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Session 1999-2000
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Delegated Legislation Committee Debates

Local Government Finance (England) Special Grant Report (No. 61)

Second Standing Committee on Delegated Legislation

Monday 17 April 2000

[Mr. Bowen Wells in the Chair]

Local Government Finance (England) Special Grant Report (No. 61)

4.30 pm

The Minister for School Standards (Ms Estelle Morris): I beg to move,

    That the Committee has considered the Local Government Finance (England) Special Grant Report (No. 61) on Special Grants for School Standards, Support of School Budgets and Costs of Transitional Funding (HC 399).

I welcome the opportunity under your chairmanship, Mr. Wells, to describe special grant report No. 61, which will put more money into school budgets. I know that it will be welcomed, not only by members of the Committee, but by the House as a whole, as well as by teachers, pupils and parents. The report will allow my right hon. Friend the Secretary of State for Education and Employment to pay three types of grant to local authorities to improve school standards, to support school budgets and to help local education authorities with the cost of transitional funding for their former grant-maintained schools.

I shall deal first with the school standards grant. My right hon. Friend the Chancellor of the Exchequer announced in the Budget in March that an extra £290 million would be made available to schools in England in this financial year. As members of the Committee will know, that was part of a £1 billion United Kingdom package to help improve standards in education throughout the country. The grant for school standards will be paid directly to all local education authorities. The amounts will depend on the number of schools of each size in the authority's area.

The money for schools will amount to between £3,000 and £9,000 for each primary school, depending on the number of pupils enrolled; between £30,000 and £50,000 for secondary schools, depending on the number of pupils enrolled; £15,000 for all special schools; and £9,000 for middle schools. Nursery schools, city technology colleges, non-maintained special schools and pupil referral units will also benefit directly from that extra funding. We will soon propose regulations to require local education authorities to increase school budgets and to pass on the extra funding to their schools within seven days of their receiving it. They will not be allowed to top-slice any of it.

It is clear that the extra money that was secured by the Secretary of State and granted by the Treasury will go directly to schools—not one penny of it will be taken away by the authorities from the heads of governing bodies to spend how they wish. We expect schools to receive the money in May. Local authorities will not be able to pass it to schools in slices, but will be required to make all of it available in one go. The funding will help primary schools to meet the challenge in literacy and numeracy targets that they have set for 2001 and 2002. It will give extra support to secondary and middle schools in their important job of raising standards at key stage 3. Schools will be allowed to use the extra finding how they please, whether for books, computers or extra staff.

The second grant concerns support for school budgets. It originated at the time of the local government finance settlement on 25 November 1999. It, too, will be paid to all local authorities at the same time as the school standards grant, to which I have referred. The Secretary of State decided that those schools in authorities that have not passported the increase in education standard spending assessments—the number of which is six—should not be penalised further by the Government withholding their share of the grant. That was part of a revenue funding package that included a £1.1 billion increase in education standard spending assessments.

The grant has been allocated on the same basis as the school improvement grant in the standards fund, not in accordance with the traditional SSA formula that determines the amount of money going from central to local government. Each authority should allocate the grant to individual schools in accordance with its local school funding formula. If the authorities wish to use another method, they must consult their schools and then apply to the Secretary of State, at which time any sensible alternative will be considered favourably.

The third grant concerns transitional funding, which will be paid to those authorities with former grant-maintained schools that need transitional funding for 2000–01. It will help those local authorities to avoid unmanageable changes in the budgets of former grant-maintained schools, as fair funding spreads the benefits of increased delegation. In June last year, the Secretary of State announced that protected budgets of former grant-maintained schools would be increased by 2.5 per cent, which is in line with inflation for this financial year. That certainly places an extra burden on local education authorities with former grant-maintained schools. The purpose of the grant is to support the increased cost. It is important to encourage authorities to increase per pupil funding for all their schools, which should narrow the gap between protected funding of former grant-maintained schools and LEA budgets. Some LEAs managed to eliminate transitional funding last year; we want many more to do so this year.

