Green Investment Bank

Debate between Graham Stuart and Iain Wright

Thursday 29th October 2015 Westminster Hall

[Mr Wright]

I agree with my hon. Friend, although my concerns have changed since the Bill Committee three years ago. Then I was concerned that without sufficient powers to borrow the bank would be only a fund. Now I think that, given the privatisation plans, the Green Investment Bank will become simply another bank, and a very small bank at that, and will therefore lose its distinctiveness, which plays a major part in the leveraging or crowding in of other private sector investment.

[Graham Stuart]

Will the hon. Gentleman give way?

[Mr Wright]

I will mention one point, because it is central to my concerns, then I will certainly give way.

Given that the bank will be small, I am concerned that it will be vulnerable to a takeover by another institution, whose concern for its shareholders would be the pursuit of short-term profits rather than long-term value maximisation. That would be a real danger.

[Graham Stuart]

The bank will not be able to borrow, because it is at too early a stage—it does not have the cash flow to borrow against, so it would not be able to borrow. That is one of the reasons why it either uses the £3 billion—now £3.8 billion—provided by the Government, or gets private equity investment for the long term. Borrowing is probably out of the window, because there is nothing for the bank to borrow against, apart from future cash flow, which people do not normally lend on.

[Mr Wright]

I disagree, because of the bank’s financial track record so far. We are talking about a policy decision by the Chancellor. Throughout the bank’s life to date, he has stopped the ability to borrow. He has said in the past that once overall public debt is falling as a proportion of GDP, the bank might be allowed to borrow. He seems to have changed his tune now. However, based on the bank’s track record, the banks could leverage in further private sector money through borrowing as a means of strengthening its balance sheet.

I have mentioned the risk profile, which is another concern. As I said, the bank turned a profit quickly, which is welcome, but a scaled-up bank could diversify its investments, concentrating to an extent on higher-risk and innovative technologies. In many respects, what the bank has done in the first three years of its life is to invest in important and environmentally sustainable, but commercially lucrative opportunities, such as offshore wind, and in driving down costs by investing in, say, product and process innovation. In the next phase of its life, there is a real opportunity to think about the products and technologies that have not even been invented yet. A traditional market will not consider that unless a state-backed development bank both de-risks and crowds in further investment. In this field, Britain could have first-mover advantage, thanks to investments led by the Green Investment Bank. That would have positive effects for UK prosperity and employment opportunities.

In giving evidence to the Enterprise and Regulatory Reform Bill Committee in June 2012, the CBI told us something that stuck with me: that the bank could encourage

“investment into technologies that are not entirely proven yet, or that will require a little assistance to get going. The Green investment bank is part of helping private sector investment and it could have a role in topping up investment in new technologies.”––[Official Report, Enterprise and Regulatory Reform Public Bill Committee, 19 June 2012; c. 5, Q5.]

I certainly agree, and we are putting that at risk with the Government’s plans. The Government have talked about securing safeguards and reassurances, but they cannot provide them because by sacrificing control and repealing the bank’s green purposes, they will have no input whatever. Clearly no safeguards can match legislation on the statute book.

The repeal sends out entirely the wrong message. The Minister is a decent, good man on a whole range of different matters, and I know that this is not his policy area—he has been cast into the lion’s den—but when he responds to the debate, I would like him to answer this question. If he cannot provide adequate safeguards now and he cannot articulate the criteria for the safeguards that would reassure us, why do the Government expect Parliament to repeal the part of the 2013 Act that provides the green purposes?

The Government have got themselves in a real bind. They want to scale up the bank’s operations, but they do not want it on the balance sheet. They have had conflicts with the Office for National Statistics, which said it was not possible to do anything and retain control without completely repealing part of the legislation.

The Government will have no direction whatever because they had to go for the nuclear option of repealing part 1 of the 2013 Act. They will therefore have no control over what the Green Investment Bank does, which leaves it entirely vulnerable to its private ownership. The strategic direction of the bank could completely alter.

