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Lord Thomas of Gresford: We on these Benches support the extension of the existing remit of Her Majesty's Chief Inspector of Schools in Wales to this type of education. We share the puzzlement of the noble Lord, Lord Roberts of Conwy, about what precisely is meant by the additional paragraph (b). I hope that we shall receive enlightenment.

Baroness Farrington of Ribbleton: Driving up standards and quality are key factors in the Bill and I know that the noble Lords, Lord Roberts of Conwy and Lord Thomas of Gresford, will agree that that is the correct approach. It is also right for us to ensure that prospective providers of education are up to the quality mark that we would expect to see. Therefore, it is wholly appropriate for Estyn to be given the power to conduct preliminary inspections of prospective providers where publicly funded education is being considered. That may answer the question asked by the noble Lord, Lord Roberts. It is to cover the eventuality of funding provision, then inspecting and finding that the provider is not of the appropriate quality. The preliminary inspections will provide the CETW and the National Assembly with reassurance that public funds are not being directed towards prospective providers whose offerings are inadequate.

The noble Lord asked about staffing levels. That will be a matter for the chief inspector following an imminent review. That is essential to establish the appropriate levels and the level of individual skills and experience. I hope that, with that explanation and the fact that the provision was inserted at the request of the National Assembly, the noble Lord will withdraw his amendment.

Lord Roberts of Conwy: I am grateful to the Minister for explaining what the Government have in mind. I quite understand that some authority is required for a preliminary inspection of a prospective provider. But my criticism of the drafting is still valid in that both these paragraphs could have been rolled into one. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 198 not moved.]

Clause 71 agreed to.

Clauses 72 to 77 agreed to.

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Clause 78 [Inspections of education and training provided under 1973 Act arrangements]:

Lord Roberts of Conwy moved Amendment No. 199:

    Page 34, line 22, leave out (", at the request of the Secretary of State or the Adult Learning Inspectorate,").

The noble Lord said: At first sight it appears odd that the Secretary of State for Education and Employment--I am sure he is meant here, although it could be any Secretary of State or indeed the adult learning inspectorate for England--should request an inspection in Wales. But I believe that the clause is intended to enable some current ongoing work to continue. Perhaps the Minister will enlighten me.

I personally welcome such co-operation across the border. We could all learn, including inspectors, from each other. I beg to move.

Baroness Farrington of Ribbleton: My right honourable friend the Secretary of State for Education and Employment has responsibility for education and training under Section 2 of the Employment and Training Act 1973. That includes, for example, the New Deal for the unemployed aged 18 to 24. The adult learning inspectorate will have a duty to inspect such provision in both England and Wales.

In Wales, Estyn has no remit to conduct inspection of provisions such as the New Deal. If we had left it at that the adult learning inspectorate would become involved in the inspection of all provision under the New Deal across Wales and Estyn would be excluded from such inspection. That would cause confusion among providers and make poor use of resources. Therefore, our policy is to ask Estyn, where it agrees, to inspect New Deal provision in Wales. Estyn will of course be fully competent to conduct such inspection. With that reassurance I feel fairly confident that the noble Lord will be able to withdraw his amendment.

Lord Roberts of Conwy: I thank the Minister for her explanation, which is clearly intended to benefit the inspectorate in Wales. I certainly welcome that. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 78 agreed to.

Clauses 79 to 83 agreed to.

10.45 p.m.

Baroness Blackstone moved Amendment No. 200:

    After Clause 83, insert the following new clause--


(".--(1) The Secretary of State may make a scheme providing for the transfer of any of the property, rights and liabilities of the Further Education Funding Council for England to any of the listed transferees.
(2) The listed transferees are--
(a) the Secretary of State;
(b) Her Majesty's Chief Inspector of Schools in England;
(c) the Adult Learning Inspectorate.

