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11 pm
Lord Greaves: My Lords, I am grateful to the Minister for the honesty in his considered reply. I am a little alarmed by the idea that Baldrick may be in charge of government education policy, but I do not think that he quite said that. If I cite him correctly, he said: "We have not come up with a clear answer to the role of local authorities". The more that we have considered the Bill, the more obvious it has been to me-this point was made by some of my noble friends-that it would have been a good idea for it to have had pre-legislative scrutiny to try to bottom out some of these issues and at least to present us with some considered alternatives on these important matters.
The future role of local authorities in relation to schools is vital. Clearly, a few hundreds of academies can be created without, in most areas, severely affecting the role of local authorities, but not once it gets into the thousands. I think that there are about 20,000 schools in England. If 5,000 or 6,000 of them, a quarter of them, converted to academies, which is clearly possible under the criteria that the Government propose, during the next four or five years, that would have a severe effect on the viability of local authorities-at least in some areas, because their creation would tend to be geographically patchy.
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I believe that we are to get a schools Bill or an education Bill which will be a bit fatter than this Bill later this year. If so, this issue should certainly be returned to at that time, if not before. I am grateful to the Minister for saying that he will reflect on the matter. Finally, the answer to the noble Baroness, Lady Morgan of Drefelin, as to why we are rushing this, is that we have a Secretary of State in a hurry. That is not necessarily a bad thing, but if it results in bad legislation with all sorts of unintended consequences, we will have to sort them out in due course.
Baroness Thornton: Before the noble Lord withdraws his amendment-which I expect he will do rather than test the opinion of the Committee on the matter at this time of night-does he have a view on what is the tipping point? If he does not, perhaps he would like to ask his noble friend what he thinks the tipping point is before a local authority becomes unviable.
Lord Greaves: That is the $64,000 question, or perhaps more than that at present exchange rates. I do not know. We will all have a view on that. It will depend on how big or small the local authority is. A big local authority, such as Lancashire, could probably survive quite a lot of its schools becoming academies, because it would still have a critical mass, but if a small local authority-a small London borough that has only a few schools-is left with just two or three primary schools, it will be in serious trouble.
Lord Hunt of Kings Heath: Is the point not round the other way? If the cumulative impact of a lot of independent academies in an LEA area is to render problems for the education system, what happens if the LEA no longer has any intervention powers? How is the public interest in a community to be upheld?
Lord Greaves: I am beginning to feel like the Minister, the way that I am being cross-questioned by the Labour Party. I am not a Minister; I am not a member of the Government. My first amendment faces exactly the problems that the noble Lord just raised. They are serious problems. The answer has to be properly thought out. It may take longer than this Bill to think about, but it ought not to take very much longer. Having said that, I have said more than enough tonight and I beg leave to withdraw the amendment.
Clause 8: Charitable status of Academy proprietors etc
Lord Phillips of Sudbury: I shall speak also to Amendment 167. Amendment 161 is jointly in the name of my noble friend Lady Walmsley, and Amendment 167 is jointly in the names of my noble friends Lady Walmsley and Lady Williams of Crosby, and the noble Baroness, Lady Howe of Idlicote.
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As my noble friend the Minister referred to Baldrick, I think that he will sympathise if I say that Clause 8 could have been drafted by Monty Python himself. It is a dog's dinner. Quite why we have to have this new definition of "academy proprietors" when the first five clauses make no reference to academy proprietors and they make only a desultory appearance in Clause 6 and a latter-day appearance in Clause 7, I do not quite know. It does not seem to me to be worth its presence in the Bill, which is complicated enough already.
I shall briefly deal with Amendment 161. I am a little shy about proposing it at 11 o'clock at night, but I shall nevertheless do so briefly. The use of the word "proprietor" is unhappy, given that all these academies can only be charities and that the word "proprietor" has an almost aggressively private ring about it, a ring of ownership. If you look up the definition, all its resonances and ring are about personal, private ownership. I am not expecting the Minister to make any concession on this tonight, but if he reflects on this and thinks that the word "operator" would be more in tune with the culture of the Bill, so much the better. The language of Bills can often be quite important in the way they are understood by the public afterwards.
