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Baroness Farrington of Ribbleton: My Lords, will the Minister place on record that during the time that pilots were being sought, the Government, against the wishes of virtually everyone in Wales, imposed local government reorganisation, which affected the structure and make-up of almost every local education authority?

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Whether or not people would have wished to take part in a pilot scheme, it was a singularly inappropriate time for them to do so.

Lord Henley: My Lords, that might have been so, but I do not believe that it ruled out the possibility of a bid from Wales. There was no bid for a pilot scheme; and, as I made clear, the fact is that the arrangements for the pilot are not about the principle but about operational arrangements.

Baroness Thomas of Walliswood: My Lords, the point that has just been made is important. Which Welsh authority would have made the bid when the authorities were in the middle of changing over?

Lord Henley: My Lords, it would have been open to one of the emerging new authorities to make a bid. The shadow arrangements were in place and it was open to them. There was no bid and there is an end to it.

As I made clear, the arrangements for the pilot are not about the principle, they are about the practical mechanics of distribution, and so on. I believe that what we learnt from the pilots in Norfolk and the three London boroughs can be applied to Wales.

Baroness White: My Lords, the noble Lord has no true grasp of the difficulties in Wales which we suffer through the reorganisation of local authorities. I shall not detain the House by going into details, but Wales has more difficulties than most places in England.

Lord Henley: My Lords, I do not think that I can take the House much further than what I said. We do not believe that it is about principle but about the mechanical arrangements. Much can be learnt from the arrangements in England; and, as I said earlier, there was no bid from Wales.

Before I touch on the grant-maintained aspect, perhaps I may say a word to the noble Baroness, Lady David, about corporal punishment, on which she feels strongly. I believe that I answered a Written Question on it not long ago. As she knows, we will ensure that all four year-old children where the voucher is used in any institution are not subject to corporal punishment. I accept that the noble Baroness says that it does not go far enough, why do we not just forbid corporal punishment absolutely? That is another question for another Bill and another day. However, in a voucher-redeeming institution it is unlikely that some children would come along with vouchers and a mark on their backs saying: "Do not beat", while some without vouchers--I am not sure who they would be--had a mark saying: "Beat, if necessary". Perhaps we may leave the matter with an assurance to the noble Baroness that an institution will not be able to make the children bearing vouchers subject to corporal punishment. I believe that that goes so far as is necessary. I also feel that there is no question but that we comply with our international obligations in that area.

Lastly, I wish to say a few words about anxieties raised on grant-maintained borrowing. My noble friend Lord Skidelsky asked why we could not let local authority schools borrow. I am sure that my noble friend

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is aware that the responsibility for capital spending in local authority schools already lies in the LEAs. They can already borrow from the markets, and that is how they finance most of their capital expenditure on schools. However, it has a knock-on effect for the PSBR, and therefore Treasury permission is necessary on occasion. The fact that it affects PSBR is something over which we have no control; and, as my noble friend is aware, it is purely a matter for the rules laid out by the OECD.

Lord Skidelsky: My Lords, I thank the Minister for giving way. Will he confirm that under the present rules they cannot borrow on the security of their own property?

Lord Henley: My Lords, the individual school would not be able to borrow on its own property, it would be a matter for the local education authority to borrow in the usual way.

Lord Skidelsky: My Lords, I mean the LEAs.

Lord Henley: My Lords, I am not sure that I can confirm on what basis the LEA can borrow. It would have to seek permission in the usual way, and it has an effect on the PSBR. It would not be open to the school.

The noble Baroness, Lady Thomas, asked about the proceeds of grant-maintained school asset disposal and suggested that they should go to the LEA rather than to the grant-maintained school. We believe that grant-maintained schools, like local authorities, serve their own community. We believe it is right that they and the children and parents who make use of the schools should benefit from the assets that the schools no longer need.

Baroness Farrington of Ribbleton: My Lords, would the Minister at least be prepared to concede that where the entire community still has a debt to repay, the individual grant-maintained school ought only to have those capital receipts that accrue above the debt outstanding?

Lord Henley: No, my Lords, I do not accept that at all. It should be a matter for the LEA. However, no doubt we can discuss it on later occasions.

Earlier this afternoon, I mentioned the three important themes which have underpinned all our reforms over recent years and which underpin this legislation. They

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are the themes of choice, diversity and quality. Our reforms have given parents a say in the education of their children that would have been unimaginable 20 years ago. Not only do they now have more choice than ever before about the school their children attend, but through the appointment of parent governors they have a say about the way in which schools are run. This Bill takes that principle further, by giving parents the power to choose the kind of nursery setting--maintained, voluntary or independent--in which their children will be educated.

Because that decision will be made by parents, the Bill also supports diversity. Parents should be able to decide for themselves what is right for their child from the great diversity of provision available for the education of the under-fives. Some will want to choose maintained or independent nursery schools or reception classes in primary schools. Others will be keener on playgroups or Montessori schools. That should be up to them, provided that the setting in question is of sufficient quality.

Another aspect of government policy has been to give individual schools the freedom to take important decisions for themselves and to choose the direction in which they want to develop. The Bill takes those reforms further by giving grant-maintained schools the power to borrow from the market to finance capital expenditure.

Finally, the Bill complements the Government's commitment to raising standards in education quality, while parents will make decisions about the kind of nursery education that is right for their child. They need to know that what is being offered is of sufficient quality. Our proposals provide for that through the mechanisms I have spoken about.

Among the many speakers today we have heard some interesting contributions. With the possible exception of parts of the speech of my noble friend Lord Skidelsky, virtually all have spoken of the benefits of expanding nursery education. This Bill will provide for just that--for expansion to the advantage of all four year-olds in England and Wales. I commend the Bill to the Whole House.

On Question, Bill read a second time, and committed to a Committee of the Whole House.

        House adjourned at twenty-eight minutes past seven o'clock.

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