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12.44 pm

The Parliamentary Under-Secretary of State for Education and Employment (Mr. Robin Squire): I am grateful to the right hon. Member for Berwick-upon-Tweed (Mr. Beith) for initiating this debate, thus giving the House an opportunity to consider how education is funded in Northumberland. I also welcome hon. Members on both sides of the House to the debate. I make one introductory comment in response to an introductory comment by the right hon. Gentleman concerning a certain memorandum. I reiterate what my right hon. Friend the Secretary of State for Education and Employment has said more than once. She did not devise, write, sign or use that memorandum. Although we never comment on leaked alleged memoranda, it is only fair to put that point on record in light of the right hon. Gentleman's opening comment.

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Inevitably, what I say today can, in part, be only a curtain raiser for the announcements that will be made next week by my right hon. Friends. Tempting though it is to say much more, I must decline invitations, however kindly given by the right hon. Gentleman, to say more about funding for education in Northumberland for 1996-97.

The first education expenditure matter on which we all need to be clear is that Northumberland county council, like every other local authority, is responsible for setting its education budget and deciding the priorities between and within services. The council has the final say on how much is spent on education and how much is spent on other services.

We heard--I expected it--a lot from the right hon. Gentleman about reductions, past, present and future, in Northumberland's education budget. I have already made it clear that I can say nothing about next year's financial settlement except this. Neither hon. Members nor Northumberland county council can yet have a clue about the level of that settlement. Any talk, therefore, of budget cuts must be purely speculative. Frankly, it is irresponsible for local authorities to ring alarm bells at this time of the year when they cannot know how much money they will have in 1996-97. I make it clear, for the avoidance of doubt, that a number of local education authorities, including Northumberland, Lancashire and East Sussex, have indulged in that practice. At the very least, it does not assist in rational discussion of these matters.

Mr. Jack Thompson: Is the Minister aware that I am chairman of governors of one of the schools in my constituency, Newbiggin middle school? Last Friday, the board of governors had a meeting. In our budget preparations, we had to take into account the possibility of having a reduction of between 1 per cent. and 3 per cent. That is the simple logic that one must use in planning and preparing for an academic year for a school. We also have to consider the next year, the year after and the year after that. We have to take into account the welfare of the pupils, the staffing levels, the provision of resources and the building itself--the whole gamut of running a school. One has to prepare and consider those factors and take them into account, otherwise one is caught with one's pants down.

Mr. Squire: I am grateful for the hon. Gentleman's work in his capacity as chairman of governors. Of course I endorse the point that all governors and all local authorities must plan ahead. My point was specific. I speak as the recipient of many letters, from across the country, which have been caused by local education authorities describing now, in advance of next week's settlement, exactly the cuts or whatever they will face. I repeat for the hon. Gentleman and the House that those figures cannot yet be known and that such talk is, at this stage, alarmist.

The right hon. Gentleman said that Northumberland has been forced to cut millions of pounds from its education budget this year. That is not true. Northumberland has been able to increase its education budget by some 2 per cent. this year and is able to spend over £200 million on all services. That, I submit, is not bad in a year in which local authorities face a tough, but fair, settlement.

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Mr. Beith: Will the Minister give way?

Mr. Squire: I wish to make progress. The right hon. Gentleman made a number of points and in fairness to him I would like to reach them. If I have time, I will willingly give way. As he knows, I do not refuse to give way.

So from where does the talk about cuts come? The county council is not cutting what it is actually spending; it is drawing up a shopping list of additional spending, fully uprating for all price and income movements, and then cutting back on what it would ideally like to spend if it could buy all the items on that list.

We have to recognise the wider background to the financial settlement for Northumberland. The Government have made it clear all along that this year's settlement has been tough. That is necessary to constrain increases in public expenditure, since local authority expenditure accounts for roughly a quarter of all public expenditure. The whole of the public sector should be looking to meet pay and price pressures, and to make efficiency savings. The long-term future of funding for education in Northumberland depends on ensuring that the economy is placed on a firm footing and that Government keep a firm grip on inflation.

We should give more attention to what Northumberland county council is doing with the funds it receives from central Government. There are important questions which schools and parents will want to ask the county council. Is it achieving value for money? How many surplus places are there in Northumberland schools and what does the county council intend to do about them? I shall not exchange comparative figures because that would be tantamount to telling Northumberland exactly what it should do, but I shall say that the county council has some way to go to catch up with what a number of LEAs are already doing.

The right hon. Gentleman mentioned class sizes in Northumberland schools. Despite the horror stories that appear about class sizes of 30, 35 and more, the facts are that the latest available data show that the average class size in Northumberland schools is 27 in the case of primary schools and 23 in the case of secondary schools. If there are individual class sizes of over 30, it is up to the county council in the first place, and those managing school budgets in the second, to explain to parents why those particular class sizes are so far above the Northumberland average. There could be any number of reasons: the level of teaching done by the head teacher and deputy--

Mr. Beith: The rural factor.

Mr. Squire: I fully concede that and I will say more on the rural factor if time permits.

