Apprenticeships, Skills, Children and Learning Bill

I very much hope that I will be able to offer the reassurance that noble Lords are looking for. I am very happy to talk about numbers and the disjuncture about which the noble Baroness, Lady Sharp, is worried. Sometimes when you look at a Bill, it is the powers and the strong stuff that leap out at you, and the cuddly stuff that she is looking for is sometimes more difficult to enshrine in legislation. However, that is not to say that it is not very important that the YPLA’s relationship with local authorities is close and supportive. That is what we hope to achieve. I thank the noble Lord, Lord Hunt, for his introduction and for giving me the opportunity to walk us through some of the key issues. He is right that this is an important debate, and how we frame it is important. I speak with some passion, having worked on the previous education Bill that came through this House and that focused so much on raising the participation age for young people. I remember the passion that we put into that. Many strands flow from that Bill into this, and we see the importance of getting these bodies functioning properly and well set up. There are a number of reasons why it is appropriate for the YPLA and the Skills Funding Agency to be established as separate bodies. They will serve very different constituencies. The YPLA will support local authorities to ensure that the interests of all young people aged 16 to 19, of those aged up to 25 with learning difficulties, and of young people subject to youth detention on whom we have just focused, are met. The Skills Funding Agency will meet the demands of employers and adult learners and is exactly about the flexibility to which the noble Baroness, Lady Perry, pointed. These groups are different and they have different needs. Each requires a distinct focus for really strong delivery. The Skills Funding Agency will oversee the demand-led funding system that we know employers are looking for. It will support employers and adult learners through a number of customer-focused services, including Train to Gain, the National Apprenticeship Service, the Adult Advancement and Careers Service and the learners’ skills services. The YPLA, on the other hand, will have a supporting and enabling role, assisting local authorities and their partners to meet the needs and aspirations of our young people. It will fund local authorities on the basis of their commissioning plans. Detailed work needs to go into developing those commissioning plans because we need to ensure that they are right. Such diverse models and client groups suggest to me and to many with whom we have consulted that two separate agencies are needed. As one would expect, the noble Lord, Lord Hunt, brought some very interesting quotes to our debate. The Association of Colleges has been on record as welcoming the proposals for the structure of the 14 to 19 education system. The Association of School and College Leaders also welcomes the proposals. The CBI said: ""Business welcomes the intention to create a more ‘demand-led’ approach to adult skills funding through the … Skills Funding Agency"." As separately run organisations, the YPLA and the Skills Funding Agency will be governed to respond to their customers. The YPLA, as an NDPB, will have a strong sector-led representation on the board, as the noble Baroness, Lady Sharp, was concerned to see. The SFA, as an agency of BIS, will have that close relationship to government which is necessary to deliver a strong, demand-led post-19 system. Having separate organisations also enables clear and unambiguous lines of accountability to each Secretary of State, as well as to Parliament, which this House is very concerned always to see. Both organisations are required by the Bill to produce annual reports, which will be subject to parliamentary scrutiny. They will share a common aim to drive up participation and achievement to new levels, to be flexible and able to respond to new developments, to provide the specialist services that their different customers need and, above all, to equip our current and future workforce with the skills to drive our economy forward, which is crucial. In line with good practice, we also plan to ensure that they share common backroom services such as HR, estates management and information systems support, thus maximising the efficiency and effectiveness of the two bodies. I am sure that both parties opposite will recognise the importance of that. The range of functions required at national and regional level is such that these functions must be undertaken at arm’s length from the department and that only a stand-alone YPLA would deliver the intensity of focus on young people and the local authorities that serve them which is required to make a success of the raised participation age, about which I have talked already. The noble Lord, Lord Hunt, asked for clarification on intervention. Earlier, I said that the YPLA will have powers to intervene if a local authority is failing in its commissioning duty in respect of young offenders. It will have the same power to intervene in an authority if it is