15 Feb 2000 : Column 1190

(3) A scheme under this section may include such supplementary, incidental, consequential or transitional provisions as the Secretary of State thinks are appropriate.
(4) A scheme under this section comes into force on the day it specifies for it to come into force.
(5) When a scheme under this section comes into force it has effect to transfer (in accordance with its provisions) the property, rights and liabilities to which it applies.
(6) The day specified by a scheme under this section for the scheme to come into force must fall before the day appointed under section 116 for the commencement of section 83.").

The noble Baroness said: In moving this amendment I am also speaking to Amendments Nos. 202, 245, 250 and 258. I recognise that these are significant government amendments to bring forward, but the scale of the changes that we are making put a premium on ensuring that effective transition arrangements are in place. We have been working closely with partner organisations at national, regional and local level both before and after the introduction of the Bill to identify and address the key transition issues. These amendments, which reflect those discussions, create the essential legal framework for a smooth transition.

Since publishing the White Paper we have put a major effort into managing the transition process effectively. The detailed transition plan we published alongside the White Paper was a sign of our commitment to doing so in line with "Modernising Government" principles. It sets out what needs to be done, by whom and by when. It was produced jointly with the DTI and sets out clearly who within each department is leading on each aspect of the plan.

Since that plan was published, we have continued to develop and refine it with the support of a wide range of partners at national, regional and local level. We have set up a range of mechanisms to ensure that we learn from the experience and expertise of a wide range of organisations, including TECs, local government, careers services and the FEFC. I am very grateful to all of those bodies and other organisations for the positive and constructive help that they have given.

We published an updated version of our transition plan in November and we shall continue to review it in the light of experience. This process has also helped us to identify the necessary legal provisions we need to make which are now contained in these amendments. We recognise that the scale of the changes we are making requires a significant financial investment in the transition process. The work we have done with partner organisations has also helped us to develop a clearer assessment of the transition costs.

We currently estimate that the transition costs of establishing the LSC and ALI over the next two years will be between £60 and £65 million. These costs include the development of new IT systems, premises and, of course, a significant investment in staff training and development. There are also likely to be some restructuring costs in the DfEE and government offices.

It is too early to be precise about TEC transition costs. The position depends greatly on decisions yet to be made on LSC premises and the location of small

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business services franchises. It also depends on how many staff transfer under TUPE to the LSC and other successor bodies.

In the coming year we shall be making available £25 million to meet the start-up costs of the LSC. This up-front investment will ensure that the LSC gets off to the best possible start. We shall meet the remaining costs from the savings we shall make and from reprioritising other work. This investment in transition will quickly be repaid by the savings we intend to make. In Committee last week, the noble Baroness, Lady Blatch, questioned the level of savings. To me it is self-evident that the changes will create a system more efficient than that which has gone before. We are moving from 73 organisations developing their own funding systems to one. We are moving from over 80 sets of premises to fewer than 50. Furthermore, we are moving from duplication and overlap to a single and more coherent approach.

We are confident that at least £50 million-worth of savings will be made each year and we shall invest those savings in the quality of learning. The budgets we set for the learning and skills council will reflect this.

The noble Baroness also raised a number of specific issues about the transition for TECs, which we promised to address today. We recognise that this is a challenging period for TECs and we have been extremely impressed by the commitment and hard work of TEC board members and staff both in managing difficult transition issues and in helping us to develop the new arrangements. The fact that TEC performance continues to hold up well is a great credit to them.

Many TECs have evolved over time into complex organisations with a wide variety of functions. Some have merged with chambers of commerce, others have a Business Link as part of the same company, while others have developed wider commercial activities. We are therefore working with each TEC to agree a detailed transition plan which will take into account both the nature of the organisation and local circumstances.

We recognise that one of the important issues for TEC staff is to get a clear understanding of their position in respect of TUPE. Depending on the nature of the TEC, current functions may well be transferring to the LSC, the Employment Service, a new small business service franchise, or another successor body. We have made it clear that we expect many TEC staff to transfer under TUPE to the LSC, to the Employment Service, or to other bodies to which functions are to be transferred. We are working with TECs, the FEFC, the Employment Service and other partner organisations to map out a detailed process for handling transfers and we shall publish that next month. Given the complexity of TEC structures and their status as independent companies, we believe that the detailed position on TUPE can be resolved only on a TEC-by-TEC basis.