I turn to the heart of this group: Amendment 167. It deletes subsection (4) of Clause 8 which states that all academy proprietors-to use the language of the clause-shall be exempt charities. I know that my noble friend Lord Hodgson of Astley Abbotts will argue in the next group along the lines that I now do-it is nice to be in harness with him again and to see the noble Lord, Lord Bassam, o'er yonder because we battled it out for a year over the Charities Bill in 2006. The question of who regulates this new breed of schools is vital. I am entirely happy that the Bill makes clear that all these academies are to be charities-indeed I would have been frantic if it had not.
However, as we in this House know only too well, charities are both highly privileged entities in the national legal fauna and have very considerable tax and other advantages over any other sort of legal animal. Because of that and their ancient nature, and because they are at the heart of civic society and our wonderful voluntary movement, they need to be and, indeed, are specially regulated. It is also fair to say that the law of charity is very particular and complex and requires more judgment on the part of those who apply it than most other parts of our law. It is no accident that the Charity Commission was established in the first half of the 19th century and has maintained to this day its pre-eminent-indeed, almost absolutist-role with regard to the oversight of charity activity and, starting at the beginning, of charity registration.
Therefore, it was with some alarm that I read the Bill and saw that academies were to be exempt charities because, as many Members of your Lordships' House will know, that means that they are taken out of Charity Commission regulation. It is particularly odd on two grounds. First, schools and other educational establishments used to be regulated by what was then called the Department for Education and Science, but that special possession was taken from it and put back into the responsibility of the Charity Commission many years ago.
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The second oddity is that existing academies are subject to the regulation of the Charity Commission. I understand that there was a little brouhaha when at first it was suggested that the regulation should not be with the Charity Commission, but that was overcome and the academies remain subject to the oversight and regulation of the Charity Commission. It is worth pointing out that the DCSF, in its guidance to academy schools which it issued less than a year ago, makes very plain why the Charity Commission rather than anyone else is to regulate them. The reason is principally to ensure that academies that are charities must remain charities with the essential attribute of charitable status, which is independence, above all things.
Although the Government will rightly claim that one of the great virtues of the new wave of academies is to be more independent-I do not for a minute suggest that my noble friend the Minister has any other thoughts in his mind-sometimes things can occur that are not intended when one is legislating, and we must be absolutely sure that the independence of new academies, over and against local education authorities for example, is not replaced by subservience to the Government of the day. That is the principal benefaction, if I can use that word, of charitable status, which is why the Charity Commission goes to great lengths to ensure that academy schools are properly independent of government.
The Government say in their guidance that the agreement must be reached after,
and that the trustees of an academy school must not,
- "commit themselves simply to giving effect to the policies and wishes of the governmental authority".
Finally, the trustees cannot agree to allow the governmental authority,
- "to decide who is to benefit and in what way ... However ... it is possible for trustees to accept funding from a governmental authority on terms that are quite prescriptive".
That gives you a flavour of this long document.
My amendment, which is supported by my noble friends, would bring the regulation back into the hands of the Charity Commission. I do not seek that for any other reason than that it has the experience and expertise to do this job not only better than any other regulating authority but, dare I say it, with less bureaucratic stumbling than might be the case if the regulation were moved to-what is it called these days? Is it still the DCSF?
Lord Phillips of Sudbury: I am sorry. I have got the abbreviation wrong. I am well behind. On utilitarian grounds, and on the grounds of the most effective regulation, the Charity Commission should not be ousted in the way it is in subsection (4).
