My Lords, I regret to inform the House of the death of the noble Baroness, Lady Wall of New Barnet, earlier today. On behalf of the House I extend our condolences to the noble Baroness’s family and friends.

To ask Her Majesty’s Government whether they will commission a feasibility study to consider converting the entire Southern Rail network to a roadway for autonomous vehicles.

My Lords, we have no current plans to commission such a study. However, we are investing more than £100 million in research and development into connected and autonomous vehicles, and a further £100 million into testing infrastructure. We have commenced a programme of regulatory reforms that will keep pace with changes in technology as it comes to market. We continue to invest in our national rail infrastructure through transformative projects such as Thameslink and Crossrail to meet ever-increasing passenger demand.

My Lords, I am very grateful to my noble friend for the access he gave me to Department for Transport officials and contractors, and congratulate him on the progress being made by his autonomous vehicle projects. Does he agree that the successful pilot currently under way at Heathrow demonstrates the potential of autonomous vehicles to serve on a branch line such as Lewes to Seaford, and that if we demonstrate success on that line, the technology would suit the peripheral parts of the Southern network very well? If we succeed at that, we will be in a great position in an industry with worldwide applications, which is just what we are trying to with the industrial strategy.

My Lords, of course we welcome the cutting-edge nature of transport innovation in the rail sector. In particular my noble friend talked about the new systems and operations at Heathrow and the pods being used there. There are also other parts of the rail network such as the DLR and the new rolling stock from Siemens that will be coming on line on Thameslink. There will be a use of technology and autonomous vehicles in what I believe will be controlled environments. He mentioned further innovations on the wider network. We need to see how technology can be adapted on existing systems while recognising that the interface with the people who work in the rail sector is equally important, and look at how their skills can be adapted in line with the technologies we are now seeing across the system.

My Lords, is there any function of a train driver that cannot theoretically be safely automated?

My Lords, as I have already said, the DfT is not looking at any particular study. Train drivers across the network, across the country and beyond play a very important role. We are seeing the outlay and the new driver-only operated trains coming on board. As I have already said, we need to embrace technology and look at how the employee interface works with it. We are seeing some very good examples across the country.

My Lords, does the Minister not think that a very good example can be found from 54 years ago in Admiralty Fleet Order 150/63 —action to be taken in the instance of being bitten by a snake? When one looks at the Southern region, the first bit of advice is “Kill the snake”.

I regret to say that I am not familiar with the order that the noble Lord has mentioned, nor with its related nature. As I often say to him, in the interests of education, I will look up that order when I return to the department.

My Lords, does my noble friend agree that, in trying to achieve autonomous vehicles, we should not only look at roads; they have uses not only on rail lines but in agricultural and marine environments, where there will be huge opportunities for connected and autonomous vehicles, although possibly short of full autonomy?

My noble friend is quite right to suggest that. He mentioned roads and I agree. As a Government, we are already trialling connected and autonomous vehicles. To digress for a moment, it is quite a strange sensation when you sit in an autonomous car for the first time, knowing that you are no longer directly in control. My noble friend talks about other uses. In my own area of transport—aviation—the autopilot has been used extensively. There is a need to see how we can embrace technology in an innovative way across all transport modes, while recognising that in certain circumstances controlled interaction is also important.

My Lords, yesterday Transport Focus announced its latest survey results, which showed the satisfaction level with the way in which Southern trains deals with delays to be down to 12%. It also referred to the timetable for London and the south-east of England as, in many cases, a work of fiction. Therefore, I have some sympathy with the imagination that the noble Lord, Lord Lucas, has applied to this Question. However, if autonomous vehicles develop as promised—and as the Government wish them to, as indicated by the Minister—they will be on our roads by 2025. What are the Government doing to prepare our legal structures and road system for this revolution?

The noble Baroness referred to Southern rail. I am sure that across the House we welcome the fact that one of the two unions is now sitting down to talk. That will be welcomed not just by those who use the network and who have particularly suffered over a long period but by us all. We hope that the result of those discussions will be positive. She talked about the importance of innovation and autonomous vehicles coming on line. Of course, she is right to raise insurance and other areas related to the use of such technology. The DfT is investing a great deal of time in research and development and in talking to the industry in exactly the way that she has suggested.

Before Southern rail tracks are tarmacked over, perhaps I may again take the opportunity to ask the Government the question that I asked the other week but to which I received absolutely no answer—namely, what financial penalties has Southern rail or its holding company, Govia, had to pay for poor performance unrelated to industrial action over the last 18 months under the terms of the franchise agreement providing for them to operate the rail service?

As the noble Lord is aware—we have already had an exchange on this—first, we hold the company to account. My honourable friend the Rail Minister meets the company once a week. Secondly, we have levied penalties in accordance with the current contract. Thirdly, as he is fully aware, the operator has invoked force majeure clauses. We need to look at each case before we decide on further action, and that work is nearly complete. However, to put it into context, as some noble Lords may know, there were 10,000 different cases and claims of force majeure between April and June, and that underlines the challenge that we face.

Does the Minister agree that anyone who suggests that we close railway lines should be referred back to the vandalism of the Beeching era, when thousands of miles of track were closed, viaducts were smashed up and tunnels were filled in? Now many communities up and down the country are trying to reopen lines that were closed. Perhaps that is a lesson that everyone should take on board.

The noble Lord is right. Indeed there are lines that were disused in the past that we are currently looking at to see how they can be brought back into service. I do not think any noble Lord, including my noble friend, has at any time suggested closing or tarmacking over railway lines. Instead we are trying to see how we can use innovation and technology in adapting for our railways of the future.

To ask Her Majesty’s Government what action they are taking to increase the number of citizens registered to vote.

My Lords, on behalf of my noble friend Lady Kennedy of Cradley, and at her request, I beg leave to ask the Question standing in her name on the Order Paper. I refer the House to my registered interests.

That is a request the noble Lord was not in a position to refuse. The Government allocated £7.5 million to promote registration prior to the EU referendum, and a record 46.5 million people are now registered to vote. Online registration has made it easier and faster to make an application to register, with 75% of the 23 million applications made since the introduction of individual electoral registration using this method. The Government aim to further streamline the annual registration canvass and to work closely with the electoral community and civil society organisations to remove barriers that deter underregistered groups from joining the register.

My Lords, significant local elections are taking place this May, and millions of people are still not registered to vote. What are the Government going to do about this? Their response to date has been feeble, ineffective and lacking in any policy perspective other than to do as little as possible.

With respect, I would reject the accusations that we have done very little. As I said, we allocated £7.5 million last May, ahead of the EU referendum, for a whole range of voter registration activities, and we now have a number of targeted initiatives for those who are underregistered—black and ethnic-minority groups, social tenants, tenants in the private rented sector, young people and students. We are developing those initiatives in order to drive up the numbers registered, which, as I said a moment ago, now stand at a record level.

My Lords, what would be the problem with amending the letter sent to young people informing them of their national insurance number so that it also told them how to use that number to register online? What would be the problem with extending across Great Britain the system successfully used in all Northern Ireland schools whereby the electoral registration process is undertaken at schools, or with extending across all universities in the UK the system used at Sheffield University for combining electoral registration with registration at the university, thereby ensuring that 76% of its students are registered to vote, compared with only 13% in other HE institutions of a similar size? Are the Government not simply dragging their feet on voter registration for young people?

My Lords, there were three questions there. On the first, I am all in favour of what is called the nudge, so that when people get notified of their national insurance number they are also encouraged to vote. As for Sheffield, two weeks ago, on the Higher Education and Research Bill, we had a very good debate on the Sheffield initiative, which was part-funded by the Government. We are in the process of analysing that initiative to learn the lessons from it, and when we have done that we will be in touch with other further and higher education institutions to see whether that is the right model for them, or whether there are other models that might work even better. We are determined to do all we can to ensure that no individual is left behind and no community is unregistered to vote.

My Lords, I ask my noble friend a question that I have asked his predecessors many times. What is the logical case against compulsory registration, particularly bearing in mind that it is technically an offence if you do not register?

I understand that, technically, it is not an offence if you do not register. It is an offence if you do not reply to some correspondence from the electoral registration officer. I am sorry to disappoint my noble friend, but I will give him exactly the same answer that he received from my noble friend at the Dispatch Box a few weeks ago. We have no plans to introduce compulsory registration.

My Lords, could we do away with all this nonsense by introducing ID cards? Would that not resolve this problem and many others?

Again, I reply in a similar vein. The Government have no plans to introduce ID cards.

Will my noble friend look at the Northern Ireland schools initiative mentioned by the noble Lord, Lord Rennard, which has been commended in this House across parties on a number of occasions?

Yes, I am aware of the initiative in Northern Ireland. The advice that I have received is that the EROs are already free to work with local schools and colleges in their areas. Many already do so. Northern Ireland registration is different from the rest of the UK, so the schools initiative may not necessarily translate across to the rest of the UK.

Does the Minister agree that Northern Ireland gives us another reason to think about compulsory registration? The Government have maintained that the common travel area will continue after Brexit. I do not see how that can be done except by people having ID cards or passports that are biometrically sophisticated and carried by all of us. It is no good just saying, “Let the illegals identify themselves”.

That goes way beyond my negotiating brief and takes us into very difficult territory about the future of the common travel area in Northern Ireland. I repeat that we have had a debate about ID cards and the Government have made their position clear. We are not minded to introduce them in the UK.

My Lords, have the Government done any calculations about the demographics of the electorate in coming years? Can the Government give any idea of the number of people aged 18 who will be joining the electoral register and the rate of attrition among older people who will be leaving the electoral register?

The short answer is no. But the noble Baroness will be pleased to hear that, since IER was introduced, 5.7 million people between the ages of 16 and 24 have joined the register, so we have had some success in getting that end of the register backfilled. So far as the other half of her question is concerned, I will have to write to her.

To ask Her Majesty’s Government what plans they have to promote the increased consumption of school milk.

My Lords, this Government recognise the vital importance of pupils being healthy and well nourished. We already encourage the consumption of dairy products as part of a balanced diet through school funding legislation and guidance. Under the school food standards, milk must be available during school hours and offered free to disadvantaged pupils. In addition, schools and childcare settings receive over £70 million a year of funding through the EU and nursery milk schemes.

Is it not the case that milk can play a conspicuous part in helping to combat obesity among children and the decay of their teeth—problems, sadly, that are increasing in our country today? Is there not more that can be done by the Government, schools themselves and interested organisations to get regular, increased consumption of milk in schools, so that children gain the health benefits that it brings?

I agree entirely with my noble friend that milk is excellent for children’s growth and development. It is a good source of energy and protein and contains a wide range of vitamins and minerals. It is also rich in calcium, which growing children and young people need to build healthy bones and teeth. That is why the school food standards require low-fat milk or lactose-reduced milk to be available during school hours and why we are encouraging further consumption of dairy or dairy alternatives through our Eatwell Guide. Of course, we are focused on healthy eating through our child obesity plan.

My Lords, is the Minister aware that children who are given whole milk—as opposed to semi-skimmed milk—for the first six years of their life are much healthier and less obese than those who are not? This is because fat in whole milk enters the duodenum and delays the emptying of the stomach, giving the feeling of fullness and therefore reducing the chances of obesity.

My noble friend raises a very interesting point. I shall ensure that officials are aware of it and of all the implications to which he referred. The Government recommend that children should be given whole milk and dairy products until they are two years old because they may not get the calories or essential vitamins they need from lower-fat milks. After the age of two, children should gradually move to semi-skimmed milk, as long as they have a varied, balanced diet and are growing well. In England, whole milk can be provided up to the end of the school year in which children reach five, but after that, as I have said, school milk must be low-fat or lactose reduced.

My Lords, the Minister mentioned the problems of tooth decay, which in the north-west—my area—have reached worrying levels. Up to 35% of young people there have tooth decay. The Minister will be aware that in many schools, pupils are offered dental milk. Parents have a choice: they can choose ordinary milk or dental milk. This option to choose dental milk has been very helpful in dealing with tooth decay. Do the Government have any plans to further promote the drinking of dental milk?

The noble Lord raises a very good point and I know he is very experienced in the area of primary schools. I am aware of a depressing number of children having their teeth removed because they have rotted at a very young age, and of many schools having things such as tooth-brushing schemes, et cetera. I shall certainly look more at what we are doing in the area he mentioned.

