link between colleges and businesses or the many decent networks of colleges and schools in the area. As I said to The Times Educational Supplement in October,
“FE is all about getting students”—
especially local people—
“into work in the local economy.”
However, the area reviews risk undoing all that hard work. In view of the potential for combined authorities in the north-east that may wish to take on skills, education and training powers, over-centralised, Whitehall-led area decisions taken now could hamper their ability to do so effectively. That is particularly the case for adult skills and community learning budgets, which are the ones most likely to be devolved under any combined authority umbrella settlement.
Reports from the many parties that have run reviews have raised concerns that there is no clear process for making difficult decisions. My hon. Friend the Member for Scunthorpe (Nic Dakin), who is a former FE principal, expressed that view to FE Week in October. The steering groups look unwieldy and the reviews do not have to involve all post-16 providers. I am also concerned that groups of 25 are far too large. I would like the Minister to respond to those points.
We know that there are issues of financial inadequacy. The National Audit Office’s report shows that 29 colleges were inadequate in 2013 and that will rise to about 70 in 2015-16. That is a consequence of the many errors and failures of the previous Government, which have been continued by this Government. For many people, the idea that we have one law for sixth-forms and FE colleges and another for schools, academies and free school sixth-forms who are not participating in the process or affected by it, beggars belief. If the reviews were about the quality of teaching and maximising FE colleges’ apprenticeships and outreach in the community, surely they should include all education and training providers. That point was made by Susan Pember, who was a distinguished civil servant in the Minister’s Department until not so long ago. As Martin Doel from the Association of Colleges and others have said, it is illogical that the process should continue without them.
All of the concerns raised have been highlighted in our discussion and it is imperative, as we have heard, that the local geography and economic conditions are taken into account in such reviews. In the north-east, as my hon. Friend the Member for Bishop Auckland demonstrated, the changes may be very harmful to the social fabric and social mobility of young people.
It is interesting that when the ideas for mergers and so on came to the Minister’s distinguished predecessor as Minister for Skills, the right hon. Member for South Holland and The Deepings (Mr Hayes), I am led to believe that he quietly shooed them away. He did that for a good reason, because he represents a rural constituency and therefore he knew well what some of the problems would be. The area reviews look set to force shotgun marriages on many colleges, with closures and mergers being put ahead of geography and economic sense.
It is also a pity, as my hon. Friends have said, that there has not been a broader role for learners, trade unions and the whole range of people affected by the changes. The National Union of Students has taken its own initiative and convened roundtables to mirror some of the reviews. An early report from its area review in the Tees Valley says:
“The travel infrastructure across Tees Valley needs to be improved significantly, particularly if learners are expected to travel further. At the moment, many colleges have to put on buses to enable students to come to college. With funding cuts and potential for a wider catchment of learners, this is not a sustainable model.”
It also mentioned an issue that we have not touched on today:
“We have significant concerns about the future of student support services, such as counselling, pastoral care and childcare, which are vital for widening access…and a commitment to ongoing support for disabled students…with physical and learning disabilities.”
My hon. Friend the Member for Stockton North (Alex Cunningham) mentioned the potential costs. Although the Minister said yesterday that he did not want such things to happen, we all know about the law of unintended consequences, so I hope that, if he does not answer that point today, he will write specifically to hon. Members to explain who will pay.
The truth of the matter is that all of the colleges we have heard about play a crucial role in partnering with businesses to provide the training and skills needed for the future in the north-east. We have seen that in the examples given and I could list many more, but I do not wish to add to those amply provided by my colleagues. We need to see the potential skills shortages and careers advice issue addressed, because they are crucial to sustaining those colleges. I was interested to see the recent Newcastle City Council taskforce report, which criticised standards as being inconsistent.
The experience of careers advice and training falls short not just in the north-east but across the country, yet the Government have continued their cuts, restricting the support it is possible to give young people. Just yesterday in the Chamber, the Secretary of State had no answer to my question on the adequacy of limited funding and volunteers for a national careers service and the area reviews may do little to help and plenty to hinder promoting FE in careers advice.
