It is two o’clock. We start with Clause 13.

Clause 13 [Incorporation of further education institutions]:

moved Amendment No. 37:

From these Benches we share the concern of the noble Baroness, Lady Morris of Bolton, about the removal of powers from an elected Secretary of State to the unelected Learning and Skills Council. I shall not say anything more about the amendments because we, like the noble Baroness, are anxious to hear what the Minister says at this stage of our scrutiny of the Bill about the justification for this move.

I support my noble friend Lady Morris, in particular on Amendments Nos. 37, 38 and 39. I thank my noble friend for her thorough and interesting opening to this part of the debate, and I await with great interest the Minister’s response to the points that she raised.

I declare an interest as for 12 years I was a visiting lecturer at City of London College and Holborn College. In addition to lecturing, I have also written educational material and still often speak at various leadership courses. I have set up awards to recognise and reward the attainment of young people who are rising stars and who, it is hoped, will be our future leaders. I have also been a director of South London Training and Enterprise Council.

The United Kingdom lags behind its international competitors: it is ranked 24th out of 29 developed nations for the proportion of young people staying on in education or training after the age of 16. The number of adults in the workforce without the skills needed to succeed in a modern economy is also high: the United Kingdom is ranked 17th out of 30 countries. At the same time, nations such as India and China are rapidly improving their skills base.

I welcome any Bill that addresses the need to raise the standards of skills. I believe that is vital as the UK faces a challenge with its ever-increasing skills gap. The Further Education and Training Bill does not have enough content, and I consider that a missed opportunity.

Amendments Nos. 38 to 39 would prevent a transfer of the Secretary of State’s power of intervention to the Learning and Skills Council for England in Clauses 13 and 14. The Learning and Skills Council is an unelected body not accountable for its actions and, through this Bill, it will have the power to direct a college to remove principals and senior post holders. It will also have the power to create and abolish colleges in England without the permission of the Secretary of State.

The Learning and Skills Council, which spends £11 billion a year on further education and training for young people in England who are not at university, managed to carry out three internal reorganisations in just five years. It is a depressing achievement for a fairly new body such as the Learning and Skills Council to have already accumulated redundancy costs of £54.4 million. A further £61.9 million of taxpayers’ money was spent in the year before its launch, in winding up its predecessor, the national network of Training and Enterprise Councils, bringing the total bill to more than £116 million since 2000. That has threatened to undermine attempts to ensure that young people have the skills they needed to survive in an increasingly competitive job market.

The recent report by the noble Lord, Lord Leitch, on skills and training, which was commissioned by the Treasury, warned that the UK needed to find an extra 500,000 apprenticeship places by 2020. The £116.3 million spent on reorganising the LSC and its predecessor since 2000 could already have financed an extra 32,300 apprenticeship places. Surely this would suggest that the Secretary of State should remain the appropriate authority, as he is an elected official and accountable.

Perhaps I may first say that far from being irritating, the generally constructive approach taken by the noble Baroness, Lady Morris, to our proceedings has been greatly appreciated, particularly by the Government, and worth every cough and splutter.

In respect of the powers that we are discussing in Clauses 13 and 14, I reassure the Committee that under those clauses the LSC will be required to publish proposals for dissolving or incorporating institutions, as now, and to carry out structured consultations taking account of local needs, as now. The Bill makes no changes in those respects; what it does is to give the LSC final responsibility for decisions in that area subject to the power of the Secretary of State to intervene when he considers that the council has acted unreasonably in relation to any of its statutory duties. So there is a reserve power for the Secretary of State in cases in which he believes that the council has not acted reasonably.

We believe that this is the right way forward. The Learning and Skills Council for England is the body responsible for planning and funding high-quality education and training for young people and adults. It is best placed, we believe, to ensure the most appropriate arrangements for delivery of such provision. By transferring these powers to the Learning and Skills Council, we expect that the process of establishing institutions will be simpler, quicker and less bureaucratic.

I stress that most incorporations and dissolutions take place as a result of college mergers, where one corporation is dissolved and subsumed by another or where two corporations are dissolved and a new one is formed. In practice, very few merger proposals have raised concerns and all of those proposed in recent years have been brought into effect. We need to get this power in perspective.

Let me give some concrete figures. Since 1997, 13 new further education corporations have been established; 11 of them have been set up as a result of merger proposals. Similarly, since 1997, 68 further education corporations have been closed but 67 of them were closed as a result of merger proposals. In the overwhelming majority of cases, these have not been contentious proposals.

The powers in Clause 14 will require the Learning and Skills Council to publish all proposals before a decision is made to establish a new further education corporation or to dissolve an existing corporation. The process for publishing proposals is set out in existing regulations, which we intend to keep in their present form. Through maintaining these regulations, we can be sure that there is an appropriate level of communication and engagement at local level. We will need to make minor changes to reflect the transfer of powers from the Secretary of State, and we believe that Amendment No. 39 would prevent those changes being made.

Simplifying the decision-making process in the way that we intend will, we believe, encourage the FE system to ensure that it is fit for purpose and properly meets the needs of learners and employers. However, in doing all this, we want to ensure that in exceptional circumstances the Secretary of State, as the elected Minister ultimately responsible for the education system, retains a reserve power to direct the Learning and Skills Council in relation to its functions regarding the establishment or dissolution of further education corporations.

In taking account of all the points I have made, I hope that the noble Baroness will be reassured.

Before my noble friend replies, I should like to do two things. First, I apologise to the Minister: at Tuesday’s proceedings, Hansard and I got in a muddle and attributed some words in a letter to the Minister when they were mine. I have so informed Hansard, which is correcting the record. It is in column GC 323.

Secondly, on Tuesday my noble friend Lord Norton of Louth referred to what I might characterise as poacher/gamekeeper situations. He suggested that some of the provisions in the Bill might put the Learning and Skills Council on both sides of the fence. He might have wanted to cite this as a situation in which that could happen. The point is neither complicated nor difficult to understand in the light of my noble friend’s amendment. Should the proposal and advice given by the Learning and Skills Council be subject to the decision of the Secretary of State or should the council, having listened to whatever anybody else says, be responsible for the decision as well? The amendment simply says that the decision should rest with the Secretary of State and not be transferred to the Learning and Skills Council.

I thank the noble Baroness, Lady Walmsley, for her support, as well as my noble friend Lord Eccles and my noble friend Lord Sheikh for his knowledgeable contribution. I also thank the Minister for his, as ever, courteous and thoughtful reply. I listened carefully, but I am afraid I was not persuaded by the argument. We simply do not understand why this has to happen, especially as the Secretary of State retains reserve powers. Although the Minister says that that simplifies the process, we think that it complicates it and moves decisions further away from direct accountability to the electorate. But for the moment, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 38 not moved.]

Clause 13 agreed to.

Clause 14 [Dissolution of further education corporations]:

[Amendment No. 39 not moved.]

Clause 14 agreed to.

Clause 15 agreed to.

Because of the amendment I moved as the last item of business at the first meeting of the Grand Committee, the Government no longer wish Clause 16 to stand part of the Bill.

Clause 16 negatived.

Clause 17 [Intervention: England]:

moved Amendment No. 40:

I very much agree with the sentiments of the noble Baroness. I shall speak to Clause 17 stand part, which is grouped with these amendments. Clause 17, which gives the Learning and Skills Council greater powers to intervene in FE colleges, and Clause 18, which does the same for the Welsh Assembly, go against even the recommendation in the Government’s report for the development of the further education sector of more independence for the colleges and a greater willingness to allow a real diversity.

Although we understand the necessity for last-resort intervention in a failing college, we think the degree of intervention that will now be possible, as well as the development of the power to intervene given to bodies, which will necessarily be in close contact with the colleges for more day-to-day matters—for instance, in Clause 10, where they are allowed to have partnerships—could very well be a conflict of interests; as does my noble friend Lord Norton of Louth, who, sadly, is not in his place today because he is at a degree-awarding ceremony, of which we shall hear more later. Therefore, we think that this provision is misguided.