Careers Advice (14 to 19-Year-Olds)

Debate between Graham Stuart and Iain Wright

Wednesday 25th February 2015 Westminster Hall

[Mr Iain Wright (Hartlepool) (Lab)]

It is a pleasure to serve under your chairmanship again, Mr Williams. I thank the hon. Member for Eastbourne (Stephen Lloyd) for securing this excellent and important debate.

I come at the matter from two perspectives. My key priority is the people of Hartlepool. There is huge potential in my constituency. We have a nuclear power station providing well-paid jobs, and there is the prospect of an additional power station in the next 10, 15 or 20 years. We have got Nissan up the road. We have got Hitachi in Newton Aycliffe. We have the largest concentration of chemical engineering anywhere in western Europe, and we have the potential for carbon capture and storage. There is massive opportunity in my local economy, and yet the Office for National Statistics report from last year on young people in the labour market shows that Hartlepool, alongside Wolverhampton, has the largest number of young people unemployed and outside education or training anywhere in England and Wales. Why is that the case? Why is there such a mismatch between potential, skill shortages and the level of youth unemployment? Careers advice has a role to play in making sure that we address that mismatch.

My second consideration is that for the last 11 months of the previous Labour Government, I was the Minister in charge of 14-to-19 reform and apprenticeships, and I had responsibility for information, advice and guidance. I was conscious that in far too many cases, careers advice was seen as a secondary activity—often even a nuisance—that took time and attention away from the core business of learning. Careers advice was often delivered as a one-off event in a single afternoon. I was keen to see a new approach, which was the purpose of the new strategy for information, advice and guidance published in October 2009. I am not suggesting that there was ever a golden age for careers guidance, but as a Minister I was keen to push it up the agenda.

As we have heard from my hon. Friend the Member for Scunthorpe (Nic Dakin), the provision of careers advice to young people under this Government has got markedly worse. Reductions in funding and personnel, increases in fragmentation in the school system and organisational change, such as the dismantling of Connexions, have meant that young people often face real barriers to navigating what is on offer. Good careers advice can also be an important tool of effective social mobility. A young person should get good careers advice regardless of where they live, their background, who their parents are or who they know. That is often not the case, however, and it is a question of who they know and their connections when it comes to getting into a good career or profession.

The CBI has said that 93% young of people are not getting the careers information that they need, but good careers information, advice and guidance are needed more than ever, because the certainties of the past have gone. In my patch, my grandfather’s generation could leave school at the age of 15 on Friday and be working in the steelworks or the shipyard the following Monday, and they would stay there for 40 years. That certainty and that clear route have gone for ever. The futurist Thomas Frey has said that 60% of the best jobs in the next decade have not even been invented yet. At the same time, technology threatens a third of all UK jobs over the next 20 years, especially at the low-skilled end of the employment market. As Andreas Schleicher of the OECD has said,

“because of rapid economic and social change, schools have to prepare students for jobs that have not yet been created, technologies that have not yet been invented and problems that we don’t yet know will arise.”

In those circumstances, there needs to be much greater alignment between education policy and business and industrial policy, with effective careers advice and meaningful engagement between businesses and schools acting as the bridge, but the Government have to help. Government policy is not addressing the issue, and a narrowing of the curriculum by Ministers means that creative learning, problem solving and team building in the widest sense—enterprise education, in the widest definition, is required for the knowledge-based economy of the 21st century that will allow us to compete in the modern world—are not being championed, and careers advice is being downgraded.

[Mr Graham Stuart (Beverley and Holderness) (Con)]

The hon. Gentleman is right to say that there was no golden age. The careers system that he left behind at the end of the Labour Government was pretty weak. Does he agree that there has been a failure to change the incentives in order to ensure that all schools provide first-class careers advice and guidance, as a small number currently do? One of the major things is to ensure that, in places such as Hartlepool, young people get qualifications that add value. He will be delighted, as I am, to see the number of young unemployed people aged between 18 and 24 in his constituency go down from the 1,200 when he left government in 2010 to, I think, 615 according to the latest figures. That is fantastic news, and we are seeing that transformation across the country under this Government.