My Lords, the Minister alluded to, but did not mention, the European school milk scheme, which is funded by the European Union, but administered by Defra. It provides subsidised milk to all children above the age of five each day in school. However, Defra has committed to continuing participation in the scheme for only as long as the UK is a member of the EU. I am sure noble Lords will remember that some 40 years ago, a former Education Secretary attracted considerable opprobrium when she decided to reduce the amount of milk available to school children. I am certain the Minister would not like that to happen to his current boss, so will he commit to meeting with his fellow Ministers in the Department of Health to find a way of lobbying the Government to provide a replacement for the current scheme when it expires in 2019?

We will play a full role in the existing scheme until we leave the EU, but as our involvement in the scheme will be short term, we are taking a pragmatic approach to keeping changes to current arrangements to a minimum. We will consider the long-term approach to school milk provision, following our exit from the EU, as part of our future domestic policy programme.

My Lords, milk is also rich in vitamin D, as the Minister has said. There is some research highlighting that young girls from ethnic minorities and Asian women are more prone to vitamin D deficiency. Will the Minister say whether his department is working closely with the Department of Health to highlight this issue so that it can be addressed?

I am afraid I do not know the answer to that question. I will investigate it and write to my noble friend.

My Lords, will the Minister say whether there are any systems in schools so that children who are deprived and come to school without breakfast get the milk they need?

I entirely agree with the noble Baroness and I am very shocked to see how many pupils often arrive at school having not eaten. Some even do not necessarily use their dinner money to eat in school. All schools try to discourage this and try to get them to eat in school, but there are an increasing number of breakfast programmes, such as the Magic Breakfast, and we have announced in the Budget that we are providing further money to enable schools to provide breakfast clubs.

My Lords, milk production and milk prices are slowly recovering. The market is still volatile and many British dairy farmers suffer daily losses. Can my noble friend explain what steps the Government are taking to support the milk industry?

I can. The UK dairy industry is enormously important to us. We are working with it to encourage greater resilience in the face of global market volatility. There are examples, with the introduction of extended tax averaging, enabling many farmers to smooth their tax bills over a five-year period.

Will the Minister confirm that free milk will still be available post-2019?

I do not think that I can look that far ahead, but I would be surprised if it was not.

To ask Her Majesty’s Government, in the light of recent analysis by UNICEF of the growth in the number of unaccompanied child migrants to Italy, what measures they are taking under section 67 of the Immigration Act 2016 to relocate child refugees from Italy to the United Kingdom.

My Lords, in 2016 we transferred more than 900 unaccompanied asylum-seeking children to the UK from Europe. More children will be transferred under the Immigration Act and we will continue to meet our obligations under the Dublin regulation. We have a long-standing secondee in Italy, who is based in the Italian Dublin unit. We will announce in due course the process and criteria for transferring more children to the UK from Europe.

I thank the Minister for that Answer. During 2016, 25,800 unaccompanied and separated children arrived in Italy. The UK took only three from Italy during 2016. Would the Minister confirm that, in future, the vulnerability of the child, and in particular the danger of exploitation and trafficking, will continue to be the central criteria, and that there will be a strong enough team in both Italy and Greece for future transfers?

My Lords, the right reverend Prelate is absolutely right to raise the issue of vulnerability, which has always been paramount in the Government’s consideration of children, particularly unaccompanied children, who are travelling to this country—and not only that but their vulnerability when they arrive here. As he will know, the Government, through a Written Ministerial Statement, are committed to publishing a strategy for safeguarding unaccompanied asylum-seeking and refugee children in England.

On the capacity in Italy that the right reverend Prelate asked about, yes, we have a long-standing secondee there—and NGOs such as the UNHCR and IOM are present there. In addition to that, they are part of the EU relocation scheme.

My Lords, given that the Minister has said that vulnerability is the paramount question in the Government’s mind, what progress has been made on the 10,000 children that Europol said had disappeared on the continent and the reports in the British press that some 360 children had disappeared here—as the right reverend Prelate said, almost certainly into the hands of traffickers and people who will use them for the purposes of exploitation?

My Lords, the question of children who have disappeared here has been brought up previously in your Lordships’ House and, if we ever get any information or reports of such things, obviously we will follow them up. To date we have not had representation from local authorities or the police that this is the case. As for intervening in other countries where children may have disappeared, as I have said before at this Dispatch Box, while a child is in another country they are the responsibility of that jurisdiction. We are there to help and we will help when asked, but we cannot unilaterally take these things into our hands.

My Lords, I am pleased to follow the right reverend Prelate in pursuit of this issue, about which there is concern right across this House. I remind the Minister that Italy is where the largest number of refugee and unaccompanied children are, together with Greece. These are children who, last summer, had their faces disfigured by mosquito bites and who now have to deal with intolerable and freezing conditions. So the situation is urgent.

In a helpful Written Answer to me on 23 November, the Minister drew on the Home Secretary’s reference to many hundreds of children coming to this country in the following few weeks—and she has updated us on that today. Will she give us further information on the number of children in Italy and Greece who are being assessed, and will she also make it clear to the House that there is no question that, at the end of this financial year, support for these children will cease?

There are several questions there. The noble Baroness continued the theme of the noble Lord, Lord Alton. He spoke of children whom we would dearly like to assist who are living in conditions that are less than satisfactory in European countries. I cannot stress enough that we can help only when the country in question gives us leave to come and help. We have got a long-standing secondee in Italy. There are also NGOs in Italy such as UNHCR.

As to specifying the number, the Government have committed to transferring a specified number of refugee children to the UK from within Europe. They will specify that number in due course.

My Lords, unaccompanied child migrants are likely to have been subjected to significant trauma. Can the Minister tell the House what assistance the Government are giving to ensure that accompanied child migrants receive appropriate psychological support, whether they are in Europe or in the UK?

I think I touched on this in my response to the right reverend Prelate, but the noble Lord is absolutely right to raise this subject. He will know that the Government already have in place a comprehensive strategy for safeguarding children, including unaccompanied asylum-seeking and refugee children, who arrive here severely traumatised and in some cases require a package of care. The Immigration Minister’s joint Written Statement with the Minister of State for Vulnerable Children and Families on 1 November committed the Government to publishing a strategy for the safeguarding of unaccompanied asylum-seeking and refugee children in England, and the children who have been identified for transfer from Europe.

The good news is that we have already been working with local authorities, charities and other organisations to make sure that plans are in place to give these children the immediate support they need—which I think was what the noble Lord was alluding to.

My Lords, will my noble friend update the House on the agreement made with Turkey to take unaccompanied children and other refugees from Greece? Could this be extended to Italy?

My noble friend has got me on an update on the position on Turkey. If she does not mind, I will write to her.

My Lords, it may be for the convenience of your Lordships to have a slight pause here to enable those who are not taking part in the Bill to leave the Chamber.

Clause 47: Validation by the OfS

My Lords, I beg noble Lords’ indulgence because there will be a couple of times when I will need to look up the wording of the Government’s factsheet, which may cause a delay. Clause 47 states:

“If (having regard to advice from the OfS) the Secretary of State considers it necessary or expedient, the Secretary of State may by regulations … authorise the OfS to enter into validation arrangements”.

That sounds quite reasonable, until one realises what is actually happening here. The OfS is the regulator of the sector and is being authorised to award degrees.

This is an extraordinary proposition. For an organisation that is regulating higher education providers, and bestowing and removing from them the power to award degrees according to terms of registration committee conditions, also to award degrees may not be unprecedented but it seemed rather amazing when I first read the clause. I read it four or five times to make sure I had not completely misunderstood it.

My Lords, I have added my name to this amendment for all the good reasons set out by the noble Baroness, Lady Wolf.

The ability for the regulator also to validate degrees, and thereby operate within the market it regulates, continues to be widely seen as wholly inappropriate for a regulator, and unnecessary. There is no evidence to support the lack of a suitable validator being a barrier to entry. We believe, furthermore, that there are no circumstances in which the proposal in Clause 47 would be appropriate or necessary, so there is no reason for the clause to remain in the Bill, even as a backstop power. The policy intent is covered by Clause 46, which allows the Office for Students to make arrangements with a higher education provider to act as a validator of last resort, and, as we discussed on Monday, the Open University could very well provide this service without any conflict of interest.

The removal of Clause 47, therefore, does not remove the policy intent of opening up the market through a wider choice of validation arrangements—as the noble Baroness has pointed out—but removes the need for the OfS, as authorised by the Secretary of State, to enter into validation arrangements with providers.

We support the option of identifying a central validation body. The current system of awarding bodies works well, though it is recognised that protectionist practices are sometimes adopted on both sides. We therefore agree that validating bodies should commit to competition, diversity and innovation, though that should not mean that all comers must be validated. Expertise in validation —as the noble Baroness, Lady Wolf, has set out so clearly—lies in the objective and impartial appraisal of an institution’s capacity to deliver and maintain appropriate standards of quality and student experience. We acknowledge that many universities already offer validation to students whose provider institutions are in trouble and such arrangements should be allowed to continue.

Whichever way you look at it, there is no need for Clause 47.

My Lords, I speak for Clause 47. I have not spoken on the Bill to date but I have followed its progress closely because I was the author of the last review of higher education funding and student finance, commonly referred to as the Browne review. It looked at three pillars of the system: quality, participation and sustainability. Its recommendations were conceived as part of a holistic package. Much needed to change to secure the future of the sector. I welcome the Bill for completing many of those recommendations: by linking teaching excellence with fees charged to students; removing barriers to market entry for new providers; and creating a new regulator that is fit for purpose.

One of the principles that guided the review was diversity of institutions being essential to creating a competitive market that can provide quality teaching and satisfy student demand. Organisations offering courses validated by a provider with degree-awarding powers are critical to this diversity. However, in compiling the review, my panel and I spoke to many such organisations and found that in many instances the validation arrangements simply did not work. Highly lucrative for the established providers, they created a closed shop that stifled innovation and competition among new entrants and as a result reduced student choice. I hope, therefore, that the Bill will prompt traditional providers to recognise the benefits for all in expanding the higher education sector, promoting greater choice, greater opportunities and excellence in higher education. I hope they will respond positively to such competition.

In the rare case where that does not happen, however, it seems entirely right that the Office for Students should be able to step in as a validator of last resort. In doing so, it is essential that the regulator is independent. The OfS’s board must be populated with those with no vested interests in the sector. If it is not, the reforms proposed in this Bill will be neither sustainable nor credible.

My Lords, I was going to speak early in this debate, but the intervention by the Lord Speaker, with his new approach to managing business, saved your Lordships from that—although I did have a wonderful anecdote that I was going to share and a few jokes that I thought might get us off at a good speed to what will be a very long session. However, we have all benefited from the two excellent speeches from the noble Baronesses, Lady Wolf and Lady Garden, against the clause standing part. It is also good to see the noble Lord, Lord Browne, in his place. His report continues to send waves through this area, and it is good to hear, in his voice, what he would have done had he been in a position to deliver the rest of the recommendations in it.

These issues were raised on the last amendment on the previous day in Committee, but we are still left with some questions that need to be answered before we can make progress in this area. Although the noble Baroness, Lady Wolf, made it clear that the evidence that has been provided is only anecdotal, there may be problems in this area and it may be that we need a new validating system involving an independent validator like the OfS, which was set up to take away any hint that there might be some competitive pressures or any other issues that might interfere with innovation and challenger institutions of a new type coming into the system. However, again, I am not sure that that answers the problem of how the Office for Students, if it is the regulator, combines its responsibilities for validation with its responsibilities for overseeing standards, publishing statistics and overseeing fair access. The more we think about the OfS as some sort of Gilbertian character, reflective of all the various issues for which it is responsible and which are needed in the higher education sector, the more we lose touch with the reality of how that system will work. The noble Baroness, Lady Wolf, is quite right to ask how we got into this mess and whether this is really the right solution to get us out of it.

The issue that needs to be sorted out is whether the validation that is required in the system can be provided from within that system or whether it has to be provided from outside. If it is outside, surely it should be independent and available on the basis that it is not responsible for those who might benefit from any decision or other action that is part of it. But we have others that could do this job. The professional bodies all have a stake in the success or otherwise of the institutions and students for which they are responsible. Professional bodies do a lot of validation of institutions and courses, and their expertise could be used and harnessed. As we discussed on a previous amendment, and again today, the CNAA is still, in a vestigial form, present in the Open University, and maybe that would be a way forward. Alternatively, it may need to be a body completely independent of the system currently set up for the purpose. Whatever it is, I do not think Clause 47 has taken the trick that needs to be taken. It will not sort out the problem that we have and it should be taken back by the Government and reviewed.