Does the Minister not feel that giving the Learning and Skills Council for England the power to intervene in colleges to which it already issues guidance will only increase the likelihood of colleges playing it safe and following the standard line, rather than exploring innovation, for fear of sanctions? I understand that a college will still be able to appeal to the Secretary of State, but I am worried by the trend that the Bill seems to indicate of devolving yet more power away from the Secretary of State not to the colleges, where we would like to see it go, but yet again to the unelected LSC. Have there been any times when the current powers of intervention and guidance have not been sufficient?

I support Amendment No. 43 in particular. It surprised me to read in Clause 17(6)(a) that a governing body may be directed to dismiss such members of staff as may be specified. That is going below the principal. I find it astonishing that an outside body should have the knowledge and competence to look below the principal and identify such fault that it could direct a governing body, notwithstanding consultations that should have taken place, to take this action. I should have thought that if such a person were dismissed, good arguments could be made for wrongful dismissal. By implication, if the principal and the governing body were not prepared to dismiss him, they did not think that he should be dismissed. As the noble Baroness asked, who bears the responsibility? But to go below the principal is to me amazing.

The point about the principal I begin to understand, but it concerns me. Below the level of principal, that could not happen. I agree with Amendment No. 44 that the next stage would be to issue a letter to the governing body and require it to respond. If there were a residual power to dismiss, the principal would have a strong case to argue before an arbitration tribunal that those who were his employers and knew him best disagreed with the decision.

Furthermore—and speaking as a former chairman of more than one funding body—I am concerned that sometimes the principal may be strong-minded, a pain somewhere or another, and if he does not have the confidence to stand up, the well-being of the institution and its management will be damaged. It may be that men and women are afraid to make themselves unpopular because if their college enters a period of less-than-desired performance, they will be particularly vulnerable. I do not dissent from the view that this is a difficult situation. When I read Clause 44, I say yes, but what if the governing body is still resistant? There must be a sanction somewhere. The answer may be that since the responsibility is vested in the governing body, it is a question of the resignation of its chairman rather than dismissal of the principal because he represents the employer.

It is surprising that the power, which is wide-sweeping, goes down to any member of staff. It is repugnant that an outside body should have such power in relation to any member of staff. I am therefore deeply disturbed about this subsection.

I, too, want to speak to Amendment No. 43, relating to Clause 17(6). I shall not repeat the eloquent words of the noble Lord, Lord Dearing, as he has made a strong case. However, I want to make one comment and ask two or three questions. My first question has implicitly been answered by the noble Lord’s remarks. I was going to give the benefit of the doubt and ask whether the intention was that the provision could apply to any member of staff or simply to a principal. They are in different situations.

The one comment that I have to make that might encourage the Minister to move away from this fairly draconian clause is that I have seen heads of institutions moved on the basis of questions raised by funding councils and investigations set in place by them without this specific power having to be invoked. I refer to the university sector. It can be done and has been done—and I could give examples of that. The power to do what is sometimes sadly necessary is perhaps already there in the system, if what happens in higher education could be adapted in statute for further education.

My questions bear on the point raised by the noble Baroness, Lady Walmsley, about the identity of the employer. An employer-employee relationship is a contractual one; if I am an employee, I am contracted to do X, Y and Z by my employer. But it would seem that that relationship has been questioned here, so there is a real question of who the employer is under law. Until that is resolved, this statute will cause all sorts of difficulties.

Dismissing people in higher education is not easy, which is perhaps a pity in some cases—but I have been through the process and done it, and it almost always ends up with an employment tribunal. If the tribunal is made up in the way that they are made up today, one of the first questions that it will ask is against whom the case has been brought. That is a legal question that requires an answer before we proceed down this line; is it being brought against the funding council or the employer—apparently, the institution? That would apply equally to principals. I would much prefer an alternative route to, in the extreme situation, moving principals out; but we need an answer to the question where the case would be put when, inevitably, it comes to an employment tribunal.

I have two points. My first point is that this is a second example of my noble friend Lord Norton’s concerns about poachers and gamekeepers. This discussion has gone along those lines; I shall not repeat them, but I am in 105 per cent agreement with the points that the noble Baroness, Lady Walmsley, and others made. I think that my noble friend Lady Morris will also be found to be in support of that thesis.

On my second point, I should like to suggest to the Minister a way of testing the clause. He might do well to discuss it with the Mayor of London. If the amendment tabled by the noble Baroness, Lady Turner, on Tuesday went into the Bill, the strategic leadership would be handed over to the Mayor. I do not think that he, in setting out his strategic leadership—which might of course be somewhat different from the strategic leadership provided by the LSC to other people—would be at all happy or would take a decision that one of his colleges, as he would see it, should be inconvenienced as is described in these clauses. That would be conflict—and on Tuesday we edged around the subject of creating conflict. So that is a test that I suggest the Minister makes.

I endorse the arguments eloquently set out by noble Lords, especially the noble Baroness, Lady Walmsley. As this is the first occasion on which I have spoken in this Committee, I declare my interest as chief executive of Universities UK.

Noble Lords who have had experience of the higher education sector can probably imagine the reaction if it was proposed that the Higher Education Funding Council should be given the power to direct university governors to dismiss senior staff of universities. It is possible to have a lengthy and interesting debate about the definition of public and private bodies, but as the Association of Colleges and, indeed, the noble Baroness, Lady Walmsley, have pointed out, universities and colleges are now defined as private sector bodies by, among others, the Office for National Statistics. Many of our universities receive a large proportion of their funding from the public purse, some of them up to 70 per cent from the Government in the form of support for teaching and research. They are quite properly accountable for the use of those funds, but they remain autonomous institutions, responsible for their own financial management, their admissions, their academic standards and their compliance with the law.

Centrally managed systems of higher education exist in Europe. The Government could look to France as a model where appointments and dismissals are a matter for civil servants. It is just that I do not think that is a very effective way of managing a very important sector of education.

I find it odd that Ministers are arguing that on the one hand colleges should be trusted and their status enhanced by the measures in Clause 19, which we will come on to later, and on the other proposing a measure that seems to me to argue precisely the opposite of that trust. Giving the LSC the power to act effectively as a shadow governing body is not conducive to good governance, any more than it would be proper to allow shadow directors to operate in the context of companies.

The governing bodies of colleges, as of universities, currently have the ultimate responsibility of the effective management of their institutions, including meeting the statutory responsibilities and appointing or dismissing senior staff. I must ask, as have several other noble Lords: what is the Government’s evidence that this has not been effective in the further education sector? It would be helpful for us to understand this a bit better if the Minister could give an example of where those powers might have been exercised.

It is important to say clearly, before we reach what I imagine will be the rather choppy waters of Clause 19, that my opposition to Clause 17 as it is currently drafted is entirely compatible with my desire to see the many fruitful partnerships between further and higher education institutions protected and encouraged. Universities want strong partners that are properly supported, but not micromanaged, by the Government and the LSC.

I support the amendments tabled by the noble Baronesses, Lady Sharp and Lady Walmsley, opposite, which would remove the power of the LSCs to direct a governing body to dismiss members of staff. I agree with Amendment No. 42, that the LSC should be empowered to provide advice, not direction.

We are all broadly agreed in the Committee on the need to eliminate inadequate provision, and that cases of inadequate provision are thankfully rare. We also agree that in the overwhelming majority of cases, these issues will be resolved by the college itself. The noble Baroness, Lady Walmsley, said that we should be working through colleges, and that will be the almost invariable practice. Where that is not possible because of the reluctance or unwillingness of the college to take action, when it is believed by the Learning and Skills Council on the basis of objective evidence that it should be taking such action, I agree with the noble Lord, Lord Sutherland, that the council will have other means in addition—the kind of informal means that he set out, which he knows about, having occupied these positions himself—to bring about that objective.

I should note in passing that, although those are alternative means, particularly threats that there might be about funding, or other processes the LSC might set in train, I would not necessarily suggest that they are less onerous. My noble friend Lady Warwick said that further education colleges were self-governing institutions, which is of course true, but the overwhelming bulk of their money comes from the public purse. The LSC has an absolute right on behalf of the Government as the funder to take an interest in the effective management and value for money being provided by colleges. The power will be exercised in very rare cases. There must be some process for seeing if ultimately they believe, as custodians of those public funds on behalf of the taxpayer, that those funds are not being effectively used. There must be some redress.