Critically, we cannot afford to let talented and skilled young people, and older ones, fall by the wayside because their colleges have closed and the funding is not there to develop the skills needed to boost regional and sub-regional economies. The Government’s area reviews, as they stand at the moment, are littered with problems and miss key components—they are simply a cost-cutting exercise. As we have heard, FE in the north-east is vital to improving the regional economy, so the Government must ensure that closures, mergers and cost-cuttings do not take place and do not destabilise the balance between education and work and that students do not lose the opportunity to go to a college near them. Otherwise, the Minister is in danger of presiding over a series of dysfunctional Rubik’s cube processes, which could do permanent damage to local economies and learners’ life chances in the north-east and elsewhere.
It is a great pleasure to serve under your chairmanship, Sir Edward. I congratulate and, indeed, thank the hon. Member for Bishop Auckland (Helen Goodman) for securing the debate because I hope that it gives me an opportunity to reassure her on a number of points.
The hon. Lady said that the process of area reviews is destabilising colleges in the north-east. What destabilises colleges in not only the north-east but across the country is the Labour party holding an Opposition day debate in advance of the spending review and declaring that further education budgets will be cut by between 25% and 40%. Of course, what we actually saw in the spending review was a protection in flat cash terms of both the adult and community learning budgets and the funding rate for 16 to 19-year-olds—something that nobody in the college sector, the Opposition or anywhere else had predicted.
What also destabilises is hearing a series of speeches—with a few honourable exceptions, which I will come back to—from Members in which they wave appalling prospects of forced closures and people having to trudge hundreds of miles through the snow to get to a course, when absolutely nothing could be further from the truth and when they have literally no evidence at all for any of the fears they are trying to awake.
There are two approaches to opposition. The first is the approach that was admirably modelled by the hon. Members for Darlington (Jenny Chapman) and for Newcastle upon Tyne North (Catherine McKinnell), who said that she, in principle, could support the idea of an area review if it was genuinely intended to create stronger institutions that would be better able to supply the skills training required to meet the region’s skills needs. We also heard constructive suggestions from the hon. Member for Newcastle upon Tyne Central (Chi Onwurah), who has now left. However, I would say to the other Opposition Members that it does nothing at all for their colleges or the students who they claim to represent to terrify them into thinking that the Government are somehow slashing budgets when we are not or closing institutions when there is no proposal to do so.
Hon. Members have asked a great many questions, and I want to try to answer as many as I can.
First, as well as seeming to think that my own educational background was a subject of interest for the debate, the hon. Member for Bishop Auckland suggested that I have no understanding of rural areas and the issues they face. I point out to her and the hon. Member for Blackpool South (Mr Marsden) that the constituency of South Holland and The Deepings neighbours—indeed, borders—my own. Your constituency, Sir Edward, also does. I, too, have a very rural constituency. I, too, have a constituency in which there are three towns that are more than 20 miles apart, so I entirely understand the issues. I am afraid that in Lincolnshire, fine and wonderful county though it is, we probably do not have much better public transport between towns than in the north-east, so to suggest that I have somehow brought an urban or south-east view to area reviews is ludicrous.
Secondly, the whole point about area reviews is that they are locally based. They are run locally, with local colleges taking these decisions. We of course accept that for the lower level of training in particular—level 1, 2 and 3 training—it is simply impossible to expect people to travel significant distances if we want them to continue in education. We do want them to continue in education, so we will absolutely not be looking to do that.
Opposition Members might want to ask themselves why the great and much admired Newcastle College is able to do so well. One reason is that it is big. In a single year, it secures £38 million of grant funding from the Skills Funding Agency alone, whereas many other colleges in the north-east receive £2 million, £3 million, £4 million or £5 million. “Merger” does not necessarily mean the closure of sites. In fact, what makes the closure of a site much more likely is a small, financially challenged institution that simply cannot cope with the overhead costs of running a college for very low volumes of training—
I will now move on to funding. With many of the Opposition Members here today having participated in that Opposition day debate in which they frightened their constituents and mine with the prospect of a 25% to 40% cut, I hoped that I might hear one word of welcome for the fact that the Chancellor was able to guarantee that the adult and community learning budget will be protected in flat cash terms throughout the spending review period—that is, until 2019-20—and that the 16-to-19 funding rate will also remain flat at £4,000 until 2019-20. Opposition Members predicted a 25% to 40% cut. We, through managing the economy responsibly, have secured funding stability, which I know their colleges welcome.