The amount of grant that will be paid to local authorities will depend to a large extent on whether the authority has met the target for increasing funding per pupil for its schools, which the Secretary of State set at 5 per cent. for those authorities delegating more than 85 per cent. last year, and 6 per cent. for all other authorities. Those authorities that do not meet the target will receive less grant than those that do. The Secretary of State does not intend to pay money to local authorities that have not done their best to increase delegation to schools. The compilation of tables of LEA expenditure will have to be completed before claim forms for the grant can be sent out. That is expected in June, with a return date of early September. Payments can be made later in September or October.

In addition to the money allocated in the standard spending assessment to schools to raise standards, the order represents three diverse ranges of grants to support the work of teachers, as part of the Government's programme to raise standards. Teachers should spend those grants in schools as they see fit. The grant announced in last month's Budget was widely welcomed by schools, and, if I recall rightly, it is the first time that a Government have made a grant of such size directly available to schools. We have done all that we can to make sure that the money goes where it is intended.

Local authorities and schools welcomed my right hon. Friend the Chancellor of the Exchequer's comments in the statement last year. Schools—often foundation schools and former GM schools—also welcomed the 2.5 per cent. inflation protection provided this year. The three grants are an important part of our wish to increase the money available to schools and make education a priority. I hope that they receive the approval of the Committee.

4.37 pm

Mr. James Clappison (Hertsmere): I associate myself with the Minister's comments expressing pleasure at serving under your chairmanship, Mr. Wells. I have a number of questions relating to the three grants that the Minister has just detailed.

As the Minister said, the school standards grant gives effect to the £290 million announced by the Chancellor of the Exchequer. Although I do not want to make too much of this matter, I note, for the sake of accuracy, that page 12 of the special grant document refers to an announcement by the Chancellor on Tuesday 22 March. However, the Chancellor delivered the Budget speech on Tuesday 21 March. Many announcements come from the Treasury at or around the time of the Budget, so it would be helpful to know whether the reference is to the Chancellor's announcement in his Budget speech. Will the Minister confirm that the reference to Tuesday 22 March is a mistake, as Tuesday was 21 March?

Mr. Richard Allan (Sheffield, Hallam): I have another version, which refers to Tuesday 21 March. Looking over the shoulder of another hon. Member, I see that his copy refers to Tuesday 22 March. There appears to be a printer's problem, if nothing else.

Ms Morris: I apologise for that. The hon. Member for Hertsmere (Mr. Clappison) is absolutely right: Tuesday was 21 March. The report should refer to that date. I apologise if some hon. Members' copies are inaccurate. The announcement is from the Budget speech, which took place on Tuesday 21 March.

Mr. Clappison: The Minister has been gracious and helpful. As I said at the outset, I do not want to make too much of the mistake, but it is helpful to have accuracy.

On another small point, I would like to know a little more about the quantum of the sum being given to schools. This afternoon, the Minister mentioned the figure of £290 million. Perhaps we can marry that to the Chancellor's announcement. Is the Minister's figure a reference to the Chancellor's announcement that education measures alone

    amount to £300 million in new investment.—[Official Report, 21 March 2000; Vol. 346, c. 870.]?

Can the Minister confirm that that £300 million has become £290 million? If not, can she explain how the difference in the figures has arisen? I ask those questions, because I think that it is important to be accurate in such matters.

Conservative Members are more interested in the thinking that lies behind the decision to pay money direct to schools. We make no bones about the fact that we want more money to go to schools for use in the classroom. We note what the Secretary of State said about heads and governors having the freedom to determine how new resources are used. In light of that, will the Minister tell us how the school standards grant fits in with the rest of the system for financing schools? As I understand it, that grant has been presented to the public and the Committee not as a reform of education finance, but as a piecemeal addition to the existing system. Money now goes to schools via local authorities through the revenue support grant and the standards fund.

Money also goes direct to schools. What is the Government's thinking on that? Do they propose to go further down the road of giving money direct to schools? As I said, the Government have made a fanfare about money going to schools for heads and governors to spend themselves. Does the Minister accept that that money amounts to only a very small proportion of spending on schools, let alone total education spending by local education authorities? Can the Minister confirm that the grant is equivalent to 1.3 per cent. of total standard spending on education by local education authorities?