At the moment, of course, there is redress on the part of the Secretary of State. The issue we are debating is not whether there should be some ultimate redress; Parliament has accepted that there should be. We do not accept the principle that the self-government of colleges is an absolute right that holds in all circumstances, however great the level of failure. When we strip away those rather grand statements, we are debating the much narrower point about whether that ultimate power of intervention should be exercised by the Secretary of State, or whether it is appropriate that those powers—

Does the Minister not agree, however, that the Secretary of State is an elected Member of the other place and, through the process of being elected, has some democratic legitimacy? One of the problems with transferring this power to the LSC—the issue about which the noble Lord, Lord Norton of Louth, is concerned—is that we are transferring these responsibilities from someone who has some democratic legitimacy to a body that has none.

We do not accept that that ultimate transfer has taken place. As the noble Baroness will be aware, the Bill also secures the Secretary of State the power to direct the LSC as to the proper exercises of its functions under Section 56A. If the Secretary of State, in his role as ultimate custodian of the education system and an elected Member of the other place, takes the view that the Learning and Skills Council is acting unreasonably, he has a power to act in this regard.

The Minister has already said that the power is used very seldom. If the Secretary of State has the ultimate powers of direction, there is no particular need to alter the existing provision. We could leave it as it is under Learning and Skills Act 2000, which provides that the Secretary of State holds these powers.

In terms of the role that the Learning and Skills Council plays in acting on behalf of the Government in these respects, we believe it would be appropriate that, except in the very extreme circumstances in which the Secretary of State felt that the council was not acting reasonably, these powers should be exercised by the council.

As well as the role of the Secretary of State who has ultimate powers of direction, the proposed new Section 56B also requires the Learning and Skills Council to prepare and publish a statement of its policy with respect to the exercise of its powers under new Section 56A. It will be the duty of the council to have regard to its policy and any guidance given to it by the Secretary of State—which, in response to the noble Baroness, Lady Sharp, is a further role for the Secretary of State—before exercising these powers and to keep the policy under review.

Until the Bill receives Royal Assent, the Learning and Skills Council’s guidance document Identifying and Managing Underperformance gives an overview of the processes that will be used to identify and address underperformance and inadequate provision. A copy of this document is available in the Library.

The concept of underperformance, set out in proposed new Section 56A(2)(d), inserted by Clause 17, is not a vague one. The Learning and Skills Council’s intervention policy spells out in clear and objective terms the circumstances in which institutions will be held to fall into this category. Paragraphs 10, 11 and 12 of the document set out those criteria. Paragraph 12 states:

“Withdrawal of LSC funding, restructuring or intervention options will be considered in cases of outright failure, defined as those where … Ofsted has judged a provider as inadequate … 25 per cent of more of the provision on offer has failed to reach the minimum performance levels defined in this document … financial viability is seriously at risk … underperformance is identified and improvement does not occur within the specified period … Apprenticeship provision does not meet minimum performance levels”.

This is not in any way an arbitrary power. The document sets out the circumstances in which it could be exercised. Even then, in the overwhelming majority of cases, we would expect to see these issues resolved by the college operating through its normal processes.

Clause 17 empowers the Learning and Skills Council to direct the dismissal of a college principal or senior staff. This is not a wide-ranging power by which the Learning and Skills Council could undertake a wholesale removal of college staff. In response to the noble Lord, Lord Dearing, and the concerns that he raised, this could be so interpreted. I stress that it is strictly limited in scope, enabling the Learning and Skills Council to direct dismissal only where the governing body has the power to dismiss under its own institution’s articles of governance and only in cases of serious underperformance. In colleges, it would affect only a small number of senior staff.

We accept that the oversight of the principal and senior staff of a further education institution is the responsibility of the institution’s governing body. On the evidence of recent years, we are satisfied that the vast majority of governing bodies act swiftly and decisively on their own initiative to remove senior members of staff who are ineffective, of whom there are relatively few in the further education system. However, we also consider it important that the Leaning and Skills Council should be able to tackle effectively any cases where poor college management is letting down learners and employers and where governing bodies fail to take the necessary action to rectify matters on their own initiative.

As to the comparison with schools, an issue raised by the noble Baroness, Lady Walmsley, there are powers for very significant intervention in schools on the part of their own regulatory and oversight body—the relevant education authority—including, for example, the power to suspend the delegation of funds to a governing body. I stress that with that power goes the full staffing responsibilities, which transfer to the local authority, and the decisions which can be taken about the future of the head teacher and senior staff. Although we have to make allowance for the fact that the precise regulatory structure is different, these are not powers without precedence in other parts of the education system where the value for money of public funds is at stake.

Amendment No. 43 would prevent this important part of the improved powers of intervention. We want to place decision-making powers as close to the front-line delivery as possible. As the body responsible for planning and funding high-quality education and training for young people and adults, the Learning and Skills Council, we believe, is best placed to hold these powers. The present arrangements distance the power to intervene from the body best placed to exercise it.

The noble Baroness, Lady Walmsley, suggested that these provisions might undermine the position of college governing bodies in leading their organisations and might impose a third party in the employment relationship with college leaders. I stress that the Government wish to support college governors in leading their institutions effectively and have no intention of making things more difficult for them. As the LSC’s recent publication, Identifying and Managing Underperformance, made clear, the LSC would work through an intensive dialogue with the provider concerned before even issuing a notice to improve, which would itself be only the first stage of the process. Governors would have the opportunity to take action to address underlying problems before there was any recourse to these powers on the part of the LSC, and we are confident that most governing bodies would want to do so.

In the extreme case where a direction was given under new Section 56A, the termination of the employment relationship and any financial consequences would remain the responsibility of the college concerned. I believe that meets one of the points raised by the noble Baroness, Lady Walmsley.

The intervention policy required to be prepared and published by the Learning and Skills Council under new Section 56B will set out the operational procedures surrounding the exercise of these powers. This policy will be the subject of consultation with providers and, amongst other things, these procedures should ensure that colleges act consistently with their legal responsibilities as employers in cases where a direction to dismiss would, in practice, be given at the end of a process based on clear evidence.

The procedure envisaged by Amendment No. 44 is very similar to the arrangements set out in the Learning and Skills Council’s intervention strategy, to which I referred earlier. The Learning and Skills Council will, in all cases where it has concerns regarding levels of performance, issue a formal notice to improve to the chair of governors and the principal. This notice will be a letter which sets out the conditions for continued funding and the timeframe in which improvements are required, usually within a minimum period of 12 months. Of course, in the overwhelming majority of cases such improvements would be made in that period. We would expect the college to set out its actions to address the notice conditions in its development plan and to inform the LSC.

In most circumstances, the LSC would also ask the Quality Improvement Agency to work with the college to help make the required improvements. We believe that the underlying intent of this amendment is to ensure that the chair of governors and the principal are fully informed of the LSC’s concerns and are given the opportunity to remedy them and respond appropriately. We fully support that intent. However, we believe that the administrative details for such arrangements are more properly cited in operational guidance rather than in primary legislation. The procedures envisaged by the noble Baroness are close to those that we envisage ourselves.

In summary, I stress again that we see this as a last resort intervention. We expect the LSC to exercise these powers only in exceptional circumstances where all other options have failed and where the relevant governing body has not taken the action required. It is the role of the governing body to lead the college and secure the best interests for its learners. We believe that having the powers available to the LSC and the possibility of them being exercised would in some cases be the trigger for governing bodies to act themselves more expeditiously. The proposed amendments to Clause 17 would deny the Learning and Skills Council the tools to secure improvement in a sufficiently rapid and robust manner and in the interests of learners and employers. Therefore, we do not believe that it would be appropriate to insert them.

Before the Minister finally sits down, will the powers conferred on the LSC, particularly in relation to principals, which are a different category, be different from the powers that can be exercised in the case of someone failing to operate as a competent accounting officer in the accounting officer line? That is how the movements to which I referred have taken place in other higher education institutions where a judgment was made that the head of the institution, who had accepted accounting officer status, was not adequately fulfilling those responsibilities. It gives considerable powers to go round the side of the governing body, because a different judgment is made by the accounting officer further up the line. Are the powers in this measure different from those? If the answer is not immediately available, perhaps the Minister could write to me later.

