Select Committee on Delegated Powers and Deregulation Twenty-Fourth Report


ANNEX 2

LEARNING AND SKILLS BILL [HL]

Supplementary Memorandum from the Department for Education and Employment

Introduction

1. The Learning and Skills Bill received its first reading in the House of Lords on the 16th December 1999. On 19 January, Committee reported on provisions of the Bill which delegate legislative power. The Bill is due to receive Commons Third Reading on 27 June. This supplementary Memorandum identifies additional provisions for delegated legislation which the Government intends will be contained in the Bill when it returns to the House of Lords for consideration of Commons amendments. It explains the purpose of additional delegated provisions and their method of operation, and explains why the particular form of Parliamentary control of delegated legislation been selected in each case.

2. The Government wishes to inform the Committee that it has met the commitment which it made in the initial memorandum to amend provisions in the Bill for orders and regulations. Accordingly, all of the Secretary of State's powers to make Regulations and Orders by means of Statutory Instruments are to be subject to the negative resolution procedure with the exception of Commencement Orders and Orders under clause 132 (Further Education: designated institutions).

Rationale and overview of additional delegated powers

3. In considering whether matters should be specified on the face of the Bill or left to delegated legislation the Government has continued to take account of the need to ensure that:

(a) the overall legislative framework and the substantive policy provisions are presented clearly on the face of the Bill;

(b) the provisions of the Bill contain sufficient flexibility to allow detailed administrative arrangements to respond to changing circumstances.

4. Further to the initial memorandum, the supplementary memorandum sets out the rationale for further delegated powers in respect of

a. learning accounts;

b. City Academies;

c. status of trainees whose training is secured by the Learning and Skills Council;

d. collective worship in designated sixth form colleges;

e. institutions which are to be exempt from Part III of the 1995 Disability Discrimination Act;

f. training programmes: cessation of funding;

g. pensions;

h. revised provisions for commencement.

Qualifying Arrangements for Learning Accounts (clause 101)

5. New provisions have been added to the Bill in respect of individual learning accounts (clauses 101 and 102). Clause 101 contains further powers to make regulations to define the conditions which will allow individuals to qualify as holders of a learning account, dealt with in the clause by reference to the concept of an individual being party to a qualifying arrangement. The conditions set by regulations made under clause 101 may include conditions as to the circumstances in which individuals may enter into an arrangement, the method of entry into an arrangement, and the description of a body with whom arrangements may be made. They will also include provision to prevent individuals from registering for more than one account at any time. This approach, which will operate in a manner similar to a membership scheme, will now form the basis for the national implementation of learning accounts (rather than an approach based on dedicated financial savings accounts at clause 100). It is possible that the provisions at clause 100 may be used to provide a type of learning account in the future, though there are no immediate plans for this.

6. In practice, the 'qualifying arrangements' to which clause 101 refers will allow an individual to register as an account holder with a central learning account provider in order to be eligible for the various benefits which will be associated with learning accounts. The powers to make regulations under clause 101 are similar in nature to those set out in clause 100 as described in the earlier memorandum to the Committee. For similar reasons the Government believes that regulations under the negative procedure are appropriate: they provide flexibility to respond to changing circumstances and avoid setting out too much technical and administrative detail in primary legislation. New Clause 14 contains similar provisions for Northern Ireland.

City Academies (clauses 124, 125, 126 new clause 20 and schedule 8)

7. Clauses 124 and 125 make provision in connection with a new type of independent school - a City Academy. Section 482 of the Education Act 1996 as amended by the Bill will enable the Secretary of State to enter into an agreement to make payments to the City Academy in consideration of undertakings given by the promoters of the City Academy where the school has the characteristics detailed in the section. City Academies will be urban schools providing secondary education to pupils of different abilities. City Academies will not charge fees but will be funded by central government. The legal framework for the funding arrangements is the same as that which applies to City Technology Colleges and City Colleges for Technology and the Arts. Clause 124 provides that such an independent school having the relevant characteristics and whose curriculum emphasises either modern foreign languages, or the visual arts, the performing arts or media arts (or any combination of such arts) or sport is to be known as a City Academy. Additionally an independent school having the relevant characteristics and established on or after the day on which the Bill obtains Royal Assent and whose curriculum emphasises either science or technology or technology in its application to the performing and creative arts may be known as a City Academy. Clause 125 introduces schedule 8 which provides for transfer schemes for land to be used for City Academies. Clause 126 clarifies the law in connection with children with special educational needs and the making of financial provision for their attendance at City Academies, City Technology Colleges, and City Colleges for Technology and the Arts.

