16:56 - Division on Amendment 3 - Ayes: 154 / Noes: 239 - Amendment 3 disagreed.
Lord Bates
My Lords, I understand why the amendment has been tabled and in many ways find the argument that has been put forward persuasive. I wonder whether the reason why it is necessary in the first place is that it is proposed that catchment areas will be too narrowly drawn. If catchment areas for new schools are too narrowly drawn, they will clearly have a disproportionate effect on neighbouring schools. Would not therefore an answer, along with the amendment proposed by my noble friend, be to broaden out the catchment area of schools to cover, perhaps, a local education authority area or even two local education authority areas? There is a precedent for that. When my noble friend Lord Baker introduced the Education Reform Bill in 1987, which allowed for city technology colleges, the Government overcame the problem of too great an impact on one, two or three schools by broadening the catchment area to cover two local education authority areas. In that way, the impact on neighbouring schools was diminished a little.
The Parliamentary Under-Secretary of State for Schools (Lord Hill of Oareford)
My Lords, as I said in Committee when we discussed this last time, establishing new schools is, I know, what exercises my noble friends and, I think, noble Lords across the House, in particular, the new free schools, to which the noble Lord, Lord Knight, referred. I take this opportunity to welcome the noble Lord formally to this House. I hope that I made it clear in Committee that it is very much the Government’s view that the implications for other schools in an area should be considered. The amendment moved by my noble friend brings us back to that debate.
I start by thanking my noble friends Lord Phillips and Lady Williams, and other noble friends, for the time that they have spent with me on this issue. I think that it is fair to say that they accept the reassurances that I have given that the Secretary of State would certainly consider any representations from those affected by academy proposals and that he would want to support only proposals for new schools that lead to an overall improvement in provision. As I have argued to my noble friend Lord Phillips, the general requirements on the Secretary of State to act reasonably will, in our view, provide sufficient protection. That is the answer to the point raised by the noble Baroness, Lady Howe. We think that the protection is there.
However, I certainly accept that my noble friends Lord Phillips and Lady Williams, and other noble Lords, have made the case to me for some further reassurance in the Bill with a great deal of tenacity and great courtesy. I have listened to those concerns and, having listened to this debate today, decided to act on them. I am able to say to my noble friends Lord Phillips and Lady Williams, that I accept the purpose of their amendment in principle. I suggest that my noble friends and I talk further and return to the issue at Third Reading. I hope that that is agreeable to my noble friends and, in the mean time, I ask them to withdraw the amendment.
Lord Phillips of Sudbury
I am grateful to my noble friend Lord Hill and am more than happy to leave the matter today on the basis that he suggests. I look forward to an amendment coming forward at the final stage of the Bill. I beg leave to withdraw the amendment.
Lord Hunt of Kings Heath
My Lords, this has been a short, interesting debate. I too support the amendments moved by the noble Baroness. In relation to funding, three issues have been raised today and in our previous discussions. First, there is a need for much greater clarity about how these financial arrangements will work. Secondly, there is the question of equity between schools. Thirdly, as the noble Earl, Lord Listowel, suggested, there is a question of whether there will be sufficient resources for the kind of special services that some schools will require.
On clarity, very shortly before our debate today, I received the model funding agreement, as I am sure other noble Lords did. While it is always welcome to receive the funding agreement, in the short time available we have not been able to study it carefully. It therefore would not be amiss to have an opportunity to come back at Third Reading after we have had time consider it more fully. It is helpful to us in these debates.
I am sure that the noble Lord, Lord Hill, will be aware of paragraph 17 of the model funding agreement, which relates to pupils. It starts with the statement:
“The Academy will be an all ability inclusive school”.
Which of these provisions would apply to those grammar schools which select their pupils and choose to become an academy? To what extent does this model funding agreement apply to those schools? In terms of equity, it is very important that we know the answer.
My second point as regards equity goes back to the point made by the noble Baroness, Lady Walmsley. We have been told:
“Funding of academies will be broadly comparable with that of maintained schools, taking into account their additional responsibilities. While converting to academy status will give schools additional freedoms, those who opt to stay within local authority control will not be financially disadvantaged”.
That is a welcome statement of intent. But, as the noble Baroness, Lady Walmsley, has pointed out, there is some concern within educational circles that this may not prove to be the outcome following publication of the ready reckoner and the technical note. I am not going to bore the House by going into the details of the ready reckoner, but it is a point that the noble Lord may wish to come back to.
