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Baroness Seccombe: My Lords, I thank the Minister for his description of the order and for the explanation of what it is designed to achieve. As I understand it, this is the continuation of a process initiated in 2002, when 103 activities that could be contracted out by local education authorities were identified. Now we are adding to those a further three.

As a principle, we on these Benches appreciate that contracting out can be a highly beneficial process because it improves efficiency. In the case of LEAs, contracting out can also achieve great cost savings, and for that reason we shall not resist the order. However, there are a few matters on which I would like reassurance from the Minister.

What has prompted the Minister to single out these three areas as candidates for contracting out? What take-up by LEAs is anticipated and at what cost saving? Is the Minister confident that the costs saved will not be outweighed by the inconvenience of providing a contractor with all the information that he requires?

In addition, I am concerned about whether safeguards are in place to ensure that that delicate line between policy and administration is not violated. The Minister says that the former remains the responsibility of the LEA and that the latter can be contracted out. But how

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can that demarcation be sustained and guaranteed? Surely the issue is not as black and white as that, with contractors across the country accepting greater and lesser degrees of responsibility and some sailing closer to the policy boundary than others.

It seems that the direction in which we are heading—I should be interested in the Minister's opinion—is that, wherever savings can be made, the entirety of the LEA's administrative role will be able to be contracted out. That will leave local education authorities with only a narrow policy role. Can the Minister tell me how far down this road we are already and how much further he plans to go?

Baroness Sharp of Guildford: My Lords, I, too, thank the Minister for having explained the order to us. We shall not oppose it on these Benches. However, I also want to raise a number of questions about the order.

First, I echo the words of the noble Baroness, Lady Seccombe, in saying that we wonder what use will be made of the three additional functions. To date, in the debate that took place in the House of Commons, the Minister was able to talk about three authorities which had made use of the contracting-out procedures in relation to the 103 separate functions that we gave them last year. The Minister explained that the process obviously takes time.

Equally, we gave the authorities a vast range of functions that they could contract out and only three have taken that up. One, as the Minister will know as it is his beacon authority, is my own authority of Surrey County Council. I point out that the other two authorities are Conservative. Surrey County Council has been a beacon authority for the Government and a Conservative authority in leading this contracting-out procedure.

Because the Minister spoke about general contracting out, he will know that Surrey is now proposing to contract out a whole range of services. That business is going to a leading defence contractor—namely, Vosper Thornycroft. Some people in Surrey County Council have wondered what competence a defence contractor such as Vosper Thornycroft might have in relation to the provision of education services. However, the company is getting round that issue by employing a great many people who were previously employed by the local education authority in Surrey County Council. That is all well and good because it means that they will continue in employment and receive higher salaries, which is also extremely nice for them. Vosper Thornycroft is employing them back into the services of Surrey County Council at—with a profit on top—considerably greater expense. Therefore, one wonders what the cost-benefit analysis of the whole procedure might ultimately be. Perhaps the Minister will comment on that.

We also question how many authorities will go through with these procedures in future. I want to take up the question raised by the noble Baroness, Lady Seccombe, concerning the boundary between the decision-making issue, which clearly still lies with the local education authority, and the whole question of contracting-out procedures.

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Consultation among parents in relation to admissions procedures is contracted out. Perhaps I may point out that admissions is a highly sensitive area within local authorities, as the Minister well knows. The process of consultation is also obviously highly sensitive. When one reports back on the consultation, who draws up the report? I believe that the procedure is sometimes quite difficult. The officers draw up the reports, but is there really virtue or advantage in having a completely separate organisation to send out all those pieces of paper and collate the returns? Whoever collates the returns also needs that information if they are to advise the authority on the decisions that it should be taking. If, in this extraordinarily sensitive issue, an officer is to write a report on the process of consultation and on the views expressed, he will want to see the whole range of returns that have been submitted and feel—I believe the term is "internalise"—the information contained in the consultation process. Therefore, I wonder how far one can draw boundaries between these matters.

I also noticed that responsibility for the accuracy and submission on time of the accounts remains with the LEAs. If the LEAs must check their accuracy and timely submission, what virtue is there in contracting out? Therefore, I return to the central question: is there any purpose in these regulations?


Lord Davies of Oldham: My Lords, I am grateful for the contributions from noble Lords opposite. It will be recognised that this order is a minor addition to the order of last year. Last year we identified 103 functions that could suitably be put into the voluntary framework—I stress the word "voluntary"—of which the local authorities would have the right to avail themselves if they so wished.

We have added three areas to those contained in the 2002 provisions that, after consultation, we consider can usefully help with the ability to develop contracts—the main point made in both contributions from the Opposition Benches. They are areas related to establishing clearly in a contract the boundaries of policy and decision taking—responsibilities of the LEA—and the bureaucratic and administrative processes. The requirement is that the contract has to specify those matters with the utmost clarity.

At this early stage I am open to the challenge of what benefits can be established from the process thus far. I shall make the obvious point that it is still early days and it takes time for contracts to be established so we do not have a track record to which to refer. But it will be recognised that there are bound to be start-up costs. At this stage it is difficult, on the basis of experience already accumulated, to establish value for money.

However, the point is obvious and relates to a whole range of other areas where such contracts have been established. Specialist organisations can bring to a function on which a local authority's ability may be limited a level of expertise acquired from operating in other areas. That would enable both parties to draw

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down wider resources and experience and, if necessary, they can see that their own administrators are closely involved in the exercise.

I appreciate the point in regard to Vosper Thornycroft. We all know of its reputation in the area of defence, but it will be recognised that the aspects of its expertise which are being drawn down with regard to these particular contracts will be, of course, administrative expertise and bureaucratic expertise.

Baroness Sharp of Guildford: My Lords, perhaps I may point out to the Minister that in some senses its organisation and its management expertise was not always regarded as being necessarily of the highest calibre. It is having to buy in the educational administration expertise to cope with the task.

Lord Davies of Oldham: My Lords, I would be more than a little surprised if an organisation that is so remote from the world of education did not have to buy in a certain degree of educational expertise to fulfil such a function.

There is a gain to be made from bringing in organisational and administrative expertise. Local authorities have an ultimate responsibility to their electorates. A failure with regard to such a contract inevitably would rebound upon a local authority which has to take ultimate responsibility for everything that is done in its name. As a consequence, it is clear that a concept of these permissive functions is faith in the local authority to be able to make a judgment about best value. One may say that a number of local authorities or the majority of local authorities will not see gains from this permissive legislation, but it is quite clear that local authorities and the education world are proceeding with great care and caution. We have not had rapid development against the 2002 order for all the reasons that have been rightly identified in the contributions made by the noble Baronesses, Lady Seccombe and Lady Sharp.

I recognise that this is an area in which we are still testing the waters. That is not to say that the issue of public/private partnerships has not brought significant rewards elsewhere in the public service. But in an area that is as significant as those that we are debating today, and particularly in the area that relates to education activities by local authorities, we recognise that, first, local authorities are rightly jealous of their records in the past. Secondly, local authorities will be mightily concerned that the clear issues of the policy for which they are responsible, and for which they are answerable, are absolutely central to the contract. That is why the contracts are being drawn up with great care. It is also why we are moving slowly in this area against a background, as rightly identified today, of educational objectives of crucial importance to our nation. Such educational objectives can be arrived at only by responsible authorities who, when they subcontract, must ensure that the contracts adequately fulfil their obligation.

On Question, Motion agreed to.

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