Apprenticeships, Skills, Children and Learning Bill

My Lords, many questions have been raised in today’s debate. I have been struck by how much common ground there is between us on the need to reform our post-19 education and training system. There is general recognition that the current system of funding education and training requires refocusing, with employers playing a leading role in identifying what skills are needed locally, regionally and nationally and designing the necessary qualifications, and with funding following individual and employer choice. This requires a more demand-led approach, where funding is allocated to colleges and training providers based on the choices of individuals and employers and on wider local, regional and national skill needs. The Skills Funding Agency will be one part of a new skills landscape in which the UK Commission for Employment and Skills, sector skills councils, RDAs, the sub-regional economic and skills boards and local authorities will all play their part in determining the skill needs of the nation. In making funding decisions, the chief executive of skills funding will be required to take account of advice from these bodies through guidance issued by the Secretary of State under Clause 115. Colleges and other providers will also continue to have a central role in informing and shaping the policies that will drive skills forward. At a national level, colleges will continue to be represented on the ministerial standing group and the FE Reform and Performance Programme Board and will directly inform the development of the policies and programmes. At a regional level, colleges and providers will be consulted by the RDAs on the development of the regional skills strategies, which will be integral to the single integrated regional strategies to be developed by RDAs with local authority leader boards, as proposed in the Local Democracy, Economic Development and Construction Bill. At a local level, we will expect colleges and providers to engage with learners and employers in their local communities and to explore new and innovative ways to meet their skill needs. The best colleges are already doing this. The system that we are setting up will free colleges and providers from the constraints of rigid funding agreements, enabling them to provide the courses that students and employers want. The core question in this debate is a narrow one: should the SFA be an NDPB or an agency? Amendment 171, in the name of the Conservative Front Bench, proposes an NDPB. Our overriding aim has been to ensure greater democratic accountability. In the case of the YPLA, NDPB status is appropriate because that body will exist to provide technical support to local authorities in the delivery of their new duties under the Bill. The key commissioning decisions will be made by local authorities, so democratic accountability is maintained. In the case of the SFA, our preference is for a structure that places a premium on democratic accountability and ensures that Ministers deliver on their responsibilities through the department. Operating as an agency, the Skills Funding Agency will be closer to government, ensuring that it operates within the department’s overall strategic framework. This will enable the chief executive to react much more quickly to changing strategic needs and to contribute to the decision-making process through practical experience of what works and why. If Parliament had agreed to abolish the LSC, we could have established a Skills Funding Agency by purely administrative means using existing powers; we would not have needed Part 4 of the Bill at all. However, we took the view that it was essential to have a robust legislative underpinning for the functions, powers and duties in respect of post-19 education and training, including the responsibility for some £4 billion in funding. These are therefore set out clearly in the Bill, vested in the chief executive of skills funding. We also wanted to put the entitlement to an apprenticeship into legislation. This approach also enabled us to include a clear statutory requirement for the chief executive to report to Parliament through an annual report—I thought that that would be welcomed—which will set out how the chief executive has performed the functions of the office for the financial year, and for his accounts to be laid before Parliament and subject to certification by the Comptroller and Auditor-General. Select Committees will also be able to require the chief executive of skills funding to give evidence and respond to recommendations made by the committee. I understand the concerns of colleges and the 157 Group about the status of the new body. There are two main worries. The first is that agency status may somehow lead to the politicisation of funding decisions. However, I think that that is to misunderstand the nature of the day-to-day funding decisions that the SFA will take. In a demand-led system, it will matter less where the money sits, because funding will follow the choices of learners and employers. It will be the role of the SFA to ensure that this new system operates effectively so that it really does enable individual learners and employers to access courses of their choice and so that the skills needs identified by the UKCES, sector skills councils, RDAs and local authorities are met. It is therefore demand-led. Indeed, such a system is inherently less vulnerable to the sort of political influence about which the colleges have expressed concern. As an additional safeguard, however, we are creating the SFA as an agency and naming in legislation the chief executive on whom the powers and duties rest. We are also making it explicit, through Clause 117(4), that the Secretary of State cannot intervene in individual funding decisions. The second concern is that the voice of colleges and other providers will somehow be lost. However, as I have already made clear, colleges will continue to have a central and influential role to play in the new arrangements and will have a much freer hand to do so. The changes that we are making will mean that, rather than being lost, their voices will be heard louder and more clearly at an earlier stage of policy development. By making the SFA an agency that is part of the Department for Business, Innovation and Skills, there will be a clear line between the department and the chief executive of skills funding—an area about which colleges and providers have raised concerns in the past. The power in Clause 80 for the Secretary of State to direct the chief executive on the performance of apprenticeship functions, which Amendment 172 seeks to remove, is a further measure to enhance the accountability framework. This provision ensures that the chief executive of the National Apprenticeship Service is directly accountable to the Secretary of State. It reflects the central importance that we attach to the apprenticeships programme as part of the Government’s response to the economic downturn and their wider post-16 education and training strategy. It will mean that the apprenticeships programme has a directly accountable national head who will be able to give evidence to parliamentary committees. The noble Lord, Lord De Mauley, asked when the chief executive of skills funding would be appointed. The SFA will be established incrementally in shadow form from November and will be fully operational by April 2010. Another question was whether the structure can be altered without further reference to Parliament. The answer is yes, but the focus is on delivering services, and we do not expect any changes. A framework document will set out for Ministers what is expected of the Skills Funding Agency and how it is accountable. On the structure of the SFA, it will, as I have said, have a customer focus, offering a set of services that I have described already: the National Apprenticeship Service, the Employer Skills Service, the Learner Support Service, and a college and learner provider service. It will also be overseen by a small executive board. I apologise for the length of that statement. However, this is a very important issue and I wanted to set out quite clearly why we decided to make the Skills Funding Agency an agency. I therefore hope in the light of those assurances that noble Lords will not oppose the clause.