To ask Her Majesty’s Government whether they intend to maintain the parachuting capability of the Armed Forces.

My Lords, the Government intend to maintain a parachute capability for the Armed Forces for the foreseeable future. The level at which it is maintained will be kept under review to ensure that it is consistent with operational priorities, but parachuting remains a key part of our defence doctrine.

My Lords, I am grateful to the Minister for that reply but the reality is that at the present time there is a serious overstretch problem with availability of aircraft. Noble Lords visited 16 Air Assault Brigade in July, before the Recess, and discovered that on many occasions soldiers were turning up at Lyneham prepared to jump, only to find that the aircraft were not available, out of service or had been retasked on higher priority, and therefore they had to turn back and return to base. We discovered that, overall, something like 41 per cent of the members of 16 Air Assault Brigade are not now parachute qualified because of lack of jump availability. As for newer recruits, those who have completed the pre-training course have not jumped for more than two years. What plans do the Government have to remedy the situation?

My Lords, there is indeed a shortfall and we acknowledge that, as has been made clear in the replies that I have given, not least to the noble Lord, Lord Lee. We believe that we have sufficient training for the core tasks that are in hand. Operational requirements have to take precedence, but we have made provision to use Skyvan. The contract with the private contractor that was used until 2004 is now being reinstituted, which should help to ease the situation.

My Lords, I was on the visit and I was very concerned that the Paras did not have any wings—they had lost their pride. We are short of aircraft but we have 40 countries co-operating with us in Afghanistan, many of which have Hercules and other aircraft. Perhaps they might be able to lend them to us so that our parachutists could learn how to jump.

My Lords, we have looked at the possibility of making arrangements with other countries, such as some of our allies. There are some technical and practical problems with the configuration of the aircraft, even if it is basically the same plane, but we have not excluded that possibility and we are doing everything that we can to be imaginative about how we maintain the training that we need.

My Lords, is it not the case that parachutists who complete the course get a bonus in their pay packet? Are we not effectively depriving a number of our troops of a bonus that they would have expected to get in their wages?

My Lords, we have taken account of that factor. The bonus, which I believe is £5.35 per day, is paid to those who have qualified even if they are not able to maintain their current qualification by jumping within the prescribed period. It means that they do not get the training and practice that they want and that is obviously important, but, in terms of financial penalty, those who are not able to maintain their currency do not get penalised, because we have made provision for that.

My Lords, when exactly will this all be sorted out? This is not an optional extra of Her Majesty's forces: this is a key component of them.

My Lords, as I made clear, the current capability is there. The lack of parachute training is not having an effect on the mandated operational capacity. Of course, we would like to improve the training facilities, but I hope that everybody would agree that it is right to give operational needs the priority that we have given them.

My Lords, will the noble Baroness comment on the effect on ethos of the lack of training such as has been perpetrated by this withdrawal? In extension, what might the ethos of the Territorial Army be in light of the reduction of training that it is about to suffer?

My Lords, it is clear that those who are in parachute regiments want to be able to exercise their skills. That is something that we all understand. As far as I understand it, morale is good and I have checked that with those who are in charge of the particular division. They would like more facilities and would appreciate more opportunities to jump, but they all acknowledge—as we should all acknowledge—that when aircraft are needed for operations, that is where they should be. That is important.

My Lords, the Minister talks about developing parachute training. Weston-on-the-Green near Otmoor in Oxfordshire is one of the main sites used for parachute training. The Government have recently been touting this as an eco site. Although it will not go forward in the first round of ecotowns, what provision have the Government made in the event of Weston-on-the-Green becoming an ecotown so that other sites are developed to take on this parachute training?

My Lords, I cannot comment on ecotowns, but we ensure that we have the relevant areas that we require for training. The Skyvan contract, which I mentioned is being reinstituted, is allowing for training in the Colchester area. The training does not need to be in one particular area only.

My Lords, will the noble Baroness explain what she meant when she said that morale had not been affected? What does that actually mean, and how is it judged?

My Lords, I can judge it only by those who are in charge telling me that that is the case. I would not presume to make that assessment myself.

My Lords, when is a mass parachute drop ever likely to happen again? Surely, mass paratroop drops are as out of date as horses are to cavalry regiments.

My Lords, I hear a voice from behind me saying that we should have one on Otmoor, but I am not sure that that is our intention. The important thing is that there is no stated requirement for that kind of parachuting in Afghanistan. That is our priority at present because the operational commitment is extremely high. If we can meet our obligations there, we will be pursuing the right priorities.

My Lords, what other key capabilities are being neglected, because I believe that there are many?

My Lords, I do not believe that key capabilities are being neglected. It is right that we should prioritise operations.

My Lords, is it not a fact that the Royal Air Force plays an important role in parachuting? Any curtailment in the research and development of new techniques and new technologies for clandestine entry by parachute and other means must not in any way be thwarted.

My Lords, I totally agree. The Ministry of Defence spends a great deal of money, time and research on new technologies and new techniques, and that will continue.

To ask Her Majesty’s Government what specific policies have been imposed on banks over which they have effective control.

My Lords, on behalf of my noble friend Lord Barnett, and at his request, I beg leave to ask the Question standing in his name on the Order Paper. My noble friend is recovering quite well from his stroke but, in spite of his 86th birthday today, he is unable to put his Question.

My Lords, we are all delighted to hear that my noble friend Lord Barnett is making a good and swift recovery. The House joins my noble friend in conveying our very happiest returns to my noble friend Lord Barnett on his 86th birthday.

As part of their recapitalisation and participation in the asset protection scheme, the Government agreed certain commitments with the Royal Bank of Scotland and Lloyds Banking Group, including on lending, remuneration and board structures. Government stakes in financial sector institutions are managed at arm’s length and on a commercial basis by UK Financial Investments Limited, which acts as an engaged institutional investor. The Government do not impose wider policy objectives on the banks through UKFI.

I thank my noble friend for that reply, but my noble friend Lord Barnett considered that, in connection with the specific policies imposed on banks, the answer should have been, “None”. Has the Minister seen the article in the Times that said—it was either a genuine leak or just a guess—that £27 billion of high-quality loan applications by small and medium-sized companies had been refused and that he intended to impose a positive response? Will he say whether that is true? What sanctions would have been imposed on the two banks, Lloyds and the Royal Bank of Scotland, if it was not true?

My noble friend Lord Barnett would have been incorrect in saying that there were no conditions. The Government’s support for the banks importantly included conditions around remuneration, board structures and governance, as well as making credit available and the conditions on which that credit was available, including conduct and forbearance consistent with good practice. As for the lending agreements, we have indicated that we will report annually to Parliament on progress against those agreements and will do so after each of the boards of the two banks has produced its annual report and accounts.

The report in the Times gave a figure that I did not recognise. What is more important is that, as I heard on the radio this morning, the Royal Bank of Scotland says that it is approving 85 per cent of business loan applications that it receives. What I hear is that the pricing of loans to small, medium-sized and larger businesses has come down dramatically in absolute terms and, more recently, in terms of lending margins, and that the banks are making a real effort to promote the availability of credit to creditworthy customers, which is consistent with the undertakings that they gave us when we provided them with support.

My Lords, given what the Minister has just said, why is it that—I know this through bitter experience—everyone from whom I hear in the SME community continues to feel that they cannot get lending from the banks? Why have the Government saved the banks while not doing enough to save the businesses that those banks are there to serve?

The experience that the noble Lord, Lord Bilimoria, describes is not one that completely accords with what we hear from the banks. Yesterday afternoon, my noble friend Lord Davies of Abersoch and I met the heads of small business lending of every major UK bank, together with representatives of the CBI, the Engineering Employers’ Federation and the Federation of Small Businesses. It was quite clear from that meeting that the primary issue in terms of lending to creditworthy, well managed and solvent businesses is demand. I cannot speak to personal experiences in which those definitions of business may not necessarily apply.

My Lords, the Minister has already said that the Government have got lending commitments out of RBS and the Lloyds Banking Group. We know, by virtue of leaks from RBS, that it is not meeting those commitments. It is difficult for Members of your Lordships’ House to know quite what is going on. Would the Government commit themselves, first, to publishing the commitments that they have with the banks and, secondly, to reporting on a quarterly basis—rather than annually and well after the event—on what has been going on? Equally, would the Government not hide behind the spurious argument of commercial confidentiality to prevent them from doing so?

My Lords, it is not a spurious confidentiality clause; it is critical to the agreement to protect the commercial interests of the banks and to create an environment that they think is likely to facilitate their achievement of the lending agreements. The lending agreements are conditional on a number of factors, including the overall economic outlook and performance. I am clear that, in a number of areas, demand for bank credit has reduced. For instance, large companies have been able to access rights issues from the stock market and the corporate bond market. The Bank of England is very clear in its own reports on lending that there is no question over availability of credit for larger businesses. The Bank of England’s most recent lending report also made it clear that availability of credit has improved recently. In that context, I would expect to see the Royal Bank of Scotland and all British banks increase their lending to creditworthy borrowers.

My Lords, the Minister also mentioned remuneration when he talked about the agreements with the banks. Recently, the Government have reached agreements with all five major banks around complying with the G20 principles. In view of the fact that investment banking revenues are self-evidently buoyant at the moment and that there are rumours of large payouts coming from the City, can the Minister explain what practical effect the agreements with the banks will have on restraining bonuses in that part of banking?

My Lords, I have come straight from a meeting with the heads of the 11 major investment banks in the United Kingdom. I would like to say that it was in anticipation of the question from the noble Baroness, but it was because we recognise that it is important that we insist, and the banks agree, that their remuneration policies will be in accordance with the FSB agreement and the G20 agreement reached in Pittsburgh three weeks ago—namely, that the banks will not reward failure, that they will defer a significant amount of bonus, that there will be clawback arrangements and that the amount of bonuses paid in cash will represent a modest proportion of the total for the very highest earners. Most important, this agreement will come into effect in the United Kingdom from this financial year, rather than a later year, as may well be the case in one or two other countries. That is significant progress. I am delighted that the noble Baroness has given me the opportunity, for which I am grateful, to update the House on another area of achievement by this Government.

To ask Her Majesty’s Government what was the total cost in the last five years of the Ministry of Defence contesting war pensions tribunal awards which were later confirmed on appeal.

My Lords, I declare an interest as honorary parliamentary adviser to the Royal British Legion.

My Lords, data on costs in closed cases are not held centrally in respect of war pension scheme and Armed Forces compensation scheme cases where we have appealed first-tier tribunal decisions to the upper-tier tribunal, and which were later confirmed on appeal. Therefore, it is not possible to separate out the costs of cases where our challenge was unsuccessful without examining each individual case and incurring disproportionate costs. A first-tier tribunal decision is challenged only in cases where it is considered that there has been an error of law.

My Lords, I am grateful to my noble friend, as ever, but is it not disquieting that, while haggling with Gulf War veterans and bereaved families over pensions still drags on, Parliament cannot yet be told even how much the MoD spent contesting the case of the late Terry Walker who, as my noble friend knows, had his war pension cut from 100 per cent to 40 per cent shortly before he died, leaving his two orphaned children in poverty? Again, how much has been spent on trying to reduce the compensation awarded to Corporal Andrew Duncan of the Light Dragoons from £46,000 to £9,250? Will the MoD continue to contest the award to this brave young soldier, who has undergone 11 operations since being hit in the leg by a bullet in Iraq?

My Lords, I am afraid that I must disagree with my noble friend’s use of the word “haggling” in regard to these cases. We do not wish to take money away from any individual, we are trying to make a system which is robust and fair and gives most compensation to those who are most severely injured. My noble friend takes issue with the case of Corporal Duncan and Marine McWilliams that on Monday was adjudicated on. I point out to him that the judge in that case, Lord Justice Carnwath, said in his judgment:

“The Secretary of State was, in my view, entirely justified in bringing the appeal … It seeks to clarify some important and difficult issues relating to construction of the scheme”.

Therefore, I think that the case was worth bringing. It is important that in all these things we ensure that those who are most severely injured and most need help get the most benefit.

My Lords, when many of these cases are brought to public attention it always appears that the law is, at least to some extent, an ass. Will the Government undertake to ensure that everybody knows exactly why these decisions have been made, and that this is put into the general media so that we can at least understand what the Government say, even if we still disagree with it?

My Lords, I agree that there is a great deal of misconception and misunderstanding about the nature of those cases and, indeed, about the Armed Forces compensation scheme itself. Whatever its deficiencies, it is a new scheme introduced only in 2005. For the first time it gives tax-free lump-sum payments to serving servicemen. We have doubled the basic lump sums. For the first time there is a guaranteed income for those who are most severely injured, so we have made significant progress. There will always be complex and difficult individual cases but the basic principle behind what we are doing—namely, that those who are most severely injured should get the most help—is one on which the whole House should agree.

My Lords, in the case cited by my noble friend, is not the issue at stake the complications that arose during medical treatment? While I understand why there is an important argument to be had about whether that is properly the liability of the compensation scheme, is there not also an issue about the duty of care of the Government towards Armed Forces personnel? Was it not possible to separate out the two issues in this case?

My Lords, that is exactly what the judge was referring to when he said that there was a need for clarification. This was a complex case and additional factors came in at a later stage which were not part of the original decision. That is why it was right to seek further clarification. The case will now be remitted back to the independent tribunal, which I hope will come to a decision very quickly. Of course, whatever the decision of that tribunal, the MoD will pay whatever funds and whatever money is recommended.

To ask Her Majesty’s Government how they ensure that all newly built schools have adequate fire sprinklers installed, in the light of the report by Zurich Insurance.

My Lords, on 1 March 2007, Jim Knight, the Minister of State for Schools and Learners, launched a new policy to install fire sprinkler systems to protect the fabric of new schools. This has resulted in more than 70 per cent of current new schools including sprinkler systems. Only those buildings which are unsuitable or of low risk do not now include sprinklers. Sprinklers are not required for life safety but are primarily a property protection measure.

My Lords, some 20 schools a week suffer considerable fire damage, costing the nation some £65 million. My understanding is that fewer than six out of 10 new-build schools are fitted with sprinklers. Given the advice from Jim Knight, which was for all schools, with just those at the very lowest risk being excluded, will the Government now make mandatory the fitting of fire sprinklers in schools, thereby saving lives, saving up to 70 per cent on insurance premiums and avoiding the wasteful disruption to schools which so spoils opportunities for children to learn?

My Lords, I thank my noble friend for that question, which gives me the opportunity to reiterate our expectation in DCSF that, where appropriate, all new schools should be fitted with sprinklers. They are an extremely important tool in combating the distressing and unnecessary loss of school property to fires, whether they are set on purpose or happen by accident. We are absolutely committed to doing the right thing. While I recognise my noble friend’s commitment, I have to say that we have made really significant progress in reducing the number of fires in schools.

Can the Minister tell us about the retrofitting of old schools with sprinklers? We have not only the situation outlined by the noble Lord, Lord Harrison, but total disruption to young people’s education and loss of teaching notes and coursework. There is also an environmental problem, because if the fire brigade has to come in, it uses enormous amounts of water, while sprinklers use about 5 per cent of that, as I understand it. You also get contaminated water run-off. Could the Minister tell us what plans there are to retrofit all schools with sprinklers?

My Lords, the advice that I have had is that it would not be appropriate to retrofit all schools, because to fit a sprinkler system into a refurbishment programme is twice the cost of fitting a sprinkler system into a new building. There are significant issues about the cost-effectiveness of doing that. We are therefore very much of the view that fire prevention must be promoted as a key tool. I totally accept the assertion by the noble Baroness about the environmental impact, the impact on children and young people, and the impact on the community when there is a fire. There is also the effect when there are injuries and, sadly and rarely, loss of life. We take this issue incredibly seriously, but it must be the right step in the right place.

Is it not time to ensure that teachers are able to search for and confiscate items that are likely to cause harm or disruption in schools, such as lighters and matches, to reduce the risk of fires?

My Lords, I agree that we need to ensure that teachers have the powers that they need to ensure that the school environment is safe and is the right environment for learning, with all the host of issues that brings. I remember when those of us who were concerned about the fabric of our schools and about education in this country spent far too much time worrying about leaking school roofs and the appalling fabric of the school estate that was promoted by the Government from the Benches opposite.

My Lords, given the number of schools that have recently been replaced under a private finance initiative, is the Minister satisfied with the responsibilities laid on and the performance of private sector partners in ensuring that there is high-standard, long-term fire protection in place in these PFI replacement schools?

My Lords, as regards the PFI approach, the cost-benefit analysis on the proposal for the use of sprinklers allows for the reduction in insurance premiums to be taken into account. Therefore, there is a good record of sprinklers being fitted in PFI schools. I am delighted that we have seen a significant improvement in the number of schools fitting sprinklers. Ultimately, this is about reducing the number of fires in schools—and we have reduced them. In 2003, there were 1,232 school fires, whereas in 2007, there were 825. That is an extremely important reduction.

My Lords, given that this is National Schools Fire Safety Day, will the Minister and the House join me in recognising the enormous contribution that the fire and rescue service makes to the safety of our communities, and also the enormous number of educational and social activities that it undertakes with communities?

Hear, hear, my Lords. I am delighted to join my noble friend in recognising the incredibly important contribution that our fire and rescue services make throughout the country—not only in saving lives, but also in fire prevention. That is what the National Schools Fire Safety Day today is all about—helping children in all schools around the country, focusing in particular this year on year 2 children, to understand simple, key messages about what to do in the event of a fire, and encouraging them to take those messages home to their families, so that they can act as young educators and help to prevent fires in their homes.

My Lords, the noble Lord, Lord Harrison, referred to 20 school fires a week. The Minister, too, has given us some figures. Will she say what proportion of the fires take place within school hours and how many take place outside school hours? My impression is that the majority happen outside school hours.

My Lords, the noble Lord makes a very good point. I do not have the figures, but I will write to him and copy the letter to interested Peers. The implied question is whether fires are accidental or deliberate and whether they are set by young people with a grievance outside school hours. We are working with school leaders and fire services to ensure that we take the right steps to ensure that school security is promoted, so that we can reduce the number of deliberate fires that are set. These are reducing consistently with the overall total. I will check on the information required by the noble Lord.

That the draft orders be referred to a Grand Committee.

That the amendments for the Report stage be marshalled and considered in the following order: Clauses 1 to 11, Schedule 1, Clauses 12 to 19, Schedule 2, Clause 20, Schedule 3, Clauses 21 and 22, Schedule 4, Clauses 23 to 28, Schedule 5, Clause 29, Schedule 6, Clause 30, Schedule 7, Clause 31, Schedule 8, Clauses 32 to 36, Schedule 9, Clauses 37 to 44, Schedule 10, Clauses 45 to 55, Schedule 11, Clauses 56 to 62, Schedule 12, Clauses 63 to 89, Schedule 13, Clauses 90 to 108, Schedule 14, Clauses 109 to 127, Schedule 15, Clauses 128 to 134, Schedule 16, Clauses 135 to 142, Schedule 17, Clauses 143 to 158, Schedule 18, Clauses 159 to 164, Schedule 19, Clauses 165 and 166, Schedules 20 and 21, Clause 167, Schedule 22, Clauses 168 to 172.