My Lords, I support that final point, because we have to get at the principle of whether it is appropriate for a regulator to participate in the market it is regulating. That is the key issue. Based on the very effective arguments put forward by the noble Baroness, Lady Wolf, I urge the Government to think very carefully about this. There was an enormous amount of consultation on the Bill prior to it coming to the Commons and to this House, and yet, although there are lots of other areas where there could have been conflict rather than simple disagreement with the sector, this is the one area where the whole of the sector seems to have come together to suggest that the Government really need to think again.

As the former chair of a regulator, and having worked with other regulators, I cannot think of any regulator which is empowered to act in this way. This seems the key issue that the Government need to address. The current validation process seems to have worked pretty well, but if private providers are having problems, we should address those problems and, if necessary, have an independent validator—possibly more than one if we are going to give the range of processes that might be needed, as described by other speakers, for different courses, for example. We really need to think very carefully about that principle and address it.

My Lords, I wonder how this works in view of Clause 47(6):

“Regulations under subsection (1) may include power for the OfS to deprive a person of a taught award or foundation degree granted by or on behalf of the OfS under validation arrangements”.

What sort of validation of a degree is it when it can be taken from you—after you have got it, I assume?

My Lords, I thank noble Lords for the opportunity to discuss validation arrangements. We believe that they are essential to a fully functioning higher education sector. We have listened to the concerns raised around the potential for Clause 47 to create a conflict of interest. However, I believe that a more substantial conflict of interest already exists within the sector.

At the moment, new providers usually have to find a willing incumbent provider to validate their provision. This gives those incumbent providers significant levers to control which new providers can enter the market, and what kind of provision they offer. Even if established providers are willing to help new providers get a foothold in the sector, there is an inherent conflict of interest if the proposed new provision would directly compete with one of their own courses. Of course, conflicts of interest are not the only problem validated providers can face. We know that some providers still find it difficult to find a partner that is willing to enter into validation arrangements with them, or have established arrangements unexpectedly withdrawn, and not because they are considered poor quality.

The noble Baroness, Lady Garden, stated that there was no evidence, but I have to put her right. We only need to look at events at Teesside University last year. Following a change of leadership, the university unexpectedly withdrew important validation services to 10 local colleges, based on a change of strategic direction and not as a reflection of the quality of the provision. Ensuring new and existing high-quality providers are not locked out of the market via their preferred entry route is essential to ensuring that students are able to access the right type of higher education for them.

The OfS cannot force providers to enter into validation arrangements. If insufficient providers are entering into validation agreements with each other or into commissioning arrangements with the OfS, or these fail to correct the problem, the OfS will need to find another way to promote competition and choice. Without further powers, the OfS could potentially be forced to stand by and watch while good-quality providers that do not want to seek their own degree-awarding powers remain locked out of degree-level provision indefinitely.

The OfS will, if it performs any validation function, have to have regard to the need to encourage competition among higher education providers in England. Its aim will not be to compete with the other higher education providers with a view to diminishing their attractiveness or their ability to offer validation services. It will only offer these services if there is demonstrable evidence that validation services are failing to support the sector. A regulator needing to take a role in the sector it regulates is not totally unprecedented. For example, the Bank of England regulates many aspects of the financial sector in order to maintain financial stability in the UK. In extremis, however, it will also act as the lender of last resort, or a market-maker of last resort, for example by buying and selling assets such as government bonds to provide liquidity at a time of financial stress.

Noble Lords might wish to read an interim report by the Open University and Independent Higher Education on a joint project piloting a streamlined approach to validation. The report highlights several perceived obstacles for providers in developing successful validation partnerships, including restrictive behaviour on the part of some validating universities and,

“insufficient support for alternative delivery models including accelerated and more work-based degrees”.

While the report accepts that this is not representative of all validation partnerships, it recognises the importance of validation as a route into the higher education sector and the need to fix problems which, if left unchecked, could have an adverse impact on student choice.

The report says:

“Validation stands as a critical part of the regulatory infrastructure, and its role as a gateway into the higher education sector means that any dysfunction will have a substantially negative impact on the diversity and quality of provision available to students”.

Relying on incumbents to shape the future of higher education can also curb innovation and result in the entrenchment of the same model of higher education, as providers may be hesitant to validate courses that do not conform to their usual modes of delivery. As the noble Lord, Lord Browne, said, validation can create a closed shop. As part of its work on improving validation services, we would expect the OfS to draw and build on this and other work already carried out.

I also noted the suggestion in the previous debate to create an independent central validation body akin to the CNAA model. As a regulator of the higher education sector, the OfS is ultimately responsible for ensuring that the regulatory framework and its supporting processes are functioning effectively. As the noble Lord, Lord Browne, said, it therefore makes sense for the OfS to have a role in determining how validation problems that could prevent it from fulfilling its responsibilities, such as ensuring that market entry routes and related processes are functioning effectively, are actually fixed.

The OfS’s broader strategic role makes it best placed to identify emerging trends in validation services across the sector and to monitor the impact of whatever solution it puts in place to correct any problems. It will be able to draw on information and advice from all its designated bodies and stakeholders to develop a robust evidence-based approach to address any serious validation failings. I reassure noble Lords that this is not a power easily given or used. We envisage that the OfS would be authorised as a validator of last resort only if it was absolutely necessary or expedient after other measures had been tried and failed.

The noble Baroness, Lady Wolf, said that this would be based only on anecdotal evidence. The Secretary of State may exercise this power if she considers that it is necessary or expedient to do so, having taken OfS advice. That advice is most likely to come in the form of an evidence-based report.

The Secretary of State would need to lay secondary regulations in Parliament. As we all know, it is common practice for these regulations, which use the negative procedure, to be laid before Parliament 21 days before coming into force, giving Parliament the opportunity to see these conditions. As always, Parliament retains the power of veto.

The regulations, should they be deemed necessary, are expected to set out the terms and conditions of any OfS validation activity. I would expect the OfS, as the overall regulator of higher education quality and champion of students’ interests, to be best in class in terms of demonstrating that its validation services abided by best practice validation principles and delivered to the highest standards. I would also expect the OfS to put in place appropriate governance arrangements ensuring that an appropriate level of independent scrutiny was applied to the validating arm of the organisation and the safeguards to protect student interests.

The noble Baroness, Lady Wolf, asked how this would work, who within the OfS would do the validating and whether they would have the requisite skills and qualifications. The regulations by the Secretary of State could attach certain conditions to ensure that the service set up by the OfS was underpinned by the necessary expertise. As we expect members of the OfS board to have between them experience of providing higher education, the organisation will have the necessary expertise to recruit the staff needed to set up a validation function. For further detail on how the OfS validation arrangements would work, I again refer noble Lords to my letter of 19 January enclosing a factsheet published by the Department for Education on validation. With that, I move that this clause stand part of the Bill.

My Lords, I thank the Minister for his full reply, though if anything I am now more confused than ever. Either the validation issue is a serious one, in which case presumably the OfS will be giving out degrees in large quantities, or it is not, in which case I am not quite sure why we have these massive powers. I hope the Government revisit the whole validation issue. I actually have no idea when it appeared on the scene; it was not the case for many years, and I assume it was created by government for a purpose. This is an issue we will want to return to on Report, but at the moment I am happy to see the clause stand part of the Bill.

My Lords, this group of amendments deals with whether and on what basis the powers of the OfS should be strengthened to ensure that it takes over responsibility for many areas which are currently the responsibility of the Privy Council. I should like to make it clear that I have no particular brief for the Privy Council. I am not a member of it; I have never aspired to it, and I do not know how it operates, although I know it operates in relative secrecy. Having experienced some of the debates around the BBC charter renewal and press standards, I want to make it clear that I am not arguing for the Privy Council. It is probably sufficiently devalued—in the public mind at least—and fallen from grace so as not to be considered the way forward in future. I am arguing in this group of amendments for some level of scrutiny and oversight, reflective of what the Privy Council does at present, to be reinserted into this Bill.

Amendments 339, 340 and 341 reinsert the words “Privy Council” where they have been deleted. In Amendments 342 and 343 and in the whole of Clause 52, there are issues that need to be addressed by the Government in promoting the Bill further on this basis and which I hope will be picked up in debate and discussed.

The correspondence on this matter has been flowing. An issue raised by the Constitution Committee resulted in a letter being sent to the noble Viscount, Lord Younger, on 6 January. It raised questions, the response to which I assume is still in preparation. I have not seen a reply, although the noble Viscount may be able to tell us when he responds to this debate. It asked why a number of powers have been transferred from the Privy Council to the Office for Students. The Delegated Powers and Regulatory Reform Committee has also expressed concern about this and the degree to which the exercise of these powers will, or will not, be subject to parliamentary scrutiny. Indeed, we have discussed these thanks to the interventions of the noble Lord, Lord Lisvane, and other noble Lords on a number of occasions, and there are more to come.

Common to all who have commented on this issue is how removing powers from the Privy Council will, in effect, remove them from the oversight of a body that is independent of and separate from Parliament. In some senses, it can be regarded as being cross-party. It behoves those who wish to support the line of argument that I am taking to make suggestions as to how this might be resolved. It seems that the Office for Students is to be the all-singing, all-dancing regulator, both validator and remover of degrees—as we have just discussed—guardian of the flame and operator of all the functions relating to higher education. If this is so, it must not be given responsibilities which cannot be checked and covered if decisions are taken which are not appropriate. There must be some sort of appeals system. Its advice to the sector and to Ministers should, on occasion—and this will be relatively slight—be subject to the will of Parliament. The question is how.

The Privy Council stands as a surrogate for a process which requires Ministers and their advisers—in this case, the Office for Students—to defend the decisions they take in a way which at least opens them to wider scrutiny. I do not see—and it will be for the Minister to convince us if this is wrong—any position within the arrangements currently laid out in the Bill which will satisfy the high standard that the Privy Council is intended to confer on this mode of scrutiny. I beg to move.

My Lords, let me first reassure your Lordships that we absolutely agree that a university title is valuable and prestigious, and that a university’s reputation needs to be protected. I am grateful for the opportunity to set out how we want to do this. I thank the noble Lord, Lord Stevenson, for raising some genuinely interesting points which I shall try to address.

As regards Clauses 51 and 52, currently there are three main legislative routes for English higher education providers to obtain university title. Two of these require consent of the Privy Council. The other requires consent of the Secretary of State under the Companies Act to the use of the word “university” in a company or business name. While the criteria are the same for all routes, in general publicly-funded higher education providers obtain university title from the Privy Council. Alternative providers can currently use only the Companies Act route. This creates a slightly complex and certainly inconsistent situation. The Government want to achieve the position whereby the OfS is able to grant university title to all providers. Clauses 51 and 52 achieve this by making changes to the two Privy Council routes by transferring the responsibility for consenting to the use of university title to the Office for Students. This transfer to the OfS will not lower standards. We believe the reforms will continue to ensure that only the highest-quality providers can call themselves a university. That is because we are not anticipating wide-ranging changes to the criteria. As now, we want any institution that wants to call itself a university to demonstrate that it has a cohesive academic community and a critical mass of HE students. This means that there will continue to be a distinction between universities and other degree- awarding bodies. That is not changing.

I endeavour to reassure the noble Lord, Lord Stevenson: we envisage that providers will be eligible for university title only if they are registered in either the approved or the approved fee cap category, and have undergone strict financial sustainability and quality checks; have over 55% of full-time equivalent students studying HE; and have successfully operated with full degree-awarding powers for three years. As we do now, we intend to set out the detailed criteria and processes for obtaining university title in guidance, and we plan to consult on the detail of this before publication. The OfS will make awards having regard to this guidance, just as the Privy Council does now. I make it clear that we want this to be a high bar, designed to ensure that the reputation and prestige of being an English university are maintained. That is in the interests of the whole sector. The term “university” will, of course, remain a sensitive word under the Companies Act, which means that it cannot be used in a business or company name without the appropriate consent.

I know there are some concerns that our reforms would open the door to low-quality or even bogus universities. That would be a very unwelcome prospect. However, I submit that the protection of the word “university”, along with all the safeguards I have just outlined in relation to obtaining university title, are designed to ensure that this could not happen.

I turn to the amendments that relate to the role of the Privy Council. As I said, we intend to keep the broad structures for the award of university title—that is, a decision which is made independently, having regard to published guidance. At present, providers send their application to HEFCE, which advises the department, which in turn advises the Privy Council, which then rubber-stamps a decision. This is unnecessarily complex. It is legitimate to ask the question posed by the noble Lord, Lord Stevenson: what is the role of the Privy Council in this context? That is an important question. A briefing paper of the Library of the House of Commons describes the Privy Council, in this context, as,

“effectively a vehicle for executive decisions made by the Government”.