My safest course would be to promise to write to the noble Lord rather than give an answer off the top of my head.

I thank the Minister for his careful response and other Members of the Committee who have supported the approach that we are taking in Clause 17. We do not want to remove it completely, but we do propose to take some of the more draconian powers away from it. The Minister said that we were talking about outright failure, but I do not think that we are. We are also talking about performance that is,

“significantly less well than it might in all the circumstances reasonably be expected”,

to be. I still say that that is a woolly expression and that there is no definition.

We are all agreed that we would be talking about only a small number of colleges, particularly in light of the fact that colleges now are required to have a strong self-evaluation process. In most colleges, that works pretty well.

We all also accept that organisations that get 80 per cent of their funding from the public purse should, of course, be accountable for that money. But the difference between us is that we believe an elected representative of the citizens of this country—whose money it is—should make that final decision, not a quango appointed by the Government. It smacks of passing the buck from the elected Government—the Secretary of State for Education and Skills—to the LSC, which is absolutely wrong. The Minister made my point for me. When I said that the system seems to be much more draconian than that in place for schools or higher education, which the noble Baroness, Lady Warwick, expanded on, he talked about a system for schools where the local education authority can intervene. That is an elected body.

The local education authority is absolutely the right organisation to intervene when dealing with schools. Because it is an elected body it has the authority of the citizens it represents and for whose children it provides education. In this case it should be the Secretary of State that takes the power and the responsibility, obviously with the advice of the LSC and any other appropriate person, but ultimately it should be that elected body which takes the responsibility to intervene.

The Minister has made my point for me, and I am quite sure that we will return to this issue at the next stage of the Bill’s scrutiny. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 41 to 44 not moved.]

Clause 17 agreed to.

Clause 18 [Intervention: Wales]:

I have given notice of my intention to oppose Clause 18.

The Assembly for Wales has existing direction-making powers for use in relation to education and training to ensure high quality. Yet Clause 18 specifies certain powers and procedures which the Assembly must take to itself if a college is performing

“significantly less well than it might in all the circumstances reasonably be expected to perform”.

Putting aside our objection, which I have just expressed, to this loose and undefined phrase, the basis of our objection to this clause is that it should be part of the devolutionary process to leave it to the Welsh Ministers to decide what powers they wish to have in these circumstances. If we remove Clause 18, we accept that the Welsh Ministers would then have to seek to amend these powers in accordance with the needs of Wales. I think that we should leave it to them to do that, and I am sure that they will do it swiftly. To enable them to do that we have tabled Amendment No. 56 to Clause 26, which would add a provision for intervention to the list of matters over which the Assembly may make measures.

Clause 18 throws up issues about accountability in Wales too, specifically, a lack of an independent appeal process. In England, in the end, a principal could appeal to the Minister. The same thing is not available in Wales. So we believe that these matters are best left to detailed scrutiny within the Assembly by Assembly Members who know and work with the education system, as set up in Wales.

I believe that in this case I can fully meet the concerns of the noble Baroness. Amendment No. 56 would add another matter to the list set out on pages 19 and 20 of the Bill giving powers to the National Assembly for Wales on education and training. The proposed matter would insert:

“Provision for intervention in the event of mismanagement or breach of duty”

into Clause 26 on page 20.

However, I am advised that that does not add to the legislative competence already proposed in the clause and that Matter 5.2 confers legislative competency on the National Assembly for Wales to make provision about the property rights and liabilities of institutions,

“concerned with the provision of further education, and … [the] bodies that conduct such institutions”

and to make:

“Provision about … the governance and staff of such institutions”.

We therefore consider that the subject of the proposed amendment is incorporated within Matter 5.2 of Clause 26. So I believe that the noble Baroness’s concern is met.

I wonder whether it would be appropriate for me to speak to Clause 26, which is also on Welsh issues. Clause 26 was originally grouped with Amendment No. 56.

My noble friend Lord Roberts, who is the authority on Wales in my party, was going to speak on this, but I have also put my name down as opposing the clause. We gave notice of our intention to do so for probing purposes. We want to tease out the implications of the clause, which amends Schedule 5 to the Government of Wales Act and, in effect, transfers legislative power over further education in Wales to the National Assembly.

When the Government of Wales Act passed through this House last Session, one of the most contentious parts, as I am sure everyone involved remembers, was the order-making power in what became Section 95, which defined the scope of the Assembly's legislative competence. This allowed the Secretary of State to amend Schedule 5 and increase the scope for Assembly measures by means of an Order in Council. It involved a complex procedure, leading eventually to the approval of both Houses.

As the Government have the option of using this order-making power, can the Minister explain why they are not using it? A cynic might speculate that the necessary preparation involved in the Order in Council process is considered too onerous and that this Bill was selected to be the primary legislative vehicle for the quick devolution of legislative powers over further education simply because it offered the easiest way to achieve that end.

I am not altogether convinced that Clause 26 is legitimate in its use of statutory powers to change Schedule 5 to the Government of Wales Act. Section 95 of that Act specifies that Part 1 of Schedule 5 may be changed by Order in Council. There is no reference to any other means or source of power to change it.

I am sure that the Minister will be very quick to reassure me that Clause 26 is a perfectly proper means of adding to the legislative competence of the Assembly, as he has just said. I should very much like to know what consultation there has been in Wales about this devolution measure and what the results of that consultation were. It would be an extraordinary act of devolution if these steps were taken without any measure of approval from the colleges and institutions that will be affected by it.

I should also be interested to know what debates have been held in the National Assembly on this matter. The Order in Council procedure anticipated that the National Assembly would be the instigator of the process, asking Westminster for the legislative powers. Given the apparent absence of that innovative process, I hope that the National Assembly is sufficiently prepared for the extra responsibilities that are about to be foisted on it. I look forward to the Minister’s response.

The noble Baroness is so fair-minded that she often gives the replies to her own queries when she raises them. She rightly said that the UK Government’s policy to transfer legislative competence to the Assembly, as set out in the Better Governance for Wales White Paper published in June 2005, indicates that the Order in Council is intended to deal with the issue of there being no suitable Bill in the Government’s programme to address the Assembly’s needs. Of course, this constitutes a suitable Bill to address those needs.

With regard to the transfer of the legislative competency, the answer that the noble Baroness suggested is in fact correct. This is an England and Wales Bill and, therefore, discussing these provisions in this context is entirely appropriate. If these provisions were left to the Order in Council route and removed from the Bill, not only would that be contrary to the Government’s policy but we would have to return at a later stage to a discussion on the same issues covered by the scope of this Bill. We therefore regard it as good parliamentary management that it is done at this stage in the context of an England and Wales Bill.

The noble Baroness also raised the issue of consultation in Wales on the further education policy. If I may say so, I took her remarks to be directed to the National Assembly as much as to myself. I am sure that, when the Members of the National Assembly come to discuss this matter, they will pay careful attention to her remarks and, implicitly, the views and concerns of her noble friend.

Perhaps I may set out what processes are in train at the moment. Consultation on the future of further education in Wales will be carried out as a consequence of the independent review of the mission and purpose of further education launched on 22 November last year by the Assembly Minister for Education, Lifelong Learning and Skills. The report of the independent review will be published in autumn this year, and policy direction for further education in Wales will be informed by the outcomes of the independent review. Taking the opportunity to gain broad framework powers for the Assembly within the clauses of this Bill will ensure that, once the review is completed, the necessary authority and mechanisms will be in place to implement any changes that the Assembly may wish for Wales. But I stress that the Assembly Government have an independent review taking place and will ensure that proper processes are observed in taking forward reforms in this area.

I thank the Minister for that reply and for responding at this stage. I thought that it would be better to deal with these issues together.

I, too, thank the Minister. As he knows, we on these Benches are great fans of devolution. We will query anything that smacks of keeping the powers in the centre and not allowing the Welsh Assembly to decide for itself.

