Academies Bill [HL]

Lord Phillips of Sudbury Excerpts

Monday 28th June 2010 Lords Chamber

[Baroness Howe of Idlicote]

My Lords, my Amendment 179 is also in this group of amendments. As the noble Baroness, Lady Sharp, has mentioned, probably a number of us were sent them and we have used them in differing ways, but they are in fact extremely similar. My proposal is very much, as we argued in the first place, that if you have to go through a series of consultations before you take the specific step of applying properly to become an academy, the whole procedure of consulting the parents, the staff and everyone—the kitchen sink, as it were—to become an academy is the same as the procedure before you decide to come out of the process. All of that indicates the concern about the whole process. There are without doubt, as originally set out, a number of reasons why a school, having suddenly leapt to the idea that becoming an academy is definitely the way forward, might regret converting to one, so it should have the option of returning to maintained status if that is best for the education of its children.

I therefore join other noble Lords in what they have said about these amendments, and I hope the Minister will be able to satisfy us on these points.

[Lord Phillips of Sudbury]

My Lords, I have tabled Amendment 92 in this group. I cannot resist commenting on the fact that we have been in debate on the Bill for 20 hours and are still only on Clause 2. That says something about the drafting. My amendment covers a simple point. I suspect that the Minister will say that the amendment is unnecessary, but it makes clear that the seven years’ period of notice the Secretary of State can give under Clause 2(2) in relation to payments to an academy may be given at any time. It follows a well worn precedent in normal law of contract, but if he assures the Committee that it is superfluous, so be it.

[The Lord Bishop of Exeter]

My Lords, I make a brief intervention on the group of amendments concerned with reversion to maintained status. What I am looking for is clarification on the consequences, intended or unintended, of any of these amendments in the case of an academy that had formerly been a church school or a school of particular religious character. Is there a clear intention here that such academies should revert to that form of status, and if so, to what extent in any of these amendments is that intention secured? Moreover, in the provisions that require consultation, in the case of church schools should there not be explicit consultation with diocesan boards of education or their equivalents, for whom such a reversion would have resource implications?

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Moved by

[Lord Phillips of Sudbury]

161: Clause 8, page 6, line 14, leave out “proprietor” and insert “operator”

[Lord Phillips of Sudbury]

I shall speak also to Amendment 167. Amendment 161 is jointly in the name of my noble friend Lady Walmsley, and Amendment 167 is jointly in the names of my noble friends Lady Walmsley and Lady Williams of Crosby, and the noble Baroness, Lady Howe of Idlicote.

As my noble friend the Minister referred to Baldrick, I think that he will sympathise if I say that Clause 8 could have been drafted by Monty Python himself. It is a dog’s dinner. Quite why we have to have this new definition of “academy proprietors” when the first five clauses make no reference to academy proprietors and they make only a desultory appearance in Clause 6 and a latter-day appearance in Clause 7, I do not quite know. It does not seem to me to be worth its presence in the Bill, which is complicated enough already.

I shall briefly deal with Amendment 161. I am a little shy about proposing it at 11 o’clock at night, but I shall nevertheless do so briefly. The use of the word “proprietor” is unhappy, given that all these academies can only be charities and that the word “proprietor” has an almost aggressively private ring about it, a ring of ownership. If you look up the definition, all its resonances and ring are about personal, private ownership. I am not expecting the Minister to make any concession on this tonight, but if he reflects on this and thinks that the word “operator” would be more in tune with the culture of the Bill, so much the better. The language of Bills can often be quite important in the way they are understood by the public afterwards.

I turn to the heart of this group: Amendment 167. It deletes subsection (4) of Clause 8 which states that all academy proprietors—to use the language of the clause—shall be exempt charities. I know that my noble friend Lord Hodgson of Astley Abbotts will argue in the next group along the lines that I now do—it is nice to be in harness with him again and to see the noble Lord, Lord Bassam, o’er yonder because we battled it out for a year over the Charities Bill in 2006. The question of who regulates this new breed of schools is vital. I am entirely happy that the Bill makes clear that all these academies are to be charities—indeed I would have been frantic if it had not.

However, as we in this House know only too well, charities are both highly privileged entities in the national legal fauna and have very considerable tax and other advantages over any other sort of legal animal. Because of that and their ancient nature, and because they are at the heart of civic society and our wonderful voluntary movement, they need to be and, indeed, are specially regulated. It is also fair to say that the law of charity is very particular and complex and requires more judgment on the part of those who apply it than most other parts of our law. It is no accident that the Charity Commission was established in the first half of the 19th century and has maintained to this day its pre-eminent—indeed, almost absolutist—role with regard to the oversight of charity activity and, starting at the beginning, of charity registration.

