COMMITTEE FOR EDUCATION
OFFICIAL REPORT
(Hansard)
Education Bill
4 February 2009
Members present for all or part of the proceedings:
Mr Mervyn Storey (Chairperson)
Mr Dominic Bradley (Deputy Chairperson)
Mrs Mary Bradley
Mr Nelson McCausland
Mr Basil McCrea
Miss Michelle McIlveen
Mr John O’Dowd
Mrs Michelle O’Neill
Witnesses:
Mr John McGrath ) Department of Education
Mr Chris Stewart ) Department of Education
The Chairperson (Mr Storey):
I welcome again honorary members of the Committee for Education, John McGrath and Chris Stewart. Their presentation will be on the controlled estate.
Mr Chris Stewart (Department of Education):
Good morning, Chairperson and members. We are glad to be back. I am sure that the privilege of honorary membership does not extend to voting, so we will content ourselves with making presentations.
Mr John McGrath (Department of Education):
We are here for the tea and scones.
The Chairperson:
You are welcome to them.
Mr Stewart:
I am trying to give them up, so I will forego that pleasure. My presentation, which will be relatively brief, follows on from the previous session in which members discussed the proposals for representation and advocacy for the controlled sector.
Today we propose to deal with the related issue of the ownership of the controlled estate. Members will be familiar with the underlying drivers and the rationale for the proposal in paper 20. It stems from concerns that were expressed by some members of the Committee and by other stakeholders about a perceived conflict of interest if the education and skills authority (ESA) were to own a group of schools.
The paper sets out proposals for a separate body to take ownership of what are known as controlled schools. Members may ask in response to that proposal why there is a need for two bodies; why not simply combine the representative body and the ownership body in a single organisation? The answer lies in the policy decisions and requirements under which we must work. It is the Department’s view that ownership of the controlled estate must be on a statutory basis. It involves the stewardship of public assets worth some £2·3 billion; therefore we feel that the appropriate solution is for a statutory body to take ownership.
However, the Department’s policy is also that all the representative bodies must be non-statutory and have no statutory functions in order to ensure equality for all sectors and all types of school. Thus the Department’s policy is that statutory and non-statutory functions cannot be combined in a single body and that there is a need for two organisations.
However, as signalled in the paper, the Department recognises the need for close links between the representational body and the ownership body in the controlled sector; perhaps through joint chairmanship or some overlap of membership or perhaps through a statutory duty on the ownership body to consult the representative body about the discharge of its functions.
Central to the role and functions of the ownership body is the ownership and stewardship of the assets in the controlled sector. The paper contains several potential additional functions that may be added to that body. Owners of schools tend to have a role in appointing governors, so it may be appropriate to consider whether the ownership body should have some role in appointing or suggesting some governors for controlled schools. However, I assure the Committee that that is quite separate from the ongoing role of the Transferor Representatives’ Council (TRC) in appointing governors and would not be at the expense of that role.
The ownership body may also have a role in making development proposals, particularly in what I have termed a safety-net capacity. If there is an identified need for a school development in an area but for some reason there are no proposals to meet that need, the ownership body might be charged with making a proposal to plug the gap. That would be a last resort or safety-net function.
The paper also sets out a possible longer-term vision for the controlled sector. That stems from the policy on accountable autonomy for schools. In future, some boards of governors of controlled schools may be able to take ownership of the physical assets of the school and thus achieve greater autonomy and provide a closer link between the school and the community that it serves. It should be stressed that that is a long-term vision, and no board of governors would be compelled to take on that role. Part of the role of the controlled schools ownership body might be to work with and support boards of governors to prepare them for taking on that responsibility if they wished to do so.
The paper sets out options for the nature of the body and its accountability arrangements and identifies the Department’s preferred option: a statutory public authority. As I say, the Department’s view is that that is the only option that provides sufficient accountability and safeguards for this vital public asset base.
The paper also deals with other important technical matters, mainly financial, notably the potential treatment of value added tax (VAT), stamp duty and land registry fees. I assure the Committee that we are talking to our colleagues in the Department of Finance and Personnel and the Treasury to minimise the potential effect of the transfer of assets on the Department’s budget and on the public purse.
Ideally, if the first and second review of public administration Bills could be implemented at the same time, there could be a single transfer of assets from the education and library boards to the new controlled schools ownership body rather than two transfers of assets. However, that would involve extremely challenging timescales and could in no way be guaranteed.
In previous sessions members asked us to return to the subject of the disposal of assets and the potential for inequality between sectors stemming from the rules on those disposals. Those rules are determined, and occasionally changed, by DFP and are based on the central principle that resources — the proceeds of the disposal of assets — are returned to the centre for reallocation according to assessed need and determined priority. The minor exception to that at present is that education and library boards are permitted to retain a small proportion in order to encourage them to dispose of surplus assets. Most proceeds are returned for reallocation. It is through that principle that equality will be ensured because resources will be reallocated according to objectively assessed need. The same will apply to other sectors for which there are clawback arrangements that are applied when assets that are funded by capital grants are disposed of.
