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House of Lords Hansard
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Greater Manchester Combined Authority (Adult Education Functions) Order 2018
24 October 2018
Volume 793

Liverpool City Region Combined Authority (Adult Education Functions) Order 2018

Cambridgeshire and Peterborough Combined Authority (Adult Education Functions) Order 2018

Tees Valley Combined Authority (Adult Education Functions) Order 2018

West Midlands Combined Authority (Adult Education Functions) Order 2018

West of England Combined Authority (Adult Education Functions) Order 2018

Considered in Grand Committee

Moved by

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That the Grand Committee do consider the Greater Manchester Combined Authority (Adult Education Functions) Order 2018, the Liverpool City Region Combined Authority (Adult Education Functions) Order 2018, the Cambridgeshire and Peterborough Combined Authority (Adult Education Functions) Order 2018, the Tees Valley Combined Authority (Adult Education Functions) Order 2018, the West Midlands Combined Authority (Adult Education Functions) Order 2018, and the West of England Combined Authority (Adult Education Functions) Order 2018.

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My Lords, these six orders, if approved and made, will provide for the transfer of certain adult education functions and the associated adult education budget—the AEB—to the mayoral combined authorities. This provides an opportunity for them to help their residents to fulfil their potential in life and contribute to the growth of the region. As noble Lords will be aware, in 2015 and 2016, through a series of devolution arrangements agreed between the Government and the mayoral combined authorities, we made the commitment fully to devolve the AEB to specified mayoral combined authorities. These orders will deliver on this commitment.

These orders are made under the Local Democracy, Economic Development and Construction Act 2009. They will transfer certain adult education functions of the Secretary of State, as set out in the Apprenticeships, Skills, Children and Learning Act 2009, to the mayoral combined authorities in relation to the area of each specified mayoral combined authority for the academic year 2019-20 and thereafter. This transfer does not include the functions in so far as they relate to apprenticeships or those subject to adult detention.

In the 2015 spending review, government made available £1.5 billion annually until 2020 for the adult education budget. Across England, this budget is supporting adults with the skills and learning they need to equip them for work, an apprenticeship or further learning. These facilities provide an integral stepping stone, particularly for disadvantaged adult learners.

In 2016-17, the AEB supported adults to study English, maths and courses of English for speakers of other languages, full level 2 or 3 qualifications and a wide range of community learning provision. Devolution will mean that mayoral combined authorities are able directly to shape the adult education provision available to their residents. This means that, from the academic year 2019-20, the provision can be more focused around local area need.

We are currently undertaking a wide-ranging programme of skills funding reforms across areas such as T-levels and apprenticeships. Post-16 education plays a crucial part in supporting future economic growth. In leaving the EU, it is important that our homegrown workforce is skilled and able to make the most of the new opportunities that arise. Devolution of the relevant functions and the associated AEB forms a key part of these reforms. Alongside devolution, the department is opening dialogue with mayoral combined authorities and other sectors on how best skills provision and reforms can be shaped to fit the needs of local areas.

These orders will transfer certain adult education functions of the Secretary of State in the Apprenticeships, Skills, Children and Learning Act 2009 to the mayoral combined authority in relation to its area. They will enable the transfer of that relevant part of the AEB to the mayoral combined authority. In particular, the following functions will be exercisable by the mayoral combined authority instead of by the Secretary of State in relation to its area: Section 86, which relates to education and training for persons aged 19 or over; Section 87, which relates to learning aims for such persons and the provision of facilities; and Section 88, which relates to the payment of tuition fees for such persons.

Conditions are set in relation to the transferred functions—in particular, that the mayoral combined authority must have regard to guidance issued by the Secretary of State and must adopt eligibility rules in accordance with any direction of the Secretary of State. The Department for Education will transfer the relevant part of the adult education budget to the mayoral combined authorities to undertake the functions. It will be the responsibility of each area to manage its overall AEB allocation efficiently and effectively to ensure that it delivers for its local residents. The department is assisting the mayoral combined authorities to be ready for taking on the functions and has provided implementation funding to each of them to prepare effectively.

From the 2019-20 academic year, the mayoral combined authorities will be responsible for providing funding for statutory entitlements for eligible learners in maths and English up to and including level 2, first full level 2 for learners aged 19 to 23, first full level 3 qualifications for learners aged 19 to 23 and the forthcoming digital skills entitlement. We talk about the northern powerhouse and the Midlands engine among others. Skills are an essential driver for economic growth in all our regions.

