Draft Contracting Out (Local Education Authority Functions) (England) Order 2002

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Mr. Mark Hoban (Fareham): May I add my remarks to those of the hon. Member for Eddisbury (Mr. O'Brien) and welcome you to the Chair of the Committee, Miss Widdecombe? I have had the pleasure of serving under your chairmanship for the second week running.

I want to discuss the extent of the Bill. I regret that I will not be the first member of the Committee to refer to Nicholas Ridley, as the hon. Member for Harrogate and Knaresborough pre-empted me. Nicholas Ridley had the vision of a council meeting once a year to allocate contracts, but I suspect that even he did not envisage that a Labour Government would come forward with such a measure. I also suspect that he would not have envisaged that a Secretary of State for Education would have drawn so many powers to herself that he would have expected an LEA to exercise.

The sheer variety and range of functions that an LEA could contract out concerns me. Some functions could rightly be contracted out, such as the provision of clothing, meals, and board and lodging. However, the Bill would allow other areas to be contracted out that cannot be so easily contracted out piecemeal. Sections 406 and 407 of the Education Act 1996 refer to politics in schools and classrooms, and specifically to powers in respect of political indoctrination and the duty to secure balanced treatment of political issues in the classroom. Which body do Ministers think may take on those functions piecemeal? My hon. Friends mentioned sections 69 and 70 of the School Standards and Framework Act 1998, which refer to religious education. The draft statutory instrument contains a series of powers that no third party that acts as a contractor can exercise. The Government may be doing a disservice to LEAs, parents and schools by simply issuing a shopping list of measures that could be contracted out. There may be a better way to group the powers into a more sensible list so that they could be contracted out to commercial or not-for-profit organisations in a way that made more sense educationally.

I am also concerned about how far the powers can go and what safeguards there will be when they are exercised. The significant powers under sections 14 to 17 of the 1998 Act could be exercised in local communities. If schools' powers to manage their budgets are suspended, will a commercial or not-for-profit body exercise the powers that LEAs would exercise? If the powers are contracted out to commercial or not-for-profit organisations, how will those organisations be accountable to parents and members of the local community? There seems to be a risk of LEAs going down the route of contracting out

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without adequate mechanisms to ensure that those who take the decisions are accountable to the LEAs or to acting members of the LEAs. My principal concerns are the ragbag of powers that make no sense if they are contracted out piecemeal, and the fact that the order contains powers that stray dangerously close to the proper exercise of power by LEAs.

As someone born and brought up in the north-east, where one is used to the idea of monolithic Labour education authorities exercising power, it is amusing to note that the ideas of Nicholas Ridley have been adopted to disassemble the empires created by Labour LEAs up and down the country.

5.35 pm

Dr. John Pugh (Southport): This has been an interesting debate on both sides and it was good to hear the contribution of my hon. Friend the Member for Harrogate and Knaresborough. Conservative Members point to the difficulties with these piecemeal proposals, but my hon. Friend draws attention to the sound principle underlying them; that power should be devolved to the lowest base and that local authorities are entitled to take all sorts of decisions.

The rationale behind what the Minister proposes interests me. On one view, it is a Liberty hall position where a heterogeneous list of powers are assembled and the words ''contracting out'' are written against them. However, some powers are statutory and some non-statutory. I want the Minister to clarify his principles and explain which powers are properly discharged by LEAs and which can be devolved. Does he believe that any powers are better discharged by LEAs? Not all types of organisation can deliver the same service in precisely the same way or with the same efficiency.

Does the Minister have a view on these critical questions or are they so difficult that the burden of the decision should be left to local authorities? I would be sorry if the Minister did not take a view on which local authority functions were best kept with a public body. If he has no view and believes that any functions can pass from public bodies to any other sort of organisation, I would certainly be surprised. I look forward to hearing his reply.

5.37 pm

Mr. Timms: I am grateful to hon. Members for contributing to the debate. I am particularly grateful to the hon. Member for Harrogate and Knaresborough, who is right to say that we are talking about a different model from the old compulsory competitive tendering regime that was imposed on us in the past. The proposed model reflects the best value arrangements of the present Government, who envisage an active role for local authorities. We definitely do not share Nicholas Ridley's view of local authorities meeting once a year to hand out contracts. We envisage an active role for local authorities in underpinning the proposals. They will deliver some services themselves, and will monitor the delivery of other services by contractors that they have appointed

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for the remainder. The real question for local education authorities is how best to provide the requisite services.

The hon. Member for Southport (Dr. Pugh) asked about the principles underpinning the legislation. The list comprises statutory functions that require the exercise of discretion. The order proposes that such functions can, if the LEA chooses, be delegated to a contractor. As I said at the outset, the key strategic policy-making budgetary responsibility will remain with LEAs, but it is for them to decide whether these functions should be delegated. I see no overriding reason why all these functions should in every case be carried out by the local authority itself. If the local authority so chooses, it should be open to it to enlist a contractor to provide them.

I should like now to deal with a number of the points raised by the hon. Member for Altrincham and Sale, West. He asked detailed questions about how a number of the items in the schedules would work and who would carry out each part of the function. Specific decisions in each individual case are for LEAs, rather than the Department, to take. The clarity that the hon. Gentleman seeks will be achieved through the contract that is made in each case. I will say more about some of the specific points that he raised, but it would help if I first set out the general approach that applies to all of those items. There will be a contract in each case and LEAs will retain the approval of final strategic decisions such as decisions on educational plans, early years development plans and so on.

Mr. Stephen O'Brien: That was an interesting point in answer to the general concern raised by my hon. Friend the member for Altrincham and Sale, West. Does that imply that the Government intend to retain some form of audit supervisory role over LEAs about the terms of the contract? All contracts are sui generis; they are between the two contracting parties. Should an LEA choose to stray from the intentions that the Minister has rightly set out, what is the reserve position to ensure that it does not offer powers, where the only remedy would not be through some form of ultra vires—hence making the contracting party unable to pursue that—but through the private courts, where it would be a matter between the LEA and the contracting party and would not allow the statutory imposition of the Secretary of State's power?

Mr. Timms: I think that the hon. Gentleman is asking me what is there to stop a local authority entering into a contract that is not provided for by the order. Is that the question?

Mr. O'Brien: Perhaps I can just clarify that again. I apologise for not making it clear the first time. What happens if when a local education authority contracts with a provider of services of some kind, it offloads to the other party parts of what the Minister is expecting it to retain as a reserve power? What is to stop an LEA entering into the wrong type of contract, which offloads too many of its powers? Is there some form of audit process or supervisory checking to ensure that

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contract terms are acceptable within the Department to stop that contract giving too much away and leaving nothing for the LEA to do?

Mr. Timms: The order spells out in considerable detail the functions that can be delegated to contractors. Clearly if a local authority went beyond the powers that are specified here, an ultra vires situation might arise. The accountable officer in the LEA should be alert to and avoid such situations. The normal Audit Commission processes would apply. The list does not introduce any new issues beyond those that already arise where local authorities contract functions. It simply increases the scope for LEAs to enter into contracts if they see it as in their interests to do so. The principal issues are as they currently stand with local authority contracts.

Mr. O'Brien: I am grateful to have an opportunity to develop the point further. The order has been introduced under the Deregulation and Contracting Out Act 1994, but given the huge scope for contracts to be entered into, the regulation to ensure that it is complied with will add, potentially enormously, to the local government officer and any Audit Commission issues. We should consider the order carefully with regard to the supervisory and penalty provision, which has not yet been spelt out.

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