Schools: Well-being and Personal and Social Needs

Motion to Take Note

2.06 pm

Moved By Baroness Jones of Whitchurch

That this House takes note of the contribution of schools to the well-being and personal and social needs of children and young people.

Baroness Jones of Whitchurch: My Lords, I am very pleased to have the opportunity today to introduce this important debate, and I do so in the knowledge that there are a number of noble Lords on all sides of the House with very impressive records of campaigning on these issues. A number of them are here today and I look forward to learning from their contributions in due course.

I also approach this debate with a sense of sadness, because I genuinely feel that the Government opposite have lost their way on this agenda. Their concentration on education structures and exam results has overshadowed the wider contribution that schools make to producing well rounded, confident and thoughtful young people. As a result, the post-war consensus about the wider purpose of education is unravelling.

The White Paper that preceded the Education Act 1944 stated:

“The government’s purpose is to ensure for children a happier childhood and a better start in life and to provide means for all of developing the various talents with which they are endowed”.

Over the decades, through many iterations, these same principles have underpinned the provision of education in this country. However, if we judge the current Government by what they do rather than by what they say, the wider social, personal and health issues of children are no longer a priority. I would go so far as to say that, rather than our education policy being determined by the ideology of one man, there needs to be a national debate about the purpose of education

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to allow parents, teachers and young people themselves to raise their concerns and to seek to develop a 21st century consensus about the role of education.

While I would be the first to acknowledge that the previous Government did not get everything right, I am proud of our educational achievements. There was a sustained period of improvement in education outcomes in the UK from 1997 to 2010. At the same time, we recognised that pupils’ low achievement was only partly determined by their education. Factors such as levels of poverty, parental support, a stable home life and a lack of community aspiration all played their part. That is why we developed the Every Child Matters strategy. This sought to integrate children’s services so that every child had the right to be happy, safe, achieve economic well-being, enjoy life and make a positive contribution. This vision achieved impressive outcomes in tackling poverty, providing early intervention for Sure Start, improving nutrition and exercise in schools, providing programmes to tackle bullying and low self-esteem and providing improved sex education, to give just a few examples.

We took the view then, as now, that you cannot expect schools to do everything. To be successful there needs to be a comprehensive approach to children with schools and communities working together. Unfortunately this is not a philosophy that is shared by the current Government. As a result, many of the successful initiatives have now been undermined. In his speeches and his policy initiatives, Michael Gove has made it clear that the No.1 and only purpose of schools is to drive up performance in exam results. In fact he has gone as far as to admit that he can be criticised for having too strong a focus on testing. His view is that asking schools to play their part in addressing the wider social problems of their pupils gets in the way of rigorous educational achievement. As a result, policies that were proven to be working and have a positive effect on the well-being and learning capacity of young people have been dismantled, or become optional extras to be implemented when money and time allows. The starkest example of this is the Government’s decision to remove the ring-fenced funding for Sure Start centres, which has resulted in hundreds up and down the country being closed or merged.

However, the changes to the curriculum and school environment are equally far reaching. Let me give an example. Yesterday I tabled an Oral Question on nutritional standards in school food. Following the turkey twizzler scandal and Jamie Oliver’s excellent exposé of the poor quality of school food, the School Food Trust was set up to prepare nutritional standards that would underpin provision in all schools. The outcome was a great success. School food was transformed. There was increasing evidence that it was improving concentration and behaviour, and uptake increased. This Government, in their wisdom, decided that academies and free schools would not be obliged to adopt the nutritional standards. Now, not surprisingly, there is evidence that these schools are selling chocolates, crisps and snacks rather than healthy food; so all the health benefits of eating quality food will be undermined as more and more schools opt to become academies.

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What about another example? The previous Government sought to tackle the growing rise of obesity and lack of exercise by setting up a comprehensive network of school sports partnerships, with a requirement for young people to have two, rising to five, hours of exercise a week. All the reports were that the partnerships were a great success, and that a generation of young people were now being given the opportunity to have regular exercise. The first thing this Government did was cut the funding for the sports partnerships, and although some funding has now been returned after a national outcry the current provision is a shadow of its former self, with many posts lost and many of the initiatives gone.

We believe that schools have an important role to play in tackling poor physical health and in supporting those with behavioural difficulties or mental health problems in school. We believe that by addressing these issues we will improve the capacity of children to study and learn. It is not either/or; the two things must go together. Similarly, there is a growing weight of evidence that many young children start school without the basic skills to learn. Poor parenting means that they do not have the vocabulary to take part in lessons and they do not know how to dress themselves or to hold a pencil. Schools have no choice but to deal with these issues before they can progress with the formal stages of learning. Assuming, for example, that every child is sufficiently school-ready that they can start to learn a poem by heart at age five just adds to the list of impossible demands with which teachers struggle daily.

Incidentally, do I detect something of a schism between David Cameron and his Education Ministers? The Prime Minister has been very vocal in identifying that children’s well-being is a key priority. It is a commitment shared by the World Health Organisation and the United Nations Children’s Fund. Since we are languishing somewhere near the bottom of UNICEF’s list of 21 developed countries with regard to children’s well-being, he seems to be on the right track. Yet Ofsted is no longer required to measure it, and both Michael Gove and Nick Gibb have described it as peripheral or a distraction from the core purpose of academic education, rather than recognising it as a foundation on which to build achievement. I look forward to hearing from the Minister whether he shares the views of his colleagues in the department or whether he agrees with the Prime Minister that schools should play an important role in contributing to children’s well-being.

I also want to say something about the fate of the specific PSHE courses which my noble friend Lady Massey has championed for so long. There are key elements of PSHE which it is vital for young people to learn about and discuss to prepare themselves for adult life. Learning about issues such as relationships, self-esteem, how to counteract bullying, personal health and finance, parenting skills and sex education should not be optional add-ons to the curriculum; they are essential life skills. I know that these have also been pursued by the noble Baroness, Lady Walmsley, on the Lib Dem Benches, which is why we were so disappointed that she felt unable to support my noble friend Lady Massey’s amendment to make PSHE compulsory during the passage of the Academies Bill.

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Since that time, my noble friend Lady Massey and the Minister have had a well rehearsed stand-off on the lack of progress in the review of PSHE education. I have to say to the noble Lord that this is not good enough. Most parents expect and want these sensitive issues to be covered in a systematic way within the school curriculum, so perhaps he will be able to give us some good news on this score if nothing else when he responds to the debate today.

We all want young people to achieve their maximum academic potential, and in the future a Labour Government will create an office of educational achievement that will provide a genuinely independent clearing house for research to learn from international comparisons and share best practice among teachers. We also believe that there are wider and softer social skills which young people should learn in school that do not have to be measured by exam results. It is a view shared in a recent Work Foundation report, which identified that the number of young people not in employment, education or training continues to rise with 954,000, or one in six now falling into this category. Its report identifies a lack of soft skills such as communication or customer service being increasingly quoted as a reason why these young people are unable to find work. These views are also echoed by employers who despair that young people are so ill prepared for the world of work. John Cridland, the CBI director-general, has criticised the Government’s obsession with GCSE grades, arguing that it encourages short-term cramming and frustrates teachers because it stops them delivering an inspirational classroom experience.

We share the view that good teaching by enthusiastic, motivated teachers lies at the heart of effective learning. In the end it is the teachers not the lessons that people remember most about their schooldays. That is why it is important to value the workforce in a way that is often overlooked by this Government and to empower it to be more creative in the way lessons are taught. Creativity should be at the centre of school life for teachers and young people, but increasingly schools are failing to nurture the creative talents of young people and we are losing global market share in the crucial creative industry sector as a result. As Steve Jobs of Apple said so eloquently:

“The Macintosh turned out so well because the people working on it were musicians, artists, poets and historians who also happened to be excellent computer scientists”.

Not all creativity can be measured by exams and not every child wants to sit an exam in a creative subject that they enjoy. There has to be space within the school timetable for children to pursue wider interests such as music, drama and art. However, the reality is that these subjects are being squeezed from the curriculum. We believe that our approach to joined-up children’s services, including schools, was the right approach in the past and our childcare commission, bringing together shadow Cabinet members from across the departments, will explore how we can learn from the past and provide even more effective integrated children’s services for the future.

In this context, we will continue to make the case for a wider role for education in contributing to the well-being, personal and social needs of young people,

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and for nurturing their creativity, confidence and life skills. We believe that this is what parents, children and employers want, and it is what educationists tell us is the bedrock of effective learning. If Michael Gove would join us in a national debate about the purpose of education, perhaps in time we would persuade him, too.

In the mean time, I am pleased to have had the opportunity to share our concerns and to give the Minister the opportunity to distance himself from the hard line of some of his departmental colleagues and to endorse our perspective of the importance of a wider well-being, social and personal role for schools. I beg to move.

2.20 pm

Baroness Walmsley: My Lords, I thank the noble Baroness, Lady Jones of Whitchurch, for introducing this very important debate and for her interesting speech. This Government’s objectives for children are very similar to those of her Government, but there is more than one way to skin a cat and we are skinning it in a slightly different way. I also point out that “Mary Had a Little Lamb”is a poem that most three and four year-olds I know can recite perfectly well.

It is a well documented fact that a child who is stressed, ill, emotionally disturbed, hungry or who does not have good general well-being will not be a good learner and is very unlikely to fulfil his or her educational potential. It is also accepted that those who do not fulfil that potential are less likely to lead happy and fulfilled adult lives, and certainly will not contribute as much to the general economy as they might have done. Therefore, I am sure that no one will disagree that we need to focus carefully on how well-being can be achieved.

Parents, of course, are the prime players in ensuring their child’s health and happiness, but schools play a pivotal role, especially where parents do not carry out their role as well as possible, for whatever reason. However, we must not expect too much of schools; I agree with the noble Baroness, Lady Jones, on that. No school, however caring and professional, can take the place of a loving, caring parent. I congratulate the Government on the measures they are taking to offer support to parents and to extend and improve the quality and flexibility of free nursery education offered to very young children. I welcome the fact that they have brought forward to this September the offer of free nursery education to disadvantaged two year-olds in some areas.

As we all know, children are born with their brains incompletely developed. Some experts have called babies “the external foetus” because of the great amount of development that happens outside the mother’s body in the first three years of life. Good-quality nursery education contributes enormously to a child’s emotional, social, physical and intellectual development. Therefore, when talking about the contribution of schools, we must not forget what has gone before.

The primary purpose of schools is the education of their pupils, but we should educate our children for a life, not just for a job. Schools help to develop citizens, husbands, wives, friends and parents—not just employees, employers or academics. Indeed, employees, employers

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and academics are all those other things, too. Therefore, I look to schools to get the balance right between fostering the health and well-being of children and developing their intellects. In the search for high academic standards, there is a danger of focusing too much on the child’s intellectual and skills development at the expense of their well-being and emotional maturity. That is a self-defeating strategy.

I heard an interesting interview on Radio 4 the other day with a spokeswoman from the CBI. She criticised schools for not turning out young people who were prepared for today’s workplace. She did not complain about the number of GCSEs or vocational qualifications they had. She asked for life skills. She said that business and industry need young people who have self-confidence, emotional maturity, the ability to work in a team, to negotiate and to compromise, and who are punctual and conscientious, have creativity and flexibility of thought, et cetera. That was not the first time I had heard such a plea from business leaders—it is fairly common. So where are we going wrong?

Noble Lords will know how keen I am on statutory personal, social, health and economic education. My enthusiasm for it is undiminished. I have talked to the noble Baroness, Lady Massey, about why I could not support her amendment, and I think that she understands. I say to the noble Baroness, Lady Jones, that such barbs are self-defeating. We have a duty to deliver this information, and the opportunity to develop skills in these areas, to every child. This should be done by high-quality specialists who are trained to do the job. Only then will we avoid the current postcode lottery in the quality of provision, and raise the standard overall. I have never felt that we should prescribe how schools should do this, preferring to leave it to their professional judgment. Every child should be entitled to have it delivered to a high standard.

There is much good practice. Some schools have PSHE elements as fundamental parts of their ethos and of everything that happens in them. Some have specialised teachers, and work with qualified people from outside the school to deliver elements of their programme. Others use some of the plethora of good-quality materials available to general class teachers. Many ensure that every lesson, throughout the curriculum, fosters these qualities and abilities in their pupils, not just special PSHE lessons. Some schools have adopted UNICEF’s wonderful Rights Respecting Schools programme, which fosters democracy and mutual respect in schools, both of which contribute to well-being. Children who have a meaningful input into decisions that affect them are usually happy.

It is important that the Government should make it clear that they expect schools to do this and that they will measure success not just on the number of A to C grades at GCSE but on the way in which schools foster well-being. Therefore, Ofsted plays a pivotal role. Schools and teachers are only human and will deliver the things on which they are measured. Parents expect schools to be happy places for their children to be, especially in the primary years. However, somehow the expectation often disappears in later years unless parents understand the link between well-being and academic success. Many of them do, of course.

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I ask my noble friend the Minister whether schools will be allowed to use their pupil premium to provide the rich experiences that all children need to develop into self-confident young adults, as long as they can demonstrate a link between the use of this money and better performance by the most deprived children. Sometimes it is extra-curricular activities that have the most effect on these qualities. Outdoor pursuits, sport, music and the other arts, and heritage experiences and activities can all contribute. It would be a pity if, when a school is monitored on its use of the pupil premium, the range of activities for which extra money could be paid were too narrow. We rightly leave the decisions to the head and teachers, but they need guidance on the scope of the activities that would be acceptable to achieve the outcomes that we want.

Finally, I will say a word about the Government’s announcement today of a consultation on how we measure and address child poverty, because it is relevant to the debate. There is a clear link between deprivation and poor attainment at school, which must be addressed effectively. Ironically, as general incomes fall, the number of children in relative poverty will decrease, even though not one child’s life will have been improved. The Government do not want to be judged on such an anomaly. We want to do better and we will, despite the financial problems that we face. I hope that all parties will engage constructively with the consultation in the interests of the children we want to help, and I hope that my noble friend the Minister will confirm that the Government will welcome such engagement from all who have something useful to say.