8. Clause 124(3) inserts a new subsection (2A) in section 482 of the Education Act 1996. New section 482(2A)(d) will confer on the Secretary of State a power by order, subject to the negative procedure, to add further subject areas to those subject areas which a City Academy may emphasise in its curriculum. Promoters of the City Academy will be expected to develop the school's curriculum in imaginative ways and it is the Government's intention to allow potential promoters of City Academies scope to innovate in the types of subject area which such a school may emphasise. It is therefore not possible to anticipate the full range of subject areas in which promoters of such a school might wish provide such an emphasis. As a consequence it is desirable to have an order making power, subject to the negative procedure, to add appropriate subject areas to those areas that might be emphasised within a City Academy's curriculum.

9. New Clause 20 inserts a new subsection (3A) in s.483 of the Education Act 1996.The proposed section 483(3A) confers an order making power on the Secretary of State, subject to the negative resolution statutory instrument procedure, to apply with modifications the provisions of section 483(3) to city academies. Section 483 makes provision in respect of the financial provisions in an agreement for which section 482 provides. As noted above clause124 amends section 482 to add City Academies to the schools falling within section 482.The provisions of section 483 therefore apply to City Academies as they apply to City Technology Colleges and City Colleges for Technology and the Arts. Section 483(3) concerns repayments of payments made under the section 482 agreement relating to capital expenditure in circumstances in which the school either discontinues or ceases to have the characteristics specified in the agreement or in section 482(2). In these circumstances the section 482 agreement is required to provide for the repayment of sums determined by reference to the value at the time of the school premises and other capital assets and the extent to which the expenditure incurred in providing those assets was met by payments under the agreement. In the case of a City Technology College or City College for Technology and the Arts it is likely that in the circumstances to which section 483(3) refers, ownership of the premises would remain the school's and it is therefore right that a repayment is made reckoned by reference to the value of the capital assets and the Secretary of State's contribution. In the case of City Academies whilst school premises might be acquired in a number of ways, the likelihood is that the premises and land on which they stand will either be gifted by or transferred under a Schedule 8 scheme for no consideration from an LEA and if the school discontinues or otherwise ceases to be a City Academy, the land and premises on it will be re-transferred to the LEA under Schedule 8 for no consideration. In such circumstances a mandatory requirement for repayment calculated on the section 483(3) basis may be inappropriate. Section 483(3A) therefore enables the Secretary of State to make an order applying section 483(3) to City Academies with modifications. The order made is likely to involve a measure of detail unsuitable for primary legislation and better put in place in a subordinate instrument.

10. Clause 126 inserts a new section 483A in the Education Act 1996. Sub-section (4) of new section 483A confers on the Secretary of State a power to make regulations subject to the negative procedure. The Government's intention is to ensure that City Technology Colleges, City Colleges for Technology and Arts, and future City Academies, make places available to children who are the subject of a statement of special education needs and who otherwise satisfy any admission criteria of such a school. It has become clear that the present arrangements have not worked as well as might be wished, in particular the interaction between sections 324, 347, 482 and 517 has led to some confusion. The Government therefore intends to consult widely and, having received views from interested parties, make regulations for securing special educational and non-educational provision for children with statements of special educational needs who attend or may in future attend such schools. In particular, the regulation may impose a power or a duty upon local education authorities to make payments or provide other assistance in respect of a child with a statement attending such a school. A regulation making power rather than primary legislation is appropriate to the technical detail of these provisions which will reconcile the monies made available by the Secretary of State to City Academies, City Technology Colleges and City Colleges for Technology and the Arts, with monies held by LEAs for the purpose of educating children with statements of special educational needs.

11. Paragraph 7 of Schedule 8 confers on the Secretary of State a power to make regulations, subject to the negative procedure, which are incidental, consequential, transitional or supplementary provisions which the Secretary of State thinks are appropriate in consequence of Schedule 8, or for giving full effect to the Schedule.