We are already seeing the mayoral combined authorities make a real difference locally. For example, Tees Valley Combined Authority has implemented the Tees Valley Routes to Work pilot. This is an innovative pilot that has a total fund of £7.5 million, with £6 million from the Department for Work and Pensions and £1.5 million from the combined authority cabinet. It will run until 31 March 2021. Routes to Work will support at least 2,500 individuals who are long-term unemployed or who have significant barriers to employment. The pilot aims to move at least 375 individuals, 15% of the cohort, into sustainable employment. It aims to work with those most disengaged from the labour market and support them in engaging, identifying and addressing any potential barriers that they may face in gaining employment.

In Greater Manchester the mayoral combined authority has implemented the Working Well programme. This stream of work responds to one of its strategic aims of reducing long-term unemployment and helping more residents into sustained employment. The £52 million devolved programme offers intensive and tailored support to individuals who are out of work due to poor health or disability and the long-term unemployed, to help to address their barriers to employment. The programme, which takes referrals from Jobcentre Plus, will support around 22,000 individuals over its five-year life. In the first six months more than 1,700 residents had started to receive support.

Those examples give a picture of the specific interventions currently taking place at a local level and illustrate the positive impacts that devolution can have. Devolution gives all mayoral combined authorities the opportunity to address the skills challenges that they face and enhance economic growth in their areas. The scale of the challenges faced is both significant and different dependent on region. For example, there are currently 41,000 Greater Manchester Combined Authority residents with no qualifications. There are significant variations between residents’ skills levels across the districts. West Midlands Combined Authority currently has the lowest employment rate of any of any mayoral combined authority—72.3%, against a national average of 78.4—whereas Liverpool City Region Combined Authority has one of the highest rates of economically inactive residents of any combined authority area. Similarly, despite employment levels rising at a rate faster than the national average, Tees Valley Combined Authority still has higher levels of claimant unemployment compared to national averages, with a Tees Valley average of 4.2% compared to 2.2% nationally. Cambridgeshire, Peterborough and West of England combined authorities have skills shortages and hard-to-fill vacancies that are constraining local businesses. These examples show that each area has specific challenges. These can be addressed through the devolved AEB, and the orders give the mayoral combined authorities the opportunity to address specific regional problems.

The orders will enable mayoral combined authorities to support their residents into good jobs with opportunities for people to progress and develop; improve the earnings potential of their low-paid, low-skilled workers; and help to deliver a thriving and dynamic economy. Without these orders, the mayoral combined authorities will not have the ability to address these challenges and bring greater prosperity to their regions. I beg to move that these orders be approved.

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My Lords, I thank the Minister for his introduction. No doubt he will share my relief that in your Lordships’ House we are considering all six of these orders together, not following the procedure adopted in another place, where they required three sittings over a period of eight days. I think we can do things more efficiently.

The devolution of powers and funding for adult education that the orders introduce is welcome, as much of the most effective adult education provision is delivered locally in line with the needs of local communities. The Explanatory Memorandum characterises the transfer of functions as giving local areas a prominent role in managing and shaping their own economic prosperity. Who could argue against that? But—there is almost always a but—the transition from national funding to devolved funding may have unintended consequences for some national providers if it disrupts their existing local provision. A long-established national charity, the Workers’ Educational Association, is one such provider that may be adversely affected. I declare an interest as a former employee of the WEA. I shall say more about that organisation in due course, but before doing so it is appropriate to put the effect of these instruments into context.

The Explanatory Memorandum also states:

“The transfer of the specified functions to the combined authorities will result in an associated transfer of funds to each combined authority to facilitate the exercise of those functions. This will take the form of a proportion of the overall adult education budget moving from the Department for Education to the specified combined authority”.

The key question mark over the future delivery of adult education concerns how much funding will transfer and how that will affect the ability of the combined authorities to deliver a full provision. The Minister delivered an upbeat assessment of what the combined authorities will achieve through the powers contained in these orders, but the current experiences of providers are not so upbeat.

The report published last month by the Institute for Fiscal Studies, which the Minister and his officials will be aware of, found that between 2004 and 2016 the number of adult learners fell from 4 million to 2.2 million. That alarming 45% drop means that apprenticeships now account for over one-third of total adult education funding, as opposed to 13% in 2010. That may be good news for those fortunate enough to work for an employer that is part of the apprenticeship programme, but of course millions more people never get the chance to undertake an apprenticeship, such as those working part-time, in the gig economy, for a microbusiness or on zero-hours contracts.