[Mr Wright]

The hon. Gentleman will understand that we want a universal and properly resourced careers service that is staffed by committed and professional people with the necessary breadth of knowledge and experience to be able to say, “This is what the future looks like. The potential for you, as a young person, is huge. This is what’s on offer. Let me guide you through it.” That is not happening at the moment. I have six specific, brief points.

Academies Bill [Lords]

Debate between Graham Stuart and Iain Wright

Thursday 22nd July 2010 Commons Chamber

[Mr Wright]

As I mentioned earlier, clauses 7 and 8 are significant elements of the Bill; they change dramatically the current situation on the transfer of school surpluses and property. It is worth reiterating the point that I made about clause 7. Clause 7(2) requires that when the Secretary of State approves a maintained school’s application to become an academy,

“The local authority must determine…whether, immediately before the conversion date, the school has a surplus, and…if so, the amount of that surplus.”

Under clause 7(3), once that is done the local authority must pay the surplus over to the proprietor of the academy. As I said earlier, that represents a fundamental change to the current landscape, as at the moment surpluses of closing schools remain with the local authority. That includes cases in which an existing school is closed to become an academy.

A school might have built up a surplus for many reasons. Shared facilities might generate an income, for example, or a local authority or other party might have provided additional funding for work in the community and the maintained school might have been encouraged to build up a surplus to ensure that the new community facility could be built or established. That has certainly happened in my constituency, and I am sure that it has happened in other Members’ as well. In Hartlepool, a sports centre has been built on the estate of a particular school, through increased funding from various sources and surpluses held by that school. The understanding is that it will be used by other schools and by community groups.

Under the terms of the Bill as it stands, in such a situation the surplus would be transferred to the new academy, and any benefit to the wider community that was originally envisaged—the original purpose of the surpluses—would be lost. What reassurances can the Minister give to ensure that that does not happen? What is the Minister doing to stop a situation in which, somewhat late in the process, a school that has built up surpluses and is anticipating the building of a new community or shared facility on its estate, following negotiations with the local authority, then decides to convert to an academy?

That could happen without real consultation, but the school would hold on to those surpluses. The issue comes back to unilateral decisions that fail to take into account the wider community and collaboration between schools and the local education authority. In essence, the amendment tries to probe the Minister by asking what checks and balances he will insert into clause 7 to ensure that such surpluses are identified as appropriate and constitute value for money.

[Mr Graham Stuart]

Why would a school that had built up such surpluses to provide a community facility for joint use suddenly wish to deviate from that when it sought to become an academy? I am not saying that that would be impossible, but the hon. Gentleman seems to be suggesting that it would be the norm.

[Mr Wright]

I am not suggesting at all that that would be the norm, but we could provide a control mechanism in the legislation on this issue, to tighten up the existing provision. We are not suggesting that the transfer of surpluses should not take place, but wider circumstances might be considered that could prove detrimental to neighbouring schools.

The whole Committee would agree with the need to see transparency and value for money in all aspects involving public money and public assets. To respond to the Chair of the Education Committee, I should say that, essentially, clause 7 moves taxpayers’ money from the public sector to the private sector. What controls is the Minister proposing to ensure that that is subject to appropriate balance, scrutiny, transparency and probity?

[Mr Graham Stuart]

It is surely unfair to say that the clause moves resources to the private sector. We are talking about an independent state school, but it would still be a state school and not part of the private sector. Yesterday evening, the hon. Gentleman made a desperate effort to change the wording to “free market schools” rather than the wording in his amendment; that suggested more political desperation than is the norm with him.

[Mr Wright]

I thank the Chair of the Education Committee and I entirely understand his point. Perhaps I should moderate my language in Committee. However, the point is essentially the same: how do we ensure that local taxpayers get good value for money? Like the equalities impact assessment, the impact assessment of the Bill is somewhat vague and light on detail. It states:

“Total one-off costs incurred by schools converting to an academy are estimated to be an average £78k including VAT.

