Baroness Smith of Malvern (Lab)

My Lords, I start our consideration of this group of amendments by re-emphasising, as I did in the first group, the urgency with which we need to tackle the skills gaps in our economy. They are holding back growth and opportunity, which is why we intend, as a priority, to establish Skills England as an executive agency of the Department for Education. I know that, quite legitimately, in Committee there was a challenge about the nature of the executive agency, questions about whether that was an appropriate form for Skills England, and concern about the fact that the nature of the Bill meant that there was no mention of Skills England. I hope that, in the amendments that I propose and through some of the other reassurance that I have provided to noble Lords, I have addressed those issues. The executive agency is a widely used model of arm’s-length body, of which there are many examples which play important roles, including the Met Office, the DVLA, and the Standards and Testing Agency. I provided more information about the functioning of executive agencies in the letter that I circulated. It is certainly not the case, as was suggested at Second Reading or at some point in Committee, that somehow Skills England would be in some cupboard in the Department for Education. This is a serious and well-used way in which to create an arm’s-length agency in government, which has been used by Governments of all persuasions in recent years. Executive agencies have clearly defined status and must be established and governed in line with official Cabinet Office guidance. To summarise, the guidance states that executive agencies are identified as appropriate for the delivery of specialised functions, separate from a primarily policy-focused department but within a policy and resources framework set by that department, and the delivery of services to other parts of central government using specialist skills. The executive agency model therefore provides a strong fit for Skills England. As I have emphasised, it is imperative that Skills England is fully operational as quickly as possible, designing and delivering high-quality training that reflects employers’ needs. Compared with a non-departmental body, for example, the executive agency model can be up and running much more quickly. Following what I hope is the successful passing of this Bill, Skills England can quickly take on functions from IfATE, alongside those it has already begun to deliver while in shadow form. The executive agency model provides Skills England with the independence to focus on the delivery of its functions at arm’s length from the Department for Education, while ensuring sufficient proximity to the department, so that Skills England can quickly and efficiently inform decisions on skills policy and delivery. Noble Lords have expressed concerns that pursuing this model will mean that there is insufficient transparency around exactly which functions are being transferred to the Secretary of State from IfATE and those which are to be executed by Skills England, as well as around the impact that Skills England’s responsibility for and execution of its functions will have in practice on our apprenticeships, technical education and the objectives that I know noble Lords share to improve our skills system. Similarly, noble Lords have queried what the executive agency model means for how Ministers will be held to account for their decisions as related to these functions, and how Skills England will be held accountable for its performance. I assure noble Lords that, as with other executive agencies, Skills England will be required to have robust governance arrangements and clear lines of accountability, including to Parliament. Ministers, the principal accounting officer and the chief executive will be accountable to Parliament, and are usually those who, for example, appear before Select Committees as required. Skills England will be overseen by a board, headed by a non-executive chair. As I said in Committee, I assure noble Lords that we have borne in mind the necessity to have strong credibility with employers in choosing who the non-executive chair will be. I hope that we can soon introduce them not only to noble Lords in this House but more widely to employers and others engaged in this activity. This board and chair reflect Cabinet Office guidance that executive agencies should be led by a board where there is a need for a significant level of independence from a department to carry out its functions effectively, or where they are of sufficient size and importance to require independent assurance. The board will advise on strategy and deliverability, maintain high standards of corporate governance, ensure that controls are in place to manage risk and scrutinise performance. Working with the board, the chair will provide the strong and independent leadership, support and challenge needed for Skills England to deliver its objectives. The broader governance arrangements for Skills England, as we touched on in the previous group, will be set out in a framework document. This is a core constitutional document that must be produced in line with guidance from the Treasury. Skills England’s framework document will be agreed between its board and Ministers, as I have already suggested. Once finalised, it will be published online, and I will deposit a copy in both Houses. I have written to noble Lords with more information on what the framework document will likely set out, including the detailed sponsor relationship between Skills England and the Department for Education, lines of accountability to Parliament, and Skills England’s purpose, aims and duties. Noble Lords can see examples of such documents for other arm’s-length bodies online, as all are published by the Treasury. Noble Lords have expressed an interest in understanding more about Skills England’s future reporting arrangements. I can provide assurance that the reporting arrangements of executive agencies are clearly defined. They must produce an annual corporate plan and an annual report, both of which will be published in respect of Skills England, subject to any commercial considerations in the corporate plan. These will, together, support Skills England’s accountability, including to Parliament, by providing transparency over its strategic priorities and performance. Again, my recent letter to noble Lords sets out more detail on what guidance dictates that corporate plans should include, such as—I know noble Lords have raised this point—key objectives and performance targets, and assessment of current and recent performance against those targets. Taken together, I hope that the steps I have described here—namely, compliance with clear and detailed Cabinet Office guidance on the role and purpose of executive agencies; appointment of an independent board; and publication of a framework document, annual corporate plan and annual report—demonstrate that Skills England is being set up in a way that ensures transparency about its work and accountability for its performance.