For the majority of adult learners, the IFS report painted a rather bleak picture. The numbers show that there are fewer evening classes and opportunities for people to learn, whether it be to improve literacy and numeracy, to update technical skills that might help get a job or a promotion, or to take GCSEs and A-levels to help to access higher education. Each year there are 1.8 million fewer adults able to improve their life chances through education. This is not the place for discussing the Open University, but in recent debates in your Lordships’ House I have highlighted the serious decrease in adult part-time education on Open University courses since the tripling of tuition fees in 2012, and that fits with the pattern across adult education.

Of course, cuts in funding which have the inevitable consequence of reducing the numbers participating in adult learning have a direct impact on the economy. One of the obvious benefits of adult education is helping people, as the Minister said, to equip themselves with the skills that employers need now and will need even more in the future. This is a pressing issue, with fewer EU nationals being allowed to bring their skills to the UK. In the context of our leaving the EU, opportunities for upskilling and reskilling should surely be going up not down, yet figures on enrolments in key areas of the labour market are worrying. Enrolments in health and social care courses dropped by a third between 2006 and 2016. The reduction was of a similar percentage in both construction and engineering. If the Minister, his department and the Government are not concerned by these figures, I think we should be told why.

There is an urgent need to improve productivity and acknowledge the risks to millions of jobs from new technologies. The National Retraining Scheme is being designed to address both, but will need major investment to fill the gaps from that 45% drop in adult learning. Spending on adult learning—indeed, on any form of education—needs to be seen as an investment for the long term. Benefits accrue to learners, their families and the communities they live in, as well as to employers and the economy as a whole. The next spending review will be an opportunity to show that, post-Brexit, the Government recognise that. That assumes that the Government will still be in power at that time, but for all our sakes I suggest that we do not go there.

It would be appropriate if it were to be done by a Labour Government, because of course the two pieces of legislation that we are discussing today, in terms of the powers, stem from the legislation of 2009. That brings me to an anomaly, because the orders will transfer certain adult education functions set out in the Apprenticeships, Skills, Children and Learning Act, yet the transfer does not, as the Minister said, include the functions in so far as they relate to apprenticeships. Will the Minister explain why that should be the case? Perhaps pre-empting that slightly, in one of the debates on these orders in another place, the Minister for Skills said:

“In some ways, apprenticeships have been devolved down to the smallest point possible, in that they are in the hands of employers”.—[Official Report, Commons, Delegated Legislation Committee, 15/10/18; col. 9.]

Strictly speaking, that is the case, but we believe that the combined authorities could play a significant role as facilitators in gathering employers together and helping them to demystify the new order in terms of apprenticeships.

Some progress has been made in the devolution of adult skills funding, but it needs to be set in the context of a wider spread of apprenticeships and skills funding. That is highlighted by the sharp downturn in apprenticeship starts since the levy was introduced. I am on record as saying that I believe that that is down to initial teething problems and that those figures will rise, but one potential avenue that could be explored is devolved skills and the implications of the adult education budget’s relative narrowness. Devolving apprenticeships, including for adult apprenticeships and other skills funding, and not just the adult education budget, would be a positive step down that route. When these orders were being considered in another place, the Minister for Skills stated her belief that the devolution of further education should be the way forward in terms of community growth and cohesion. That is certainly a view that we share, and I am sure that the Minister does too, but the task ahead is achieving it, with future funding at best uncertain.

Turning to transitional funding in preparation for the full implementation of these orders, this will apply for the academic years 2019-20 and 2020-21 and will be funded nationally by the Education and Skills Funding Agency. It was announced earlier this year, in the form of an Answer to a Written Question in another place, and involves criteria all of which apply only to four residential colleges. That does not take into account the manner in which the Workers’ Educational Association delivers adult education, which is as a national provider but with the emphasis on local delivery through a network of regional offices.

The WEA is one of the providers currently in receipt of a national Education and Skills Funding Agency grant to deliver much of its work. The combined authority areas have introduced specific protections to guard against destabilisation of the existing local provider base during the transition period, but not all of them have yet determined what will happen to providers which deliver local provision but within the framework of a national funding settlement, such as the WEA. Such providers may be expected to enter into competitive bidding processes, even where they are already well-established and delivering high-quality and effective provision in the combined authority.