I shall go away, look carefully at the Minister’s words and consult my Assembly Member colleagues in Wales as to whether they are satisfied with what he said. I am convinced by what he said about the Bill being an appropriate mechanism rather than waiting for an Order in Council—I do not have a problem with that—but I would like to consult further about whether the way in which the powers of intervention are being established in Wales is the right way ahead.

Clause 18 agreed to.

moved Amendment No. 45:

We support the amendment. If anyone wishes to access the learning and skills website, they will notice that 17 items were added to it last week, most of which advised members of further education colleges what they should take into account in what they have to do. The amount of verbiage that hits the education sector is quite unacceptable. Last night, I was wading through the draft criteria for foundation degree awarding powers. Having been trained as a civil servant back in the early 1960s, when drafting was quite a skill, I felt I could have reduced them to about three or four pages. The amount of duplication and verbiage is totally unnecessary, and yet one has to wade through it time and again. Plain Words, which I know is issued to every new civil servant, needs to be taken into account. It should be put in practice rather than simply aspired to. I add my voice and those of these Benches in support of the amendment.

We should employ the noble Baroness in the department to act as a one-person bureaucracy-buster for further education. If she wishes to bring back an amendment on Report proposing that she occupies that post, we might give it sympathetic consideration, particularly if she has the power to reduce the long documents my department produces to three pages. As a Minister, I am always anxious to see the most concise presentation of documents. We would welcome her services.

We are in favour of any action that reduces unnecessary bureaucracy in the FE system, and we are as committed as both noble Baronesses to resisting what the noble Baroness, Lady Morris, referred to as the veritable snowstorm. I hope it is not quite that bad, but we believe there is a continuing challenge to see that bureaucracy is reduced and that concision becomes the order of the day in the production of those documents that are essential.

In the FE White Paper, we said that the Learning and Skills Council would introduce a single gateway for all its publications and data returns. The communications gateway is modelled on the gateway for publication sent to schools, which followed the action by my right honourable friend David Miliband, which the noble Baroness, Lady Walmsley, referred to. We are establishing a panel with members drawn from colleges and providers who can describe real examples of information overload. I will draw to the attention of the panel the particular instance the noble Baroness, Lady Sharp, has just given. It will challenge the department and other agencies to reduce the amount of prescriptive guidance they send out. We will shortly be inviting nominations for the new panel, from the Opposition parties as well as from the sector itself.

As for reducing the bureaucratic burden across the system, we have also set up the Information Authority, a body that includes representation from the DfES, providers, inspectorates, HEFCE and the QCA. It will be independently chaired, and the IA will determine the amount of data to be collected from FE colleges, and when.

The Bureaucracy Reduction Group has representatives from all the key bodies plus practitioners, trades unions, associations and managers from the FE sector. The group, which reports to Ministers, has a key strategic role to scrutinise and challenge any aspects of policy implementation that, it considers, result in excessive material or administrative burdens. We are on the case, but I am sure we can always do better.

I thank the noble Baroness for her support on this. I thank the Minister for his reply. I am not at all surprised by it. I still think this is an area where colleges are out of step with everyone else, and we would like to see this provision in the Bill. I hear what he has to say about the Bureaucracy Reduction Group; I just hope that one day it is not completely reduced itself. I may well come back with this, but for now, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 19 [Power to award foundation degrees]:

moved Amendment No. 46:

Clause 19 is the thorny heart of the Bill. Ministers have argued that the creation of a new category of degree-awarding powers for the FE sector does not represent a major change. I disagree. This is a fundamentally significant development that could have major implications for the way in which our higher education sector is perceived internationally and the general understanding of what is meant by the term “degree”.

I understand that Ministers do not intend a large number of FE colleges to gain the new degree-awarding powers, but I question that assumption. If foundation degree-awarding powers are intended to enhance the status of further education colleges, which governing body will not want them—if not immediately, then in future?

Before I turn to the detail of the amendments, I would like to debunk a myth that seems to have been thrown into the debate. Ministers have said that universities are opposed to this measure because they are afraid of competition. That is not so; universities are well used to intense competition—it is a pervasive part of the landscape, in which they are extremely adept. They operate in it both at home and internationally. As one vice-chancellor wryly put it:

“If I were afraid of competition from my local FE college, I would have a grave problem”.

He collaborates very successfully with his local FE college.

The real point about unleashing competition in areas where collaboration has recently been the norm is that it is very likely to prove a barrier to further collaboration between FE and HE institutions. As several institutions have told me, if the foundation degree becomes the signature qualification in the FE sector, why should my institution offer it?

I understand that the Minister may think that the arguments of the universities are purely self-interested and that they are concerned only with protecting their own markets, but that is really not the case. There is a widespread and genuine concern that the measures introduced by Clause 19 will prove actively counter-productive if, as I believe, the Government’s aim is to increase the take-up of foundation degrees and the number of providers offering that qualification.

The foundation degree was first offered in 2001. Then there were just 4,200 students; since then, student numbers have grown to about 60,000. Eighty institutions with degree-awarding powers offer foundation degrees and a further two are in the process of developing that provision. There are about 2,000 courses currently running and a further 750 in development, so the current arrangements are hardly unsuccessful in terms of growth. Perhaps more important than the growth, with this qualification, is the fact that it has proved an invaluable catalyst for collaboration between the further and higher education sectors—and virtually every noble Lord who has spoken in this debate has made that point. It has formed the basis of partnerships, such as the lifelong learning networks, and proved an invaluable tool in efforts to widen participation. So this is a success story. Along with other noble Lords, I have asked Ministers in the past, “If it ain’t broke, why fix it?”

The arguments that current arrangements are “broke” appear to rest on the following assertions: that universities are slow to validate new courses, that they charge too much for their services and that they sometimes lack the expertise to develop the courses that FE colleges want to deliver. In one sense, my answer to these charges is simple. Eighty institutions are validating foundation degrees. Any college that is dissatisfied with the service that it receives from its validating institution is free to look elsewhere. Effective partnerships are clearly in operation.

Evidence gathered by Universities UK over the past few weeks demonstrates that the speed of validation can vary. We recognise that it varies, but it can do so by as little as six weeks or as much as several months, with a typical timescale being about five to six months from the initial idea to the first students starting a course. At a recent meeting organised by the Association of Colleges, one businessman said in response to this point, “Yes, but if I want a shirt, I don’t want to have to wait several months for it. I want it today”. However, as the Pro Vice-Chancellor of the University of Derby put it, we are not really in the business of selling shirts.

Speed has to be balanced with quality. Where we know of examples of foundation degrees that have taken several months to develop, there are often good reasons for it. Indeed, we have been told that delays are sometimes occasioned by the fact that staff in FE colleges do not have enough time to devote to programme development alongside their often very heavy teaching duties. So I am not convinced that when colleges are responsible for all aspects of programme development, including quality assurance and enhancement, they will find that they are able to set up new courses any quicker than they do under the current arrangements.

As for the costs, again, our evidence suggests that they vary from zero to about 25 per cent of the fees and funding per student, depending on what each partner is contributing. For example, one institution told us that where a college gradually took on more responsibility for programme design, it reduced the share of the fees accordingly. We also have examples of a number of institutions that provide a validation service at a loss precisely because they value the relationship with the college, for the reasons that I mentioned earlier.

If there are problems with the current system, they may well have been exaggerated. I am certainly not aware that there is any evidence—other than the anecdotal evidence offered by the Mixed Economy Group and the Association of Colleges, which after all, like me, I guess have a vested interest—of a widespread problem. As other noble Lords have noted, it is a shame that we were not able to debate these issues before legislation was announced and that there was no prior consultation.

My view is that the legislation now before us offers a potentially problematic sledgehammer to crack a nut. As I noted in my contribution to the debate on Clause 17, if the Government’s real motive for introducing these powers is to raise the status of FE colleges—I know that the Minister has said that elsewhere—I find it odd that we should find this measure alongside the previous measure, which, in my view, undermines that status.

It is rather reckless to use degree-awarding powers as a status-raising tool when there are genuine concerns. There are concerns about the potential impact on the qualification in question, on the degree brand, on the UK’s reputation for quality higher education and, finally, on the partnerships between further and higher education.