In Committee we discussed the different approach of the seven-year arrangement with schools, and those are the arrangements that are likely to apply to free schools. The noble Lord said then that there would need to be, in a sense, a get-out clause if for one reason or another it was shown that a free school was perhaps not able to handle the funding arrangements or there were problems which meant that the Secretary of State would not want to get himself into a long-term commitment. I understand that, but it identifies a problem with the whole process of approving free schools by this route. It suggests that the Government are not confident that they will have a rigorous process in place, and that is why they are unwilling to agree to the seven-year commitment. For that reason, I strongly support the amendment tabled by the noble Baroness.
Finally, I come back to the whole question of clarity. I believe that we need further clarity because these financial arrangements are complex and it is important that all schools feel that the system is fair and equitable. Further, I would remind the noble Lord of the suggestion made by my noble friend Lord Adonis that there is a case for having some kind of independent process of assessment and reporting on the overall scheme for funding academies. I know that the noble Lord has put forward his proposal for how that is to be done, but my noble friend’s suggestion of an organisation like the National Audit Office, one that stands well outside the educational establishment, would command greater confidence. Overall, however, this debate has shown that much more remains to be discussed in relation to the financial consequences of this legislation, and I for one hope that the noble Baroness might press her amendment today.
Lord Hill of Oareford
My Lords, I start by saying to the noble Lord, Lord Hunt, and other noble Lords that I am sorry that the model funding agreement did not get to them any earlier. I know that there is a lot to take on board and that it is a long document. On his particular point about paragraph 17, the model will need some changes to reflect the particular circumstances of individual schools, which I hope answers his question.
Like the noble Lord, I am grateful to my noble friends for raising the issue of grant funding and for giving me the opportunity, I hope, to reassure them and the rest of the House as far as I am able. On Amendments 2, 19 and 19A, as we discussed at an earlier stage and to which the noble Lord, Lord Hunt, has just referred, the rationale for allowing the Secretary of State to fund via a grant in what is likely to be a small number of cases is to provide more flexibility, and as we have also discussed, we envisage a grant being used particularly in response to proposals for a free school where by definition there is no track record. We think that this flexibility makes more sense than committing to seven years at the beginning, but I want to emphasise that we expect this to be a minority of cases.
Lord Knight of Weymouth
Perusing the model funding agreement, I have one question on the specific issue of the general academies grant. Clause 50 talks about the amount of grant that would be available in the first year of conversion, and that the money would be on the same basis as that used by the local authority for determining the budget share of the predecessor maintained school. In the case of an academy free school where there is no predecessor, how would the funding for the first year be calculated so that people who are interested in setting up these interesting new schools can have some certainty?
Lord Hill of Oareford
I accept entirely the need for giving certainty to people who are setting up new schools. This process has just started and the question will be worked through with the first group of schools that have expressed an interest. It is a good point to which we will need to return when we have done that work.
On the point my noble friends have raised with me, particularly in relation to Amendment 28A, I stress that any academy funded via a grant will be subject to exactly the same requirements as those which apply to the funding agreement: there will be the same safeguards on admissions, exclusions and special educational needs, about which I know not only my noble friends but others on all sides of the House are concerned. These safeguards will apply equally to the majority of academies, which will be funded by the funding agreement, and to the minority, which may turn out to be funded by grant. The safeguards will be set out in the grant letter just as they are set out in the funding agreement. I can confirm that the governing body and the academy trust would be aware of the terms of the grant before finalising the academy arrangements. I hope that provides reassurance to my noble friends and your Lordships generally and I am happy to place it on the record.
Amendment 20, to which a number of noble Lords have spoken, would require academy funding to be based on the needs of pupils as well as on their numbers. I agree with my noble friends and others who have spoken that the needs of pupils as well as the numbers of pupils must be taken into account. The primary driver of academy funding will be the numbers on the roll because that is the best way to begin to measure the total amount of teaching and other resource that is likely to be required in a school. However, the local authority funding formula which is used to fund an academy also contains factors which measure special educational need and the level of deprivation among pupils. Some do this directly—for example, by measuring prior attainment—others use proxy indicators such as free school meals. The sixth-form formula used for academies and maintained schools also contains a measure for deprivation. In no case is an academy funded simply on the basis of its pupil numbers.
On the point raised by the noble Lord, Lord Knight, we intend developing a simple funding model for free schools based mainly on a per pupil amount. However, of course—I think this point was raised by my noble friend Lady Walmsley; she will forgive me if it was not her—the pupil premium for disadvantaged pupils, on which we will bring forward proposals in the autumn, will also be in operation and so needs will be recognised.