The hon. Member for Hartlepool (Mr Wright), as always, asked some important and serious follow-up questions, with the slight advantage of having quizzed me yesterday for an hour and a half. I will try to answer them, though they are not directly on the theme of area reviews. The change in the nature of apprenticeship funding is, of course, a critical element in looking at the future of any college’s finances. I hope that he will welcome, endorse and help to go out and spread this message. Currently, across the country, colleges secure only 30% of all the funding for apprenticeship training. The rest—two thirds—goes to private training providers. We all believe that private training providers have an important role to play, and none of us wants to fix the market for colleges, but I hope that he and other hon. Members will join me in urging colleges to set themselves the ambition of winning two thirds of that funding.
Colleges are incredibly well placed to provide training for apprenticeships, as many colleges in the north-east already do. It will be a significantly expanding budget. The apprenticeship levy, about which the hon. Gentleman has some understandable concerns, will increase apprenticeship funding in England to £2.6 billion by the end of this Parliament. Between 2010 and 2020, apprenticeship funding in this country will have doubled. What other education budget will have doubled in that period? That is a dramatic shift. Colleges are fantastically well placed to take advantage of that funding, and I hope that we can work together to ensure that more of them secure it.
The hon. Member for Bishop Auckland asked an important question about the interaction between the new apprenticeship levy and the Construction Industry Training Board levy. She is right to say that the CITB has the support of the industry, but she is perhaps a little over-generous to say that the scheme is not broke. The reality is that our construction industry yet again has gone straight from feast to famine and suddenly finds that it does not have the skills it needs, so something is not quite working in the provision of skilled labour. I am sure that that is as true in her constituency as it is elsewhere in the country.
We have made very clear to the industry and, indeed, to the CITB that it will be for the industry to decide how it wants to combine the two levies. It may well be possible to devise a solution whereby one levy is effectively netted off against the other, so that no individual levy payer pays twice but we continue to provide support. The CITB levy, as the hon. Lady will be well aware, will cover more employers than the apprenticeship levy. She has my commitment that we will work with the industry to ensure the two levies work well alongside each other.
A question was asked about the devolution settlements and whether the funding that might be devolved will be ring-fenced. Hon. Members will be aware that we have already devolved capital funding to local enterprise partnerships in relation to skills. That funding is not ring-fenced; it goes into the single capital pot that the partnerships have. I hope that Members will be reassured to know that even as adult skills funding starts to be devolved to areas that have secured devolution deals, local authorities in those areas will still be subject to the same statutory requirements to provide certain skills for free to certain members of the population. Local authorities might not have a ring-fenced budget, but they absolutely will have a statutory duty to meet that provision, as they do in relation to social services and all sorts of other services. I am sure that hon. Members will know from their own experience that local authorities take such statutory duties very seriously indeed.
The hon. Member for Darlington raised an interesting point and was the only person really to get into what she called the jungle of qualifications. I agree with her; it is often a baffling sea to any 16-year-old who comes in, seeking a set of courses to take them to a career. I hope that she will welcome and contribute to the review being conducted by a former Labour Minister, Lord Sainsbury. He is looking into constructing slightly clearer and more directive routes for technical and professional education, so that from the age of 16, young people are given a clear sense of what will actually take them into a job.
Finally, I come back to area reviews, which are the real subject of the debate. It is very important to understand and underline that colleges are independent institutions. We simply do not have the power, nor do we want to have the power, to tell them to merge, close or do any such thing. That is why—
I am not going to give way when I am in the middle of explaining something. That is why, of course, we have set up these reviews as being locally based and driven by the colleges. Of course, there is input from the Skills Funding Agency, because there is a great deal of expertise and because the Skills Funding Agency and the Education Funding Agency are the major sources of their financing. Frankly, however, many colleges—not least Newcastle College—also get a lot of funding independently, and quite right, too. They get it from business and do not need to look to the Government to tell them what their future is. We have invited all these colleges to work together and come up with a solution that will make them all more robust and more sustainable. It seems extraordinary to me that Opposition Members do not believe that any change could be positive.