My Lords, with the leave of the House, I shall repeat a Statement made in another place by my right honourable friend the Prime Minister. The Statement is as follows.

“With permission, Mr Speaker, I should like to make a Statement on Afghanistan and Pakistan: first, on our work with the Government of Pakistan to counter the terrorist threat from al-Qaeda and the Taliban; secondly, on our priorities for Afghanistan in the next stage of the work our Armed Forces and civilians are undertaking there; and thirdly, on the conditions that we are setting down for the next stage, including for the best possible protection of our troops, especially against the growing threat of IEDs.

Earlier this afternoon we honoured those who have died serving our country in Afghanistan. Today I also want to honour and thank all those who serve, and who have served, there. Each time I visit them, as I did a few weeks ago, I find myself in awe of the immense skill, courage and sacrifice of our forces. It is right that we also put on record in this House—and for times to come—our gratitude for their immeasurable contribution to our security. We should also pay tribute to the service and sacrifice of our allies in the 42-country coalition, including that of the 873 American soldiers who have been killed, and of two of our closest partners in central Helmand—the Danes and the Estonians—who have disproportionately suffered among the largest losses of all.

Every time I read to this House the names of those who have lost their lives in Afghanistan, every time I write a letter of personal condolence to their families, every time I meet the wounded at Selly Oak, I ask myself the question that has already been asked today—whether we can justify sending our young men and women to join our allies to fight on the other side of the world. I have to conclude: that when the safety of our country is at stake, we cannot and will not walk away; that three-quarters of the most serious terror plots against the UK have roots in the border and mountain areas of Afghanistan and Pakistan; that, as our security services report to me, while the sustained pressure on al-Qaeda in Pakistan, combined with military action in Afghanistan, is having a suppressive effect on al-Qaeda, the main element of the threat to Britain still emanates from al-Qaeda and Pakistan; and that a peaceful and stable Afghanistan would be a strategic failure for al-Qaeda.

Our objective is clear and focused: to prevent al-Qaeda launching attacks on our streets and threatening legitimate government in Afghanistan and Pakistan. But if we limit ourselves simply to targeting al-Qaeda without building the capacity of Afghanistan and Pakistan to deal with terrorism and violent extremism, the security gains will not endure. So, over the past two years we have sought to build and support the Afghan army and police and to work with the Pakistan security forces. Our strategy is dedicated to counter insurgency and what we have called Afghanisation. This guiding purpose, reinforced in our strategy and in the NATO strategy in April, is at the heart also of the announcements that I am making today.

The first is our work with Pakistan against terrorism and extremism. At the meeting of the Friends of Democratic Pakistan, which I chaired in New York on 24 September together with President Zardari and President Obama, there is now a clear plan for stabilisation and a policy that will assist reconstruction. We welcomed the recent success of the Pakistan Government, who have decided to take action against the Pakistan Taliban in Swat, Dir and Buner. The support of the opposition now demonstrates that a wide cross-section of Pakistan society accepts that terrorism poses a threat as serious to Pakistan as to the rest of the world. It is vital that basic services and economic assistance be provided in the liberated areas of Pakistan as soon as security conditions allow. So the Development Secretary is today announcing a further British contribution of £10 million on top of the £22 million that we have already provided for humanitarian assistance.

Secondly, in Afghanistan we will now move further and faster to implement our strategy—one that starts with training, mentoring and partnering the Afghan army and police. The more the Afghans can take responsibility for security, the less our coalition forces will be needed in the long term and the sooner our troops will come home.

In recent weeks I have discussed this approach with President Obama, Secretary of State Clinton and NATO Secretary-General Rasmussen. I have met Admiral Mullen, the US chairman of the Joint Chiefs of Staff, and Generals Petraeus and McChrystal, as well as our own military commanders here and on the ground. Britain supports General McChrystal’s ambition to accelerate the growth of the Afghan security forces, with the Afghan army building to 134,000 by next October. The Afghans are committed to the recruitment of 5,000 soldiers a month from next spring; the new NATO training mission established at Strasbourg expects to help train 40,000 Afghan soldiers in 2010; and Britain is setting up a new training centre which will train around 900 junior officers and NCOs each month.

In Helmand last year there were only 4,200 Afghan soldiers. This year there are 50 per cent more. At our request the Afghan Government undertook to send more units to support Operation Panther’s Claw. While those units arrived, they were below strength and not yet fully ready for the task. In a province which faces 30 per cent of the violence in the country we need more and better Afghan participation, and we need it now. That is why I can announce that the Afghans will set up a corps headquarters in Helmand and that British forces will be ready to partner 5,000 of the 10,000 Afghan troops. The coalition will be training in Helmand over the next few months, not just embedding mentors with Afghan units but working integrally right up the command chain. In future operations the protection of populated areas must be the shared responsibility of Afghan and coalition forces. This will be central to the new benchmarks and timelines that we and General McChrystal will set out as part of a new framework for the transition to Afghan authority—Afghan forces taking responsibility for security for the Afghan people, and doing so area by area.

As 19 Light Brigade completes its tour of duty, I know that the whole House will join me in thanking Brigadier Tim Radford, and the men and women he leads, for their service throughout this hard-fought summer, and join me also in sending our best wishes to 11 Light Brigade, who are replacing them. 11 Light Brigade will deploy with further enhancements to deal with the deadly threat from IEDs, including more specialist troops and more equipment to protect our forces, to find and defuse the IEDs, and to identify and target the networks who build and set them. 19 Brigade were able to prevent 1,200 IEDs from being detonated. They will pass on this experience to their successors, together with the equipment enhancements I announced on my recent visit and which are now coming on stream this month and next: increased flying hours for unmanned aerial vehicles—33 per cent for Hermes, 50 per cent for Desert Hawk and, next year, 80 per cent for Reaper; an extra £20 million contributing to a fourfold increase in the total number of Mastiff and Ridgeback mine-protected vehicles since April; and the first Merlin helicopters to be deployed to Helmand in two weeks.

This is highly specialised equipment, which must be manufactured, delivered and adapted—and personnel must be trained to operate it—before it can be put into action. But no one should doubt our commitment to responding as fast as we possibly can to the new and deadly tactics of the Taliban; nor should they doubt the scale of our financial commitment to our soldiers and to this campaign. Since 2006-07, we have increased annual military spending on the Afghan operation—spending from the Treasury reserve, in addition to the defence budget—from £700 million to £1.5 billion to £2.6 billion to more than £3.5 billion this year.

We are determined to provide our forces with the resources they need to keep them safe, but we are also determined to make the right decisions about equipment and troop deployments as part of our wider strategy. To meet the changing demands of the campaign, which require greater concentration of our forces in central Helmand, we have confirmed the decision we made at the National Security Committee in the summer: that one of the British units, the regional battle group for southern Afghanistan, will be redeployed to Helmand with immediate effect.

To support our plan to train more Afghan soldiers and police, while at the same time maintaining the security of our forces, I have agreed in principle a new force level subject to the following conditions: first, that a new Afghan Government demonstrate their commitment to bring forward the Afghan troops to be trained and to fight alongside our forces—I talked yesterday to President Karzai and Dr Abdullah and received assurances that, with their determination, that will happen; secondly, that, as before, every soldier and unit deployed to Afghanistan is fully equipped for the operations they have agreed to undertake; and, thirdly, that our commitment is part of an agreed approach across the international coalition, with all countries bearing their fair share.

The combination of force levels, equipment levels and tasks that I am setting out today follows the clear military advice from our chiefs of staff and commanders on the ground on implementing our strategy and on reducing the risk to our forces. It is on this basis that I have agreed in principle to a new British force level of 9,500, which will be put into effect once those conditions are met.

As I said, we do not yet know the result of the first round of the Afghan elections. Although they were the first ever elections run by the Afghans themselves and took place against the backdrop of a serious insurgency, we cannot be anything other than dissatisfied with the intimidation and corruption which has been exposed by Afghan and international observers. The Electoral Complaints Commission has set out a process of investigation, including the disqualification of fraudulent votes, and that process must be allowed to run its course.

When I spoke to President Obama last week, we agreed that when a new Government are formed, the international community, including Afghanistan’s neighbours, must develop a contract with the new Government including a commitment to growing the Afghan army; tough action on corruption; a more inclusive political process, including reaching out to reconcilable elements of the insurgency; and stronger Afghan control of local affairs. Those are the necessary changes that I discussed with President Karzai and Dr Abdullah yesterday, for without them the efforts of our military will be hampered, and the new Afghan Government will not gain the trust of their people.

A better future for Afghanistan, with its village and rural population, can be forged only if there is stronger governance right down to district level, so last year we doubled the number of civilian stabilisation advisers, and now our joint civilian-military stabilisation teams—the first in Afghanistan—are supporting not just Governor Mangal but district governors and village shuras. During the past year, four new district governors have been appointed in Helmand. The Afghan Government are now functioning in nine out of their 13 districts, compared to five last year, and we are supporting community councils to consult with thousands of local people.

To ensure this work has immediate backing, I announced last month an extra £20 million for stabilisation in Helmand—money that is already being disbursed—increasing the number of Afghan national police in Helmand by 1,000 a year for each of the next three years, building a new police training academy and building new facilities for district governors. We are working with coalition partners to extend such support to the 34 provincial governors and 400 district governors right across Afghanistan. British aid will therefore continue to help pay the salaries of teachers and doctors, but we are also ready to fund and partner the first Afghan stabilisation teams sent from Kabul to work alongside us in Helmand, and we want to reinforce the hard-won gains of our forces in this hardest of summers, while fostering greater Afghan responsibility for their own affairs.

We will have prevailed in Afghanistan when our troops are coming home because the Afghans have not only the will to fight but the ability to take control of their own affairs, so the right strategy is the one that finishes the job by giving the Afghans the tools to take over. A safer Afghanistan is a safer Britain. A stronger Pakistan is also a safer Britain. We must never again let the territory of this region, or any region, become a base for terror on the Underground, the streets, the cities and airports of Britain. We must not permit it, and we will not permit it. We have the right strategy, and we will see it through.

I commend this Statement to the House”.

My Lords, we are of course all very grateful to the Leader of the House for repeating this very important and sombre Statement. Will she at the outset accept that we endorse, 100 per cent, everything that has been said about our brave troops, about those who have fallen, and about the grief of their bereaved families? Let us also keep at the forefront of our minds those who have been severely disabled, some grievously and for life, and the need for sustained care and support for them in the years ahead. We must never forget them.

We all realise the immensely difficult decisions at stake here, but we also need to see this latest Statement in the correct and wider context. The obvious first question that I have to put to the Leader of the House is whether we yet have a really clear definition of our objectives, strategy and vision in Afghanistan—in Helmand province—and in Pakistan and the other areas where al-Qaeda is setting up training cells and where its units are flourishing, such as Somalia, which was mentioned towards the end of the previous Session in this House.

Secondly, is the balance between military effort and civilian-led strategy to entrench stability and squeeze out the terrorists yet anywhere near correct? Have we taken account of the fact that the US is revising its whole aid and reconstruction strategy at this moment? Indeed, just how does this announcement today fit in with Mr Obama’s imminent announcement on troop levels and on overall Afghanistan strategy? Have we got the proper focus on the central task of helping to eliminate al-Qaeda leadership and encouraging the Pashtun tribes on both sides of the border and the Durand line to yield up, or at least curb radically, Osama bin Laden and his henchmen, who are almost certainly still hiding in these areas?

Thirdly, while we welcome words about support for Pakistan, how in practice can we contribute most effectively in encouraging Pakistan to fight the Taliban or its more extreme elements, or maybe eventually to bring some of the less extreme ones to the negotiating table? Is that what the Prime Minister means in the Statement when he talks about “reaching out to reconcilable elements of the insurgency”?

Fourthly, are our security and intelligence resources providing all they can to support co-operation with those of Pakistan and Saudi Arabia, and even of Russia and China, as urged in a recent article by His Excellency Turki al-Faisal, the former Saudi ambassador here and in Washington, who is known to many of us? The noble Baroness may have seen that very important article.

Fifthly, what can we do to reinforce the apparently increasingly successful American-led efforts to throttle al-Qaeda financially? That really does seem to be yielding some dividends, if that is the right expression.

Sixthly, we have a direct interest in the opium and heroin issues. What progress are we at last making in replacing all the poppy crops, as the Americans did effectively in Turkey some years ago? Indeed, what progress are we making in our overall counter-narcotics strategy, with which we have been struggling now for several years?

Finally, what success have we achieved in persuading our NATO allies and our European neighbours to commit larger forces to the theatre? Are we planning a new international conference with allies to clarify aims, as I think was earlier proposed and promised?

In the longer term, the political need is clearly, in the very accurate words of Ambassador Sherard Cowper-Coles, to put the leaders of the area’s many tribes “back in charge”, as well as to give the Afghan Government, Afghan forces and Afghan police full responsibility for stabilising and governing their country. That, I know, is what we aim to do. In the short term, however, more troops on the ground may be the only answer. It is very hard to judge and we need to see what President Obama will shortly decide, because that must influence our overall approach.

We welcome the provision of mine-protected vehicles and Merlin helicopters, although the only thing that one can say about that is, “About time too”. One thing is crystal clear: any soldiers we send, as well as all those already there, must have the best possible equipment. The Prime Minister seeks assurances from the military that it will be so equipped, but surely this is the wrong way around. It is the military that needs assurances from the Government because of past disappointments and clear past failures. That is the very minimum requirement that the Armed Forces deserve and the public now expect from this Government, and it is what we want to hear unequivocally from Ministers in all future reports to Parliament on Afghanistan and Pakistan developments, which we hope will be both full and regular.

My Lords, we always start these Statements with a good deal of cross-party support, but the very detail of the numerous questions asked by the noble Lord, Lord Howell, shows that, although there is cross-party support with regard to a safer Afghanistan and a stronger Pakistan—we certainly share the tributes which the noble Lord, Lord Howell, paid to the dead and the wounded—it is right, when forces are fighting such a war, that the Government are questioned closely.

I have always felt that, by any definition, the fighting in Afghanistan is a just war. The noble Baroness, Lady Taylor, reminded us yesterday, as the Prime Minister did today in the other place, of just the price that we are paying for that war, so it is always, as the noble Lord, Lord Howell, said, a sombre moment when we talk about sending troops into battle. We appreciate the very real dilemma for Ministers when faced with these decisions. Afghanistan, of course, has a long history of humbling empires, so “We’re here because we’re here because we’re here” is not a strategy for a commitment such as this. We need to justify extra troop deployment in terms of a clear and winnable strategy and what one expert has called obtaining an “exit ramp from combat”.

As the noble Lord, Lord Howell, has said, the Government must also guarantee that troops are well equipped. There is the worry that, in the Statement, Ministers are simply playing catch-up on equipment supply. Any really decent forward planning would have shown that this kind of material was needed and should have been ready, rather than implying that there are still problems in supply.

I understand that Ministers have to take decisions and that the buck stops with them. That is why the military advice that they get should be untainted by politics and I hope that, in giving frank advice to Ministers, the senior military retains itself within that. Otherwise, trust does break down. As well as the noble Lord, Lord Howell, I worry when the Prime Minister talks about this new commitment being in the context of commitment from other allies. Has any country, other than the impending announcement from the United States, made such a commitment?

I was glad that the Statement linked in Pakistan because quite clearly this is now not just an Afghanistan problem but a regional one, and important on many fronts. However, the description of the present state of Pakistani politics by the Prime Minister is a little on the sunny side, if one listens to other informed observers about the situation there. I also share with the noble Lord, Lord Howell, the query about what has happened to Europe’s call for a broader-based international conference, because that is important.

It is also important that, when looking at the regional commitments, we look at two contrasting neighbour countries, both with a probable role in a long-term solution. What are our relations with the Saudis, supposedly some of our closest allies, in the fairly open knowledge that the Saudis are major contributors to some of the more extreme Islamic organisations? On the other hand, Iran—that problem child of the region—could and should be playing some role in solving that region’s problems.

Finally, and again echoing the noble Lord, Lord Howell, there is the question of whether what is announced today—an upgrade in troop commitment, with further numbers—matches what most people argue is probably the longer way forward of getting a proper hearts-and-minds policy in Afghanistan. Earlier this week, Secretary of State Clinton said something about the need to have some outreach, and in his own Statement the Prime Minister talked about involving reconcilable elements. How is that to be progressed? How are those initiatives going to be taken? As I have said, nobody comes to these Statements without a sense of the heavy responsibility that Ministers carry, but there is a duty on the Opposition to question, within a broad desire to see ultimate success, the strategy and content of policy.

My Lords, I am grateful for the endorsement from both noble Lords opposite of the bravery of our troops and the sacrifices by them. The noble Lord, Lord Howell, drew our attention to the families, who we often think about only in the context of the troops who, sadly, die when they are in theatre. It is good to remember today the families that are left behind when their loved ones are away fighting. Not long ago I met several brave wives and partners and I promised to bring their bravery to the attention of the House. I am glad that the noble Lord also mentioned the sustained needs of the wounded. I believe that not only are this Government providing the most excellent care for soldiers when they go to Selly Oak, but also that things are improving for their long-term care.

The noble Lord asked for a clear definition of objectives, strategies and vision. Today’s Statement clearly articulates what our strategy is and what it has been for some time. I am reminded of the Statement made by the Prime Minister in April this year. Today’s Statement builds on that strategy by taking a slightly different approach, but still building on the strategy of “Afghanisation”. The noble Lord also asked how our strategy fits in with that of the United States. In many ways we are trailblazing here. As the Statement says, the Prime Minister has had many conversations with President Obama and Secretary of State Clinton and I am confident, from what the Prime Minister has said, that our strategy will dovetail with that of the US when it is announced.

Before I go any further, perhaps I may draw the attention of the House to a recent statement by the Chief of the Defence Staff, Air Chief Marshall Sir Jock Stirrup, in which he says:

“I welcome the Prime Minister’s announcement of an increase to our force level for the mission in Afghanistan”.

There is also a statement from Sir David Richards, Chief of the General Staff:

“We asked for 9500 and that is what we have got”.

I believe that this is tangible proof that the Government are working in tandem with military chiefs of staff, which is something that was much needed.

In relation to Pakistan, our contacts with the military in Pakistan are good and I would draw the attention of noble Lords to a brief mention made in the Statement of a meeting of the Friends of Democratic Pakistan that took place in September. There were several key outcomes from the meeting which point to the fact that all these friends are working together to support Pakistan, including the establishment of a multi-donor trust fund for the border areas to provide co-ordinated financing mechanisms for donor-supported areas affected by terrorism, militancy and extremism. In answer to the noble Lord, Lord McNally, the Friends of Democratic Pakistan include Saudi Arabia and Iran, so we are all working together for the benefit of the people of Pakistan and in fighting the terrorists there.

I have been asked about the poppy crop. Great progress is being made through the wheat initiative that we have had this year and it is clear from the statistics for 2008-09 that the poppy crop has gone down. However, we are anxious to ensure that counternarcotics is not a strategy on its own, but that it is mainstreamed into all aspects of governance. Like all noble Lords, we are aware that there is a direct link between finance for terrorism and the poppy crop.