From time to time, members have suggested that the proceeds of asset disposal ought to be hypothecated or ring-fenced to the sectors or areas where the disposal occurred. However, that would be extremely problematic. It must be borne in mind that the proceeds of an asset disposal do not in any way constitute extra moneys for the Department of Education; they are netted off its capital allocation. Therefore hypothecation or ring-fencing would lock a significant proportion of the Department’s resources into historical patterns of provision when the assessment of need may in fact suggest the need for a different pattern of resource allocation. Ring-fencing might thus make it more difficult to achieve equality.
The Department is particularly concerned that ring-fencing could seriously distort the area-planning process. Area planning will be based on the objective assessment of need and determination of priorities and the allocation of resources accordingly. In the current financial climate, that will inevitably involve making difficult choices between competing demands. It is difficult to see how that process could operate fairly and effectively if it were to be constrained by historical patterns of distribution of resources. For those reasons, we do not propose the ring-fencing of the disposal of assets.
That is a brief summary of what is quite a technical section of the paper. We welcome the views of the Committee because the paper is out for consultation. We will, of course, bring it back to the Committee when the consultation finishes, and we will be happy to answer members’ questions.
The Chairperson:
Several issues arise from the paper and its reference to the controlled estate. You referred to one of them — the Committee has had a concern for a considerable time about the equity in how assets are disposed of and the money distributed. Legislation on capital grants was enacted in 1974 or 1977. My understanding was that a non-controlled or maintained school that applied for capital works raised the money, did the work, and then applied for a capital grant, which was paid back to the trustees. State money is given to a privately owned organisation.
If, due to having become surplus to requirements or demographic decline, that estate is sold, not all the money returns to the Department. In fact, only a small percentage goes to the Department; most goes to the owners and trustees. How is that fair and equitable?
The capital grant covers all the costs, yet the money recouped from the disposal of a controlled-sector asset goes to the board. You said earlier that money is distributed on an analysis of need in any sector, but there is no equality in how that is done. The Minister claims to want to ensure equality, so how will we address that glaring inequality?
I read nothing in the paper that deals with that problem; indeed, I see that no work has been done to establish the group. January 2010 is still talked about as the date for the establishment of that group, but not everything is in place for that to be possible.
I am also concerned by the paper’s reference to the ESA initially having ownership of the estate in 2010. That is unacceptable. Chris, you have said many times that the ESA cannot be the body that owns the estate. Nevertheless, this paper states that if the body is not established, the ESA will own the controlled-schools estate for a time.
Mr Stewart:
I will deal with your first concern and then return to your point about the timescale.
The arrangements are as you describe with one important exception, which contains the reassurance that you seek. Clawback arrangements are included in the grant agreement for an asset funded by a capital grant. A proportion of the resources come back to the Department, and that proportion of resources would not be small, as you fear. The Department will get back what it put in, and that is why it is not flagged up significantly in the paper.
We are satisfied that the continuation of the existing arrangements will ensure the equality that you seek. The Department would receive a significant proportion of the grant. The clawback arrangements for 100% publicly funded assets mean that the Department recoups what it puts in.
The Chairperson:
I want to tease out some further information. Does the Department have an analysis of how the disposal of assets in the maintained and controlled sectors has worked in practice in recent years? Is that the desired aim of the new arrangements or is that how it has been since the change to the capital-grants system?
Mr Stewart:
Both. There are some longstanding grant agreements, and, if we delve deep enough, I am sure that differences could be found in the precise clawback arrangements over time. Practices and the requirements of DFP have developed over the years; a grant agreement that is drawn up now may not be exactly the same as a grant agreement that was drawn up in 1974. Our clawback arrangements will be applied to all grants at present, whatever DFP’s requirements may be.
Mr McGrath:
In a sense, the proposals for the body do not affect the funding arrangements; they are separate. However, there is a view that the ESA should not own any of the estate because it would be the determinate of area planning. Eugene Rooney will be here later, and he can provide further insight into the operation of the capital grant and clawback arrangements that apply to voluntary grammars. In essence, however, we get back pro rata what we put in.
The policy on disposals is governed from the centre, and, in the past couple of years, the CART report brought added impetus to that. As Chris said, the centre counts in expected receipts, which are included in our baseline figures. However, this year, we thought that we would get £30 million of receipts; our budget settlement envisaged that £15 million of that would go back to the centre, and we would keep £15 million. Our capital plans included the expectation that £15 million of disposals would come in and we would recycle them. As Chris said, disposals are not extra — they are built from at the beginning. The drop in the market over the past 24 months has had a significant effect on capital resources.
If you begin to hypothecate, you might maintain investment only to the level of disposals, which would not be a fair way of meeting need. Eugene Rooney will expand on the capital grant and clawback arrangements later. If necessary, we can provide a paper on that specific arrangement, which is unaffected by the body for the controlled estate.
The Chairperson:
That would be useful. Will you speak about the timetable?