Therefore, it was with some alarm that I read the Bill and saw that academies were to be exempt charities because, as many Members of your Lordships' House will know, that means that they are taken out of Charity Commission regulation. It is particularly odd on two grounds. First, schools and other educational establishments used to be regulated by what was then called the Department for Education and Science, but that special possession was taken from it and put back into the responsibility of the Charity Commission many years ago.

The second oddity is that existing academies are subject to the regulation of the Charity Commission. I understand that there was a little brouhaha when at first it was suggested that the regulation should not be with the Charity Commission, but that was overcome and the academies remain subject to the oversight and regulation of the Charity Commission. It is worth pointing out that the DCSF, in its guidance to academy schools which it issued less than a year ago, makes very plain why the Charity Commission rather than anyone else is to regulate them. The reason is principally to ensure that academies that are charities must remain charities with the essential attribute of charitable status, which is independence, above all things.

Although the Government will rightly claim that one of the great virtues of the new wave of academies is to be more independent—I do not for a minute suggest that my noble friend the Minister has any other thoughts in his mind—sometimes things can occur that are not intended when one is legislating, and we must be absolutely sure that the independence of new academies, over and against local education authorities for example, is not replaced by subservience to the Government of the day. That is the principal benefaction, if I can use that word, of charitable status, which is why the Charity Commission goes to great lengths to ensure that academy schools are properly independent of government.

The Government say in their guidance that the agreement must be reached after,

“arm’s-length negotiations with the governmental authority”,

and that the trustees of an academy school must not,

“commit themselves simply to giving effect to the policies and wishes of the governmental authority”.

Finally, the trustees cannot agree to allow the governmental authority,

“to decide who is to benefit and in what way … However … it is possible for trustees to accept funding from a governmental authority on terms that are quite prescriptive”.

That gives you a flavour of this long document.

My amendment, which is supported by my noble friends, would bring the regulation back into the hands of the Charity Commission. I do not seek that for any other reason than that it has the experience and expertise to do this job not only better than any other regulating authority but, dare I say it, with less bureaucratic stumbling than might be the case if the regulation were moved to—what is it called these days? Is it still the DCSF?

[Noble Lords]

The DfE.

[Lord Phillips of Sudbury]

I am sorry. I have got the abbreviation wrong. I am well behind. On utilitarian grounds, and on the grounds of the most effective regulation, the Charity Commission should not be ousted in the way it is in subsection (4).

I also need to say this. The Charity Commission could not take on the role of regulating the new academies unless it was given more staff—it is currently losing nearly 60 staff. Whoever is given the task of regulation will have to have the necessary staff, and any regulating hand will have to have more staff than the Charity Commission, because the Charity Commission has resort to a huge reservoir of experience, expertise and assistance. Noble Lords may ask who will regulate. That is the problem. The Government say that the Charity Commission is not the regulator, but there is nothing in the Bill about who they wish to be the regulator.

Let us concede for the minute that they insist on a different regulator, although I hope the Minister will have second thoughts about that. There are very few examples of other principal regulators. Most of our big national museums are regulated by DCMS, while Kew Gardens is regulated by Defra. Some of the universities are regulated by HEFCE, and some housing associations have a separate principal regulator. There has to be a principal regulator, and if I may say, the principal regulator in the case of the universities has delegated much of its regulatory function to the Charity Commission under a memorandum of understanding. So it all gets a bit confusing and, I would say, wasteful.

I end by saying that, whatever else, we must have the name of regulator on the face of such an important Bill as this. It is not enough for the Government to use their powers to appoint a principal regulator by secondary legislation. We all know how futile are the powers of this and the other place in relation to secondary legislation. We ought at least to have the possibility of commenting on the appropriateness and quality of the principal regulator the Government have in mind in order to assist them.

Finally, why on earth are the Government doing this? I hope it is not because they want to whip these academies through without the careful initial oversight of the arrangements, particularly of the new academies, that the Charity Commission could and will provide. I hope that the Government are not hoping that this will rush things through. If that is the case, they could repent at leisure. I beg to move.

