Academies Bill [HL]

My Lords, as usual this has been an interesting debate. My noble friend Lord Hodgson has set out important points of principle, which, as he said, we have had the chance to debate outside the Chamber—I am grateful to him for taking the time to do so. I start by setting out the purpose of Clause 8(1), which is to put beyond doubt that academies are charities. Because it is proposed that academies will be exempt charities, they will not in the future be registered with the Charity Commission. It follows from that that they will not receive a charity registration number from the Charity Commission or the Charity Commission’s confirmation of charitable status that comes with being registered. Therefore, we think it important statutorily to confirm academies’ status as charities in this clause. My noble friend Lord Hodgson has spoken powerfully and from a position of principle. I know how much work he and other noble Lords did on the Charities Act 2006 and, when I heard him arguing his case in Committee and when we met, I found what he said very much worth listening to. He touched previously on his concern that deeming academy trusts to be charities would set a precedent and he set out the response that he was given about that. I reiterate our view that there is a precedent. Our proposal to deem academy proprietors as charities will replicate the current legal position as it applies for a variety of other educational bodies whose status as charities is declared by statute. A range of educational bodies are deemed charities and are made exempt charities. Further education colleges and higher education colleges are deemed charities and are made exempt charities not regulated by the Charity Commission. The governing bodies of foundation and voluntary schools are deemed as charities; they are shortly to become exempt charities as well, following discussion and agreement between Ministers at the Cabinet Office and the department. It seems to me that it is not completely inappropriate for academies to be treated consistently with these other schools and educational bodies and for them to be deemed as charities under Clause 8(1) and made exempt under Clause 8(4). My noble friend Lord Hodgson reiterated tonight the point that he made in Committee: he has no doubt that academies would be able to pass the public benefit test established by the Charities Act 2006. Given that, it would be appropriate to treat academies in the same way as these other educational institutions. The model articles of association for academy trusts provide that the objective of the academy trust is to advance education for the public benefit. It is only academy trusts which have exclusively charitable objectives that would be deemed charities. The provision of education to pupils without charge is in the public benefit. Therefore, their charitable status should be confirmed. If Clause 8(4) is enacted, a principal regulator would need to be appointed to oversee academies’ compliance with charity law. The Minister for the Cabinet Office, as noble Lords know, has agreed in principle to appoint the Young People’s Learning Agency as principal regulator. I know that some reservations have been expressed about that. It will clearly need to recruit people to perform that role in just the same way as the Charity Commission would have to. It has made clear that it does not necessarily have the staff to perform this responsibility. As the government body with day-to-day responsibility for managing the performance of open academies, the YPLA could be an appropriate body to carry out this role, since it means that it would be managing academies as a whole. The YPLA and the Charity Commission would agree a memorandum of understanding about the principal regulator role to ensure that academy trusts remain fully compliant with charity law. On the matter of maintaining accountability and transparency, funding agreements or grant arrangements would place an obligation on academy trusts to publish their governing documents, reports, accounts and the names of their trustees. Amendment 40A, spoken to by my noble friend Lord Phillips, would allow charitable incorporated organisations to enter into academy arrangements. If that is my noble friend’s intention, I am pleased to tell him that the Bill as drafted would allow that to take place. Clause 1(1) allows the Secretary of State to enter into academy arrangements "with any person". I am advised that it is thus already possible for the Secretary of State to enter into academy arrangements with a charitable incorporated organisation, but it is not necessary for it to be deemed a charity or exempted to enter into such an arrangement. I know my noble friend’s expertise in this area and that he will want to reflect on this point. I will be happy to arrange to confirm that understanding with him. Amendment 40B would give the Charity Commission the power to institute an inquiry if it considered that an academy trust was not complying with its charity law obligations. We would certainly accept and agree with my noble friend that the principal regulator should seek advice from the Charity Commission where necessary. We expect the YPLA to work closely with the Charity Commission, but are not currently convinced that the commission should be able to override the principal regulator. The Charity Commission has the power to conduct inquiries in relation to exempt charities under Section 8 of the Charities Act 1993, where the principal regulator requests this. This next point may go some way to meeting my noble friend’s point about the backstop but, again, I am happy to discuss it with him. If the Secretary of State was satisfied that the YPLA was unreasonably refusing to invite the Charity Commission to carry out an inquiry in relation to an academy—I assume that is a conversation that he could have with the Charity Commission, or it with him—he has the power to direct the YPLA to make such a request to the Charity Commission, so that it could carry out that inquiry. I hope that provides a modicum of reassurance to my noble friend, but I am happy to discuss that further. Overall, it is a clear principle of the academies programme that academy trusts should be charities. Clause 8 will make the process of establishing an academy easier by removing the need for each one to apply to the Charity Commission to be registered as a charity. It will simplify the regulation process. I hope that on some of these points I have provided reassurance that academies’ compliance with charity law, and public accountability and transparency, will be fully maintained.