Other reasons include the degree of non-contact time, a bulge in the pupil population, the physical size of classrooms and the general organisation of teaching and learning at the school.

I remind the House of the main finding in the recent Ofsted report based on inspectors' independent observations. There is no simple link between the size of class and the quality of teaching and learning within it. The selection of teaching methods and forms of class organisation have a greater impact on learning than the

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size of the class. For example, how well classroom assistants are used alongside teachers is an important factor influencing the quality of teaching and learning.

It is interesting to compare the quality of education in Northumberland with schools elsewhere with smaller class sizes. Look, sadly, for instance at Hackney Downs school, where spending is two and a half times the national average per pupil, and the pupil-teacher ratio is 8:1. That illustrates my point, particularly as the coincidence of small class size and failing schools is by no means limited to Hackney Downs.

Mr. Peter Atkinson (Hexham): Pupils in Newcastle get far more funding per pupil than those in schools in Northumberland. Newcastle gets £651 per head of population in grant while Northumberland gets £482. Northumberland is in the top half of local authority schools in the league table, but Newcastle is second from the bottom and is clearly failing its children.

Mr. Squire: My hon. Friend makes a very important point. I will deal with the SSA system on differential funding, but he must be right to say that, at any given level of funding, there is a considerable difference in the outturn as a result of that funding, as we have seen most recently in the tables published this week. In particular, schools in disadvantaged circumstances can perform tremendously while others in similar circumstances cannot currently do so. I know that heads and governors in those circumstances will revisit their own schools' experience.

I thought optimistically that I might get away without discussion of the standard spending assessment, but I understand why the right hon. Member for Berwick-upon-Tweed raised it. Next week, my right hon. Friend the Secretary of State for the Environment will announce his proposals just after the Budget, but I can make two points about the SSA methodology. Both will be familiar to hon. Members but they none the less concern two essential elements of a methodology which would purport to be fair.

The first is that the education SSA system does not set out to allow the same level of spending for each pupil, nor should it. That is the point raised by the hon. Member for Blyth Valley (Mr. Campbell). The system aims to provide funding for a common standard of service across the country, taking account of the fact that the costs of providing education vary from one LEA to next. As need varies from one council to another, so logically does poundage per pupil.

Each authority's education SSA reflects the relative costs of educating children in very different circumstances: in sparsely populated areas; in London and the south-east where labour costs are higher; and in areas of socio-economic disadvantage or with a high proportion of non-English-speaking children.

I know that the sparsity allowance is a particular concern to Northumberland, and the right hon. Member for Berwick-upon-Tweed mentioned the problem of running an education service in a scattered rural area. The fact is that, alone of all the factors in the education SSA

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formula, including the much-loved area cost adjustment with which I shall deal shortly, the weight given to the sparsity allowance is 50 per cent. higher than the raw statistical evidence would suggest.

Alongside all the representations I receive about a bigger slice of the SSA cake for rural authorities, I have to consider the position of those authorities that object to that 50 per cent. judgmental uplift. They might ask: why should the Government not reduce it, or increase the weight on additional educational needs, or even uplift the area cost adjustment by 50 per cent. as well? All those arguments have to be balanced against each other. Our aim is always to arrive at the fairest formula possible for distributing grant between authorities. In consultation with the local authority associations, we will continue to consider carefully the arguments for and against making changes.

I want to say a brief word about the area cost adjustment, since I know that it is a particularly controversial aspect of the formula that hon. Members on both sides of the House have raised with the Government. The right hon. Member referred to the level of support going to local authorities in the south. Everybody agrees that there has to be an area cost adjustment. Not even Northumberland county council would abolish it altogether. It is the unanimous view of the various local authority associations that some recognition of the factors that lie behind it must be made. Those LEAs that get it say that they need to spend even more, and those that do not say that the money needs to be redistributed to them. That is perhaps unsurprising.

The Government, however, want to make progress on this issue. As the right hon. Gentleman mentioned, my hon. Friend the Minister for Local Government, Housing and Urban Regeneration met leaders of the local authority associations on 16 October to discuss the area cost adjustment. My hon. Friend proposed that we should set up an independent review of the area cost adjustment to try to ensure that it receives uniform support among LEAs. I know that that review will be welcomed by many hon. Members even if, inevitably, the consequence of that review cannot reasonably feed into the announcement that the Secretary of State for the Environment will make immediately after the Budget.

The right hon. Member for Berwick-upon-Tweed briefly mentioned capping. I know that there is a wide range of opinions on that subject, but capping is important as part of the Government's wider economic objectives.

We should be clear in our minds about the way in which capping works. It does not force local education authorities to cut their budgets; rather it limits the rate at which they can increase them. As I mentioned at the start of my speech, there is little that I can say today about the role of capping in 1996-97. The right hon. Gentleman will have to wait--but only a short while--for the relevant announcement to be made.

This has been a short but wide-ranging debate and I am grateful to the right hon. Gentleman for allowing me the chance to put the record straight on several issues. I am sorry none the less, especially as a result of the coincidence of timing, that I cannot say more about the settlement for 1996-97 now.

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