Academies Bill [HL]

Baroness Thornton Excerpts

Monday 28th June 2010 Lords Chamber

[Lord Greaves]

My Lords, I am grateful to the Minister for the honesty in his considered reply. I am a little alarmed by the idea that Baldrick may be in charge of government education policy, but I do not think that he quite said that. If I cite him correctly, he said: “We have not come up with a clear answer to the role of local authorities”. The more that we have considered the Bill, the more obvious it has been to me—this point was made by some of my noble friends—that it would have been a good idea for it to have had pre-legislative scrutiny to try to bottom out some of these issues and at least to present us with some considered alternatives on these important matters.

The future role of local authorities in relation to schools is vital. Clearly, a few hundreds of academies can be created without, in most areas, severely affecting the role of local authorities, but not once it gets into the thousands. I think that there are about 20,000 schools in England. If 5,000 or 6,000 of them, a quarter of them, converted to academies, which is clearly possible under the criteria that the Government propose, during the next four or five years, that would have a severe effect on the viability of local authorities—at least in some areas, because their creation would tend to be geographically patchy.

I believe that we are to get a schools Bill or an education Bill which will be a bit fatter than this Bill later this year. If so, this issue should certainly be returned to at that time, if not before. I am grateful to the Minister for saying that he will reflect on the matter. Finally, the answer to the noble Baroness, Lady Morgan of Drefelin, as to why we are rushing this, is that we have a Secretary of State in a hurry. That is not necessarily a bad thing, but if it results in bad legislation with all sorts of unintended consequences, we will have to sort them out in due course.

[Baroness Thornton]

Before the noble Lord withdraws his amendment—which I expect he will do rather than test the opinion of the Committee on the matter at this time of night—does he have a view on what is the tipping point? If he does not, perhaps he would like to ask his noble friend what he thinks the tipping point is before a local authority becomes unviable.

[Lord Greaves]

That is the $64,000 question, or perhaps more than that at present exchange rates. I do not know. We will all have a view on that. It will depend on how big or small the local authority is. A big local authority, such as Lancashire, could probably survive quite a lot of its schools becoming academies, because it would still have a critical mass, but if a small local authority—a small London borough that has only a few schools—is left with just two or three primary schools, it will be in serious trouble.

--- Later in debate ---

[Lord Hodgson of Astley Abbotts]

My Lords, I shall be very brief on Amendment 165, because it is an alternative route to heaven for academies. It would permit them, instead of becoming charities, to become community interest companies. It is a probing amendment which may repay some study, and I look forward to hearing what my noble friend has to say about it.

The Companies (Audit, Investigations and Community Enterprise) Act 2004—inelegantly entitled, I agree—has in it a bit on community enterprise. Part 2 of the Act, which comprises Sections 26 to 63, establishes the concept of community interest companies. If the Minister’s officials care to look through those clauses, they may be able to or wish to advise him that it could be a useful structure for the new academies to adopt. I shall not weary the Committee tonight with a recitation of how they would all fit together, except to say that Section 35 sets up a community interest test, rather like the public benefit test, while Section 27 establishes a regulator of CICs, as they are known, with extensive powers, and Section 30 caps dividends and distributions, so they are not profit-making in the normal sense of the word. There are a number of less important aspects, which might have value in this approach.

CICs cannot be charities, so they would be travelling a totally separate road. They come under Companies Act regulations. However, this could be a useful alternative—not compulsory, but a possible alternative—to becoming an exempt charity with some of the issues that we have just been debating in the previous group of amendments. This amendment seeks to explore the possibility. I beg to move.

[Baroness Thornton]

My Lords, I know that the noble Lord, Lord Phillips, will probably have something to say on this. The noble Lord, Lord Hodgson of Astley Abbotts and I had several happy hours in the Chamber discussing community interest companies and how they should be formed. The noble Lord is correct—it was a matter of some significant discussion at the time that a community interest company could not be a charity. However, a main feature of a community interest company is the asset lock. That is why it is such a valuable company form for social enterprises. I am not sure how that could be applied as an alternative form to a charity. This is a complex issue, and I am sure that the noble Lord, Lord Phillips of Sudbury, is about to make it even more complicated, because I know that he has very firm views on this, but I cannot see how the asset lock would work here.

[Lord Phillips of Sudbury]

I do not like being known as a man who complicates things, but I shall just say that I, unusually, do not support the noble Lord in his amendment. The fact that a CIC cannot be a charity is a fundamental impediment. It would also mean that it could not have a principal regulator under the Charities Acts 1993 and 2006, which would be a really major drawback. However, the noble Lord has at least drawn the attention of the House, inadvertently perhaps, to the charitable incorporated organisation, which is a new corporate animal created under the Charities Act 2006. The Charity Commission is still struggling to find the regulations appropriate to the birth of this new beast but, by jingo, when it is born, it will be a perfect vehicle for these new academies. As Clause 8 has been drafted by Monty Python, it will not be a permitted corporate carrier of a school, although plainly it should be. So I am grateful to the noble Lord for his amendment, even if I disagree with it.