We talk to our NATO allies all the time and we are trying to encourage them to send more troops to Afghanistan. We believe that one or two countries may be ready to do that, but we will certainly keep talking.

In response to the points made about equipment, I think it was the noble Lord, Lord McNally, who said that the Government are not doing their duty and are somehow shifting the blame on to the military—not shifting the blame, I shall not put it like that, but saying that it is the military that must decide. I believe that the Government are doing their job and that we are going about this in the right way. We are working with the military, but of course the needs of our troops on the ground change all the time and these types of equipment are not kept on the shelf. It takes time to ensure that the right equipment is available in the right place, and that is what we are doing all the time. I think that we are now getting the balance right.

The noble Lord was quite correct that it is important that the Government are questioned closely about this just war. While all of us in this Chamber broadly agree that this is a war that has to be fought and are wholeheartedly behind our troops, we have somehow failed to undertake our duty as Members of the House of Lords, as well as members of the Government and Opposition, to get that message out to the people of this country, whose support our troops on the ground need and deserve.

I agree that military advice should not be tainted by politics. I was asked about the EU. I do not know where we are in terms of a conference being called, but we certainly welcome the increased attention that the European Union is paying to Pakistan. The UK is giving its full support to the work of the Swedish presidency of the EU, designed to lead to an enhanced and more coherent EU contribution to the civilian effort in Afghanistan. We look forward to the outcome of the October European Council, which will endorse and give momentum to this strengthened approach. It is just one more reason why it is important for us to be working with our allies in the European Union and why we need a strong European Union.

My Lords, I, too, thank the Leader for repeating the Statement. I make it clear that the questions that I shall pose today are based on consultation with my Afghan colleagues.

Does the noble Baroness agree, first, that the insurgency will not be eradicated by force alone, however augmented it will be? Does she agree, secondly, that the Afghan police are just not up to the job and thus urgently require adequate training resources in order to put in place anti-corruption and civilian protection mechanisms? A further run-off of the election would probably result in a far lower turnout; fraud and violations would continue; and the expense would be prohibitive. Therefore, should not the votes as collected be now announced? At the same time, there should be a vast increase in investment in regeneration programmes in the safer zones. There should also perhaps be a clear-cut, long-term and timed agenda for the country, which should be agreed with all bilateral and multilateral donors, who will have significant influence if acting as a body. Finally, does she agree that the future focus should be on training, development and co-ordination of aid donors and the promotion of Afghan leadership, together with a possible new, transitional Government, and away from armed conflict?

My Lords, I agree with each and every one of the points made by the noble Baroness. It is of course right that the insurgency will not be eradicated by force alone, but that is the whole purpose of our strategy and that which has been outlined by General McChrystal. It is about “Afghanisation”, which involves both a military effort and a civilian effort working in tandem. It is all about providing support to, and working in partnership with, the Afghan troops and police and improving the governance of that country, so that the Afghan people are able to take control of their own country and ensure that it is not overrun by terrorists. It is about hearts and minds and development as well as the military effort, but without the military effort, these other things could not fall into place.

The noble Baroness spoke about the elections. We have to be patient and let the process run its course. We support the various investigations that are taking place and hope that there will be a declaration in the not-too-distant future.

My Lords, is the Leader of the House aware that the whole House recognises the grave situation that we now face? We may not be losing, but we are certainly not yet winning. The Statement has not to my mind changed things in any way that will make a significant difference to the grave situation that is being carried mainly on the courage and amazing bravery of our forces, who are paying a very heavy price.

I found the timing of the Statement rather extraordinary. I do not know whether it was meant to pre-empt what President Obama is going to say. The United States is the lead player. If, as the noble Baroness said, the Statement dovetails with the discussions between the Prime Minister and the President and is an indication of what President Obama is going to say, I have a real concern as to whether a new and adequate strategy is being prepared.

In that connection, this very carefully worded Statement makes clear that even this proposed very limited increase is conditional on three conditions and will not happen unless they are met. The second condition is that every soldier is fully equipped. As Secretary of State, I certainly saw it as my responsibility on behalf of the Government to see that our forces were properly equipped and in no sense sold to a general that it was his job. Everyone knows that there are not enough helicopters. Even with the welcome announcement today, that is nothing like enough. Compared to the American provision it is woefully inadequate. So that condition is not yet met.

The third condition is that all countries in the coalition bear their fair share. I have now listened to three Secretaries of State for Defence, in the rapid speed at which they turn over in this Government, each saying, “Everyone else has got to bear their fair share. We are going to talk to them and make sure that they do”. They never come back with any adequate answer. With great respect to the noble Baroness—I understand entirely the position she is in—she has repeated exactly the same sentence. She said, “We are going to go on talking to them”. If other countries in the coalition do not bear their fair share and the conditions are not met, will the Prime Minister not provide even this very limited number of extra troops?

My Lords, the noble Lord, Lord McNally, earlier referred to the conditions. The three clear conditions do not relate to troops from our NATO allies. I will have to check, but I believe that they relate to extra troops from the Afghans themselves. If one looks at the Statement, I believe that it refers to extra Afghan troops, not to allied troops.

In relation to the three conditions, I read briefly an extract from the Chief of the Defence Staff, which I cannot find just at the moment. He said that he is confident that the conditions will be met. As regards the timing, is the noble Lord saying that if our commanders on the ground and our military troops are saying, “We need more troops”, we say, “Sorry, you have to wait for the Americans”? We are not saying that. We have put down three important conditions which do not relate to the Americans. They relate to three other things which we are confident will be met. I am sure that our troops will be on the ground in the not too distant future.

I know that this is a very difficult and long Statement and that the House will have great—

With great respect—

My Lords—

With great respect to the noble Lord, Lord King, we do not have a debate at this stage in a Statement. It is questions and answers.

The Statement says,

“thirdly, that our commitment is part of an agreed approach across the international coalition, with all countries bearing their fair share”.

I beg the pardon of noble Lords. I was not wishing to mislead the House and I take back what I said earlier. However, I am confident that the Prime Minister would not have made this Statement if he were not confident that this condition could be met. That is exactly what the Chief of the Defence Staff also thinks. This is not me speaking: it is the Prime Minister and the Chief of Defence Staff who will have had conversations with their counterparts.

My Lords, the noble Baroness the Leader of the House continues to assert that we have here a well founded strategy. We are questioning her so vigorously because it seems to be a set of aspirations and conditions rather than a strategy. I say that because a strategy should incorporate what will happen if the three conditions are not met. That is missing today.

I say with respect to the noble Baroness that the bottom line of page 4 says,

“which will be put into effect once these conditions are met”.

On that note she tells us that Sir Jock Stirrup and Sir David Richards are completely behind the increase in force levels. Will she also tell us what will happen if the conditions are not met? What will be the positions of Sir Jock Stirrups and Sir David Richards?

Finally, given the Government’s rosy view of what is happening in Pakistan—which does not seem to take into account the divided political parties, the infiltrated army, which we saw only this week in an attack, and a population that does not possess any resilience—what will we do if our strategy of Pakistanisation fails?

My Lords, of course noble Lords, including the noble Baroness, are right to question me carefully on this. The Government have a strategy—it is right to have a strategy—but all noble Lords would wish the three conditions to be there to ensure that our troops are properly supported in every way, with enough troops on the ground and enough equipment. That is why we have the conditions. We are confident that the conditions will be met. Again I say that Sir Jock Stirrup, and all those people who are so much better equipped to deal with these matters than I am, are confident that they can be met. Noble Lords laugh at me—they do not think that that is adequate—but it is the case that if the conditions cannot be met it must mean that the 500 extra troops will not be going to Afghanistan; that is the clear outcome.

In relation to Pakistan, I am sure the Statement does not wish to put an over-rosy view on the situation but it is important, as the noble Baroness will agree, to consider both Afghanistan and Pakistan together. As I understand it, the Opposition in Pakistan are now working together with the Government to ensure that there is much more consensus in the country in favour of doing what has already happened in the Swat Valley and what is happening in other places—that is, beating the Taliban.

My Lords, while expressing our condolences and paying tribute to our soldiers and to the soldiers of our NATO allies, can we also pay tribute to the Pakistani soldiers, who have suffered heavy losses recently?

Support is needed by the Pakistan Army. There is considerable support and determination within Pakistan to fight with the Tehrik-i-Taliban and the Taliban in the Swat Valley and the north-west frontier, but there has to be more financial support for Pakistan. We have to remember that NATO and the allied forces of 40 countries are paying for the war in Afghanistan, but Pakistan alone cannot do it. The multi-donor trust fund has not realised much money other than from our Government and the Americans. What pressure are we putting on our European friends to give financial support to the Government of Pakistan and, particularly, the Pakistan army? I can assure my noble friend that with financial support for the Pakistan army—I have recently come back from Pakistan—there is a huge determination that it will fight on.

My Lords, I am grateful to my noble friend, especially for his last comment, which is proof that there is determination in Pakistan for the army to fight on. We will continue to put pressure on our EU friends and colleagues to support Pakistan. The Kerry-Luger Bill, which is currently going through in the United States, will provide $7.5 billion-worth of aid for Pakistan which, when it is disbursed, will be a major boost for Pakistan.

My noble friend was right to bring to my attention and the attention of the House the deaths of Pakistani soldiers and Pakistani civilians, who have been sorely hit by terrorists in recent times.

My Lords, in Devon we are very proud of our long association with Her Majesty’s forces and are deeply aware of their level of professionalism and selfless service. We are also deeply aware of the costs borne by service families. I am glad that mention has already been made of that because it brings me to my question. Every further deployment of British forces brings an increased pressure on marriage and family life and, sadly, in some cases, consequential marriage and family breakdown. Will the Minister assure the House that this increased deployment will be without an increase in back-to-back overseas tours of duty? What resources are being put in place to support service families and to ameliorate the effects of long-term overseas deployment?

My Lords, 24 months is the harmony period that we should and must respect when troops go into different theatres. We and the military are doing everything possible to respect that period, and in the vast majority of cases it is being respected. We realise the immense pressures on the troops and their families. Recently, we released a Command Paper that dealt with the very issue of support for families. I have recently been with families myself and many of my colleagues are going out to talk to families, to find out what their real needs are and to try to ensure that the various government agencies work together with the military. The military is working with the Department for Communities and Local Government and the Department of Health to ensure that there is proper support, not just for the soldiers when they come home but for the families, and to ensure that there is childcare so that the wives and partners can go out to work and so on, if they wish to.

I pay tribute to the way in which the military itself works with the families. It provides fantastic support, as do organisations such as the Royal British Legion.

My Lords, I have a question about public support for this conflict, but I would like to put it in a context that relates to the intervention of the noble Lord, Lord King. If we go down the road of having a party-political divide on this—he did ask us to compare the current situation to his record as Secretary of State for Defence—we will end up in a party slanging match, and that would not be beneficial to him. I could start talking about the housing provision at that time; he will know how much damage that did to morale in the Armed Forces. His question was inadvisable because if we go down that route, the only people who will gain will be our opponents in Afghanistan and the surrounding area.

My specific question is this: there is a lowering of support for this conflict in Britain, Europe and north America. Part of the reason is obviously the increase in the number of deaths, but we really have yet to match our opponents in our ability to convey what we are doing there and why and how we are doing it. Given the problems within NATO in terms of delivering fighting forces, there is a very real role for it here, particularly using the internet and other means, to convey a much more powerful message about what it and the United Nations are doing, how they are doing it and the linkage between the military and civilian roles. That is immensely important.

My Lords, with regard to my noble friend’s initial comments, I think it is right that at this Dispatch Box I am closely questioned about what the Government are doing. However, I know that the clear message from this House as a whole is that we are in support of what the Government are doing in Afghanistan, and that we are behind our troops and their families.

On communication, my noble friend is right: support for the conflict is being lost. That is why it is incumbent on us as Government, Opposition, NATO and the UN to explain that this is a conflict that the UN has asked us to engage in. Not a lot of people understand or know that, so we have to get out there and use all the tools at our disposal to try to ensure better understanding and more support for our troops.

My Lords, I invite the Minister to return to the question that has already been raised about the presidential election held on 20 August this year in Afghanistan. She will recollect that President Karzai claims to have attained more than 50 per cent of the vote, but the United Nations-backed independent body, the Elections Complaints Commission, is of the view that some 1.5 million votes—in other words, about one-third of the totality of votes received by the President—are very suspect. I appreciate that the Minister says that the Government will soon come to a conclusion about this matter. In view of the independence of this distinguished body, and indeed of the considerable work in which it has already involved itself, will the Government be prepared in principle to accept that body’s verdict in this connection? It is essential, if there is to be credibility for an Afghan Government, that validity and legality should be established in relation to that matter.

My Lords, naturally, we support the ongoing IEC and ECC investigations into the elections. They have not reached their conclusions yet, but the noble Lord is right about what President Karzai said. However, we have to wait until those bodies have concluded their investigations. Once they have been concluded, we will accept what they say.

My Lords, could we have greater clarity about this 9,500 force level? Our commanders have asked for it, but my noble friend has just established that the Prime Minister is saying that the force level will be achieved only when those conditions have been met. The Minister said that if they have not all been achieved the troops will not go, which must naturally follow. In what timescale do the Government estimate that the conditions will be met? In answer to questions this afternoon, the Minister said, “We are trying to encourage our allies, and we think one or two of them are ready to do so”. It does not sound like a very immediate timescale. Can she help?

My Lords, I do not have a timescale and cannot give the noble and learned Lord one. We just have to wait until those conditions are met. However, I am confident, because of the conversations that have taken place between the Prime Minister and his counterparts and between the chiefs of staff and their counterparts that, unless we were confident that those conditions would be met, the Prime Minister would not have made this Statement today.

My Lords, we have tabled these amendments to draw attention to yet more problems which we see as being inherent in the Government's desire to replace the Learning and Skills Council with at least two different bodies. We discussed the matter on Monday at some length. I do not want to occupy the Committee for any great period of time on this amendment, except to say that the Association of Colleges has expressed concerns that further education colleges will have to respond to different bodies.

Clause 61 enables the YPLA to carry out performance assessments on colleges, but Clause 100 allows the Skills Funding Agency the same privilege, alongside, rather than in co-operation with the other. These amendments were raised in the other place, where discussion centred around the desire to ensure, first, that colleges do not have to deal with more bureaucracy than is strictly necessary and, secondly, that assessments are carried out in a consistent and co-ordinated fashion so that there is no duplication of work, but also that nothing is left uncovered.

Amendment 154 would mean that the YPLA,

“must consult with … the Skills Funding Agency”,

the relevant local education authority in England and Ofsted when undertaking performance assessments which will help inform funding decisions. Amendment 212 would place the same duty on the SFA, which in addition would have to consult the Quality Assurance Agency for Higher Education. Given the Government's desire to create these new bodies, it seems sensible that every effort should be made to ensure that they communicate effectively to ensure coherence across the education administration. I hope that the Minister will be able to answer these questions directly. I beg to move.

My Lords, earlier I indicated to the Opposition that we were not too happy with this amendment, but I misinterpreted it and I apologise to the noble Lord. In fact, we have a lot of sympathy with what he is suggesting. It is quite clear that, as the LSC has in its role set targets and assessment schemes for colleges, the YPLA will be doing that not only in relation to the providers of education and training, it will presumably be judging local authorities as well, and it is appropriate that they consult. I was slightly surprised that the amendment mentioned,

“a local authority in England”,

because the YPLA should be in consultation with all local authorities rather than just a single one.

We spoke at length on Monday about the need for the YPLA to be seen to be a co-operative authority working in partnership with local authorities as well as with the subregional groups. We want to see that sense of partnership and we have tabled a series of amendments that we hope the Government will look kindly on to give the YPLA a greater sense of co-operation within the terms of the Bill. These two amendments fit in very well with what we are asking for.

My Lords, I hope that I can offer the reassurance that the noble Lords opposite are looking for. As we have heard, Amendments 154 and 212 would place a duty on the YPLA and the chief executive of the Skills Funding Agency to consult specified bodies. We would all agree, because we have debated it before in Committee, that that is an extremely important principle. The YPLA and the Skills Funding Agency should work in partnership. BIS and DCSF are already developing a new performance assessment scheme in the post-16 education and training sector for introduction in 2010. That is being done, as this House would expect, in consultation with key sector partners.

This initial consultation has involved a wide range of stakeholders, noble Lords will be pleased to hear, including the Association of Colleges, the Local Government Association and the Association of Directors of Children’s Services. The dialogue has taken place already without a specific statutory requirement, although I appreciate noble Lords’ concerns. The expertise of our partners has been invaluable in helping to shape the new arrangements. I can reassure noble Lords that the end result will give the coherence sought by the noble Lord, Lord Hunt. It will also give a common assessment approach for all types of provider, which will enable us to make valid comparisons of performance across the post-16 sector, and bring greater transparency to commissioning decisions, which will be extremely important. That will ensure that providers are treated fairly and understand the basis of decisions.

The Secretary of State will be able to set out in his grant letter, or in guidance under Clause 74, what schemes he expects the YPLA to be involved in and who should be consulted. We can be clear to the YPLA and all those concerned—all our partners—what the performance assessment tools will be. Importantly, the Secretary of State may issue guidance to the chief executive of the Skills Funding Agency under Clause 155. I may have signalled to the opposition parties, with some help from officials, that we will commit to using these powers to ensure that the bodies that noble Lords are obviously concerned about will be consulted. I can make a commitment that we will be using this guidance to ensure that the consultation takes place and the coherence that noble Lords are looking for will be made possible. I do not want to detain the Committee now but it would be helpful for me to write to noble Lords about the framework for excellence that is in development, so that noble Lords opposite can have further background on what the programme will be like.

Before my noble friend speaks, I applaud him for moving the amendment. It touches on the grave weakness of the Bill, namely the administrative system that will be set up after it has been enacted. At the moment FE colleges have one funding agency, the Skills Funding Agency. In the future, they will have four funding agencies—the Skills Funding Agency, their own YPLA, HEFCE and the apprenticeship body. It will not be a dialogue but a trialogue or a quadrilogue. There will be constant consultations and discussions; it is a recipe for jungle warfare. Each of those bodies will be under severe financial constraints and none of them will want to be very supportive of what is being done. In my discussions over the recess with members of the FE world and, indeed, the education world, they all looked on this as a total nightmare.

I cannot believe that there has been a guiding ministerial hand behind the Bill from Ministers from two departments. Nobody seems to have considered the administrative turmoil that will be inflicted on the whole area of 14 to 19 training and education. It is extraordinary. I have never known a Bill that has needed so many Ministers’ letters to explain parts of it. There was a letter before the House rose to explain the system that I have just outlined. Not only are there four bodies, there are regional assessment committees, local assessment committees and a national assessment committee, all replacing the Learning and Skills Agency. I do not know whether Ministers have totally taken on board how complex this will be. I only hope that the shadow Ministers have because I do not believe that this system will work. I do not suppose it will feature strongly in our manifesto to say that we will overhaul all this, but we will soon find, when in office, that this system will simply break down and not do the job that is needed, which is enforcing the 14 to 19 curriculum.