I shall comment briefly on the detail of the amendments. Amendment No. 52A, which stands in my name, is intended to achieve a similar effect to Amendments Nos. 51 and 53, removing the power of further education colleges to authorise other institutions to award degrees on their behalf. In view of the fact that managing quality and standards in collaborative arrangements presents particular challenges, I think that this aspect of the clause substantially increases the risk of maintaining quality. It seems to me that it would also undermine the Government’s intention that only a small number of further education colleges with substantial experience of delivering foundation degrees should benefit from these new arrangements.

My amendment goes slightly further than Amendments Nos. 51 and 53 by also preventing institutions with foundation degree awarding powers offering joint awards with other institutions. As currently drafted, it would also prevent the awarding institution depriving a person of an award granted by that institution. I am willing to be persuaded that the drafting of Amendments Nos. 51 and 53 is preferable; none the less, I think that the principle is important.

I support the thrust of the rest of the amendments standing in the name of the noble Lord, Lord Dearing. They would seek to protect the interests of students by ensuring that progression arrangements remained a requirement of foundation degree qualifications. Not all students want to progress to further study, but 59 per cent of foundation degree graduates currently do so, and those opportunities must be maintained. So it should be incumbent on the awarding FE college to secure the necessary progression arrangements as a condition of offering the award.

I have an amendment in this group. I do not propose to go over the general points that I made at Second Reading but, as I said then, I regard the standing of the brand of the British degree as being of immense value. It has been said to me that some other countries let the market play and that there is an informal ranking of universities, as in the United States and Japan. We did not think that was in the United Kingdom’s interests in higher education and beyond. If we may make a comparison with the United States, half the world would like to be domiciled there, and getting into an American university is a way in. We do not quite have the same pull.

We have been immensely successful, through the standard of the British degree, in attracting a very large number of students from throughout the world. I am thinking in terms not only of income-generating benefit to the balance of payments but of the quality of mind in research, in particular, in our universities.

I do not intend to go over the general arguments; I shall concentrate on the four parts of my amendment, which are based on a premise that the Government’s intentions will be implemented, although I hope that they will be modified. The first part of the amendment is based on a view that the interest that is most at stake here is that of the student, in terms not only of the quality of the education but of the standing of the award. Since what is proposed is a change in the award and, to some extent, its standing, the student has a right to be consulted. I am aware that Clause 21 provides that governing bodies must have regard to any guidance that is given, and I am grateful to the Minister for providing us with copies of the guidance. I have read the relevant part on further education institutions, which says that the guidance,

“encourages governing bodies of further education institutions to consult with learners”.

It goes on to say that the guidance “offers advice”. That is hardly a vatic.

I am sure that if the right reverend Prelate the Bishop of Manchester were with us, he would be glad, as I am, to see the references about consultation on the faith and spiritual needs of learners, but there is no mention of consultation on the specific important point—whose degree it is. I place particular emphasis on consulting students before an application is made.

My second point is that it should be a condition of power being granted by the Privy Council that the institution makes arrangements with an institution or institutions of higher education for progression. Reference has been made to the high proportion of students who seek to go beyond the foundation degree. The word “foundation” suggests that it is the foundation for something beyond, and the interest of the student is very much that it should form the basis for progression to something else so that he or she does not, in a dislocated way, have to start again. I regard this as a particularly important requirement of any institution.

My third point relates to not authorising other bodies to award a foundation degree or a credit or to provide courses. I hope that there will be an opportunity to discuss the wording of that provision carefully so that there is complete clarity. When I led a committee looking into the future of higher education, we looked into that matter. Although things worked very well in the main, there were occasions when people took risks. That is particularly so—and I believe that it would apply in this case—when the power, if there is one, extends overseas, because the channels of communication are so long. In paragraph 10.77 of the report of the committee that I chaired, we drew attention to the problems that had arisen, including serial franchising,

“where one institution validates or franchises provision to another, which in turn franchises this provision elsewhere”.

We said that that must cease. These things have to be controlled; it is a major step to grant a power to a limited number of institutions. That power should be exercised within their bailiwick, as it were, rather than that they should start spreading the power elsewhere.

My final point has already been referred to by the noble Baronesses. After a reasonable interval—the noble Baroness, Lady Morris of Bolton, said six years; I said four—there is a check of the quality of what is going on. I went for four years because that is long enough for things to settle down and, if things are not going well, it is desirable that they are remedied quickly, but the four-year period was purely arbitrary. This is a new power, and the interest of the student and of the standing of the British degree suggest strongly that it should be used circumspectly and carefully.

The debate so far has made many good and important points, eloquently supported. I refer, in particular, to the proposals for amendment from my noble friend Lord Dearing, which I support wholeheartedly. They all refer to questions of the brand and standards. That is critical for any innovation that we bring in, and this is a major innovation. That said, I support the intention to increase the flexibility and variety in the provision of foundation degrees. The more flexible and innovative we can be, within a structured system, the better it will be for the community at large.

I hope I can say, without being offensive to anyone, that I have heard some of these arguments before. The last time they came around was when degree-awarding powers were offered to what were then called polytechnics, so there is a question in my mind about how far the doom being predicted will eventually materialise. If we get the provisions right—and that is the spirit of many of the amendments being put forward today—that need not be the case. There can be flexibility and positive innovation, rather than doom and limiting the brand.

I want to refer to a matter that I raised at Second Reading. I did not want to table amendments at this stage, but the matter to which I spoke principally concerned standards and, by implication, the brand. The Bill gives an assurance on the kind of advice that the Privy Council would receive if it made a decision to give degree-awarding powers to a further education college. The advice, however, would be almost wholly concerned with capabilities and potential process. It would be to do with facilities and staffing levels. Inevitably, it could not be a matter of what standards would be operated in the degrees in question, because they have not yet been offered.

That is why it is essential that there is a provision in the Bill to ensure that some form of external assessment of the standards operated when these degrees are being offered and awarded is built into the system. I stress “external assessment” for all sorts of good reasons. I shall not go into them in detail, but they have to do with temptations to slip and slide and be on the edge of the famous slippery slope that it seems we are always on. One of the ways that could be done, and I simply instance this, would be by taking due account of proposed Amendment No. 52, which sensibly suggests that there should be an annual report—perhaps that would be too prescriptive in due course, but initially I think annual would be right—on the standards of the foundation degrees awarded. If the amendment were accepted, one way to deal with my point would be that the standards in the report should include reference to the nature and quality of the external assessment of those degrees. That is a critical element of retaining the brand, and the acceptability of the brand, of British degrees in an international circuit where we are in deep competition, particularly with other English-speaking countries.

I rest my point at this stage. I may well come back on Report with an amendment, unless there is some clear movement to include reference in the Bill to the external assessment of standards.

I support my noble friend Lady Morris on her Amendments Nos. 46 and 47. I thank my noble friend for the thorough and interesting work she has added to the debate.

I agree with the arrangements proposed in Clause 19 that will allow for further education institutions to apply for powers to validate their own foundation degrees and enable the Privy Council to grant institutions the power to award foundation degrees. That will mean that most students will benefit from the opportunities created by foundation degrees while colleges will be able to respond more quickly to employers’ needs.

That being said, the potential break-up of further and higher education concerns me. There are currently 275 further education colleges offering foundation degrees. Of these, it is expected that only a small number, mostly from the Mixed Economy Group of colleges which currently provide 14 per cent of all foundation provision, will wish to apply for the foundation degree-awarding power. That will weaken the brand of UK universities internationally if further education colleges are permitted to award foundation degrees. They will be seen as further education qualifications, undermining their credibility with employers who view them as a fragile new qualification.

Furthermore, the proposal will potentially jeopardise the partnerships built up between further education colleges and universities. They will be competing with each other instead of working together for the further development of learners. It is not clear whether this measure is intended to boost the status of colleges or whether it is a gamble to increase numbers to meet targets.

I welcome the aforementioned amendments as, in this case, a market solution is not necessarily in the best interests of learners. It is important that colleges continue to work in conjunction with universities. Further education institutions will have a more equal role in foundation degree courses with their higher education partner and in some cases a greater role. Surely the Minister will welcome this compromise as the college and university partnership is vital to the betterment of our education system.