On Amendment 12A and the establishment of an independent monitoring system, as we discussed in Committee, the Bill requires that the academy arrangements will oblige the academy proprietor to comply with these characteristics when establishing and running an academy. The Secretary of State ensures at the outset—
Baroness Thornton
I am still not sure about the answer to my noble friend’s question. In layman’s terms, if the money for a new free school is to come from the money that is available to a local authority to fund all its schools, what happens to the other schools?
Lord Hill of Oareford
We discussed this point in connection with the free schools announcement, which was raised in the first group of amendments. It also relates to the amendment tabled by my noble friend Lord Phillips and the desire of people to have some reassurance that the effect to which the noble Baroness refers will be taken into account by the Secretary of State. One of the purposes of the free school measures is to ensure that a new school which proves attractive to parents is able to take funds from a failing school to which parents do not want to send their children. The purpose of the reform is to introduce competition of that kind into the system.
Continuing compliance with the characteristics and all aspects of the funding agreement is monitored by the Young People’s Learning Agency. The Secretary of State has intervention and, ultimately, termination powers that can be used if an academy is not complying with the fundamental characteristics. I say in response to the question asked by my noble friend Lady Sharp that the YPLA has the capacity and capability to do that, but we shall certainly keep it under review.
My noble friend Lady Walmsley asked about the ready reckoner, picked up on also by the noble Lord, Lord Hunt. I understand that there have been issues with the ready reckoner. I shall write to my noble friend about the situation in York.
If anyone has concerns that an academy is not complying with its statutory characteristics or the terms of its academy arrangements, these can be brought to the attention of the YLPA or the Secretary of State, who will look into them and take such action as is appropriate.
I hope that I have provided some reassurance to the House generally and to my noble friends in particular on these matters relating to the funding arrangements. In the light of that, I ask them not to press their amendments.
Baroness Sharp of Guildford
I am grateful to the Minister for his response. I am glad that the governing boards will be kept informed about the financial assistance grants.
On needs versus numbers, I am still a little uncertain. If a free school is to be set up, it will have projections of how many pupils it will take but will not necessarily know how many it is going to enrol. How will the Government set its grant in the first place? Is the first year of grant taken from local authority funding when they do not know how the school is going to do?
Will the Minister copy to me the letter that he writes about the York ready reckoner? I am a little unhappy about that, because it seems to set expectations unduly high for a quite a lot of schools. The bulk of money kept back by local authorities goes to meet special educational needs and transport. When that is deducted, the sum likely to be distributed will not be very great. The ready reckoner is leading a number of schools to have quite inflated ideas as to how much they might receive. If the Minister is unable to respond to any of these issues now, perhaps he could write to me. I beg leave to withdraw the amendment.
Lord Mackay of Clashfern
My Lords, I very much follow the line that the noble Baroness, Lady Howe of Idlicote, has taken. Assuming that some primary schools would eminently qualify—I rather thought that the noble Lord, Lord Knight of Weymouth, said that there were some—I cannot see why it is right to delay the power to deal with them while you wait to see if others should join them. One has to remember that this is for primary schools and the time spent in primary school is comparatively short. We would deprive children who might well benefit from the system for a considerable portion of their primary school life. While delay is attractive from some points of view, it would damage those who are qualified now to obtain the benefit.
I believe that it is right for the Secretary of State to have discretion to receive these applications and to refuse those that he considers to be unsuitable or to delay them. I have no reason to doubt that he will exercise that discretion wisely. Apart from anything else, as the noble Lord, Lord Sutherland, said, the Secretary of State will be judged and, if the schools are failures, that will come home to roost. I have no doubt that the noble Baroness is aware of that problem.
Lord Hill of Oareford
My Lords, I am grateful for the comments made in this interesting debate. There have been three broad sets of comments. Clearly, some are not at all keen in principle that primary schools should become academies. Some on the Cross Benches who have spoken eloquently have said that primary schools should be given the chance to become academies, that there is no reason in principle why they should not and that there are safeguards to provide some reassurance. There is a third group, including some of my noble friends, who agree in principle that academy status for primary schools is good and that they should not be excluded but given the opportunity. But they want reassurance on the timing and the pace. I hope that I can provide that.
