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Mr. Jamieson: My hon. Friend the Member for Liverpool, Walton (Mr. Kilfoyle) has clearly marked out the difference between the Opposition and the Government on this important matter. We are in favour of the careful and prudent use of taxpayers' money, but the Government are quite happy about the careless and imprudent use of the exceedingly limited resources for school buildings.
The Opposition know that clause 6 is largely superfluous. I have already spoken to a number of grant-maintained school heads and their governors, who cannot conceive how they will find the money from their revenue budgets to pay back the loans envisaged under the Bill. They do not understand what part of their land or buildings they could use as collateral against such loans.
As I said to the Minister in Committee, even a modest building in a school could cost up to £500,000 to provide. At the very minimum, a school would have to pay back about £50,000 a year out of its revenue budget to finance that building. That is approximately the cost of two and a half teachers. That repayment could go on not just for one or two years but for between 10 and 30 years. Such is the length of time that that school would have to forgo teachers in order to provide for the new building. Unfortunately, the Government are trying to treat schools rather like businesses, but very few comparisons can be properly made.
Yes, we are happy that schools should have financial autonomy, but no, schools do not have an unlimited ability to expand. Of course, schools get most of their money from the public purse.
Mr. Andrew Rowe (Mid-Kent):
Will the hon. Gentleman give way?
Mr. Jamieson:
Time is short and the hon. Gentleman seems to have just popped in for a few minutes, so he will understand why I will not give way to him.
The amendment would ensure, as any lender would in other circumstances, that the borrower could pay back the money. The key question is whether a borrower can pay back the loan and the interest. It seems infinitely sensible to the Opposition that that safeguard should be included in the Bill. We want to know that that borrowing can be repaid without further recourse to other funds that a school may call upon the Funding Agency for Schools to provide.
The amendment would also ensure that the borrowing is not made against core assets. At this stage we need a clear definition of the core assets against which a school cannot borrow. No clear definition is supplied in the Bill. It is important to know that definition because, if a school defaulted on its payments, are we to assume that those assets could be repossessed? Could the bailiffs go into the science room and take the equipment out? Is that what the Minister is suggesting? If not, what is the point of using those assets as collateral? Children's education is far too important to be left to the vagaries in the Bill. We need a clear definition of the core assets.
We are told that the Funding Agency for Schools will consider loan applications. If, once the Bill is enacted, the agency received between 100 and 200 applications, to how much scrutiny would it subject each of those bids? Will it find time to send officials to look closely at a school's buildings and assets to see whether they meet the definition of core assets? Those of us who sat on the Committee considering the Education Bill in 1993 will know that we were told that the Funding Agency for Schools would have a light touch. If it is required to scrutinise in detail loan applications, that is not equivalent to a light touch. For that reason, the Bill needs to contain a clear definition of core assets.
What we need, and, most of all, what parents and governors need, is a yardstick against which the applications will be measured. The Opposition appreciate that the matter is too important to be left to the terms of the Bill as currently drafted. The Bill should contain a clearer definition of core assets. I invite the Minister to make that clear to us now.
The Parliamentary Under-Secretary of State for Education and Employment (Mrs. Cheryl Gillan):
The one thing that the Opposition cannot bear is the success of the Government's education policy--for example, on the national curriculum, testing and, in particular, grant-maintained schools. Those schools are successful and well run. They have demonstrated that they know how to use self-governing status wisely. We want to recognise that fact by giving them the additional freedom to borrow money on the commercial market.
Amendment No. 15 would include in the Bill some of the Government's proposed administrative safeguards on borrowing by GM schools. We have made it clear on a
number of occasions that those schools will be allowed to borrow only if they can service any debt from their income without prejudicing their main business. I can assure the House that there is no question of the Government making additional grant available to GM schools to allow them to take out larger loans. Recurrent funding for GM schools will continue to be directly related, as it is now, to the funds received by schools maintained by local education authorities.
The other part of the amendment relates to core assets. I can confirm that GM schools will not be allowed to offer core assets--those that are essential to their functioning--as collateral. I am pleased to see that the Opposition have taken on board those proposals and agree with us about the need for safeguards on commercial borrowing by GM schools.
Safeguards are necessary for three main reasons: first, to protect the public interest in publicly funded assets; secondly, to ensure that schools can continue to provide education in accordance with their statutory responsibilities; and thirdly, to maintain public accountability for the use of public funds.
Although we agree with the Opposition about the need for safeguards, we think that applying them in the form implied by the amendment will introduce unnecessary inflexibility. We resisted similar amendments in Committee. We resist amendment No. 15 because we take a sensible and consistent view about what should properly be contained in primary legislation and what should not.
That represents the essential difference between our approach and that of the Opposition. We are in favour of choice and diversity, whereas the Labour party is in favour of uniformity and prescription from the centre. In diversifying circumstances, it is entirely inappropriate for such detail to be prescribed in legislation. We want to leave GM schools the ability to act effectively.
I can understand that the Labour party, which seeks to prescribe a uniform system, would want to enter every small, detailed point in primary legislation. Even if we agree with the general objective, we do not want to reach it by some form of Procrustean bed.
Opposition Members also want us to define in regulations what is a core fixed asset. That is both unnecessary and undesirable, although we understand the concerns that underlie it. Defining core assets in regulations is difficult because the circumstances of individual schools vary so widely.
The hon. Member for Liverpool, Walton (Mr. Kilfoyle) repeated word for word what we said in Committee, so he knows our two simple rules of thumb: whether the asset is essential to allow the school to meet statutory requirements and whether it is essential to its functioning in other respects. I am pleased that he appears to have listened carefully in Committee as he noticed that the starting assumption of the Funding Agency for Schools is that all buildings are core assets.
I hope that Opposition Members recognise that, although we share their concerns about the importance of protecting publicly funded assets, such decisions are best left to administrative discretion in the light of specific local circumstances.
In Committee, Opposition Members produced a number of powerful arguments against their own amendment. They gave us a long list of facilities--
including photographic studios, gymnasiums, information technology rooms, assembly halls, sports halls and landscaped areas--that they thought should be defined in regulations as core assets.
I thought that the House would want to know the reason for the legislation, as Opposition Members have asked. They have often alluded to the fact that schools would not want to borrow. I am pleased to say that a school in the south-east wants to borrow funds and extend its buildings and has already, in anticipation of the Bill, had discussions with bankers in principle about a loan.Two schools in the south-east intend to borrow £500,000 each, in both cases to finance the construction of a performing arts centre. Another wants to borrow to improve its sports facilities. A school in East Anglia is currently preparing a substantial project to be financed by borrowing. Another in the south-east intends to borrow money to build a new caretaker's house.
The grant-maintained school movement has been a great success for the Government. Opposition Members take every possible opportunity to try to scupper the grant-maintained movement. To put it into perspective, the hon. Member for Walton has said on many occasions--but it bears repetition--
in the Labour party--
"The Minister cannot be in any doubt that we"--
"have made a firm commitment to abolish GM status because it is not compatible with our new arrangements for schools."--[Official Report, Standing Committee F, 22 February 1996; c. 373.]
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