2.29 pm

Lord Wills: My Lords, I congratulate my noble friend Lady Jones on giving your Lordships the opportunity to discuss some of the fundamental challenges facing our education system. I hope there will be general agreement on the proposition that schools can make an invaluable contribution to the well-being and personal and social needs of young people. I hope that there will also be general agreement that, as my noble friend said, the introduction by the previous Government of personal, social, health and economic education was a valuable addition to the curriculum. Therefore, the outcome of the Government’s review, when it finally emerges, will be important. Judging from what the Schools Minister, Mr Nick Gibb MP, said last year when announcing the review—that children “can benefit enormously from PSHE education”—it seems that the Government may at least pay lip service to its importance and its value. However, in considering how to proceed, I hope that the Government will make resources available to schools so that they can deliver whatever will be asked of them.

The national curriculum, for all its well rehearsed merits, has over time proved an irresistible temptation for Ministers to pursue their pet interests without always thinking through all the consequences for schools. The present Ministers seem to be no exception. I make the exception of my noble friend Lady Morris, who will be speaking later in the debate, who was an outstanding Schools Minister and an outstanding Secretary of State.

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There are always compelling arguments for changing what is taught and how it is taught. Temptation is ever present for Ministers. Schools are now being told, for example, that they need to do better with basic numeracy and literacy; that they need to give young people a richer account of our national story; that they need to encourage greater take-up of foreign languages; that they need to stimulate more interest in maths and science; that they need to pay more attention to inculcating the soft skills that are increasingly important for employers; and that they must not overlook the importance of the humanities in producing well-rounded citizens.

Schools are being asked to deliver all this in the face of profound societal change which makes the task of teaching complex and demanding in a way that it was not a generation ago. Young people are exposed from an early age to an unprecedented amount of information and influences from a wide range of authorities. All this amplifies peer pressure in an unprecedented way.

This clearly creates new and demanding challenges for teachers. For example, the quickest way to secure a dramatic improvement in GCSE results would be to get boys to do as well as girls. However, there is a stubborn and intractable gender gap, with girls outperforming boys across the curriculum. This applies, to varying extents, across almost every social class, region and ethnic group. The precise reasons for this are unclear, but what is clear is that a significant cause must lie in societal change, which teachers are having to address on top of all the frequent and extensive changes that politicians demand of them.

Tackling these challenges might not be the problem it is for so many schools if sufficient resources of time and teachers were available, but they are not. Education, like everywhere in the public sector, is enduring tightening budgets which are not going to ease at any time soon.

Apart from budgetary pressures, there is the problem of trying to meet all these demands within an institutional framework which has changed too slowly to meet the new demands on it. The exam system, for example, is still based on the flawed premise that young people all mature, emotionally and intellectually, at the same rate, and so they are all due, more or less, to take exams at the same time. A system which allowed and encouraged young people to take exams as soon as they were ready to do so would create valuable flexibility which could help meet some of the challenges faced by schools.

Again, for all the waves of reforms launched by Minister after Minister to the curriculum, to the exam system and to school structures, far too little attention has been paid to methods of teaching. Schools still rely too much on the teacher acting as a sage on the stage even though new technologies and learning programmes could enable more flexible approaches, tailored more to the needs of individual students, with teachers acting more as a guide by the side. This is not to replace whole class teaching but to enrich it.

A longer school year would create more space for all the subjects that merit inclusion in the curriculum. It would allow more intensive teaching of core subjects; create the space to tackle the difficult transition between key stage 2 and key stage 3, where many pupils regress;

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and many parents would welcome shorter holidays. If we want improvement in educational outcomes, I can see no good reason against lengthening the school year, apart from resourcing it. Has the Minister’s department done any research into the returns from such an investment?

The Minister may well argue that the new freedoms the Government are giving to schools will enable them to meet these challenges—and so they may—but they can never be a complete solution. Our education system is one of the most important forces that bind us together as a nation. If the Government abdicate from their responsibilities to ensure an appropriate curriculum, an effective pedagogy with agreed outcomes and, crucially, adequate resources to deliver all this, the result will inevitably be uneven provision of varying quality—and those who are likely to suffer most from this uneven provision, whatever the pupil premium will deliver, are the most disadvantaged, those young people who have most need of a good education to get a better start in life. Such an abdication of responsibility by government can never be acceptable.

Schools can make an invaluable contribution to the well-being and personal and social needs of young people, but only if government enables them to do so. I hope the Minister can reassure us today that this Government will not walk away from their responsibilities to do so.

2.35 pm

The Lord Bishop of Chester: My Lords, you would expect me to make a contribution to this welcome debate from the perspective of church schools. However, those who are expecting a learned discourse on sex education from these Benches will be disappointed. Some of my fellow bishops are much better qualified to speak on such matters.

While the church school movement has always given a proper emphasis to the three Rs, and is valued as such by parents and educational authorities, church schools have always aimed for a wider development of character in young people—the well rounded and thoughtful young people to whom the noble Baroness, Lady Jones, referred in her excellent opening speech. It is the notion of character as a virtue that encompasses the well-being, personal and social needs of which the Motion speaks.

Church schools would also wish to include a reference to the spiritual and moral development of young people as being an intrinsic aspect of being human. To be a human being is unavoidably to be a moral agent, for good or for ill. We see the spiritual and moral education of children as more than merely religious education as such, although it has a part in it. A proper excellence in religious education is of course one of the aims of church schools, but in the broader spiritual agenda. This is also implied in the Motion.

Perhaps I may say a word about a subject which has been much discussed in recent years but which has not been referred to yet in the debate—that is, the role of schools in promoting community cohesion. Since 2007, it has been a statutory requirement on maintained schools to promote community cohesion. There has been some criticism of church schools that they may

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work in the other direction by concentrating upon a particular section of society or by approaching education from a particular direction and point of view.

Fortunately, we have been able to commission an independent report into the issue which looked at the comparative outcomes of different types of schools in promoting community cohesion. This has been possible because Ofsted is now required to report explicitly upon this. We commissioned a report from Professor David Jesson of the University of York, using Ofsted data. The report was published a couple of years ago now and is entitled Strong schools for strong communities. It demonstrated that at primary level there is little difference in the outcomes of different types of schools, although church schools are as good as or better than other primary schools. However, at the vital secondary level, interestingly, the report showed that faith schools had a noticeably better outcome in the Ofsted report conclusions in promoting community cohesion. The report states that,

“there are relatively few Community or Foundation schools that are graded anywhere near those of Faith schools”,

in promoting community cohesion.

Ofsted also reviews the performance of schools in the promotion of equality of opportunity and the elimination of discrimination. Professor Jesson, in the report, also reviewed those outcomes in relation to different types of schools. The report states:

“Here again the contrast between Faith schools and Community schools is clear. Faith schools achieve higher gradings on this aspect of their contribution to their pupils and their community”,

than other types of schools. I hope that those who, for understandable reasons on the surface, are drawn to potential criticism of faith schools will pay attention to these hard research findings in this area.

Why is this the case? It is because schools are most effective when they avoid a sausage-factory mentality, when they are clear about their own distinctive values and the position from which they approach the task of education. That does not exclude others, but typically nurtures a shared sense of belonging to the wider community. When we know where we come from, we can more easily reach out and engage with other groups and sections in society, be that locally, nationally or, equally important, internationally and globally.

Let me offer a final quotation from the report:

“Promoting community cohesion is not about diluting what we believe in in order to create a pallid mush of ‘niceness’. Nor is it about trying to make all schools reflect exactly the economic or cultural make-up of the nation”.

There has been a temptation in recent decades to adopt a sausage-factory mentality in relation to maintained education, so there is a lot of promise in contemporary developments.

I have spoken rather generally about “church” or “faith” schools, and I believe that it is right to do so, but an interesting development over recent years has been the emergence of all sorts of partnerships and a greater variety in the sector itself. I welcome the range of schools now sponsored or supported by different faith communities and different combinations. In my own diocese we now have joint Anglican and Roman Catholic primary and secondary schools, whereas when I became bishop, we had none at all. Often the churches themselves are now in partnership with other institutions.

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My diocese is in partnership with the University of Chester in sponsoring an academy that will replace two failing secondary schools in a particularly difficult area. There is also potentially to be a new free school based at Chester cathedral with a music specialism. So the term “faith” school now embraces a wider variety of partnerships and activities, which is thoroughly welcome.

We also should not overlook the contribution of the independent sector. A lot of independent schools have either a faith foundation or to one degree or another a faith character. The work of chaplains in independent schools is often overlooked, but typically they are regarded as significant people in the school community because they help the community to look beyond the narrow academic focus. The thread that holds all this together is a commitment to the common good. Faith schools may have different outlooks—Roman Catholic schools tend to put a slightly closer focus on nurturing Roman Catholics, which is understandable—but, as I say, the thread is a commitment to the common good. That is what really counts. The common good lies, as we have already discovered in this debate, beyond a narrow academic focus.

Some noble Lords will have read in the press or heard on the radio discussions about Martin Amis’s new novel, which apparently is an exploration of the triviality of much of modern society. We live in a world that has a tendency to be too dumbed down, and that can easily affect our education. Alongside academic excellence, you need the soft skills we have heard about, the emotional intelligence that used to be nurtured primarily in families. With the decline of family life for various reasons, more pressure is put on schools, so it is important that in the future schools should look at the soft elements, including emotional intelligence in education.

2.44 pm

Lord Layard: My Lords, if parents are asked what they want a school to do for their children, they almost always say two things: first they say, “I want my child to learn”, and then they say, “I want my child to be happy”. The question is this: are those in conflict? The scientific evidence is absolutely clear: they are not in conflict. In order to learn you need to be happy, with peace of mind and inner calm. Einstein once said that to make scientific discoveries, you need to be happy, and the same is true of children. Here is a recent analysis of a sample of American eighth graders who were tested at the beginning of the year on their IQ and their resilience. At the end of the year they were given their academic grades and, as a predictor of those grades, resilience was twice as important as IQ. You have to have the character as well as the brain.

Fortunately we now have a great deal more evidence about how to produce resilient, happy young people who do not engage in risky or anti-social behaviours. There have been hundreds of randomised controlled trials of highly structured programmes covering social and emotional learning, sex and relationships education and healthy living. I shall set out a meta-analysis of the effects of those programmes, each of which took about 18 hours of the child’s time. The effect on the

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emotional well-being of children was something like 11 percentile points up—from 50 to 61. The effect on behaviour was an extra 11 percentile points, and the effect on academic achievement was an extra 11 percentile points. These programmes are working on every dimension. So let us abandon the idea of a conflict between the objectives and ask schools to do exactly what parents want them to do. What a surprising suggestion.

What this would mean is complicated, so I want to make just three points. First, I turn to the whole school approach. Obviously, the whole school has to commit itself to making the happiness of its children one of its prime objectives. This should be a decision that is made after a great deal of debate involving teachers, parents and governors. I belong to a movement called Action for Happiness, which is preparing a code for schools that might wish to take a step of this kind. One would hope that every school will make the happiness of its children one of its prime objectives. That means going beyond what all schools are now expected to do—anti-bullying, anti-racism, anti-drugs—by trying to build up positive attitudes and adopting a positive lifestyle that children can enjoy, including replacing the desire to pass exams with the love of learning.

Secondly, I turn to explicit training in life skills, which is a particular part of the curriculum that is otherwise known as PSHE. Of course, this can be done very badly or very well. Undoubtedly, there are inspired teachers who can think it through for themselves, but these are very difficult subjects to teach. They can hardly just be given to someone who has a gap in their timetable. It is easy to teach these subjects in a way that makes no difference. We should not live in a Pollyanna world where we think that all this is easy and can be carried out successfully. It needs a great deal of thought and application. For example, the evaluation of the secondary SEAL programme, the only part of the programme that has been scientifically evaluated, shows that it makes no difference to anything. That is an important finding. The reason given—I must say that I foresaw this—was that the programme was not sufficiently structured to ensure that ordinary teachers could be guaranteed to achieve a result. We need to rely on much more structured, manualised programmes that have been scientifically evaluated to show that they make a difference. Perhaps I may declare an interest. I belong to a group that is aiming to put together a set of programmes from the hundreds I mentioned earlier in my remarks which could constitute the complete PSHE secondary school curriculum. If that was shown to work, we would be able to develop PSHE as a proper subject in schools and as a specialism within the PGCE.

I shall go back for a moment to the fundamental aim of all these programmes, which is to give children control over their minds. The idea is that we can all gain more control over our minds and our thoughts, which is particularly important because changing our thoughts can change our feelings and our behaviour.

This brings me to my last point, which is about mental health. This should obviously be a part of the basic training programme for every teacher and schools

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should become much better at identifying mental health problems among their children. In fact, the Good Childhood Inquiry that I was involved with suggested piloting a questionnaire tool to be used at periodic intervals over a child’s life, which would have the effect not only of helping to identify children who were in trouble—and many emotionally disturbed children do not show it; they are not always behaviourally disturbed—but of motivating schools to take the outcome of well-being much more seriously because they were actually measuring it.

Of course, once a child has been identified as having a mental health problem, there must be facilities available to treat them. I was appalled to read this morning that half of all mental health services are experiencing budget cuts at the moment, in many cases of 25% or more. This is an outrage. This is obviously such a big area of unmet need already in our country. We also know that mental illness among children has increased since the 1970s. A nationally representative survey has been conducted four times, supported by a local survey in the west of Scotland. Both these surveys found that there is twice as much emotional and behavioural difficulty among 15 year-olds as there was in the 1970s. The reasons given in subsequent questioning are, not surprisingly, more anxiety about looks, possessions and, of course, exams.

This brings us back to the question of whether we can shift our schools from exam factories to schools for life. I think we really have to do that and I really hope that the Minister can persuade his Secretary of State to open his powerful mind to that issue.