Mr Stewart:
Ideally, we would all like the controlled schools ownership body to be established by 1 January 2010, as it would mean a single transfer of assets rather than two. However, the RPA programme is based on the need for two Bills and the recognition that the timescale is extremely challenging for us. As we indicated in our policy memorandum papers, the target for the implementation of the second Bill is 1 January 2010, or 1 April 2010 if we need a fallback position. It may be 1 April, perhaps even later, before we can bring the controlled schools ownership body into being. However, we would like that period to be as short as possible.
The ESA would be the owner of a group of schools. We recognise the difficulty and the concern in that, so it is in everyone’s interest to ensure that that period is as short as possible. However, we cannot guarantee the Committee that we could reduce it to zero.
The Chairperson:
Do we not run the risk of having the same concerns as the voluntary grammars in relation to the single employing authority? Do we not run the risk of the controlled sector saying exactly the same? If the estate is under the control and ownership of the ESA, the ESA will have the power to appoint boards of governors, and the functions that you outlined in the paper would be part of the body, which would be responsible for the controlled sector and under the control of the ESA. Therefore all the concerns that people have about the ESA will be realised in two sectors, that is, the voluntary grammar and the controlled sector, and that makes it even more difficult.
Mr Stewart:
There are two separate points. First, the ESA will appoint the bulk of governors in controlled schools because the community governors would be the largest category by far. Therefore, I do not think that that issue would change, no matter how things turn out.
On the more fundamental concern, the issue is one of a perceived conflict of interests; we recognise and accept that. The issue is about the most robust and effective measure that we can take to reduce or manage that risk. If we can minimise the period in which the ESA owns those schools to a matter of months, the risk becomes extremely small.
It still exists, and stakeholders may continue to have a negative perception of it. However, I am not certain that it is practicable for us to go any further than that.
Mr McGrath:
The critical issue will be the perception that the ESA might somehow be more partial in determining decisions on capital expenditure.
The Chairperson:
From others?
Mr McGrath:
Yes. The period of ownership would be as limited as possible. First, there will be a spotlight on the ESA to demonstrate that it was doing nothing that might reflect partiality. Secondly, it is unlikely that significant capital decisions would be taken in that period unless they were already in the pipeline. In those circumstances, the scope for something going awry in that limited period is very limited.
Mr O’Dowd:
Can you clarify DFP’s involvement or guidelines on the matter? Who will own the voluntary grammar-school sector estate? If it is owned by a group of trustees or individual schools, what mechanism will ensure that public money is secured for capital expenditure?
Mr Stewart:
The second question is perhaps more easily answered than the first. With the exception of controlled schools, nothing in the RPA will change the ownership of schools of any type. In the voluntary-grammar sector, schools will continue to be owned by the trustees or, in some cases, by the boards of governors. In every case in which a school is funded through a capital grant, there is a formal grant agreement that is signed by the Department and by the owners of the school. That includes the clawback arrangements that ensure that in the event of the asset being disposed of if it is no longer required, the Department gets back what it put in.
Perhaps the most important point about the DFP rules is that not all the proceeds of asset disposal come to the Department of Education; some are retained at the centre by DFP for allocation to Departments according to a central assessment of priorities. Those rules change from time to time, but the core principle remains the same: assets are returned to the centre and reallocated on the basis of objective and assessed need.
Mr B McCrea:
Following on from that point, there is concern among voluntary grammar schools and others that the ESA will take control of their estate in some way.
Mr McGrath:
As Chris said, there is nothing in the proposals that affects voluntary grammar schools’ ownership of their estate.
Mr B McCrea:
That is OK; I just wanted to hear you say it twice. However, the nub of the concern is the failure to recognise the blatant inequality — the inequity — that, some time ago, the transferors gave up their schools for the public good and now feel that they are being disadvantaged. The issue appears similar to land that was vested for public use and which is no longer required; therefore, under vesting regulations, it was offered to the people who originally owned it. I think that you are going headlong down the path of centralised ownership, which means that the voluntary grammar sector and the Council for Catholic Maintained Schools have a perceived advantage over the controlled sector. I do not think that that has been tackled.
Mr McGrath:
There is an important difference between the transferors handing over their assets for what, at the time, they regarded as good reasons and a vesting process whereby the state decides, for the greater good, to take ownership of a property, notwithstanding the owner’s views. Therefore it is appropriate that if that public need ceases, the previous owners should, in certain cases, have first refusal on getting the property back.
There are differences between the two cases.
Mr Stewart:
There is another important technical consideration. The rules come from the Crichel Down case: where there has been compulsory acquisition of an asset that is subsequently disposed of, that asset is offered to the original owners for sale. I am not certain that the Churches have expressed an interest in buying back the schools that they handed over to the state.
Mr B McCrea:
I am not suggesting that they have; it is I who am suggesting it. It is a basic inequality that some sectors are perceived as retaining estate control. Your paper states that there are advantages and disadvantages. However, a significant sector has, I have been told, been raped and pillaged over the years. I do not suppose that there is much point in going on about it other than to impress upon you that I do not think that your paper or your proposals address that perceived hurt and inequality. You have not made the necessary inroads. After the Committee’s last meeting, I spoke to representatives of the TRC, who said that they are still not happy.