The noble Baroness also asked about the position in respect of TEC assets. Under our contract with TECs, certain assets purchased out of funds provided by the

15 Feb 2000 : Column 1192

Secretary of State must be returned to him on termination of the contract. It is our intention that such assets, if appropriate, should be made available to the LSC for the continued benefit of the local community. These amendments will allow the Secretary of State to do so.

Before I explain each of the amendments in turn, first, I shall say a few words about their general purpose. They contain essential provisions to ensure that the assets, rights and liabilities of the two funding councils can be transferred as appropriate to the successor bodies. They will also allow the Secretary of State to make available other assets, such as those returned to him by TECs, which I have just mentioned, and the Training Standards Council to the LSC and ALI. They also ensure that the LSC can make the necessary preparatory steps before it assumes its full functions. The amendments do not cover LEA assets. Until this legislation comes into force, LEAs continue to have a duty to secure adequate facilities for further education outside the scope of the Further and Higher Education Act 1992. Under this Bill, LEAs will continue to make an important contribution to community and adult education.

The Government are also guaranteeing that each LEA will receive funding in the first two years of the LSC's operation at a level comparable with their current spend provided they produce and implement suitable plans which at least maintain their current spend. The effect of these arrangements is that LEAs will need to ensure that the necessary assets continue to be available within their areas to provide the facilities which local people need. Therefore, there is no need to cover LEA assets in the Bill.

I now turn to the amendments themselves. Clause 83 provides that on the day that the FEFC is dissolved, its property, rights and liabilities will transfer to the LSC. In practice, the situation will be more complex as some assets which are linked with the FEFC's current inspection work are likely to be transferred to the new adult learning inspectorate or Ofsted. Therefore, Amendment No. 200 provides for transfer schemes so that the Secretary of State may make any necessary transfers of FEFC assets, rights and liabilities to the department, Ofsted and ALI in advance of the dissolution date. Any assets, rights and liabilities of the FEFC which are not covered by such a scheme will then transfer on the date of dissolution to the LSC by virtue of the provisions of Clause 83.

As I mentioned a moment ago, under the terms of the licence agreement between each TEC and the Secretary of State, any property and assets which were issued to the TEC or funded under the licence are to be returned to the Secretary of State on termination of the licence. Amendment No. 202 provides for schemes whereby the Secretary of State can transfer any such former assets, rights and liabilities to the appropriate body once they have been returned to him by TECs or by the Training Standards Council. It will also allow for any necessary residual transfers between the LSC, ALI and Ofsted. The right of the Secretary of State to transfer new liabilities to the LSC is limited to three years after the appointed date.

15 Feb 2000 : Column 1193

As we set out in our Explanatory Notes to the Bill, the LSC will be established before it takes on its full functions in April 2001 in order that it can make the necessary advance arrangements. As it stands, Clause 116 enables the Secretary of State to confer upon the LSC such powers as he considers will help it to carry out its full functions. The National Assembly similarly is enabled to confer such powers on the CETW.

However, the transition between the two funding councils and the new councils will be complex and we must make transitional provisions for the LSC and the CETW to take responsibility for a number of the FEFCs' remaining statutory functions or other responsibilities. They include requirements--for which the amendment makes specific provision--to complete the final accounts of the FEFCs; to make a report to the Secretary of State and the National Assembly on the previous year's provision for disabled people under the terms of the requirements of the Disability Discrimination Act; and to take over the FEFCs' responsibilities in any legal proceedings in which they may be involved at the point of dissolution.

Amendments Nos. 245, 250 and 258 provide for that period of transition before the LSC and the CETW assume their full functions from April 2001. The LSC and CETW can become legal entities once the first two council members--namely, the chairman and the chief executive--are appointed. They also provide the framework to enable the FEFCs for England and for Wales to help in that process.

The amendments provide the necessary provisions for an orderly and efficient transfer to our new structures and I commend them to the Committee. I beg to move.

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