2.52 pm

Baroness Miller of Chilthorne Domer: My Lords, I declare an interest as a board member of UNICEF UK. I am very pleased that the noble Baroness, Lady Massey of Darwen, is going to speak this afternoon—as I would expect that she would, with her expertise—because I hope that she is going to talk about all her work with UNICEF on the Rights Respecting Schools Awards and the positive effect of that programme, of which she has been such a tremendous champion. I actually want to talk about food.

I congratulate the noble Baroness, Lady Jones of Whitchurch, on introducing this debate, and on her Question yesterday, which gave me some useful pointers on what I wanted to concentrate on today. The noble Baroness was a little bit down on some of the achievements of this Government. For example, I would point to my honourable friend Sarah Teather’s tremendous achievement in ensuring that the UN Convention on the Rights of the Child is really embedded and understood not only in her department but across government.

I want to concentrate on food because the quality and amount of food and how it is eaten has the most fundamental effect on children’s well-being. It is obvious: if you are hungry, you are just not able to learn. As a result of sugar-intense foods and drinks—not just sugar as we understand it from cane or beet but also the epidemic of corn syrup that has been pumped in to every sort of food, whether it is pizza, sausages or baked beans—children are becoming obese at an earlier and earlier age.

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As also came out in the Question yesterday, in the comment made by the noble Lord, Lord Ramsbotham—he was referring to young offenders but it applies to children too—young people are unable to control their behaviour and mood if they have eaten foods particularly high in sugar, caffeine or some additives that are implicated in bad behaviour. The point that a change of diet produces dramatic results in children’s ability to learn and concentrate is very important.

In Answer to the Question tabled by the noble Baroness, Lady Jones, the Minister referred to,

“inculcating extremely good habits of eating”.—[Official Report, 13/6/12; col. 1336.]

That is the key because it is at the primary age that we have a responsibility to make sure that those habits that set children up well for life are achieved. We are fighting quite a battle now because we are paying a very heavy price for the loss of school kitchens and traditional cooked lunches that swept across the UK in the 1980s. Many of today’s parents never really formed those healthy eating habits and now we are expecting schools to be at the forefront of trying to change diet, eating habits and attitudes to food.

However, there are some bright spots. We do not want to change habits back to the 20th century—that was not such a golden moment either—but to adapt them to 21st century possibilities. On the plus side, I point to the great rise of ethnic foods such as lentils, curries and couscous. I am sure that your Lordships can remember when garlic was an exotic food and there was a pretty boring range of vegetables. We have come a long way from that time and there is now a world of spices and herbs that can make carbohydrates such as a bowl of rice much more interesting and appealing.

It would not be right to talk about school food without mentioning all the organisations that are making a tremendous difference: the School Food Trust, School Food Matters, the Children’s Food Campaign, the Local Authority Caterers Association and Garden Organic. Earlier today I attended the launch of Going Hungry? Young People’s Experiences of Free School Meals, a piece of research by the Child Poverty Action Group and the British Youth Council. It reinforced what I had already heard, that out of 7.5 million schoolchildren there are 2.2 million living in poverty, of whom 1.5 million are eligible for free school means but only 1 million actually receive them. Half a million children are missing out and that really is a disgrace. I also strongly support the Children’s Society Fair and Square campaign.

There are lots of reasons why free school meal take-up is not what it should be. One of these is stigma, and take-up has been proved to be much improved where schools operate a cashless system that anonymises pupils who are on free school meals. A really decent aspiration for any Government would be that when the nation can afford it, all primary age children—at least—receive a free school lunch. It should be as much a part of education as teachers, playgrounds and learning materials. It is very strange that food became the optional extra in the education system.

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However, in the mean time I hope the Minister can assure me that the Government’s priority is to increase free school meal take-up among the eligible and ensure that all the schoolchildren whose families are in receipt of universal credit, when it comes in, will be eligible for free school meals. Can he assure me that the introduction of universal credit will not mean that fewer children will qualify for free school meals?

The Food for Life Partnership has been working for some time on the issue of nutrition. According to its research, twice as many primary schools received an Ofsted rating of outstanding following their participation in the Food for Life Partnership’s work. School nutritional standards are highly important, as is Let’s Get Cooking, which runs the country’s largest network of cooking clubs. If you want to enthuse pupils and parents, cooking clubs are a great way to do it.

Baroness King of Bow: I thank the noble Baroness for giving way and commend her on an excellent speech. Is she aware that a third of academies have described school nutritional standards as a burden? Does she agree that the real burden is the heart disease, diabetes and cancer and other diseases that will afflict our children? Does she think that the Government could increase the urgency with which those nutritional standards are introduced for all schools, including academies?

Baroness Miller of Chilthorne Domer: Yes, I think that children in all forms of education should expect the same standards to be applied to them when it comes to what is deemed to be healthy food.

I commend the work being done to encourage children to grow their own food. Making the connection between where food comes from and the effort that goes into producing it has other effects such as making sure that less is wasted.

3.01 pm

Baroness Morris of Yardley: My Lords, I am glad to be able to contribute to this debate and congratulate my noble friend Lady Jones on bringing it to the Chamber. I do not think that anybody is going to speak against improving the well-being of children or meeting their personal and social needs. I shall wait to the end of the debate to see whether any noble Lord does—perhaps the Minister will. However, it is an area of contention, where there is genuine debate and some uneasiness about how we are progressing. The crucial thing is not to persuade the world, those in the educational system or politicians that those things are an important part of education; it is to try to understand why we do not do it very well and to overcome those barriers.

However, the world has moved on and we now have a better understanding of the consequences of not getting this right, which in some way increases our support for it. I shall refer to three areas, two of them being pretty obvious and the third being the point made by the noble Lord, Lord Layard. First, there is a body of knowledge about sex education, drugs education, physical education and physical well-being that needs to be given to young people. That comes under this area of learning. There is a set of skills and attitudes—

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resilience, teamwork, self-esteem and confidence—which children and young people need to develop if they are to do well in the world. We have come to accept during the past few years that schools have a role to play in that, because for some children all those things are developed at home. Some children would get all that knowledge and all those skills without going to school, but the truth is that many do not and everyone could contribute to good-quality education in that field. I accept the point made by the right reverend Prelate the Bishop of Chester that, years ago, the church called it “character”; it was the same debate.

As my noble friend Lord Layard pointed out, we have become stuck because we have seen these things as competing forces—it has been an either/or. We have wanted either education for qualifications or a rounded education. We have pitted one against the other with terrible consequences when we come to evaluate our performance. What is new is the body of evidence and research that shows those approaches not as an either/or but as interdependent. If we can get social and emotional literacy right, children will improve their academic skills as well. More than that, we are now developing a pedagogy and ways of working in school that are beginning to lead to progress in how we teach SEL effectively in the way that we have been trying to make progress in how to teach literacy and numeracy effectively in years past. The pedagogy in this area is therefore slowly catching up. The more it catches up, the more powerful is the case for making it an integral part of what we would do.

I agree with my noble friend Lord Layard about the research coming out of America—Joseph Durlak and Roger Weissberg have done some excellent randomised control studies. I disagree with them slightly on the social, emotional, and academic learning programme. With the primary SEAL programme, the evidence about the effects of that sort of learning on academic attainment and well-being is far better.

This is a very important time. We have a choice: either build on these changes which are taking root and try to take what we can from them in delivering a good quality of education; or ignore those seeds that are shooting through. That is the crux of this debate. The Government of whom I was a member could be criticised for being top-heavy and too instructive, but we tried to put in place a structure on which these things could develop. Whether it was the PSHE programme, compulsory citizenship, SEAL, the sports partnerships, the creative partnerships or training teachers, it was a structure which allowed those things to flourish.

My great worry is this: I am seeing that structure decline and fall away. I do not think that this area of pedagogy and effective teaching is sufficiently strong to withstand that. The danger comes from two things that the Government are doing. First, if they hold true to their pledge to let teachers decide about curriculum and teaching methods, the risk is that this area of school activity is not well enough rooted to withstand that. Too many schools, often those which lack confidence or are in areas where children are disadvantaged and behind in basic skills, feel that they do not have time for these things. The second risk is that—even if the Government do not keep to their pledge, as seems

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likely, to leave it to schools to develop curriculum and pedagogy—the messages that they are giving are not about this area of teaching. I do not have much of a problem with poetry; I do not have much of a problem with literacy or numeracy; but I look at the utterances of Ministers and cannot find the speeches. I cannot see the press releases; I cannot read the leaked documents in the

Sunday Telegraph

and the

Daily Mail

that talk about this area of the curriculum. Quite simply, schools and teachers get the message inadvertently—because I do not believe that the Government take this view—that it is not valued.

We are at a vital time where it is for the Government to help us make the decision on whether we build on this growing body of knowledge, understanding what we did not know 10 or 15 years ago, and put some support in there for us to do better, or we go backwards and turn our back on the progress that has been made.

I look for three things from the Minister: first, an acknowledgement of what the research is telling us and how the Government might build on it; secondly, a clear signal, which the Government may give in any way they wish, that this area of teaching is valued and that schools are expected to do it, with the impact that it can have right across the academic curriculum as well as in its own right being explained to them; and thirdly—and this is where I am most likely to disagree with the Minister—the Government should provide some sort of infrastructure. If they do not like the structure that we had, that is fine, but they need something, because all the evidence and all the experience of past years tells us that, when the going gets tough, this gets left out. It deserves better than that.

3.08 pm

Baroness Massey of Darwen: My Lords, it is always a great pleasure to follow my noble friend Lady Morris. I found myself nodding at almost every sentence she spoke.

I am delighted that my noble friend Lady Jones has given us the opportunity to debate these important issues today. I shall cover and echo some of the concerns of other speakers and, as the noble Baroness, Lady Miller, anticipated, I shall refer briefly to Rights Respecting Schools as a trustee of UNICEF.

Research and observation by teachers has long shown that if a child lacks emotional and social strength and does not have protective factors with which to encourage good physical and emotional health, and to resist negative influences, then he or she will perform less well at school.

The Joseph Rowntree Foundation report of 2010 pointed out that young people were more likely to do well at GCSE if they had belief in their ability, could examine their own behaviour and actions, avoided risky behaviour and did not experience bullying. Pupil well-being enhances academic achievement. As the right reverend Prelate said, it is not just about being nice; it is something a bit firmer—my noble friend Lord Layard echoed that.

As many have said, parents and families are vital in providing the foundations for well-being. Sadly, some families do not do that. Some children enter our schools deprived—materially, socially and

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academically—and schools have a hard job to make up that deficit. To their credit, many do. Families cannot provide all that is necessary to foster social skills. Being in a school sports team, singing together, playing in a music or drama group or creating a small business help social skills and self-esteem. Highly academic schools, such as Eton or Rugby, recognise that there is more to being successful than learning by rote. The deputy head of Rugby School said:

“As a parent, you don’t buy into a school like Rugby just for the academic education. You also want your child to develop skills for life. Personal social and health education is an important part of how the school measures that”.

I am very disappointed that the Government appear to have decided that personal, social and health education, PSHE, will not be mandatory in schools. It is not the only thing that develops well-being, as I shall discuss in a moment, but if the Government gave PSHE status, that would send a message that this area needs focus and organisation and is important for all children. PSHE would provide informed decisions about resisting pressure and working in groups. From that core, PSHE could radiate other aspects of well-being in school—for example on school policies such as bullying or school meals and the work of school councils and assemblies—in subjects across the curriculum and in programmes such as UNICEF’s Rights Respecting Schools.

I give an example. Bullying could be a focus of discussion in PSHE; it could be discussed by the school council; it could form part of an assembly; and it could be taken up in English or drama with a story about bullying or writing and role play about bullying. It is not just a body of knowledge, it is about the process of education and decision-making. Schools deliver education for well-being and personal and social needs in many ways. This delivery, like any school subject, should develop from simple concepts to more complex ones as the child matures. One-offs on diet, alcohol, relationships, safety and so on are not enough. They need to be reinforced year on year. That is why organisation is so important.

Many schools see the sense of that and are involved in the Personal, Social, Health and Economic Education Association’s charter programme, which draws on effective practice of PSHE as described in Ofsted reports and evidence from schools. A key to the success of programmes to foster well-being and personal, social and health education is their organisation in schools. Good organisation depends on school leadership taking it seriously and recognising that well-being is informed by self-evaluation and must be included in the school action plan. No child should be left to experience random, disorganised or non-existent education in personal and social development.

A positive ethos in school is, of course, also important: an ethos where bad behaviour is difficult and strategies implemented; where kindness and respect between everyone in the school is considered important; and where boundaries for conduct are clear and explicit. It is all very well to say that a school should have regard to well-being. It is another matter to make it a focus in the school.

That is why I believe that there should be a core subject of PSHE in schools and that it should not be isolated. I would be unhappy if a school had a programme

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that simply ticked off topics such as diet, safety, sexual relationships, drugs and alcohol. That should back up what is already going on in school, plug gaps and reinforce the development approach to learning for every child.

I go back to organisation and structure. Schools which take educational well-being seriously often have a senior member of staff to co-ordinate its aspects across the school: in the taught curriculum, in policies, in activities such as the school council and in out-of-school activities. Such a person can and does work with staff to deliver structured programmes. A school in Cheshire, the Sir William Stanier Community School, has created champions in each area that PSHE covers. That has motivated staff. Some schools have their own teacher training programmes. Some have a PSHE room where the school ethos and positive messages of that behaviour are reinforced. The Frederick Gough School in Scunthorpe has adopted a PSHE Association school charter and says that PSHE is regularly rated by parents and pupils as the most valued non-academic subject.

The Rights Respecting Schools evaluation said that school leavers were unable to identify specific investments that they had made in the Rights Respecting Schools programme because it is embedded in the school rather than separated from their other work. So it should be for the school’s contribution to personal and social well-being and development. It should be embedded in the whole school. All children can benefit from such an input from school. In particular, those children who do not have the advantage of caring and respectful homes may be encouraged to see life differently. It is an issue of equality as well as education.

