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Schools: Building Schools for the Future
2.58 pm
The Lord Bishop of Liverpool asked Her Majesty’s Government:
The Parliamentary Under-Secretary of State, Department for Education and Skills (Lord Adonis): My Lords, the Government want all schools, including those in Building Schools for the Future, to respect their environment and to promote ecological principles. We mandate an environmental assessment for all major school projects, which promotes sustainable design and seeks not only to minimise damage to sites during construction but also to improve and to create habitats.
The Lord Bishop of Liverpool: My Lords, I thank the Minister for his informative Answer. Are the Government prepared to revisit the plans for Building Schools for the Future in the light of the urgent recommendations of the review by Sir Nicolas Stern and of the need for the Government to be in the lead in creating carbon-neutral buildings?
Lord Adonis: My Lords, we understand the importance of the issues raised in the Stern report, and my department is researching the feasibility and cost of setting higher standards of the kind suggested by the right reverend Prelate. I should stress that building regulations have already raised energy-efficiency standards by 40 per cent during the past five years and there are planning requirements for renewable energy in many areas. We see this as building on existing best practice, including, I should stress, that established by the Academy of St Francis of Assisi in Liverpool, which was pioneered by the right reverend Prelate and has been dubbed Britain's greenest school. Many others are looking to it for inspiration.
Baroness Verma: My Lords, what steps are being taken to ensure that local authorities have the expertise to manage the Building Schools for the Future programme? Will the Government make a commitment to bringing all schools up to the highest standards of energy efficiency to limit their environmental footprint?
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Lord Adonis: My Lords, the Government have established an organisation called Partnerships for Schools, which works closely with local authorities in developing their plans under Building Schools for the Future. It can bring great expertise to bear and is helping local authorities, especially smaller ones, which may not have the expertise to develop their plans as effectively as they would like.
On sustainable design, a requirement is set by my department that, as a condition of funding for all new build and refurbishments costing more than £500,000 for primary schools and £2 million for secondary schools, those schools must achieve a standard of very good or excellent in the Building Research Establishment’s environmental assessment method for schools, called the BREEAM schools standard. That is helping schools and local authorities to raise the quality and standards of design in that area.
Baroness Walmsley: My Lords, does the Minister agree that, in building energy-efficient schools, local authorities are not just helping to save the planet but providing a potent tool for teaching children about the environment and the importance of energy conservation and climate change? When people live in an energy-efficient building, they learn a great deal more than they would if they just read about it.
Lord Adonis: My Lords, I could not agree more with what the noble Baroness says. This is a process of education, not merely setting high standards in public design and construction. The Academy of St Francis of Assisi in Liverpool and other schools which take their environmental duties seriously place great emphasis on the study of environmental sciences at GCSE and on integrating environmental studies into the curriculum of the whole school, not simply its design.
Lord Greaves: My Lords, the Building Schools for the Future programme includes six new schools in Burnley and two in Pendle. That is generally welcomed in the area, but is the Minister aware that, at the same time, the budget for transport of pupils to schools set by Lancashire County Council is under severe pressure and is being cut year on year? Is it not ridiculous that children at those new schools will have to be taken there by their parents on the school run? It is not very ecologically satisfactory when school transport is under threat and bus services are being cut.
Lord Adonis: My Lords, I am not accountable to the House for decisions taken by the county council about the allocation of its own education budget. The resources available for education from central Government to the county council have been rising substantially in real terms, year on year. It is up to county councils, which are democratically accountable to their electors, what decisions they take about allocating resources to school transport as against other priorities within their revenue budgets. I stress that their revenue budget has been rising substantially, so that is an issue for them. I stress that no cuts are being forced on them by central Government.
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The noble Lord is quite right: the capital for school buildings has risen dramatically in recent years. In 1997, the entire capital budget for schools was £693 million. This year, it is £6.4 billion and, by 2010, it will be £8 billion. There is no area of our public infrastructure on which this Government have a prouder record than our investment in school buildings.
Lord Brooke of Alverthorpe: My Lords, are the ecological principles the Minister seeks to apply in state schools being similarly applied in public schools?
Lord Adonis: My Lords, when my noble friend refers to “public” schools, I assume he means private schools, in keeping with that wonderful nomenclature we have in this country for describing our schools system. I hope that they are following the very good example set by our state schools.
Baroness Sharp of Guildford: My Lords, can the Minister assure us that the academies that have been completed have been built to the same ecological principles as are now being applied under the Building Schools for the Future programme?
Lord Adonis: My Lords, certainly ongoing and future schools will be, but we have raised standards of design over the past few years, so some of the earlier ones will not conform in all respects, like other schools built at the same time.
