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Lord Henley: I am grateful to my noble friend for his lengthy explanation of the terms of the amendment, for which he apologised. I should like to look at all the amendments tomorrow with considerable care when I have more time at my disposal. I do not wish to sound too hopeful to my noble friend. I must remind him that the amendments were only tabled last Friday and, therefore, we need slightly more time to study them.

Having said that, I should like to make a few brief comments on what my noble friend said. First, the Bill as drafted does allow unsecured borrowing for schools which have no non-core assets to offer as security. Therefore, he is not proposing anything extra. Secondly, we agree with my noble friend that grant-maintained schools should, subject to certain restrictions, be free to take out whatever loans they see fit. We also agree in general terms about what those restrictions should be. Borrowing by grant-maintained schools should not impair their ability to perform their main business--that is, educating children--nor should they place at risk assets that have been provided out of the public purse.

However, where I suspect my noble friend and the department differ is over the mechanism for applying those restrictions. Both of us believe that there should be as light a touch as is possible. My noble friend has argued that schools should not have to seek consent from the Secretary of State or the Funding Agency for Schools but that their borrowing should be circumscribed by the kind of statutory standard contract that he suggested. We prefer the other route because we believe that that provides more of the light touch that is necessary and that it leaves the grant-maintained schools to make their own arrangements. Having said that, I shall have a further look at my noble friend's amendments and give them the proper consideration that they deserve.

Lord Skidelsky: I thank my noble friend the Minister for that very helpful reply. In the circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Deputy Chairman of Committees (Lord Burnham): I should inform Members of the Committee that I am advised that Amendment No. 78 has been incorrectly placed on the Marshalled List and that it should be called after Amendment No. 80.

Lord Tope moved Amendment No. 79:

Page 2, line 30, at end insert ("as may fall within the meaning of the "core assets" of the school as prescribed by regulations made under section (Core assets) of the Nursery Education and Grant-Maintained Schools Act 1996").

17 Jun 1996 : Column 153

The noble Lord said: The amendment and the suggested new clause in Amendment No. 82 are an attempt to insert on the face of the Bill some definition of "core assets" against which borrowing will not be allowed; that is, to insert some framework for agreeing a definition of that phrase against which borrowing will not be allowed. I hope that the Minister will accept the suggestion as I believe we need to have a clearer definition of exactly what is meant by "core assets" and a framework within which schools and the FAS need to be working.

I understand that the Secretary of State will be sending a remit letter to the FAS in due course. If the Minister is not inclined at this stage to accept the amendments, I hope he will at least give us some information on the content and status of that letter. Finally, and most particularly, before any further definition of "core assets" is produced, I hope that there will be full consultation with all interested parties, especially the representatives of local education authorities. I beg to move.

12.30 a.m.

Lord Henley: I start by pointing out that the noble Lord's amendment is technically flawed. I do so purely to be of assistance should he want to return to it later. It would explicitly allow GM schools to offer core assets--however they are defined--as collateral for loans. I take it that the noble Lord's intention is actually the same as the Government's--that it should not be possible for grant-maintained schools to mortgage essential assets. This was pointed out to the Opposition in another place but they seem to have tabled an identical amendment today.

An important part of our policy for grant-maintained borrowing is that vital publicly funded assets should not be placed at risk. To that end the Government are committed to proper and appropriate safeguards. I believe there is a good deal of agreement on this between this side of the Chamber and noble Lords opposite. We agree that schools should not be able to offer as collateral assets that are essential to their functioning. I think we also agree about what is and what is not likely to be considered essential. Where we differ from noble Lords opposite is whether there is any

17 Jun 1996 : Column 154

need to define core assets in legislation. The noble Lord, Lord Tope, wants us to set this out in regulations. I believe that that is unnecessary and undesirable.

The difficulty with defining core assets in regulations is that the circumstances of individual schools vary so widely. The layout, size and quality of school buildings in different institutions may also vary. Whether particular buildings are essential to a school's functioning at any one time will depend on a wide variety of factors.

As regards consultation, I can give an assurance that the department consulted fully on the proposals and the remit letter will obviously be based on that. If the noble Lord would like me to write to him in greater detail on precisely what will be included I shall be more than happy to do so. If that would assist, I shall try to do so before the next stage. I hope therefore that the noble Lord will feel able to withdraw his amendment.

Lord Tope: I am grateful to the Minister for those comments. It would be helpful if he could write to me in more detail as soon as he is able. I shall certainly consider what he says with great interest before we reach the next stage. In the meantime I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 80 not moved.]

[Amendment No. 78 not moved.]

[Amendment No. 81 not moved.]

Clause 6 agreed to.

[Amendments Nos. 82 and 83 not moved.]

Clause 7 [Orders and regulations]:

[Amendments Nos. 84 and 85 not moved.]

Clause 7 agreed to.

Clauses 8 and 9 agreed to.

Schedule 3 [Consequential amendments]:

[Amendments Nos. 86 to 91 not moved.]

Schedule 3 agreed to.

Schedule 4 [Repeals]:

[Amendment No. 92 not moved.]

Schedule 4 agreed to.

Remaining clause agreed to.

House resumed: Bill reported with amendments.

        House adjourned at twenty-four minutes before one o'clock.

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