We have investigated and cannot cite a single case in recent memory where the Privy Council disagreed with a recommendation by the department.

I hope I have been able to explain that we are not planning to change the independent decision-making and scrutiny, nor the core of what it means to be a university. I therefore suggest that the amendments proposed by the noble Lord, Lord Stevenson, are not necessary and in these circumstances I ask him to withdraw Amendment 339.

My Lords, I thank the Minister for her contribution. I am glad to see that she has got over her sore throat and it is not worse than at our last meeting so she is in full voice again. I am a bit confused about quite where that answer took us. I welcome the candour with which a Minister of the Crown has spoken about the role Ministers play in relation to royal charter achievements. The idea that the Privy Council has never turned down a Minister’s recommendations is exactly the point that many of us were making in relation to the BBC. The former chairman is sitting there, looking as if he is about to leap to his feet and comment on this matter—I am sure he will at a later stage.

My Lords, I was very careful and quite specific in the expression of my description of the Privy Council in the context of this Bill.

The subtlety of that point, I am afraid, has been lost on me entirely and therefore I will continue. The point I was trying to make —it completes the circle of the argument—is that it is not about the Privy Council in essence but about independent scrutiny of the processes under which organisations achieve the valuable status of becoming universities, which at the moment is done by an outside body. It may not be perfect, and probably it is not, but it still requires a step to be taken by a body beyond the processes controlled by Ministers which could, at least in theory, raise questions of an uncomfortable nature.

The Minister will be aware that although there has been no occasion when the Privy Council has not accepted the recommendations, I am sure there have been occasions when difficult questions have been asked of institutions which have wanted to change statutes or make changes to their own governing arrangements. Indeed, I know that to be true. Because of Privy Council requirements these have had to be laid before the council and before they could be agreed they were the subject of a considerable exchange of information, discussion and debate. Indeed, anecdotally one could even talk about the recent press standards issue. Just after the legislation went through both Houses of Parliament, the royal charter for the press recognition arrangement could not be implemented because the Privy Council could not consider two applications for approval on a single area at the same time. There are processes that engage with the sort of scrutiny I am talking about. It is not about the Privy Council but about whether such standards should be in existence. Let us park that for a moment.

As I understand it, the changes proposed in the Bill will not reduce standards. I accept that. There will still be a process under which a university title is different from being a higher education provider—the Minister read out a list including the number of students, the amount of time it takes and so on. These are distinctions that would be made and the body currently charged with that, the Office for Students, would have to make the recommendations, whether to the Privy Council or not, on that issue. That is good and I am not trying to move away from it, but it still raises the question of whether the last step, which may not be a substantive step at the moment but could be, is still required. That is the point that we might want to return to, but I will not detain the Committee further. I look forward to reading Hansard and I may come back to this on Report. I beg leave to withdraw the amendment.

My Lords, if Amendment 362 is agreed to, I cannot call Amendment 363 by reason of pre-emption.

My Lords, this amendment stands in my name and that of my noble friend Lady Wolf. It would limit the powers of entry and search to suspected breaches of registration concerning fraud and serious financial mismanagement of public funds. The relationship between the Office for Students and registered providers is basically a civil one, and indeed in many areas a supportive one, and criminal proceedings such as search and entry should clearly be used only in cases of very serious misconduct, as specified in the amendment.

I recognise that paragraph 1(3)(b) of Schedule 5 says that,

“the suspected breach is sufficiently serious to justify entering the premises”,

and I am sure that the intent is that powers of entry would be used only in exceptional circumstances. However, this part of the Bill has been described by the sector as draconian, and the amendment, in effectively defining what constitutes “sufficiently serious” breaches, would provide considerable reassurance to the sector. I beg to move.

My Lords, I thank the noble Baroness for her contribution. Clause 56 and Schedule 5 as drafted will ensure that the Office for Students and the Secretary of State have the powers needed to investigate effectively if there are grounds to suspect serious breaches of funding or registration conditions at higher education providers. The amendment recognises that these powers are necessary where there are suspicions of fraud, or serious or wilful mismanagement of public funds.

As the noble Baroness indicated, we would expect the majority of cases where these powers would be used to fall into this category, but limiting the powers to this category would risk compromising our ability to investigate effectively certain other cases where value for public money, quality, or the student interest is at risk.

The OfS may, at the time of an institution’s registration or later, impose a “specific registration” condition. This is a key part of our risk-based regulatory framework. For example, an institution with high drop-out and low qualification rates could have a student number control imposed by the OfS if it considered that this poor level of performance was related to recruiting more students than the institution could properly cater for.

A breach of such a condition may not constitute fraud, or serious or wilful mismanagement of public money, as students will still be eligible to access student support. But there is a very real risk that students, quality, and value for public money will all suffer. If the OfS has reason to believe that despite, for example, the imposition of a condition that limits the numbers of students a provider can recruit the provider is nevertheless undertaking an aggressive student enrolment campaign, it will be important that evidence can be swiftly secured to confirm this. If the proposed amendment were made, a warrant to enter and search may not be granted in such cases. That would be an unfortunate and perhaps unintended deficiency in these important powers. I therefore ask the noble Baroness to withdraw Amendment 364.

Before my noble friend sits down, I was wondering whether the justice of the peace who is to decide such a matter has to give a certificate that he has been satisfied on all the matters required in the schedule at this point in order to grant the warrant, because it sets out conditions about which he must be satisfied. I think it would be quite a reasonable requirement that before the warrant was granted, he should certify that he—or she, I should of course have said—is satisfied on each one of all those rather important conditions.

I thank my noble and very learned friend for his contribution. I cannot comment on the specifics of the operation of magistrates’ warrants in England, but I certainly can undertake to write to him with clarification as to how—a very large piece of paper has just been handed to me, entitled, “What will the magistrate take into account when considering whether to issue a search warrant?” If your Lordships, like me, are agog to know this riveting information, here we go.

The magistrate would need to be satisfied on the basis of the written evidence and the questions answered on oath that reasonable grounds existed for suspecting a serious breach of a condition of funding or registration, and that entry to the premises was necessary to determine whether the breach was taking place. Further to this, the magistrate would also need to be satisfied that entry to the premises was likely to be refused or that the purpose of entry would be frustrated or seriously prejudiced. These criteria will ensure the exercise of the power is narrowly limited.

Well, as FE Smith once famously said to a judge, I may not be any wiser, but I am much better informed.

My Lords, I am grateful for that, but of course it does not deal with the question that I am asking. It is very useful information—or rather, I think I am right in saying that, at least so far as I followed it, it is a repetition of what is already in the Bill. The question, however, is whether the magistrate needs to be aware that these are the conditions. When applications for warrants are dealt with, the degree of speed required sometimes slightly derogates from the detail in which they are considered. This is an important matter: if a higher education institution has a search warrant on its premises that is a pretty damaging thing, especially if it happens to come out in the press that a highly regarded senior institution is being subjected to a search of its premises, which may be quite large, when it comes to it.

It would be useful to have a requirement that the magistrate should certify that he or she is satisfied on these matters and grants the warrant accordingly, or something like that.

My Lords, I totally defer to my noble and learned friend on these matters. I do not have the technical information that he seeks, but I undertake to write to him.

I thank the Minister for her detailed reply. I am not sure I understand what the grounds for search and entry in the case of a risk to quality might be. Indeed, as an engineer not a lawyer, I feel that taking a large number of students who you had been told you could not take when they were supported by government loans could count as wilful mismanagement of public funds, but I am sure others have a better understanding than I have.

However, when there is time, I ask the Minister to reflect that some of the clauses in the Bill seem rather draconian powers for a regulator whose general tone is about supporting the system to prosper and grow. But at this point, I beg leave to withdraw the amendment.

My Lords, in moving this amendment I shall also speak to others in this group in the name of my noble friend Lord Stevenson. Amendment 366 is self-explanatory, so I will say a little about the others. Amendment 374 seeks to extend “what … when and how” to,

“what … when, where and how”,

when the Office for Students is determining what course information is to be published. It is designed to make it incumbent on the OfS to consider what would be helpful to students on higher education courses in terms of where the information should be made available. The Government have decided to ensure that how the information provided by the OfS is disseminated should be subject to all considerations with the exception of where it should be available. Surely this is one small amendment that the Minister cannot find a reason to turn down.

At first reading, Amendments 376 and 377 may seem pedantic, but the aim is simply to ensure that this subsection is all encompassing. If the Minister declines to accept these two amendments, it could imply that only some people considering applying for such courses should be included. Should that be the Minister’s intention, he needs to say who he thinks might or should be excluded. I hope that would not mean mature students.

Amendment 379 would achieve the same purpose in respect of staff, who also need to be given consideration in this case. Amendment 384 would add staff working in higher education institutions to the list of those whom the OfS must consult from time to time about the information to be made available. Students and prospective employers are included in the Bill so it is fair to ask why not the people who collectively work to ensure that the student experience is as rewarding, in all senses of the word, as possible. This clearly casts the net wider than academics. Support staff in many categories also contribute to the success of the courses provided to students at our universities and it is therefore appropriate that they should also be part of the consultation exercise.

Amendments 396 and 406 are similarly concerned with ensuring that the views of higher education staff are taken into account—the first in respect of consultation prior to recommendation of the designated body and the latter in situations where it is proposed that the designation be removed. I suspect the Minister will point to the final subsection in all three cases, which allows for the involvement of “such persons” as the Secretary of State “considers appropriate”. These two amendments are concerned with inclusion—involving the people who work day to day in our higher education institutions. The Government have been unwilling to include staff explicitly as the Bill stands, or perhaps they have considered them and deemed such inclusion inappropriate. As a result, what confidence would staff likely have that the Secretary of State might suddenly decide that it was a good idea and introduce them under the “such persons” subsection? These two amendments are about including staff; doing so would not exclude anyone else. It is right and proper that the Minister should agree to this common-sense addition to the Bill.

My Lords, I have three amendments in this group. Amendment 371 urges the Government to make as much of these data open as possible. This is not really the pattern with university data at the moment. Even HESA, which is an easy organisation to deal with, none the less guards them closely so that it can charge fees for their release. I think life will be a good deal better for prospective students if that information is more widely used, available and circulated. It is a principle the Government have established in other areas such as Ordnance Survey and the Land Registry, and it has worked extremely well. I would like to push the Government in that direction so far as university data are concerned.

My second amendment is Amendment 383 and we have been here before. It should be obvious that the principal customers for these data are prospective students. They are the ones who need to know about universities. We really ought to take the views of people who look after prospective students into account in deciding how data should be made available.

I have tabled Amendment 413 because there is a tendency for bodies, once you have given them the power to charge, to start inventing things to do, because they can always get them paid for. Look at UCAS, for example; it probably does five times as much as it needs to. The central “apply” function, which everybody uses, is only about 20% of UCAS’s activity. The rest it can get paid for and it is interesting, so it does it. This body ought to be under tighter financial discipline than that.

My Lords, I support the amendments in this group, particularly Amendment 368, which is about the number of staff on non-permanent contracts and zero-hours contracts, as the noble Lord, Lord Watson, set out. As we have discussed before, these sorts of metrics might be more valuable to the TEF than many of the metrics already in it, because the non-permanent staff and zero-hours staff will have a greater impact on teaching quality than many of the other things which the TEF purports to measure. On Amendments 376 and 377, it is important at all stages of the Bill to ensure that adult, mature and part-time students are included as part of the student population.

My Lords, I have one amendment in this group, which is a very small amendment in that it asks that one word be substituted for another. But if I read out the original clause, it may be evident why this is really quite important. I am very much in sympathy with what the noble Lord, Lord Lucas, said about keeping an eye on the fees that people charge.

The original Clause 61(2) reads:

“The amount of a fee payable by a registered higher education provider under this section may be calculated by reference to costs incurred, or to be incurred”—

so you do not even have to incur it yet—

“by the body in the performance by the body of any of its functions under this Act which are unconnected with the provider”.

My amendment would replace “unconnected” with “connected”. This is quite typical of a number of statements in the Bill to which amendments have been tabled already; it implies a degree of freedom for the regulator or designated body to impose fees of any sort or level, without any requirement that the necessity or even the link to the provider being charged be demonstrated.

It would be entirely possible for the Government, without losing sight of any of their major objectives, to go through the Bill and change these extraordinarily open-ended invitations to levy a charge for something that we know not what. It starts to sound something like the South Sea bubble. With a regulator or an official body, it is very important that the nature of fees, like the nature of information, be very clear, and that there is not an ambiguity in the legislation about the ability of organisations that rest on statute to be able to levy charges that are not in any sense proportionate to the activities or what is required of the individual provider. I would be very grateful if the Minister could come back to us on that.