Business
3.05 pm
Lord Grocott: My Lords, with permission, following the debate on the Pre-Budget Report, my noble friend Lord Rooker will repeat a Statement on the European Council.
Further Education and Training Bill [HL]
3.06 pm
The Parliamentary Under-Secretary of State, Department for Education and Skills (Lord Adonis): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That it be an instruction to the Grand Committee to which the Further Education and Training Bill [HL] has been committed that they consider the Bill in the following order:
Schedule 1, Clause 29, Schedule 2,Clauses 30 to 33.—(Lord Adonis.)On Question, Motion agreed to.
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Consolidated Fund Bill
Lord McKenzie of Luton: My Lords, I beg to move that this Bill be now read a second time.
Moved, That the Bill be now read a second time.—(Lord McKenzie of Luton.)
On Question, Bill read a second time; Committee negatived.
Then, Standing Order 47 having been dispensed with, Bill read a third time, and passed.
Investment Exchanges and Clearing Houses Bill
3.07 pm
Lord McKenzie of Luton: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved accordingly, and, on Question, Motion agreed to.
House in Committee accordingly.
[The LORD SPEAKER in the Chair.]
Clause 2 [Procedural and other supplementary provisions]:
Lord Bridges moved the Amendment:
“(4) For the avoidance of doubt, should ownership of the London Stock Exchange or other principal financial exchange pass into the hands of a foreign entity, supervision and control of that exchange shall remain in the hands of the supervisory bodies already established for those purposes in the United Kingdom.”The noble Lord said: I much regret that I was unable to be present when the Bill was given its Second Reading last week. The issues that need attention were addressed by Mr Balls, the Economic Secretary, in another place on 28 November and by the noble Lord, Lord McKenzie of Luton, in this House on 11 December. The Economic Secretary said very clearly that ownership of the Stock Exchange was not a cause for concern, but that a change of ownership should not affect the existing regulatory regime. I heartily agree with that view, but unfortunately it was not included in the text of the Bill as it now stands. Instead, the Bill confers powers on the regulator—the FSA—to disallow excessive regulatory provision. The sole purpose of my amendment is to remedy the omission—namely, the reassurance regarding the change of ownership, which should, I think, be a feature of the Bill. I have no other significant objective in view.
The Bill focuses on the legal basis of the authority’s power to disallow excessive regulation. The neutrality of the Government on the ownership issue is not referred to. That is unfortunate, as it describes the authority’s existing powers to intervene and extends to five pages of complicated provisions on the way in which enforcement could be rendered more effective. How is that to be done if the owner of
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I should briefly explain my interest in this subject. For four years, from 1976 to 1979, I was the Minister (Commercial) at the Washington embassy. After retirement from the public service, I was a non-executive director of the then SFA—an association at that time—and a member of its disciplinary committee. The American attitude to jurisdiction is very different from our own. Noble Lords may know that the IRS, the American equivalent of the Inland Revenue, taxes the revenue of its citizens resident abroad as a matter of course. In addition, the US authorities permitted American Airlines to breach our bilateral aviation treaty for several years by allowing it to have direct routes from London Heathrow Airport to European destinations. This was certainly extraterritoriality with a vengeance. We had to give legal notice of the termination of the treaty to obtain a fair and legal deal for our airlines.
I could give other examples, and we could all recall, as some noble Lords did in Committee on another Bill, the recent problems with our bilateral treaty on extradition. My point is simply that the US has regularly extended its international legal reach to promote its perceived national interests. International jurisdiction is thus an active and sensitive subject in the USA; it is a far more important issue there than it is here. We should do nothing to stir this hornets’ nest, which I fear the Bill risks doing in its existing form.
The long passages in the Bill making excessive and heavy-handed references to existing law are rather unfortunate and have no direct effect on international legal enforcement. If no one has questioned the validity of the various laws that are cited in the Bill, why do we need to list them now? If it is thought necessary to list them, they should be in a separate annexe with the Explanatory Notes, which are already to be treated in the same way, instead of in the body of the Bill.
I thank the Minister for his kindness in discussing some of these matters with me on the telephone last week. At one point late last Thursday, he persuaded me to abandon the amendment but, after a sleepless night, I decided that my first instincts were right. He also expressed unease that my amendment, if accepted, might delay the passage of the legislation. But if speed is essential, why has it taken so long to prepare the Bill? Several people, including me, foresaw this difficulty some weeks ago. I cannot believe that it would cause concern if we were to delay this matter for some days or even a few weeks longer, given the very clear policy statements courageously made by Ministers about the acceptance of foreign ownership.
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All these difficulties could be overcome by accepting my amendment or another amendment on similar lines. Will the Government please decide to defer progress on the Bill until they have examined afresh the issues that I have mentioned this afternoon? The Bill does not strike the right balance in its present form. I beg to move.