The 14 to 19 curriculum is at the heart of the Bill. The Government were right to identify a 14 to 19 curriculum, but to deliver that curriculum there must be 14 to 19 institutions, not some in FE colleges and some in schools. Until that matter is resolved, there will be confusion, jungle warfare and a great deal of ill will and non-performance. I only hope that Ministers will take this to heart. It goes to the very heart of the Bill. We are setting up the most complex administrative regime that has ever been inflicted on any part of our education system. Can Ministers think of any other part of the education system which is as complex as the system that they are creating? I shall answer for them, since that was a rhetorical question. There is no part of the education system that is as complicated as this. It does a disservice to the area that we are all most interested in, which is improving the training and skills base of many young people in our country.

I add a grace note to what my noble friend has said with such trenchancy. The children and young adults involved in this are at the most vulnerable stage of their lives. The transition, particularly for those who are in care or depend on benefit, from 17 to 19 is a time when they have to learn to stand on their own feet, when they been accustomed to having their hands held all the time. If their educational programme is going to be thrown into chaos, then, in addition to having to learn how to do that, they will have to struggle with the ropes and strings attached to their education. If they fall foul of that, I am afraid that there will be more young people lost to society.

My Lords, would it not be better to have just one body that is responsible for designing these assessments? It seems to me that it ought to be Ofsted, which actually knows how to do these things, rather than a couple of newly created bodies which are going to have to find their own way. If one body was responsible for creating these assessments and had, naturally, to consult with the many created agencies which have an interest in these things, at least it would get done simply and consistently, and once it was done it would not be subject to endless argument and tussling.

My Lords, what has been said illustrates the real concerns that everybody has with this Bill. Will the Minister answer the question raised by the noble Baroness, Lady Sharp, about the wording of the amendment—namely whether,

“(b) a local education authority”,

is right, or whether it should encompass a much broader concept? However, my main point is that I hope the Minister will take back the real concerns about the way that this is being set up.

My Lords, I agree with much of what has been said about the detail and complexity of many Bills, not just this one. The first Bill on which I worked was the Welfare Reform Bill, which was incredibly complicated. Part of the complication in this Bill arises from the fact that we are talking about the machinery of government changes. Regardless of how complicated the back-wiring is, it has to be described in the Bill, which means that Ministers have to devote time to writing letters and circulating them. That is certainly the way that I like to work. I shall continue to write letters and I apologise if noble Lords find that too burdensome.

We expect colleges to have two conversations: a conversation with their local authority on pre-19 provision and a conversation with the SFA on post-19 provision. Our aspiration and commitment is to simplify for institutions and learners the experience of engaging in 14 to 19 and post-19 education. I cannot answer the question of the noble Baroness, Lady Howe, about the amendment because it is not my amendment. However, as regards the point made by the noble Lord, Lord Lucas, on assessments, the framework for excellence is being developed by BIS and DCSF in partnership with providers. Through the performance management arrangements we aim to reduce the number of inspections that institutions have to have so that Ofsted can move towards its lighter touch approach. This is about providing practical tools, but as I said in response to the noble Lord, Lord Hunt, as regards the guidance, we are happy to give a commitment that we will be explicit about the consultation that he wishes to see.

My Lords, as I think the Minister will be aware, I detect a general view on all sides of the Committee that this is not a simple system. As my noble friend Lord Baker of Dorking put it, there is great worry that it will be a rather complicated system which a lot of people will find very difficult to operate within. However much guidance you supply, the more bodies you create, the more complex the structure automatically becomes. In a way, there is a demand—we should just have one main body, instead of trying to divide responsibilities. That has come across in a number of these debates.

I say to the noble Baronesses, Lady Sharp of Guildford and Lady Howe of Idlicote, that I recognise that there are one or two things about the amendment that render it slightly imperfect, and I will take them away to consider them. I apologise to the noble Baroness, Lady Sharp of Guildford, for not explaining at the outset that I did carefully think about the point that she raised on Monday, and I endeavoured to put it as a matter of principle and practice in moving the amendment rather than tying myself to the precise detail.

Coming back to the point raised by my noble friends Lord Elton and Lord Lucas, I sense that we are now getting before us very complicated legislation. I know that the Government have been in power for—what is it?—12 years now, and they have a lot to answer for. They keep amending, reamending and creating new bodies here and there, with new emphases. Do they not realise that they are creating more complications and more bureaucracy all the time? There must be a simpler solution and a more streamlined operation.

My spirits were uplifted when the Minister said that she agreed with much of what my noble friend Lord Baker of Dorking said. I hope that she will read the comments that he made, because I sense that they were echoed right around the Chamber. If she manages to come forward on Report with a series of amendments that present a streamlined, easy-to-understand approach that will make life less complicated, there will be general approval. Will she permit us a little cynicism and scepticism about whether that is likely to happen? As my noble friend pointed out, we are dealing with a number of ministerial responsibilities and a number of different departments, and life is getting too complicated. I am worried about the bureaucracy. Whoever is going to operate the system will need more than just guidance; they will have to simplify the system. Where better to do that than in the legislation itself, before we approve it?

So many points have been raised in what has been a valuable and short debate. I hope that the Minister will do a little bit more. I heard her say “partnership” and mention a “common assessment approach”, which I warmly applaud. I hope that she recognises that we are looking for a little bit more to try to reassure everyone who has to operate in what is going to be a very complicated field. That is the purpose of my amendment. I am delighted that it has had the effect it has, which was to make the Minister think pretty deeply about exactly what she and her ministerial colleagues are creating. Against that background, I have much pleasure in withdrawing the amendment.

Amendment 155 would require the YPLA to establish a quality control framework which includes learners, parents and organisations representing learners. I shall also speak briefly to Amendment 161, which says:

“The YPLA must ensure that learning difficulty assessments are carried out by suitably qualified persons … within 3 months”.

I declare again my interest as president of SKILL, the National Bureau for Students with Disabilities. I thank the Government again for their constructive engagement with SKILL over the summer on the guidance for Sections 139A and 140—that is, the guidance under the Act of last year. I cannot emphasise enough how useful it would be if we could see the Government’s response to the consultation that has taken place on the guidance before Report. However, even without that, I can say at this stage that, in the light of the engagement over the summer between Ministers and SKILL, it will be possible to withdraw the amendment this evening.

I would like assurances on three points to clear up one or two remaining loose ends. These are matters on which I spoke at some length when we debated Clause 40 earlier in Committee. First, I seek assurance that the YPLA will establish a quality control framework to underpin the assessment process, involving disabled learners, parents and organisations representing disabled learners, as called for by Amendment 155. In other words, the reassurance that I am seeking is that it will be put in place by administrative action if it cannot be written into the Bill. I also hope that a complaints procedure will be put in place.

Secondly, it would be good to know that a senior person will be required to sign off the Section 139A assessments, as a means of providing a framework of accountability—something that was found to be sadly lacking by the court in the case of Alloway v London Borough of Bromley.

Thirdly, I would like to be reassured that the guidance that will be produced on the Bill will indicate that local authorities should arrange an assessment of disabled young people’s learning and support needs, including their transport needs as well as wider transition planning, wherever they believe that an assessment would be beneficial, regardless of whether the learner has been assessed or supported before. In other words, I seek an assurance that all those needing an assessment will receive one. If the Minister will help me on these points, it should be possible to withdraw the amendment.

My Lords, my name is attached to this amendment, along with that of the noble Lord, Lord Low, and I heartily endorse what he has said. I will speak briefly about one category of students about whom I am particularly concerned—disabled students who do not have a learning disability assessment to start off with and who are sometimes put at a disadvantage in post-16 provision and support. We know that, quite often, those who drop out of the school system at 16 and move into the college sector are found to have learning disabilities of one sort or another. It is vital, as the noble Lord, Lord Low, said, that at an early stage in their post-16 career assessments should be made and proper provision and support given to them.

This was brought to my attention by my honourable friend in the other place, Annette Brooke MP. She had a constituent with learning difficulties who, after some time, signed up at a college to do a level 1 course. However, because by that time they were over 19, they got no support whatever. If they had been given a proper learning difficulty assessment at an earlier point, they would have been entitled to support through to the age of 25, but, as no such assessment had been made, no support was forthcoming. They were in some difficulty, although they could appeal to the college. That casework issue was brought to my attention by my honourable friend, as she felt that there was an anomaly. People do not necessarily have learning difficulty assessments but, when they get one later, they are then given the support that they need at that point, including financial support.

My Lords, here again is a classic example of where co-operation is needed between ministries. In earlier parts of the Bill, we discussed the problem of those with learning disabilities and learning difficulties who are in custody and what should happen to them. A draft National Standards for Youth Justice Services has recently been published for consultation. It talks about the standards that should be observed in young offender institutions and others. I hope very much that in pursuing what my noble friend Lord Low has recommended, with which I thoroughly agree, the Minister will make certain that, instead of having two separate systems for the same sort of people, the Ministry of Justice will be involved in close liaison with the YPLA, which has the responsibility for this. That should happen not least because, in the future, once these assessments have been carried out, as one hopes, the YPLA will ensure that something that has been identified as needing treatment is continued in custody, just as when something is identified in custody it oversees what happens in the community on the release of that individual.

My Lords, the amendments tabled by the noble Lord, Lord Low, and the noble Baroness, Lady Sharp of Guildford, show great insight and consideration for the consequences of the Bill’s provisions and reflect the desire that I detected across the Committee to promote the best quality of education. As has been explained, the first amendment would ensure that the views of learners and parents were taken into account regarding the quality of education and possible improvements that could be made. I hope that the Minister will let us know whether there is already a channel for representations from these groups and how it works. Does he acknowledge the importance of receiving the views of those at the receiving end of the new machinery to ensure that the best possible service is provided? The Committee will be aware of the various interests that I have recorded in the register, including, like the noble Lord, Lord Low, association with a number of groups that are keen to see Amendments 155 and 161 accepted.

Quality control is a necessary part of educational provision. Recent evidence from the National Audit Office’s survey Supporting People with Autism through Adulthood shows that learning difficulty assessments carried out under new Section 139A of the Education and Skills Act 2008 have been lacking in quality and that statutory obligations have not been met. Does the Minister agree that action must be taken to fix that? The NAO study showed that only 17 per cent of respondents thought that Section 140 assessments were “very useful”. That is a very low percentage. Does the Minister agree that a quality framework, informed by the views of parents and learners, might enable that figure to rise? If the Minister cannot support the amendment, it would be interesting to hear his alternative strategy to ensure that learning difficulty assessments are carried out with the utmost regard for quality.

At a recent Skill seminar, it was mooted that perhaps, as has already been mentioned, Section 139A should undergo some form of national auditing in order to ensure quality, or that there should be a system of incentives and penalties to encourage quality. Perhaps the Minister will respond to those recommendations.

We also very much support the second amendment in the group. Amendment 161 specifies that a learning difficulty assessment must be carried out by a suitably qualified person. That sounds like common sense; nevertheless, despite that being a seemingly obvious approach, the National Audit Office report that I mentioned took evidence from a student support co-ordinator at a further education college, who said that,

“the usefulness of the Connexions Section 140 assessments very much depends on the individual Personal Advisor. Many do not have specialist training in working with learners with learning difficulties or disabilities”.

Can the Minister explain that failing and expand on what he considers “suitably qualified” to mean?

I agree with the request that the YPLA must ensure that it has regard to the timely delivery of learning difficulty assessments. Does the Minister think that three months is an appropriate length of time? Does he have any figures available that might inform the Committee about how long the process normally takes? Finally on these two amendments, can the Minister update the Committee on the results of the consultation regarding draft guidance on Section 139A assessments? Can he, for example, inform us whether Skill’s concerns regarding specific mention of the YPLA, so that the guidance will reflect the agencies introduced by the Bill, have been, or will be, dealt with? I warmly support the amendments.

My Lords, first, I thank the noble Lord, Lord Low, and the agencies with whom we have dealt for all their co-operation. We have had a lot of dialogue, as was reflected in the noble Lord’s opening contribution.

I entirely agree with the sentiment behind Amendment 155 that the YPLA, when developing schemes for the assessment of the performance of education and training, should be guided by the use of learners, parents and organisations representing learners. I reassure the noble Lord about the arrangements that are already in place and will continue once the YPLA is established to ensure that the views of learners and parents are given the highest priority. The YPLA will adopt and develop the framework for excellence, which will provide a quantitative performance assessment tool with standard indicators against which to assess providers. This will include an annual learner views survey, which will enable all learners to voice their opinions about the quality and effectiveness of the learning that they receive. Consultation is already under way with key stakeholders, including the National Union of Students and Skill. I am advised that we hope to be able to issue the results of the consultation before Report.

I sympathise with the noble Lord’s concern about the issue raised in Amendment 161. We have been working closely with Skill to improve the statutory guidance given to local authorities about their duty to carry out learning difficulty assessments. We intend to issue the revised guidance, together with a report on the consultation, in the late autumn. This will be followed up by a further document in early 2010, providing guidance arising from the changes described in the Bill, once enacted.

The guidance to be issued this autumn will reinforce the importance of local authorities having a quality assurance system in place covering Section 139A assessment. In addition, it will emphasise, through the inclusion of good practice case studies, the importance of senior management accountability for the quality of the assessment. Learners and their parents and carers will have access to a local authority’s complaints procedure, an issue that was raised in this debate.

We will also ensure that the guidance sets out clearly, based on effective practice, what should be included in a Section 139A assessment, such as transport, which concerned the noble Lord, Lord Low. It will also set out who should be given an assessment. The importance of a multi-agency approach to assessment will be highlighted and examples will demonstrate wider transition planning.

Before I conclude, I shall try to deal with some of the questions raised. The noble Lord, Lord Low, asked whether someone could get a Section 139A assessment if they had not previously been assessed. There is no need for a pre-16 year-old statement. It is right that that should be so—for example, a learning difficulty may be diagnosed only later in life.

The noble Baroness, Lady Sharp, was concerned that young people without an LDA are at a disadvantage in post-16 education. Our view is that that is not the case. We make support available through the additional learning support funds and an LDA is not necessary to qualify for the additional learning support. Our figures are that there are currently 320,000 young people with self-declared learning difficulties or disabilities in FE colleges being helped and supported. I do not think that there is ever room for complacency, but important progress has been made.

One of the concerns of the noble Lord, Lord Hunt, was whether the new guidance will reflect the National Audit Office’s report on Section 139A assessments. In view of the inconsistent quality of learning difficulty assessments, we have instituted a major review of the system supporting those with additional needs. This will be conducted by Ofsted and will include issues around transition from school, assessment and support services. We will wait until that review has reported before making any changes to the post-16 assessment process, but we see that as an important issue.

I am not sure that I can answer the question about training for Connexions advisers now, but I shall do so in writing. There is training, but I share the concern that we need to have consistency in the quality of the training and advice given, because this is an important group.

The noble Lord, Lord Ramsbotham, asked whether the assessment would be the same for those in young offender institutions. I think that it should be, but I shall confirm that in writing. I am looking at the Box and am being told that it is the same assessment, so it looks like I do not have to confirm that.

With those statements and with the assurances given, I trust that the noble Lord will feel that he can withdraw the amendment.

Before he does so, can the Minister tell us a couple of things about what is going on at the moment? I think he mentioned a national learners’ survey in which every learner will be able to express an opinion. Will he tell us what that comprises, how many people contribute to it and what is done with the result? Secondly, the Minister referred to 320,000 students with self-declared learning difficulties in CFEs. What provision is made for them?

I think I made it clear that they qualify for the additional learner support funding.

I do not have such a ready answer on the national learner survey and I will have to come back to the noble Lord on exactly how that will work. I think he wants to know exactly who is participating in it and what will happen with the results. We need to come back to him on that point.

The Minister said that those without a learning difficulty assessment are not at a disadvantage. However, there is free tuition up to the age of 25 if you have a learning difficulty assessment. If you do not have a learning difficulty assessment, when you are 19 you have to start paying tuition fees. There are substantial financial advantages in having an assessment, and if young people do not get an assessment before they are 19 there can be considerable difficulties.

I have been told that the report on the annual learner survey will form part of the framework for excellence.

I do not want to dispute the noble Baroness’s point about the disadvantage of not having an assessment. I will come back to her on the arrangements that we make to ensure the point that we all believe in: that everyone has an assessment.

That reinforces the point of Amendment 155: that it is important, when the student is in the transition phase from 16 onwards and goes on to some sort of post-16 education and training, that there is a high-quality assessment of their capabilities.

We were told just before the Summer Recess that 7,000 teachers were going to be trained specifically to make these sorts of assessments. May we be told how they are getting on—if not now, then in a letter perhaps?

We will reply to the noble Lord in writing.

I thank all noble Lords for their support for the amendments in this short debate. I also thank the Minister for his very full and, I think, forthcoming and accommodating response. I asked for three assurances and I think that he has met them all. He has indicated that a quality control framework will be established; that senior persons will be involved in these assessments in order to provide a proper structure of accountability; and, perhaps most important of all, that the guidance will indicate who should receive an assessment and that assessments will not just be confined to those who have been supported at an earlier stage. They are all important points, but that may turn out to be one of the most important.

Much will turn on the guidance, and we will want to look at that. I am very glad to learn that the Government hope to make it available before Report so that we can look at it. The noble Baroness, Lady Sharp, particularly pressed on the need to ensure that those who have not had an assessment but who may still have a learning difficulty are not put at a disadvantage, and can have their needs met and be given the support that they require. As we continue to discuss the Bill, going forward to some amendments later this evening, we will find that is really quite a key issue. Discussions have been continuing on that issue, as well as the ones I have drawn particular attention to with these amendments.

We may have some distance further to travel before we have a complete unity of view between ourselves and the department on that issue—the question of support for the wider, more numerous group of students than those who have had a learning difficulty assessment. We have further to go in discussing that issue. However, regarding the particular issues I have raised with these amendments, I should like to thank the Minister again; his responses have been very helpful and, with that, I beg leave to withdraw the amendment.

My Lords, might I ask a couple of quick questions on Clause 63? I am not necessarily expecting a quick answer. On subsection (1), I am interested to know how the usual sort of charges which hang around education fare under this particular wording. Those are things like charges for musical instruments, trips, the cost of a uniform or other workwear required for particular applications. How will those fare under that wording?

Similarly, I read subsection (4) as saying that if the YPLA is providing any funding to an institution, then all the education provided by that institution is subject to this clause. If I am reading that wrong, I should be grateful for some comfort. I would also be interested to know what is proposed in the regulations under subsection (5).

My Lords, I shall do my best to respond to the question from the noble Lord, Lord Lucas. This comes about because of the raising of the participation age and the requirement that post-16 education becomes compulsory as we go forward with that. We therefore have to apply the prohibition on charging to a higher age group; that is what this clause is about.

My assumption—and I look behind me as I say this—is that charging for uniforms and musical instrument lessons will apply in the older age group in the same way as it applies at present in the younger age group. I was not getting a lot of inspiration on this, but I have some now, so I can tell noble Lords that regulations made under subsection (5) of this clause will specify what would or would not be considered as prohibited charges. We propose that the regulations will reflect the conditions that the LSC currently applies, as set out in the LSC Funding Guidance 2008/09: Principles, Rules and Regulations. For example, paragraph 47(c)(xi) of that guidance states:

“Charges may continue to be made for … travel, board and lodging”.