Since the VAT costs are a transfer payment from DoE to HMRC, they are not economic costs. The total economic costs per conversion to academy are therefore £66k.

However, there is scope for Academies meeting these costs from within their existing balances which could reduce the cost to DFE to as little as £25,000 per Academy.”

Will the Minister outline the evidence base for this? No mention whatever is made of the transfer of surpluses in this regard. In preparing for the Bill and with regard to the impact assessment, what work has been done in relation to surpluses that could be transferred to the academy? I would be interested in any information that he could provide about that.

The purpose of amendment 76 is to address those concerns about transparency and accountability and to try to ensure that there is an appropriate process.

[Mr Wright]

I will come to that, but I assure the hon. Gentleman that the amendments are not contradictory—they are trying to address a similar problem and to ensure that we can resolve this issue.

Amendment 76 would ensure that all existing and contingent liabilities, including any liabilities that have been incurred on behalf of the school by the local authority, should also be considered. In this context, I take the contingent liability to mean a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence of one or more uncertain future events not wholly within the existing school’s control. An example could be outstanding legal cases. We discussed in Committee last night the possibility of legal challenge from staff who might not have had the opportunity or the time to consider properly the TUPE arrangements of moving from a maintained school to an academy—a point that has been well articulated by my hon. Friend the Member for Blaydon (Mr Anderson). That might be considered a possible contingent liability.

Another example, which has been discussed this afternoon, could be any liabilities arising under current private finance initiative arrangements. We had an interesting debate about amendment 70, with particular regard to PFI. One of the risks is that a local authority could have a potential 25-year period of liabilities arising from PFI, and converting a maintained school to an academy means that the academy has no way of being liable for that payment over that quarter of a century. What reassurance can the Minister give in that regard?

[Mr Graham Stuart]

May I take the hon. Gentleman back to TUPE and the speech last night by the hon. Member for Blaydon (Mr. Anderson), who was passionate about the uncertainty that could beset many employees of schools? Will he, as the Minister did, but from his side of the House, put their minds at rest? Can he confirm that when a school converts and becomes an academy, the staff will have no reason to believe that they will have any different conditions, and that it is therefore hard to see exactly what great liabilities could be in store in that transfer?

[Mr Wright]

I am not suggesting that there would automatically be any sort of change or reduction in terms and conditions. However, the freedoms and flexibilities, and the movement away from national terms and conditions and pay scales, could provide a degree of anxiety for staff, particularly low-paid staff who may have given good and loyal service to the local education authority for many years. For example, staff might think that they have had insufficient time to consider what converting to an academy might mean, and therefore, in conjunction with the union, take their employer to a tribunal. Perhaps that should be considered as part of a contingent liability. We need to ensure that all possible scenarios have been considered when taking into account the transfer of surpluses.

Clause 8 allows for the transfer of other property, and amendment 66 would remove the word “liabilities” from subsection (5)(b), which refers to the apportionment of properties, rights and liabilities. In response to the point made by the hon. Member for North Cornwall (Dan Rogerson), the reasoning behind the amendment is similar to the point that I made earlier about contingent liabilities. I reiterate that there is a particular concern about arrangements such as those under the private finance initiative regarding the transfer of liabilities, and the potential for them to be apportioned between the local authority and a new academy. In a PFI arrangement with 25 years of payments still to go, we must ask how appropriate costs should be so apportioned, and the amendment is an attempt to resolve that question.

We reason that if an academy is to operate as an independent school with full autonomy and freedom from the local authority, it should be responsible for full liability under any PFI arrangement in respect of the school. That seems balanced and fair, and I ask the Minister whether he is opposed to it.