failing in its duty for all young people. It is right to have that backstop power in the interests of young people, but it is very much for extreme, exceptional cases. These powers stand out in the Bill, but they have to be in legislation of this nature because we are talking about the use of public money and ensuring that the best results are achieved. As regards this being a complicated system, I do not accept that two bodies will make life more complicated for colleges and other providers. As noble Lords are aware, colleges and other providers manage multiple funding streams and blend their work across government with the vast sums that are spent by the private sector on training. Having two main funding streams, one for young people and one for adults, is not dissimilar to present arrangements. I would argue that this is a step very much in the right direction. As the noble Lord, Lord Hunt, requested, we said that we will write to noble Lords about transitional costs in detail before Report, and I reiterate that commitment. The noble Lord was very concerned about references to increasing bureaucracy. I, too, would be very concerned at any suggestion that these plans are about increasing democracy. We plan very clearly to reduce bureaucracy, which is why we have been in discussion with the Association of Colleges, the ASCL, the LGA and others about how we can do so in practical terms. We are committed to doing that. As regards Amendments 146B, 146C, 146D and 146E, and the concern that the YPLA’s board is representative, I will consider further the proposals of the noble Baronesses, Lady Sharp and Lady Garden, further and will think about coming back on Report with proposals. The noble Baroness, Lady Sharp, asked another detailed question on EMA about which I shall have to write to her and I undertake to do that very quickly. I also appreciate the seriousness of the noble Baronesses’ concerns set out in Amendments 155A, 153ZA et cetera. These amendments concern clarifying the YPLA’s role in supporting local authorities in the fulfilment of their new duties and I should like to think further on that. Amendments 145 and 169A seek to limit the number of staff employed by the Young People’s Learning Agency to 500 and by the Skills Funding Agency to 1,800. Our current plans are that the two bodies will start off their lives with staffing at about the levels highlighted in the amendments. We are confident that staffing will not rise significantly beyond these levels. We do not see the need to set these ceilings in primary legislation for a number of reasons. First, as with every organisation in the public sector, both bodies will be expected to contribute towards year-on-year efficiency targets. Just because they are new bodies does not exempt them from that. Secondly, the principal brake on staff numbers will come through the annual remit and budget letter, which will set out the objectives and budgets of each organisation. Thirdly, proper structures are in place to ensure that both bodies can be scrutinised effectively and held to account for the use of the resources they are given. They will be required to report annually to Parliament. The chief executive and, in the case of the YPLA, the chair, will be or can be summoned by the Public Accounts Committee or their departmental select committees and their work will be subject to scrutiny by the National Audit Office. Amendment 146A would require the Secretary of State to carry out a regulatory impact assessment to review the costs of abolishing the Learning and Skills Council, and the setting up of the Young People’s Learning Agency and the office of the chief executive of skills funding. The impact assessment for this Bill, which, as the noble Lord, Lord Hunt, highlighted, has been updated prior to introduction to this House, confirms our commitment that the transfer to the new arrangements will be cost-neutral, which I reiterate now. In designing the new structures we are working to an indicative administrative budget, which is set at the same level as that within which the Learning and Skills Council currently operates. As noble Lords would expect, there will be one-off costs associated with the transition to new arrangements; for example, to close down premises which are no longer needed and to pay for possible staff relocation and retraining costs. They are the normal transitional costs that one would expect. Initial estimates are that these costs will total around £38 million, but we expect the reduction of the estate to rapidly generate savings in subsequent years, with annual savings of up to £17 million. The potential for additional savings from operating shared services in relation to the IT systems will be particularly important. I want to be absolutely clear that this is being driven by the outcomes we are looking for in adult skills and in raising the participation age for young people in education in this country. I hear the concerns raised by noble Lords and I have offered to consider further the amendments put forward by the noble Baronesses, Lady Sharp and Lady Garden. On that basis, I hope that the noble Lord will withdraw his amendment.