The second grant that we are considering is the school budget support grant, which involves an even smaller sum in relation to education spending as a whole—£50 million. We are told simply that that money is being made available to support school budgets. The money had already been announced on 25 November 1999. The Minister hinted that that had something to do with encouraging local authorities not to withhold money from schools. However, the Secretary of State said in a letter of 7 April that he would give the money to local education authorities whether or not they withheld money from schools. The Minister also referred to that. Why have the Government decided to slice off that sum of £50 million and make it the subject of a separate announcement and a separate fund for schools? We appreciate that the money generates a separate announcement, and the Government are certainly not averse to making lots of different announcements and generating lots of different headlines. How does that money fit into the overall system of finance?

The third grant concerns transitional funding. It concerns an important subject—the financing of former grant-maintained schools. The Government's claims, including those that we have heard today and during the Budget speech, about getting money direct to schools do not sit well with the background to this grant. As we all know, money went direct to grant-maintained schools, whose heads and governors had real freedom to make their own decisions about finance and how they administered their schools. The Government are now making claims about getting money direct to schools, having taken that freedom away from the former grant-maintained schools. There is no room for doubt about the fact that those schools have lost out financially under the new arrangements as compared with the system that they previously enjoyed. There is no doubt that they used their independence under the old system to make significant savings in running the schools.

When the Government took office, they promised through the School Standards and Framework Act 1998 to establish a process of levelling up for the grant-maintained schools. The current Secretary of State for Trade and Industry gave that assurance, but as on other things, he has been proved wrong. No one could seriously contend that there has been any levelling up for the schools. The Government have been forced to admit as much by providing special protection for the schools to stave off the most disastrous consequences of the new funding system that they imposed.

Notwithstanding that protection, the schools still face serious financial problems. The Government have made assistance available in the form of cash protection to the schools. For the year 1999–2000, the Government guaranteed that grant-maintained schools would receive the same level of funding per pupil in cash terms as they did in 1998–99. For a majority of grant-maintained schools, it appears that the amount that they would have received through local authorities under the new system meant that they had to fall back on that guarantee.

The Association of Grant Maintained and Aided Schools produced a survey that suggested that two thirds of schools had fallen back on the cash protection. Of course, that protected only the amount that they would have received in 1998–99, and it took no account of the 2.5 per cent. increase in teachers' pay that was part of the previous teachers' pay settlement, for example. The representatives of grant-maintained schools themselves have pointed out that the schools have had a real-terms cut in funding, which has caused problems for grant-maintained schools around the country. Those problems are reflected in budget deficits, teacher redundancies, requests to parents for financial assistance—not to fund extras but to meet core commitments—and a host of other financial problems.

I will briefly give an example from a school in my constituency that has lobbied me. Wroxham primary school in Potters Bar has 245 pupils. The new system imposed by the Government has resulted in the loss of the equivalent of 100 hours per week of support time from classroom assistants and the loss of the part-time special needs teacher. Those losses have reduced the help that the school gives to those most in need of special help. I understand that such a pattern has been replicated in several schools, and that those most in need of help are losing out.

That is but one example, and I submit that the financial plight of the former grant-maintained sector under the Government is becoming increasingly well known and well documented. That plight is likely to be exacerbated when schools with the benefit of reserves draw deeper on them or exhaust them. We can expect more cuts in provision, more teacher redundancies and more support staff redundancies as reserves are exhausted and financial problems continue. In a written answer that I received today from the Minister, it is interesting to note that class sizes in grant-maintained secondary schools have risen even faster than those in maintained secondary schools since 1997.

The Minister and the Government must answer several questions about the grant, which increases the cash protection given to former grant-maintained schools by only 2.5 per cent. over the cash protection made available in 1999–2000. Once again, the Government have failed to provide for the financial pressures that the schools will face in the year ahead, owing not least to the 3.3 per cent. teachers' pay settlement, which exceeds the amount now being made available to the grant-maintained sector. Once again, many former grant-maintained schools will be faced with a real-terms cut. Most grant-maintained schools may face such a cut, given that a clear majority—two thirds of them—had to rely on cash protection last year. How much does the Minister expect those schools to be paid through the transitional fund in 2000–01, and how much were they paid in 1999–2000?


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