We seek reassurance from the Minister that local authorities, which will face immense financial pressures over the next few years, with enormous potential cuts and pressures from changing social circumstances such as the ageing population, will not be liable for the debts of schools that have transferred as well as having to cover the costs of central services such as payroll, human resources and other infrastructure that they were, and will be, providing to maintained schools. I hope that he can provide that reassurance, and I commend the amendments to the Committee.

Academies Bill [Lords]

Debate between Graham Stuart and Iain Wright

Wednesday 21st July 2010 Commons Chamber

[Mr Wright]

I certainly agree with choice in the education system, but it would be choice for a very narrow stratum of society—predominantly middle class, media-articulate, affluent parents at the expense of disadvantaged communities. That is wrong: we need to raise standards completely across the board.

In the Bill as it stands, there is nothing to stop a load of private sector chancers, keen on making a quick profit, from contacting local parents in an area and suggesting that perhaps a new school could be beneficial, without any appropriate checks and balances on the impact that such free-market profiteers would have on educational quality, provision and capacity. Those free-market chancers could incentivise the local community with perhaps with a free laptop or the opportunity to enter a competition to win something if they expressed an interest in providing a new free school. New clause 5 would allow that to be stopped. It would ensure that there were effective checks and balances so that no person or organisation could offer inducements to pupils, parents or guardians for the purpose of new school places.

This afternoon, we had an extremely heated and interesting debate in Westminster Hall about Building Schools for the Future. Following what the Secretary of State said in his statement, 735 schools will no longer be refurbished or rebuilt. A review of the school capital programme is to be carried out by Sebastian James. Let me quote from the terms of the review:

“The overall aim of the review is to ensure that future capital investment represents good value for money and strongly supports the Government’s ambitions to reduce the deficit, raise standards and tackle disadvantage.”

Okay, that is the narrative that the Secretary of State has been producing—I understand that. However, the terms of the review also state that it is intended to do the following:

“To consider how to generate sufficient places to allow new providers to enter the state school system in response to parental demand…To increase choice locally determined by parental demand”,

and, crucially,

“To enable the establishment of new schools.”

Will the Minister discount the scenario whereby in a community where parents are disappointed that schools will not be rebuilt or refurbished under BSF, the Secretary of State could say, “But if you set up a new free school you can unilaterally decide to have a school capital building programme, and what is more, we will provide the school capital to allow you to do that, regardless of the impact that it will have on the wider educational provision in your local area. If you and a few other parents decide to do that, we will drop you a load of money to make sure you can have a rebuilt school.” Will the Minister confirm that that will not happen?

If a new school is to be established, surely it is courteous, and just common sense, to establish what people in the local area think of the proposal. Surely it is important to scrutinise the impact and effect that it will have on existing schools. The amendments therefore highlight the need to ensure that local people are satisfied that there is a clear and rational case for additional capacity in education provision, that the proposal has been subject to local consultation, scrutiny and challenge, and that additional provision could best be served through the establishment of a new school.

Amendment 33 addresses the risks that I have outlined to the Committee and is therefore very important. Before arrangements for setting up a new free-market school are entered into, there should be consultation with local parents and children, schools, the local authority, school staff and unions and any other persons deemed appropriate. We believe that the amendment would involve relevant and important stakeholders in a fundamental decision about changes to education in a particular area.

Amendment 50 follows on from that point and addresses the risk of fragmentation in the education system as a result of setting up a free school. To avoid a two-tier system and funding being automatically diverted to new free schools without any consideration of the impact on existing schools’ finances or the number of students in the wider local education authority, the amendment would insert into the Bill a requirement to consider various factors. Those are

“the impact on funding for the other maintained schools…the effect on social cohesion in the area in which the additional school is (or is proposed to be) situated”

and

“the impact on the balance of intake”

for other schools in the area and the further education sector. That last point is important, and I am pleased to see the Minister of State, Department for Business, Innovation and Skills, the hon. Member for South Holland and The Deepings (Mr Hayes), who is responsible for further education, on the Treasury Bench. I shall return to that matter later in my remarks.

