Further Education Bodies (Insolvency) Regulations 2018

Lord Jones Excerpts

Tuesday 30th October 2018 Grand Committee

[Baroness Garden of Frognal (LD)]

My Lords, I too thank the Minister for introducing the regulations. It is always somewhat frustrating that discussion of regulations offers no chance to amend, but of course it gives us an opportunity to challenge and seek clarification from the Government on rationale, detail or implementation.

We on these Benches found the Technical and Further Education Act a deeply depressing piece of legislation. Our further education sector makes an enormous contribution to education and the economy but continues to be overtasked, underfunded and underappreciated. The Bill was largely about potential insolvency in further education—hardly a resounding message of support. Of course, it introduced the baffling T-levels, which were not sought by the sector and continue to be baffling months after their inception. They risk undermining the highly regarded vocational qualifications that have served this country well for generations, but we will keep the perplexities of T-levels for another debate.

I declare an interest as a vice-president of City & Guilds, an organisation I worked with for some 20 years. For more than 140 years, it has been an immense source of employment skills for the nation. City & Guilds has always worked with FE colleges, which play a crucial part in delivering world-class qualifications that are highly regarded in the UK and overseas by employers across the whole range of work-related skills.

We note that a number of FE colleges have fallen into financial difficulties. Can the Minister tell us how many of them have actually become insolvent? I note that the Explanatory Memorandum indicates that,

“in reality we expect that FE colleges entering insolvency would be a very rare event”.

One wonders why, in that case, so much of the Act was devoted to such insolvency. We gather too that:

“The Department will publish two sets of guidance before the instrument comes into force”.


Will the Minister say when we can expect these sets of guidance? Apparently there is to be no monitoring to assess whether there are,

“any unexpected burdens or tensions within the FE sector”.

Any legislation that imposes additional burdens and tensions on an overburdened sector should surely be dismissed instantly. Would it not be prudent to have some sort of review?

Will the Minister also say what part in those financial difficulties has been played by the unwelcome and damaging burden of providing GCSE resits in maths and English? If ever a policy was designed to reinforce failure in learners, these resits are that policy. Young people who may have brilliant workplace skills are forced into taking exams again and again which have little, if any, relevance to the work they wish to do, and they fail time and again. This is hardly encouragement for the future. Colleges have been tasked with this depressing and resource-intensive duty. When will the Government realise the negative and counterproductive impact of their obsession with academic qualifications, regardless of the talents of young people or the relevance of those qualifications to the things that young people actually want to do? Can the Minister say if and when the Government have plans to review the GCSE resit policy?

I share the concerns of the noble Lord, Lord Watson, over the drop in funding for FE, which is surely unacceptable with all the pressures put on it.

Can the Minister say what provision has been made for private providers? What progress has been made in developing comparable safeguards for apprentices and other learners who are with private providers, especially in view of the collapse of 3aaa? What about the looming collapse of learndirect? Do these regulations have any implications for protecting learners if there are subcontracting arrangements, for instance? We know that colleges and private providers are entangled in highly complex subcontractors. The Minister may have an answer on this, but if he does not, perhaps he could write to me.

We do not seek to challenge these regulations, but we express again our deep concerns over government policies towards vocational, or even technical, education. We hope that wise heads will appreciate that it is in the national interest, and in the interest of learners, to give every possible support and status to those who seek to acquire the work skills the country so desperately needs. I look forward to the Minister’s reply.

[Lord Jones (Lab)]

My Lords, I thank the Minister for his cogent introduction and my noble friend for his eloquent steer in a debate such as this. My remarks will be very brief. The regulations refer to Section 124A of the Insolvency Act, which is headed “Petition for winding up on grounds of public interest”. Will the Minister expand on how he perceives the public interest in the context of this sphere of education? The matter is complicated, and obviously the provision is necessary, but can he give a recent instance of where a specific further education establishment has been perceived to be insolvent? Has that happened? Does he know of a sixth-form college that has been wound up? Has that happened?

Paragraph 7 of the Explanatory Memorandum on the policy background is helpful. Does the Minister know whether exceptional financial support has been given to one of these institutions? Like others in this debate, I think the further education sector is crucial to the future of Britain’s economy. In particular, FE colleges might help us save what remains of our manufacturing base.

[Lord Storey (LD)]

My Lords, I preface my remarks by saying that we value further education. It will go through a renaissance and the need for vocational courses, skills development and apprenticeships will help it to blossom. This instrument is technical but it is absolutely right that we should agree it.

However, I have a number of concerns. We have had the area reviews, of course, but why do we allow a further education or sixth-form college to become insolvent? One would think that further down the line we would take strong and robust action to ensure that that does not happen. If a college closes down the effect on the local community and economy can be devastating. If we allowed a further education college in, say, Northumberland to close down because we had not kept our finger on the pulse, imagine the effect that that would have in a predominantly rural area.

It is important that we understand the mechanisms for ensuring that this does not happen. I see in the document that 37 further education colleges published notices to improve financial health. What do the Government do to make sure that that support is given?

I agree with the comments of the noble Lord, Lord Watson, about cuts, but it is not always about cuts; it is about management as well. An institution might not have all the resources it needs but it might be so well managed that it thrives nevertheless. It is about the management of the college as well as its finances.

I have three further questions. First, the Minister said that insolvency will not always mean closure. Will he expand on that and say what other actions can be taken? Secondly, do these regulations apply to university technical colleges? Thirdly, if we want to create the level playing that the Minister talked about, should we not ensure that all sixth-form colleges are treated equally and that those that have to pay VAT will no longer have to do so? Will he perhaps explain why sixth-form colleges that are not in a multi-academy trust have to pay VAT?