My Lords, the amendments in my name are relevant to the points that the noble Baroness, Lady Wolf, has just made. I am concerned with the scope that the OfS has to levy charges on the sector; effectively, it is a provision to tax the sector for unlimited purposes, which are not clear, and there needs to be some mechanism of control and full consultation on any proposed charges. Just as regulators impose limits on rises in fees on institutions in line with the cost of living, similarly the regulators should be under an obligation to try not to put up their charges on the sector above the rate of increase that universities can themselves charge.

I think that I am right in saying that some years ago it was decided that a statutory authority did not have power to charge fees unless it was expressly conferred on the body in question. As the noble Baroness said, this is the authority for this fee, so it is exceedingly important that we see that the authority is limited to what it ought to refer to. How exactly it should be dealt with in relation to unconnected matters strikes me as a little strange. I cannot see exactly why something completely unconnected should be regarded as something on which you can reasonably charge other people—taxpayers, or people applying for help.

The noble Lord, Lord Watson of Invergowrie, said that there was no reference to employees in this Bill, but I found one—and I found it a little unsatisfactory, and tabled an amendment to deal with it, Amendment 492. In a moment of reflection, he may see it and come to my help.

My Lords, I remind the Committee that the people who will pay these fees that the regulator is charging will be the students. Therefore, we very much need to make sure the regulator is charging the absolute minimum it can to perform its duties effectively.

My Lords, I shall speak to Amendment 371. I hope that the amendment of the noble Lord, Lord Lucas, will not get lost in this group because what he raises is fundamental to the Bill and to the way we are going to improve the offer we make to students and the veracity with which we look at the higher education sector.

I have written to the Minister on this issue and raised it as a question earlier. I am referring again to the role of HESA and the role of data. Unless you have accurate data with which to interrogate, and unless they are consistent across all providers, quite frankly, they are pretty useless. At the moment, it is not simply that you cannot get at some of HESA’s data. I gave the Minister an example just this week. You cannot get the data because HESA simply says, “Different institutions collect them in different ways”. That is a brilliant cop-out for saying, “We can’t let you have it”.

The other cop-out, which occurs quite frequently, is to say that data are sensitive to the universities because they own them, and therefore could be damaging to their reputation. If we are to give students the sort of offer they rightly should have, and if we are to give taxpayers the confidence they rightly should have, data should not be hidden. Data are absolutely key to delivering a higher education system of the highest possible quality which will maintain the high quality we already have in the future. I urge the Minister, in reference to Amendment 371, to reflect on how we are to ensure that data are not just left to HESA, but that the Office for Students has powers to ensure their consistency and effectiveness to be interrogated.

I thank all noble Lords who have raised these important issues. I agree immediately with the noble Lord, Lord Willis, about the importance and quality of data. I will make one overarching point, in the interest of brevity, before addressing individual amendments. We are not seeking to determine in the Bill exactly which data must be collected or exactly who must be consulted. Data requirements and needs evolve over time, and the body needs to maintain the ability to adapt to changes.

In response to comments made by the noble Lord, Lord Watson, I appreciate what he said. We do not feel it is appropriate, for example, to specify workforce data when all other data will—very importantly—be agreed under the duty to consult. The relevant body will have the duties to plan data publication in conjunction with the full range of interested parties, with sufficient flexibility to take a responsive approach.

Turning to Amendments 376, 377 and 383, given the OFS’s duty to have regard to the need to promote greater choice and opportunities for students, just to reassure my noble friend Lord Lucas, there is, to my mind, no question that under Clause 59(5), considering the needs of people thinking about undertaking higher education courses must include considering what would be helpful to prospective and potential students from a diverse range of backgrounds.

In considering Amendments 368, 379, 384, 396 and 406, it is expected that the views of higher education staff will be considered as part of the voice of the sector institutions. The OfS will also have the discretion to consult persons they consider appropriate, including any relevant bodies representing the staff interests. I think the noble Lord, Lord Watson, foresaw the words that I have just spoken.

On that point, the Minister said that it would be “expected” of the OfS, but I do not see what could be done if it chose not to do it. I would think it was a normal thing to do, but if it is expected, why not just say that or something equivalent to it in the Bill?

The noble Lord makes a fair point, but I must go back to the overarching statement that I made at the beginning of the Bill: we have carefully crafted it to look ahead to the future. I have said specifically that we do not consider it right to be too exact in what we put in the Bill. I hope he will accept that.

On Amendment 371, spoken to by my noble friend Lord Lucas, the Government are committed to making data available publicly and in a format that can be easily used wherever possible. However, the data body will collect personal data and it may therefore not be appropriate or lawful to publish identifiers. In accordance with the code of practice for official statistics, the statistics published by the body should not reveal the identity of an individual.

On Amendments 413, 415, 415A and 415B, fees should be fair and proportionate, neither creating disproportionate barriers to entry nor disadvantaging any category of provider. I want to reassure noble Lords that there are several safeguards to prevent a burdensome charging regime. First, the Bill makes clear that the total fees charged by the body must not exceed the total costs incurred. However, I recognise that there must in addition to this be due oversight to ensure that these costs are kept to a minimum—so let me answer some points raised by the noble Baroness, Lady Wolf, the noble Lord, Lord Liddle, and my noble and learned friend Lord Mackay. The data body will be required to publish a statement showing the amount of the fees it charges and the basis on which they are calculated. Also, as part of the triennial reporting process, the OfS must report to the Secretary of State on the appropriateness of any fees charged by the designated body. We are confident that these safeguards are sufficient and that further specific requirements would be overly restrictive.

On Amendment 366, I must stress that we want to minimise the regulatory burden on providers by avoiding duplication. For this reason, it is best for the sector to have only one body designated to collect the information at any one time. However, I also recognise that there are already several sector organisations with an interest in gathering data, and I understand that noble Lords may have concerns about the availability of data and collaboration over their use. I assure Members that Clause 59(7) and (8) set out a clear expectation that the data body must co-operate with those other organisations and have regard to the desirability of reducing burdens on providers.

The noble Baroness, Lady Wolf, referred to unconnected fees. I hope I can give some reassurance that I understand the intention to ensure that fees are calculated fairly. However, I fear the effect would be to damage the interests of both the data body and providers. It would prevent legitimate overheads related to designated functions being incorporated in the annual fee and block the current practice, common to sector bodies, of charging fees varied by the number of students at a provider, which is essential to ensuring proportionate and affordable fees. With these explanations, I hope the Lord will withdraw Amendment 366.

On the Minister’s last point about connected and unconnected fees, I understand that the Secretary of State has to be satisfied that the fees charged are proportionate. On the other hand, the Secretary of State is not obliged to consider whether they are connected in any way whatever with the provider. That is the problem. The Secretary of State’s power to monitor the fees depends on what the authority is for the fees being charged. Most of the illustrations that the Minister has given are connected in some way with the provider. For example, if it is a question of assembling data, the data will include those provided by the provider who is charged—so that is connected to the provider all right. It is perfectly reasonable to charge for overheads in relation to a function connected with a provider, but charging for those unconnected with a provider seems to open up a large and rather unspecific area.

I will attempt to answer the points made by my noble and learned friend. Surely this is encompassed by the safeguards that I outlined. There will be an opportunity on a regular basis, as I mentioned, to analyse and scrutinise the statement showing the amount of fees, including those that are unconnected, and how they were made up.

My Lords, I am grateful to my noble friend for his reply on Amendment 371, but I think he rather missed the point. In respect of school data, the Department for Education already publishes extensive information, under the heading of performance tables, as open data. The level of information has grown substantially over the years and is free for anyone to reuse, as is the database on schools, EduBase. I am very sorry to say, as the proprietor of the Good Schools Guide, that this has resulted in the emergence of a lot of competitors, which is thoroughly tiresome. While it would be convenient for me if the Government did not do it, it is very good for the economy and for students and pupils that they have, and it is the pattern I would like them to pursue with regard to university data.

The Department for Education also makes available the National Pupil Database, which is confidential, at various levels. The whole database is available to the “very serious” level of researchers, but anonymised information is also available at pupil level, which is immensely useful for understanding how schools are operating and how various examinations and other aspects of the school system are working. That is a precedent for really good practice that is, now, contained within the same department that will look after university data.

The practice for university data is different. It is either held by UCAS, in which case it is effectively not available to anybody, or by HESA. In the latter case, there is a long application process to determine whether it will let the data out because nothing is standardised and you have to ask permission from individual institutions. It then charges a hefty fee. This is a comfortable situation for me, as a user of HESA data, because it means I do not get a lot of competition, but it is not the way the market should be. The market should be open. The only reason that the use of the data is charged for is that HESA wants to make money out of it. If it is given the power to charge institutions then it is in the interests of the economy and the country that it makes it freely available whenever it can. It is much better for the country that HESA should make a little bit of money by making it available in a more restricted way and for a large fee, or a substantial fee—not an unreasonable fee; HESA is a good organisation. We should go open. The Government, as a whole, have made a lot of progress in making much bigger collections of data open, when they were formally charged for. There has been a lot of benefit from that. That is the practice we should follow with the university data.

My Lords, this has been a livelier group of amendments than had been anticipated. Gratitude is due to the noble Baroness, Lady Wolf, for exciting some controversy. It is a surprise that the shortest amendment to the entire Bill—it is just two letters—led to so much impassioned debate.

The Minister is treading on rather boggy ground if he feels that his legal people will be able to counter the argument of the noble and learned Lord, Lord Mackay, about the precedent for statutory bodies. The Minister has developed the practice of writing letters to us in Committee. I suggest to the noble and learned Lord, Lord Mackay, that he might write to the Minister on this particular point and perhaps assist in clarifying the position and getting the Minister to think again.

I liked the noble and learned Lord’s point about spotting a reference to an employee in the Bill. He was, of course, referring to a part that we will consider on Monday, but that it took his legal eagle eye to detect it underlines my point about staff being notable by their absence from the Bill, and hence, I would suggest, being undervalued. I take on board what the Minister said about it being expected that the OfS will consult staff. Experience tells us that expecting organisations or employers to do something on behalf of their staff often leads to disappointment, and that is why I believe it should have been a bit more explicit in the Bill. I suspect, however, that his comments today may well be quoted by a number of staff and their representative organisations in future. There is another question, which perhaps he could answer in one of his famous letters, which is: what recourse would be open to staff if it was shown that the OfS was not considering their views, as I suggested in my amendment?

Other noble Lords spoke about financial issues, which I think remain as they were prior to the debate, but it has been both enjoyable and interesting. On that basis, I beg leave to withdraw my amendment.

My Lords, many of the providers which will come under this Bill are operating with similar qualifications in other markets and countries. I thoroughly approve of this clause and what it aims to do, but the providers deserve the same level of confidentiality from researchers as they get from regulators. I beg to move.

My Lords, I thank the noble Lords, Lord Stevenson and Lord Lucas, and the noble Baroness, Lady Wolf, for raising these important issues.

The amendments seek to limit the power of the OfS or someone working on its behalf to carry out efficiency studies on HE providers under Clause 63. I assure the noble Lord, Lord Lucas, that we entirely accept the principle of what he is seeking to achieve here. For many providers on the register the teaching of higher education will be just a part of their overall business. Many providers will also carry out other activities, such as offering corporate conference facilities or operating sports facilities which the public can access.

Let me also assure my noble friend that the Government would not want the OfS to look at the efficiency of those other activities. Instead, the Government would expect the OfS to confine its efficiency studies to providers’ HE teaching activities. I accept that the Bill does not explicitly limit the OfS’s efficiency studies power in the way my noble friend seeks but we do not think that these amendments would achieve that laudable end. They seek to link the OfS’s efficiency studies power to those activities which are subject to the contract between the OfS and the provider relating to the provider’s registration. A provider’s registration, however, is not subject to a contract.

The Bill is not, though, entirely silent on how the OfS should carry out its functions. I point to the general duties this Bill places on the OfS in Clause 2(1)(e), which requires the OfS to,

“use the OfS’s resources in an efficient, effective and economic way”.

Furthermore, Clause 2(1)(f) places a duty on the OfS to have regard to,

“the principles of best regulatory practice, including the principles that regulatory activities should be … transparent, accountable, proportionate and consistent, and … targeted only at cases in which action is needed”.