We therefore expect that to be included in the regulations and for that to remain the policy position. Subject, of course, to Royal Assent of the Bill, regulations made under this section will be subject to full consultation before coming into force. I am willing to give the noble Lord further information if he so requires, but as I have said, legislation passed recently to raise the participation age means that from 2015 young people will have to continue in education or training until their 18th birthday so, as far as practicable, they should not be charged for this education or training. As the noble Lord knows, this clause will place a duty on the YPLA to exercise its functions in relation to funding so that young people accessing education or training are not charged inappropriately. It is the age of the young person that is key.

My Lords, that is a helpful answer to my questions on subsections (1) and (5) but not to subsection (4). I do not expect the noble Baroness to respond to that now and I am content to receive a letter.

We now move on to discuss the position of academies within this legislation. As the Bill stands, Clause 75 allows the Secretary of State to require the YPLA to enter into arrangements with the Secretary of State. These arrangements may require the YPLA to carry out specified functions of the Secretary of State in relation to academies, city technology colleges and city colleges for the technology of the arts. We on these Benches believe strongly that the YPLA is not the appropriate body to take responsibility for the extremely important task of supporting the success of academies. According to the Government’s own description, the YPLA is a body being set up primarily to,

“support and enable local authorities to carry out their new responsibilities”.

The summary of the Bill’s proposals which the Government issued then describes how the YPLA will perform this function. It is only when we reach the final sentence on the YPLA that it states:

“The YPLA will also perform a number of functions on the Secretary of State’s behalf in relation to academies”.

That speaks volumes. From this description it appears that academies have been included under the auspices of the YPLA because the Government needed to place them somewhere. As there are around 400 academies, of course we acknowledge that we must seek the best way forward. But this is not it.

In this Bill academies have been pushed under the YPLA for no other reason than that the Government are attempting to avoid a difficult thought process. The YPLA is a body being set up to lead local authorities in their education functions in relation to those aged between 16 and 19. It therefore seems entirely inappropriate that it should also have functions relating to academies, most of which have pupils between the ages of 11 and 18; some even have primary schools attached. Surely the Minister can see that the YPLA is therefore entirely inappropriate for academies. Will she inform the Committee of any other ideas that were raised regarding the status and position of academies?

The academies have raised serious concerns on the issue of independence, and our amendments attempt to alleviate them. Amendment 162 would mean that the Secretary of State can enter into an agreement with an academy only if it has agreed. Amendment 163 would require the YPLA to support the objective of academy autonomy when exercising the specified functions on behalf of the Secretary of State. Amendment 164 would insert a right of appeal if an academy believes that the YPLA has made an unreasonable decision. Amendment 166 would provide exemptions by removing the power to specify that particular functions may include those set out in Section 482 of the Education Act 1996 dealing with the setting up and running of academies, and Section 35A relating to academies and land. Amendment 168 would remove the power of the YPLA to enter into any agreement with the Secretary of State connected with the issue of monitoring and assessing school performance. This is a job for Ofsted. If the Government feel that Ofsted is failing in its duties, any changes introduced should surely be to improve Ofsted itself.

My Lords, it has been extremely helpful to hear what a Conservative Government would do with the academies should they be given the confidence of the electorate at some time in the future. But I turn to what the Government have done to them. It occurs to me that they have created a monster. It might be a benign monster in many ways, but it is a monster. They started with a few academies, which became tens of academies and then hundreds of academies. I absolutely agree with the noble Baroness, Lady Verma. It is clear that Part 3, Chapter 4 is designed to do something about the quandary in which the Government find themselves. You cannot run 400 schools from the department. It seems to us, as it does to the Official Opposition, that it has been very much an afterthought to put the academies into YPLA’s portfolio of responsibilities, and that it is not necessarily the best place for them.

Many academies do a very good job for children, but that is hardly surprising, because most of them are shiny, wonderful and beautifully resourced new schools. They attract the best teachers and parents who take a lot of interest in their child’s education and who would choose to send their child to these schools. Those circumstances in any school would lead to considerable success. We congratulate the schools and the children on that success, but our vision is of an education system that is a service to the whole community—not only to the children who are at the school at the moment, and the parents of those children, but to the children who will come down the track seven years later when the present cohort of children has gone. We therefore see the local authority’s role as somewhat more important, as the democratically elected representative of the whole community. That is why our vision of the academy system is slightly different from that of the Official Opposition.

We would like local authorities to be able to bring academies more closely into the local family of schools, with more co-operation between them. Although I am happy with the idea that the noble Baroness has just outlined in Amendment 169ZB—that there should be a review of academies legislation 12 months after the commencement of the Act—I would like that review to include the effects of an academy on other schools in the neighbourhood and to talk to local authorities about whether they wanted academies in the first place. As we all know, the only game in town these days if you want a new school is to have an academy, or you simply will not get the funding.

As for our Amendments 165 and 167, the noble Baroness, Lady Verma, expressed concerns about the YPLA’s ability to control the funding of academies. This matter was discussed at length in the Public Bill Committee in the other place. The Minister, Jim Knight, stated:

“we have no intention of requiring the YPLA to enter into funding agreements with academies … Even if we did want funding agreements to be negotiated with the YPLA in the future, by law the contracting party would still be the Secretary of State. Therefore, the Secretary of State and the Department will take an active interest in any funding agreements for the setting up of academies”.

“Take an active interest” is a very strange expression if you are contractually involved in an agreement. However, he continued:

“My understanding is that the only academy funding agreement that can be undertaken is the one between the Secretary of State and the academy sponsor. It is therefore not possible for the YPLA to enter into such an agreement”.—[Official Report, Commons, Apprenticeships, Skills, Children and Learning Bill Committee, 19/3/09; col. 448.]

So the impression of the Minister in another place of what the Bill will allow the YPLA to do in relation to funding agreements is clear.

However, the NUT, which has briefed us about these two amendments, has had its legal eagles look at the Bill. They feel that a coach and horses could be driven through Clause 75 on this matter and that an ambitious YPLA could enter into such an agreement under the Bill. All we are asking in Amendments 165 and 167 is for the Government to close that loophole and to make it absolutely clear that the Secretary of State has the contractual responsibility and that the YPLA cannot do it. These are technical amendments—they are not principled amendments, particularly—on a matter that needs to be put right.

As to the amendments moved by the noble Baroness, Lady Verma, we feel that the arbitration referred to in Amendment 155B may be quite useful if there is a local disagreement on sixth-form provision. We feel that, if Amendment 162 were put in, there would be no need for the YPLA to have the responsibility, so we do not see the need for it. On Amendment 164, we believe that a right of appeal is reasonable, should the academies feel that the YPLA has made a decision that is unreasonable in the circumstances and we would support that. On Amendment 168, we agree with the noble Baroness, Lady Verma, that monitoring and assessment of school performance is Ofsted’s job and not that of the YPLA.

The Minister has an amendment in this group, Amendment 169. We were pleased to see that and we welcome it. It relates to not including functions of making, confirming or improving subordinate legislation. We feel that these matters are so important in the picture of secondary legislation in this country at the moment that such things should certainly come back to Parliament; the YPLA should not be able to do them. I have already mentioned Amendment 169ZB regarding the annual review, in which we would want to include the effects on the wider school family, not just the academies, albeit that many of them do a very good job.

A Liberal Democrat Government would not get rid of academies; I should like to make that clear—not that we are necessarily expecting it to happen. As I said, we have a public service here for the whole community and it is vital that the democratic representatives of that community should have an appropriate say in the range of schooling that is offered to children and that no children are disadvantaged by the presence in their midst of these schools, which are quasi-independent but funded by the state. Many of them are very good, although some of their selection processes have, shall we say, given rise to questions in the past.

My Lords, when we are concentrating in these amendments on the technical arrangements—indeed, this part of the Bill gets into technicalities—it is worth reflecting on why it is important that academies have autonomy. We are making an assumption that it is a good thing that they are independent and autonomous and perhaps we should remind ourselves why that is so important.

We have at the moment probably the greatest disparity in our nation’s history between the performance of children in the poorest schools and those in the best schools. It is appalling that we still have a considerable number of schools where very few children—fewer than 20 per cent—attain the necessary five good GCSEs whereas others are regularly attaining 92 per cent, 95 per cent or 98 per cent.

For many decades now—in fact, for over a century—the local authorities have been in charge of local authority schools in the most deprived areas and we have not seen any improvement. I remember vividly, in my days long ago as a chief inspector, that when we were asked by the then Secretary of State to prepare a map of the most deprived areas of cities, and after we had worked away for many months doing so with the advice of all our troops out in the field, one of the clerks responsible for mapping pointed out that the maps exactly overlaid those of the 1930s. Schools in exactly the same areas had been designated as areas of extreme disadvantage educationally 40 years later.

Something drastic is needed, rather than just encouraging local authorities to make every school a good one. I am tired of hearing that; I have heard it for 30 years. They have not succeeded in doing so. I am a great supporter of local authorities—local education authorities have been huge contributors to the quality of education over the years—but they have not cracked the issue of areas of extreme educational and social deprivation.

However, the academy programme has begun to do that. I declare an interest as a trustee of Bacon’s, which is a Church of England academy that has over recent years made astonishing changes to the lives of hundreds of children. The Harris academies in south London have so far turned around the lives of more than 18,000 young people. That is why it is desperately important that academies are allowed to experiment and innovate. They should be allowed to bring in different hours of schooling, as many of them have done, and different contracts for teachers, requiring them to do more in different things, as well as bringing in different areas of the curriculum which may not be in the national curriculum. All those freedoms, quite apart from their shiny new buildings, have enabled the academies to turn around the lives of many thousands of children. Of course, we support the programme and want to see it vastly expanded, with far more than 400 academies, but we also want to see the absolute autonomy of those schools to perform differently from local authority schools and to tackle a problem that has remained for over a century.

Just to put shiny new schools in perspective, it is important to remember that what actually delivers a first-class education is a first-class teacher, not a first-class building. My noble friend’s first amendment deals with sixth forms. The presence or absence of a sixth form in a school affects not only the attitudes of children at the school but the calibre of staff that are attracted to it. Therefore, the award of a sixth form is an integral and important part of setting up an academy. My noble friend thereby addresses a very important point. A local authority, faced with a choice between an academy and preserving a successful sixth form, could condemn the academy and its much wider effect to failure—or it might not come into existence, simply because it was denied a sixth form. Some form of arbitration independent of the local authority is absolutely essential.

My Lords, I am delighted to respond to an extremely important debate. With the Committee’s forgiveness, I will take time to go through the points that have been raised. In some ways, I am speaking to the Committee, but I also speak to those outside the House who have made a great contribution to the education of children and young people in this country through their involvement in the academies movement.

I strongly believe that this Government have made a hugely significant impact on school improvement in this country. There is absolutely no doubt in my mind that we have transformed the performance of our schools. Back in 1997—although I do not have the exact numbers in front of me—the number of schools that failed to achieve more than 30 per cent of pupils with five good GCSEs was measured in thousands, whereas now the number of schools qualifying for national challenge status is well down to the low hundreds. Academies have played an extremely important part through their innovation, strong leadership and fresh resources, as well as through the work that they do. I pay tribute to them, their leadership and their sponsors—and, of course, as the noble Lord, Lord Elton, reminds us, to the teachers serving in them.

I hope that I can give the noble Baroness, Lady Walmsley, some reassurance, too. She asked whether we could put right some of her concerns. I hope that, if I can make some of the tweaks that she mentioned, I can look forward to her support in taking forward the new shape of the clauses that would flow from those tweaks.

I am delighted that there is a perception that middle-class children are attending academies, but I want to remind the Committee that academies have a higher proportion of children who are entitled to free school meals. They serve, as the noble Baroness, Lady Perry, explained so eloquently, some of the most deprived and challenged communities. We strongly support the work of the Harris academies, to which she referred. I repeat that there is nothing that we are doing that would inhibit the great contribution that academies have made and will make in the future.

I believe that I can offer the reassurances that noble Lords are looking for. As we have heard, the provisions in this Bill are designed to help us to move forward towards our target of 400 strong, high-performing academies. We are committed to preserving all those innovations in academies and the autonomy that has made them so successful in delivering better outcomes for pupils. We do not believe that the proposals will undermine that success. I want to explain how they will, in fact, strengthen the academies programme and enhance the support that we are able to offer academies.

These provisions are enabling. They allow the Secretary of State to make academy arrangements with the YPLA; they do not require him to do so. We know that some sponsors and principals have doubts about how the arrangements with the YPLA will work in practice, particularly, as we heard from the noble Baroness, Lady Verma, in connection with the commissioning of sixth-form places. I understand that we have to provide reassurance at this stage. I accept that this a new way of operating. However, we are strongly committed to consulting academies on the details to make sure that we get this right.

Over the past few months, we have held a number of consultations and meetings with those concerned and will continue to do so. We have established a reference group of academy sponsors and principals—it has already met and is scheduled to meet again tomorrow—which will focus in particular on sixth-form commissioning and funding. We will also consult widely with sponsors, particularly those running a number of academies where their particular expertise has a lot to offer. We want to hear their specific concerns so that we can address them and clarify any uncertainties.

I can commit to providing, by Report, an outline of what we plan to include in the Secretary of State’s policy guidance to the YPLA in relation to academy arrangements. That outline will also set the key principles that should govern the way in which the YPLA operates in relation to academies. I would expect those principles to include absolute respect for the autonomy of academies that noble Lords have spoken about.

In the other place, both the Conservatives and the Liberal Democrats said that the current way of working was unsustainable—we have also heard that today—and would not ultimately serve the long-term needs of academies. We have heard in detail about that. Sponsors also agree. Dan Moynihan, the chief executive of the multi-sponsor Harris Federation, said in the oral evidence sessions, as many noble Lords will have read:

“It makes sense for the Department to have an agency to take care of academies. Clearly the Department was never meant to be a local authority, so we are perfectly happy with that”.

There is common ground among us that the department should not end up being the biggest education department in the country.

May I ask just one question? How can it be right to say that the YPLA will be the chosen agency for academies, which I think is what the noble Baroness said, and not have it in the Bill?

I think it is in the Bill. The concern that noble Lords are voicing is that academies and academy sponsors are looking for a fuller explanation of how the relationship between the Secretary of State, the YPLA and the academies will operate, and more clarity about, for example, how matters would work if there were disagreements between the various parties.

My Lords, I think that the noble Baroness said that it was on the face of the Bill in the form of an enabling possibility. I think that she went on to say that enabling means enabling; it does not necessarily mean that it will take place. Parliament may well normally expect enabling legislation to come forward in some way in the future, but for a matter as important as this it would be much better if, by Report, some flesh was put on the bones of enabling legislation so that we could see what was intended statutorily.

My Lords, I am trying to be extremely helpful and accommodating. I am sure that the work that we will do between now and Report will be as helpful as possible. I hope very much that I will be able to satisfy the noble Viscount. I am very happy to discuss the matter further with him before Report to ensure that that is achieved.

I thank all noble Lords for their contributions. The noble Baroness, Lady Walmsley, obviously supports the academies’ success. We all share her concerns about the schools that are still underachieving. That is why we on these Benches believe that all schools should be able to free themselves from local authority control. However, we should remind ourselves that some academies serve underachieving communities and have raised educational attainment in some communities. My noble friend Lady Perry set out fluently the difficulties that academies have faced and the situations that they have managed to turn around in some of our most deprived areas. My noble friend Lord Elton mentioned the difficulties that some academies are already facing in respect of sixth-form provision. As ever, my noble friend Lord Eccles raised the serious technical points that the Bill seems to overlook.

I listened very carefully to the noble Baroness’s response. I find it incredibly difficult to understand why the Government believe that academies have to be delivered through the YPLA. I am pleased that the Government will meet representatives from the academies movement tomorrow and I look forward to hearing about the outcome of that meeting. However, I remain thoroughly unconvinced that the Government’s response meets our concerns. I shall read very carefully what the Minister has said but I assure her that if we do not find the government amendments satisfactory we shall return to the relevant amendments on Report. I do not think that anyone on this side of the Committee is convinced by the Government’s arguments. I beg leave to withdraw the amendment.

I move Amendment 156 and speak to Amendments 157, 158, 159 and 160. There are, so to speak, two separate sets of amendments within these four amendments, and I wish to speak separately to Amendment 160. Amendments 156 to 159 pick up the theme that I developed when we discussed the YPLA on Monday. Essentially, we talked then about the YPLA being a more friendly consultative body, but it is, of course, an appointed body. At the moment it is appointed largely by the Secretary of State although, as we indicated, we would like to see a wider representation in the membership of that body. The fundamental question behind this issue is whether an appointed body, the YPLA, should have the power to issue directions to elected local authorities. Our amendments seek to ensure that the YPLA is not a dictatorial body but is a consultative, friendly organisation working in partnership with local education authorities. If it needs to issue directions, as distinct from guidance, it must work through the Secretary of State. An elected Minister can tell an elected body what to do. Amendment 159 deals with complaints. Complaints should be directed to the Minister, who can then take action. The purport of these amendments is to make clear that directions should come from the Secretary of State, not the YPLA.

Amendment 160 falls into a completely different category and comes from the Association of Colleges. The new system of funding for 16 to 19 provision by local authorities, via sub-regional groups and the Young People’s Learning Agency, could potentially be very complicated and increase the likelihood of delays occurring or genuine mistakes being made. The overall aim of the system must be to ensure that colleges and schools can plan and provide education and training for their students in an efficient and timely manner.

When we discussed the first group of amendments this afternoon, we talked about the complications that will arise from the number of bodies that a further education college will have to deal with in terms of the YPLA, local authorities and others. However, colleges already deal with a large number of authorities. They deal with the HEFCE and employers with regard to apprenticeships, so they are dealing with a large number of different funding streams, and I greatly admire the way in which they do so. However, over the past few years the main funding stream for most further education colleges was undoubtedly the LSC. There have been problems with LSC funding because the colleges’ academic year starts in September but the financial year runs from August to the following August. Therefore, by the end of July, you need to have your budget in place for the following financial year. The aim has always been to get the final figures from the LSC by the end of March or the beginning of April. However, over the past few years these figures have not come through in many cases until the very end of July. Even when colleges are dealing with only one funding authority, the LSC, they are experiencing great difficulty in getting their future budgets agreed. Negotiations often continue right through to 31 July.

The new system will be even more complicated. To date, colleges have negotiated only with the LSC. I have received a letter from the chief executive of the Association of Colleges. The letter states:

“To remind you this is the process through which funding will reach Colleges”.

It is a seven-step process. The letter continues:

“The YPLA will help local authorities to carry out their new responsibilities by developing a national framework to support planning and commissioning, ensuring coherence of plans, managing the national funding formula and providing strategic data and analysis.

Each local authority will assess supply and demand for 16-19 provision in their area.

Each local authority will then take this assessment to one of the sub-regional groups of local authorities, of which it will be a member. This group will agree the commissioning plans for their sub-region.

The plans will then be agreed by a regional planning group which will scrutinise the local plans and ensure they are coherent, can be funded within the regional budget and will deliver the 14-19 entitlement.