Mr McGrath:
In a guarded way, may I ask for a definition of rape and pillage?
Mr B McCrea:
There was a perception that the controlled sector took the brunt of school closures because that was easier. I do not know whether that is right or not, but it is a perception. One of the reasons for building up a representative sectoral body is to address that issue. There is a perception that the controlled sector is the poor relation.
Mr McGrath:
There is that perception, which is outwith the ownership of schools. There are issues of achievement in some areas. There is an equal perception that CCMS has done more to drive forward closure and rationalisation than the controlled sector has. In other areas, there may be a perception that the controlled sector has not driven forward rationalisation linked to quality, and indeed has resisted that. However, those perceptions are important and must be dealt with.
This body has been set up because there is a perception that it would be inappropriate for the ESA to own the estate. That does not solve the issue of how one would demonstrate that future investment and rationalisational proposals are dealt with equitably. It may be a necessity, but it is not a sufficiency. The ESA will still face the issue that we have now. There are perceptions that one sector does better than another, that investment is not fairly targeted, and that disposals are not recycled properly. Those issues will simply not disappear, which is why we need a process built round area-based planning to take a proper, more deterministic way to meet need and to channel investment. Those are building blocks, but they do not deal with the core issue. The issues of whether there is a controlled estate body, whether the ESA owns it, where future investment goes, and what the pattern of schools will be, still need to be determined. That is why we are looking to area-based planning as the keystone to deal with those issues. There are perceptions, Basil, but they work both ways.
Mr B McCrea:
In my attempt to be helpful and to show you where my representations come from, I must state that there is a hierarchy of needs. The process and the mechanism for deciding how to manage capital, for example, is two or three levels down; whereas the need to be treated fairly and equally — and the perception that one is being treated fairly — is at the highest level. If those levels are not right, all else fails. It does not matter how good the rules and processes are, if people think that they are working agin them, we have a problem.
I am sorry if I am being unhelpful, but your paper does not address the perceived inequality and sense of hurt of the TRC and others about how their estate is being handled compared to other estates. It is a serious issue. I am sorry to be the harbinger of bad news.
Mr Stewart:
It is not at all unhelpful. We continue to talk to the TRC and others, and we register their concern. We want to continue to engage with them, and we are happy to consider suggestions or ideas. This is a paper for consultation to which they may wish to contribute in order to attempt to address those issues.
We are conscious of the various perceptions and we take them seriously. Common to them all is that we have had an adversarial and competitive approach to the planning and delivery of the educational estate. In the case of winners or losers — or perceived winners or losers — the pattern of perception varies from time to time. The core of our policy is that we absolutely must move away from that. No sector or group of schools must perceive itself to be part of anything other than a fair, open and transparent process that is based on need. That is why we continue to place area-based planning at the centre.
Mr McGrath:
To reflect on previous discussions, we recognise that many controlled schools — perhaps controlled grammar schools — feel that the current arrangements have them operating in a command-and-control system when compared to their peers in other sectors. The arrangement that we propose is precisely to enable them to be more liberated and to have greater control of their destiny.
We spoke previously about the aspirations of Ballyclare grammar or any other school — we must find another example, because it is unfair to keep singling out Ballyclare.
The Chairperson:
I am sure that you will have no difficulty there.
Mr McGrath:
Absolutely. You have referred to the aspirations of schools to move to greater autonomy, and Chris talked about the long-term vision. We want to create the capacity in these provisions for some of those controlled schools to migrate along a path where they might eventually own their own estate akin to the status of voluntary grammar schools. It would be a move towards greater autonomy. We recognise that, and Basil’s points are well made. We can deal with facts, but dealing with perceptions is more complex. That is one of the issues that we have to deal with.
Mr B McCrea:
There may be some mileage in fleshing out a route map for how the long-term vision might happen.
Mr McGrath:
Part of our thinking about autonomy was how schools could take ownership of their assets.
Mr B McCrea:
That is worth exploring.
Mr Stewart:
We may have undersold that notion in the paper and tried to sound cautious about it. I hope that we did not give the impression that we are reluctant to go down that path; it was simply an attempt to reflect the fact that, particularly in the controlled sector, one size does not fit all. Many schools in the controlled sector would be glad to go down that route as quickly as possible; others are unwilling to do that, as they quite happy with the present arrangements. Both positions are legitimate, and we want to allow space for both approaches in the policy that we develop.
The Chairperson:
We may return to that. Do you have a question, Michelle?
Miss McIlveen:
Oh, thank you. I did not think that I was going to be called so quickly.
The Chairperson:
Pay attention, please. Thank you. [Laughter.]
Miss McIlveen:
A couple of weeks ago, you discussed appointments to the working group. However, I do not remember your outlining the education and library boards’ role of nominating members.
Mr McGrath:
Are you referring to appointments to the working group that will conduct some initial work on the controlled sector support group?
Miss McIlveen:
Yes.
Mr McGrath:
The Department is seeking a group of interested individuals. That does not necessarily exclude board members of education and library boards or officials, given that many people may be making a career move and may not be interested in membership of that group. It is not a representation, because it will not be a statutory body; we are seeking volunteerism as opposed to statutory representation.