Let me also assure my noble friend that individuals conducting efficiency studies on behalf of the OfS will be subject to the same confidentiality requirements as the OfS.

I hope that these latter points provide my noble friend with some reassurance that the OfS will carry out its efficiency studies in the focused way he seeks to achieve. This level of focus is certainly something the Government want to see. In these circumstances I ask him to withdraw Amendment 416.

My Lords, I am very grateful to my noble friend for that explanation, which I shall go away and chew over. It is not that the university might be running a tiddlywinks club for money that worries me, but that it may well be selling the same higher education product as commercial training outside the university sector, or internationally online. These are both money-making activities where the university is concerned about commercial confidentiality but, under the Bill’s current wording, researchers might be asked to look at and gather data on them.

I shall have to do some work between now and Report, but I hope the Government will look again at what I have said today. I beg leave to withdraw the amendment.

My Lords, in moving Amendment 420, which is in my name and that of my noble friend Lady Wolf, I will also speak to Amendments 421 and 421A in my noble friend’s absence.

These amendments bring us back to the discussion we had previously about the costs and charges of the OfS. The purpose of the amendments is to probe the issue of who will act to control the costs and charges of the regulator—the Office for Students. Higher education providers will pay these charges, and hence students, at the end of the day, will have to bear them. The OfS is referred to frequently as a regulator by Ministers and others talking about the Bill, but nowhere is it clear in the Bill whether or not the OfS will have to sign up to the Regulators’ Code, published by the Department for Business, Innovation and Skills in 2014. If it was clear that the OfS was covered by the code, it would provide some of the reassurance sought in a number of amendments to the Bill.

The code for example requires that regulators must consider how they can best minimise the,

“costs of compliance for those they regulate”—

the issue behind some of these amendments. They also,

“should avoid imposing unnecessary regulatory burdens”,

and,

“should carry out their activities in a way that supports those they regulate to comply and grow”.

As your Lordships can hear, the language of the Regulators’ Code is both clear and supportive. Can the Minister provide assurance that the OfS will sign up to the Regulators’ Code? It would be helpful in providing clarity and reassurance to the sector. I beg to move.

My Lords, I am greatly in sympathy with what the noble Baroness has just said. I very much hope that universities will carry those principles through into their current practice of taking lots of money off students who are studying humanities in order to give it to students who are studying sciences. The little bits of money being unfairly taken off students to fund the OfS are not a very substantial worry in proportion to what universities are already doing to students on different classes of course.

My Lords, I will speak to Amendment 423 in my name. The question is about grants to the OfS for set-up and running costs, but there is the additional possibility, picked up in the amendment of the noble Baroness, Lady Brown, that there may be other aspects and bright ideas that come to mind about how these charges might be recouped. The amendment asks whether or not there are tight guidelines available which would restrict the ability of the OfS to raise funds in a broader sense other than specifically for set-up and running costs. I look forward to hearing the Minister’s response.

The point raised by the noble Baroness, Lady Brown, in her opening remarks on Amendment 420 is important, because we still worry a bit about what the nature of the beast called “OfS” is. Is it a regulator? It has been said that it is, and if it is, does it fall under the Regulators’ Code? I think I heard the Minister say on a previous amendment that it did not qualify to be considered within the code of practice for regulators. But if that is so, why call it a regulator? It will cause confusion and doubt if, in the public mind, it is a regulator for the sector but in fact it is not because it does not fulfil the criteria that would normally apply to other regulators. As the Minister said, these are not unhelpful comments in relation to regulator practice. They would clarify a lot of the uncertainty we have been experiencing in terms of how the regulator will operate. It might be that there is a case for it, even though it was not intended.

The noble and learned Lord, Lord Mackay, has pointed out a number of times that there are other statutory provisions and considerations that might bear on how this Bill is constructed and issues relating to it. It is wise to have a wider net on these matters than simply to focus on the wording of the Bill. If there are other considerations that we ought to be aware of, it would be helpful if the Minister could respond, making quite clear what it is that drives the determination that the regulatory code does not apply in this area, even though some of the factors might be helpful and effective in terms of how it discharges its responsibilities.

My Lords, I want to repeat what has been said by a large number of people in the Committee this afternoon about the issue of fees paid and how this is looked at and moderated. It seems fundamental to the future of the relationship between the regulator and the sector. An awful lot of what one gets from reading the Bill is the sense that they will be at odds—that the regulator is there to punish, to force, to fine and to search. Ultimately, that is completely destructive. The most destructive thing of all will be if people are fighting constantly over the nature of fees, what is legitimate and what is not.

Therefore, rather than repeating comments that I made in connection with an earlier amendment, I simply say how fundamentally important this issue is and how very much I hope that the Government will look carefully at the structures that are being set up. Fees and payments go to the heart of everything. As a policy researcher, “follow the money” is always what I say to myself. It would be very helpful if the Minister were able to assure us that, following this House’s deliberations on the Bill, that is one of the things that the Government will look at in terms of other legislation and statutory requirements, and that they will look at how, going forward, the OfS will interact with the sector in a way that is mutually beneficial rather than being made up of constant arguments and turf wars.

My Lords, it is the Government’s intention that the OfS’s running costs will be shared between the sector, in the form of registration fees charged on registered providers, and government. The Bill enables this, granting the OfS the power to charge fees to cover the cost of its functions, with the detail of those fees to be set out in secondary legislation following proper consultation with the sector. That consultation is now open.

Moving to a co-funded model will be more sustainable, bringing the approach to funding the OfS in line with that of other, established regulators, such as Ofgem and Ofcom. It also reflects current practice in sector-owned bodies, including HESA and the QAA. Asking providers to contribute will strengthen their incentive to hold the OfS to account and challenge its efficiency. To reassure your Lordships, the total amount of funding raised by fees would represent less than 0.1% of the annual income that the sector generates.

Turning to Amendment 423, I thank the noble Lord, Lord Stevenson, for his thoughtful contribution. Let me assure him that the fees consultation seeks views on guiding principles in relation to areas where the Secretary of State may provide supplementary funding to the OfS. This could include funding to cover set-up costs and elements of its running costs. If we were to specify this in legislation, however, in the way that the amendment does, it would inadvertently prohibit the Secretary of State from giving money to the OfS to distribute as teaching grant.

My Lords, I thank the Minister for her detailed reply and her very strong assurances in this area. I thank noble Lords who have contributed to the debate. As the noble Baroness, Lady Wolf, said, a healthy relationship between the regulator and the sector will be hugely important to success. The assurances that the Minister has given us, and indeed her agreement to look further into whether the OfS should sign up to the Regulators’ Code, are extremely helpful. Again, speaking as an engineer and a former vice-chancellor, I think the language of the Bill is sometimes quite hard for a novice reader to understand. The language of the Regulators’ Code is excellent; it is clear and simple and is about building an effective relationship between the regulator and the regulated. It would be a real assurance for the sector if the Government looked hard at the OfS signing up to it. I thank the Minister for her reassuring response, and beg leave to withdraw the amendment.

My Lords, Amendment 429 is in my name and that of the noble Baroness, Lady Wolf. This is a probing amendment to investigate the relationship between the two higher education regulators—the Office for Students and the Competition and Markets Authority. The perception of overlap between the two regulators, the potential for conflicting advice and requirements, and the perception of the difficulty of collaboration under Competition and Markets Authority regulation are all issues causing concern in the sector. As an aside, this is part of the reason behind our desire for the OfS to promote both competition and collaboration.

I ask the Minister: would it not be possible for the sector to work with a single regulator, the OfS? If this cannot be the case, will she explain how the two regulators will work together with the sector to ensure they support,

“those they regulate to comply and grow”,

as the Regulators’ Code says? I beg to move.

My Lords, I strongly support what my noble friend Lady Brown said. Up until now, higher education has been fortunate in that it has had relatively few different regulatory authorities. The OfS will be quite different from anything that we have had before.

I refer to other sectors. I personally know the social care sector quite well. Those of us who have worked with or in this sector or the health sector, for example, know that, when you have more than one regulator, if they overlap or if it is not really clear who is responsible for what, you get regulatory and expenditure creep. This is not necessarily what the regulators mean—at least, not at the top level—but it is very much the experience that one has. The noble Lord, Lord Willetts, referred to this earlier in our deliberations. He talked about the problems that you could have in the health sector as a result of Monitor thinking that bringing institutions together was not a good idea when other people thought it was.

This is a probing amendment to ask for clarity, if not total simplicity, because there are very real costs when a sector does not have it.

My Lords, I apologise to the Minister. I was watching a figure behind who seemed to be moving towards an upright position and therefore might speak. If he is not I will carry on.

This is an interesting amendment and I am glad that it has been raised in the form that it has. We cover a number of points every time we debate this, but here is a question that cannot be ducked. The reality is that universities have to face a number of different regulators already. Those that are charities obviously have the Charity Commission as their regulator. Then there are those that are established as companies. As we have heard, many higher education providers have the permission of the Secretary of State to use “university” in their title or, even if they do not, are subject to anything that may be required under the Companies Acts. Many will have a variety of regulators; it is not unknown to have companies that are also charities. There are also bodies that are not for profit—corporations that are subject to the Companies Acts, but in a different way from those that are set up for profit.

However, I think the main purpose was to try to untangle the relationship between the CMA—a recent entry to this area—and the universities. It is a little surprising that the CMA has entered this area rather late given that it stated recently that providers of higher education that now come within its scope are subject to the Consumer Protection from Unfair Trading Regulations 2008; the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013; the Unfair Terms in Consumer Contracts Regulations 1999, for contracts concluded prior to 1 October 2015; and Part 2 of the Consumer Rights Act 2015. That Act went through your Lordships’ House just over a year ago and included the application of consumer rights to public bodies such as institutions of higher education. It was amended during its passage through the House.

As I think is well known, the CMA has carried out a preliminary investigation into the new responsibilities that it has taken on in the last 18 months, and has obtained undertakings from more than a few universities to secure improvements to their terms and/or practices. It has written to all higher education providers, drawing the findings of the compliance review to their attention, and asking them to review and revise their practices and terms, as necessary, to ensure compliance with consumer protection law.

Where will this wave of regulatory practice, which is sweeping in with unforeseen and possibly unpleasant purposes, stop? I do not object to the CMA’s engagement or to anything that raises standards and keeps public bodies moving forward. However, there will be regulatory overload, as has been mentioned. We must be very careful to guard against that. The way most sectors operate in the event of overlapping regulators is to obtain a memorandum of understanding between the principal regulator—or in this case regulators—and the one closest to the bodies concerned. If the OfS is to be a regulator, we will need to know how this will operate in practice. It is welcome news that the Bill team is considering whether to engage more directly with the Regulators’ Code, as that would solve a lot of problems.

Before we proceed further with the Bill, we should be told exactly what the boundary between the CMA and the OfS, as envisaged, is. Indeed, it would be helpful to be informed of the boundary between the Charity Commission and the Registrar of Companies, if that is relevant. We should also probe a little further whether it is envisaged that a memorandum of understanding between these regulators will be drawn up to protect the provision we are discussing. If so, what timescale applies to that? Could that be provided by Report, at least in draft form, so that we can discuss it further?

My Lords, I thank the noble Baronesses, Lady Brown and Lady Wolf, and others for laying this amendment as it gives me the opportunity to clarify the role of the Competition and Markets Authority in the higher education sector. I say at the outset that I understand that the CMA is content that there is no conflict between the two organisations. The Government share that view.

In summary, the CMA is not a sector regulator but an enforcer of both competition and consumer protection law across the UK economy. It also has a number of other investigatory-type functions across the economy, including investigating mergers and conducting market studies and investigations, so I shall say a little more about competition and consumer enforcement in particular.

Enforcing competition law is a specialist activity requiring particular economic and legal expertise. Enforcement cases require substantial input of specific skills over a sometimes protracted period of time. The OfS will not have these and it would be unnecessary and expensive to replicate them. Placing a duty on the OfS to encourage competition between higher education providers in the interests of students and employers is a very different matter to enforcing competition law. We believe that there is no conflict between these two different responsibilities. Arguably, giving the OfS additional competition enforcement powers would risk distracting it from its important regulatory duties, or would possibly create conflicts of interest.

To answer concerns that encouraging competition would be at the expense of collaboration, there should be no conflict between providers collaborating and the OfS’s duty to have regard to the need to encourage competition where that competition is in the interest of students and employers. We are wholly supportive, as is the CMA, of collaboration and innovation where they are in the interest of students.

