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Lord Northbourne: My Lords, I am tremendously grateful to the noble Baroness for those very helpful and encouraging remarks. I wish also to express my gratitude to the number of noble Lords who contributed most effectively and who added to the thoughts that I have had on this subject. I believe we are all agreed that we need a balance between life skills for work and those for non-work. I am delighted that the noble Baroness shares that view.

Of course, I shall read what the Minister said. However, my view is that that is fine but it does not say so in the Bill. Therefore, I may very well bring back this amendment and press it at a later stage. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Blatch moved Amendment No. 24:

("(d) make the most cost-effective use of resources consistent with the effective provision of services.").

The noble Baroness said: My Lords, in moving this amendment, I shall speak also to Amendments Nos. 38A and 95 in my name. My noble friend Lord Pilkington will speak to Amendment No. 25.

The Minister will know that I have very real reservations about the phrase,

    "make the best use of the Council's resources and in particular avoid provision which might give rise to disproportionate expenditure".

One may be making provision for young people with learning disabilities. In sixth forms, one may be making provision for the teaching of minority subjects. A school may positively choose to have very

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small groups for a particular subject, perhaps due to fluctuations in numbers or it may be that only a small number of pupils want to take the subject but the school determines that that subject shall be taught. In those cases, disproportionate expenditure will be incurred. It seems to me that the test should be not whether the expenditure is disproportionate but whether it makes the best and most cost-effective use of resources consistent with the effective delivery of services.

If one has that test where expenditure is considered by those making the judgment to be disproportionate, it may be that there is a very good reason for that, and that should be a proper defence.

The wording in Clauses 2 and 3 and in the Welsh clause, Clause 31, merely refer to making the best use of resources. The meaning of the term "best use" is an extremely subjective issue. Therefore, I prefer the wording in the amendment which refers to,

    "make the most cost-effective use of resources consistent with the effective provision of services".

That is a more objective test than trying to determine what is "best use". It certainly allows expenditure to be consistent with good service delivery; but it also allows the providers of education and training to be disproportionate in their expenditure if they have good reason for doing so. That good reason will be fully accountable through the inspection process, the budgeting allocations, and the inspectorate which will make value-for-money judgments.

I support my noble friend Lord Pilkington who will speak to his Amendment No. 25. In a way, that also touches on the issue of schools and colleges determining for themselves how they will spend their money as long as they are fully accountable for those decisions. As I say, the test should be more objective than that which is set out in the Bill. I beg to move.

6.45 p.m.

Lord Pilkington of Oxenford: My Lords, as noble Lords know, my great concern is school sixth forms. Like my noble friend, I am worried about the narrowness of Clause 2(3)(d) which refers to,

    "making the best use of the Council's resources and in particular avoid provision which might give rise to disproportionate expenditure".

The danger is that purely utilitarian judgments will be made. In view of the universal support for the idea of the noble Lord, Lord Northbourne, of broader education, I believe that this business of finance governing everything should be looked at very carefully.

School sixth forms fulfil many of the hopes of the noble Lord, Lord Northbourne. They are more than just practical instruments for teaching. They have a wider agenda of orchestras, sports teams and religious and moral education. In sparsely populated areas in particular, they are often rather small and certainly, because of the extensive services which they provide, are somewhat more expensive.

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The Minister assured us in Committee that her intentions were not to follow pure economy and not to let the chequebook govern education. Therefore, Clause 2(3)(d) seems to me a contradiction of what she said so clearly in Committee.

My amendment would put into a very short phrase the noble intentions of the noble Baroness. In fact--dare I suggest?--I have done her a service in that I have placed her morality, of which she assured us in Committee, in a sentence and met all her noble hopes for the ideals of the noble Lord, Lord Northbourne. It would certainly help school sixth forms in rural areas, which are inevitably small but often excellent, to resist closure if the learning and skills council followed Clause 2(3)(d) to the letter. Therefore, I suggest that without loss of face and in this season of Lent, fulfilling a noble hope, the noble Baroness could accept my amendment and go to confession with a clear heart. I commend Amendment No. 25 to the House.

Lord Tope: My Lords, I do not think I want to follow that too closely, but I wish the Minister well in rather more secular terms.

I have much sympathy with the amendment in the name of the noble Lord, Lord Pilkington. I hope that the Minister will offer him the reassurance that he seeks. I certainly believe that school sixth forms should not be closed down solely because of their size. There are important issues here about the quality of provision. The virtue of being small does not necessarily mean that the quality is not good. Indeed, often, the reverse is the case. But it will almost always mean that such sixth forms have higher unit costs, which gives rise to the concerns to which other noble Lords have referred in relation to making the best use of the council's resources.

Perhaps I may return to the point which caused the noble Lord, Lord Bach, so much difficulty in Committee. I cannot see that it is necessary to add to the phrase,

    "make the best use of the Council's resources",

the words,

    "and in particular avoid provision which might give rise to disproportionate expenditure".

If you are making best use of the council's resources, you cannot make provision which gives rise to disproportionate expenditure. However, I shall not make more of that. We got excited about it last time. I still think that it is unnecessary.