Miss McIlveen:
If you are appointing, nominating or, in this instance, shoulder-tapping to appoint members, I am concerned that when that body is established, its membership will decide who is on the board. Furthermore, there is a possibility of appointing joint chairpersons to the ownership board.
Point 26 states:
“DE should have the right to appoint the members of the ownership organisation in accordance with OCPANI principles;”
Can you expand on that?
Mr Stewart:
In the interest of creating a coherent approach for the controlled sector, it is desirable at least to explore the scope for linking a few bodies. We will have to explore the extent to which the law and guidelines from the Commissioner for Public Appointments allow us to link those bodies. The ownership body must be a statutory non-departmental public body whose membership is appointed according to OCPANI rules with uppermost regard to the principle of merit.
By contrast, the representative body will be a non-statutory body that will essentially determine its own governance and appointment arrangements, although the Department will have to agree to those arrangements. At the moment, I cannot explain in detail to what extent we can legitimately ensure an overlap or commonality of membership; however, the concept is worth exploring and would be beneficial. However, we will be constrained by the law.
Miss McIlveen:
I am concerned that the Department might use a heavy hand. We will have to consider that matter.
Mr Stewart:
The Department’s hand will be supporting.
Miss McIlveen:
That remains to be seen. Point 29 refers to VAT exemptions. When will you have that information? There is a huge cost of up to £700,000 a year to a school that has been built under PPP arrangements over the 25-year life of the contract.
Mr Stewart:
I will check that and come back to you. My colleague in the finance directorate Catherine Daly is actively pursuing that matter with the Department of Finance and Personnel. I do not know when we will receive an answer. We recognise the urgency of getting a response, and the outcome will be significant. We know the answer that we want, and we are emphasising to our colleagues the need to give us that answer.
Miss McIlveen:
We need that information. If we are conducting a spend-to-save for the ESA, there is another cost of which we have not been made aware.
The Chairperson:
Does DFP have the power to authorise VAT exemptions?
Mr Stewart:
No; DFP will take that issue up with the Treasury.
The Chairperson:
It is a Treasury issue. What if the Treasury says no? We have had difficulties in the past with VAT, and the controlled sector now faces an additional cost of £700,000 a year; that would be huge. Is that matter being pursued?
Mr Stewart:
Yes. If it became a reality, its effect would be profound. However, at this stage, our assessment of the likelihood of the risk is low. We hope to convince our colleagues in the Treasury — through DFP — that it constitutes, essentially, a technical transfer of assets among public authorities. That should not attract VAT or significant land registry fees; it would not be a sensible approach.
The Chairperson:
Has a business case been prepared?
Mr Stewart:
I am sure that that issue will be included in the development of the full business case for the RPA.
Mr McGrath:
The Treasury or, specifically, HM Revenue and Customs will rule on that matter. As the paper states, we sought confirmation that the ESA will have VAT exemption in the same way that education and library boards do.
The test is pointing out to HMRC that it classifies those bodies according to a GB model. We have to point out that whereas local authorities run education in GB, the ESA and the education and library boards are the Northern Ireland equivalents and should be treated in the same way. The process is one of articulation and explanation. It is not necessarily swift, but we hope that it will be resolved satisfactorily; if not, significant issues will arise: we will have to ask whether the benefits of the body are sufficient to justify the significant cost that will fall on the education budget. I do not think that that cost would penalise controlled schools; the education budget would have to bear it on a broad back, and that is unpalatable. When we get the numbers sorted out and some progress made, we will inform the Committee. The issue will have a bearing on whether we want to follow this through to a conclusion.
The Chairperson:
Do we know whether DFP accepts the merits of the case? Has the Department of Education to convince DFP or draw up a business case for an exemption; or is the Department seeking VAT exemption for the ESA? Has the Department asked DFP for exemption, putting the onus on DFP to put the case in conjunction with it? DFP would then negotiate with HMRC and explain to it why the VAT exemption is necessary.
Mr McGrath:
That is the process. When such issues arise, and they often do, DFP tends to support the Department. The decisions are not in DFP’s gift; it is the conduit.
Catherine will be here shortly, and she will give the Committee an update.
Mr D Bradley:
The situation that you outline in the paper is one where a school’s ownership body may be little more than a repository of the deeds; at other end of the scale, new voluntary schools could emerge. Point 20 reads:
“A possible long-term vision for the sector is one where the capacity of the staff and the governors of the majority of schools is developed to the point where the Board of Governors in each school is able and willing to become the legal owner of the school, thereby increasing the vested interest in the school.”
You said that that would lead to truly locally owned schools. Is that not a recipe for the break-up or fragmentation of the controlled sector? Would it not become more difficult to area-plan for that sector? Does that not defeat the point of having a unified organisation?
Mr McGrath:
The controlled sector is very diverse; in a sense, the only common theme that links those schools is that they are controlled; they include inner-city, rural, grammar and non-grammar schools. Previously in the Committee, we discussed the different aspirations of schools in the sector. I am not sure that trying to maintain rigidity about the sector formerly known as controlled is an objective.