Amendment 20 is an attempt to rein in free-market abandon and address the point that I have already made about capacity. It would add to the characteristics in clause 1(6) that must be demonstrated by a potential additional school if one is to be established. That subsection is currently broad to the point of being vague and, I would argue, meaningless. The amendment states that if there is to be an additional school in an area, it must be demonstrated as part of the selection process that it

“meets a proven need for additional capacity in the area in which the school is situated.”

As the Bill is currently drafted, when an academy order has been made, the converting school or relevant local authority will not have to follow the school closure procedures set out in section 30 of the School Standards and Framework Act 1998 or sections 15 to 17 of the Education and Inspections Act 2006. The relevant provisions in the 1998 Act are designed specifically to ensure that reflection is made on the consequences of a closure. Those provisions are that the governing body should give at least two years’ notice to the Secretary of State, and that if closure would affect the facilities for full-time education for post-16-year-olds, the relevant further education funding council should be consulted. I believe that in the current regime that would be the Young People’s Learning Agency, but it would be useful if the Minister confirmed that. Those provisions allow the decision on closing a school to be considered in a proper manner.

Removing the provisions of sections 15 to 17 of the 2006 Act is particularly risky. Those sections essentially ensure that when a school maintained by a local authority is to be discontinued, the authority must publish its proposals. Prior to that, the relevant body must consult the registered parents of pupils at the affected school as well as the local education authority. That just seems like good common sense. When there are proposals to discontinue a school, there should be the widest possible consultation, challenge and scrutiny. I ask the Minister to tell us specifically why it was felt necessary to remove those requirements, which seem like good, plain common sense.

Clause 9(4) states that an additional school is not to be considered a maintained school

“if it provides education for pupils of a wider range of ages than the maintained school.”

That is a significant part of the Bill, and at the risk of being too melodramatic, I believe it could prove the death knell for our current further education sector. I shall expand that argument with reference to my constituency. For a relatively small town, Hartlepool has a diverse offer of 16-to-19 provision. It has a college of further education, a sixth-form college, a specialist art and design college and a Catholic school sixth-form college. The choice on offer for students in Hartlepool is really quite rich, and it works incredibly well, but under clause 10(4), a school in Hartlepool or anywhere else that currently offers 11-to-16 provision could apply to become an 11-to-18 free school or academy without consideration for the wider area, without consultation regarding current post-16 provision, and without any assessment of whether the new arrangements are feasible, viable or desirable. That cannot be right or sensible. I would be grateful if the Minister could, before his winding-up speech, have a word with the Business, Innovation and Skills Minister, to determine the rationale behind that measure, because it puts at risk the advances that have been made in the FE sector since incorporation in 1992-93.

[Mr Graham Stuart]

I may be reading clause 10 incorrectly, but it seems to me to have precisely the opposite meaning to the one the hon. Gentleman suggests. It states that

“a school does not replace a maintained school if it provides education for pupils of a wider range of ages”,

which means that it would be viewed as an additional school, and therefore that it comes under clause 10(2), which states:

“The Secretary of State must take into account what the impact of establishing the additional school would be likely to be on maintained schools, Academies and institutions…in the area”.

As I said, the measure therefore appears to have the opposite effect to the one the hon. Gentleman suggests.

[Mr Wright]

That is certainly not how I interpret the Bill. Amendment 50 is a probing amendment, because given the advances in FE provision and the huge choice in my constituency, I would hate anything that meant that an 11-to-16 school could disrupt post-16 provision.

The amendment would ensure that institutions within the FE sector, as well as the local education authority, pupils and parents are consulted. It is also important that that wider family—I hate that phrase—of education providers is consulted, but that will have a direct impact on post-16 provision.

The Opposition have faith in parents, pupils, teachers, councils and the wider community, and we think that their views should be taken into account when setting up academies, and that no new free-market schools that fragment the current system should be set up. That could lead to a two-tier system and compromise the viability of current schools and colleges.