I thank the Minister for his explanation and the further detail he supplied. I would be interested to know whether there is any thought that there might be an MoU between the regulators. I also ask him to encourage the CMA to produce some advice for universities in simple language to explain its role and how it works alongside the OfS. I very much hope that we will hear more about a potential MoU and, in the light of his detailed explanation, I beg leave to withdraw the amendment.

Amendment 434ZA, in my name and that of the noble Viscount, Lord Ridley, is not exactly a probing amendment but it seeks to emphasise the importance of something that gets rather little attention in the Bill as it stands. In speeches and discussions we have heard a great deal about the importance of innovation, opening up the sector and preventing vested interests getting in the way. There has also been quite a lot of discussion on the Floor of the House about the need for diversity. However, there is remarkably little about diversity in the Bill. When I looked through it did not appear at all, although the Lords spiritual had a couple of amendments that explicitly talked about it. The point of this amendment is to make explicit that diversity is truly important and we stand to benefit from a far more diverse set of institutions. However, diversity will not happen by magic or automatically simply by virtue of making it easier for a certain number of new providers to enter the higher education sector.

It is very important that we think positively about diversity and not negatively in terms of possible barriers. Diversity does not happen automatically, and one reason that Governments exist is to tackle what are in effect major barriers to entry when those barriers mean that we do not serve the long-term or even the short-term interests of the country and of students.

Having more providers that offer business degrees may be very good for the quality of business degrees but it will not in itself do anything either about the need to think of very different ways of delivering higher education and lifelong learning or about the areas where we know that we have enormous skills shortages in this country, which will not be solved without active government.

Over the last 15 or 20 years, there has been a very large increase in the number of providers, although possibly there should be more. Alternative providers offer courses which are cheap, which you can afford to put on with the resources at hand and which do not put you at risk of going broke in week one. That is absolutely as it should be but, when you look at the profile and detail of what is being offered, as I have done, you find that it is accounting and business and business accounting—things that do not need huge up-front investment.

A similar pattern can be seen in, for example, the apprenticeship statistics. Again, there has been a regime of effectively inviting people to offer apprenticeships—not dissimilar to what we are talking about for higher education. The result has been overwhelmingly a growth in apprenticeships that do not require expensive equipment or involve high-risk activity, which means that you can cover your costs and more with relative ease.

Therefore, the purpose of the amendment is to argue that it is truly vital that the Government take a more active approach to encouraging new and different institutions. If they do not, then simply enacting the current regime as proposed will not solve the problem. New entrants will not on the whole do science or engineering. I am sure that lots of them would love to do exciting and expensive things, but the reality of being a new, small institution is that they do not.

I have mentioned the history of apprenticeships. Another example is the fight over saving archaeology A-level. I have considerable sympathy with the examination boards. Running things where you lose money heavily is quite hard to do. Unless you are large enough to spread those courses, by and large you just do not do them. These courses are very expensive and, without government support, they will be too risky and long-term for most people, but they are areas that are badly needed.

In a week in which an industrial strategy has just been launched, it would be appropriate for the discussions on the Higher Education and Research Bill also to take account of the fact that, in the past, Governments in other countries have felt the need to take a very active role in this area. They have felt the need to put long-term planning and substantial government money into the sector in a directed and planned way, because otherwise things would not happen. In this context, it seems to me that the Dyson Institute of Technology, which is clearly a wonderful initiative, makes the point. How many very rich individual entrepreneurs with the ability and money to take these decisions are there in this country? So far, there has been James Dyson. As a strategy for providing that part of the higher education sector, relying on the beneficence, good will and commitment of rich individuals is not very sensible. Obviously we cannot go back to the 1960s but it is worth looking at the commitment, vision and expenditure that were put in back then.

Therefore, the amendment asks for the Secretary of State—not the OfS—to have an obligation to take, on a regular basis, a strategic view of where in the country and in what disciplines we might need something more, something new, something different and something involving government commitment and government money. We suggest that the Government also look at how these institutions can be set up. We have gone on a lot this afternoon about validation. Going back to the 1960s, we had institutions that were developed over time. They launched forth, they had their own degree-awarding powers from day one and they had royal charters.

I think we are getting into a sort of mindset here in which there is the existing sector and then there will be new, brave little institutions, which may or may not need validation by other institutions and, if they do not, maybe the OfS will do it. That is too narrow and far too limited a view of what our universities and our higher education need to look like. I am sure that one possible response will be to say, “Oh, I’m sure the Office for Students will do it”. The Office for Students is already being asked to do an amazing number of things. I do not believe that this is a matter for a regulator; it is for the Secretary of State, on behalf of the nation and on a regular basis, to look at how, in new ways or “back to the future” ways, something can be done to create genuine diversity and genuine responsiveness to the needs of the economy and of society now and in the decades to come. I beg to move.

My Lords, I support the amendment, which also stands in my name. I did not speak at Second Reading but I hope the Committee will indulge me. I attended nearly all of the Second Reading debate but, because I thought I would not be there at the end, I did not put my name down to speak.

I share some of the doubts that have been expressed about the Bill in other parts, but I am enthusiastic about one of its principal aims, which is what the amendment seeks to reinforce. I refer to the encouragement of diversity and innovation, as the noble Baroness, Lady Wolf, has eloquently explained, and the encouragement of new entrants, not just passively but actively—letting 1,000 flowers bloom but planting 1,000 flowers as well.

I am a great believer in competition, so it is important that we do our best to bring forward new ways of doing higher education, as well as new types of courses and new locations for them, especially in vocationally relevant areas—areas that are in demand with employers and where the signal is not being transmitted well enough to students. As the noble Baroness, Lady Wolf, said, it is not just a matter of opening the gate and seeing a flock of new entrants come through; starting a new university is a huge investment and there are enormous barriers to entry. You need premises, people, programmes and quite a lot of pennies. So, before taking the plunge, as the noble Baroness said, entrepreneurs will need to be given signals that the state prioritises supporting certain courses and certain disciplines. As has been said, the industrial strategy makes the case for singling out and encouraging certain things that we think will be important in the future.

The example that I would give is data science. I know somebody who, as a sideline, retrains the holders of physics PhDs as data scientists, because that makes them much more valuable to employers in the private sector. There is a huge demand for data science in business, and that is the kind of thing that perhaps it would not be immediately obvious to existing universities to supply, or indeed obvious to new entrants, who might be hard pressed for cash and so on. I think that with the right kind of encouragement from government, advised by independent expertise, the sector could benefit from this sort of duty on the Secretary of State to consider where new ideas should come from.

I am no fan of committees for committees’ sake, so I am not wedded to the exact form of the amendment. In that sense, I see it as somewhat probing—raising the issue and seeing whether the Government are interested in responding in a positive way to this suggestion.

My Lords, I support the amendment. As the noble Baroness, Lady Wolf, said, the possible proliferation of new universities is likely to include a great many offering subjects such as business and management, and far fewer offering subjects such as civil engineering, artificial intelligence and modern languages—whereas it would make sense for any new provision to arise out of shortages in disciplines and skills within the UK.

Secondly, there are parts of the country that are ill served by further and higher education. I have noble friends from Berwick-upon-Tweed who often relay the lack of local provision for local people to study. This is a cause of unfairness, not only in the north-east but in other parts of the country which are also ill served. If new provision were being set up it would make a lot of sense to look geographically at the parts of the country where there is less provision for people to study. Surely it would be a helpful part of the duties of the Office for Students to ensure that new providers should be established only—or mainly, perhaps—where they meet needs both of location and of provision. The amendment therefore seems a helpful addition to the Bill.

I too support the amendment. There are things that only Governments can do. If we want an example of creating universities, we should look at the career of our late colleague Lord Briggs and what he did, and what the status of the institutions he created is now. They are considered to be top-ranking universities. As the noble Baroness, Lady Wolf, said, they were just made and put in place and they ran. It can be done. Indeed, it is happening overseas: other countries are doing it.

We are proud that we have a collection of top-ranking international universities. Why do we not want another one? What would it take to make another one? It would take substantial action by the Government. Do we need a tech powerhouse on the lines of Stanford or MIT? Yes, I think we probably do. As my noble friend Lord Ridley said, there is a space for that—but it is not going to happen through little institutions founding themselves. We have seen enough of what that is like. I am involved with a couple of small institutions trying to become bigger ones, and it is a very hard path. Reputation is hard won in narrow areas, and it takes a long time. Look at how long it has taken BPP to get to its current size: it has taken my lifetime.

The Government can make things happen much faster, and if they realise that things need to be done, they can do that. For them to come to that realisation, a process of being focused on it is needed, and the committee proposed in the amendment certainly represents one way of achieving that. I would like to see, for instance, much wider availability of a proper liberal arts course in British universities. By and large, they are deciding not to offer such courses. If the Government said, “We want to see it; we will fund this provision”, and if the existing universities did not respond, we could set up a new one, in a part of the country that needed it. That would be a great thing. Equally, the idea might be taken up by existing universities. That is not going to happen through the market, because the market in this area is far too slow. But the Government can do it, and they ought to be looking to do it.

I support the amendment and endorse everything that the noble Baroness, Lady Wolf, said in introducing it. She hit the nail on the head very firmly. There are issues around new providers. There is not very good evidence, and the evidence that there is seems to be anecdotal rather than scientific. The information published recently by HEPI threw doubt on whether many of the institutions that have come forward were bona fide or would survive, and some questionable practices were exposed—so there is an issue there.

In addition to the points that the noble Baroness made, which I endorse, there is, again, a gap in the centre of what the Office for Students is being established to do. It could have been imagined—pace the points made by the noble Lord, Lord Willetts, about not wanting to overload the OfS—that it would have a responsibility to speak for the sector to the Secretary of State about the gaps that it may see in provision, and the issues that may need to be picked up in future guidance. I would have expected that to be the normal thing.

However, it is interesting to see that the general duties in Clause 2 do not cover it. They are all about functions to do with quality, competition, value for money, equality of opportunity and access. They are nothing to do with surveying and being intelligent about the future and how it might go. However, as the noble Viscount, Lord Ridley, said, the game may have changed a bit now with the publication of a strongly worded industrial strategy—or at least, we hope it will turn into an industrial strategy after the consultation period. Out of that will come a requirement to think much harder about the training and educational provision that will support and supply the industrial machine that we will need as we go forward into the later parts of this century. It therefore makes sense to have advance intelligence about this, and to recruit from those who have expertise. It makes even more sense to do that in the way suggested by the amendment.

My Lords, we agree that it is necessary to have a holistic overview of the sector to understand whether our aim of encouraging high-quality, innovative and diverse provision that meets the needs of students is being achieved. However, I do not agree that to achieve this an independent standing committee is necessary. There are already a number of provisions in the Bill that allow the Secretary of State, the OfS and other regulatory or sector bodies, where necessary, to work together to consider these important issues.

For example, Clause 72 enables the Secretary of State to request information from the OfS, which, as the regulator, will have the best overview of the sector. Clause 58 enables the OfS to co-operate and share information with other bodies, and, as we have discussed at length, the Secretary of State can give guidance to the OfS to encourage this further.

We have already debated the issue of new providers at length, but let me reiterate that there is a need for new innovative providers. The Competition and Markets Authority concluded in its report on competition in the HE sector that aspects of the current system could be holding back greater competition among providers and need to be addressed. In a 2015 survey of vice-chancellors and university leaders, 70% expected higher education to look the same in 2030. This risks becoming a self-fulfilling prophecy.

We must not be constrained by our historical successes, because if we place barriers in the way of new and innovative providers we risk diminishing the relevance and value of our higher education sector to changing student and employer needs, and becoming a relic of the last century while the rest of the world is moving on.

I do not think that the amendment was proposing barriers of any sort. We need to be clear about that. It does not propose barriers in aid of diversity. It just says that simply removing barriers to entry would not deliver diversity. I apologise if that was not made clear.

I thank the noble Baroness for her intervention. I fully accept that the express text may not have intended that—but we have to look at what the consequences of this new independent committee would be, and infer from that what effect it might have on the broader sector.

At the moment we have a university sector that needs to do more to support its students and the wider economy: it has built up over time to serve only parts of the country; it is not providing employers with enough of the right type of graduate, especially STEM graduates; it can do more to offer more flexible study options to meet students’ diverse needs; and it can to do more to support social mobility. It is not enough simply to ensure that all young people with the potential to benefit have a theoretical opportunity to go to university and secure a good job when they graduate.

Alternative providers are already supporting greater diversity in the sector: 56% of students at alternative providers are aged 25 or over, compared with 23% of students at publicly funded institutions. They also have more BME students: 59% of undergraduate students at alternative providers are from BME groups, compared with 21% at HEIs.