12. Schedule 8 provides, amongst other things, that except in circumstances when a local education authority disposes of land which has been used for a community or county school in the last five years preceding the passing of the Act for the purposes of a City Academy and for no consideration, it must obtain the Secretary of State's consent before disposing of such land. It gives the Secretary of State power to make a scheme transferring a local education authority's interest in land used for a community or county school in the five years preceding the passing of the Act but which is no longer used as such, to the promoters of a City Academy. The Secretary of State may also make a scheme to re-transfer land which has been transferred from a local education authority to the promoters of a City Academy for the purposes of such a school should the land cease to be used for the purposes of a City Academy. Schedule 8 places a duty on a local education authority to inform the Secretary of State if the authority proposes to change the use of land which in the five years preceeding the passing of the Act was used for the purposes of a community or county school so that it is no longer capable of being used as a school.

13. Paragraphs 8 and 9 of schedule 8 give examples of the types of provision which might be included in regulations made under paragraph 7. The examples given would all enhance the effective working of the schedule. They include the provision for the appointment by the Secretary of State of a person in connection with making of a transfer scheme under paragraph 1. For example, the Secretary of State might wish to appoint a solicitor or surveyor expert in land matters. Other examples of such provisions include those for setting out how the Secretary of State's consent for disposal is to be sought under paragraph 2 and how he is to be informed of a change in use under paragraph 4. Such regulations will make allow provision necessary to ensure that Schedule 8 works effectively and those affected will know in detail what they are required to do. The government believes that these matters of detail are best set out in secondary rather than primary legislation.

Status of trainees whose training is secured by the Learning and Skills Council (Schedule 9: amendment 90)

14. Amendment 90 to schedule 9 amends section 26 of the Employment Act 1988 by adding a new subsection (1A). The new subsection contains a power allowing Orders to be made by the Secretary of State. In circumstances where the Learning and Skills Council has made provision for payments to be made to trainees such Orders can specify the employment status of the trainees and also the way in which the money paid to them is to be treated for such purposes as liability to tax, national insurance contributions and entitlement to social security benefits. Such Orders are an extension of the existing power in section 26(1) which covers the case of moneys paid to trainees by the Secretary of State pursuant to his own power to make such payments contained in section 2 of the Employment and Training Act 1973.

15. By virtue of section 26(2) of the Employment Act 1988 Orders made under the existing provision are made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament; may modify existing enactments and legislation; and require the consent of the Treasury if they contain any provision which determines the way in which any payment is to be treated for the purposes of the Income Taxes Act. The Department takes the view that these provisions are equally appropriate to the power as it will apply in respect of payments made by the new bodies as they are in the case of identical payments made by the Secretary of State.

Acts of collective worship in sixth form colleges (schedule 9, para 23)

16. Schedule 9 paragraph 23 includes a new delegated power within section 44(2)(c) of the Further and Higher Education Act 1992. Section 44 requires that sixth form colleges hold an act of collective worship at least once a week. However, the provisions in the 1992 Act cannot be applied to sixth form colleges which have been established since the commencement of this provision in 1992 or which may be established in future. The amendment gives the Secretary of State the power at section 44(2)(c) to designate by order institutions which are to be 'institutions of voluntary origin' for the purposes of this section and section 45, so that special requirements about the nature of collective worship and religious education will apply to those institutions. Orders are likely to apply to individual institutions as they are created and therefore primary legislation is not appropriate. For reasons similar to those set out in paragraph 59 of the earlier memorandum to the Committee (dealing with the power of the Secretary of State to specify institutions), the Government believes that no Parliamentary procedure is necessary because these orders will affect only individual colleges and will not be contentious. This follows the practice adopted in section 22 of the Further and Higher Education Act which deals with instruments and articles of governance of individual colleges, and for which orders are not made by Statutory Instrument.

Institutions to be exempted from Part III of the Disability Discrimination Act 1995: (schedule 9 para 44)

17. Section 19(6) of the Disability Discrimination Act 1995 lists a range of education funding bodies. Education funded or secured by these bodies is exempt from Part III of the 1995 Act. The list currently includes the Further Education Funding Councils for England and Wales (FEFCE and FEFCW) at S19(6)(e) and (f), which are dissolved by Clauses 86 and 87 of this Bill.