We want to promote as much autonomy as possible among schools in future. Some schools might see greater autonomy as a migration route towards control over their own affairs and ownership of their own estate. That would be a critical test, not just something that we would hand over willy-nilly. However, we would not regard it as inimical. Area-based planning will still be about determining the educational needs of an area and planning to meet them. Sector support groups will have an input to that, but they will not have a monopoly of wisdom or input to the process.
The ESA will therefore be set up largely to deal with an element of the perceptions that exist. Neither my Minister nor I would regard it as a problem if the controlled sector shrank over time. If some schools took ownership of their own estate, it would gradually become redundant — rather like the “Carlsberg complaints department.” I would regard that as a positive rather than a negative.
I am not sure that preserving the controlled sector in aspic is a positive aspiration. Instead, we should encourage the various sectors to migrate to different places in future so that boundaries break down. Over time, the mix of sector-support groups may need to be redefined because schools have repositioned themselves.
Mr D Bradley:
I was going to make that point. If that sector becomes so fragmented, it will be very difficult for a sector-support body to represent the sector’s interests.
Mr McGrath:
That is a fair point, Dominic.
Mr D Bradley:
One could go one step further and question the point of the ESA.
Mr McGrath:
We have to work from where we are. We are talking about long-term migration — it may take some time for schools to move. We need a sector-support group because of the others that are in place. Not having a group will add to the sense of prejudice and inequality that Basil articulated.
Over time, the sector could break down into different sub-sectors, such as an inner-city sector, a rural sector or even a geographical span. We would not have a fundamental issue with that; neither, however, would we want over-fragmentation. In addition, we would not want to take any more money from the front line for sector support.
Mr Stewart:
As John said, Dominic correctly identified the risk; at the same time, however, if the only thing that links or binds those schools is shared details of their ownership, I am not certain that it would be a terribly coherent sector anyway. As Dominic rightly said, the real challenge is for the controlled schools’ representative body because it will play a significant role in the area-planning process; not the ownership body, which will have little or no role.
Interestingly, one of the early responses that we received to the consultation on the paper was from a principal of a controlled integrated school, which has a very close association with the Northern Ireland Council for Integrated Education (NICIE). The principal asked whether the school will belong to the controlled sector or the integrated sector in future. Our response is that that school can belong to the sector of its choice, to both sectors or to neither.
Mr D Bradley:
OK.
Mr McCausland:
Equality is a key issue; we want to ensure that there is equality across the sectors and equality for all children. I am sure that nobody would want to enshrine or embed anything inequitable in the new proposal.
Will you confirm that the proposals will ensure full equality among all the sectoral bodies, including the ownership body and the support body? In other words, will the ownership body have the same rights, role and authority as the trustees of Catholic schools?
Mr Stewart:
That is our aim. However, the phrasing of your question leads me to believe that you are about to point to some aspect that you think is sub-optimal.
Mr McCausland:
I just want to put this matter on the record. Are you assuring us that there is equality of role, status and powers?
Mr Stewart:
Yes.
Mr McCausland:
OK. That is reassuring.
Returning to an issue that Michelle McIlveen raised, point 26 states that
“DE should have the right to appoint the members of the ownership organisation in accordance with OCPANI principles;”
Do those principles apply to the membership of the trustees’ body?
Mr McGrath:
No; they do not.
Mr McCausland:
Therefore there is not equality.
Mr McGrath:
Those assets are owned by the state, and the ownership organisation will be a statutory body.
Mr McCausland:
I know that. However, there are two sectors; in one, the Church appoints the trustees; in the other, the Department appoints the trustees. Is that correct?
Mr McGrath:
Yes. Voluntary grammar schools will have their own arrangements for appointing the members of their boards of governors.
Mr McCausland:
I might address voluntary grammar schools later, but I am more concerned about controlled schools at the moment. The OCPANI principles generally apply to public bodies that cater for the entire community in Northern Ireland.
Mr Stewart:
As do all public bodies.
Mr McCausland:
Yes, but that body will deal with schools that cater for nearly the entire unionist community and small numbers from other communities — it does not cater for all of Northern Ireland.
Mr McGrath:
The body will own the estate of a number of schools that cater for the community that you described.
Mr McCausland:
Yes, it will deal with a sector that caters for those communities.
Mr McGrath:
It will own the estate.
Mr McCausland:
Yes, I know that. Therefore in one case the Catholic Church appoints trustees; in the other, there is a system of appointment to create an ownership body that could not be representative or reflective of the community that those schools serve.
Mr McGrath:
There is a difference in ownership status: controlled schools are owned by the state, so even as we speak —
Mr McCausland:
I know that there is inequality, but we want to get away from that.
Mr McGrath:
There is a difference in ownership — assets in public ownership are subject to certain standards of governance and accountability that do not necessarily apply to the assets of other bodies that, despite operating in the public sphere, are essentially private organisations. The Committee would not expect us to dilute those principles. We are saying that we will create an ownership body that will own substantive public assets.