Clause 19 clearly raises issues of considerable concern to the Committee. I hope that noble Lords will forgive me if I speak at greater length than normal to address the complex issues as fully as I can.

I thank all noble Lords who have engaged with my honourable friend Bill Rammell and me in the extensive discussions we have had on this issue since Second Reading. We are deeply appreciative of the contribution which all noble Lords, from all parties and none, have made. I make special mention of my noble friend Lady Warwick and the ongoing discussions we have had with Universities UK, which have been immensely valuable. I note, too, the highly constructive approach from both opposition parties in this regard, which has been fully reflected in the speeches we have heard today. I should like to mention John Hayes, the colleague of the noble Baroness, Lady Morris, who has had further extensive discussions with my honourable friend Bill Rammell.

I know there is a general desire to find an effective way forward and, with regard to the point of the noble Lord, Lord Sutherland, a recognition that there are significant issues to do with meeting skills needs and empowering all those who have the capacity for the benefit of students. There is a vital issue of national interest at stake, and we all recognise the importance of getting this right.

The purpose of Clause 19 is to empower the Privy Council to grant foundation degree-awarding powers only, and no other degree-awarding powers, to further education institutions in England. We believe that the clause will enable the FE sector to respond more quickly and effectively to employers’ needs, meeting the skills challenges set out by my noble friend Lord Leitch in his recent report.

At present, further education colleges have the option of applying only for the full taught and/or research award-making powers which include degree-awarding powers. In practice, it is virtually impossible for them to succeed in this because the criteria for being granted full award-making powers quite rightly make reference to the quality of an institution’s academic research and its ability to provide teaching up to higher degree level.

Therefore, in practice, FE institutions set up new foundation degree programmes in partnership with an institution that has degree-awarding powers, which is usually a higher education institution. Most of these partnerships work well; in such cases, we anticipate that the current validation arrangements will remain in place to mutual advantage.

The encouragement of partnerships and collaboration, as referred to by the noble Baroness, Lady Morris, when speaking to Amendments Nos. 46, 47 and 50 is therefore a cause which we fully support. In some cases, further education colleges with considerable experience in providing good quality employer-focused higher education qualifications such as foundation degrees have been unable to respond with the necessary speed to approaches from employers with whom they have strong links. That is part of the justification for the proposed powers in Clause 19. Some large Mixed Economy Group institutions have had difficulty in finding a validating university with relevant experience in some foundation degrees.

As we take forward these new powers, we will continue to place great emphasis on partnership and collaborative working. The reforms we are proposing, which remove an unnecessarily strong legal constraint, equally uphold stringent quality criteria and will help those colleges that are already well equipped to draw more learners into higher education to do so even better, without jeopardising necessary collaboration across the two sectors.

It will be for the Privy Council, taking into account advice from the Quality Assurance Agency, to decide whether a further education institution applying for foundation degree-awarding powers should be granted those powers. Students and employers will rightly expect the same standard of provision whether a foundation degree is awarded by a further education institution or a higher education institution. To this end, the department has published draft criteria, referred to by several noble Lords, that we propose that the QAA should use in assessing an application for foundation degree-awarding powers. The criteria can be found on the Further Education and Training Bill web page, accessible by the department’s website. I am also arranging for copies to be placed in the Library of the House.

The criteria are extremely closely based on those currently used to assess fitness to award the whole range of awards, including all taught degrees. The essential difference is that, in deciding whether a further education institution should be granted foundation degree-awarding powers, there would be no need to assess the college’s ability to award other qualifications because they would not be given the power to make such awards.

At present, any institution that is granted award-making powers under Section 76 of the Further and Higher Education Act 1992 is able to authorise other institutions to make awards on its behalf. This provision has been at the heart of degree law for 15 years. In practice, it means that a university with degree-awarding powers can authorise another institution to grant degrees in its name. In addition, the powers allow an institution, usually a university, to work with overseas providers and to authorise them to grant an award that bears the name of that university.

Amendments Nos. 51, 52A and 53, in the names of the noble Baroness, Lady Sharp, my noble friend Lady Warwick and the noble Lord, Lord Dearing, seek respectively to remove from a further education institution granted the power to award foundation degrees the power then to authorise another institution to make awards on its behalf or to accredit another body to provide courses leading to an award of the institution with foundation degree-awarding powers, a process which the noble Lord, Lord Dearing, likens to the franchising arrangements which applied in the recent past.

Some FE institutions already undertake substantial activity overseas, and provided that it is of high quality, I am sure that we would all want to see this flourish. We believe that in time, when some leading colleges have established a track record in awarding their own foundation degrees, they should be able to offer them through overseas institutions. However, mindful of the points made in the debate and set out at some length by the noble Lord, Lord Dearing, we are aware of the issue of “external authorisation” being a contentious one and fully understand the concerns that a number of Committee Members have voiced over the damage that might take place to the United Kingdom’s higher education brand. This “brand” is something of which we are all proud, and it is right that it should be carefully guarded. It is important to bear in mind, as the noble Lord said, the importance of ensuring that the perceptions of overseas customers about quality are maintained, as well as the underlying reality of how good the product actually is. I therefore undertake that my ministerial colleagues and I will reflect further on the points made in this debate. I hope that I will be able to return with the conclusion of that consideration before Report.

There are three further elements to Amendment No. 53, proposed by the noble Lord, Lord Dearing. These address the question of whether FE colleges should be under a duty to consult their students before applying for foundation degree-awarding powers; whether a condition of the new powers should be the existence of clear progression arrangements for foundation degree students to honours degrees; and whether the Privy Council's powers to grant foundation degree-awarding powers to FE Institutions should be subject to review after four years. I will take these three issues in turn.

It is vital that our proposals take into account the views of learners. We are therefore sympathetic to the noble Lord's suggestion that the views of the student body should be taken into account whenever an institution seeks to make significant changes that will impact on the learner experience. This requirement can, we believe, be reflected in the QAA criteria themselves. We intend to look further at how this can be done and I hope to return to the noble Lord and to the House on a way forward in this regard before Report.

Similarly, the criteria against which any institution applying for foundation degree-awarding powers is assessed will cover the issue of progression, which was highlighted by many noble Lords in our discussion. Progression arrangements, which were particularly raised by the noble Baroness, Lady Morris, and John Hayes in our discussions, are a vital issue. They have helped us greatly to work through our own thinking on how this can be effectively safeguarded. I want to be clear that our proposals for reform are made within a stated intention that higher education providers in the FE sector should work in partnership with the established higher education sector and vice versa. That is best for both sectors and it is essential for learners and employers.

The Quality Assurance Agency's qualifications benchmark for the foundation degree incorporates the requirement for,

“clear routes that facilitate opportunities for progression from Foundation Degrees towards another qualification”.

That qualifications benchmark will be written into the criteria for institutions seeking to award their own foundation degrees. Indeed, this particular criterion is essential to ensuring parity of the foundation degree wherever it is delivered. We are therefore confident that transparent and articulated progression routes will continue to be available to all learners and that the precise amendment at stake here is unnecessary. However, although the draft criteria that we have circulated go a long way towards assuring Committee Members of our bona fides in this regard, it may be helpful if we expand on what is meant by progression.

I therefore propose that before Report, we should bring forward further details on how the articulation agreements between further and higher education will work in practice. I propose also to provide further clarity on the options that are available to the QAA should a further education college that has been awarded the new foundation degree-awarding powers fail to fulfil its responsibilities in terms of articulation or of wider quality issues. I will also consider how higher education and further education institutions should promote the articulation arrangements to learners so that learners are able to see for themselves that arrangements are in place to guarantee effective progression.

I am extremely grateful to the Minister for his lengthy reply, and am somewhat reassured by some of the assurances that he has given us. I take it that he will come back with a number of suggested amendments on Report.

I intend to come back by writing to noble Lords fully covering all the points set out. In some cases there may be suggested amendments, but in other cases I hope that I can provide reassurances of a non-legislative kind.

I am very grateful. We shall await the noble Lord’s proposals with interest. This has been a wide-ranging debate. By and large there is a coalescence of interest around particular issues which have arisen, and these are the ones that I think the Minister has addressed.

