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Lord Henley: After all that, I intend to respond briefly in the manner that I adopted in relation to earlier amendments. We believe that it is unnecessary to prescribe the scope of the chief inspector's duty to report to the Secretary of State, or the scope of the inspections, in any greater detail than that already provided for in the Bill. The Bill provides for that in some detail and in a manner very similar to other bits of legislation which have been before the House relating to inspectors. The provisions for the chief inspector and the inspector to consider the quality and standards of funded nursery education embrace the standard and suitability of teaching, alongside other aspects of quality. Having said that, I believe that it is unnecessary to go down the line that the noble Lord, Lord Morris,

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wishes us to pursue and further prescribe the scope of his duty. Therefore, I hope that the noble Lord will feel able to withdraw his amendment.

Lord Morris of Castle Morris: The remarks of the Minister are noted. I disagree with what he has said. Like General MacArthur in the Pacific in the Second World War, I shall return. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos.51 to 61 not moved.]

Lord Morris of Castle Morris moved Amendment No. 62:


Page 5, line 38, after ("a") insert ("public").

The noble Lord said: The purpose of the amendment is to require the register of inspectors to be public. This is, by contrast, a gloriously simple amendment. There are no technicalities or complexities. It simply requires that the registers of nursery education inspectors established and maintained by chief inspectors for England and Wales be in the public domain.

The amendment is intended to promote public access to information contained in the registers. Parents and other members of the public with a legitimate interest in the quality and integrity of inspectors entering institutions for the purpose of carrying out inspections would be able to have access to the registers in order to satisfy themselves that those persons charged with the important responsibility of scrutinising the quality of education in such institutions are properly qualified and experienced to do so.

The amendment does not seek to prescribe the detail of any arrangements for providing access to the registers. By implication, that could quite properly be left to the chief inspectors for England and Wales. We do not see it as an invasion of personal or sensitive information which the chief inspectors may legitimately hold. Published information contained in the registers would include the lengths of the inspectors' registration and the nature of any conditions imposed by the chief inspector on registered inspectors as provided for elsewhere in the schedule.

Thus the public, if it wished, could be informed as to the experience and competence of registered inspectors. I beg to move.

Lord Henley: These amendments are unnecessary. The chief inspector already makes a register of inspectors available to the public under the 1992 Act. It has always been our intention to follow the same course of action for nursery education. I assure the noble Lord that the register will be available free of charge on request. There seems little to be gained from spelling that out on the face of the Bill, particularly if it is not spelt out on the face of the 1992 Act, and to have different provisions in different Acts. I suspect that that could lead to a different interpretation of the procedures

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in both Acts. Therefore I suggest that we follow the provision in the 1992 Act. I hope that the noble Lord will withdraw his amendment.

Lord Morris of Castle Morris: I am satisfied with what I have heard. I am grateful to the Minister for putting it on the record, and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 63 to 72 not moved.]

Schedule 1 agreed to.

Clause 5 agreed to.

[Amendment No. 73 not moved.]

Schedule 2 [Nursery education grants: disclosure of information]:

[Amendments Nos 74 and 75 not moved.]

Schedule 2 agreed to.

Clause 6 [Power to borrow]:

[Amendment No. 76 not moved.]

Lord Skidelsky moved Amendment No. 77:


Page 2, line 27, leave out from ("fit") to end of line 30 and insert ("subject to the provisions of the standard form contract under subsection (5) below, which is to be known as the School Standard Loan Contract").

The noble Lord said: I have been advised that Amendment No. 83 is out of order as being inconsistent with the long title of the Bill. I will therefore not move it or otherwise refer to it, except to say that the weakness of the Bill is, in my view, the artificial distinction it creates between the borrowing powers of the two maintained sectors--a distinction that my "out of order" amendment was designed to rectify.

The amendments to which I will speak may look a little complicated but they are designed to do two things. I am sorry that I must explain them at a little length, even though it is late. I shall try to keep my remarks as short and succinct as possible.

Amendment No. 77 is designed to create a level playing field for all GM schools. Clause 6 allows GM schools to borrow from the private sector but only on the security of surplus assets. This means that many GM schools will not be able to borrow at all. Whether or not they have inherited assets surplus to their current requirements is largely a matter of historical accident.

Moveover, if a surplus asset becomes the security for a loan it is no longer available for return to the local authority which first acquired or created it. So there is not just the inequality between the borrowing powers of GM schools but also a strong sense of inequity between the two maintained sectors. My amendment tries to get rid of the first inequality by allowing all GM schools to take unsecured loans, subject to a school standard loan contract, the terms of which are spelt out in Amendment No. 81.

The reason for getting the Secretary of State to introduce a standard contract is that the market for loans to schools will need a great deal of prompting. The transaction costs of arranging loans is extremely high as everyone will be playing unfamiliar roles. In addition,

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the standard contract can provide a convenient and simple vehicle for regulating the types and levels of borrowing allowed.

The amendment removes the discretionary veto power of the Secretary of State over the granting of loans and instead requires him to set out the rules of the game in the schools standard loan contract. I hope that one day this most basic principle of modern political economy will penetrate into the Department for Education and Employment; setting out the rules of the game rather than intervening in an anxious manner over every case.

The amendment suggests a basic framework of the standard contract. In essence, it should not specify the length, price or the maximum size of the loans permitted. These are matters to be filled in later by the parties to a specific loan. However, the contract will have to do several things. It will make clear that loans are not underwritten by the public authority; it will issue a standard procedure for what happens in the event of a school or bank ceasing to trade; and, in particular, what happens if the school fails the Ofsted inspection. It will also cap borrowing powers by forbidding schools to devote more than a set proportion of their cash income for servicing the loans.

Most importantly, the standard contract will deal with the issue of default with organised and pre-set arrangements. In particular, signatories will agree on a schedule of required resources for the school. These will simply be income and capital assets required for the school to meet its obligation to provide education. In the standard contract schools will have to service and repay loans as long as their resources year by year exceed their required resources. If resources dip below the required resources, schools will be permitted to default on their loans and carry on trading.

The aim is to ensure that the first liability of schools is to service their statutory obligation to the state. Banks will never be allowed to claim resources, income or capital if the school cannot then properly teach. The resources required to meet those obligations will be agreed in advance. Being part of the negotiation in signing a standard loan contract, they will be understood at the time the loan is made.

One advantage of this procedure is that it replaces the rather narrow notion of surplus assets which are difficult to define--the distinction between surplus and core assets is rather vague--with a far more general notion of required resources.

Thus the amendment sets in train procedures for unsecured as well as secured loans. The expectation is that most schools will require all their assets; that is, they will have no surplus assets and, consequently, they will be able to apply for unsecured loans only. On the other hand, if the loan is used to create a new separable asset like, for example, a new building, that could be recovered by the lender, as the new asset will not, by definition, have been required.

That is the end of the technical exposition. I move very swiftly to my conclusion. I believe that these amendments offer an elegant mechanism for enabling

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publicly funded institutions to borrow from the private sector, and is one which could be extended, if necessary, to other public sector institutions, such as local authority schools, hospitals, and so on. It would be far better to consider the borrowing problems of such institutions in a general way rather than on a case-by-case or sector-by-sector basis. I hope that my noble friend the Minister will consider this group of amendments in the light of the explanation that I have rather lengthily offered, and for which I apologise. I beg to move.


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