Lack of transitional support introduces uncertainty and fragmentation into the WEA’s budgeting, with the result that it may have to downsize significantly as a result of reduced national funding, and this will impact on its ability to deliver much of its substantial programme across England. As much as a third of the WEA’s funding could be affected by the transition from national grant to devolved funding to the combined authority. I cannot imagine that is what the Government intended when they developed the policy that these orders will implement. For devolution to be fully effective, support must be offered to the full range of community-based local providers, even those which operate within national structures, and especially those already working with the most disadvantaged. The WEA is not the only organisation to be caught—apparently by accident—in the rollout of these orders. It is—as would be expected—involved in discussions with the skills teams in each of the combined authorities, but I hope that the Minister, if he cannot answer now, will be able to write to me to address the issues I have raised.

In conclusion, I repeat that we welcome these orders and much of the thrust behind them, and shall not be opposing them.

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My Lords, I welcome the orders that will devolve elements of the adult education budget that are currently held centrally to the mayoral combined authorities. I always welcome devolving budgets to authorities, either combined or local. We can have local decisions to help local people, which is much better than having national decisions made by people in London who, in my experience, know little about the folk I represent in Yorkshire. One of the factors that is holding back business development, business expansion, economic development and GVA in many regions, and in the north in particular, is a lack of appropriate skills and the low levels of skills in the population compared with the more prosperous parts of the country.

I want to highlight four issues, broadly supporting what we have before us today. The first, which the noble Lord, Lord Watson, also raised, is that of funding. The question should be: how much funding are each of the combined authorities going to be allocated, and how does this allocation of additional funding fit in with the significant reduction of government funding to further education colleges, where much of the skills provision is delivered? It does not bode well for the adult education elements of the budget. I know from my own experience in Yorkshire that there is a huge demand for construction workers, yet the colleges delivering those skills are finding it difficult to do so because of the funding squeeze on them. There is also a danger that we will end up with a very fragmented adult skills funding mechanism and delivery. This will not help achieve what the Government have set out in what the noble Lord, Lord Agnew, has said; namely, enabling those areas of the country with combined authorities to really support skills being developed by people who left school without the appropriate skills for the economy and for their own well-being.

The second point I want to make is about one of the phrases in the document; it talks about the challenge of encouraging more training and education. Obviously, as someone who has spent a lifetime in education, I totally support that. What is interesting is that the Government have had rather limited success in addressing the issue of what are crudely called NEETs—those who are not in employment, education or training. We ought to focus much more attention on that group of people, who, as we have heard, will need those skills for their lifetime of employment, and the country needs them to have skills. I want to understand, from that element of what is before us, how that is going to be measured. We are talking about it being important to encourage them, so how are the Government and the combined authorities going to measure that?

The third issue that I want to raise is the business of consultation, which the noble Lord, Lord Watson, has raised in a different way. All the documents say there is no need for additional consultation because it was done three or four years ago for the original orders for the combined authorities; adult education and skills were in all those original functions for the combined authorities, and this is just giving the funding to allow that to happen. However, now that we have a specific defined allocation and devolution of a function and funding, a consultation ought to take place in those combined authority areas as to how that should be carried out. There are institutions that will be affected one way or another—one in particular, as the noble Lord, Lord Watson, has pointed out—and I think there ought to be consultation among providers in those areas to listen to any issues that they raise. I am disappointed that in here it says that no consultation will be necessary.

The fourth issue that I want to raise is accountability. Right from the start of combined authorities, I have been concerned about the lack of accountability for the devolved functions and the funding that has been made available. The governance model that the Government have decreed is very light on accountability. Perhaps the Minister will be able to describe how the combined authorities will be held accountable to the Government for the delivery of the function that is being devolved, and how he anticipates the constituent local authorities being able to hold the combined authority decision-makers to account in a public way. I hope he will not tell me that they all have scrutiny panels or committees, because I do not think they have the necessary powers to really hold the combined authorities to account for the functions that they fulfil and the public money that they spend.

In summary, I support what is being proposed here. I know from the examples that have been given that the combined authorities will set up different models to fit the needs of the people in the regions, and that is positive. However, there are some issues that we need to be concerned about: consultation is one, accountability another, and the third is the fragmentation of funding. I look forward to the Minister’s response.

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I thank noble Lords for their comments and questions. I thank the noble Lord, Lord Watson, and the noble Baroness, Lady Pinnock, for their broad although perhaps qualified support. I will try to address the various questions that they have both raised.