Thank you very much, Sir Edward, for confirming my understanding of Standing Orders. I just want to conclude by reassuring hon. Members—[Interruption.] I just want to conclude my argument by reassuring hon. Members that area reviews are not top-down impositions. They are not going to come up—
On a point of order, Sir Edward. I have never seen a Minister fail to accept any interventions. When time is not on a Minister’s side, it is fair not to, but we have eight minutes left and he has refused to have any Opposition Members challenge him on anything he has said, which is absolutely outrageous.
I hoped that Opposition Members would understand that, when I said that I wanted to conclude my argument, that was slightly different from saying that I wanted to conclude my speech. I will be happy to take some interventions when I have concluded the argument that area reviews are not going to be centrally imposed solutions. They are locally generated solutions that will provide a prospect for every college—about which Opposition Members have spoken in such glowing terms—to do an even better job in the future of providing vital technical skills to their young people.
I will start, if I may, by taking an intervention from the hon. Member for Bishop Auckland, given that she secured the debate, and I am happy to use the rest of the time to take further interventions.
The Minister has not addressed the issue that I raised with him yesterday, which has been raised again today, about the banking fees that merging colleges will ultimately face as a result of any mergers that take place. They will run into millions of pounds across the country. What action will he take either to influence the banks or to ensure that those costs do not lie at the doors of colleges and that they get the benefit of any mergers that go ahead?
I am glad that the hon. Gentleman has asked the question again. He is right, of course, that sometimes when there are changes to banking arrangements, fees arise, but those will be visible and transparent, and a college will only undertake an operation that might trigger those fees if it considers that, overall, doing so is in its interest. He will be aware that the Chancellor made it clear in the spending review process that there will be a facility to provide transitional funding for the implementation of area reviews. We will have access to that facility if we need it to support, for instance, a merger or some other arrangement; but ultimately, we will only support such a merger or arrangement if the colleges believe that it is worth doing, even if there are some transitional transaction fees. I hope that helps a little.
I am glad that, despite the Minister’s arrogance, he has been shamed into accepting interventions. He is trying to portray the north-east colleges as somehow stuck in the mud and not wanting to change. I assure him, however, that he could not meet a more dynamic set of leaders who actually want change. I want to ask him specifically about the point I raised on the specialist employment service. Although I accept that that is a Department for Work and Pensions responsibility, will he assure me that he will raise it with his colleagues at the DWP?
Of course, I am very happy to raise that with DWP colleagues; I regularly meet the Minister for Employment and actually I will meet the Under-Secretary of State for Disabled People soon. May I just make it clear on the record that at no time have I suggested that colleges in the north-east are stick-in-the-muds? Indeed, I have singled out several as exemplar colleges. I absolutely have said that some Labour Members who have spoken in the debate seem to be stick-in-the-muds and attached to defending existing arrangements, and I happy to repeat that claim.
What the Minister is highlighting is that it seems as though he has made up his mind what he wants: he thinks big is beautiful. He rightly argues, as I said in my contribution, that Newcastle College is a good, forward-looking institution, but he clearly wants large colleges with satellites. That is not what local colleges in the region want; they want to co-operate with one another, so I am sorry, but he is being disingenuous if he is suggesting that he has somehow not made his mind up even before he started this review.
First, the Minister began his remarks by suggesting that some of us who spoke in this debate were scaremongering and that we had no evidence to suggest that options coming out of the reviews might include the closure of institutions. That is not the case. It was his document, “Reviewing post-16 education and training institutions: guidance on area reviews”—published on 8 September 2015, when he was the Minister—that floated that option. That is what people have noticed.
Secondly, the Minister knows perfectly well—he is an extremely well-informed man—that flat cash means real-terms cuts. That is what we have pointed out.
Thirdly, I asked the Minister why he thought it was right that the capitation was lowest in FE, as compared with universities and, of course, with sixth-form colleges. If this country is going to continue to develop a high level of technical expertise and manufacturing, we need to put more money into this kind of education, which needs small groups and high-quality equipment to teach these young people.
Question put and agreed to.
That this House has considered further education colleges in the North East.