Mr McCausland:
How will you get a body whose membership represents or reflects the community that is educated in those schools?
Mr McGrath:
That is a fair point. We have work to do to define the criteria for membership of the body. Some of those criteria will have to include technical skills, because the body will own a great deal of property. Criteria will have to be drawn up so that the membership of the body understands the ethos and background of the controlled sector and the communities that the controlled sector serves. Those criteria will have to be built in.
The way to get an overlap of membership is for people to apply. Despite Michelle McIlveen’s remarks, people have to apply for public appointments — we do not just tap people on the shoulder. The criteria for membership of the body will have to have guidelines woven in that cater for the point that you make.
Mr McCausland:
The document is going out for consultation without such criteria.
Mr McGrath:
That is a fair point.
Mr McCausland:
That is unfortunate, because it is a fundamental issue. Will the powers and authorities of the new body be the same as those of the trustees in the Catholic-maintained sector?
Mr McGrath:
Yes.
Mr McCausland:
I am also interested in pathways for the future; it is a pity that the issue was not dealt with more fully in the document. Before we go too far down that road, I can think of areas in which there are schools that might want the establishment of a smaller trust.
For instance, some schools might want to be part of a smaller system for reasons of ethos or religion; I would like to see much more about that, because I am concerned about the situation. As I said before, a controlled school can transform itself into an integrated school, but an integrated school cannot transform itself into a controlled school. Those issues are of significant concern to the unionist community, and they must be tied down before any Bills come before the Assembly and before decisions are made.
Mr McGrath:
That is a good idea. It is a fair point, and I will come back to it. This paper covers a great deal, and perhaps we should have delved more into the process of appointing members of the body. We might come back to that. However, I accept that it might have been useful to make some reference to it in the public consultation.
The pathways are an emergent policy. There is a view that there should be accountable autonomy: schools should have as much autonomy as possible to determine how they will meet improving standards of outcomes for children. They may wish to do different things with regard to employing staff, and previously we talked about giving schools more scope over securing professional development. Another strand that is highlighted is that, over time, we should create the potential for a pathway for some schools in the controlled sector that might aspire to owning their own estate eventually.
That would be a long-term plan, because a school’s board of governors would have to be of a sufficient calibre to take that step. There are issues about the calibre of boards of governors across the board; it is an evolution. We want to explain how we see that emerging and happening over time, and we must ensure that the provisions that we put in place will create the potential for those developments as opposed to closing off potential. We think that those issues will materialise in the next five to 10 years rather than in the next two or three. It is evolution rather than revolution.
Mr McCausland:
The legislation relating to the Equality Commission or the Human Rights Commission — or both — states that their membership must be reflective or representative of the community that they serve.
Mr Stewart:
It is the Human Rights Commission. It is an extremely problematic piece of legislation.
Mr McCausland:
That may be so, but there is a precedent.
Mr Stewart:
There is a precedent, but one must remember that it is Westminster legislation.
Mr McCausland:
It is good practice for a public body to reflect the community that it serves. In the case of the Human Rights Commission, it reflects the whole of Northern Ireland. In the case that I have identified, the community that the school is serving should be reflected in the membership.
Mr Stewart:
It is an issue that could be explored. My reference to its being Westminster legislation was to draw your attention to section 6 of the Northern Ireland Act 1998, which determines the legislative competence of the Assembly. We would have to make sure that any formulation of words was capable of getting through that.
Careful thought needs to be given to the extent to which we would want such a body to reflect the composition of the community served by schools or reflect the composition of the community of Northern Ireland that will, potentially, be served by all those schools. Do we want to reinforce or underpin the existing composition of the controlled-schools sector or not? I offer that as a question.
John Mr McGrath said that that is not the only, or most important, factor, to be considered in arriving at the criteria for the membership of the ESA. Its role will be different from that of the representative body; its role, as Dominic said, is narrow and technical and centres on the stewardship of public assets that are worth £2·3 billion.
The skills and competencies required for the stewardship of public assets worth £2·3 billion will be high on the list of criteria.
Mr McCausland:
I entirely agree with you regarding the competencies. However, on your previous question about a or b, I know which one I expect; that is an equality issue that you simply cannot avoid.
Mr McGrath:
It is an important point and, as Chris said, we must explore the extent to which certain things should be specified. It would also be appropriate to look for people who have an understanding of issues concerning the controlled sector, such as perception, which Basil mentioned. Those people do not necessarily have to be from a particular religious group; they could simply have the required knowledge and experience.
It may be someone who has a good understanding that the controlled sector’s perceptions are real; however, it should not be a question of representation over understanding, experience and talent. Merit is central to all public appointments, and those appointed must be capable of doing the job that they are charged to do.
Mr McCausland:
My point, which I will not labour any further, is simply that people with skills of the highest calibre who can do the job should be appointed. It would be madness to give an insufficiently skilled body ownership of a stock of such high-value buildings. I have no doubt that there will be plenty of people with the necessary skills to choose from.
However, in order to gain the confidence of the broad unionist community, and other communities whose children attend controlled schools, it is important that membership of the body is reflective and representative; and I emphasise those words. I may be able to understand many of the relevant issues, but it would be extremely impertinent for me to say that I could be representative.
