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Further Education and Training Bill [HL]

In speaking to the second two amendments in the group, I refer back to the reference made by my noble friend Lady Morris to streamlining, which I think is another word for downsizing. A sound case has not been made for reducing the structure of the LSC from 57 councils to 10—the LSC itself and nine regional councils. We know very little about how the LSC will operate. How decentralised beyond regional centres will it be? How many offices will it have? How many of the present 750 non-executives will remain? Much else is unknown. The amendment, which would keep 47 of the 57 councils, seeks an explanation of intended LSC resources. The prompt came from the noble Baroness, Lady Sharp, when she asked at Second Reading: "““Why do we have the Bill? The main reason seems to be to provide legislative cover for the reorganisation of the LSC which has already half been put into effect””.—[Official Report, 13/12/06; col. 1547.]" It is also significant that the Minister has not replied to questions about the 148 local partnerships. The answer to the question whether the LSC is halfway through a reorganisation appears to be yes, because, although we know that reorganisation started in August 2005 with theme 7 of Learning and Skills–the Agenda for Change, the Minister said in response to my noble friend Lady Morris: "““We believe, based on our regulatory impact assessment, that these proposals””—" that is, the proposals in the Bill— "““will help us to save £40 million in the administrative costs imposed on the FE sector””.—[Official Report, 13/12/06; col. 1608.]" ““Imposed”” is a curious word to use about a public body responsible for £11 billion of public money dispersed to 2,600 providers. I thought that the LSC was in partnership with the sector. We can follow the progress of the LSC’s reorganisation. If we take as a starting point the fact that virtually all the LSC’s administrative costs are people costs and directly people-related costs, we can read across with accuracy from numbers of staff to expenditure. In reporting on Agenda for Change, in the 2005-06 accounts published last July, the LSC gave as its objective a reduction in staff by 1,300, from around 4,550 at the peak to 3,250 by the end of 2006. It looks as though this objective will be met by this March year end. Thus, the opening position before the Bill is enacted will be that the LSC will have reduced its staff by one in four, and lowered its costs by about 25 per cent. In order to fund this major reduction, the LSC has made a provision for exceptional costs of £55.7 million. This prudent move makes it difficult to compare one year’s underlying expenditure with another. By no means all the provision has yet been used. It also reduces any savings made for some years. That point needs to be recognised, both for its own sake and because it is likely to recur. What of the near future and the second half of reorganisation? On 11 January the Minister wrote: "““By restructuring both the Executive and non-executive parts””—" presumably that refers to local councils— "““the LSC will release savings of up to £40 million a year. This planned additional saving means that a further 600 people will depart, requiring a £25-30 million provision for exceptional costs and bringing the LSC numbers down to 2,650””." That drastic streamlining—numbers of staff down by 40 per cent—raises three questions. The first is a big question: what exactly is the Government’s policy towards the LSC? In December the Minister provided no great measure of certainty. There was no ringing endorsement and nothing about strength and independence. Instead, there is a sentence which reads: "““The Bill will enable further efficiencies to be secured in future””.—[Official Report, 13/12/06; col. 1542.]" Is that a prelude to following the Mayor of London, who appears to believe that while the LSC may administer the money, it should play no part in how it is spent? The regions could be encouraged to follow. The second question is: does not a reduction of 40 per cent in staff entail a reduction in responsibilities? We might make this inference from what has been said in response to Foster and from our knowledge of the fragile relationships between the LSC and the sector. However, this Bill increases the LSC’s responsibilities. How does the Minister square that circle? Finally, if the LSC’s responsibilities are to be equal to or greater than its present duties, it is plain that there has been a major management misjudgment. It was thought that 4,550 people were needed, but now it is only 2,650. What a disruption to the careers and lives of those who have to depart. They joined in good faith to do the jobs offered to them, but now they are not needed. We need to be told what has happened to these people, against whose departure there have been, to date, provisions of £55.7 million. In summary, I repeat: I do not think that a sound case has been made for the restructuring proposals in this Bill.