I do not think that the Government understand what personal, social and health education is about. The Minister may; I know that the noble Baroness, Lady Walmsley, does; but it is not about skinning cats it is about nurturing cats. The Government are placing too much emphasis on topics and factual information and not enough on whole school processes which foster the well-being of children. I think that they are nervous about sex education, not recognising that this is about relationships and well understood by most faith groups. I do not understand why there is such a delay in producing a curriculum review including PSHE. We have examples from research, good practice, inspection and teachers of what helps pupils achieve in schools. Children need a firm basis of confidence, self-esteem and support, all inherent in a school’s contribution to well-being. I look forward to the Minister’s response to some of the issues raised today.

3.16 pm

Baroness Benjamin: My Lords, I thank the noble Baroness, Lady Jones, for securing this important debate because, according to the saying, school days are the best days of your life. But I have always thought that it should be changed to, school days are the most important days of your life, because the school experience can either make or break you. Childhood lasts a lifetime and the early foundation stages are the most important of a child’s life. That is when the billions of brain cells are forming connections, so good nursery and primary school teaching is essential

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to the foundation of a child's development. That is the time when they need the best teachers. A nursery or primary school teacher is just as important as a university lecturer; they do the same core job.

Teaching and learning should not be a box-ticking exercise for either teacher or pupil. We should be helping children to develop their problem-solving skills, to digest and analyse information, to be creative and original and to use their imagination through exposure to music, singing, dance, art, drama and poetry, as well as sports and exercise. Self-discipline is also important, but that comes with the confidence children gain from these types of experiences in the place they spend most of their time—school.

I loved my school days. Starting back in Trinidad, where I was born, we sang the national anthem at the beginning of each school day. It gave me a sense of national pride, which has served me well. Seeing young children waving their union jacks with pride during the Queen’s Diamond Jubilee, it occurred to me that perhaps we should start each school day with the singing of our national anthem so that they have a sense of national pride embedded in their psyche—because the feeling of being proud of who you are is the best confidence booster, which in turn helps with learning.

I have spent a great deal of my life visiting schools around the country and over the past two decades I have witnessed many changes, mostly for the good. One of the most significant changes I have seen is the way in which schools and those who teach in them have adapted to the diverse society that Britain has become. Something which has developed from this is the way in which schools are nurturing the concept of a more tolerant and considerate society. I have for many years believed that we should, in addition to the core curriculum subjects, allow children from a very early age to delve into the psychology of life and encourage them to explore, discuss and develop fundamental life skills and interpersonal and social skills. Some schools are already doing so. I know a head in a deprived area of north London who invites students in years 5 and 6 to sit around a table in her study to have lunch with her and discuss current affairs—and to hear their views on issues that affect their lives. This helps to develop the children’s social and intellectual skills and build their confidence.

When I am invited to speak in schools, I often use the story of “The Three Little Pigs” to demonstrate simple philosophy. I am sure that noble Lords here are familiar with the story, so I will not tell it today, but when I tell it to young children I show them through the story that to build your life on solid foundation you need to work hard, to do a good job, to think ahead and analyse the situation—and never to give up. It all helps them to cope with life’s big bad wolf. The reaction I get is amazing. Children as young as five really get it and it shows how much teachers need external support from parents, as well as from visiting writers, artists and musicians.

That is why PSHE needs a place at the heart of the curriculum. Delivered creatively, it empowers children to have the moral courage to stand up for what is

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right; to learn to resist temptation; to say no to bullying, gang culture or drugs and alcohol; to have empathy for others, and to get a better understanding about morality, integrity and honesty. All this should be the foundation of every school’s philosophy, giving children the ability to make good long-term decisions in their relationships and lifestyles, which in turn they will pass on to their children. It is an indirect way of giving them the parenting skills that they might need one day. Schools need to be encouraged to make space in their timetables to offer these opportunities or to integrate them into their lessons—and to feel free and able to do so, not to be inhibited or feel pressured to do otherwise.

These may seem simple concepts but so many children have never had the opportunity to think in a philosophical way, to discuss moral issues or to project their imagination into the future and envisage what their lives may be like if they take a particular course of action. This is why we should seriously consider the teaching of life skills and encourage young children to explore basic philosophy.

Good teachers are so important in all this to help with the well-being and happiness of children, making them want to attend school. We as a society must demand this but we must also hold teachers in the highest regard. Parents and children must be aware that teachers deliver the special gift of education, which can change lives. The fantastic teachers I meet when I visit schools are aware of their responsibilities to every child in their care and that they must treat each one like a delicate piece of porcelain. However, we must continue to strengthen and develop the training of teachers and to continue to raise awareness, in all schools, of children who are in danger of slipping through the net for a variety of reasons. Holistic teacher training is most important, now more than ever.

Many children in our schools come from dysfunctional households, never having any family bonding or attachment, but play therapy can help emotionally damaged or abused children, as in the work done by the British Association of Play Therapists. I declare an interest as patron. However, many schools engage people who have taken a three or four-day part-time course in play work, believing that they are employing a play therapist, at a much lower salary than they would if employing a fully qualified play therapist. A fully qualified play therapist requires a post-graduate two-year course in play therapy plus one year for the MA. To safeguard vulnerable children and to make sure nothing is missed from the child’s play, therapy must and should be carried out by people who are highly trained and skilled in this work. I ask my noble friend to consider setting up a national register of play therapists and not just leave it up to local authorities or schools to engage play therapists who may not have the fully registered and necessary qualifications.

We are here to pay tribute to the tremendous work done in schools and to praise and encourage those who work there. No system is perfect, but as long as we all continue to work together to improve and adapt to the changes in society, we can ensure that our children are in good hands at school.

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3.24 pm

Lord Pendry: My Lords, I too begin by congratulating the noble Baroness, Lady Jones of Whitchurch, on introducing this timely debate. In October 2010, the Secretary of State for Education made a statement informing the Youth Sport Trust and others that the previous Government’s policy on physical education and sports strategy was to be abandoned and that the ring-fencing of that strategy was to end by March 2011. The excuse was that he wished to encourage more competitive sport in schools by removing many of the requirements of the previous strategy.

We know from those who, unlike the Secretary of State, are genuine lovers of sport and know about its benefits just how unpopular and illogical his approach was, so much so that, following pressure from teachers, parents, sportspeople and others, including Members of this House and the other place, he was forced to make a mini-U-turn in December 2010 when his department announced that every secondary school would receive funding up to the end of 2013 for one day a week of PE teachers’ time to be spent outside the classroom. Although this was welcome, his approach in October 2010 should never have been undertaken. It was evident that he was completely out of touch with the good work that has been carried out under the previous strategy of collaborative planning across schools, which was highly praised by Ofsted for improving the capacity of individual schools, quality sport provision and strengthening the pathways from school into community sports clubs.

Clearly one of those most affected by the Minister’s stance was, and still to some extent is, the Youth Sport Trust, which has done so much under the leadership of the noble Baroness, Lady Campbell of Loughborough, to ensure access to high-quality PE in schools and to provide for young people to be active and healthy. As it has pointed out to me, sport helps ensure that young people make healthy choices as they move into adulthood and provides a framework for aiding their mental development, improving their self-confidence and self-image and enhancing their attainment across the curriculum. It seems inconceivable to me and, I am sure, to other noble Lords that this Government and this particular Minister do not recognise the correlation between the provision of sport and combating many of the problems that face our society today.

In the time I have available, I wish to dwell on a sporting activity which is very relevant to this debate. However, it is not a sport that I excel in. Just two weeks ago, I met Kate Prince, the choreographer and founder of the ZooNation Dance Company and ZooNation Academy of Dance. She has done an extraordinary amount of work to engage young people in physical activity. The ZooNation Academy of Dance works with children as young as four years old to help them get engaged and inspired about dance, music and fitness. The academy, situated in Islington, brings together young people from many backgrounds and works with them to teach fitness, discipline, confidence and teamwork through street dance. Young people today have wide-ranging interests that we need to recognise if we want keep them engaged and motivated in sport and education. Kate’s

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experience shows that street dance is a very popular form of dance for many young people and a favourite way to keep fit.

It is a great shame that we are not using the wonderful vehicle of dance to engage more young people in sport while they are at school. A recent survey by the Women’s Sport and Fitness Foundation showed that only 12% of girls and 25% of boys aged 14 are doing as much physical activity as they should be in schools. Many of these young people said that the lack of options available in school sports turned them off doing physical activity, and many, girls in particular, would have preferred to have had less competitive PE options like dance.

I am increasingly concerned that no real consideration is being given to the availability of wider sport and fitness activities in schools, including dance. Kate’s experience and national statistics prove it. If we are to get children interested in sport at a young age, schools should give them more opportunity with a wider choice of activities and a more flexible approach. As Kate Prince told me, our duty is to educate children in the round—their entire body, not just their brain. Alongside academic subjects, that is essential. Activities like dance that are creative and physically demanding help children express themselves, feel part of the team and valued by their peers. Children of the ZooNation Academy get the chance to channel their energies towards a positive and exciting goal, rather than spending it on the streets causing trouble.

Today we must not forget that school sports should be built on more and more, and supported by appropriate extracurricular activities being available for our young people. The Education Select Committee looked at services for young people last year, and reported that 85% of young people’s waking hours are spent outside formal education, yet each year local authorities spend 55 times more on formal education than they do on providing services for young people outside the school day. With cuts affecting sports and youth clubs around the country, there is a real worry that young people will be deprived of active and fun things to do, both inside and outside their school.

I hope that the Minister will have learnt something from what has been said in today’s debate. I hope that he will be able to give us some encouraging news that the Government have learnt something over the past few years, following the misguided approach of the current Secretary of State for Education.

3.33 pm

Baroness Warnock: My Lords, in July 2011 the Office for National Statistics published a paper called Measuring Children and Young People’s Well-being, which showed that the belief that they were doing well at school was a crucial factor in the sense that children from the age of eight upwards have of the quality of their own lives. Given the many hours that children spend at school, as we well know, that is not in the least surprising.

I am sure that your Lordships will agree that a good school is a happy school. More than that, if, at the crucial age of 14, we could adapt the school curriculum more to the wants and ambitions of the children than

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we do at present, in the manner advocated by the noble Lord, Lord Baker, who is no longer in his place, we would find that far more children than do at present had the peculiar satisfaction of believing that they could succeed and the feeling that they were doing something that was worth doing. Nothing could be more central to personal and social well-being than that kind of sense of the worthwhileness of what you are doing. The Minister should give even more attention, and I am sure that he is, to the plans for changing schools and changing the direction of the curriculum at the age of 14.

I agree entirely with, among other people, the noble Baroness, Lady Benjamin, that the early stages of school are crucial. I ask the Minister whether the Government could not, even now, rethink the connections between the needs that children have at this age. I know that we have been promised an end to the concept of the statement of educational need by 2013. I know that the multiple assessments and long delays to which children are now subjected are to be replaced by a single assessment that will culminate in an education, health and care plan.

That holds some promise. But, in my view, it also points to something further, and I would be grateful if the Minister could tell me what he thinks of this. As long ago as 2006, the House of Commons Select Committee on education published a report that was highly critical of the present structure and framework of special educational needs and urged the then Government to start again and radically rethink the concept of special needs. More recently, in 2010, Ofsted reported on the inflated numbers of children who were classified as having special educational needs, suggesting that, for various reasons of self-interest, schools were wrongly so designating children, and sometimes masking incompetent teaching with claims of special educational needs among the pupils.

As a way to reverse this expensive and ultimately futile and damaging trend, I suggest that the idea of special educational needs, as opposed to other needs, should be dropped altogether—at least for nursery and primary school years. Instead, we should conceive of the duty of the school as to meet the needs of the child without distinction, by whatever means are available, through the skills and the training of teachers, the vigilance of the head and the governors, and, in general, the ethos developed within the school. After all, for very young children, every experience is educational. For children who are disadvantaged and, above all, for children who come to school with a poor vocabulary and poor communication skills, the most crucial need is that they should be enabled to develop these skills and thus to learn. Of course there will emerge—and probably will already have emerged—children whose special needs include specialised teaching of one kind or another, children who are perhaps profoundly and multiply disabled, and children who genuinely prove to be dyslexic. These children will emerge and can have specialised teaching. The rest of the children do not need to be scrutinised to see whether they have special educational needs. They have special needs. They need to be taught to communicate, to play, and to take part in dancing, music and drama. All these things are

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highly educational, but are absolutely crucial to the development of the child, and to his or her feeling that he or she can succeed. This is where the happiness that can be generated by a school really lies: the feeling that you are doing something at which you can succeed. The main task of the first years of education must be to enable children both to succeed and to learn to believe that they can. This is the basis of enjoyment.

The concept of SEN was introduced into legislation in 1981, more than 30 years ago. The inquiry that preceded the 1981 Act had been expressly forbidden to take any account of social deprivation in its consideration of what were then known as “handicapped children”. This is now practically unbelievable but it was the case. Therefore, the concept of educational need seemed to be the only way of grouping children together when they required something beyond what most teachers provided. We have come an enormously long way since those days.

It is time for us to change our attitude to the function of schools, and to put right at the front the function of making children believe that they can succeed. We should not designate them as having special educational needs unless they have some specific, sometimes very profound, difficulty that needs a different kind of education altogether—perhaps different teachers with different skills. We should change not only our attitude but our vocabulary accordingly. Therefore, I ask the Minister whether the Government will, after all, consider a fresh start in this area, which should be completely divorced from party politics.

3.41 pm

Baroness Warwick of Undercliffe: My Lords, I thank my noble friend Lady Jones for introducing this debate. As she so eloquently reminded us, children’s well-being matters not simply to ensure that they have a good childhood but because it provides a solid foundation for their future well-being as adults.