Regional Government Offices ‘will contribute to discussion of regional priorities and support local authorities in undertaking their new responsibilities. They are, and will continue to be, a conduit for information to flow from sub-regional groupings … to DCSF’”.

That came from a parliamentary Answer on 18 December last year.

“They will also have a role in assessing performance of local authorities.

The YPLA will check these plans to ensure that they cohere and are affordable and then fund local authorities appropriately. The local authorities will then pass the funding to Colleges”.

That is the seventh step.

Whereas to date you are negotiating with the local LSC and it is finding it difficult enough to agree your budget for the coming 12 months, in the future you are not only going to have to negotiate with your local authority, you are going to have to go through the local authority to the YPLA, the YPLA is going to have to go to the sub-regional groups, the sub-regional groups are going to have to go to the regional groups and the regional groups are going to have to cohere with the government offices. They are then going up to the YPLA and will have to be checked at the YPLA, and then it all comes back down to local authorities.

When I was teaching economics, one of the courses I taught was about the Soviet Union and the Soviet economy. It was in the old days of the 1970s and 1980s, and there was an organisation known as Gosplan. One of the problems that the Soviet Union faced in those days was that every decision taken locally had to go all the way up to the top at the Moscow office of Gosplan and then come all the way down again. The process took a very long time. Perhaps one sees this today in some of the consultants who are around in the further education field. There were a lot of fixers, whose job it was to speed the process along and to try to make sure that these things actually worked in the end. We all know that the Soviet Union collapsed partly because of the sheer inefficiency of its economy. It is quite reasonable that colleges should wish to have some way in which, if they are not getting the information that they need out of their local authorities, they can go directly to the YPLA. Amendment 160 says precisely that:

“A further education college may inform the YPLA if it is satisfied that a local education authority is failing, or is likely to fail, to perform its duty under section 15ZA of the Education Act 1996”.

That is really saying that it should be able to talk directly to the YPLA rather than necessarily waiting until the local authority comes back.

The Government must recognise how difficult it is for organisations such as further education colleges, which do not have assurances. The Government have given the university sector a three-year forward assurance on its funding. The further education college does not have these assurances. It has to negotiate its funding, because it is being commissioned by a lot of different organisations. The core 16-to-19 function will now come from local authorities, and they will be the key commissioning agents. This will be a huge block of money for the college sector. The rest of the sector, which is demand-led, is totally uncertain. It comes through employers and individuals who decide whether they are going to attend courses at that college. There is gross uncertainty about that, and the college has to make best guesses as to how much it will be attracting people to courses in the following year. Colleges are enjoined to break even, as are all public sector organisations. It is very difficult to break even in those circumstances.

The amendments say, first, that if there is an elected authority, direction should come from the Secretary of State not from the YPLA and, secondly, that the Government should have some sympathy with the college sector and allow it to be able to talk directly to the YPLA if it thinks that the local authority is not fulfilling its function. I beg to move.

My Lords, before we get into the general debate, it was not just Gosplan that had a system like that. It was the same under the ancien regime in France. De Tocqueville has in almost his first chapter an illustration of how that went wrong, by giving an account of a curé who applied locally for the replacement of a tile on the roof of his chancel. When the answer came back, the roof had fallen in. It would be a great pity if the Government were to attempt that sort of retribution.

My Lords, when Hansard comes out tomorrow, I shall cut out the speech made by the noble Baroness, Lady Sharp, and pin it on my wall so that I at last have an explanation of how the system is proposed to work. Listening to her, not being a historian, I was reminded of a recipe for cooking capercaillie, where you go through endless stages to remove the overpowering stench of pine needles and to render the incredibly tough flesh delicate. The last step is always to throw it in the dustbin.

My Lords, briefly, I will come back to Amendments 156, 157 and 158. I strongly support what the noble Baroness, Lady Sharp, said. The YPLA is an entirely inappropriate body to have the power of direction. It is doubly inappropriate because it would be an unelected body giving directions to elected bodies. Since it would not issue a direction unless it had a memorandum from the Secretary of State saying that it was all right to do so, I do not think you should send the boy in to do the man’s job. If this amendment were brought to a vote, I would support the noble Baroness, Lady Sharp, with great enthusiasm.

It is rather difficult to follow those four speeches. It has been an interesting journey through the history books and the cookery books. I agree with my noble friend Lord Eccles that in many ways we all agree with the noble Baroness, because she has given the Government a real test. I am slightly bemused, if I can add to the questions, about how the YPLA is going to satisfy itself that a local education authority is failing or is likely to fail. Clause 65 does not give us much indication of the process. I agree with the noble Baroness that, as she has quoted from the chief executive of the Association of Colleges, the whole process seems to be lengthy, complex and difficult, with an over-riding question mark over whether the YPLA is the correct body to be saying whether a local authority is failing.

I wonder whether the Minister could explain how all this is supposed to work. Presumably, he is the author of all this. He may immediately seek to disown it and pass the buck to one of his ministerial colleagues; but presumably Clause 65 is all his idea. He owes it to this House to explain, first, why, but, above all, why the YPLA. I agree with my noble friends Lord Eccles, Lord Lucas and Lord Elton that it does not seem to make sense. He must have thought through how it is all going to operate.

The initial amendments mean that those at the forefront of delivering the services should be able to inform the YPLA if they think that the local education authority is not up to the mark. However, I am particularly concerned about the worries expressed by the Association of Colleges. There is no doubt that colleges should have the right to appeal directly to the YPLA; but again we have the overriding question: why the YPLA?

My Lords, I particularly support Amendment 160, although the other amendments reinforce the considerable concern that there is on the matter. The Association of Colleges has informed a number of noble Lords about its concerns, and has done so in a very reasonable and tolerant way, particularly with regard to Amendment 160. It says that some local education authorities will be able to cope with all this, and will not have the problems that we anticipate in a number of other authorities. However, the association’s point is that if something goes wrong, there will be a need for a much speedier process. As the noble Baroness, Lady Sharp, pointed out, it will be crucial—especially in these economic times, which will reinforce the problem—that colleges get the funding in time to continue to provide the courses that have been approved. I very much support this. The Association of Colleges has made an excellent case in the detail it has set out, which was delivered to us today and referred to on Monday. It sets out the case beautifully of why the whole thing has become incredibly bureaucratic. Whether or not the whole system is redesigned, we all believe that there is a big challenge to the Government to think through the whole process.

My Lords, I, too, have enjoyed the journey through history. The YPLA was gaining in powers as the debate went on—a mixture of the Supreme Soviet and the ancien regime. I can reassure the House that the Supreme Soviet disposed of its ancien regime, which solved that problem. Of course we do not want to recreate that monster, or try to reproduce Gosplan, because we know that that would inevitably result in failure.

Amendments 156, 157 and 158 concern the powers of the YPLA to intervene where a local authority is failing in its commissioning duty. I believe that there is agreement on all sides that, while we would expect that in the overwhelming majority of cases local authorities will fulfil their duties effectively, we need a backstop to protect the interests of young people and providers in case any authorities run into difficulties. Sometimes, as we know, local authorities do run into difficulties—a fact that has been mentioned here this evening. It is most appropriate that this power sits with the Young People’s Learning Agency. The YPLA will be involved already in supporting local authorities and subregional groups through the commissioning process, and so is closer to where decisions are made than the Secretary of State.

To ensure that local authorities have a clear understanding of the circumstances under which they may be subject to intervention, and that there is appropriate oversight at a ministerial level to ensure that no question of a democratic deficit can arise—I know that that concerns some noble Lords—we have built in a range of safeguards governing the use of the power. The YPLA is required by Clause 71 to produce an interventions statement. There must be consultation on this statement with all appropriate bodies, which will include local authorities. The statement must be approved by the Secretary of State. Furthermore, under Clause 65(4), the YPLA must consult the Secretary of State before exercising its power of intervention under Clause 65. It is not a case of some kind of semi-supreme soviet riding roughshod over local authorities on a whim: there must be an interventions statement and, before the YPLA can exercise that power, it must consult the Secretary of State.

On Amendments 159 and 160, we are committed to ensuring that colleges and providers have a route of appeal against decisions that affect them. Details of the process will be included in the national commissioning framework. We are committed to ensuring a process that addresses all concerns in a timely fashion, and I can assure the noble Baroness, Lady Sharp, that we are working with stakeholders, including the Association of Colleges, to ensure that the administrative processes reflect the requirements of all those involved. We anticipate that, while in the first instance appeals will be dealt with as close as possible to where the decision took place—that is, with local authorities, and with suitable escalation routes set out—the YPLA will be aware of any appeals made. It is not the case that the colleges will have no right of access to the YPLA, which will provide a facilitating role, including proportionate support and challenge where appropriate.

There is understandable concern among some people involved in the commissioning process about the level of complexity. I thank the noble Baroness, Lady Sharp, for reminding us that, despite the dire predictions of doom and open warfare from the noble Lord, Lord Baker, colleges currently negotiate with a number of different authorities. We have no desire to make this more difficult. However, to ensure that there is timely agreement on budgets—something that understandably concerns the noble Baroness, Lady Sharp—we are committed to issuing figures to providers by the end of March. We are committed to setting budgets by 31 March each year. While the timing of the new system is still being consulted on with partners, nothing suggests that the 31 March deadline cannot be met.

While it is true that there are seven stages—I thought that we were going through the Creation as the noble Baroness recounted them—a number of those processes will be conducted in parallel.

I have already addressed the concern of the noble Baroness, Lady Sharp, about whether colleges can get information from the YPLA if they are not getting it from their local authority. The answer is that they can. Colleges are the source of the data that the YPLA will use to inform the local authority commissioning plans, so they will have access to them.

I hope that I have given sufficient assurances. I cannot confirm the suggestion of the noble Lord, Lord Hunt, that I was the author of all of this—I am far too modest to claim that. However, as part of the supporting cast, I support the proposals. We have endeavoured to satisfy the concerns expressed by the noble Baroness, Lady Sharp. I hope that, on the basis of these assurances, she will withdraw the amendment.

My Lords, I thank the Minister for his reply, but, if I may say so, in both cases he misses the point. The key issue expressed in the first four amendments is not that there is any objection to the fact that there may be an intervention process—we recognise that there must be a fallback position and are not objecting to Clause 65 as such. What the amendments are saying is that an elected authority with the power of the electorate behind it is the appropriate one. There are many procedures for consultation with the Secretary of State—you must issue an intervention statement and so forth—so it is right that the Secretary of State, who has the legitimacy of being elected, issues a directive to an elected authority. The YPLA is just an appointed authority—this is the point. The Minister’s answer does not address that. It is a minor thing. The YPLA has to go to the Secretary of State and justify issuing a directive. The Secretary of State has to say, “Okay, you can issue a directive”, so we might as well have the Secretary of State issuing the directive. It is a matter of constitutional legitimacy, not a question of whether or not there should be intervention.

In relation to the colleges, again it seems that they seek to cut through the bureaucracy. There may be occasions when local authorities miscalculate the figures, do not commission enough provision; or when there is genuine disagreement about funding. Colleges will then have to go through the normal local government complaints procedures if they wish to appeal against decisions. As we know, such procedures can be lengthy and bureaucratic, and it is important that funding is in place for September. The Minister says that the Government are committed to the budget being set by 31 March. The LSC is also committed to that, but the budget is often not in place by 31 July. How can you guarantee, when you have this complicated procedure, that your budget can get set?

This is a mild amendment. Having read Martin Doel’s letter I am surprised at how mild it is. All it asks is to enable colleges to talk directly to the YPLA to sort out an issue. I shall go away and contemplate the Minister’s totally inadequate answers.

If the Government are minded to have a right of appeal, why do they object to putting it in the Bill but wish to leave it to the national commissioning framework? The other thing that puzzles me is: in the sequential process described by the noble Baroness of A having to tell B, having to discuss with C, having to tell D and having to discuss with E, how can those stages be carried out in parallel?

I regret that the noble Baroness felt that my answer was totally inadequate, but I believe that it addressed the concern. Perhaps it hinges on the question of requiring the YPLA to produce an intervention statement. There has to be consultation with all the appropriate bodies on the statement. I thought that that would be welcome. After all, the noble Baroness complained about the overweening power of the YPLA, and that consultation on the statement should include local authorities. The intervention statement has to be approved by the Secretary of State. We are setting the backdrop, which is important.

The noble Baroness, Lady Sharp, was concerned that I had indicated that somehow the YPLA must consult the Secretary of State before exercising its powers of intervention and that that was merely some perfunctory process. Clearly it is appropriate that the YPLA should make the first assessment on whether intervention is necessary as it is closer to what is going on. But consulting the Secretary of State is certainly not a perfunctory process before it can exercise its powers of intervention. I hoped to convey that it is an important part of the process, not just a matter of, “We are consulting and expect you to agree”. We believe that we have involved the Secretary of State in the important decision. The noble Baroness is right to stress the importance of involving elected rather than appointed representatives.

I am finding it very difficult to understand the Minister’s argument. Amendment 156 merely rewrites subsection (2) so that instead of saying that the “YPLA may give directions”, it proposes that the Secretary of State, on a recommendation from the YPLA, may give directions. I am not sure why the noble Baroness, the Minister, is objecting to that. The Minister seems to be saying that it is right that an elected official should make the decision, but under the clause it is not the Secretary of State who makes the decision. It states:

“The YPLA may give directions”.

If the Minister were to address that point we may make a little more progress.

Apart from the worrying change of gender that I achieved during that contribution, I never felt a thing. I did something similar to the noble Lord, Lord Addington, last night, so it may be something in the water.

We think that we have the balance right but we want to address the concerns. We will reflect on the point that has been made as I hate being described as totally inadequate. The noble Lord, Lord Elton, raised two points. We believe that the detail of the process is appropriate for the national commissioning framework. In relation to his second point on the stages, I am assured that some of the processes will take place in parallel. Rather than trying to explain the parallel process we shall include it when we write to noble Lords. We have to address the genuine concerns. We do not want a process that is overcomplicated or one in which authorities cannot meet the deadlines, with the impact that that will have on colleges. We have to bottom it out, and when we write to noble Lords, we hope to give some reassurance on the nature of the process which will not reflect Gosplan or even the Ancien Regime. With those assurances, I hope that the noble Baroness will withdraw the amendment.

I shall try to be helpful. I shall speak about directions several times in subsequent amendments. Directions raise constitutional issues; they are not issues of process only. Directions are not subject to any parliamentary procedure, and when given people must comply. There is no room for manoeuvre and directions classically are not the subject of negotiation. If the Bill team, with whom I have had exchanges about directions, were to look at Craies and Bennion for the constitutional position of directions, they will find that they have been used for administrative matters, such as Treasury accounting and other matters of that sort, and as a power of last resort, which the Minister referred to. But it has to be last resort, and not in the middle of a normal set of transactions if we are to stay somewhere near the constitutional precedent.

It would be interesting to have a series of precedents about non-departmental public bodies having the right to give directions with which local authorities must comply, but I am not aware of such precedents, and what is included in the Bill is very unusual if not itself a precedent.

I am grateful to the Minister for being prepared to take away this first batch of amendments. It is an issue of constitutional legitimacy and not a question of objecting to the procedures. We can ponder on these things. It strikes me that they are mild amendments. On Amendment 160, will the Minister reflect on whether we need some means in which a college can try to short-circuit what have been long-winded procedures of one sort or another?

As I said, we will reflect. The Minister does not need to write to us further about the procedures. We have had masses of paper about how the YPLA will operate and we do not need the Bill team to write us yet another set of letters. We will ponder on it further, because the AOC is legitimately concerned. With that, I beg leave to withdraw the amendment.

My Lords, I want to raise a small question about the interpretation of Clause 73(4). There is a very helpful section in the guidance notes, which state:

“Under subsection (4) directions under this clause may not relate to the funding of activities carried on by particular individuals or bodies. For example, the Secretary of State could not require the YPLA to fund a particular provider to deliver a particular course in respect of a young person”.

That is understood, but the subsection itself concludes,

“in respect of a particular person or persons”,

so my question is: where does that place the boundary? Clearly, a direction to give more money to Hills Road Sixth Form College would be prohibited, but is a direction to give more money to sixth-form colleges generally prohibited? If that is allowed, is a requirement to give more money to sixth-form colleges in Cambridge allowed? If that is allowed, what about giving more money to sixth-form colleges in Winchester, of which there is only one? Then the Secretary of State could give a direction that goes against the subsection. The logic of the subsection seems to flow ever outwards, so that there is no limit to the prohibition that it places on the Secretary of State in giving directions, unless he directs something that has no implications for any class of providers. It is not only individual providers or individuals who are referred to, he cannot give a direction that relates to a class. For instance, he cannot say that more money should be provided to support the international baccalaureate, because that is, in a way, designating a set of colleges and therefore falls foul of the subsection. It is a technical question: where does the boundary lie? Under the clause, where is the boundary between what the Secretary of State is allowed to do and what he is not?

I put the question in quite a different light. It concerns not different classes of provision, but different classes of recipient. The question is whether people have to achieve a certain age before they could study a subject. It may be intended to eliminate a particular individual, but it appears to limit any general direction such as that.

But, my Lords, I think that paragraph 59 of the notes covers the corporate as well as the individual use of person.

It could do.

My Lords, the clause gives the Secretary of State powers to direct the YPLA. He may give the YPLA directions containing objectives at any time when it has either failed to discharge a duty imposed under this or any other Act or has acted or proposes to act unreasonably with respect to the performance of any of its functions. He may give it other directions about its performance. In giving directions, the Secretary of State may set time limits within which they are to be complied. Directions may also relate to the management of the YPLA.

Directions may not relate to the funding of activities carried on by individuals or individual bodies, so the Secretary of State cannot require the YPLA to fund a particular provider to deliver a particular course in respect of a young person. That is to ensure that the YPLA can retain responsibility and accountability for individual funding decisions, without influence from the Secretary of State. The clause is essential to enable the Secretary of State to exercise an appropriate level of control over the YPLA, as one of his agencies—surely an important point—and is a consistent provision across many NDPBs.

To address all the points made: yes, on direction to a type of college, and no to individual colleges. I commend Clause 73.

What the noble Lord has said agrees exactly with what is in the Explanatory Notes, but it does not seem to agree precisely with what is in the Bill.

My Lords, at least we are closer to a starting point. The Minister says that classes of college can be allowed. As I said, if the class of college is sixth-form colleges in Winchester, that is a class of one, so the Secretary of State is thereby giving a direction concerning an individual college, an individual person. That is my difficulty: if we allow the direction to apply to classes, a class can consist of one, so he can get round the prohibition by defining a class of one. If we do not allow classes, an enormous area of discretion is off-limits to the Secretary of State. I do not require an answer now, but I would very much like an answer in writing.

My Lords, this is one in a series of probing amendments designed to elicit from the Minister the reason why the chief executive of skills funding has been enshrined in legislation, but the Skills Funding Agency as an organisation has not. We simply want to understand the Government’s reasoning why, while the Learning and Skills Council was set up as an NDPB, and the YPLA is to be accorded that status, the Skills Funding Agency is not.