I also need to say this. The Charity Commission could not take on the role of regulating the new academies unless it was given more staff-it is currently losing nearly 60 staff. Whoever is given the task of regulation will have to have the necessary staff, and any regulating hand will have to have more staff than the Charity Commission, because the Charity Commission has resort to a huge reservoir of experience, expertise
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Let us concede for the minute that they insist on a different regulator, although I hope the Minister will have second thoughts about that. There are very few examples of other principal regulators. Most of our big national museums are regulated by DCMS, while Kew Gardens is regulated by Defra. Some of the universities are regulated by HEFCE, and some housing associations have a separate principal regulator. There has to be a principal regulator, and if I may say, the principal regulator in the case of the universities has delegated much of its regulatory function to the Charity Commission under a memorandum of understanding. So it all gets a bit confusing and, I would say, wasteful.
I end by saying that, whatever else, we must have the name of regulator on the face of such an important Bill as this. It is not enough for the Government to use their powers to appoint a principal regulator by secondary legislation. We all know how futile are the powers of this and the other place in relation to secondary legislation. We ought at least to have the possibility of commenting on the appropriateness and quality of the principal regulator the Government have in mind in order to assist them.
Finally, why on earth are the Government doing this? I hope it is not because they want to whip these academies through without the careful initial oversight of the arrangements, particularly of the new academies, that the Charity Commission could and will provide. I hope that the Government are not hoping that this will rush things through. If that is the case, they could repent at leisure. I beg to move.
11.15 pm
Lord Hodgson of Astley Abbotts: My Lords, I have two amendments that address many of the points made by my noble friend Lord Phillips, although they approach them from a different angle. Given the lateness of the hour, it might be for the convenience of the Committee if I speak to them now so that the Minister can deal with the various arguments. I apologise for not having participated in the debates before, although I have read in particular the Second Reading debate carefully. As we are discussing charitable matters, I should declare my interests as president of the National Council of Voluntary Organisations and chairman of the Armed Forces Charities Advisory Company, inelegantly known as AFCAC.
The most important of my amendments is Amendment 164. It would remove the words "is a charity" and replace them with the phrase,
I am not quite as concerned as my noble friend Lord Phillips about the use of exempt status, but I am concerned about the way in which the charitable status and arrangements are being drawn in this Bill. I do not oppose the principles of the Bill; indeed, I support them, because I am for aspiration in our education system and it seems to me that this Bill will lead to
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I shall take a moment to say a word about the background. The Charities Act 2006, which was a Lords starter like the Academies Bill, went through a high degree of scrutiny, not only pre-legislative scrutiny but also because the parliamentary examination took place twice over. We had reached the end of the process when we came to the wash-up before the 2005 election, when our progress resembled the childhood game of snakes and ladders-we had reached square 99 but then stepped on a very long snake and went all the way back down to square two, from where we had to start again. I had the privilege of serving my party on the Front Bench and, as my noble friend Lord Phillips said, we spent many happy hours with the noble Lord, Lord Bassam of Brighton, and others dealing with the issues in that Bill. The result of what some might say was an inordinately long gestation was that we had a huge amount of input from the sector and the wider public. I must say that the then Labour Government were prepared to listen and I think that we made some sensible changes. I think that the sector believes that a delicate balance that reconciles the many strongly held views about the charitable sector and its position in our society was achieved. This Bill, if unamended, will damage that delicate balance.
What is the balance? First, the Bill reintroduces presumption by the back door. The Charitable Uses Act 1601 stated that there was a presumption of charitable status for three purposes: the relief of poverty, the advancement of religion and, of relevance to us tonight, the advancement of education. Therefore, if you checked into the Charity Commission with the Hodgson educational trust, it would be bound to give you charitable status. However, it became perfectly clear in recent years that that no longer held water in our society and that we therefore needed to find a way in which all applicants for charitable status, with the benefits described by my noble friend Lord Phillips, had to show that they afforded an appropriate level of benefit to the public to offset the tax and other benefits that they received. So we achieved a level playing field.
This public benefit test was to be achieved by the Charity Commission and we wanted to make sure that the commission was insulated from political pressure from all sides of the House. Therefore, written into Clause 6 of the Charities Bill were words to the effect that the Charity Commission should not be subject to the direction of any government agency or any Minister of the Crown. We had a level playing field with an independent regulator.