The Good Childhood Report, published earlier this year by the Children’s Society, makes the point that fortunately many children in the UK are happy with their lives. However, substantial numbers of children do not feel so positive. It says that at any given time around 4% of eight year-olds and 14% of 15 year-olds have low subjective well-being—the term used to describe people’s assessment of, or happiness with, their lives as a whole. The society points out that children who report low levels of happiness are much less likely to enjoy being at home with their family, to feel safe when they are with their friends, to look forward to going to school, to like the way they look, and to feel positive about their future. The evidence shows that a low level of subjective well-being is associated with a wide range of social and personal problems. These include poor mental health through increased depression, social isolation through increased loneliness and the likelihood of victimisation, and involvement in risky behaviours such as running away from home and sexual exploitation.

The Children’s Society report is part of a growing body of evidence about children’s well-being that is based on responses from children themselves. This was given greater impetus here in the UK by UNICEF’s

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2007 report, which placed the UK at the bottom of a league table of child well-being in 21 industrialised nations. Although there has been some progress, the UK remains within the lower rankings compared with other OECD countries. It hardly needs saying that education is core to this. All the studies show that learning is closely intertwined with well-being. The school environment, as a context of learning, plays an important role in children’s social, emotional and behavioural well-being.

This afternoon, I will focus on the contribution of schools to young people’s well-being at both the entry and exit points. Those are the nursery school years, or early years foundation stage, and the latter years of school life, as schools prepare their leavers for the next stage of their developing adult lives, including through careers advice or further academic study. I have spoken on the subject of early years education in this House before. It is very important that nursery schools are able to address each child’s individual developmental and cultural needs. I welcomed the Department for Education’s recently published document Supporting Families in the Foundation Years. It reminds us that the primary aim of these years is to promote a child’s physical, emotional, cognitive and social development so that all children have a fair chance to succeed at school and in later life.

Reforms to the early years foundation stage will take effect from September this year. I am glad that they pick up the recommendations made by Clare Tickell and others last year, and acknowledge the compelling evidence that high-quality early education is linked to children’s healthy progress through school and into adulthood. For example, studies show that nursery schools offer a secure environment in which children with special educational needs, or with English as an additional language, can flourish. A significant number of nursery schools are also children’s centres serving areas of social or economic deprivation. They therefore have a particular role to play in social inclusion.

However, nursery schools across the country are under threat due to cutbacks in council spending. Universal services are becoming more targeted. The loss of more early years’ grants will directly affect existing children’s centres. Further cuts threaten nursery classes within schools as nursery schools find it increasingly difficult to be financially viable within the LEA. What assurances can the Minister give that behind the welcome words about the importance of the reformed EYFS there will be clear directives to local authorities to raise the profile of nursery schools and to promote an understanding of their role?

A further point here is the importance of experienced, properly qualified staff. Work in early education and childcare is still widely seen as low status, low paid and low skilled. I therefore await with great interest Professor Cathy Nutbrown’s report on strengthening the early years’ workforce, which is due out this month. We must ensure that women and men enter the profession with the skills and experiences that they need to do the best work possible with young children and their families. What will the Minister do to encourage the promises made in the Supporting Families in the Foundation Years document to strengthen qualifications and career

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pathways in the foundation years? What assurances can he give us that there will indeed be continuing investment in graduate-level training in early education and childcare, and that early years education professionals will become a central part of the remit of the new Teaching Agency?

We can all agree with the Department for Education’s aim that children should start school healthy, happy, communicative, sociable, curious, active, and ready and equipped for the next phase of life and learning. The same aim should hold, of course, for when they leave school. Schools have a tremendous role to play in preparing young people in a whole range of areas as they enter the next stage of their lives. There is no doubt that advice and guidance on careers is needed. The latest statistics show that the number of 16 to 18 year-olds not in employment, education or training increased from 159,000 in the first quarter of 2011 to 183,000 in the same period this year. This means that the proportion of NEET 16 to 18 year-olds now stands at 9.8%, which is up from 8.3% from last year. Those are troubling statistics. We are in difficult economic times and the employment prospects for young people can seem bleak. It is all the more important, therefore, that schools are equipped to advise on the most appropriate next steps for each individual.

From this September, schools will have a statutory duty to provide independent, impartial careers guidance for pupils aged 14 to 16. While I do not think that that goes far enough, with no additional funding many schools will be unable to meet even this basic requirement. The Milburn recommendation to use the previous Connexions budget to allow schools to tender for careers services has not happened. What is more, the guidance was issued with little time for schools to commission careers services to start from this autumn. Will the Minister take steps to ensure that careers advice in schools does not miss the most disadvantaged pupils? Will he also give consideration to the call in the Milburn report to prioritise initiatives, such as a national mentoring scheme?

Schools also have an important role to play in giving accurate, up to date information on the diverse landscape of higher education. I believe passionately that a key part of a young person’s social and personal development can come through the life-enhancing experience of higher education, but they must have the right advice on their choice of A-level subjects and accurate information on the changing arrangements for student funding. There is little universities can do to counteract the impact of a student having studied the “wrong” A-levels for the degree course.

It is crucial that young people, particularly those from disadvantaged backgrounds and those with no family history of higher education, have access to first-class guidance about their options and on how to navigate the many choices offered by higher education. In conclusion, perhaps I may ask the Minister whether, if schools are to be charged with providing this, they will be given the means to do so. Without a ring-fenced budget, and without much clearer guidance to schools on what good careers guidance looks like and how to provide it, there is a real danger that the system will fail those who most need it.

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3.49 pm

Baroness Tyler of Enfield: My Lords, I, too, congratulate the noble Baroness, Lady Jones of Whitchurch, on securing this vital debate on a subject that is very close to my heart. It is in the nature of coming towards the end of a debate like this that so many things that I wanted to say have already been said, and said extremely eloquently, so I shall improvise a little and add one or two things that have not yet come up in the debate.

There is an increasing body of evidence that good emotional well-being is strongly associated with good educational attainment and improved employment prospects. More recently, a link has been shown between well-being and increased earnings potential. Of course, the reverse is also true. Drawing on my previous experience as chief executive of the charity Relate, I know very well from the work that we did in many schools across the country that when children and young people experience problems with relationships at home in the wake of a high-conflict family breakdown, it adds great difficulties to their ability to learn at school. That is one reason why high-quality relationship education for all is so critical.

There is so much that I would like to say, probably on another occasion, about sex and relationships education, or relationships and sex education, as I have always liked to call it, but I shall wait for another debate to discuss that in more detail.

On the whole issue of the importance of emotional well-being, it is little surprise that, as we know from James Wetz’s work and his visits to schools in the United States, the United States has explicitly devoted its efforts to turning out children with emotional well-being as well as academic achievement. We know from his work how those two have been so clearly linked, and how critical this has been for children in disadvantaged areas.

Closer to home, there are schools in the independent sector—we have already heard about this from the noble Baroness, Lady Massey—such as Wellington College, which has been a trailblazer for the principle of well-being and emotional resilience. It has done this by involving every aspect in their school of their ethos, design and teaching across the whole curriculum. It is not just a question of having a lesson called “emotional well-being” but about it running through absolutely everything that the school does—not least, as the principal would tell us, because it has helped to boost their academic results. If that is good enough for the independent sector, should such an approach not be good enough for the state sector? I very much believe that it should.

To try to bring in one slightly new angle to this debate, I wanted to mention the work that I have been involved in. I have been very privileged over the last year to be a member of the All-Party Parliamentary Group on Social Mobility. On 1 May we published our interim report, Seven Key Truths About Social Mobility. Truth number seven was that personal resilience and emotional well-being are quite often the missing link in the chain for social mobility. I shall try to explain what we meant there. We already know, from all the work that we did, that young people’s expectations,

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aspirations, feelings about their own abilities and whether they have the power to control what will happen in their lives and their sense of agency affects behaviour and decisions.

There is an emerging body of fascinating research in this field that points to the importance of young people developing the social and emotional skills that in turn give them the confidence, self-esteem, resilience, persistence and motivation to deal with the stresses, strains and set-backs of everyday life and still come through. This capability, sometimes called a character trait, is increasingly being linked in the academic literature with the ability to do well at school, move up the social ladder and take advantage of second and third chances. These social and emotional capabilities range from the softer end of the spectrum, if I can use that term—skills around empathy and the ability to make and maintain relationships—to the harder end of the spectrum, which is discipline, application, mental toughness, for which people sometimes use the term “grit”, delayed gratification and self-control.

In policy terms—and this is relevant to this debate—it is really interesting that these skills can be taught not just in early years at school but into adulthood, and that effective interventions in this area, where schools have a vital role to play, can make a real difference to educational attainment, employability and job success.

The American Nobel prize-winning economist James Heckman has also shown that there is a good economic case with good economic returns for investing early in this area, particularly for disadvantaged children. He concludes that identifying and scaling up these sorts of interventions in school and elsewhere is fertile territory for tackling disadvantage and improving social mobility. In case this should all sound too academic, or indeed from the other side of the pond, it is interesting to observe that developing psychological or emotional resilience and mental toughness is seen as a very important life skill by many educationalists here. Indeed, as one director of children’s services has put it recently:

“Not only can we, in many cases, enhance a young person’s performance, these particular skills are useful for just about everything that a person is going to have to do in life”.

We have already heard many facts and figures on mental health and the UNICEF report. We also heard some interesting things about the Office for National Statistic’s recent report, Measuring Children’s and Young People’s Well-being, which was published in 2011, not least that it assessed the impact of a child’s well-being on a parent’s well-being, and said that,

“a parent is only as happy as their saddest child”.

We have also heard about The Good ChildhoodReport published by the Children’s Society, which emphasised the value of asking children how they feel about their lives to help to understand the key ingredients of a good childhood. Many factors came out of that and we have heard about many of them in this debate, so I will not repeat them. However, what I think was most relevant to this debate was the consultation with children, which found that they saw school as vital to their well-being, both at present and in the future.

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What does all this add up to and what can schools do in this regard? I understand the argument that there is only so much that a school can do. At the very least it is absolutely vital that schools ensure that their staff understand signs of emotional and behavioural problems, and that there is someone in each school responsible for knowing what support is available from local services, be they in the statutory or voluntary sectors. It might be things such as increasing access to psychological therapy—I very much welcome its recent extension to children and young people—and ensuring that children can get linked in as quickly as possible. It is interesting to note that in both Wales and Northern Ireland but not in England there is a requirement for counselling services to be available in all secondary schools.

There is much that schools can do with universal approaches and targeted services. The experience in the USA and in private schools is particularly important. I very much look forward to hearing the Minister’s response on these issues.

3.57 pm

Lord Griffiths of Burry Port: My Lords, when drawn at No. 15 out of 15, you never know what is going to be left—perhaps items from the rich man’s table—but I will do my best.

I thought dark thoughts when the noble Baroness, Lady Miller, spoke about food and took my pitch from me. However, I hope that she will think that what I have to say complements what she said so strongly and well. I pay tribute to my noble friend Lady Jones of Whitchurch for pulling this debate out of the bag, especially given her background of the School Food Trust. I hope that I am entitled to add to what has already been said.

I was led to the subject of food because today I must be ultra organised in that I must go straight from the Chamber to a governors’ meeting at the Central Foundation School, where I have served in that capacity for a very long time. The May newsletter that we shall be looking at at the governors’ meeting concentrates on food, and therefore my subject was chosen for me. I was delighted to see that the newsletter states that detailed discussions between the school’s catering company, Alliance in Partnership, the school council and Islington Council have led to an improvement in the nutritional value of the school’s food, but that it has also smartened up the canteen so that it is a more agreeable environment within which to eat food. All of us know that when we choose a restaurant we want to go to a nice place with ambience as well as gastronomie.

The sort of menu that you now find in the school canteen in the basement of a Victorian building looks as though it might rival the Rivington Grill or L’Abat Jour—my favourite restaurants in my area. On offer are lamb meatballs in tomato sauce, Mediterranean vegetables with couscous, beef curry, vegetable balti, mango chicken baguette or wrap; for side dishes, country mixed vegetables, pasta, braised rice or side salad; and, for dessert, a fruit bag, home-based dessert selection or rhubarb crunch with custard. The mouth waters.

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The great thing about this is that it is not simply what is on offer when you go with your tray to the cafeteria; everything is integrated in a more generic approach to food, and that runs through the whole school curriculum. We offer food technology classes throughout years 7 to 9 in which students learn how to prepare healthy meals from scratch. Food technology has proved so popular that we also offer an after-school cooking club.

As though that were not enough, the school has tried out a student-run restaurant called The Globe. Hospitality diploma pupils were given another opportunity to wine and dine guests in their very own food establishment, this time named Central Cuisine. From luxury student-run restaurants to French food tasting, the Central Foundation offers a whole host of ways to keep students excited about healthy eating. Along with a variety of extracurricular sports activities and classes, there is something for everybody. And as though all that were not enough, who needs to write speeches when they are written so brilliantly for you in this way? Top tips—there are seven of them—on page three of the menu reads:

“Drink plenty of water. Take iron. Eat breakfast. Include protein-rich foods. Optimise Omega 3s. Boost energy. Destress with salad”.

It is all absolutely fantastic.

Far from this being an esoteric and rather marginal thing to talk about, we should be making more of good and healthy eating as the basis for a child’s sense of well-being at school so that they are well disposed to receive what happens in the classroom and have the strength to undertake what happens on the sports field afterwards. I should have said that I was talking about the Central Foundation Boys’ School. Therefore, even better, all these things challenge gender stereotyping as well.

Although she is not in her place now, I want to pick up on the intervention of my noble friend Lady King regarding whether the freed, autonomous and freestanding academies are under the same sort of pressure to give the same prominence to food in their general delivery or whether, as she suggested, up to a third have given it very low importance. I ask the Minister to give me some kind of satisfaction on that point but not to take too long on it as I have to get to the school governors’ meeting presently.

As a child in far-away Wales in a poor home where I did not eat any meat until I was 16, it was in 20th-century school canteens that I was fed all my protein through school meals. There was very tough meat. It was not called lamb then; it was called mutton and it was not very nice but, goodness me, it seems to have given me enough strength to stand up in your Lordships’ House and to go on at noble Lords in this way.