The 157 Group, for example, has expressed a desire to see the Skills Funding Agency established as an NDPB. It is worried that it is highly unusual for a funding agency not to have an independent board to oversee the progress and accountability of its work. Its concerns are that the body will be too closely tied to government and that any serious matters will have to be raised straight to the level of a government department. Therefore, instead of being an independent CEO, the chief executive will simply be a cog within, and subordinate to, the machinery of government. Does this not worry the Minister? Furthermore, as insufficient detail is included in the Bill, it would be useful if the Minister could explain what he envisages the structure of the SFA will be, what he considers to be its main functions and how it will carry them out.

We need to probe this area because it was discovered in another place that the Government had indeed considered giving the SFA this status. It would be useful to learn from the Minister the reasons why this approach was rejected. The constitution, legal status and board of the SFA are not included in the Bill. Is the Minister unconcerned that this means that the structure can be altered on the whim of a Minister without any reference to Parliament?

In addition, perhaps the Minister could inform your Lordships of the current practical position of the SFA. Is the senior management team in place? Could he give us details of any shadow running of the SFA, which is currently happening with the YPLA? We are concerned that the closing date for applications to head the SFA has long since passed. Can he confirm that no appointment has yet been announced? If that is correct, can he explain why, especially in view of the fact that there is already a chief executive of the YPLA? It seems that operations are perhaps running rather behind schedule. Does the Minister have any details of the timetable that he can share with your Lordships? Can he at least tell us how many months behind schedule the SFA is running at the moment?

Because this is a clause stand part debate, we have no Motion to move and it is for any noble Lord to speak.

My Lords, our names are not attached to these amendments or to the clause stand part, but we have a great deal of sympathy with them. Although the Skills Funding Agency’s budget is smaller than that of the YPLA—it is roughly £3.5 billion, whereas the YPLA has a budget of about £7 billion—it is still a very substantial budget. The situation is very odd. For 16 to 19 education, and probably 14 to 19 education, we are setting up the YPLA, which is to be an NDPB, have its own separate board and report directly to Parliament. Higher education is also run by an NDPB—HEFCE—which has a separate board and reports directly to Parliament. The Skills Funding Agency will deal with adult education and will run four separate agencies of substantial importance: the Train to Gain service, the Adult Advancement and Careers Service, the National Apprenticeship Service and the National Employer Service. They are not mentioned in the Bill, which picks up the point made by the noble Lord, Lord De Mauley, that we know remarkably little about the running of the SFA.

In terms of transparency and accountability, I find this a difficult issue. On the one hand, it can be argued that the Minister has to answer directly for the SFA. It is going to be set up as a next-steps agency run by a civil servant with a large number of people under him. It will have more people than the YPLA, which is going to have only 500 allocated to it from the LSC; the SFA will have 1,500 allocated to it. It is a substantial organisation being run by a civil servant, answerable directly to the Minister and with considerable powers, which are detailed in the Bill. It will run the whole of our adult education and training services and the adult apprenticeship service.

How is the SFA going to be made more accountable? We have done away with the Adult Learning Committee that was established under the LSC. One advantage of the SFA having NDPB status is that there would be a board behind the chief executive representing the many areas in the adult skills world. Local government, the sector skills councils, employers and regional initiatives could all be represented. The anomaly is that elsewhere in the education world there are NDPBs with advisory boards that are, to some extent, answerable directly. With the Higher Education Funding Council for England and the LSC, the tradition was that they were set up as NDPBs, but now we suddenly break with that tradition and have this organisation with substantial functions that is only answerable to Parliament through the Minister.

Our party’s vision is very different from that of the Conservative Party. On the whole, we feel that with the adult world, and given the blurring of boundaries between higher education and further education, the sensible thing is to expand HEFCE to include all adult education. The name that we have given to it is the council for adult skills and higher education—abbreviated, that becomes CASH, which is perhaps appropriate since we are still advocating that there should be no tuition fees. However, we believe that there is a lot behind these amendments and we have a lot of sympathy with them.

My Lords, many questions have been raised in today’s debate. I have been struck by how much common ground there is between us on the need to reform our post-19 education and training system. There is general recognition that the current system of funding education and training requires refocusing, with employers playing a leading role in identifying what skills are needed locally, regionally and nationally and designing the necessary qualifications, and with funding following individual and employer choice. This requires a more demand-led approach, where funding is allocated to colleges and training providers based on the choices of individuals and employers and on wider local, regional and national skill needs.

The Skills Funding Agency will be one part of a new skills landscape in which the UK Commission for Employment and Skills, sector skills councils, RDAs, the sub-regional economic and skills boards and local authorities will all play their part in determining the skill needs of the nation. In making funding decisions, the chief executive of skills funding will be required to take account of advice from these bodies through guidance issued by the Secretary of State under Clause 115.

Colleges and other providers will also continue to have a central role in informing and shaping the policies that will drive skills forward. At a national level, colleges will continue to be represented on the ministerial standing group and the FE Reform and Performance Programme Board and will directly inform the development of the policies and programmes.

At a regional level, colleges and providers will be consulted by the RDAs on the development of the regional skills strategies, which will be integral to the single integrated regional strategies to be developed by RDAs with local authority leader boards, as proposed in the Local Democracy, Economic Development and Construction Bill.

At a local level, we will expect colleges and providers to engage with learners and employers in their local communities and to explore new and innovative ways to meet their skill needs. The best colleges are already doing this. The system that we are setting up will free colleges and providers from the constraints of rigid funding agreements, enabling them to provide the courses that students and employers want.

The core question in this debate is a narrow one: should the SFA be an NDPB or an agency? Amendment 171, in the name of the Conservative Front Bench, proposes an NDPB. Our overriding aim has been to ensure greater democratic accountability. In the case of the YPLA, NDPB status is appropriate because that body will exist to provide technical support to local authorities in the delivery of their new duties under the Bill. The key commissioning decisions will be made by local authorities, so democratic accountability is maintained.

In the case of the SFA, our preference is for a structure that places a premium on democratic accountability and ensures that Ministers deliver on their responsibilities through the department. Operating as an agency, the Skills Funding Agency will be closer to government, ensuring that it operates within the department’s overall strategic framework. This will enable the chief executive to react much more quickly to changing strategic needs and to contribute to the decision-making process through practical experience of what works and why.

If Parliament had agreed to abolish the LSC, we could have established a Skills Funding Agency by purely administrative means using existing powers; we would not have needed Part 4 of the Bill at all. However, we took the view that it was essential to have a robust legislative underpinning for the functions, powers and duties in respect of post-19 education and training, including the responsibility for some £4 billion in funding. These are therefore set out clearly in the Bill, vested in the chief executive of skills funding. We also wanted to put the entitlement to an apprenticeship into legislation.

This approach also enabled us to include a clear statutory requirement for the chief executive to report to Parliament through an annual report—I thought that that would be welcomed—which will set out how the chief executive has performed the functions of the office for the financial year, and for his accounts to be laid before Parliament and subject to certification by the Comptroller and Auditor-General. Select Committees will also be able to require the chief executive of skills funding to give evidence and respond to recommendations made by the committee.

I understand the concerns of colleges and the 157 Group about the status of the new body. There are two main worries. The first is that agency status may somehow lead to the politicisation of funding decisions. However, I think that that is to misunderstand the nature of the day-to-day funding decisions that the SFA will take. In a demand-led system, it will matter less where the money sits, because funding will follow the choices of learners and employers.

It will be the role of the SFA to ensure that this new system operates effectively so that it really does enable individual learners and employers to access courses of their choice and so that the skills needs identified by the UKCES, sector skills councils, RDAs and local authorities are met. It is therefore demand-led. Indeed, such a system is inherently less vulnerable to the sort of political influence about which the colleges have expressed concern. As an additional safeguard, however, we are creating the SFA as an agency and naming in legislation the chief executive on whom the powers and duties rest. We are also making it explicit, through Clause 117(4), that the Secretary of State cannot intervene in individual funding decisions.

The second concern is that the voice of colleges and other providers will somehow be lost. However, as I have already made clear, colleges will continue to have a central and influential role to play in the new arrangements and will have a much freer hand to do so. The changes that we are making will mean that, rather than being lost, their voices will be heard louder and more clearly at an earlier stage of policy development. By making the SFA an agency that is part of the Department for Business, Innovation and Skills, there will be a clear line between the department and the chief executive of skills funding—an area about which colleges and providers have raised concerns in the past.

I have two further questions. The Minister mentioned just now that the SFA was going to be overseen by a small executive board. One of the issues that I raised was the whole question of the absence of what in the LSC was called the adult learning committee: an absence, in a sense, of those who would advise the chief executive and who come from the community and represent the community—in so far as a small executive board will be on that small executive board.

The other issue that I meant to raise but forgot to in my initial remarks relates to the role that the regions will play in the SFA. In the second paragraph of a letter sent to Jim Brathwaite at SEEDA on 31 July, the noble Lord, Lord Mandelson, says very clearly:

“I can confirm that I am considering the case for modifying the existing plans for the creation of the Skills Funding Agency … to allow the existing skills landscape to be simplified by making the RDAs the single body with responsibility for producing the regional skills strategy and being the champion and advocate for skills at the regional level. Under this scenario, RDAs would be assigned the lead role in identifying, as part of their wider responsibilities for regional economic development, demand-side needs for skills in their regions. Those needs will be expressed in a regional skills strategy, led by the RDA, which will constitute an investment plan which would become binding on the Skills Funding Agency”.

That is a somewhat different scenario from that presented in the Bill. It is a very substantial change. Can the Minister tell us something about it?

My Lords, my apologies for speaking not to the noble Baroness’s amendment but to the clause stand part. I think that there were two points. First, how will the FE sector be engaged in the new engagements? We have indicated that there will be a board. We will also continue to need the expert advice of the sector in informing and shaping the policies which will drive skills forward. That will be strengthened in the new system by ensuring that the source of that advice and the body which will implement it are both close to government.

Colleges will continue to be represented on the ministerial standing group and the further education reform and performance programme board, as well as through other regular meetings with Ministers. Those discussions will directly inform the development of the policies and programmes which will be implemented by the chief executive, who is very much of that department. On the other question that the noble Baroness raised, I must admit that I need to ask her—

It was about the letter that the noble Lord, Lord Mandelson, sent to Jim Brathwaite at SEEDA, which sets out a very different view of how the SFA will operate from that which comes over in the Bill and the Explanatory Notes.

I thank the noble Baroness for reminding me. We anticipate that the RDAs will lead in identifying demand-side need for skills in their regions. This will be reflected in their regional skills strategy, which will be part of the single integrated regional strategy developed with—and I stress this—the local authority leader boards.

We envisage that the RDAs will also take responsibility for skills advocacy—including championing and delivering initiatives to raise demand, such as the skills pledge—partnership building, and spearheading multi-agency action in support of employers to identify and resolve mismatches in the supply of skills to meet new employer demand. Responsibility for allocating funds to and managing the relationships with colleges and training providers will rest with the chief executive of skills funding. In doing that, he or she will take into account the national, regional and sub-regional strategies of the UK Commission for Employment and Skills, the RDAs and the sub-regional and city partnerships.

My Lords, I am grateful to the noble Baroness, Lady Sharp, for her expression of sympathy for our central point in the debate. I think she said that she had not put her name to the clause stand-part Motion, but I am delighted to say that my version of the Marshalled List indicated her support. She helpfully added to what I had said with, among other things, the compelling financial point. The noble Baroness subsequently raised the introduction of the RDAs, and rightly said that this is a substantial change. I think we shall need to come back to it later in these debates.

I thank the Minister for his detailed response to this probing amendment. I am not entirely sure that I am convinced by his answer—I will need to read carefully what he has said—but I shall not press the point this evening.

My Lords, this is another probing amendment which will raise questions for clarification. It is, as the Committee will see, about a paragraph in this schedule that contains directions. First, why is it necessary to include the power to direct,

“other management … and administrative arrangements”,

as the schedule does? The chief executive is a civil servant, as we have heard, reporting to the Secretary of State and not to Parliament. He or she will follow departmental rules with which he or she will be familiar, which will cover administrative and management matters. If by some chance they were not being followed, the Secretary of State would have no trouble finding somebody else in the department to point out that this was how it should be done.

Why, indeed, is a paragraph on directions needed at all? Financial arrangements will need to be in accordance with Treasury rules, and in all other matters the chief executive reports to the Secretary of State, who sets the agenda and can change it at any time. Directions are a draconian power and should not be used where they are not needed. They are not needed in any way in this schedule, which covers the detailed arrangements for an executive agency’s chief executive. Indeed, Schedule 4 does not indicate any likelihood that the chief executive will be able to act independently.

The only thing left is whether there is, somewhere within this arrangement, a need for a back-stop power. I, for one, cannot begin to understand why there ever would be a need for such a power to bring the chief executive into line, because if he or she was not in line I suppose that they would be disappointed—somebody else would be put in their place, and we would only hear about it later. If there is any way in which I could be helped to understand why this paragraph is included in the way that it is, it would be if there were an agency precedent on which Parliament might rely. If so, which agency is it? I beg to move.

My Lords, I thank my noble friend Lord Eccles for his characteristically detailed scrutiny of the Bill. It is quite clear, as he said, that the Secretary of State should not have the power to direct the chief executive of skills funding on every aspect of the day-to-day management and administration of his organisation. We have just been probing the status of the SFA; in Committee in another place, the Minister suggested that by putting duties on the statutory post-holder, we would somehow arrive at a greater separation between him and the Secretary of State. This seems rather unlikely under the current terms of Schedule 4, so I am looking forward to the Minister’s response to my noble friend.

My Lords, Amendment 170 would have the effect of reducing the scope of paragraph 10 of Schedule 4, such that the Secretary of State would be able to direct the chief executive of skills funding regarding only the financial arrangements for the office and staff of the chief executive and not the other management and administrative arrangements. This is an important enabling power which allows the Secretary of State to issue directions to the chief executive of skills funding about the financial, management and administrative arrangements of the office of chief executive, should it be necessary to do so.

Guidance will be available to the chief executive to ensure that the arrangements for the Skills Funding Agency in these areas are consistent with current Treasury and Cabinet Office guidelines and with public accountability rules on the financial management and administration of a public body. Issuing such guidance is crucial for the effective and proper handling of the considerable sums of public money which will be routed through the Skills Funding Agency as well as for the efficient and effective management of the organisation as a whole. If the Secretary of State considered that the chief executive or a member of his staff failed to adhere to any such guidance, these powers could be used to direct the chief executive to do so—and, as such, although I do not know if they equate to a back-stop, they are certainly powers of last resort.

This power is not about seeking to control the chief executive. That individual certainly has powers that include reporting to Parliament through an annual report. It is about ensuring, through the power to give directions, that there are high standards of financial probity and administrative arrangements in place.

I turn to a point made by the noble Viscount, Lord Eccles, who asked why it is necessary to have powers to direct the chief executive officer, who is a civil servant. It is because the chief executive officer has his own legal personality under the Act and is personally responsible for exercising his own statutory powers. I hope, with that explanation, that the noble Viscount will feel able to withdraw his amendment.

As a former senior civil servant myself, I find this clause to be very unusual. I cannot imagine any occasion on which the chief executive of an agency that is entirely within the Civil Service structure would need directions from a Secretary of State of the kind just described by the Minister. Every senior civil servant knows that they must keep within Treasury rules in terms of finance, so it seems odd to say that the Secretary of State would tell him, because it would be assumed that she or he would do so. As for giving directions, the Secretary of State gives directions to all his or her civil servants because they are there to serve their Ministers. Whether or not they have moved one step away into an agency does not in any sense remove them from the obligation to perform within the rules of the Civil Service, including the Treasury rules, and according to the will and wishes of the Secretary of State.

I find it strange that this has been put into the Bill. I understand the motivation, a noble one, to wish to make the agency as freestanding as possible, but in terms of the Secretary of State directing it on the kind of thing the Minister has described, that is simply unnecessary and, I think, a genuine precedent in legislation.

I will not prolong this short debate except to say that two big clauses, Clauses 116 and 117, deal with directions, so I do not seek to take away the whole panoply of the Secretary of State’s ability to give directions to the chief executive. However, I think that we are living in never-never land. An extraordinary piece of advice has come the Minister’s way if what he has told us is how the department really works. It is not how the world of the public sector—which I have been in on a number of occasions—has ever worked. I do not believe that it works this way now. Meanwhile, I beg leave to withdraw the amendment.

Perhaps I may—

I have withdrawn the amendment.

I must advise the Committee that I have not yet put the question on withdrawing the amendment, so it is possible for the noble Lord to contribute to the debate.

In that case, I just want to put into the Minister’s mind a disturbing thought. My noble friend said that one could not expect civil servants to do other than what they are told by their Minister, but the advice that he has been given, that a power should go into this Bill to make directions, has come from those civil servants. There may be something afoot in his department that he is not aware of.

To resolve that this House regrets that the Non-Domestic Rating (Deferred Payments) (England) Regulations 2009 (SI 2009/1597) do not remove the retrospective application of a revaluation of non-domestic rates for port-side operators.

My Lords, this is not the first time that the case of backdating taxes on port-side operators has been drawn to the attention of this House and I suspect that it will not be the last. What Her Majesty’s Government should know is that we on this side of the House will take every possible opportunity to raise the matter in order to protect vital jobs, because the threat is real. The conduct of the Valuation Office Agency has been shambolic and the culpability of the Government in failing to address this manifest injustice and instead choosing to fight among themselves as to who is to blame rather than to get a grip on the situation before it is too late is lamentable. It is something that people will remember.

On 18 March 2009, my noble friend Lord Attlee moved a Motion of Regret similar to this one in respect of the Non-Domestic Rating (Collection and Enforcement) (Local Lists) (Amendment) (England) Regulations 2009. The House listened to a debate in which deep expertise on the impact of the backdating of this measure was shared. When the opinion of the House was tested, the Motion of Regret was carried by a majority of eight votes.

On 9 June 2009, I moved an amendment to the Business Rate Supplements Bill that would have removed the ability of the Government to levy retrospective tax increases where there was a liability affecting the business rate supplement, the responsibility for which was not in any way due to an error made by business but was actually an error on the part of the Valuation Office Agency. The opinion of this House was again tested and the result was a majority of 60 votes in favour of this principle. The Government would not accept the amendment in another place and used the Parliament Act citing privilege to refuse to allow it to be debated again in this House, even though the principle that we were arguing and fighting for was in fact government policy.

Current rating legislation provides for this in the Non-Domestic Rating (Alteration of Lists and Appeals) (England) Regulations 2005. It imposes an obligation of responsibility both on the Valuation Office Agency and the ratepayer. If the Valuation Office Agency makes a mistake because of an error or default by a ratepayer, the ratepayer has imposed on it retrospective liability to pay any increase in business rates that it would have paid but for the mistake by the Valuation Office Agency. Equally, if the Valuation Office Agency makes a mistake without an error or default on the part of the ratepayer, the ratepayer does not have imposed on it retrospective liability to pay any increase in business rates that it would have paid but for the assessment undertaken by the Valuation Office Agency. I realise that that is difficult to comprehend at this late hour, but sadly that is what the regulations say.