On the specific proposals we put forward, I am sorry that the Minister does not see fit to limit the provision by designated area. I see real problems because the criteria for the degree-awarding powers relate, above all, to issues of governance within the institution, which can be satisfied in relation to the institution as a whole. It is quite clear that the academic standards required can be satisfied in relation to specific departments. It is also clear that a further education college is a very different institution from a university, or even from the former teacher-training colleges which are now recognised as universities. It poses some problems, and, indeed, will pose problems for the QAA in monitoring standards because it will be required to monitor specific standards within specific departments.

I hear what the Minister says. I have a copy of the Burgess report regarding credit transfers and credit accumulation; our amendment was tabled partly to raise that. It seems to me that Britain has taken an unconscionable time to move in this direction; and that we need to move in this direction if we are actually going to provide the flexible framework that, for example, the noble Lord, Lord Leitch, in his report is looking towards. The sooner such a framework is set up and working the better.

There is, as I said, a certain coalescence of agreement around a number of the issues. Clearly, we will be returning to this matter on Report, and talking at length about it. As some Members of the Committee know, I shall not be here for Report, but I shall read Hansard with considerable interest when I return.

We have had a fascinating debate. I am most grateful to the Minister for listening so sympathetically to our amendments. We are not saying for one moment that they are perfect, but we are pleased that the Government have recognised the genuine concerns behind them.

I also thank the Minister and the noble Baroness, Lady Warwick, for their kind comments. My honourable friends John Hayes and Boris Johnson in another place and I have worked very hard, as have many noble Lords, to resolve the polarised positions that Clause 19 engineered because we respected the arguments of both the colleges and the universities. It is now vital that we move forward constructively and through consultation. In that vein, I look forward to seeing the Government’s further reflections on articulation and progression proposals. For now, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 47 to 54 not moved.]

Clause 19 agreed to.

Clause 20 agreed to.

Clause 21 [Consultation by governing bodies of further education institutions]:

[Amendment No. 55 not moved.]

Clause 21 agreed to.

Clause 22 [Qualifications of principals of further education institutions]:

On Question, Whether Clause 22 shall stand part of the Bill?

This is intended to give the Minister an opportunity to clarify the Government’s intentions and explore the practical consequences of the clause.

Clause 22 expands upon the power that the Secretary of State has already to make regulations about what qualifications the principal of a further education college must have or be working towards. It gives a further power to set a time limit on how long a principal can continue to hold his or her post while studying for the qualification and removes an exemption for principals who were appointed before 2002. Can the Minister explain why the clause has been found necessary? Have there been cases where a principal has drawn out the process of attaining a necessary qualification beyond what is reasonable?

The White Paper suggested that newly appointed principals would be given three years to achieve the qualification. Is this still the case and will it apply to all principals? Forty-seven per cent of principals are 55 years old or over and it is unlikely that they are planning to change jobs before their retirement. Are the Government expecting those near retirement, who have taught successfully for many years, to work towards the qualification too? I look forward to the Minister’s answer and to being reassured that this clause will be applied sensibly.

We never do anything other than on a sensible basis. I appreciate the point the noble Baroness is making and I shall give a brief statement of our intentions.

The clause will enable us to bring in regulations for the mandatory qualification of existing college principals moving to a new post in England and enables Ministers to bring in future regulations for all principals in England if deemed necessary. The reason for this is our belief that strong, effective leadership is required to support the FE reforms which will improve quality in the sector, benefiting all concerned. This will help to address the weaknesses in FE leadership identified by Ofsted in its inspections and Sir Andrew Foster in his independent review of further education. Therefore, requiring the qualification of FE principals is part of our work to professionalise staff in the FE system.

Following the passage of the Bill, we intend to lay regulations covering principals who move to a new principal’s post. These will apply from April 2009. However, we do not intend at this stage to make this leadership qualification mandatory for serving principals who remain in post, which is the group I believe the noble Baroness has in mind.

However, there is a clear expectation that serving principals should undertake the new principals’ qualifying programme on a voluntary basis. In cases where the serving principal is on the verge of retirement, that may not be appropriate and I am sure that commonsense will apply in this matter, as in all others under the Bill.

I thank the Minister for those assurances. As I mentioned at Second Reading, given that further education colleges have some of the best Ofsted reports in the whole of the public service, I think principals will have taken on board the requirement for continuous professional development and will have done their best to achieve it. I am very pleased that no one will be made to do it when they want to dedicate their last few years to doing the job that they have done so well for such a long time.

Clause 22 agreed to.

Clause 23 [Conditions relating to levy proposals]:

On Question, Whether Clause 23 shall stand part of the Bill?

This is intended to probe the new arrangements for compulsory levies. I understand that the clause is designed to remove an unnecessary technicality for the industrial training boards to prove a consensus has been reached that the levy should continue. Can the Minister explain why this adjustment has become necessary now, or, if it has always been apparent, why it has taken 13 years for it to be put right?

An illogical and inefficient requirement may seem in isolation no more than a minor irritation, but it is the cumulative effect that imposes such a debilitating drag on our productivity and effectiveness. I hope that this clause will indeed streamline procedures to the benefit of everyone involved. I am glad to see that Clause 24 is also designed to reduce bureaucracy; the length of the levy durations going from one to three years is a sensible step.

Perhaps I may take this opportunity to ask the Minister to confirm that these clauses are not indicative of any government intention to impose another compulsory levy order on business.

Let me first confirm to the noble Baroness that this clause does not enable the imposition of levies in addition to those that can already be imposed under the Industrial Training Act 1982. The clause amends Section 11 of that Act to enable industrial training boards to demonstrate support for the levy proposals in a manner that retains a strong accountability but reflects the makeup of today's business community. Currently, Section 11 of the 1982 Act requires that, where the amount of the levy payable by any employer will exceed a specified level, the Secretary of State must be satisfied that one of three conditions is met. The first of these three conditions is that the board has industry consensus for its levy proposals. However, the board can only show this consensus by consulting organisations such as employer federations and trade associations that represent employers in their industries who are likely to be liable to pay the levy.

The two current industrial training boards, the Construction Industry Training Board and the Engineering Construction Industry Training Board, have expressed concern that, over the past 25 years, more employers are choosing not to join these organisations. Assuming that that continues, without changes to the current system, there is a real risk that the ITBs will not be able to demonstrate support, despite the 2006 CITB survey of employers in the construction industry showing that 70 per cent of employers who are not federation members support the continuation of the levy. The current legislation recognises these organisations as the only means for the boards to demonstrate employer support for their levy proposals. The support for levies is not declining; the means by which that support is measured has become outdated.

However, even with the amendment, ITBs will continue to have to demonstrate that more than half of the employers, both by value of levy to be paid and by number, support the proposals that they wish to implement, if these are to be implemented on the basis of industry consensus. Clause 23 broadens the means by which an ITB can demonstrate that it has such a consensus. It will also enable the Secretary of State to make provision in regulations setting out reasonable steps that an ITB may take for this purpose. The Government have made available a draft set of indicative regulations which illustrate the likely types of such steps.

The changes will not prevent an industrial training board consulting any organisation such as a trade federation which is authorised to speak on behalf of its members who are likely to pay the levy. Rather, they will enable it to seek the views of employers by other means including, for example, the use of sampling or approaching employers directly. It will be for the industrial training boards to choose the consultation process that best suits the needs of its industry, and in all cases the Secretary of State will need to be satisfied that the process followed by the board is reasonable. On the basis of those assurances, I hope that the noble Baroness will be satisfied.

I thank the Minister and now fully understand why the Government have included this in the Bill. I am also grateful for his reassurance that this is not a precursor of compulsory levies. The move from one to three years will be most welcome, not least by those of us who meet in this Room every year to discuss the levies. For that, I am most grateful.

Clause 23 agreed to.

Clauses 24 and 25 agreed to.

Clause 26 [Measure-making powers for National Assembly for Wales]:

[Amendment No. 56 not moved.]

Clause 26 agreed to.

Clauses 27 and 28 agreed to.

Schedule 1 [Amendments]:

moved Amendment No. 57: