Technical and Further Education Bill

Baroness Buscombe Excerpts

Committee: 2nd sitting (Hansard): House of Lords
Monday 27th February 2017 Grand Committee

[Baroness Donaghy (Lab)]

My Lords, I shall make one additional point in support of the amendment. I was one of the founding members of the Low Pay Commission. When it was first established, its job was to create the infrastructure around not just the minimum wage but the wage for apprentices and how that would play out in the world of employment. It was 19 years ago that we first grappled with these issues, so the noble Baroness, Lady Wolf, is quite right that this has been a problem for quite some time. It is a structural issue.

I know that the Minister is very good at leaping over barriers to try to solve problems. I know it is not easy, but he can see the broader pictures and can try to bang heads together on an issue which will not go away unless something positive is done.

I fully endorse what my noble friend Lord Blunkett said. The Low Pay Commission had to agree to a very low wage not only to get a unanimous report but because we were pioneering and wanted to be absolutely sure that we were not going to damage the economy. When we look at that low wage, as it still is, and the transport implications, to be honest it is a miracle that anybody whose family receives benefits goes in for an apprenticeship at all. Far from being the group that needs the least motivation—we are trying to tackle the fact that the education system is failing that group at the moment—these people require the most motivation to keep going.

This is a plea for the Minister to do his Superman act—he is about to take his jacket off, so I am feeling much more optimistic—and try to find ways of breaking down barriers and breaking through this structural anomaly, which we all want to do.

[Baroness Buscombe (Con)]

My Lords, I am sorry to disappoint, but Superman is not responding to this amendment, and I am certainly no Superwoman.

We welcome the sentiment behind Amendment 12A tabled by the noble Lords, Lord Watson and Lord Hunt, that young people should not feel financially disadvantaged by taking up an apprenticeship. However, I hope I will be able to persuade noble Lords who have taken part in this debate that sufficient safeguards are in place to support this aim. In saying that, the amendment focuses on child benefit rather than the broader issue of all other benefits, which are not part of this Bill. Therefore, it is very difficult to widen my response in that regard, but let us see what we can do.

One of the core principles of an apprenticeship is that it is a genuine job and is treated accordingly in the benefits system. A young person on an apprenticeship will receive at least the national minimum wage, which is now £3.40 per hour for apprentices following a 3% increase in October 2016. Of course, these figures do not remain static—indeed, I am moving a Motion on an SI tomorrow on upgrading the figures—and most employers pay more than the minimum. The 2016 apprenticeship pay survey estimates that the average gross hourly pay received by apprentices in England was £6.70 per hour for level 2 and 3 apprentices.

The purpose of child benefit is to support parents financially with the extra costs of raising a child—for example, with the cost of food, clothing and other necessities. If a young person is undertaking an apprenticeship, or is in training or education by virtue of a contract of employment, their parents are no longer eligible for child benefit for supporting that young person. However, parents can still receive child benefit for other children and qualifying young persons in their family.

An apprentice has to work only 6.1 hours—less than one full day’s work—on the minimum wage to earn the equivalent of the weekly child benefit amount for the eldest or only child, or four hours to earn the equivalent of the second and subsequent children’s amount. In that sense, there is more than a catch-up there. So I hope I have provided sufficient reassurance that the wages from an apprenticeship, even if paid at the apprenticeship minimum wage, will more than offset any household income reductions through the loss of child benefit.

Noble Lords talked also about the loss or reduction in housing benefit, credits and so on. As I said at the beginning, that is not within the scope of this Bill. Noble Lords have said they would like an opportunity to talk to my noble friend the Minister about this issue before Report. My noble friend is very happy to meet, but it is not within our gift to make a difference on this. The point has certainly been well put by noble Lords, but within the confines of this Bill it is very difficult to look beyond what we are already able to do for apprentices.

I hope that, on that basis, the noble Lord will withdraw his amendment.

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[Lord Young of Norwood Green]

I was going to ask the Minister to address that point. If the apprenticeship is approved by the Institute for Apprenticeships, is it an approved form of learning? The apprentices are in training for the most part. They are released at least one day a week. I would welcome some guidance on that.

[Baroness Buscombe]

The difficulty is that the institute cannot change the definition of an apprenticeship. However, my noble friend will meet with noble Lords who would like to discuss this issue further following Committee.

[Baroness Garden of Frognal]

If the institute cannot change the definition of an apprenticeship, who can?

[Baroness Buscombe]

My Lords, the difficulty is that the definition of a job is a question for Parliament.

[Lord Watson of Invergowrie]

I thank the Minister for her response and all colleagues who have spoken in the debate. I particularly welcome the support of the noble Baroness, Lady Garden, and the noble Lord, Lord Storey. One of them mentioned social mobility, which is an important point. It is within the scope of the Government’s overall objective to increase social mobility; it is mentioned often enough. I do not see how it can be outwith the scope of the Bill, as the Minister said, because we are able to discuss it today.

There is no point in repeating a lot of the points that have been made, but I certainly take the issue about an approved form of learning, which my noble friend Lord Young mentioned; it needs to be clarified. Will the Minister write to noble Lords on that point?

The noble Baroness, Lady Buscombe, perhaps did not fully hear my noble friend Lord Blunkett when he asked whether we could meet with the Minister separately to discuss the issue. It was not just with the Minister but with his opposite number in the Department for Work and Pensions as well to see what might be achieved on this. I accept the Minister said that more or less nothing could be achieved, but we are going to meet, so let us broaden the meeting so that we have somebody who has experience of those matters and we can go into them in greater detail.

My noble friend Lady Donaghy has a great deal of experience in these matters, as noble Lords will know. However, I am not sure that her metaphors stand close scrutiny of the very urbane Minister—leaping over barriers and banging heads together is not quite his modus operandi, and I will not go anywhere near the Superman reference. However, I think the Minister can at least open up channels for discussion on this. We would certainly need to have those discussions before Report.

At this stage, it is our intention to return to the matter because, at the end of the day, we want to increase the number of apprenticeships from all backgrounds. We need to increase the overall number, but many are being put off for reasons that will not be assuaged by the figures quoted by the noble Baroness, Lady Buscombe, and we have to find a way round this. With those comments, I beg leave to withdraw the amendment.

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[Lord Hunt of Kings Heath]

My Lords, I join the noble Lord, Lord Baker, in saying that, at heart, we want to hear how this will operate, because that will inform our future debates. Like my noble friend Lord Knight, I have no problem at all with competition where it can drive quality and innovation. However, that depends on the nature of the market and the capacity and nous of the commissioning body. Frankly, my concern is that government procurement has not usually shown itself able to have the agility that my noble friend asked for. The constraints put upon public sector procurement drive you to award tenders on a crude price basis. Ministers always sign up to concepts of value for money and outcomes, as the noble Lord, Lord Baker, said. But as anyone dealing with the Government will know, the reality is that it always comes down to price. The noble Baroness, Lady Wolf, made a very convincing argument on the principles, but the real question is on the practice of procurement and licensing.

There was a tension in what the noble Lord, Lord Lucas, said. He had two worries: one was that the franchising system envisaged would allow too little time for a provider to invest morally, intellectually and financially in the very long term; equally, the other was that because of the single-provider approach, there will be little competition at the end of the franchise period. I suppose he would say the risk is that we end up with the worst of all worlds, with low-quality provision and a provider that is not interested in the long term, and the institute having no choice at the end of the day.

It comes down to capacity. We are talking about an institute with 80 people. I hope that most of their time will be spent overseeing standards, because I for one simply do not trust the approach that is being taken. How can we rely on employers, given that their record in this country is so dismal? I hope the institute will have people who can talk to and challenge the panels. But who will be left to oversee these contracts? The record of government and public sector bodies in procurement is dismal.

My other question is to the noble Baroness, Lady Wolf. In its deliberations, did the review look at the ability of the public sector to commission in a sensible, grown-up way, rather than the usual crude way that is taken? My noble friend Lord Adonis is in his place, and I am tempted to invite him to talk about some examples of that in rail franchising. The noble Lord, Lord Lucas, mentioned this at Second Reading, and clearly there are a number of examples of where the Department for Transport has gone for a bid that was overambitious from the company concerned and has had to come to the rescue. There are also examples of the argument around whether a franchise can be extended to enable the train operator to invest in the future development of services. I hope that the Minister’s department will look at that experience before getting into this sort of system. For me, it is not so much about the principle but about the capacity of the institute to handle what could be a very difficult issue.

[Baroness Buscombe]

My Lords, I thank all noble Lords, and in particular my noble friend Lord Lucas, for this very helpful debate on these amendments. My task is to try to reassure all noble Lords that we are on the right page and that we are not talking about what we have had in the past, which was all about a race to the bottom. That was the reason the Sainsbury review was set up in the first place. I hope I can reassure noble Lords that we are trying to achieve the right thing, and I shall explain in more detail how this is going to work.

On Amendment 17, good-quality standards developed by employers and other relevant experts are at the heart of the apprenticeship and technical education reforms, and we must ensure that they are fit for purpose. In future, standards will form the basis of both apprenticeships and technical education qualifications in the reformed system, and they must be appropriate for both pathways. One of the cornerstones of the apprenticeship reforms has been to move away from a qualifications-based system—in the past, apprentices have collected a number of small, often low-quality, qualifications throughout their apprenticeship—to a single end-point assessment that tests all-round competency in the occupation.

By mandating, as the amendment proposes, the inclusion of a technical education qualification in each standard, we would be moving back towards this system, and reintroducing something which was a significant factor in the decreasing quality of apprenticeships in the past under the framework model. There may be some cases, such as degree apprenticeships, where including a qualification is appropriate, but we should not require it in every case. The purpose of the apprenticeship reforms is that they are employer led, so employers and other experts should have their input for each standard.

In addition, this approach may also blur the lines between the two pathways, which are intentionally different. For those on an apprenticeship, the individual primarily gains the knowledge, skills and behaviours set out in the standard through learning on the job and 20% off-the-job training, which is then tested through a single end-point assessment. A technical education qualification is taught largely in a college environment, often supplemented by a work placement and other steps leading to the new TE certificate. By including a technical education qualification in all apprenticeships—which would be the effect of the amendment—we would lose the essential flexibility of standards developed by employers and others and limit the breadth of skills that can be obtained through an apprenticeship.

I noted that a number of Second Reading speeches, particularly that of the noble Baroness, Lady Morris of Yardley, were very strong on this point of flexibility. Several noble Lords have touched on this this afternoon. We do not want to lose flexibility through this process, and we must have some clarity.

The apprenticeship end-point assessment is the equivalent of the technical education qualification for those who have undertaken an apprenticeship, but also captures a wider range of skills and behaviours as well as knowledge. It needs to be given time to gain the value and worth with employers that many currently associate with qualifications. Including a technical education qualification would undermine this by narrowing an apprenticeship so that the measurement is more focused on a knowledge-based qualification and less on occupational competency.

I can, however, reassure the noble Lord that our apprenticeship system is flexible and that qualifications can be included in apprenticeships where that is what employers need, in circumstances, for example, where failing to include a qualification would put the learner at a disadvantage in the workplace or where it is a statutory requirement. We do not believe that technical qualifications should be included in all apprenticeships.

Amendments 26 to 30 relate to copyright. I understand the concerns my noble friend Lord Lucas has raised on copyright, and I hope that I might be able to provide an explanation that will put his mind at rest. My noble friend has proposed that the institute should retain the copyright for standards and common qualification criteria rather than for relevant course documents. Amendments in the Enterprise Act, due to come into force in April, already make provision for the copyright for standards to transfer to the institute upon approval. It follows that the institute would own the copyright for any common qualification criteria that it has produced. By common criteria, we mean design features of the qualifications that are the same, irrespective of the route studied.

The qualifications system in England is unique. Qualifications that attract public funding are developed and supplied not by the Government but by awarding organisations. Our reforms will see the institute taking responsibility for ensuring that only high-quality technical qualifications that match employer-set standards are approved by the institute. This will see the institute working with employers and other relevant stakeholders to set the content of qualifications. There will be a number of people involved in this, on the different panels, including ex-apprentices.

While we recognise that it is a departure from the current system, the transfer of copyright for relevant course documents is an important feature of the reforms. The scope of the licences for the delivery of qualifications and the details of relevant course documents will be established in due course. These may well include a specific technical assessment design specification, as well as other documents that are key to the make-up and assessment of a qualification. We would expect the institute to work closely with key stakeholders, as we propose to do, to make sure that the detail is right. This will, of course, include the organisations that develop qualifications.

If copyright for relevant course documents does not reside with the institute, we could end up with a technical education system where any innovation and employer needs are undermined by commercial interests. While we believe absolutely in competition, we want competition to raise quality and standards. If an organisation other than the institute holds the copyright for a particular qualification indefinitely, this would effectively create a stranglehold that would make it difficult for other organisations to enter the market. This would clearly not be in the public interest or fair value for the taxpayer.

However, we do not want an inflexible system. The institute will be able to grant a licence to an organisation or person for use of documents for which it owns the copyright. This could include granting a licence back to the organisation that has developed the qualification. There are also important safeguards provided for in new Section A2DA.

Amendments 28 and 29 seek to clarify that the institute may grant more than one person a licence or be assigned a right or interest in any copyright document. I would like to reassure noble Lords that it is precisely our intention that more than one person may be assigned a licence if in particular circumstances this is appropriate. I would also like to draw noble Lords’ attention to Section 6 of the Interpretation Act 1978. This stipulates that, unless it is clear that there is a contrary intention, wherever there are words in the singular these include the plural and vice versa. This means that the institute may grant a licence, right or interest in any copyright document to more than one person, should this be appropriate.

I hope that that goes some way towards reassuring noble Lords. In addition, I would like to touch on one or two of the questions—all of them if possible. If I do not reassure everybody, I would be very happy to write to noble Lords. My noble friend Lord Lucas questioned this single route, but each route will include a number of qualifications, each based on a cluster of occupations. If an awarding organisation fails, the institute’s copyright arrangements will allow another awarding organisation to step in. What is important is that this primary legislation does not tie our hands. Panels will be starting work this summer on the detail of the different courses. The noble Baroness, Lady Wolf, who is, sadly, not in her place, has explained in detail why the commission decided to depart from the existing system and say that it is much better to have one organisation.

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[Baroness Buscombe]

I respect the noble Lord’s response, but 80 employees is quite a lot of people, and that is not where it will end. The number will rise by another 30 later this year as the process is introduced and developed. It is also important for noble Lords to appreciate that we want to use the expertise and interest of outside individuals who understand the needs of employers and what it was like as an apprentice and so on to support the institute so that we have a flow of expertise seconded, in a sense, to the institute, to work with it. So they are not the same individuals who are stressed and stretched at the number of 80.

The noble Lord does not look content with that answer, but is very important that price is not the point here.

My noble friend Lord Baker talked about standards. I am pleased to say in response that a number of standards for apprenticeships have already been published and are in use. We can, of course, send examples to noble Lords, but there are not enough completions to share outcomes yet. That will follow.

[Lord Baker of Dorking]

I understood the Minister to say that an outcome is not necessarily an educational qualification. Is that correct?

[Baroness Buscombe]

It is.

[Lord Baker of Dorking]

Then what is an outcome? I think that at some stage in her speech the Minister said that it was a level of knowledge. She then went on to say that it does not necessarily mean competence in applying that knowledge. When it comes to plumbing, I am all in favour of knowledgeable plumbers, but I want plumbers who can fix things.

[Baroness Buscombe]

I agree entirely with my noble friend. Forgive me if, when talking about knowledge, it seemed as though that was the end of the story. We are looking for occupational competence. That is the key to certification: that people are absolutely prepared and competent to enter the world of work as a fully-fledged employee in that area.

[Lord Young of Norwood Green]

I want to be sure I understand this. If we stick to the example of plumbing, I am assuming that the individual would have carried out an apprenticeship that met the occupational standards that have been determined by the panel of employers. That may or may not include a technical qualification. I hope I have got that right. There are 15 routes, and panels have been set up under the categories of employers—there may be other people on the panels—and they are going to set the occupational standards that will form the basis of the apprenticeship. When an individual reaches the end of their apprenticeship, they should have met all those standards and there will, I hope, be some assessment outcome that will prove to the satisfaction of the noble Lord, Lord Baker, that they can do a Yorkshire fitting and a compression joint. I would like an example of where the noble Baroness feels an apprenticeship would not include a technical qualification.

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[Baroness Buscombe]

Off the top of my head, I cannot give a particular example. The noble Baroness, Lady Cohen, talked about shipping law. Perhaps a technical qualification is not so appropriate for that.

[Baroness Cohen of Pimlico]

A lawyer’s qualification would be required, but it does not necessarily have to be called “shipping law”.

[Baroness Buscombe]

Surely that is a good example.

I have been talking plumbers with officials so that I can understand what we are trying to achieve here. The noble Lord is absolutely right: it is about achieving occupational competence. However, if that panel decides, through time and through outcomes, that something is not right, we do not want the hands of the institute to be tied. The point is that the primary legislation will allow flexibility so that those standards could be changed in the light of any perceived failure or lack of occupational competence through practical application of the examinations of the qualifications. I hope that is helpful.

[Baroness Garden of Frognal]

This is surely what awarding bodies are doing all the time—they are awarding qualifications but if things change, they adapt the qualifications as they go along. I do not quite see why we need this supra-body in the form of the institute to oversee work that goes on all the time with vocational qualifications.

[Baroness Buscombe]

That goes back to the core reason why we are doing this. There were multifarious organisations rather than one overarching body to say that the standards are just not good enough and the qualifications are not preparing x or y for the world of work. This is why the review was set up: there was no consistency in the standards and those bodies were allowed to fail the apprentices. That is what this legislation is all about. As noble Lords said at length at Second Reading, for too long we have failed apprentices and allowed them to be second class and ignored. The same rigour has not been applied in further education as in the higher education system, and that is what we are seeking to put right.

Noble Lords have asked some important, incisive questions this afternoon, and I am sure they will continue to do so throughout the passage of the Bill, about how we do this and what the process is. I reassure noble Lords that this legislation is a framework. It is not intended to prescribe the detail of what the institute will do going forward. The point is to set the framework to allow the institute and excellence to thrive. It will ensure standards of competence so that young people going out into the world of work have something in their hands which means something to all employers and which they can rely on for their future employment.

In response to the noble Baroness, Lady Cohen, providers will need to make sure that they include the core outcomes approved by the institute and developed by employers and others. However, they can add additional elements to meet employers’ needs. In a sense it could, as the noble Baroness suggested, be bespoke for a particular employer’s requirements, as it is currently. For technical qualifications at level 2 and 3, the content will be the same wherever it is taught. That is key: it gives employers a sense that they can trust that a person turning up with a qualification has something which is recognised and will provide what they are seeking. However, colleges will be able to tailor wider programmes of study to meet local needs.

I hope I have gone some way to reassuring noble Lords that these amendments are not necessary. On that basis, I ask—

[Lord Young of Norwood Green]

I think I am clearer now on the standards. In the last part of her contribution, the Minister referred to technical qualifications. The Bill is very prescriptive on the institute’s control of approving and licensing technical education certificates. How does that leave the current technical education qualifications? The Bill says that:

“The Institute must maintain a list of approved technical education qualifications”.


How does that impact on existing technical education qualifications?

[Baroness Buscombe]

In essence, I am assured that it will lead to new qualifications. Is that any help to the noble Lord?

[Lord Young of Norwood Green]

I would welcome a letter clarifying that situation. What happens to the existing ones? We have mentioned these brands almost ad nauseam. Will there be some transition process?

[Baroness Buscombe]

I would be very happy to write to the noble Lord but, in essence, the current qualifications will become obsolete and the funding will be removed. There will, obviously, be a transitional process.

[Lord Baker of Dorking]

We are learning a lot as we go along. It was quite interesting, although it was not very specific in the Bill. When all the existing qualifications are binned and new ones emerge, the awarding bodies which have lost will almost certainly challenge it under judicial review. This is going to be a lawyer’s paradise. If you are now going to decide that it is going to be City & Guilds for plumbing, BTEC will want to know exactly why you have said that and why its plumbing qualifications are no good. That is for the lawyers to decide is it not?

[Baroness Buscombe]

I reassure my noble friend that there will be a proper tender process for this. Through it, the current organisations can apply for a licence to continue what they are doing now as an awarding organisation.

[Lord Knight of Weymouth]

I want to pick up on the very interesting point that the noble Lord raises. If you have a single relationship with a provider, when it comes to renewal you are in quite a perilous place, given the closeness that the organisation will have had to government, in terms of being assured that the retendering will be as fair as can be—and not just in terms of capacity. The Minister said what she said about copyright. I have some concerns about how much valuable work you will get from awarding bodies if they are going to hand over their IP to government, but I will park that worry to one side. Given this closeness to government, how are you going to make sure that the reprocurement will work?

[Baroness Buscombe]

First, it is not being handed over to the Government but to the institute, which is funded—

[Lord Hunt of Kings Heath]

My Lords, there is no such thing as independent bodies in this area. All the bodies listed are going to be in one way or another under the heavy influence of government. The very fact that we are legislating for it means that, in the end, Ministers will take responsibility for what the institute does. There is no other way the Government can discharge accountability. Clearly, the Government will use the usual public sector tendering approach, which is a dead hand and will not, in my view, allow for innovation.

I do not know what the noble Lord, Lord Lucas, is going to do, but one thing that has struck me about the meetings we have had so far is that we have not really met the institute or its acting chief executive or the board members. I think it would be invaluable to listen to them to understand how they are going to take this process forward. We have not been convinced that the institute, to which I assume all the usual public accountabilities will apply, will have the actual capacity to handle the kind of sophisticated tendering that is required. That seems to me to be the problem.

[Baroness Buscombe]

I am sorry that the noble Lord seems to be taking quite a negative approach to this. As I said earlier, this Bill is for primary legislation to set a framework. Of course, there may be a situation where Ministers may have to have oversight, but the reality is that we want this to work as charged by the Sainsbury review. We are responding to a situation where we want to turn around something that has clearly not worked, and has clearly not been successful or provided the best outcomes for young people going into the world of work. We are trying to change that.

All I can say at this point is that we are happy to write to noble Lords to explain in more detail what we are trying to achieve through this process. As I said earlier, the legislation will not tie the hands of the institute. Flexibility and quality are key words in how this will develop.

[Lord Lucas]

My Lords, I am very grateful to my noble friend for her lengthy explanation. The main thing I would like to ask her is that, between Committee and Report, we have the chance to sit down and discuss this, as the noble Lord, Lord Hunt, says, with the people who are going to deliver this, as far as we can find them, so that we can get a real understanding of how this process is going to work.

I am delighted that my noble friend uses the word “flexibility”, but I cannot see how a seven-year provider four years into a contract is going to react when faced with an industry which says that it wants things changed because the technology or the requirements have moved on. The provider is going to ask, “How am I going to do this? It takes two years to change things and then I have a year to get my money back on this. What’s the game?”. I cannot see why, within the structure the Minister has described, two or three awarding organisations would be a problem; I can see why a single awarding organisation is a very deep problem in terms of the power transfer from government to the organisations.

I do not think that anybody who has spoken is opposed to the Government trying to make things better. We all have a sense of what is wrong with the current system, but we do not see that what is proposed answers that. That is not because the structure cannot answer it but because, to do the things that is asked of it, IFATE has to be a much stronger organisation. Alternatively, we need an arrangement, as we have with GCSEs, where below IFATE there is a layer or organisations that have a long-term commitment to and belief in improving things—they may be competing with each other but, essentially, they will work in partnership with IFATE and should expect to be there for the long term. That is better than a circulating body of people who are there and not there on a seven-year cycle, given that education cycles are so much longer. We would like to get an understanding of that and I very much hope my noble friend may be able to organise a meeting for us.

[Baroness Buscombe]

I am very happy to say that a meeting on the basis my noble friend suggests would be welcome between now and Report.

[Lord Lucas]

I am very grateful for that, and I am sure that other Members of the Committee would be delighted to come. I do not think there is any virtue then in continuing my peroration. I beg leave to withdraw the amendment.

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[Lord Storey]

My Lords, I add my support to Amendment 20. Yes, it is absolutely right that we do all in our power to ensure that young people are numerate and literate. It seems reasonable to say that we want them to get to a certain level in mathematics, but that should not be a barrier to everything else. Special needs have not been mentioned. Are we to insist that children who have particular special needs or an aversion to numbers are to be included? We would not expect children who are dyslexic to get to certain standards in literacy because of the severity of their dyslexia.

We have heard about Travellers and immigrants, but there are young people for whom the system—perhaps poor teaching—has not helped them to get it. We then have this whole re-sit culture, and they get more and more fearful of failing and we do not want to label people as failures. I enjoyed the argument and think the word “flexibility” is so important. I know young people who have been taken on by employers, and the employer has said: “Well, they’ve got problems with numeracy and literacy, but they really sparked at this particular job”. Some of them have gone on to take some qualifications later. Let us not label people, let us have flexibility and do all we can to make sure that young people get to a certain level—“C”—in mathematics, but that should not be the be all and end all.

[Baroness Buscombe]

My Lords, I thank all noble Lords for the amendments and welcome the opportunity to debate them. I fully understand why the noble Lords, Lord Watson, and Lord Hunt, are supporting Amendment 20. Having a sound grasp of English, maths and digital skills is fundamental to getting ahead in work and life. Raising literacy and numeracy levels at all stages of education, including post-16, is essential and remains an absolute priority.

We recognise that current requirements are still low by international standards, and we believe that individuals should have higher aspirations. In the longer term, as the quality of pre and post-16 English and maths teaching and associated learner outcomes improve, the Government should raise maths and English requirements to reflect those of higher-performing international technical education systems.

Since we made it a condition of funding, all 16 to 19 year-olds beginning a study programme who have not achieved an A* to C GCSE in English and maths must continue to study these subjects until they do so, unless specific special educational needs or disabilities prevent them. I will repeat that to underline it: unless specific special educational needs or disabilities prevent them from doing so, so there are exceptions. This has resulted in thousands more students securing these GCSEs by the age of 19. The OECD has commended us on our reforms and, working with schools, colleges and employers, we will build on them.

We will do so by implementing the Sainsbury panel’s recommendations on English and maths. We have accepted the panel’s recommendation that there should be a single set of English and maths exit requirements governing college-based technical education and apprenticeships, and we will continue to require all 16 to18 year-olds to study English and maths if they have yet to achieve GCSE A* to C in these subjects.

The Government consider that English and maths requirements should be included as steps towards occupational competence. As well as good literacy and numeracy, everyone needs an essential set of digital skills to succeed in the modern workplace. Digital skills requirements should be tailored and groups of persons will be in the lead to specify digital skills that are required for entry into particular groups of skilled occupations.

We believe that there should be a minimum level of English or maths which all individuals must achieve ahead of securing technical education certification, as is already the case for apprentices. We will work with the institute to ensure that occupation-specific English and maths requirements are incorporated into each route.

Before I turn to the amendments in the name of the noble Baroness, Lady Garden, I repeat the point about exceptions. We are talking about people with special needs and so on, where it may be just too difficult. The noble Lord spoke about the resit culture, and we absolutely understand that. However, in an environment where we are offering young people the opportunity through apprenticeships for genuine employment in the world of work, there is a hope and desire that those people should understand that basic core skills in English, maths and digital skills will be essential for their future. That is not least because we all know that, in the current world of work, people change jobs a lot and are not necessarily going to follow the same role for ever. Therefore, they need that basic requirement to support themselves into their future.

[Lord Storey]

I am grateful for the Minister’s reply, but how will these exceptions be decided? Will they have to have an education healthcare plan or will they be notified by the school? What will be the mechanism for exceptions?

[Baroness Buscombe]

The noble Lord raises a good question. I do not know the answer, so I will write to him on that.

[Lord Young of Norwood Green]

I want to make sure that I understood what the noble Baroness said. Nobody would dispute that these young people should carry on learning English and maths—I certainly would not—but I would like clarification. Is the noble Baroness saying that if they still did not get a grade C, that would be a barrier to them undertaking an apprenticeship? We all agree on the importance being attached to the basic skills of literacy, numeracy and digital skills, but what if an individual did not achieve that, having made real and determined efforts? Suppose they managed only a D when they reached the age of 18, would that be a barrier to them undertaking an apprenticeship, assuming that the employer would be willing to take them on?

[Baroness Buscombe]

I hope that I can help the noble Lord, Lord Young. That would not be a barrier to an apprenticeship. We are saying that they would have to continue to study through the apprenticeship and stay in that process in order to receive their certification.

[Lord Storey]

That is very helpful. So it is not a barrier to them doing an apprenticeship but they would be studying for their GCSE maths at the same time. Would the family then be entitled to tax credits because the young person is studying maths?

[Baroness Buscombe]

The noble Lord, Lord Storey, makes an interesting point, but I certainly would not want to commit on that. Let me clarify: they would study and do these resits, as we have been calling them, through the apprenticeship process—they would do them at the same time.

I want to attempt to reply to my noble friend Lord Lucas, who asked what would happen if awarding organisations have business overseas. The answer is that the institute can grant a licence back to the awarding organisation for use of the qualification documents—in other words, for use abroad. If there is an existing qualification for an awarding organisation that is out of the institute’s scope then the institute holds no copyright on that.

I thank the noble Baroness, Lady Gardner, for tabling Amendments 21 and 25. I appreciate why she has put forward these amendments, which would allow awarding organisations to retain ownership of the copyright of documents under the new reforms. However, with respect, I cannot agree to them for the following reasons.

First, the qualification is to be approved by the institute, so it is right that the institute is the ultimate owner of the copyright. This will ensure that it can carry out its functions, including awarding licences for the delivery of the qualifications. Also, as there are likely to be multiple contributors to each qualification, the amendments are likely to make it impractical for the institute to carry out its functions to approve the new qualification. All contributors are likely to want a say in matters that relate to their particular part of the qualification. The institute should have the final say if the qualification is to be approved by it.

Secondly, the amendments would be likely to stifle competition once the licence comes to an end. Those awarding organisations whose documents have been approved by the institute would be in a far stronger position than those who were unsuccessful to rebid for a licence. Of course, the authors of documents that make up a technical education qualification should decide whether to give their consent to the copyright being transferred to the institute before the qualification is approved. If they do not, the institute can remove that document from the qualification. That is provided for in the Bill: I draw the noble Baroness’s attention to the provisions in new Section A2DA which provide safeguards for both the institute and the awarding organisations.

Furthermore, awarding organisations do not have to submit a bid to the institute for the new approved qualifications if they do not like the arrangements offered. Under the reforms, it is expected that awarding organisations will go through a comprehensive procurement process before being granted a licence to deliver a qualification for an occupation or group.

[Baroness Garden of Frognal]

My Lords—

[Baroness Buscombe]

I just want to reassure the noble Baroness that we absolutely understand that the market must be attractive for awarding organisations to operate—I wonder if that is what the noble Baroness wanted to touch on.

[Baroness Garden of Frognal]

Yes, that is the gist of it, but the question that both I and the noble Lord, Lord Lucas, raised was: what possible incentive is there for awarding organisations to put a whole lot of their expertise into developing materials towards qualifications if they will all be snaffled by the institute?

[Baroness Buscombe]

It is not a question of their being snaffled by the institute. This happens in other sectors where people develop something but the copyright is retained by someone else. It is not peculiar to this sector, a first in this area or unique. If we are to have a single organisation that is to retain and underpin the standards and quality which we all want, and have flexibility without compromising the students, it is really important that we have one body that retains the copyright: the institute.

I understand where the noble Baroness is coming from: people feel that because they have created the content, they should hang on to it. However, the point is that we are changing the system so that the copyright will be with the institute, but those who have created the copyright can bid, along with others, for the licence. It is clarifying for awarding organisations what part of copyright should be retained by whom.

[Baroness Garden of Frognal]

I wonder whether we could have a meeting on the copyright issue, because I find what is proposed incredibly confusing, and I do not think I am the only one around the table who finds that. It would be helpful if we could see how this ends up being a win-win situation for the awarding organisations and the institute, because at the moment it seems to be lose-lose for the awarding organisations.

[Baroness Buscombe]

I am perfectly happy to have such a meeting between now and Report. I re-emphasise that the whole point of this is not to undermine those who produce the copyright but all part of developing a new ethos, so that the best can be retained and be consistent across the board for all those who bid for the licence for those qualifications. On that basis, I hope that the noble Lord will feel able to withdraw his amendment.

[Lord Lucas]

My Lords, I am feeling very disoriented here. A Conservative Government are arguing for nationalisation and against competition while I am arguing for more civil servants. This is not where I expected to be. My noble friend did not answer my question about external qualifications, such as Cisco or CompTIA, being embedded within apprenticeships or FE qualifications. Am I right in assuming that the Government are quite content under those circumstances to have no copyright whatever over those qualifications?

[Baroness Buscombe]

Yes, that is right. It would be absolutely outside the scope of the Bill.

[Lord Hunt of Kings Heath]

My Lords, this has been an interesting debate, with two completely separate discussions. On the issue of copyright, a meeting would be helpful. I am puzzled, because the Government are saying they would encourage those people who wish to bid for work to be innovative in the bids they put forward, but actually the reward for innovation is to be stuck in a competitive tendering exercise—and, by the way, at the end of the tendering period we will nick your ideas. That does not seem to be quite what we want. Surely we want some partnership here and some commitment from the private sector to commit to R&D and innovation, but they must have some share of the proceeds. The idea that they can get that back in the short tender period that is going to operate is, at the least, problematic.

It seems that the Government are relying on the institute to be the innovator and then to tender that out. Okay, if that is the way it is going to work then we should be explicitly told that, but I do not think they can have it both ways. It would be interesting to have that debate.

On Amendment 20, regarding resits, I take what the Minister has said—that many of those young people who resit their GCSE maths and English as a result of the new policy introduced in 2014 now have grade C —and that is a good thing. However, we know there are thousands and thousands of young people who resat but are never going to get their GCSE maths and English. My point is that this can be a very discouraging process for both students and teachers, and I am looking for a more imaginative approach. I acknowledge it is important that someone going into employment can add up and understand percentages and percentiles, but this does not necessarily mean they have reached the GCSE qualification.

Some clarification is required as there is a point I am not entirely clear on. Is it the case that for someone who goes on to an apprenticeship under the auspices of the institute and continues to resit, and can satisfy the employer at the end-point assessment, because they do not have their GCSE maths they are not going to be able to qualify as an apprentice? I may have got that wrong, so having a letter in response to that would be helpful—I am certain I have got it wrong because officials are telling me so.

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[Lord Young of Norwood Green]

My Lords, I shall not make any general assertions of what may or may not happen. I take the “all is for the best in this best of all possible worlds” approach to this. However, is the institute going to issue an apprenticeship certificate? The schedule refers to the:

“Power to issue technical education certificate”.


We heard some examples of where there could be an apprenticeship without a technical qualification, so is the institute involved in that?

I want to address the point the noble Lord, Lord Lucas, made that on the completion of an apprenticeship there should be a stamp of approval, so that you have something to show. In the old days, you got a beautifully illuminated manuscript. I was not assuming that the Government would go that far, but I remember that the master bricklayer who lived across the road from me had an exceedingly impressive document from his apprenticeship. I am not expecting that but I want to know what this actually includes. Can we be assured that every apprentice, on completing their apprenticeship successfully, will get a certified stamp of approval?

[Baroness Buscombe]

My Lords, I am grateful to the noble Baroness, Lady Garden, and my noble friend Lord Lucas for tabling these amendments relating to certification. While I appreciate the intention behind the proposed changes I hope that after I have outlined my concerns, they will withdraw or not press these amendments.

The primary purpose of a technical education certificate is to enable individuals to demonstrate to employers that they have obtained the knowledge, skills and behaviours necessary to undertake their chosen occupation. Those completing either an apprenticeship or a technical education course will receive a nationally awarded certificate from the Secretary of State. This will confirm that they have attained as many of the key skills and behaviours as the institute has deemed appropriate for a particular occupation. To answer the question asked by the noble Lord, Lord Young of Norwood Green, the Secretary of State will issue the certificate but it will be branded by the institute. For a technical education certificate, this is likely to include confirmation of maths and English qualifications, successful completion of a work placement and other route-specific qualifications. This will provide clarity for employers and support the portability and progression value of the qualifications.

The organisation or consortium of organisations which the institute has approved to deliver the technical education qualification will, however, be entitled to issue its own certificate for that qualification. It is therefore right that responsibility for issuing technical education certificates should be retained by the Secretary of State. This will also ensure that certificates for technical education align as closely as possible with certificates for apprenticeships.

Amendment 31 would allow this function to be delegated to individual awarding organisations. To do so could lead to unequal status or recognition of the value of certificates. It is also right that the Secretary of State should be able to determine whether to charge for the initial technical education certificate or further copies and, if so, how much to charge. Likewise, it will be up to the organisation to decide whether and how much to charge for issuing a certificate confirming that an individual has successfully completed their qualification. I will come on to questions when I have finished speaking to Amendment 32.

Technical and Further Education Bill

Baroness Buscombe Excerpts

Committee: 3rd sitting (Hansard): House of Lords
Wednesday 1st March 2017 Grand Committee

[Baroness Cohen of Pimlico (Lab)]

I generally support the amendments. I started from a very particular consideration: I wondered whether I would be prepared to be an education administration person, because I think I am qualified to be so. The first thing I would want to know is where my financial backing was. The first thing I would ask for would be a guarantee that I would not end up personally liable, as under normal insolvency law I would be. I would need a back-up. The problem here, as with all public sector bodies—I have been through this before when we were thinking about what to do about a failing nationalised industry—is that if the Government are the guarantor or provider of last resort, the creditors will be perfectly happy but I am not quite certain how the education administrator gets out of it. I do not think I would be prepared to be an education administrator without an underwriting behind me. Mere appointment by a court would not do it for me. Have the Government thought about this bit?

[Baroness Buscombe (Con)]

My Lords, I am grateful to the noble Lords who have put their names to this group of amendments. I shall begin with Amendments 40 and 44. I realise that the noble Lord, Lord Stevenson, also referenced Amendment 46A, regarding creditors. I will get to that but if he and other noble Lords could bear with me, it would be rather easier if I could do this sequentially.

On Amendments 40 and 44, then, as is the case with other special administration regimes, Clause 15 provides that the person to be appointed as the education administrator must be someone who is qualified to act as an insolvency practitioner in relation to the FE body. This is the only criterion that must be satisfied for appointment as an education administrator.

Amendment 40, however, would require the person appointed as the education administrator to have relevant experience and knowledge of the further education sector, as noble Lords have said, in addition to being qualified to act as an insolvency practitioner. Saving the blushes of the noble Lord, Lord Stevenson, he is a very good example of accountants who have a breadth of perspective—indeed, I should declare an interest as I am married to an accountant who has a fantastic breadth of perspective—so we should not underestimate their ability to address different sectors with the same amount of expertise.

While such experience may be desirable, it is certainly not essential. Noble Lords familiar with the company insolvency regime will know that insolvency practitioners are often appointed to administer companies in sectors where they have little or no experience. That does not prevent them carrying out their duties successfully; it is their ability to understand and apply the different options available to them in the insolvency toolkit that is of most importance, not a detailed knowledge of the sector or the company. It is no different in an education administration.

In his evidence to the Committee in another place Mr Stephen Harris, an experienced insolvency practitioner with Ernst & Young, said that:

“From an insolvency practitioner’s perspective, it is worth standing back and recognising that insolvency practitioners are not train drivers, or people who spend their life in the railway or the London Underground, when it comes to a special administration regime, nor are they specialist property developers. They come to each situation afresh. One comforting thing that insolvency practitioners bring is recognising when they need to keep in place the existing management structure in a corporate sense, or the workforce in a pastoral sense, recognising that those people have skills and qualifications that they as an office holder do not necessarily have, and also”—


this is key—in bringing,

“outside specialist help to continuing the duties of education administrator should the need arise. That is … part and parcel of any trading insolvency regime”.—[Official Report, Commons, Technical and Further Education Bill Committee, 22/11/16; col. 46.]

[Lord Stevenson of Balmacara]

What has just been said is true and I understand exactly where the Minister is coming from but, in a sense, she is talking about traditional creditor-led insolvency. That is not what we are talking about. As I am an accountant with a broad vision, I can extend to make the point that we are talking about replacing a board of governors, with expertise from all around the table, a senior management team, heads of departments, lecturers, a whole panoply of technical and support workers and everything else with one person, and that person is not doing the day job. The day job is getting the creditors into a room and banging their heads together until they settle for 10% or about that level, and then going away. This is about running an institution, perhaps for a long period and on a very complicated basis. It is not quite the same.

[Baroness Buscombe]

I accept the point, but I re-emphasise therefore the importance of that person bringing in outside expertise to support them in the process. I also ought to make the practical point that we would be hard pressed to find many insolvency practitioners who had this expertise as a matter of course. Maybe there are one or two, but I do not know how many.

Mr Harris rightly made the point that the education administrator is similar to all the other special administrator roles, and I share his view. It is not necessary for the education administrator to have direct experience and knowledge of the education sector, but I expect—indeed, I am sure that we all expect—the education administrator to avail themselves of the advice and guidance of those around them. I am being a little repetitive, but this is an important point. I mean not only the management team and staff of the insolvent college but the governors, the further education commissioner, the local authorities and others. Indeed, I cannot conceive of a situation where an education administrator would act in isolation, developing their proposals for meeting the special objective and protecting students without first discussing them with a wide range of stakeholders.

Amendment 44 provides that the education administrator should be able to request information, advice and guidance from those with an understanding of education in performing their functions for the purposes of achieving the special objective. I wholly agree with the purpose of this amendment. Of course it will be important for the education administrator to take advice from experts in the sector in carrying out their functions. As I said, this is precisely how we expect the education administrator to operate. The leadership team in the further education body will be in place to provide support on the day-to-day running of the college and to provide information to assist the education administrator in their task of achieving the special objective, if possible. So too will the further education and sixth-form commissioners and their teams, as well as the officials in the Minister’s department. The education administrator will of course be free to seek advice from any other source that they may consider. We therefore believe that there is no need to provide in the Bill for something which the education administrator is free—and encouraged—to do.

I would make the point, as I often do in situations like this, that we want to be careful not to be too prescriptive in primary legislation, particularly when the Bill, as I said on Monday, really sets out a framework for how these processes should be managed. We do not want to be too prescriptive up front. I want to respond to a number of issues but I shall leave them until I have finished replying to this group of amendments, to be clear that I can cover everything that noble Lords have asked of me.

--- Later in debate ---

[Baroness Garden of Frognal]

I am still slightly confused about how what the Minister says is squared with Clause 22(5) which says that the education administrator must,

“carry out his or her functions in a way that achieves the best result for—

(a) the company’s creditors as a whole”,

That does not seem consistent with what she is saying about the emphasis on the students.

[Baroness Buscombe]

I did actually reference this while the noble Baroness was talking to a colleague. There is no contradiction. As I said about five minutes ago, the creditors’ objective is secondary and subject to the special objective of protecting students’ studies. Only when it is consistent with the special objective does the education administrator have regard to creditors’ needs. This reflects normal insolvency procedure. It is right that the education administrator has regard to creditors’ needs. I hope this is helpful.

[Baroness Cohen of Pimlico]

May I have another go at this point? In the days when I was a civil servant, a bust company would arrive on the doorstep of the Minister. Since it was in the Industry Act that we had the power, and indeed a duty, to preserve jobs, the administrator would usually ask us, “How far do you want to go? I can keep this company going for another five weeks, while we look for a buyer, but I want an underwrite. My client, the bank, is not interested. It is going to close this company”. There is the same problem here. Who authorises the administrator to go on putting the students’ interests first and to what end? The legislation is clear: the administrator puts the students’ interests first and tries to get a satisfactory answer. After two months, it becomes clear that nobody wants these students, nor this institution. I would not start out as the administrator without having a pretty clear view of what I had to do, when I was asked to stop and to whom I should go back and say, “This one is not going to work. May I now go back and satisfy the creditors?”. The process is worrying me. The words are all right, but I do not understand the process. I am sure we would all prefer not to have the process tested in practice, as it were, and have it come unglued there.

[Baroness Buscombe]

I am clutching a response to the noble Baroness’s earlier question which is on point. Clauses 26 and 28 allow the Secretary of State to provide the education administrator with indemnities or guarantees where that is necessary or appropriate. The education administrator will be able to apply to be discharged from office when they believe that they have achieved the special objective.

It may also help if I move on to Amendment 46A which specifically references creditors. Although we share common ground in our commitment to ensuring that if a further education body were to become insolvent, students would be placed at the heart of the subsequent administration process through the special objective, we do not share common ground here.

Clause 5 applies existing company insolvency law to further education colleges. The long-standing insolvency regime ensures that the interests of creditors are protected when a company becomes insolvent. Without such protection, lenders would rightly change their lending behaviours, such as by imposing higher interest rates and lending lower amounts. Other businesses would also become more cautious in trading with companies they perceived to be at risk of failing. This would ultimately paralyse growth. The same is true of the further education sector. So, while we are all agreed that there is a need to protect students’ studies—and that is the purpose of the special administration regime—there is also a need to have regard to the interests of creditors.

Through the special administration regime, we are rightly placing the protection of students’ studies ahead of the interests of creditors. However, as I said, this does not mean that the interests of creditors can, or should, be ignored. That would undoubtedly damage the further education sector, and I am sure that colleges themselves would be opposed to such action.

Subsections (4) and (5) make clear, therefore, that where the education administrator has a choice between courses of action that equally meet the special objective and protect students, they must follow the approach which achieves the best result for creditors and, where the college is run by a company, the company’s members. This delivers both protection for student studies and the reassurance that creditors, particularly lenders, need to ensure that the further education sector continues to be able to grow and improve to meet the needs of young people.

I want to respond to questions about the banks. Gareth Jones of Santander said:

“Overall, from our perspective, we are still very supportive of the sector—still looking to grow our exposure to the sector and grow our lending book. On the Bill and the proposed insolvency regime, we are actually supportive of the clarity that they provide”—[Official Report, Commons, Technical and Further Education Bill Committee, 22/11/16; col. 38.]


I was asked whether we are afraid that commercial debt will dry up for colleges as banks reassess their risk profiles, which is a critical point. The answer is no. Banks make lending decisions based on many considerations, and of course we expect them to reassess the risk profile of the sector now that exceptional financial support will no longer be available, but we expect them to continue to lend, particularly in light of the good work being done through the area review to build financially stable and resilient colleges. If this means a careful assessment of an individual college, its business plan and management, that is a good thing.

I hope that I have been able to answer all noble Lords’ questions on this group of amendments. If not, I will be happy to write to noble Lords but, on the basis of what I have been able to say this afternoon, I hope that the noble Lord will feel able to withdraw his amendment.

[Lord Stevenson of Balmacara]

I thank those who have spoken in the debate for their questions, which are at the heart of the issues we raised. As I said at the beginning, this is a group in two parts. The questions about the individual appointed were well answered by the Minister; I am happy on that. There is a big task here. While it is true that the Bill says that the education administrator would be appointed only if they have the capacity to do the work, experience may well be lacking. We may be in difficulty there. On the other hand, I also made the point that we are talking about a specialist area in which there may be some growth in expertise that will allow us to get through that.

The noble Baroness, Lady Garden, and my noble friend Lady Cohen made points about how we balance the issues in the special administration system between the ongoing requirements of the students, the priority given them in the Bill and the rather odd words that appear in Clause 22. They which relate to a subset, not all of the groups in FE—I take that point—but they nevertheless imply, on a casual reading, that creditors will not be significantly disadvantaged in the long run because the function of the administration is to be carried out in a way that achieves the best results for the company’s creditors as a whole and, subject to that, the company’s members: its shareholders or shareholder equivalents.

I do not think there is an answer to this across the table. It might be sensible to have a meeting. The noble Lord, Lord Storey, said that he had a good briefing from officials; I did not have that chance. Perhaps if I could have a relatively short meeting on some of the technical issues here. That might be helpful in trying to tease this out. I do not think we are far apart on this. It is difficult. A bit of reassurance is required and, if the experience of the noble Lord, Lord Storey, is anything to go by, that might be helpful. In the interim, I beg leave to withdraw the amendment.

--- Later in debate ---

Moved by

[Baroness Buscombe]

52: Schedule 4, page 42, line 28, after “authority,” insert—
“( ) to the director of children’s services at the local authority or combined authority in whose area the relevant institution is based, and to any other director of children’s services that the education administrator thinks appropriate,”

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[Baroness Cohen of Pimlico]

I raise another worry that has come to me, which is the reverse. If a public or private company is in danger of takeover, one very good way to prevent that is to introduce a poison pill. The quick way to do it is usually through a very generous pension scheme, or a pay-off scheme for your senior staff. If I were a threatened institution, I might be tempted to consider either of those. It is a hard life, but do we have any means of dealing with threatened institutions which introduce financial measures which will make it much more difficult if they need to be closed or otherwise dealt with?

[Baroness Buscombe]

I thank all noble Lords who have taken part in this important debate and will do my very best to reply and, I hope, reassure—notwithstanding that I think that noble Lords accept that some of the important issues raised go beyond the scope of the amendment.

I recognise the well-intentioned purpose of the amendment, which is to ensure that those staff employed by a further education body in education administration continue to accrue their pension entitlements. I hope to reassure the Committee that pension rights will be protected in the unlikely event that the further education body becomes insolvent and is placed in education administration.

In developing the special administration regime, the Committee will see that we have sought to mirror many of the provisions that exist in the ordinary administration regime that applies in the event of a company insolvency. As noble Lords will know, in an ordinary company administration, the administrator has 14 days to decide whether to adopt staff contracts. Those who continue to be employed by the company will continue to be paid in accordance with the contract, including payment by the company of any pension contributions that fall due. These payments are an expense of the administration and continue until the staff are transferred to a new employer, if the business is sold to a new owner, as is often the case, or until their contract is terminated. We propose to adopt similar provisions for an education administration.

We have been clear that, for the education administration to be successful—for the special objective to be achieved—it will be necessary for the Government to provide funding to achieve the special objective: for example, to allow the college to continue to operate while the education administrator prepares his proposals for the college’s future. The Bill provides at Clause 25 powers for the Secretary of State or Welsh Ministers to provide that funding, where necessary, whether through loans or grants. In addition, the Secretary of State or Welsh Ministers may choose, where they consider it appropriate, to give indemnities under Clause 26, or guarantees under Clause 28, during the education administration.

Any funding provided under Clause 25 can be used to meet the cost of the education administration, including ongoing staff salaries and associated contributions, such as employer pension contributions. For as long as pension contributions are being made in accordance with staff contracts, pension entitlements will continue to accrue. The education administration changes nothing in this regard. However, once contributions cease, so too will the accrual of benefits. This would happen where staff were made redundant during the education administration. As with any employer pension scheme, once an individual’s employment ends they can no longer continue to pay into that scheme, but that does not mean that the benefits individuals have accrued in the scheme at that point are lost. Although they can no longer be added to, the benefits accrued will remain in the scheme and increase, as provided for by the terms of the scheme. Individuals will be able to access these benefits as and when the terms permit.

I believe that the way in which the regime will operate in practice means that the amendment is unnecessary. The Secretary of State may not provide a guarantee during an education administration, whereas it is almost inevitable that the Secretary of State or Welsh Ministers will provide funding through a loan or grant during an education administration. This funding will enable the continued operation of the further education body, and this in turn will mean that pension contributions continue to be made for all staff, whether teachers, caretakers, cleaners or support staff. I hope that that gives some reassurance.

I turn to some of the wider issues raised by the noble Lord, Lord Watson, and the noble Baroness, Lady Cohen. Further education colleges report that they are seeing a marked increase in the risks attached to their LGPS pension deficits. The question is: what are we going to do to counteract that? Further education bodies underwent the triennial revaluation of their LGPS pension deficit positions last year, and are still in the process of receiving and reviewing their results. We are aware of the outcome of a few, but not the majority, of the positions of colleges across England. The picture we have is mixed, with some coming out with results better than anticipated, and a minority even seeing their deficit repayment cost reduced for the forthcoming period. Others are seeing their costs increased. In some cases, that may be because they did not increase substantially in the previous revaluation period. There is residual adjustment being made in this period.

The assessment of repayment obligations is a function of many factors, including fund performance, the size of the deficit and fund managers’ overall analysis of the financial position of the relevant college. Reports from colleges received so far suggest that in only a few cases has a pension fund’s assessment of the risk of further education insolvency specifically contributed to revaluations with significantly increased repayment costs. Further education bodies have freedoms and flexibilities in law to be financially and operationally independent of government and are therefore classified by the ONS as private sector. Pension revaluations are a matter for negotiation between individual FE colleges and their pension fund, and final revaluations are normally based on a variety of factors as assessed by actuaries.

The noble Lord, Lord Watson, mentioned Sandwell, and I shall reference that and West Midlands. Only two of the 91 LGPS pension funds expressed in response to our consultation that the special objective in the insolvency regime was inappropriately formulated, one—which was actually West Midlands—suggesting that creditor protection should be placed on a par with learner protection and the other suggesting that creditor protection should be prioritised over learners. The others that responded to the consultation supported the premise of learner protection or were silent on the point.

As was set out in our response to the consultation, it is right that learner protection is prioritised and that approach is widely supported, even by other creditors. That is the point of the special objective. A few pension funds also questioned not limiting the length of the time for a SAR. We are clear that this is so as to not constrain the education administrator. In reality, an education administration may well last a similar length of time to an ordinary administration. Ordinary company administrations often last at least 12 months and then are often extended for a further 12 months or so, so an education administration lasting this length of time would not be unusual for insolvency proceedings. Several pension funds, as well as other creditors, sought greater certainty on how a SAR would be funded, and the Government responded by providing additional flexibility in the funding power set out in the Bill, removing the requirement that loans from government be made on a basis of priority to other creditors. So the Government can choose, in each individual case, to pay for the costs of the SAR up front by a loan and to not require that loan to be repaid unless any funds remained after other creditors had been paid out, meaning that the assets normally available to creditors remain available to creditors in the usual priority. This will be a matter to be decided case by case, but it does not appear that all pension funds have taken this change from the stricter position in normal insolvency into account in their assessment of the risk.

With regard to the wider issues, which go beyond the scope of the amendment, I hope that I have been able to reassure noble Lords. If there are issues outstanding, I shall write to noble Lords and place a copy in the Library for the benefit of all. On that basis, I hope that the noble Lord withdraws his amendment.

[Lord Watson of Invergowrie]

I thank the noble Baroness for that comprehensive response. On the first part of the response relating to the amendment, to a significant extent she repeated the words of Mr Halfon in another place but, equally, she repeated his failure to give a reason why this should not be in the Bill. She said that the Government propose to adopt similar provisions—

[Baroness Buscombe]

I may not be able to reassure the noble Lord, but we simply do not feel that it is necessary to have this in the Bill.

[Lord Watson of Invergowrie]

Yes, but that is not giving a reason. The proposal is very important, and it fits in with the provisions in Clauses 25 to 28. No harm can be done in having it in the Bill; if it gives reassurance to those working within the sector, I would suggest that, in the absence of any reason not to do it, that should be sufficient reason for it to be included.

I accept that the other points that I raised were beyond the scope of the amendment, and I thank the Minister for indulging me in her response. I praise the perspicacity of the officials sitting behind her, who obviously had an answer pretty much prepared, without knowing that I was going to raise these issues. Maybe it just came off the top of their heads—but either way it was impressive and very detailed.

I will want to take some time to consider what the Minister said. There may well be a case for seeking a report from the Government Actuary on funds that have acted strangely because, if I heard her correctly, she said that two out of 91 funds have suggested that they foresee problems as a result of the provisions of the Bill. I had not realised that it was that narrow. There is still the potential for other funds to adopt a similar position. Perhaps they are holding fire until the Bill becomes law. Can the matter be referred to the Government Actuary for a report on the potential outcome as well as the actual outcomes? At the moment, it seems that problems are being created for some colleges. If they are mainly in the West Midlands, so be it, but the point is that it could happen elsewhere. Will she look at that possibility? On the basis of what she has said to me, we will decide whether to revisit this issue. I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Stevenson of Balmacara]

My Lords, we have an amendment in this group. I support the amendments proposed by the noble Baroness, Lady Garden, and the noble Earl, Lord Liverpool. They make a very good case for additional words in the Bill to reflect what is surely implied in much of what we have been discussing: the ability of this sector to turn out people with not only technical and apprenticeship skills but wider abilities in the pursuit of jobs and the support of UK plc.

Our amendment is based on an assumption that if all this information is going to be collected then it must be used for something and not simply stay in files in the department. It should be used to support the technical and FE sectors and make sure that people are aware of what work is being done there. The quality being provided and assured by this Bill will make a difference to what people might do and which careers they are going to have. One of the great complaints we hear is that so little is done to try to encourage people towards this sector where good and rewarding courses are on offer, out of which good and rewarding careers can be built. If that is not known, people will not apply, and we will perpetuate the problems we have had in the past. I look forward to hearing what the Minister has to say about these issues. We support the other two amendments in this group.

[Baroness Buscombe]

Amendment 59 is proposed by the noble Baroness, Lady Garden, and the noble Lord, Lord Storey. It is important that we have a comprehensive analysis of how the further education system is operating in England, including which learners are studying which courses. I agree with noble Lords that analysis of the quality—that is a word I do not think we have used this evening but which we used a lot in Monday in Committee on this Bill—of further education provision and information about learners, including diversity and their geographic circumstances, are important.

However, we believe that this amendment is not necessary. The clause already enables the Secretary of State to require such information if she chooses to do so. The clause rightly gives discretion to the Secretary of State about what information to require from provider organisations. That is the approach in the current legislation we are amending through this clause that underpins a national data system that is working well. The way we gather information is not broken and we are not trying to fix it. We already have the ability to require the information specified in this amendment and already do so. The purpose of this clause is simply to ensure that we can continue to perform a robust and comprehensive analysis of the operation of the further education system in England after responsibility for some aspects of it are transferred to certain combined authorities as part of the wider devolution deals the Government have agreed.

On Amendment 60, I entirely agree with the sentiments of the new clause that would require the Government to have regard to four important aspects of technical and further education. However, I do not believe that the amendment is necessary because they are all things already provided for in the legislation. The duty to,

“promote and support the technical and further education sectors”,

is at the very heart of the recommendations made by the noble Lord, Lord Sainsbury, in his review. In the skills plan we announced that we would streamline the technical education system by introducing a common framework of routes underpinned by occupational maps. New qualifications will be introduced that are driven by the needs of particular occupations and based on standards designed by employers and other relevant stakeholders. Many of the reforms will be taken forward by the Institute for Apprenticeships and Technical Education under amendments made in the Enterprise Act 2016 after Royal Assent which will come into effect from April this year. The reformed technical education system will be reliant on a strong network of colleges and other providers.

The Government’s area review process has supported a restructuring of the post-16 education and training sector and helped to create more financial stable and efficient providers as well as improved collaboration across the different types of institution. We have announced £170 million of capital funding for the institutes of technology to make sure that we have sufficient provision targeted at delivering high-quality technical education at higher skills levels that is tailored around the needs of local employers.

With regard to the duty to ensure high-quality apprenticeship programmes, the duty in paragraph (b) of the proposed clause is not necessary. The Government have already made a public commitment to ensure high-quality apprenticeship programmes. We will discharge this duty in a number of ways. The Government have accepted the recommendations of the Richard and Sainsbury reviews that will help ensure that the apprenticeships offered are of a high standard. As noble Lords are aware, the Institute for Apprenticeships and Technical Education—on course to be launched in April—will be an independent body, led by employers and others, which will assure the quality of apprenticeship standards and plans in England. Our apprenticeship reforms have introduced a higher bar through the end-point assessment. The holistic assessment of apprentices will give employers confidence that their apprentices are job-ready by requiring them to demonstrate full competence in their occupation in order to pass their end-point assessment.

The Government’s responsibility to ensure high-quality apprenticeships also extends to training. We are working closely with Ofsted, which has a statutory responsibility to inspect the apprenticeships that we fund. We have also created a new register of apprenticeship training providers, with an emphasis on quality. Those with an inadequate Ofsted rating are not eligible to apply. The Skills Funding Agency also ensures the quality of apprenticeship training through its minimum standards and intervention regime.

In paragraph 10 of our draft strategic guidance for the institute, we have made it clear that,

“we would expect the Institute to support employers to develop ambitious plans for good quality standards, not least in sectors where we have evidence of skills gaps and that are priorities for the industrial strategy”.

We have also made it clear that:

“Supporting greater social mobility is also a clear Government priority. Apprenticeships can play a key role in helping to deliver this, through ensuring that people from all backgrounds are able to progress”.


The next duty is to support the financial stability and good governance of further education bodies. Strong financial management and effective governing bodies are important priorities recognised across the college sector. Many governing bodies have made significant progress in ensuring that they have the relevant finance skills and expertise. A survey of governing bodies, carried out by the Association of Colleges in 2015, found that among independent governors, 17% had a professional background in finance, which was second only to those with a background in education. We know that some colleges still find it difficult to recruit governors with a financial background. This is why the Government are funding the newly launched inspiring governance service to help colleges, as well as schools, find people with the right skills to join their governing bodies. The Government are also supporting the Education and Training Foundation in developing a training programme for governors with an existing finance role.

Where colleges fail in their financial management through poor financial performance or control there is an intervention system in place which can include referral to the further education commissioner. The commissioner will assess the college and make specific recommendations for strengthening the governing body. The further education commissioner has set out lessons for strengthening governance in colleges through his termly letters to the sector.

Finally, the duty to support good-quality careers advice is contained in the proposed new clause. The Government are committed to ensuring that everyone has the appropriate advice and guidance to climb the ladder of opportunity and make the most of their talents. That is why we confirmed in the Building our Industrial Strategy Green Paper our intention to publish a comprehensive careers strategy for all ages later this year. The strategy will set out our plans to expand the quality and quantity of careers advice. We will make it easier for people to access the support they need to find a fulfilling route that is right for them, whether that is an academic or technical route or an apprenticeship.

I hope we can all agree that we share the same objectives and that I have provided sufficient reassurance about the steps that the Government are already taking to support these objectives. I therefore hope that noble Lords will not feel inclined to move Amendment 60.

I move to Amendment 62 in the name of my noble friend Lord Liverpool and the noble Baroness, Lady Garden. As set out in the Post-16 Skills Plan, the Government’s ambition is to ensure that we have young people and adults with the skills, knowledge and behaviours that better equip them for employment in the 21st century. The effect of this amendment will be to prescribe that those skills, knowledge and behaviours include soft skills. I fully understand why my noble friend has put forward this amendment, and I agree that these skills are of paramount importance. The Government are committed to ensuring that everyone has the appropriate advice to climb the ladder of opportunity and make the most of their talents, but that will not happen without these soft skills. I fully understand why my noble friend has put forward these skills, but I am not convinced that placing an express duty on the institute is the most effective way to address them.

One of the fundamental principles of the new technical education reforms will be that employers, supported by education experts, will set the standards required for specific occupations to allow them to shape the content to give students the skills, knowledge and behaviours that employers require. It will be up to employers and relevant stakeholders to determine which soft skills are required for each occupation. That said, I recognise that soft skills will be important to ensure that individuals gain the key employability and occupational skills to get them ready for the workplace, and we are already putting in place measures to encourage this. For example, the Government continue to support schools to offer a broad and balanced curriculum.

We expect all schools to offer their pupils a rigorous curriculum that is supported by activities to develop the soft skills that prepare them for success in modern Britain. For example, extracurricular activities offered by many schools help pupils develop various soft skills such as resilience, leadership, teamwork, and social and emotional skills before they leave school at the age of 16. In 2015-16, the Government invested £5 million in character education to fund grants to organisations and schools to test new approaches and to expand existing programmes, new activity to build the evidence base and the first round of character awards to celebrate those schools and organisations leading the way in developing soft skills in young people. In addition, these core employability skills could be developed through a high-quality, substantial work placement which every 16 to 19 year-old student will undertake as part of the new technical education courses.

I take on board what my noble friend has said in referring to the report, which he and I contributed to, by that EU Sub-Committee which talked about the real importance of those basic skills. One of the key words that my noble friend used was “confidence”. Confidence, communication and self-esteem are absolutely fundamental. You can have all the skills in the world, whether they are academic, technical, or whatever, but if you do not have the ability to communicate and present and accept that as an employee you will often be the first contact with that company—your employer—then it is very difficult for you to climb that ladder of opportunity.

In view of this, we will reflect on current approaches and determine what more we can do to support schools and colleges in this area. I hope that the noble Baroness will feel reassured enough to withdraw her amendment.