The Government are determined to build a country that works for everyone. That is why we have announced a number of opportunity areas that will focus their energy, ideas and resources on allowing children and young people to fulfil their potential. That, in conjunction with what the Act sets out to achieve—the broad vision that I think universities accept as positive for the sector—holds out hope that we are proceeding on a journey in which we can have a lot of optimism and confidence.

I note the references to skills and would stress that we are carrying out reform programmes in higher education and in technical and vocational education at the same time. This gives us the opportunity to ensure that these programmes of reform are complementary. The Government’s recently published Green Paper on an industrial strategy outlines further our vision for skills and a system that can drive increases in productivity and improvements in social mobility. We are committed to reforms that will improve basic skills, create a proper system of technical education, address regional skills imbalances and shortages in STEM skills, and make it easier for adults to retrain and upskill in later life.

One of the 10 pillars of the industrial strategy is that we will create the right structures and institutions to support specific places and sectors. In some cases, this will mean strengthening existing educational institutions or creating new ones. We recognise the need for accurate information to identify and address current and future skills shortages, and we will work towards a single authoritative source of this information. To ensure a joined-up approach, the OfS’s ability to co-operate with a range of other bodies, including the Skills Funding Agency and the Institute for Apprenticeships, will be important. Clause 58 enables that.

The important issue of part-time education was raised. The Government agree that part-time education, distance learning and adult education bring enormous benefits to individuals, the economy and employers. Our reforms to part-time learning, advanced learner loans and degree apprenticeships are opening significant opportunities for mature students to learn. The OfS must—it is not a question of should, or if it feels like it—have regard to the need to promote greater choice and opportunities for students, and to the need to encourage competition between providers where that competition is in the interests of students and employers. That is alongside the other practical support that the Government are already giving for part-time students, including providing tuition fee loans where previously they were not available. We have also recently completed a consultation on providing, for the first time ever, part-time maintenance loans. We are now considering options. The Bill already provides for the mechanisms to enable the kind of information referenced here to be gathered effectively. I hope my remarks have reassured the noble Baroness, and I therefore ask her to withdraw her amendment.

Would it be worth considering inserting the phrase from this amendment,

“emerging needs for new providers within the higher education sector”, into the general duties of the OfS in Clause 2? It might well be a mechanism for this being studied.

As ever, my noble and learned friend makes a significant suggestion. I undertake that we shall reflect on that.

I observe that a whole section of Schedule 1 relating to the Office for Students concerns committees. Paragraph 8(1) states:

“The OfS may establish committees, and any committee so established may establish sub-committees”.

This appears to be a power without limitation. The noble Baroness not only can have her committee on new providers; she can have a range of sub-committees as well. We could spawn a whole bureaucracy around the provision of new providers. One hopes that, at the end of it, we will actually get some new providers and not just committees. In one of the many letters she is sending us, I wonder if the Minister could confirm that, under that power, it would be perfectly possible for the OfS to establish a committee for the purposes that the noble Baroness and the noble Viscount have in mind.

It would be very helpful to have that confirmed.

I thank the noble Lord for his intervention. He is quite correct that the schedule does indeed empower the OfS to set up committees. It is anticipated that that would be an important source of information to the OfS. I am happy to endeavour to clarify the position, as he seeks, and we will send a letter to him.

I thank the Minister. For part of the last five minutes I felt as though two different plays were going on in the Chamber, somehow scheduled on the same stage. The issue is not, to repeat, whether there should be new providers. The amendment clearly supports that. The issue is whether without direct intervention activity we will get the degree and type of diversity that the country needs. I thank the noble and learned Lord, Lord Mackay, for his suggestion, which would at least place the importance of this firmly at the beginning of the Bill. I hope that we might pursue that. This is not about hoping or having faith that new little providers will do all these things. We know, factually, that they will not, just as we know factually from the whole history of apprenticeships that if you throw it open in the way that is proposed for higher education and just wait to see what people will get from the general fee regimes available, you will not get the expensive ones.

Of course I will withdraw the amendment for the moment, but I hope we can return to it. This is not necessarily about committees—I share noble Lords’ views about committees—but about making sure that there is a clear function and duty on the Secretary of State to address these issues. I would very much like to pursue the noble and learned Lord’s suggestion, and I hope we can return to that on Report. I beg leave to withdraw the amendment.

My Lords, the Government want to make this a country that works for everyone. That is why we have introduced Clauses 80 and 81 of the Bill. Amendments 438 and 439 simply clarify the role of Treasury consent in establishing a system for alternative payment contributions to be dealt with other than by payment into the consolidated fund. They are narrow and functional amendments.

I know that the noble Lord, Lord Sharkeys has a considerable interest in the introduction of alternative student finance as provided for in Clauses 80 and 81. I beg to move.

My Lords, I will speak to Amendment 442 in my name and that of my noble friend Lord Willis. The Committee will know that sharia law forbids interest-bearing loans. That prohibition is a barrier to Muslim students attending our universities. This has been a problem for the Muslim community in this country since at least 2012. Prior to then, many Muslim students were able to attend university because they were financed by family and friends. This was possible when tuition fees were low, but it is much more difficult with fees at their current levels. Successive Governments have known about this problem. They have recognised that the current system effectively discriminates against devout Muslims for whom interest-bearing loans are not acceptable.

The system works to the direct disadvantage of our Muslim communities. Many Muslim students, although qualified, cannot progress to tertiary education. The system also works to the disadvantage of our society as a whole. An important part of the community is effectively deprived of access to higher and further education, of the opportunity to mix with others and to learn from and contribute to our culture. These are damaging and dangerous exclusions. They are also completely unnecessary.

In April 2014, BIS launched a consultation on possible sharia-compliant ways of financing students. This consultation generated an astonishing 20,000 responses. The consultation outlined the proposed solution, based on the widely used Islamic finance instrument, called a takaful. In their response to the consultation, the Government said:

“It is clear from the large number of responses … that the lack of an Alternative Finance product as an alternative to conventional student loans is a matter of major concern to many Muslims”.

The response went on to say:

“There is demand for the proposed Alternative Finance product and responses to the consultation indicate that this would enable many of those who have been or will be prevented from undertaking both FE and HE, to attend by removing the conflict between faith and funding”.

The Government’s conclusion was equally clear; they said that,

“the Government supports the introduction of a Sharia-compliant Takaful Alternative Finance product available to everyone”.

But there was a cautionary addendum:

“Given the complexity of these issues and the time needed to resolve them, it is unlikely that any Alternative Finance product could be available before academic year 2016/17”.

That was written in September 2014—two and a half years ago—and only now is enabling legislation before us. If that sounds like criticism I should say immediately that I warmly congratulate the Government and Jo Johnson on finally producing the legal framework to solving the problem. It is a vital step forward, but it has one major defect. The Bill is silent as to when the takaful scheme will be in place. We are already in academic year 2016-17. We are too far into the year for any scheme to affect the 2017-18 intake and, worse, I have been told privately that it is likely that the scheme will not be ready until the academic year 2019-20. That is seven years after the problem was recognised, five years after the solution was agreed, and two academic years away from now. If that is correct, it means that Muslim students will continue to be discriminated against and disadvantaged for another two years; another two cohorts of young people who are unable to attend university.

My Amendment 442 addresses the problem directly. It simply requires the takaful scheme to be in place to benefit students going into further education or higher education in the autumn of 2018. I have tried to get to the bottom of why there might be this extended delay of five years between agreeing a solution and putting it into practice. I have consulted with Islamic finance experts and people familiar with the operational requirements involved in introducing a takaful scheme. I am told that, with the necessary political will, a working takaful system can be put in place within eight to 12 months, and that assumes that no significant work has already been done. That is why I have chosen the deadline of academic year 2018-19.

I am also told that the reason for the very likely prolonged delay that would otherwise occur is not lack of good intentions but the inability of the Student Loans Company and HMRC to organise themselves to deliver the product in a reasonable time. People I have talked to speak of a lack of resource in both agencies and an inability to process additional work in a reasonable time. A timetable that leads up to autumn 2019-20 is not reasonable and not necessary, especially when there is precedent for moving a lot faster. For example, the Sharia-compliant version of the Help to Buy guarantee scheme took five or six months, from the beginning, to develop and launch. These things can be done in good time, if there is the will and the allocation of the required resource. When the Minister responds he—or she—may say that the takaful scheme will in fact be in operation for the academic year 2018-19. If the Minister does say that, it will be heard, noted and welcomed as a commitment by the Muslim community and Muslim students, who will at last be able to go on to university. If he does that make that commitment to the Muslim community and to Muslim students I will not press my amendment.

My Lords, I promised the noble Lord that I would try to be present for this brief debate, and I am sure it will be brief. I think he has performed a very signal service, not just for the Muslim community, but the student community in general. I sincerely hope that my noble friend Lady Goldie, who I am told is due to reply to this debate, will be able to meet the points made by the noble Lord in an extremely well-balanced, sensible and moderate speech, with a realistic timetable built into his amendment. In giving my support and expressing that hope, I also express the hope that we will not be disappointed.

My Lords, having launched that original consultation document I am delighted that we now have these provisions in this Bill. It is welcome progress and the lack of legal framework to do it was the main reason for the delays. I very much hope that the new scheme can be brought in as quickly as possible. Although it is a familiar excuse, there are IT issues to be resolved and the noble Lord is right to press for rapid progress on that.

My one qualification to the noble Lord’s otherwise excellent speech was that we have to be careful not to assume that all Muslims take the view that the current arrangements are not acceptable within Islamic law. The good news is that there are many Islamic students whose religious advice is that they can use the current framework. There is a small number who do not believe that that is satisfactory and that is why we need this provision, but it is very important that this Committee does not give the impression that Muslims cannot use the current scheme. Many of them do and their imams say that they can.

My Lords, it is very much to be welcomed that Muslim students are to be offered Sharia-friendly student loans which should assist in applying to university, although I accept the point of the noble Lord, Lord Willetts, that only some students have been put off in the past in the belief that taking out a loan conflicts with their religious beliefs.

This is certainly a big step forward, but as the noble Lord, Lord Sharkey, outlined, when will it happen? He has traced the path that has been followed since 2012, when a government commitment was first made. As he said, the consultation exercise was undertaken and the Government responded in September 2014—quite quick for government replies. Their response said that,

“the Government supports the introduction of a Sharia-compliant takaful alternative finance product available to everyone, and will work on its development”.

That response also mentioned the need to find what was described as an “appropriate legislative window”. Two years on—more than that, in fact—we are at that window, yet we do not have a date for the commencement.

Amendments 442 and 516 in the names of the noble Lords, Lord Sharkey and Lord Willis, appear to me to be rather contradictory. Amendment 442 calls for the scheme to begin in the autumn of 2018, while Amendment 516 seeks its introduction immediately after the Bill becomes law, but no matter. We wish to see the scheme introduced as soon as it is practical, and I trust the Minister will outline the timescale that the Government have in mind. In particular, I hope they will offer some explanation if, as the noble Lord, Lord Sharkey, said, they suggested that a delay would be necessary until 2019. I found it very interesting that the noble Lord, Lord Sharkey, said that he had consultations with people in the Muslim community who said that it need not take that long, so we look forward to the Minister’s response on this important matter.

My Lords, the debate has been helpful. I think we all agree that participation and choice in further and higher education must be open to everyone with the potential to succeed, irrespective of their background, gender or religion. I thank the noble Lord, Lord Sharkey, for a sensitive and reflective contribution to that debate.

The Government recognise that, under the current system, there are concerns that some prospective Muslim students may feel deterred from accessing student loans; we appreciate that they might consider that student loans are not consistent with the principles of Islamic finance. Our research has suggested to us that Muslim students are less likely to use student loans than their contemporaries. That is why the Government have introduced Clauses 80 and 81, which are ground-breaking and innovatory and set out our intention to provide the Secretary of State with the power, for the first time, to offer alternative payments alongside existing powers to offer grants and loans. We are the first Government to legislate to make alternative student finance possible, and we have legislated at the first opportunity. We are fully committed to making alternative student finance available.

There are commencement provisions in relation to Clauses 80, 81 and 82, which is why, I assume, the noble Lords, Lord Sharkey and Lord Willis, have put in a commencement provision. What they have done is not inconsistent, because it says that the provision comes into force as law when the Bill is passed, and the Bill says that it will come in in 2018. This is an important difference between what the Secretary of State proposes, which is pretty open—although it seems to relate only to the Welsh aspect of the matter. So there is a point in this relationship that has to be looked into.