On the matter of retrospection, the Government’s own guidance is set out in Regulation 14(6). The central case of the argument that we are again putting to the Government is that, contrary to the Treasury’s own guidelines, no impact assessment was made of the effect of backdating these taxes. Similarly, no consultation was undertaken. As stated in Hansard on 6 October 2008 at col. 351W, no assessment has been made of the effect on the wider economy, a charge that was acknowledged by the Government in Hansard on 14 January 2009 at col. 761W. The policy also contravenes the Treasury’s own guidance on retrospective taxation as stated in Hansard on 9 October 2008 at col. 802W. I say again: no assessment of the impact of backdating was made, no consultation exercise was undertaken and no assessment was made of the impact on the wider economy. The policy contravenes the Treasury’s own guidance. In many ways, these charges show the chaos at the heart of government on this issue.

It may seem that the point is being made on a partisan basis. However, the Home Secretary—no less—Mr Alan Johnson, wrote in July of this year to the Minister responsible, John Denham, Secretary of State for Communities and Local Government, and said the following:

“These businesses are damaged by a Government that on the one hand is looking for ways to help small businesses through the recession whilst at exactly the same time is imposing a completely unfair, retrospective system that will destroy jobs and put these companies out of business … The VOA has committed an egregious error, failed in its duties and failed to obey the instructions given by Government”.

What does the Minister make of Mr Johnson’s representations? Has he seen a copy of them? Has Mr Johnson made any further representations in person to the Secretary of State on this issue?

What consideration has been given by HMRC’s review team to the mistakes that have occurred in the Valuation Office Agency during this time? Perhaps I may quote some references in support of that question to let Members know how we have come to make that charge.

There was an indication that the Valuation Office Agency acknowledged that it had made a mistake in one in three of the assessments that it had undertaken in respect of the ports. Sixteen hundred port-side operators were affected by the change and it is estimated that one in three of them had had mistakes made. Will the Minister confirm that assessment of the impact of this measure, which was made on the record in another place?

Will the Minister report on the review of the Valuation Office Agency’s performance to date? The review looked at two aspects. Responding in another place to a reply that he had received from the Minister, Rosie Winterton, Austin Mitchell quoted the review as saying that 600 hereditaments in England should have been separately assessed. These hereditaments were not occupied by the port operator on 1 April 2005, it was admitted. So a catalogue of errors on the part of the Valuation Office Agency had been occurring.

I was interested to come across a document entitled The Review of the Valuation Office Agency 2009. It is dated 10 June 2009 and runs to some 91 pages. I was slightly disappointed not to be able to find any reference in it to the debacle of the retrospective element of the non-domestic rating. Has the Minister seen a copy of the report? The complacency of an agency that has been responsible for the loss of many jobs and the closure of many viable businesses—let alone the well documented mistakes that it made in evaluating domestic properties—is staggering. The executive summary states:

“The Agency has made year-on-year improvements in delivering its key targets and has done so despite falling resources—staff levels have been reduced by more than 22 per cent”.

It goes on to say that the agency’s “world-class vision” was launched around the time of the 2005 framework review. Well, the “world-class vision”, which is set out on page 17 of the report, looks slightly hollow in the light of the spectacular errors in respect of the port-side operators.

My Lords, I support the Motion of Regret of my noble friend Lord Bates. He reminded your Lordships that I raised this matter by means of a Motion of Regret on 18 March this year. I invited your Lordships to support my view that the regulations that were referred to by my noble friend would not prevent port companies from becoming insolvent. In a Division, the House agreed with me, including some noble Lords on the Benches opposite. Since then it does not appear that the Government have heeded your Lordships’ counsel. They may have had some internal discussions but they have failed to provide a solution. Everything that I said would go wrong is going wrong. I will not repeat the excellent analysis of the current situation by my noble friend or go over the history again.

When he replies, the Minister will tell your Lordships that businesses must expect to pay rates and other taxes. Generally speaking, he is right. But this case is different and I will repeat the argument that I put in March this year; it is a simple one to understand. If an ordinary business takes on new or altered business premises inland and is subject to normal rating principles, any competent surveyor can indicate, reasonably accurately, what the rateable value will be, and hence the rates to be paid. An allowance for those rates can be made in the company’s business plan and cash flow forecasts. If the local authority, for any reason, delays or omits to issue a rate demand, the business will not be able to organise a party on the proceeds; the business knows what the costs will be and they must be allowed for. The estimated rates will have to be shown on the balance sheet as an accrual, and provision will have to be made in the cash flow forecast.

The port companies, however, are different. The commercial arrangements between the port owners and the port businesses were predicated on the pre-2005 rating arrangements. So for those businesses rates were not an issue: they did not to consider them; they did not need to put rates into their cash flow forecasts or their balance sheets; they simply did not need to be considered by a port business as long as the port was operating under the prescribed rather than the normal rating rules.

It is most unfortunate that Ministers have not been able to sort out this mess. I accept that they did not create the problem, but the longer they procrastinate the greater proportion of the responsibility they must bear. I urge noble Lords to support my noble friend if he takes the matter to a Division this evening.

My Lords, as noble Lords on the Conservative Benches have said, this is not the first time the House has discussed this matter. When we debated a similar Motion last March, it went to a Division. I advised my colleagues to support the Conservative Front Bench and together we were able to defeat the Government. If the Conservatives put this to a vote again today, we Liberal Democrats will support them again.

I do not want to speak at great length because we have heard an eloquent and extremely long speech from the noble Lord, Lord Bates, which has covered a great deal of the ground. I want to give the Minister time to respond in some detail because this is an important matter which has not yet been resolved satisfactorily. There is no doubt that there has been a serious mistake; it has been a cock-up. The Government and the Valuation Office Agency between them have created this problem. They started in the spring by saying, “It is not really a problem. We will allow them eight years in which to pay this money and it will not make a great deal of difference”.

However, the experience is that it is making a great deal of difference. For example, on 22 August 2009, the Daily Telegraph—if it is in the Daily Telegraph it must be right of course; that is an ironic comment but I have no doubt that it is right—reported that two small businesses in the port of Goole on the Humber had received a backdated bill of just under £1 million and an ongoing liability of £350,000 a year, which is somewhat hefty for businesses with a joint annual turnover of just £2.5 million. A business at Birkenhead on the Mersey with annual sales of £7.5 million received a retrospective bill of around £2 million and an ongoing liability of £500,000 a year. These are substantial sums of money. They are, if I may use a nautical metaphor, an anchor that has been hung around the neck of these businesses, and simply saying to them, “You have got eight years to pay it back”, is not satisfactory. These businesses will have this liability and this weight around their necks for a considerable period of time.

There are two problems: one is the increased valuations of the rates because of the new system that was introduced retrospectively from 2005; the second is the retrospective demands for the payment of these rates between 2005 and 2008. It may be that the new valuations are appropriate and correct. If that is the case—the businesses may not agree—then at least if they had had advance notice they could have planned for them, but to put in the retrospective element in addition is unacceptable.

Retrospection is in the news at the moment. A newspaper article this morning suggested that where people had been overpaid child credit through no fault of their own, in future they would not have to repay it. I do not know whether that is the case but, if it is, it is a good thing. There is a great deal of talk about retrospective payments in relation to the House of Commons at the moment, but we perhaps should not interfere today in that argument in this House. But it is in the news. Whenever a Government or an authority tells people that they have to pay retrospectively money which they had not known about previously, there is a major problem, whether it is for individuals, Members of Parliament or businesses. This problem has been acknowledged and has not been solved by the Government. The time has come when they should put their hand up and say, “Yes, there is a problem and it should be sorted out”. Our line is exactly the same as it was when we discussed the matter in March and subsequently; the mess has been caused by the Government and the Valuation Office Agency and the Government should take full responsibility and sort it out.

The port industry is vital to the British economy. This is a burden for about 670 or 680 businesses and is utterly unacceptable. Cancelling the back payments does not create a precedent for other back rights because of the retrospective element here, which was caused entirely by the agency and the Government. We therefore urge the Government to maintain port ratings at the level published in the 2005 lists until the next scheduled revaluation of statutory ports is undertaken in 2010. Even if that results in increased payments, at least people will know about them and can plan for them. We support the Motion.

My Lords, sadly, this subject comes before your House yet again, and quite rightly too. The Government have not listened to our previous debates and, from what I can gather, they do not intend to listen tonight. Why do they seem pathologically incapable of saying, as in this case, that they have got it wrong and that they will look at it again?

Before I continue, I should declare that I have been a councillor in Norfolk for more than 10 years, I am a director of businesses paying business rates and I am an accountant. I mention that I am an accountant because it is relevant to this issue. A number of accountancy firms have made submissions saying that although the Government have deferred payment of these retrospective taxes and spread the payment over eight years, the accountants can do nothing else but ensure that the full liability is disclosed in the latest set of accounts. That means that many firms are insolvent or technically insolvent.

If you look at the problem from the port businesses’ point of view, in this time of recession when cash flow is of the essence and their import and export business is thin on the ground, they may need to go to the bank for a loan to tide them over until business picks up. But what bank in its right mind is going to lend good money to a company whose auditors have just declared that the business is not a going concern, or that it is technically insolvent? Indeed, I understand that while this House was in Recess, 60 port businesses have already gone bust, and no doubt more will follow.

What can these port businesses do? Well, they could go into voluntary administration, set up a new company, buy back any assets and continue to trade in the new company, thus leaving the backdated rates liability with the old company. Or they could just shut down their English operation and carry on their business from a continental port, and then transport their goods to this country by road. That would not be a good solution for our economy, as jobs and businesses would be lost for ever.

What we need is a vibrant shipping import and export industry. We are told that the carbon footprint for shipping is much less than for air or road, so, from the climate change point of view, we should be nurturing and encouraging the expansion of the shipping business, not encouraging the expansion of airports and road usage, and certainly not putting forward measures that will drive our ports businesses to the wall. Despite the assurances we are given that the Government are helping businesses all they can through the recession, why do they seem determined, with these measures, to drive a nail into the coffin of the ports businesses?

As we have heard, not all the members of the Cabinet agree with this policy. During the Recess Alan Johnson, the Home Secretary, wrote a snorter of a letter to John Denham, the Secretary of State for Local Government, urging him to,

“remove this totally unfair burden on businesses that are already struggling to survive”

by,

“imposing a completely unfair, retrospective system that will destroy jobs and put these companies out of business”.

I could not have put it better myself.

It is not just Cabinet Ministers who have broken ranks over this issue. I understand that there are many Labour Party Back-Benchers who feel equally as strongly as the Home Secretary.

I cannot understand why the Government will not listen to the concerns of port businesses and do something about it. Are they genuinely concerned with saving jobs and businesses? We are left with the distinct impression that they do not really care. They have made their decision, they are going to stick with it and they certainly will not admit that they have got it wrong. When we next hear from a government Minister that the Government are doing all they can for jobs and business, just remember what they have done for jobs and business at our ports.

My Lords, retrospective taxation is unfair, unjust and immoral. It is also scandalous that any Government claiming to support jobs should be the direct cause of their loss, with all the misery that that causes to people who lose their jobs and to their families. We should always resist such appalling and dishonourable proposals for retrospective legislation whenever they rear their heads. I support the Motion.

My Lords, my script starts with the words, “I am grateful for the opportunity to debate this important issue and its effect on business”, but of course, as the noble Lord, Lord Bates, said, we have been here before. I know that backdated liabilities and their effect on ports have been of concern to many in your Lordships’ House, and indeed in wider government. That is exemplified by the number of times that we have debated this issue through the passage of any legislation related to non-domestic rates.

First, before I address the arguments put by the noble Lord, I shall place in a policy and regulatory context the regulations that came into force on 31 July—the underlying point of the Motion—and what they aim to achieve. I feel that the noble Lord may be confusing the issue of ports with the actual aims of the regulations.

The regulations to which the noble Lord refers in the Motion are not aimed at ports, or indeed specifically at those who find themselves with backdated liabilities. They are intended to provide targeted help to business in the current economic climate by allowing them to spread the payment of increases in their 2009-10 business rates bills over three years. That is what the regulations are about. The effect of the scheme is to provide all ratepayers with the flexibility to help them manage their rate bills in the current economic climate, help their cash flow and give them time to adjust to the impact of inflation. The deferred payment scheme that the regulations establish is a separate policy from the schedule of payments scheme in place, under which businesses, including ports, are given an unprecedented eight years to pay certain significant and unexpected backdated liabilities.

It may help if I provide some background about why the Government introduced the deferred payment scheme. As with many other rates and thresholds, business rates are increased in April each year to take account of inflation as measured by the retail prices index in the previous September. This is a consistent and generally accepted approach since the introduction of the national business rates in 1990. In September 2008 RPI was 5 per cent, much higher than the level of RPI in March 2009, which was 0.4 per cent. Ratepayers therefore faced a significant increase in their bills from 1 April 2009. In addition to this sharp increase in RPI, some ratepayers’ bills increased due to the end of the 2005 transitional relief scheme, which was designed to phase in increases from the previous revaluation. The transition period for the 2005 revaluation lasted for four years and ended in 2008-09. The rationale for the four-year period was to ensure that ratepayers paid their correct bill during the life of the 2005 rating list. However, this has resulted in higher rate bills in 2009-10 for those coming out of transition.

The Government have listened to the concern of business and have taken action. In response we introduced the deferred payments regulations, enabling businesses to spread a proportion of the increase in their 2009-10 business rate bills over 2010-11 and 2011-12, thus providing practical help for businesses when they need it most. Noble Lords may be interested to know that the amount that ratepayers can defer is 3 per cent of the entire 2009-10 bill, equivalent to 60 per cent of the increase in bills and 60 per cent of any increase caused by the ending of the transitional relief scheme for the 2005 revaluation period. Ratepayers, including businesses in ports that wish to defer, need only to complete and return a simple application form to their local authority.

In addition to the deferred payments and schedule of payments schemes, the Government have introduced other measures to help businesses, which must be seen within the wider context of the steps they have taken to aid the recovery of businesses through these economically hard times. This Government are providing real help for businesses, designed to address the cash flow, credit and investment needs of medium-sized businesses. For example, the £10 billion working capital scheme, the enterprise finance guarantee scheme, securing up to £1.3 billion of additional bank loans to small firms, and the £75 million capital for enterprise fund are all an integral part of a fiscal stimulus that the noble Lord’s party has opposed all the way.

On the Motion of Regret in the name of the noble Lord, Lord Bates, you must forgive me but, as the effect of backdated liabilities on ports has been debated several times, in this House as well as in the other place, noble Lords will inevitably recognise much of what I say, as it has already been said. This Motion of Regret is about one thing—the waiving of the backdated liabilities for ports. Before I set out yet again why this cannot be done, I reiterate that although, unfortunately, the port businesses have been largely affected by backdated liabilities, they are not the only businesses to be affected by this and that backdating of rates is not a new concept in the world of rating. It happened under the noble Lord’s period of government, as well. Therein lies one of three important reasons why we cannot waive the backdated liability—backdating has been a fundamental and accepted part of the rating system for many years. It is not new.

Is the Minister saying that my argument was incorrect?

I am not sure which of his arguments the noble Earl is referring to.

I was making the point that an ordinary business knows that it will have to pay rates on its premises, but the ports, which are in a situation where they did not know that, are very different from ordinary businesses.

I do not accept that position. That is part of the confusion around this. There was a change from the old basis of dealing with ports but, even when that basis was in place, those hereditaments that were exclusively occupied and under control were still subject to rating in the normal way. The change generally for ports did not change any of that and businesses should be well aware that they should be subject to business rates. So I do not accept the noble Earl’s point.

I have given one of the three important reasons why we cannot waive the backdated liability. Why are we backdating? It is due to constant changes to the commercial property market. In this way, the system seeks to ensure that all rateable property pays its fair amount of rates, from the point at which the property should be rated, and with all businesses being treated equally. It is not in those terms anything like equivalent to what might be commonly known as retrospective taxation. The requirement to backdate liabilities is set out in legislation. It is important to note that, apart from the new port businesses, the CLG does not receive representations on the general backdating of rates liability. It is accepted as part of the system.

The second reason we cannot waive the liability, especially under the deferred payment regulations, is because the statutory framework gives no discretion to remove a liability to taxation. This is the advice that we have received, although we have recently been notified of a different view, and I shall certainly follow up on that point. I do not say that we accept it; our advice is that primary legislation would be required to undo the effective date from which properties have already been added to the rating list.

Will be the Minister be absolutely clear on that point? Is he saying that at the moment the view of the department is that primary legislation would be required, but that the recently received counsel opinion or legal opinion states that that may not be the case?

I think that we received a copy of the opinion to which the noble Lord referred, and I have a note on it which I may come to in more detail in a moment. I do not believe that it is a separate opinion that we have gone out and sought that contradicts the position we have taken to date. I shall come to it in a moment.

The third reason for not waiving the backdated liability for ports is because to suddenly remove this principle for a single sector is out of the question. Quite apart from the state aid concerns this would raise, the fundamental issue is that government would selectively let some businesses off a legally established tax and would actively disadvantage those companies that discharged their tax liabilities on time. Our starting point, rightly in my opinion, is that in principle the tax system must be equitable to all and any solution to a perceived injustice must not confer a disadvantage upon other taxpayers who have already paid. To do so temporarily for the 2005 list would be completely inequitable to the businesses that have also already been served and indeed discharged backdated liabilities in the past, as well as those that may possibly be liable in future.

Noble Lords may like to know that as at 8 October, 221 properties with ports have fully discharged their backdated liability and a further 200 business properties within ports have been granted a schedule of payments. To be clear, what is suggested would mean that, unlike all other tenants across England liable for rates, including the separately assessed properties in ports identified for the start of the 2005 list, these newly rated businesses would be given a directly favoured tax advantage over other separately assessed properties within ports and elsewhere. I ask the noble Lord whether that is seriously the sort of tax regime that he and his party would support. Furthermore we do not believe it would be in the interests of fair competition or in line with the principles of taxation for such a liability to be waived.

No one in your Lordships' House can disagree that the unexpected backdated liabilities, combined with the current economic climate, have hit businesses hard in all sectors and areas across England. Yet despite what the Opposition may purport, we in government recognise this and sympathise with their plight, which is why, among other initiatives to help businesses, we are specifically providing assistance to all businesses, not just ports, affected by significant and unexpected backdated liabilities through the schedule of payments scheme, which came into force in April this year.

The Minister is going very heavily on the fact that backdated revaluations happen quite frequently in the rating system, which is true. However, is there not a fundamental difference between a backdated revaluation, which results in a higher bill, and the backdated complete change in the system that applied to these businesses? In 2005, it was not that their rating obligation was revalued upwards but that the system changed that resulted in these huge increases, which were backdated for three years. Is there not a difference between those two things?

This is a fundamental point, which is why I disagree with the noble Lord. There was a change in the basis on which ports were generally assessed for rates, but it was not that which drove these backdated liabilities. The change indicated that there was a need for the valuation office to have more information, because it seemed that there were properties there that, under the old as well as the new system, should have been separately rated. That continues, whether or not we switch from the old to the new basis for ports generally. So it was not affected by that change.