18. A straightforward consequential amendment which substituted the LSC or CETW for the FECCE and FEFC(W) is not possible because the powers of the LSC and the CETW differ from those of the two funding Councils. For this reason, paragraph 44 of Schedule 9 amends the 1995 Act to exempt further education institutions within the further education sector as defined by S91(3) of the Further and Higher Education Act 1992. Whilst this substantially reflects those institutions currently funded by the FEFCE and FEFCW, the councils do fund other organisations to provide further education, which are thus also exempt from the 1995 Act. These include external institutions and specialist colleges, plus higher education institutions. To maintain their exemption from Part III of the 1995 Act, the Secretary of State requires the power to make an order listing these remaining institutions, as unlike the further education sector, they cannot all be readily categorised. The power will also enable the Secretary of State to reflect the fact that the institutions funded to deliver further education by the LSC may change from time to time. This could not be reflected in primary legislation.

19. It is intended that the power to make an order will be used only to maintain the existing exemptions within the 1995 Act for certain providers of education. It will not be used to redefine or change the nature of the current exemptions, within the 1995 Act, in any way. Such orders will be by statutory instrument subject to negative resolution procedure (see section 67 of the 1995 Act).

Training Programmes: Cessation of Funding (new clause 19)

20. This new clause applies to a specific category of companies which provide training by means of funded arrangements with the Secretary of State. It enables the Secretary of State by order to prescribe certain actions relating to the disposal of assets, making of payments, incurring of expenditure or entering into transactions. The effect of such orders would be to prevent a company to which it applied from taking any action prescribed in the order, or from causing another person to take such an action, without the written consent of the Secretary of State. If a company in contravention of an order under this new power takes a prescribed action without the consent of the Secretary of State, the clause provides that the Secretary of State may apply to the High Court. The High Court may make any order which seems appropriate, including varying or voiding the prescribed transaction, making an order for payment in favour of the Secretary of State, and making an order for compensation in favour of any person.

21. The companies to which such an order might apply are a special class among the bodies which receive funding from the Secretary of State for the provision of training facilities under section 2 of the Employment and Training Act 1973. They have all been constituted with a memorandum and articles of association approved before registration by the Secretary of State, and are prevented by their memorandum and articles from distributing income or profits to members, or for using them in any way other than to promote their corporate objects. All companies which may be subject to an order under this section must have been notified before the Act comes into force that the arrangements for such funding will be terminated. The effect of this latter stipulation is that the power is only capable of applying to Training and Enterprise Councils, which were notified in July 1999 that the Secretary of State's contractual arrangements with them would terminate in March 2001.

22. A delegated power which will enable the Secretary of State to control the disposal of assets derived from public funding after the funding arrangements under section 2 of the 1973 Act have terminated is necessary in the public interest to ensure that those assets are preserved for general use. Subsection 4 of the new clause requires a company in this special class to comply with a direction from the Secretary of State to transfer an asset to any other person, and the new delegated power will ensure that assets derived from public funding not dissipated, but can be transferred to another body carrying out public functions.

23. The power in the new clause will be exercised by Order subject to the negative resolution procedure. Orders made by the Secretary of State will apply to TEC companies which operate in England under arrangements made by the Secretary of State. The National Assembly for Wales will exercise the power in relation to TECs which operate in Wales. Secondary legislation is the appropriate method for prescribing actions to control or prevent the dissipation of assets since it permits the power to be used flexibly. TEC companies are protected against unreasonable exercise of the power by provision for Parliamentary scrutiny of any order made under this clause. The negative resolution procedure provides an appropriate balance between the protection of the companies affected, and the possible need to produce orders quickly in order to ensure that funds are conserved in the public interest.

Pensions (new clause 21)

24. This new clause is intended to permit the rights of pensioners and deferred pensioners and their dependents under final salary occupational pension schemes for the employees of Training and Enterprise Councils, their subsidiary companies, and the Training Standard Council, to be administered by the Principal Civil Service Pension Scheme (PCSPS). These are all bodies whose current functions will be taken over, at least in part, by new statutory bodies as a result of provisions in this Bill. This facility is desirable, therefore, because it is anticipated that significant numbers of the active members of such occupational schemes will transfer to the Learning and Skills Council or the Adult Learning Inspectorate, and will join the PCSPS. This is likely to mean that there will be a bulk transfer of funds out of the occupational schemes, with the result that they may cease to be financially viable and may have to be wound up. The trustees of those schemes will then have to secure the benefits of the residual pensioners and deferred pensioners, and actuarial assessments suggests that by far the most cost effective way to achieve this is to enable those benefits to be administered by the PCSPS.