3.15 pm
Lord McKenzie of Luton: I sympathise with at least part of the intention behind the amendment, which I think is to put on record our determination to resist extraterritorial encroachments on our ability to regulate UK markets in accordance with UK and EC law. In doing so, I acknowledge the expertise of the noble Lord, Lord Bridges, on the international scene, and I am sorry if I gave him a sleepless night on Thursday. Let me stress that the Government have no difficulty resisting extraterritorial encroachments. Indeed, I hope that that was made clear in my Second Reading opening speech and by my honourable friend the Economic Secretary to the Treasury in his Second Reading opening speech in the other place, in which he said that,
- “our interest in the ownership of the London Stock Exchange is that it should not affect the existing regulatory regime under which the exchange and its members and issuers operate. We are determined to act to protect our domestic regulatory environment, founded in both UK law and EC directives, that has made the City a magnet for international business. If a company operates in London, it should be regulated in London”.—[Official Report, Commons, 28/11/06; col. 990.]
However, we would not wish to accept this amendment today for both handling and substantive reasons. On the substance, the amendment would detract from the clarity of the Bill and would introduce an element of protectionism. While it leaves the existing processes in the Bill untouched, it adds a requirement that, if it were to have any effect, would make it impossible for the operation of the markets operated in the UK by recognised investment exchanges to be moved to another country. That could be the state in which the new owner is established or indeed any other state.
A UK-recognised body does not cease to be a UK-recognised body if control of it passes to a foreign person. Provided that it continues to carry on activities regulated under the Financial Services and Markets Act by way of business in the United Kingdom after the change of ownership, the exchange or clearing house concerned will still need to be either an authorised person under the Act or exempt from the need for that authorisation by being a recognised body. In both cases, it remains subject to the Act’s requirements and to the relevant provisions in EC law. It will still be supervised by the Financial Services Authority. There is no question of supervisory responsibility passing to a foreign regulator and there never has been. LIFFE, which is owned by the Dutch company Euronext NV, NYMEX Europe and ICE Futures, which are owned by US parents, and Virt-X, which is owned by a Swiss parent, are still supervised by the FSA and have to comply with the same FSMA requirements as the London Stock Exchange and the London Metal Exchange.
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If a UK-recognised body carries on activities in another country that are regulated in that country, it will have to comply with that country’s law. That would include, of course, complying with the conditions for a “passport” under the relevant EC directives if it wished to carry on such activities in another EU member state.
There will be no more opportunity for the SEC or any other foreign regulator or authority to commence proceedings against a UK-recognised body after a change of ownership than there is now—or against a member firm of the recognised body, against an issuer whose securities are quoted on that body or against any other person, such as the directors or employees of recognised bodies, member firms or issuers. We cannot stop the authorities in any foreign country taking action against its own citizens or residents in its own courts; we have never been able to do that and will never be able to do so. But the Bill will give them the defence of being prevented by local, UK law, from carrying out the foreign regulator’s wishes.
There is no need to legislate against any attempt by a US or other foreign regulatory authority to impose its provisions directly on a UK recognised body. The Protection of Trading Interests Act 1980 and the corresponding EC Council regulation are designed to protect Community interests by making it illegal for individuals and companies to comply with extraterritorial demands by US or other overseas authorities. Under that legislation, UK companies are obliged to inform the Government and the European Commission of any extraterritorial action taken against them in order that appropriate protective measures can be taken. Those measures make it unlawful for persons in the UK and the EU to comply with the requirements of the foreign legislation, regulator or court. None of this will happen on account of the Bill; it is simply a consequence of how the existing law works. The amendment is not therefore needed to make that point clear or to put it beyond doubt.
The Bill is directed at a different problem. Its purpose is to prevent foreign-owned bodies from applying regulatory schemes from other states that would be excessive when considered against the existing UK and EC regulatory framework. It is possible that the foreign owners of a UK-recognised body might wish to do this for commercial reasons. It is more likely, however, that the regulatory authorities or Government in their home country would attempt to force the hand of the foreign owners by passing legislation or taking enforcement action under existing legislation in that home country. The Bill’s provisions will prevent such actions from resulting in unwelcome changes to the operation of UK-recognised bodies and the markets and systems that they run by giving the FSA a right to veto excessive regulatory provision proposed by UK-recognised bodies irrespective of their ownership or whether there has been a change of ownership.
We also have concerns about how the amendment would work. The issue raised here is similar to issues that were raised in the other place when probing amendments were tabled. The Government believe that limiting the Bill’s provisions so that they took effect only after a change of control of a UK-recognised
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