Mr Stewart:
Nelson and other members expressed an interest in hearing more about the potential pathway for development. We have touched on several aspects in recent weeks that come under the broad umbrella of accountable autonomy. If the Committee would find it helpful, we will produce a paper to draw together some of those strands, including ownership, governance, our role in employment arrangements, and where we see the potential for greater autonomy.
The Chairperson:
The problem is that a paper has gone out for public consultation that alludes to but which does not address the issues that the Committee flagged up to the Department in January. It is not perceived inequality; it is inequality. I appreciate why someone in your position will say that it is perceived inequality, but it is inequality, and there will be serious implications if it is not addressed. The paper you suggest providing for the Committee, and the paper before us now, will be useful in teasing that out.
Mrs O’Neill:
The question that I was going to ask has, in effect, been answered. There needs to be a balance between stakeholders’ legitimate concerns and the associated costs. There seems to be a grey area concerning VAT, stamp duty and land-registry fees. At a time when budgets are stretched, we need know where we are going on this issue; I hope that we can get that information as soon as possible.
The two-step transfer process is a massive upheaval for staff, who will have to move from education and library boards to the ESA and then to a new body.
Mr McGrath
A small number of staff will be affected; it will not be huge.
Mr Stewart:
The VAT issue is important. There is a further important point to make in order that we do not inadvertently mislead the Committee. The issue of VAT exemption first arose when the intention to establish the ESA was announced. The Treasury and HMRC will decide whether the VAT exemption that applies to the education and library boards will be carried forward to the ESA. It is inconceivable that its decision on any new body that takes ownership of controlled schools would differ from its decision on the ESA. In that sense, therefore, that part of the policy decision will not be affected. The decision of the Treasury and HMRC on VAT exemption will be good or bad, regardless of whether controlled schools are under separate ownership or under the ownership of the ESA.
The land registry fees are a different matter that could, of course, be affected by the number of transfers that will have to take place.
Mrs O’Neill:
What about stamp duty?
Mr Stewart:
The same applies to stamp duty.
The Chairperson:
I would like clarification on the use of the word “pluralist” in paragraph 8:
“It is recognised that the education sector here remains pluralist.”
Are you referring to the controlled sector or to education in general as pluralist? Exactly what is meant by that?
Mr Stewart:
In the context of the sentence, pluralist refers to education generally and the fact that we continue to have sectors and schools of differing ethos and character. It is also true, although it is not implied in the sentence, that the controlled sector is perhaps more pluralist than the other sectors.
The Chairperson:
It is interesting to compare how the outlined purpose of the ESA stacks up with the Bill, which defines the general duties of the ESA in clause 2(2)(a):
“to contribute towards the spiritual, moral, cultural, social, intellectual and physical development”.
If every sector is pluralist, how can that be done?
Mr Stewart:
I am not sure that I understand the tension between the two.
The Chairperson:
Perhaps there is no tension; we will come back to that at another stage. I think that there is a contradiction between the two.
Mr Stewart:
You will have to assist me, Chairperson; I am afraid that I cannot see any contradiction.
The Chairperson:
I will return to that issue.
Mr McCausland:
It is unfortunate that the consultation process is under way without there being any clarity on those issues. In a sense, you are asking questions of people who do not have the necessary information to be able to answer them. That devalues the consultation, and it perhaps suggests to some people that the Department has not picked up on the public’s basic concerns. The issues that we are articulating today mirror the concerns of many in our community.
Mr Stewart:
I take your point. The consultation process is similar to dipping a toe in the water, and it is important to do that. A tension always exists between early consultation to ascertain the views of stakeholders and a later consultation when the proposals have been progressed to such an extent that the opportunity to influence them may have gone.
The current consultation is not a question of take it or leave it; the Department wants to hear, reflect on and respond to stakeholders’ views. After reflection and drawing conclusions from the points that are raised during consultation, that response may be in the form of a more definitive policy proposal. I assure the Committee that the concerns raised during the consultation process will not be overlooked.
The Chairperson:
What is the next stage of the process? Will there be further consultation on finalised or emerging proposals?
Mr Stewart:
We will reflect on that in light of the available timescales. I am conscious of the fact that, from a pragmatic perspective, the Committee wants to see detailed proposals as quickly as possible. We will certainly bring back to the Committee and make available to stakeholders an analysis of the consultation responses received and what we propose to do with them.
Miss McIlveen:
Does that mean that none of those working groups will be set up until after the consultation has been completed?
Mr McGrath:
No; we want to proceed apace with that.
Miss McIlveen:
It says so in the consultation paper.
Mr McGrath:
No; this is a consultation with the ownership body — the sector support. There is an urgent need to make progress on that, and we want to get on with it.
Mr Stewart:
We are consulting on the paper. However, given the urgency, there are steps that we can take now without prejudicing the outcome of the consultation — we can gather ideas and suggestions as to which shoulders we might tap for the initial group without constraining what that group might do. However, that might change as a result of what comes back from the consultation.