I turn now to the amendments in the name of the noble Baroness, Lady Blatch. Perhaps this is about understanding the use of words and expressions. The words,

    "the most cost-effective use of resources",

suggest to me, perhaps because I lived for so many years under a Conservative government--I use the expression of the noble Lord, Lord Pilkington--a "purely utilitarian" judgment. I much prefer the expression "best value". I did not invent either expression; neither did my party. The Bill refers to "best use" but perhaps the two are synonymous. However, "best value" implies a judgment which

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determines value as distinct from cost. It seems to me that my interpretation of the noble Baroness's amendment--I accept fully that it is not her interpretation or intention--would mean that a small sixth form will not often be the most cost-effective way of using resources, but it might be providing the best value under those circumstances. That is an important difference.

Therefore, although the two noble friends on the Conservative Benches believe themselves to be allied in their grouped amendments, were I ever to be a Minister responsible for this my view would be that they are contradictory and that the small sixth form of the noble Lord, Lord Pilkington, is not the noble Baroness's most cost-effective use of resources. Therefore, if there are any more surprises tonight--if the noble Baroness intends to press her amendment to a Division, we shall on this occasion be with the Government.

Lord Bach: My Lords, having heard the comments--I nearly said "strictures"--of the noble Lord, Lord Pilkington, to my noble friend, I wonder whether they are addressed to me also, as I have the pleasure of replying to these amendments. From our previous exchanges on a similar point, which went to a Division--the words are slightly different and although I should expect nothing less of the noble Baroness, Lady Blatch, we really have divided already on the issue--the noble Baroness will be aware that we consider formulations based around cost effectiveness to be lacking and too one-dimensional.

I agree with the noble Lord, Lord Tope, about the expression which the noble Baroness seeks to add to the Bill. It does not seem to support in the best possible way the case of the noble Lord, Lord Pilkington. Value for money is achieved though balancing economy, efficiency and effectiveness. I cannot resist the temptation to use "the three Es" yet again. In our view that is expressed most succinctly in the Bill as it stands.

However, the noble Baroness raised concerns about the meaning of "disproportionate expenditure". The noble Lord, Lord Pilkington, expressed concern about the impact of the new arrangements upon sixth forms, particularly small rural sixth forms. The words we are discussing have already received--may I say it?--disproportionate attention in earlier debates on the duties of the LSC. It is evident that the noble Baroness and the noble Lord wish to be clearer about the meaning of those words. If they and the House will indulge me, I shall try to provide greater elucidation of them. It may take a little time, but I shall be as brief as possible. It is obviously an issue which is causing genuine concern.

First, let us consider the subsection in each clause where the words appear. In each case, we find that the LSC in England and the CETW in Wales must apply four considerations as to how they perform the relevant duty referred to in the opening words of the subsection. There are three matters of which the councils must take account: first, in relation to facilities; secondly, in relation to the ability and aptitude of different persons; and, thirdly, the facilities

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that might be secured by others. The fourth matter on which we are focusing attention follows. The exact words are,

    "make the best use of the Council's resources and in particular avoid provision which might give rise to disproportionate expenditure".

    The key words are the first seven,

    "make the best use of the Council's resources".

We remain satisfied that those words are the best formulation. For the reasons explained previously, we believe that that formulation is superior to terms such as "cost-effective" which would require perhaps a less balanced approach to the use of public funds, particularly in respect of quality.

Immediately following those first seven words there appear the words, "and in particular". Those three words carry a particular weight. The words that follow them do not introduce an entirely new and separate test which the council must meet. If that were the case, there would be five distinct and separated considerations which the councils would have to take into account. Rather, they refine the meaning of the first seven words. The qualification that they introduce is concerned with the reverse of achieving the best use of council resources. If the councils are contemplating expenditure which, in proportion to normal use of resources, would not be good value for money, then clearly such expenditure would be disproportionate to the norm and the councils must avoid it.

A debate over eight years ago covered similar ground. On 9th December 1991, at columns 569 to 572 of Hansard, the then government spokesman, the noble Lord, Lord Cavendish of Furness, who, I am sure, was a colleague of the noble Baroness and other Members opposite in that government, pointed to precedents for that type of formulation going back to the Education Act 1944. He gave a practical example of what was meant. His words are perhaps worth quoting:

    "What the Bill requires is that a council should not build an expensive engineering laboratory for a handful of students when there is another laboratory just down the road. But if the provision is proportionate to the need, even if it be expensive, this clause would not rule it out".--[Official Report, 9/12/91; col. 571.]

That is good sense with which we agree. Those words would apply equally to a small rural school for which there is a need, or expensive provision for a disabled student. I say once and for the record, in view of concerns raised previously, that none of the Bill's provisions restricts either the LSC or CETW from spending money on expensive provision of whatever sort. We all know that sometimes we must pay more for something that is of the quality we want in comparison to a similar entity of shoddy quality. We all know that sometimes something is expensive by its very nature. I repeat: neither council is prevented from paying for expensive provision. But surely it is right that the council should be required to take such matters into account when spending taxpayers' money to ensure that it is not spending money unnecessarily. That made good sense then, and it makes good sense now.

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I hope that I have explained our thinking. It is on that basis that we invite the noble Baroness to withdraw her amendment.

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