In conclusion, from that menu, for me it would be the beef curry with braised rice, and I think I will choose the rhubarb crunch with custard, although that may be slightly counterproductive.

4.05 pm

The Parliamentary Under-Secretary of State for Schools (Lord Hill of Oareford): My Lords, I am the 15th speaker and the noble Lord, Lord Griffiths of

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Burry Port was 14th because we had a no show, but it is always a great pleasure to speak after him. He has reminded me how long it is since lunch and how long we still have to wait until supper. I will try not to detain him or the House too long in responding to the important issues that the noble Baroness, Lady Jones of Whitchurch, has raised this afternoon.

I am sorry to disappoint the noble Baroness, Lady Morris of Yardley, but she will not find someone to disagree with her basic contention about the importance of the contribution that schools can make to the well-being and personal social needs of children. It has been an extremely good debate this afternoon, as is always the case. The noble Lord, Lord Pendry, said that he hoped that I would listen and learn from the debate; I always try to do that in your Lordships’ House. I always learn things when I come to the House and listen, whether it is about research that I had not heard of before or a range of other issues that provide food for thought along the lines referred to by the noble Lord, Lord Griffiths.

I very much agree about the contribution that schools can make and, as has been argued this afternoon, I think that schools do that in a variety of ways. They certainly do it through sport, for example The Government agree with the noble Lord, Lord Pendry. I know that we disagree about some of the mechanisms. I know what he has contributed in the past and of his disagreement on how we are now approaching it, but it is not the case that we do not value the importance of the contribution that sport makes not just to health and in tackling obesity. Those things are important, but it contributes in terms of character and learning about oneself. I agree with the noble Lord as well on the important contribution that competitive sport makes, but there are other ways, such as dance, for example. When I go around the country I am lucky to see the variety of ways that schools try to engage pupils in different physical activity. Often the boys do the dance as well. Contributions can be made through sport, music and diet, as we have already discussed, and as mentioned by my noble friend Lady Miller of Chilthorne Domer, and of course through PHSE, as once again set out by the noble Baroness, Lady Massey. They are all crucial in helping to improve well-being and in preparing young people for the world that they will discover when they leave school.

I agree with the point made early on by my noble friend Lady Walmsley about the importance of parenting. We cannot expect schools to pick up all the pieces. We expect a huge amount from schools and over the years they have become the repository of more and more of our concerns about social ills generally. We think, “Oh well, let’s get the schools to do it”. We must not expect them to pick up all the pieces but I recognise, as the noble Baroness, Lady Massey of Darwen, reminded us, the important contribution that they make and how many schools help to make up for some of the deficiencies that too many children suffer with the decline of parenting skills and family life.

I very much take the point about the importance of soft skills that employers are looking for and the question of character, which was first raised by the right reverend Prelate the Bishop of Chester. Character

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and resilience are in a way much the same thing. I agree with him about the contribution that church schools make to community cohesion, and it was important that he reminded us of that. We have heard of some of the many excellent examples of outstanding teaching and pastoral care that brilliant teachers provide up and down the country, including, as the noble Baroness, Lady Tyler of Enfield, reminded us, in the independent sector.

All that having been said, I emphasise what I believe to be the core contribution that schools can make to a child’s well-being: to provide a decent education. The noble Baroness, Lady Jones of Whitchurch, said that in a way the Government sometimes seem too fixated on exam performance. In reply, I say that without literacy there is not likely to be a huge amount of well-being; without numeracy there is not likely to be a huge amount of well-being; and without decent qualifications, whether academic or vocational, there is not likely to be much well-being either. I agree that it is not an either/or situation but the reason why the Government are so concerned about tackling educational underperformance, particularly in the most disadvantaged areas, is that we see it as being central to helping improve children’s life chances. That is a broad goal that will include their overall well-being.

To state the obvious—this point has already been made—a well run and orderly school with high aspirations for all its children will not just equip them with better qualifications but will help them meet their other personal and social needs. The best schools that I visit do not just do well at exams; they care about music, drama, sport, the quality of food that they offer and how the children socialise. That point was made by my noble friend Lady Benjamin. Taking up the point of the noble Lord, Lord Layard, the schools care about the happiness and well-being of their children. I agree with the noble Baroness, Lady Morris of Yardley, that they do not see qualifications and well-being as being polar opposites.

We know that there are schools in this country with very challenging intakes that outperform schools in much wealthier areas with much more favoured intakes. Cuckoo Hall school in Enfield and Thomas Jones primary school in North Kensington do not have an attainment gap. In both schools, exactly the same percentage of children eligible for free school meals as those from wealthier homes reach an acceptable level in English and maths—and in both cases the figure is 100%. Therefore, I do not think for a moment that there is a difference between us on the importance of the contribution that schools make to children’s well-being. However, I accept that there is a difference between us in how best we can achieve that. My noble friend Lady Walmsley made the point that there are different ways of going about things.

I will set out as quickly as I can the Government’s overall approach, and some of the practical steps that we have taken. First, we have the overriding goal of reducing the amount of prescription from the centre and the number of central initiatives. This is not because we do not think that any of the policy objectives of the sort that we have discussed today are desirable but because we are trying, bit by bit, to increase the space for head teachers to exercise their professional

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judgment. Going back in time, Governments of all complexions have tended to shove the system first one way and then another to try to fix a problem or pursue a policy. I have a lot of sympathy with the points made in this regard by the noble Lord, Lord Wills. While one can understand the rationale behind any of the individual initiatives, the cumulative effect over time was to silt up the system, leading to governing bodies and heads struggling with paperwork and directives, and being pulled in all kinds of different directions. The old Ofsted framework was an example. Inspectors reported on a minimum of 27 areas. By contrast, we want a system that is more independent and autonomous, where heads have greater space to do what they think is right for the children in their care.

Secondly, we have recognised the importance, on which there is broad agreement across the House, of intervening early and of making sure that those from poorer backgrounds get more help. We are extending the 15 hours a week of free early education for three and four year-olds to the most disadvantaged two year-olds. We are keen for practitioners to intervene earlier with children who face difficulties. That is why we are introducing a new progress check for two year-olds under the new early years foundation stage, which was referred to by the noble Baroness, Lady Warwick. Our longer-term ambition is to introduce a fully integrated health and early years review in 2015.

We have introduced the pupil premium and are providing £1.25 billion for it this year. In answer to my noble friend Lady Walmsley, certainly the premium can be used to improve pupils’ well-being. That is precisely the kind of use to which we would want schools to put it. They should use their judgment on how best to spend the money; that is one of the principles that we are applying. We are publishing what-works evidence for schools to give them a sense of what works successfully in some areas.

As I said, we are working to raise standards of literacy and numeracy, which are the key skills that children need to succeed. From this summer our new check at age six will help make sure that children are making progress and will pick up those who have problems—for example, with dyslexia. We will get children learning poetry. I agree with noble Lords who think that this will enrich children’s learning rather than being a return to the narrow educational approach of the workhouse.

We are trying to slim down the national curriculum specifically to free up more time for the kind of activities that we have been discussing today. I agree with the point made by a couple of noble Lords about the importance of creativity in teaching. I would not argue that there is only one approach to pedagogy; we need creativity in teaching and I hope that one of the benefits of slimming down the national curriculum generally will be to free up more space for creativity.

We have spoken about the importance of an orderly environment in which children can learn and are free from bullying. A bullied and frightened child cannot learn and cannot be happy. We have introduced a number of measures to help schools provide a safe and secure environment. Some came in with the Education Act which a number of us debated last year. We are taking forward trials to improve the education of

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pupils who are at risk of exclusion from school. We have not talked today about that group of children that we want to help. It is important to remember that for those children who end up being excluded, the conveyor belt from educational failure to exclusion to, unfortunately, prison is too direct and horrible. It is important that we should try to break some of the links. The exclusion trials we are now taking forward are based on some good work that local authorities in Cambridgeshire have been doing where, by giving schools greater responsibility for their pupils, the number of pupils in their pupil referral units fell from 700 to 150 in only a couple of years. We can learn from that.

We are also taking action to improve the opportunities and well-being of our most vulnerable children and their families, those with special educational needs, through the Children and Families Bill, to which the noble Baroness, Lady Warnock, referred. I shall make sure that the views she expressed will be referred to my honourable friend Sarah Teather. She is in the lead in this area and her views always carry great weight. We are trying to give those children and their families more of a say and more of a choice, and to bring their health and educational needs together in a more co-ordinated way. If we can achieve that, we will have made a good contribution to the well-being of some of the most vulnerable children in the country.

As we want an education system that responds to the needs of all children, we are also working to improve the quality of vocational education alongside our efforts to secure academic rigour. I accept that sometimes it sounds as though we are only concerned about the academic side and qualifications, but that is a consequence, in some ways, of the nature of politics and how the media operate. However, the work we are doing in that area, the work that we have done with the Wolf review, the work we are doing to expand a couple of initiatives undertaken by the previous Government— university technical colleges and studio schools, of which I am a great supporter and trying to expand as rapidly as is sensible—and the increasing number of apprenticeships are all signs of our intent to cater for children who have a broad range of talents and aptitudes. We are also working to bring the worlds of work and education closer together.

We are also taking action outside the classroom to address some of the issues that we have touched on today. These include action on child sexual exploitation, the Bailey review, steps to speed up adoption, more support for troubled families and the introduction of the National Citizen Service, which will build up to 90,000 places a year, as a way of giving young people a chance to contribute more broadly to society.

That is a quick canter through some of the broad measures we are taking and I hope that it counters to some extent the picture that is sometimes painted of the Government as being interested in schools only as exam factories. I do not accept that that is an accurate picture of the aims and ambitions of the Government. I hope that some of the examples of the steps that we are taking across the piece will help to counter that.

I turn to some of the specific issues that were raised, and if I fail to pick up on all of them, which undoubtedly I will in the time available to me, I will follow them up. The noble Lord, Lord Wills, talked

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about the transition from key stage 2 to key stage 3, which I agree is important. It is an aspect that we are considering as part of the national curriculum review. Obviously, PSHE was a theme that we came back to repeatedly. The review, which is continuing, is looking at the kind of research we heard about this afternoon, as well as the kind of evidence that the noble Lord, Lord Layard, brought to our attention. That consultation is going on and, as the noble Baroness, Lady Massey, knows, the review is being tied in with the broader national curriculum review that is under way. We are trying to bring the two together, but until we have done the second bit I am not able to go any further on the first bit.

An important point was raised by my noble friend Lady Miller about universal credit and eligibility for free school meals. It is certainly the case that the intention behind the reforms to universal credit is not to reduce eligibility for free school meals, so we will work closely with the Department for Work and Pensions to make sure that in the definition, the priority for families with free school meals is maintained. We have talked about dance.

Important points were raised by the noble Baroness, Lady Warwick of Undercliffe, about early years. A number of her points are being considered by the Nutbrown review, and the report is due. Ten early years teaching centres are being funded to deliver professional development and leadership support to foundation years providers in their areas, but if there are some more detailed points I can follow up in order to update the noble Baroness on where we are on that, I will do so afterwards.

My noble friend Lady Tyler of Enfield talked about the importance of being able to spot mental health problems and general emotional and behaviour problems. I agree with her, and we are sharpening the focus on special educational needs in qualified teacher status. We have increased the number of placements for trainee teachers in special schools, up from 400 last year to 900 this year. We have provided funding for an additional 1,000 SENCO places this year. It is an important area and we will persevere with it.

Another important point that was raised concerned careers. I agree that it is important to provide good careers advice. As noble Lords know, one of the changes we made in the Education Act last year was to devolve that responsibility to schools, who we think know their pupils. I agree with the point that was made about the most disadvantaged. The statutory guidance we have issued makes it clear that schools should consider particularly the needs of their disadvantaged pupils in the guidance they give.

I agree strongly with the proposition that schools should educate the whole child. I also agree strongly that education is more than about learning facts and accumulating qualifications. It is about preparing children for the rest of their lives. As the noble Lord, Lord Layard, said, it is about inculcating a love of learning. But at the heart of that is the core task of equipping children well with the basic building blocks of education. We know of the terrible progression whereby illiteracy leads to so many other social ills. That is why the

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Government are so intent on raising educational standards, particularly in disadvantaged areas. I believe that if we can do that, it will make it much easier for us to achieve all the other desirable ends that noble Lords have discussed today and which I know we are all keen to achieve.

4.24 pm

Baroness Jones of Whitchurch: My Lords, I do not intend to detain the House much further. As has been said, we have had excellent contributions from around the Chamber, although I am sorry that the Minister was so unsupported by contributions from his own Back Benches.

As expected, the Minister has made a sterling effort to defend the Government’s record and intent. However, I fundamentally agree with my noble friend Lady Morris, who argued very wisely that it is easy to make reassuring noises about the Government’s intent but the lack of structure on which to hang the policies, and the lack of Ministers vocally championing some of these issues, is sending signals to schools that some of these issues are not really valued. Perhaps the Minister could take that message back.

Ultimately, we are arguing about the balance between well-being and educational attainment. We have a slightly different sense of that balance from the Government; we disagree on it and over the months to come we will continue to try to persuade the Government that they have got that wrong.

In a more positive spirit of cross-party co-operation, I will very happily volunteer to join forces with the noble Baroness, Lady Miller, to campaign for free school meals for all primary schoolchildren, and I can see a campaign developing from that.

I thank all noble Lords for their contributions from around the Chamber. This debate will be ongoing.

Motion agreed.

Banking Reform


4.26 pm

The Commercial Secretary to the Treasury (Lord Sassoon): My Lords, I refer the House to the Statement on banking reform made in another place by my honourable friend the Financial Secretary to the Treasury, copies of which have been made available in the Printed Paper Office and the text of which will be printed in full in the Official Report.

The following Statement was made earlier in the House of Commons.