25. The new clause applies section 1 of the Superannuation Act 1972 to classes of pensioners and deferred pensioners. The effect of this is that those pensioners and deferred pensioners will be brought within the scheme making power under that section. Schemes will accordingly be produced which will enable the PCSPS to pay the same levels of benefits and provide similar rights to those that the pensioners enjoy under their occupational schemes. The rights of affected pensioners and deferred pensioners are protected by the requirement for the consent of the trustees of the occupational scheme to any new scheme being made under the PCSPS, and the express stipulation that the pensioners' rights under the new scheme must be no less generous and their obligations no more onerous than those under the occupational scheme.

26. The classes of pensioner and deferred pensioner to which this provision applies are defined in the clause in terms of employment with a relevant employer, as specified by order by the Secretary of State. The power in subsection (3) of the new clause allows the Secretary of State to specify by order individual or classes of employers within a broad category. Effectively, then, the order making power permits the Secretary of State to determine the classes of pensioners to whom the scheme making power in the Superannuation Act will apply.

27. It is necessary to specify the classes of pensioners to which section 1 of the Superannuation Act will apply since it is not possible to determine in advance with accuracy which occupational schemes will be wound up. The negative resolution procedure for orders under subsection (3) allows the appropriate degree of Parliamentary scrutiny for an order which will secure the benefits of individuals, while extending the application of the Superannuation Act 1972 to new classes of pensioners. Subsection (1) of the new clause is merely enabling, and no scheme will be produced if the Minister for the Civil Service refuses to exercise his scheme making powers in relation to those new classes of pensioners. New Clause 22 provides an interpretation of terms in new clause 21.

Commencement (new clause 24)

28. The Government will replace existing clause 141 with a new clause making provisions for commencement. Subsections (1) to (5) of the new clause allow the Act to be brought into force by order. Subsection (1) sets out those provisions of the Act which may be commenced by means of an order made by the Secretary of State and subsection (2) sets out those provisions which can be brought into force by order made by the National Assembly for Wales. Subsections (3) and (4) allow some provisions of Part V to be brought into force by order made by the Secretary of State so far as the provision relates to England and by order made by the National Assembly so far as the provision relates to Wales. Subsection (5) excludes from sub-sections (3) and (4), for example, sections which will come into effect when the Bill receives Royal Assent or be commenced by order under paragraphs (1) to (4).

29. In addition subsections (6) and (7) confer on the Secretary of State and the National Assembly power to make orders in consequence of either -

(a) a provision of the Bill being brought into force at different times in relation to England and Wales, or

(b) one provision of the Bill being brought into force before another.

30. Subsection (8) provides that such orders may in particular disapply or modify the application of provisions made by or under the Bill or any other Act.

31. The power in subsection (6)(a) is intended to deal with any "cross border" issues which may arise from the same provision being brought into force at different times in relation to England and Wales. For example Clause 104 of the Bill amends the Education Act 1996 to provide a new definition of "secondary education". If this provision came into force on different days in relation to England and Wales the same type of education could, for example, be secondary education in England and further education in Wales during the interim period. The power in subsection (6)(a) is thus needed to deal with any resultant issues which may arise. The power under subsection (6)(b) is likely to be needed to be used if Parts I and II come into force at different times. During the interim period when one part is in force but not the other there will need to be some modification of provisions which are amended in Schedule 9, in particular those which refer to "a Learning and Skills Council" (for example paragraph 36 of Schedule 9). The Committee will see therefore that any modifications of primary legislation will be essentially transitory and will be limited to any period during which any provision is in force in relation to England but not in relation to Wales or vice versa or any period during which one provision of the Bill is in force but not another. Orders under subsection (6) made by the Secretary of State are subject to negative resolution.

32. Provisions of a similar nature are, for example, contained in section 144 of the School Standards and Framework Act 1998, in particular subsection (1)(g); indeed the delegated powers in that section are wider than those in subsection (6).

21 June 2000


 
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