To start with the funding question, as that is something that both speakers raised, the overall budget, as I mentioned in my introductory words, is £1.5 billion a year, which was set for this current spending review. In aggregate, the amount of money being devolved to these combined authorities—including the Greater London Authority, which has a slightly different legal structure, although we have issued a delegated letter to that authority to give it the same or very similar powers—is about £750 million. I cannot speak for beyond the spending review, but I can certainly reassure noble Lords that this is an area of huge focus of this Government. We are very committed to supporting adult learners into improving their skills and their future life chances.

The noble Lord, Lord Watson, asked about apprenticeships. As he will be aware, it is still a relatively new programme and it has undergone some of the most profound change since, probably, the Second World War. I think the view is that at the moment it is best managed centrally until we have a steady state. As the noble Lord will be aware, only a few weeks ago we increased the amount of funds that could be devolved down the supply chain from 10% to 25%. We need to ensure that we are getting it right before we begin devolution of that activity.

On the question of transitional funding, just over £6 million has been awarded to the mayoral authorities to help them to get ready for the transition of these tasks. That money has started to be released and will continue over the next year.

I can see that the noble Lord speaks with passion about the WEA; indeed the noble Lord, Lord Bird, wrote to me about that organisation earlier in the year. We have publicly recognised the work being done by the WEA and similar organisations, although the WEA in particular, given its long history—I think it was founded over 100 years ago—has a major role to play in delivering adult education and fostering a culture of lifelong adult learning.

Devolution gives the WEA an opportunity to work with the mayoral combined authorities to shape the ways in which they can contribute to meeting the skills needs locally so that more people of all ages and backgrounds are given opportunities to develop skills and experience. It is vital that providers such as the WEA make contact with the MCAs and support them so that the local economy and workforce have the skills and expertise that they need for the future. We have provided some guidance to the MCAs for the transitional years, which includes providing knowledge transfer sessions and workshops covering the practical processes of administering the AEB programme.

Sitting suspended for a Division in the House.

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My Lords, I shall finish off on the WEA. Devolution gives the WEA an opportunity to work with the mayoral authorities and shape the ways in which they can contribute to meeting skills needs locally so that people of all ages are given those opportunities. It is vital that providers such as the WEA make contact with the MCAs to support them.

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The WEA provides the contacts for these opportunities and possibilities. At the moment it is delivering adult education courses but it may not be able to do so in the future. There is not going to be a transitional period during which it can adjust. As I say, it is discussing these issues with the authorities but it may not always be successful, and that is the problem. There could then be a significant reduction in what the WEA is able to provide.

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What I can offer the noble Lord is that if he does not feel that the mayoral authorities are engaging constructively with the WEA, he should write to me and I will take the matter on. When the noble Lord, Lord Bird, wrote to me in April, I passed the letter on to the Minister, my right honourable friend Anne Milton, who wrote to the noble Lord and offered to meet him. I reassure the noble Lord, Lord Watson, that I believe such providers to be a very important part of the further education landscape and we certainly do not want to see them put out in the cold.

To address the questions asked by the noble Baroness, Lady Pinnock, on NEETs, or that category of vulnerable young adults, we are trying to help them through further studies in GCSE English and maths. In each case, more than 500,000 adult learners are studying maths and English to get them on to a platform that will enable them to go on and acquire the broader skills that are needed. We already require information about further education to be submitted to the DfE and we will continue to complete the individualised learner records in respect of provision delivered to learners resident in authority areas. This will continue to feed through into the national statistics publications. For transparency, the national statistics publications will include provision delivered to residents of the authority areas.

On accountability, we have put in place a number of measures to deal with the issues raised. There will be a robust governance arrangement between the department, the Education and Skills Funding Agency and the MCAs to govern the transitional year. As part of these arrangements the department is working with the MCAs to monitor and evaluate the performance of AEB-funded provision. This is assisting the MCAs in determining their commissioning and provision strategy when the budget is devolved from 2019-20 onwards. The Secretary of State has issued guidance on the approach an MCA should take to commissioning adult education. This includes guidance on how the approach should align to the existing adult education funding milestones which a provider operates under when commissioning. They have statutory requirements, which gives the department powers to intervene in the event of a failure to deliver decent provision.

Introducing these orders now will allow the mayoral combined authorities the opportunity to work with providers to tailor adult further education provision in preparation for the academic year 2019-20. This will give their residents the chance to reach their potential, improve their earnings and gain progression in their jobs. It will allow the skills system to deliver in responsive ways to sustain a flexible labour market. I commend these orders to the Committee.

Motion agreed.