The Bill as drafted blows a hole in this because Clause 8(1) states:
"A qualifying Academy proprietor is a charity".
That restores presumption. There is no mention of a public benefit test; it just states that it is a charity. Therefore, we no longer have a level playing field. Above all, we are introducing an unlevel playing field in an area of great controversy. It was on education
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The second worry is that this undermines the authority of the Charity Commission and damages its independence. We went to great lengths to make sure that it was above suspicion; if it could be bypassed at any time, that would be a great mistake. I have absolutely no doubt that these academies will be able to show that they can pass the benefit test, so why damage the balance that we created in the 2006 Act?
Most important, we are creating a dangerous precedent. A future Government-not this Government or any Government that I am thinking of-could use this ability to say that something is going to be pushed through on the ministerial fiat. It would be a great mistake to allow that kind of precedent to be created in the Bill.
On the implications of exempt charity status, I entirely share the views of my noble friend Lord Phillips. We need to know what the regulatory body will be. The sly, shy hint in paragraph 29 of the Explanatory Notes does not go far enough. We need to know whether the regulator will have a public benefit test and, if so, whether it will be the same as that of the Charity Commission. It is essential that it should be so.
When my noble friend replies, will he say whether he thinks that he has the power to enforce this? Section 13(2) of the 2006 Act states:
"The body or Minister must do all that it or he reasonably can to meet the compliance objective in relation to the charity".
However, as far as the Charity Commission is concerned, that is only one of five objectives. It has a public confidence objective, a public benefit objective, the compliance objective to which I have just referred, a charitable sources objective and an accountability objective. We need to know whether those other objectives will be met in this case. As my noble friend has said, we need to know what will happen to existing charities and whether we will have a further unevenness in the playing field.
I do not expect to reach finalisation on this tonight but I seek from my noble friend reassurances on two or three central points: first, that the Government will not reintroduce presumption by the back door; secondly, that they respect the independence of the Charity Commission and its expertise; and, thirdly, that they see the great dangers of the precedent that we will be creating.
Viscount Eccles: My Lords, I will not make any long arguments. My noble friend Lord Phillips has referred to museums and to Kew, but I think that, although the secondary legislation to appoint a charitable regulator other than the Charity Commission is in draft, it has not yet been triggered. I think that the matter is still in limbo.
Lord Phillips of Sudbury: In fact, it came in at the beginning of this month.
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Viscount Eccles: I stand corrected. That secondary legislation was drafted by the previous Government and I must confess that I had some hope that the coalition Government would see that there had been an error and not implement it. An extremely strong argument has to be made in order to appoint any charitable regulator other than the Charity Commission. In default of that argument, the Charity Commission should be the charitable regulator.
Baroness Morgan of Drefelin: My Lords, I have got slightly confused about the groupings. I think that I have a clause stand part in here. Anyway, I shall make a brief contribution to this debate.
The contribution from the noble Lord, Lord Phillips, on the question of charitable status and the automatic exemption proposed in the Bill was so key that I am not sure that I want to add much more. When I read the Bill, it gave me great cause for concern. I sat through much of the proceedings on the Charities Bill as a new Peer and learnt how thoroughly this House can interrogate a piece of legislation. I came to understand the importance of presumption and the role of the regulator in safeguarding the values that the charity brand, if that is the right phrase, has for members of the public. This is a fundamental step to take.
The Department for Children, Schools and Families considered this measure for its last Bill but rejected it on the basis of advice that we received, so we were listening carefully. There were lots of good reasons why academies might want to become charities, but in the end there were not enough good reasons to suggest that all the careful deliberation that this House and the other place went through to achieve that settlement should be thrown out. To carry on the Monty Python link, I would say that this clause is a dead parrot, as it really is dead as a concept. I would be interested to hear the Minister's response, but I have heard some convincing arguments today for why Clause 8 should not remain in the Bill.
11.30 pm
Lord Hill of Oareford: My Lords, I deeply regret having mentioned Baldrick. I am learning as I go and I shall attempt to be more concise in future.
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