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[Viscount Eccles]

My Lords, I will not make any long arguments. My noble friend Lord Phillips has referred to museums and to Kew, but I think that, although the secondary legislation to appoint a charitable regulator other than the Charity Commission is in draft, it has not yet been triggered. I think that the matter is still in limbo.

[Lord Phillips of Sudbury]

In fact, it came in at the beginning of this month.

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[Lord Hill of Oareford]

My Lords, I deeply regret having mentioned Baldrick. I am learning as I go and I shall attempt to be more concise in future.

I shall attempt to respond to some of the broad points that have been made and the specific concerns that have been raised. I am conscious of the expertise that resides with both my noble friends, so I think that the sensible way forward, if they are prepared to spend the time, is for me and officials to sit down with them and go through these points in more detail, taking advantage of their knowledge and trying to address some of the points that have been raised.

Perhaps I may respond in general terms to the main thrust of the points made around Amendment 167, which would remove the provision for academy trusts to be exempt charities. The effect of that, as my noble friend made clear, would be that they would have to continue, as now, to register individually with, and be regulated by, the Charity Commission. As we discussed earlier, hundreds of maintained schools may apply to become academies during the next few years and, as charities, they would, if not exempted under subsection (4), all have to be regulated by the Charity Commission. That would clearly be a huge additional burden. I accept the point made by my noble friend Lord Phillips that whoever does it will have to deal with it, but I believe that the Charity Commission accepts that the burden of taking on that regulatory role would be considerable.

A range of educational bodies are exempt charities. Further education colleges and higher education colleges are exempt charities and not regulated by the Charity Commission. The governing bodies of foundation and voluntary schools are shortly, following discussion and agreement between the Charity Commission and the department, to become exempt charities as well. They will cease to be regulated by the Charity Commission and will be regulated by the department instead. We therefore thought that academies could be treated consistently with these other schools and educational bodies and be made exempt in the same way.

I know well that the Charity Commission is committed to ensuring that proper public accountability for academies is maintained. It is our intention that funding agreements or grant arrangements should place an obligation on academy trusts to publish their governing documents, reports, accounts and the names of trustees. I hope that that offers the noble Lord at least some reassurance that there would not be an unacceptable reduction in accountability and transparency.

The Minister for the Cabinet Office has agreed in principle that the YPLA should be appointed as the principal regulator for academies. That is the government body with day-to-day responsibility for academies. Once opened, it could be the appropriate body to carry out that role. I am told in response to a point raised in the debate that all principal regulators appointed under the 2006 Act have been appointed under secondary legislation.

I hope that my answers have provided at least some factual information. However, having listened to the debate, I repeat my invitation to my noble friends Lord Phillips and Lord Hodgson to spare the time to sit down with me and discuss these matters at greater length. I ask my noble friend to withdraw his amendment.

[Lord Phillips of Sudbury]

My Lords, my noble friend the Minister cannot be fairer than that. I am tempted to make some comments of my own on some of his, but that would be wicked, cruel and unnecessary. I beg leave to withdraw the amendment.

Amendment 161 withdrawn.

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[Baroness Thornton]

My Lords, I know that the noble Lord, Lord Phillips, will probably have something to say on this. The noble Lord, Lord Hodgson of Astley Abbotts and I had several happy hours in the Chamber discussing community interest companies and how they should be formed. The noble Lord is correct—it was a matter of some significant discussion at the time that a community interest company could not be a charity. However, a main feature of a community interest company is the asset lock. That is why it is such a valuable company form for social enterprises. I am not sure how that could be applied as an alternative form to a charity. This is a complex issue, and I am sure that the noble Lord, Lord Phillips of Sudbury, is about to make it even more complicated, because I know that he has very firm views on this, but I cannot see how the asset lock would work here.

[Lord Phillips of Sudbury]

I do not like being known as a man who complicates things, but I shall just say that I, unusually, do not support the noble Lord in his amendment. The fact that a CIC cannot be a charity is a fundamental impediment. It would also mean that it could not have a principal regulator under the Charities Acts 1993 and 2006, which would be a really major drawback. However, the noble Lord has at least drawn the attention of the House, inadvertently perhaps, to the charitable incorporated organisation, which is a new corporate animal created under the Charities Act 2006. The Charity Commission is still struggling to find the regulations appropriate to the birth of this new beast but, by jingo, when it is born, it will be a perfect vehicle for these new academies. As Clause 8 has been drafted by Monty Python, it will not be a permitted corporate carrier of a school, although plainly it should be. So I am grateful to the noble Lord for his amendment, even if I disagree with it.