“Mr Speaker, the financial crisis exposed a great many flaws in the system. Banks borrowed too much, took risks they did not understand and bought securities that proved to be far from secure. Banking groups became too complex and interconnected to be managed effectively, regulators failed to identify the risks, and taxpayers paid the price. Between October 2008 and December 2010, European taxpayers provided almost €300 billion to prop up their banks, with

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liquidity and lending support in the trillions. In the UK, the bailout of RBS was the biggest banking bailout in the world.

Just as the crisis revealed many flaws, there is no single solution. This Government are reforming the substance and structure of the financial architecture, putting the Bank of England in charge of prudential regulation. We have created the Financial Policy Committee to look at risks across the financial system. Our permanent bank levy penalises short-term wholesale funding, and we have introduced the toughest and most transparent pay regime of any major financial centre in the world. We have worked with our international partners to deliver robust, consistent standards on prudential standards for banks and markets.

The White Paper we are publishing today sets out how we will implement the recommendations of the Independent Commission on Banking. These reforms form a key part of this Government’s broader programme of reform. In the same way that the action we have taken on the deficit has meant that UK debt is currently seen as a ‘safe haven’ asset by investors around the world, we will ensure that British banks are resilient, stable and competitive, and so attractive to investors at home and abroad.

The eurozone crisis makes reform more, not less, important. The link between the strength of a country’s banking sector and its own stability could not be clearer. At the same time, our proposals reflect progress that has been made in European and international regulation since December. The Government welcome the European Commission’s recovery and resolution directive, which will improve member states’ ability to resolve cross-border banks without imposing costs on taxpayers. This Government will continue to press for full implementation of Basel III in Europe.

The goals of today’s White Paper are clear. First, since future financial crises rarely repeat the pattern of the past, we must make banks more resilient to shocks. Secondly, we must make our banks more resolvable so that, if they fail, they do not threaten the provision of vital services to the real economy. Seeing through these two goals will achieve our third: to curb risk-taking in financial markets. It must be clear that investors reap rewards when banks do well but take the pain if banks fail.

The Government will ring-fence retail deposits from the risks posed by international wholesale and investment banking. A ring-fenced bank will be economically and legally separate from the rest of its group, and run by an independent board. The ring-fence will not stop a bank failing, but it will insulate the deposits of families and businesses and, if a bank does fail, these essential parts of the banking system can continue without recourse to the taxpayer. The deposits of individuals and their overdrafts, and the deposits and overdrafts of small and medium-sized businesses, will in general be placed in ring-fenced banks.

To minimise the risks that the ring-fenced bank is exposed to, it will be prohibited from conducting the vast majority of international wholesale and investment banking. It will not be permitted to carry out activities through branches or subsidiaries outside the EEA, nor, except in limited circumstances, with financial

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institutions. Beyond this, and within certain constraints, firms may decide what to put inside the ring-fence. Ring-fencing provides customers with flexibility, but not at the cost of financial stability. The Government propose to strengthen the ICB’s recommendations by applying strict controls on the use of derivatives that a ring-fenced bank uses to hedge its own balance sheet. This will ensure that a ring-fenced bank does not take excessive risks when managing its own risks, as was the case in JP Morgan’s recent much publicised trading loss.

Governance of the ring-fenced bank will be important. The Government propose to strengthen the ICB recommendations in this area, establishing separate risk and possibly remuneration committees. But it is important to focus these reforms where they have the biggest impact; that is, on the biggest, “too big to fail” banks. So the Government propose that smaller banks, with below £25 billion of mandated deposits, be exempt from these requirements. Large, systemically important banks have a competitive advantage from the perceived implicit guarantee. Our targeted reforms remove that advantage, helping smaller banks and new entrants.

One of the clearest lessons from the crisis is that investors and creditors—not taxpayers—should bear the costs of failure. That is why we have supported Basel III, which increases banks’ capital requirements to 7%, with a top-up for systemically important banks, and we have pressed for it to be implemented across Europe. But to protect taxpayers, this Government will go further. The largest UK ring-fenced banks should hold an additional 3% of equity on top of the Basel III minimum standards.

The Government also strongly endorse the introduction of a binding minimum leverage ratio. The White Paper supports the Basel proposal of a 3% leverage ratio for all banks, including UK ring-fenced banks, and will continue to press for the implementation of the Basel standard through EU law. Large ring-fenced banks should hold a minimum amount of loss-absorbing capacity—made up of equity or debt—of 17% of risk-weighted assets. Their overseas operations should be exempt from this requirement unless they pose a risk to financial stability. For smaller UK banks, as the ICB recommends, the minimum requirements should be lower.

To deliver these proposals, the authorities need a way to “bail in” bank liabilities so that bondholders, not taxpayers, bear the losses. The Government will work with European partners to ensure that the ICB’s recommendations on bail-in are credibly and consistently applied across Europe, through the recovery and resolution directive. This Government intend to introduce the principle of depositor preference for insured deposits. Unsecured lenders to banks are better placed to monitor the risks that banks are taking on and they should take losses ahead of ordinary depositors.

Our proposals on financial stability also improve competition in UK banking. The implicit guarantee to large banks distorts competition; its reduction will help create a level playing field. But the Government want to do more to encourage new entrants and promote competition. We will shortly issue a consultation on reform to the payments system.

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I welcome the reviews by the Bank of England and the FSA of the prudential and conduct requirements for new entrants to ensure that they are appropriate, not disproportionate. The Government strongly support the need for a strong challenger bank to emerge from the Lloyds Banking Group divestment, and are engaging with Lloyds and the European Commission to ensure that the divestment creates as strong a challenger as possible. A more competitive market will only work if customers are prepared to change banks.

The Government are pleased with the progress on the industry-led initiative to make current account switching faster and easier for customers. Providers covering 97% of the current account market have signed up and the scheme is on track to be launched next September. But to switch, customers need better information, so the Government welcome the fact that the OFT and FCA will take forward the ICB’s recommendation to improve transparency across all retail banking products. Work is already under way on a number of projects, such as making account data available to customers electronically to enable them to shop around.

Financial stability is a prerequisite for growth. Our analysis suggests that the proposals in the White Paper will cost, in GDP terms, in the region of £0.6 billion to £1.4 billion per annum—compare that to the estimate that the 2007-09 crisis has already cost the UK economy £140 billion, 100 times the maximum cost estimate. So these proposals, while ambitious in scale, are proportionate in impact. They will promote financial stability while supporting sustainable growth and maintaining the UK’s role as the world’s leading international financial centre.

The reforms we are announcing today, together with the changes we are making to the regulatory architecture, demonstrate that the Government are determined to take action to deliver a stable and sustainable banking system that underpins, rather than undermines, economic growth”.

4.26 pm

Lord Eatwell: My Lords, having read the Statement, I am most grateful to the noble Lord for not repeating it. He has rescued the House from some tedium. However, I am concerned that the new procedures are having the unintended consequence of shielding the Minister from embarrassment, particularly the embarrassment of having watered down the Vickers proposals, and from a number of serious ambiguities in the Statement. I have not had the opportunity to read the White Paper. I hope it will provide a better vision of the future of UK banking than does the Statement.

We on this side of the House welcomed the Vickers report as a positive step along the road to making Britain’s retail banking system safer, in particular protecting households and small and medium-sized firms from the instability that, as we have seen to our cost, may well be generated in wholesale financial markets, by banks’ proprietary trading and by the complex interconnections that characterise today’s global banking.

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The Statement suggests that one of the Government’s goals is,

“to curb risk-taking in financial markets”.

Can the Minister elaborate a little on this? As many have commented, a financial market without risk is the market of the grave. If Britain is ever to return to boisterous growth—something which under this coalition must be in increasingly serious doubt—financial institutions will need to take risks. Indeed, the expansion of credit is vital to recovery.

How does the Treasury intend to monitor the risk that is generated within the ring-fence system? What is the Treasury’s definition of “acceptable” levels of risk? What is the Treasury’s estimate of the impact of these measures on the supply of credit to households and to small and medium-sized firms? For example, what will be the impact on the supply of credit of the severe limitations on wholesale funding of the balance sheet, given the important role that wholesale funding has played in the British banking system over the past decade? What will be the impact of the new leverage collar on the supply of credit? All these issues refer directly to the ability of British industry to receive the funding that it needs for recovery.

What is the Government’s intention with respect to the substantial flow of liquidity into the UK economy from the Crown dependencies? Since large companies will be outside the ring-fence and the failure of those companies would impose unacceptable costs on the UK economy, is it not clear that the Government’s proposal has failed to deal with the issue of “too big to fail”? How would the Government deal with the failure of a non-ring-fenced bank that imposed destructive instability on large UK companies?

The Statement also reads:

“The deposits of individuals and their overdrafts, and the deposits and overdrafts of small and medium-sized businesses will, in general, be placed in ring-fenced banks”.

How can the Government be sure of this? What compels a saver to commit their savings to ring-fenced banks if those banks offer a lower rate of return than non-ring-fenced operations? Are the Government simply planning to force UK households to accept lower rates of return to secure the stability of institutions within the ring-fence?

The Statement also declares that,

“within certain constraints, firms may decide what to put inside the ring-fence”.

I presume, therefore, that they may decide what to put outside. What do the Government have in mind here? Why are they abdicating their responsibility to determine the boundary of the ring-fence?

We are told that the Government have decided that ring-fenced banks should be required to hold 10% capital against risk-weighted assets. Whence do the Government derive the belief that moving to a 10% capital-to-risk-weighted asset ratio will provide the resilience that the banking sector requires to head off a serious crisis? This belief is without empirical foundation. A little investigation would reveal that Allied Irish Bank, the collapse of which devastated the Irish economy, always had a capital-to risk-weighted asset that was higher than that which the Government now propose as the basis of security of ring-fenced banks.

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More generally, it is well known that the outcome of regulatory actions—that they stimulate a creative response from the banks, creative in the sense that they work out ways to circumvent or evade the regulations—reduces the impact of regulatory innovation over time. How do the Government intend to keep the operations of the ring-fence under review? Would it not be appropriate to keep the Independent Commission on Banking in being and charge it with the task of reviewing regularly the performance of the ring-fence? Why not ask Sir John Vickers and his team to return to the issue—let us say—12 months after the ring-fence has been introduced?

What is to be done on the timing of this legislation? We have before the House a Financial Services Bill the structure of which, as has been recognised by the Government and throughout the House, is seriously deficient. Would it not be better for the Government to withdraw that Bill, go back and rewrite it in a way which corrects its deficiencies, and incorporate the new measures from the Vickers report and the White Paper in that revised Bill? The House would then have the opportunity of assessing in its entirety the new framework for financial services in this country, rather than this hotchpotch of measures being introduced one after the other without clarity as to the way in which they relate to one another.

4.33 pm

Lord Sassoon: My Lords, I am sorry that the noble Lord, Lord Eatwell, has not yet had a chance to read the very detailed White Paper because, when he does, he will see that a lot of his detailed questions have been addressed.

I find it disappointing that the noble Lord comes here and takes such a picky attitude towards this fundamentally important reform being introduced by the Government. The previous Government had two years in which to act on the collapse of Northern Rock and then on the failures of RBS and Lloyds and did absolutely nothing about them. Did it not occur to them that there might be a problem with the structure of banking in this country? It seems not. For two years, they sat on their hands, asked no questions and did nothing. When this Government came into office, we established within weeks the Independent Commission on Banking under the chairmanship of Sir John Vickers. It has come up with a very fine report to government. We have considered it very carefully and have published our final response today. What we have before us is one of the most radical reforms of banking that I suggest the world has ever seen.

Why have we done that? We have done that because we face in this country something which my right honourable friend the Chancellor has characterised as the British dilemma: how do we continue to host a world-class financial services sector, a sector in which our banks are able to go out to compete vigorously, as they do, around the world with the best and biggest that the rest of the world has, without putting the UK taxpayer at excessive risk? That is what is encapsulated by our response to the Vickers commission, a response that picks up the essence of what Vickers recommended but which interprets it in a way that is appropriate,

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flexible, forward-looking and balances those key interests of ensuring that we have a world-class but safe banking system.

The noble Lord, Lord Eatwell, talked about risk-taking in the financial markets. The critical thing is that we want to make sure that the parts of the banks within the ring-fence, the parts of the banks in which the savings of the men, women and children of this country go, are properly ring-fenced and protected—the parts of the banks which service the SMEs of this country. We want to ensure that there is not inappropriate risk-taking within that ring-fence. The noble Lord asked how that is to be monitored. It is not for Her Majesty’s Treasury to monitor it; it will be up to the Financial Policy Committee to look at the system as a whole—as it already is in interim form—and it will be for the Prudential Regulation Authority, under the Bank of England, to supervise individual firms in future.

The noble Lord then talked about curbs on growth. That area is very important, because the flow of credit must go on, particularly at this time of challenge in the economy. That is precisely one reason why Sir John Vickers and the commission recommended that the implementation of the recommendations should be concluded by 2019, a recommendation that we have accepted. The numbers are set out in the document, but I suggest that the costs of implementation over that period and beyond on a running basis are very modest in relation to both the cost of the banking crisis over which the previous Government presided and the size of the UK economy.

The noble Lord then referred to the flow of funds in from Crown dependencies. He is clearly an expert on this subject. I believe that he is on the regulatory body of the States of Jersey. I am aware, as he is, that significant deposits flow from that and other Crown dependencies into the UK wholesale markets. That plays an important part of the funding of the wholesale markets and should continue.

The noble Lord, Lord Eatwell, then asked: what compels a saver to deposit his or her money in a ring-fenced bank? The fact is that 87%, or thereabouts, of deposits in the banking system at the moment are within banks that will be subject to the ring-fence. It is highly implausible to suggest that it would be wrong to protect 90% of the deposits of the British public but not to say that there are other places that are not ring-fenced that are accessible. What the noble Lord presents is not a realistic picture. Sir John Vickers and his commission raised the question of a de minimis limit and we set a limit that the ring-fence should not operate for banks with deposits below £25 billion. I suggest to the noble Lord that one thing on which we might agree is that we need more diversity, more competition and more new entrants in the banking sector. It is entirely appropriate, we believe, that the ring-fence should operate for only the biggest of our banks—those which account for some 90% of deposits.

