Mr. Brady: I am not persuaded by the Minister's argument. All those responsibilities will have to be met from the school budget. What about future commitments? What about performance-related pay and pension commitments? I will press the matter to a Division.
Question put, That the amendment be made:—
The Committee divided: Ayes 7, Noes 8.
Division No. 8]
Question proposed, That the clause stand part of the Bill.
Mr. Brady: It is unfortunate that the Minister has not dealt with the concerns of Opposition Members about clause 9 and the obligations that it would place on local government. Although he narrowly saved the subsection, and the Government Whip narrowly secured his position, I hope that he will give further thought to this important question. I hope that he will also reflect on the number of hon. Members who raised sensible concerns about the matter, and consider whether it may be appropriate to table an amendment of his own.
Mr. Andrew Turner: I apologise that I was not in Committee for much of the debate on my amendment No. 71.
I listened to the Minister's answer, which I was looking forward to hearing. I am not convinced that he understands how schools work, nor was I convinced from his responses to the hon. Member for Harrogate and Knaresborough that he understands delegation and what is and is not delegated. I will extend the example that was given by my hon. Friend the Member for Epsom and Ewell. The Minister suggested that the LEA has a duty to amend its payroll software system, if necessary. He thought that it would not be necessary, but accepted that, if it were, it would be the duty of the LEA. I presume that the cost would be met entirely from the LEA's held-back budget if there were no contract between the school and the LEA. That is an entirely unfair burden on the LEA and, more importantly, on the schools that have not taken advantage of earned autonomy. We all want equity between schools with and without earned autonomy.
The Minister could not answer the hon. Member for Harrogate and Knaresborough on the issue of the responsibility for drawing up the contract. He fiddled around with a piece of paper that landed on his desk from I know not where. He clearly did not have an answer on that piece of paper.
Mr. Willis: I am grateful to the hon. Gentleman for giving way, as he makes an important point. I understood the Minister to say that the contract would be the responsibility of the school, which was an important statement because it means that any school that applies under earned autonomy would have to pick up the significant legal costs in its budget.
Mr. Turner: Indeed, the Minister said it would be the school's responsibility, but he did not point to any part of the legislative framework that confirmed that it would be. That is why my hon. Friend the Member for Epsom and Ewell was right when he said that the proposal was a lawyers' charter. It is not only a charter, but a blank cheque for lawyers; when a contract is drawn up between a local education authority and a teacher in a community school, it is usually drawn up by the local authority's legal department or by its personnel service. Most personnel services are devolved; the funding for most legal departments is not delegated to schools. It would therefore be entirely a matter for the local authority's internal arrangements under which budget heading to include responsibility for drawing up the new legal contract for the members of staff employed under the new framework for earned autonomy. In such circumstances, it is hard to see how there could be equity between schools in different local education authorities.
Another issue is whether the delegated personnel service includes the construction of a contract; that may not be clear, because it may have been assumed in drawing up the scheme of delegation that only one more-or-less standard contract of employment, with variations, would be in existence.
I want the Minister to point to the legislative provision that overrides subsection (1)(b). As he has not done so, I am not convinced that such a provision exists.
Chris Grayling: I want to make two further points, pursuant to those made by my hon. Friend the Member for Isle of Wight. First, on the nature of the contract, I am well and truly confused about whether the new contract will be with the school or with the LEA. If it is with the school, it throws into sharp relief several issues, such as the provision of pension fund arrangements. What happens to a teacher who is in a local education authority pension fund if the contractual arrangement reverts to being with the school? What happens in respect of other terms and conditions of employment?
If the contract is not with the school, there are implications under employment law if terms and conditions are varied. There are European legislative stipulations surrounding the variation of terms and conditions for employees. Can the Minister tell us which, if any, of the regulations would apply as a result of the changes? What consultation would each LEA have to go through? My understanding of European employment law is that if employers vary the terms and conditions of employees, they are obliged to go through a period of statutory consultation with them. I presume that the mere presence of the possibility for individuals to negotiate contracts, which has not previously been the case, would be covered by European employment law. I should be grateful if the Minister would clarify that point.
Mr. Timms: I am continually surprised at how much time Opposition Members want to spend on this matter, given the limited time available.
I am entirely satisfied that the wording in the clause is robust. I listened carefully to the points made by the hon. Member for Isle of Wight because he has a good deal of experience in these matters. It is true that an LEA could delegate to schools the job of drawing up contracts. That is what I envisage would happen if there were to be such a variation. The LEA would not have to do that. It could maintain that responsibility and produce the contracts itself, but the most sensible arrangement would be for the LEA to delegate that task to the school. As we are starting to get questions relating to transfer of undertakings legislation, I must emphasise that nothing in the Bill changes the employment relationship. Teachers who are LEA employees before the exemptions are put into effect will continue to be LEA employees. I have made that point repeatedly.
Mr. Willis: The Minister has now raised an important issue. As he knows, the provision it does not work under the Transfer of Undertakings (Protection of Employment) regulations. Is he now saying that a school that had earned autonomy and had disapplied its staff's pay and conditions would be allowed to issue a contract to an employee who wanted to stay on his existing terms and conditions? Alternatively, if a school forced that employee to go on to new terms and conditions, as happened after 1993 with the incorporation of further education colleges, who would have the legal responsibility for sorting out that mess? Would it be the school, the LEA, the Secretary of State or the company?
Mr. Timms: There is no transfer of undertakings. That is the point that I have been emphasising. The identity of the employer does not change. If the LEA was the employer before the exemptions were applied, it would still be the employer afterwards. We are not in the terrain that the hon. Member for Epsom and Ewell suggested we were getting into.
Mr. Willis: We are in that terrain. The Bill goes on to talk about setting up companies that could provide those services. Private sector companies could also run the management of a school. If a private sector company such as Nord Anglia took over a particular school there would be new contracts, and TUPE arrangements would apply.
Mr. Timms: I look forward to those discussions when we reach that part of the Bill. The issue does not arise here.
Mr. Brady: The Minister has confirmed that the LEA will remain the employer, yet the school will be able to vary the pay and conditions of members of staff and will have a responsibility to do so in budget. What would happen if a school varied pay and conditions to include a bonus or a performance-related arrangement that would apply at a future date? I assume that as long as the school had acted in good faith in entering into a contractual agreement with the employee, it would be doing its job properly if it worked within what it believed the budget would be, yet it would be the LEA, as the employer, that would find itself liable for the payment of those sums of money. How does the subsection exclude the possibility of the LEA finding itself with a future liability that is difficult to quantify and to which it has not given any approval?
Mr. Timms: There is no difference between the situation that the hon. Gentleman describes and the one that prevails now. Decisions need to be made within the budget that is available to the governing body. At the moment they need to be made within the budget that is available to the school through the LEA. The situation has not changed.
Chris Grayling: Will the Minister address one more possible scenario? It is important to get this right. The Minister does not seem to appreciate the significant implications of the clause. Let us consider the example of a school that agrees to enhance a teacher's pension fund as part of pay and conditions. This year, pensions of Members of the House were changed from a one fiftieth to a one fortieth arrangement. If such a change were replicated in a school, would the local authority be required to implement it? If it were required to implement it, would it legally be able to avoid making the same offer to all teachers in the LEA area? If it were not required to do that, there would be a limitation on the powers of the school to operate freely in setting terms and conditions.
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