I understand the point made by the noble Lord, Lord Hunt, about the particular sensitivity of primary schools and the special part that they play in local communities. The local primary school is very much part of the village where I live and I know that that is true throughout the country. On a general point, in the first instance we are talking about only a relatively modest number of outstanding primary schools. By definition, any that do not fall into that category will involve a longer process of establishing the criteria to enable us to work these things through. If an outstanding local primary were to become an academy, it is not clear why it should automatically become less of a part of the local community, village or town life. It will have the same head, staff, parents and children with some additional freedoms. I am not clear why the change of status should suddenly make those people in their villages, towns and communities suddenly start to behave differently.
Our starting point is that we are keen that schools should determine whether academy status is right for them but I accept that in some—perhaps many—primary schools, it may not be the right decision for them. They may not have the right experience or feel comfortable, in which case they will not want to make the change. Even though there may be many schools for which it is not suitable, that does not mean that those that want to become academies and believe that it is a viable option for which they have the appetite should be prevented from doing so. That links to the point made by the noble Lord, Lord Sutherland, about the double lock in that category. To respond to the question asked directly by the noble Baroness, Lady Morris, it is only outstanding primary schools that will be able to convert quickly. Others will have to meet criteria that we will publish. The question of capacity will include leadership issues.
Baroness Howe of Idlicote
My Lords, can the Minister give the reassurance that I was hoping for? In the consideration of an application, I hope that the special educational needs side will be borne very strongly in mind, not least because early diagnosis of problems is very important for the future development of that group.
Lord Hill of Oareford
I am happy to give that reassurance, but also to make the point that, as the noble Baroness, will know, because of other amendments which I have moved on SEN, with the support of this House we will include in the Bill a commitment that there should be absolute parity in all academies on SEN comparable to that in all maintained schools.
Lord Hunt of Kings Heath
My Lords, this has been a very good debate and I am grateful to all noble Lords who have spoken. I apologise to the noble Baroness, Lady Walmsley, for trying to take over her amendment, Amendment 5. The noble Baroness, Lady Williams, put it right at the start of our debate when she talked about the role of primary schools being at the heart of many local communities. All noble Lords agree with that. That means that we should be especially careful about legislation which could have an impact on those schools. That is why noble Lords want to be assured that there will be a rigorous scrutiny process enabling us to understand whether schools are ready to take on the responsibilities which academy status will bring.
The point which has not been responded to fully is that all evidence suggests that primary schools depend the most on local education authorities. That is why we are concerned not about the principle of academy status for primary schools but about capacity. I hope that the noble Baroness, Lady Perry, did not take my remarks as meaning to criticise the capacity of leadership in primary schools; I did not seek to do so. The managerial structure within most primary schools is fairly limited. That is not about the capacity of the people, it is simply about the number of people. She will know that they do not have the managerial structures that many secondary schools have. I agree with her—many governing bodies are indeed excellent—but they still need to reflect on the corporate responsibility that they would be taking on if they went down the path of academy status. We should not underestimate those additional responsibilities.
It has been said in our debate that there are two locks. The first lock is that the Secretary of State himself will have to approve any application. We are reassured that there will be a rigorous process in so doing. I make two points about that. First, the message coming from the Secretary of State is that he is anxious to secure as many academy schools as possible. That is why I question the rigour of the process. Secondly, I come back to the point that I raised in Committee. I know that the Minister has now tabled an amendment about consultation, but the fact is that, none the less, the Bill gives the Secretary of State a huge amount of power without parliamentary scrutiny. That is why I am very worried, particularly in relation to primary schools, about just letting the Bill go through.
The second point, raised by the noble Lord, Lord Sutherland, concerns the second lock, which is that of the governing body. Of course, governing bodies will be able to decide whether or not to take an application forward, but in our previous debate, we discussed the many financial uncertainties that are readily apparent in the academy programme at the moment. I question whether governing bodies, especially of primary schools, are really in a position to make those decisions on the basis of the information that they have at the moment.
My noble friend Lord Knight spoke about the potential of all-through academies. My amendments are not intended to remove all-through schools from the legislation. Third reading is always an opportunity to tidy up legislation, but I want to make it clear that the amendments do not seek to remove all-through academies from the Bill.
Like the noble Earl, Lord Listowel, I am at heart concerned about the pace. We are going too fast, particularly in relation to primary schools. I understand the point the Minister makes about holding back; he made it in Committee. It is one approach, but I think it would be much better to get the policy sorted and to understand where the support for primary schools will come from. Primary schools will need support. The Minister happily has another Bill coming to your Lordships House in a matter of months. Surely we should leave primary schools aside until that point to give his department some months to sort this out. Then I am sure we would look with confidence to agreeing to legislation that would embrace primary schools.
Having heard the Minister, I feel that this is a matter on which we should test the opinion of the House.