The noble Lord then asked a number of technical questions about the way that the ring-fence will operate. I refer him to the details in the White Paper. If he has further questions that it does not answer, I should of course be happy to write on any supplementary questions that he may put, but there is a very full analysis there.

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As to the capital ratios proposed here, the noble Lord talked about the Government proposing them but of course what analysis there was underpinning them was all the ICB’s analysis. The Government have done one thing in this area today, which is to put out a 3% rather than a 4% ratio against total unweighted assets. That is to create a level playing field with what is proposed in Europe. We want this measure to be not a front-stop but a back-stop, in line with what the ICB proposed, and we want to make sure that our banks have every opportunity to compete on a level playing field.

The noble Lord then asked whether we should ask the ICB to return to the operation of the ring-fence by keeping it under review and coming back to it one year after it comes into operation. Given that the implementation date is set by Sir John Vickers at 2019, it might be a little unreasonable to Sir John and his commission, who have done tremendous work on this, to keep them on the hook until 2020, or later, to ask them to come back to these issues. I am sure that there will be other ways of looking at the impact of these measures in due course.

Lastly, the noble Lord asked whether we should put these measures into one Bill with those in the Financial Services Bill, which is already before your Lordships’ House. This is to misunderstand the different nature of what is being addressed here. On the one hand, the Financial Services Bill deals with the structure of regulation and, on the other, the measures that we are talking about today relate to the structure of banking. I accept of course that the two things taken together are the measures that, combined, will make sure that this country has a world-class financial services sector and will not put UK taxpayers excessively at risk. However, they are two sets of distinct measures. Your Lordships will now have them in front of them so that they, can read across from one to another, but any suggestion of delaying the legislative process, which the noble Lord and others have constantly urged us to get on with, would be wholly inappropriate.

Lord Eatwell: Before the noble Lord sits down, I would like to press him on a question on which I am genuinely puzzled. The Statement refers to the idea that UK households will place their deposits in ring-fenced banks. Why should they do that if the rate of return is higher on non-ring-fenced banks than it is on ring-fenced banks, and why should not an innovative financial sector create devices whereby households can take advantage of a higher rate of return in non-ring-fenced financial institutions? We are not planning—or are we?—to reintroduce Regulation Q as it was in the United States, where there was a limitation on the return that households could receive on their deposits to force those deposits into the commercial banking system.

Lord Sassoon: My Lords, at the moment depositors have freedom as to where they place their deposits. It is certainly not the case that the vast majority of deposits go to the outliers, as there always are, in offering returns. When it comes to the future arrangements, I would anticipate that the vast majority of deposits

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will stay where they are. For better or worse, that is the system with a number of very large incumbent banks, which will all be ring-fenced. It will be very clear to people what the difference is between ring-fenced and non-ring-fenced banks. The Statement made by my right honourable friend was merely a clear statement of observed behaviour and likely behaviour into the future—not a Statement saying that people “must” or “are compelled to”, or that they do not have any choice. Of course they will have choice, but 90% of the deposits are where they are today and I anticipate that that is not somehow going to be magically changed overnight.

4.45 pm

Lord Bilimoria: My Lords, building on what the noble Lord, Lord Eatwell, has just said, if we look back at the financial crisis, the FSA was asleep on the job, and that is being addressed by the Financial Services Bill. There is no question about that. The organisations that have got away scot free in the banking reform and the Financial Services Bill are the credit rating agencies, which were so much to blame globally for the crisis, the credit crunch and the great recession. Will the Minister address that point? Secondly, does he agree that it is surely a question of balance? Have we got the balance right with the banking reforms? There is no question that the good point about the big bang is that it opened up the economy, but the negative is that it is probably too open and not regulated enough. Are we going too far here? Quite frankly, this looks like Groundhog Day to me. We have been here before in 1933 with the Glass-Steagall Act. What lessons have been learnt from that? Have we not learnt?

Lord Sassoon: The noble Lord, Lord Bilimoria, makes a very good point about the credit rating agencies. The Bill is about the structure of banking. Credit rating agency regulation is now essentially in the hands of the European Commission. The appropriate sub-committee of your Lordships’ European Union Committee produced an excellent report, which we debated recently, on this subject. Yes, we must keep the subject of credit ratings under discussion, but the competence is not primarily here, and it is not the subject of the Statement we are addressing.

On the lessons of history, Glass-Steagall and so on, this is a different model from the Glass-Steagall model and from the model that the US is implementing at the moment. The commission talked to a very wide range of people and, I am sure, studied the history very carefully. In the knowledge of the current and historical international precedents, that was its fundamental judgment about the high but flexible ring-fence. I believe it has come up with something that takes all those lessons on board, is appropriate for what we need now and is not going to impact significantly on the necessary driver for growth in this country, which is keeping credit flowing this year, next year and the year after.

Baroness Kramer: It is with real pleasure that I welcome the White Paper and the Statement by the Minister. He will be aware that my colleagues in both

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Houses, especially Vince Cable, have long called for the structural separation of vanilla banking from more speculative investment banking. We look at Vickers and the White Paper as a very acceptable and effective compromise. As a result of its structural nature, ring-fencing has far more possibility of resisting erosion over the years as the masters of the universe regain their confidence and begin to attempt to transfer risk back to the taxpayer.

The Minister mentioned the Government’s decision to stick with the 2019 timetable. Is that a really robust measure? He will have heard some of the major banks trying to put a bit of pressure on this. A long-grass strategy is clearly under consideration by those who are resistant to these changes.

I see no reason why the Financial Services Bill should be held up to make way for legislation that comes from this White Paper, but will the Minister and his team take a look to make sure that what is likely to flow from this can find a framework and that there will be genuine capacity within the Financial Services Bill? He will know that I am particularly taken with the section in the White Paper called “A More Diverse Banking Sector”. I am delighted to see that and the whole competition area in the White Paper emphasised so strongly. Will he make sure that the capacity for that exists comfortably within the Financial Services Bill when it leaves this House?

Lord Sassoon: I am grateful—

Lord Rees-Mogg: My Lords—

Lord Sassoon: Perhaps I might answer my noble friend first. I am grateful to her for welcoming these next steps as we implement Vickers. On the questions about timetabling, we are firm not only on implementation by 2019 but on sticking to our commitment to completing the passage of the legislation in this Parliament, which allows for time for pre-legislative scrutiny this autumn and a proper and full process. On her point about whether we have thought about the read-across to the Financial Services Bill, we have done so—for example, we have picked up the Vickers recommendation about the FCA having a competition objective, and that is already drafted in the Financial Services Bill. There will be other important elements, such as account-switching, that will come in from September 2013. Everything fits together. I appreciate her recognition that a more diverse banking sector has also been thought about; it is a very important element of this.

Lord Tugendhat: My Lords, I welcome the Statement and I congratulate the Government on the speed at which they are moving. I have one question: where one part of a bank is within the ring-fence and one part is outside, does the White Paper say anything about auditing? Would one expect there to be the same auditors for both parts of the bank, or would they expect to have different auditors? Does the White Paper take a view on that?

Lord Sassoon: As far as I am aware, there is no prohibition or restriction on the use of auditors. I am pretty sure that the audit position is not addressed, but if I am wrong about that I will write to the noble Lord.

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Lord Rees-Mogg: My Lords—

Baroness Northover: My Lords, to be fair, it is actually the turn of the Labour Benches. If they are happy, then we will hear from the Cross Benches first before hearing from the Labour Benches. I think that the noble Lords have given way.

Lord Rees-Mogg: We were just brewing up to have a very satisfactory little argument about the Glass-Steagall Act. The important thing about it is how long it lasted; it was passed by the Senate in the 1930s and ultimately repealed by President Carter, who had been persuaded to do so by Wall Street. Its great virtue was that it identified more clearly than previous legislation, and more clearly than most subsequent legislation, the difference between retail bankers and what you could call casino bankers, and put different responsibilities on them. That protection worked. If one went, as I did, to Wall Street in the 1950s, one found that Wall Street had come to the conclusion that it was not going to have another slump, primarily because of that Act but also because of the wartime Bretton Woods agreement, which was masterminded by our very own Maynard Keynes. This is a consistent fruit. The set of ideas that were developed in response to the crisis of the early 1930s worked their way through the financial body and the intellectual body, and gave us what we are now looking for—a restabilisation of our own economy in its own terms.

Lord Sassoon: The noble Lord, Lord Rees-Mogg, of course speaks with great authority on these matters. All I do is to say that I listen with great interest to his historical analysis.

Lord Desai: My Lords, before we had the report from Sir John Vickers at the commission, there was talk of living wills that banks would make. Whatever happens, we are now to make quite sure that the taxpayer does not once again have to bail banks out. While it is all right to have ring-fencing and so on, we have to remember that Northern Rock was not a bank with investment banking divisions. It was a bank which failed purely because of misbehaviour. Are we sure that, whatever happens, if even a ring-fenced bank fails it will not be rescued by the taxpayer?

Lord Sassoon: The noble Lord, Lord Desai, as always, brings up important points. Of course, living wills are an integral part of the whole construct for better resolution of banks than we had before. Indeed, the FSA has been leading the project for a couple of years or more to make sure that all the arrangements are in place. The noble Lord draws attention to another important part of the construct.

Lord Bates: But can my noble friend confirm that the banking crisis actually cost the taxpayer, in direct cash, loans and guarantees, close to £500 billion—£465 billion pounds? Therefore, it behoves the Government to take some action to protect savers and the interests of the taxpayer in this regard. The introduction of the leveraging ratio is therefore welcome, particularly as it follows international norms rather than putting our industry at a competitive disadvantage.

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I have one small, technical point. The Minister has an incredible grasp of the detail, but does my noble friend have understanding of whether there will be any implications of introducing that leverage ratio for the Government’s holdings in Lloyds Banking Group and RBS?

Lord Sassoon: I am grateful to my noble friend for pointing out the extraordinary cost of the banking crisis. He cites one figure; I think that the estimates ranged from £140 billion upwards. They are extraordinary figures, which, as I said at the outset, the then Government did not seem to think required any response. I completely agree with my noble friend Lord Bates that something needed to be done, and that is what we have brought forward.

As for the effect on the Government’s holdings in RBS and Lloyds, I am sure that your Lordships like reading, as I do, the fine detail of impact assessments. At the back of the White Paper, the impact assessment contains several paragraphs analysing the effect. It gives a number on a rather theoretical comparison of what the effect might be, but then points out that this is probably already priced into the market so that the price of the holdings today takes account of what is proposed.

Lord Jones of Birmingham: My Lords, I declare an interest, and refer noble Lords to the register of interests, advising both providers of finance and also those who consume it. I remember my Yorkshire grandmother when I was about 12 saying that it was a condition of my Christmas present that an account was opened at the Halifax Building Society, and it went in there. Little did Grandma Jones ever believe that that money and its successor funds would be used to be gambled by the Bank of Scotland on commercial folly, so I congratulate the Minister on a good start.

However, of course we have one or two problems. First—and I would welcome the Minister’s comments on this—I notice that the Statement includes SMEs inside this ring-fence as well as private individuals, the provision of retail, the taking of deposits and the provision of finance. The problem is: how do we get capital and liquidity back into the small business sector? Bigger businesses have balance sheets awash with cash but lack the confidence to invest it. At this moment, smaller businesses do not. One of the biggest reasons for this is that they have lost trust in the banking sector. If you had a good credit record in 2008 and 2009 but had your credit facility taken away and had to borrow from friends and mortgage your house, you are hardly likely to trust the bank the next time around. Today does nothing to help that unless you make a virtue of necessity and prove to small business that this will in some way free up capital towards the provision of liquidity. I am not sure that this measure in any way does that and would welcome the Minister’s comments.

Secondly, there is the enormous problem of how you get the balance right so that we are seen as a well regulated, safely executed and prosecuted banking environment, without encouraging the most successful of our globally competitive sectors not to leave these

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shores. It would not go elsewhere because of all the problems with salaries and bonuses and the vilification of banking but because it will just become too difficult to lend here and easier to lend in other markets. I ask the Minister, and I include his coalition partners in this—it would be nice to have a Secretary of State for Business who supported business for once—whether, just for once, some positive words might come from the Government about the financial services sector in this country, rather than constant smacking instead of encouragement.

Lord Sassoon: My Lords, the noble Lord, Lord Jones of Birmingham, is always rightly concerned about the financing of British business, which is very important. Today’s measures are not principally about that. I could talk about the £21 billion national loan guarantee scheme or the fact that our 10-year sterling sovereign rate has been in the 1.5% to 1.7% range for the past few weeks, which is an unprecedented level. That all flows through. Here, we are significantly reducing the risk of another banking crisis. It was that crisis—the disruption and its aftermath—that caused such difficulty in the flow of loans to our businesses. Whatever we do here to minimise the chances of it happening again must be good for our businesses.

As for the UK being a competitive centre of banking, the Government are working incredibly hard. For example, only this morning I was at a very important meeting with businesses and authorities from the UK and Hong Kong, talking about how we would build the offshore RMB centre in London. That is an example of the forward-looking approach that we take to making sure that the UK and London continue to be the global financial centres of choice.

Baroness Drake: My Lords, I have only just had time to read the White Paper but I ask the Minister to elaborate on two issues. The Statement makes it clear that the strength of a country’s banking sector strengthens its stability and gives it a competitive advantage—a view that I endorse. However, that view clearly worried the European authorities, as evidenced by Mr Enria’s evidence to the Joint Committee on the Financial Services Bill. These are my words, not his, but he expressed the view that capital requirements for banks in Europe should have both a minimum and a maximum. However, the White Paper confirms that the Government support the ICB view that further buffers should be added to those of the Basel III international standards, and that the Government will, through the CRD4 negotiations, work to ensure that they can be implemented in accordance with EU law. Therefore, my first question is: how confident are the Government of securing the national regulatory freedom to impose the additional capital buffers that they would like to see?