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

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Mr. Geoffrey Clifton-Brown (Cotswold): My constituency has the highest number of former grant-maintained secondary schools of all. Those schools have been on stand-still budgets for the past two years and have lobbied me on that account. If they continue to have stand-still budgets, they will inevitably lose further support teaching staff, and the pupil–teacher ratio is bound to get worse. Will my hon. Friend press the Minister on that issue?

Mr. Clappison: My hon. Friend is right that those consequences must inexorably follow. He is also right to suggest that—whatever complexion one wants to put on it—there are a higher proportion of grant-maintained schools in some parts of the country than in others. Five out of seven secondary schools and several primary schools in my constituency are grant-maintained. It is in areas such as mine and my hon. Friend's that the losses will be concentrated.

How many grant-maintained schools does the Minister expect to receive cash protection—and therefore funding through the grant—in 2000–01? Will the figure be less or more than that for 1999–2000? What will the average level of protection be for former grant-maintained schools? How many of those schools dug into their reserves in the past year, and how many have exhausted their reserves? Is she aware of the survey published last year that stated that redundancies and cuts had been mitigated only by using reserves, and that disaster was looming? Does she expect there to be more redundancies, or does she expect more schools to seek financial assistance from parents, as several have done?

The Minister should give grant-maintained schools an explanation of their position for the forthcoming year. She needs to say more than that several local authorities have been able to take those schools out of the cash protection system. We want details about the schools, given that several of them will receive that protection and will have a stand-still budget plus 2.5 per cent, as my hon. Friend the Member for Cotswold (Mr. Clifton-Brown) described it, which will only exacerbate their problems. We do not want to hear the Government's claims for their funding of education. Despite all the hype and the different ways of presenting, announcing and reannouncing spending, they have failed to meet their manifesto commitment to increase the share of national income spent on education beyond that spent by the previous Conservative Government. That remains the case after the Budget, and after all the claims and announcements that surrounded that event. That significant manifesto commitment is one of many education issues on which the Government have failed to deliver.

Mr. Richard Allan (Sheffield, Hallam): The grants that we are discussing are important. As the Minister says, the issue before the Committee concerns giving more money to schools. The Committee is unlikely to oppose the grants, but major questions remain about how they are given and about the Government's direction in proposing them.

We were pleased to see the additional moneys allocated to school standards grants in the Budget. It is interesting to note the comment of an official from the Department for Education and Employment, which I paraphrase as, ``This is new money; it has not been announced before.'' The Government are learning that people catch on when moneys are announced and re-announced. We accept, however, that £290 million—mentioned by the hon. Member for Hertsmere (Mr. Clappison)—is genuinely new money this time.

There are legitimate questions about how the money will be spent in schools. The Minister said that it could be spent on books, computers and staff budgets. In view of the sums offered to secondary schools, the temptation will be to spend it on staffing budgets. Will the Minister give an assurance to schools that retaining staff—or recruiting on the basis of the new moneys—will be sustained in the longer term? A one-off annual grant is at odds with the Government's general and sensible policy of offering institutions such as schools a three-year funding horizon in order to provide stability. We are apparently talking about only a one-year horizon, yet the sums for the secondary sector are likely to be employed by governing bodies to employ staff, which is where the pressures lie. The greatest benefit is likely to come from additional staff funding. Recruitment and retention of staff is crucial.

Who has been left out of the grant? Sixth form and further education colleges provide similar services to those provided by secondary schools, so they are likely to wonder why, if secondary schools that provide sixth form education are receiving money, they should not also benefit from additional funding. What comparable provision, they will ask, is being made for sixth forms outside the LEA maintained sector?

The same applies to the nursery sector. LEA nursery schools are receiving additional support, but the Minister will know that the nursery sector encompasses a range of providers. Some will see the grant going to their competitors in the maintained sector. The Government wish to encourage co-operation in the nursery sector; it could be damaged if one part of the sector receives a grant while another is left out. I hope that the Government will provide an answer to those nursery providers.

More generally, significant funding is going from central Government into schools nowadays. It makes sense for the Department to fund schools through its own budget, but confusion remains about how money passes to schools in the first place. Through the allocation of block grants, the Government are avoiding the difficult issues that come out of standard spending assessments and local management of schools formulae—questions of relative need, deprivation indicators and so forth. If the Government are to continue with grant funding, do they intend to start to tackle the tougher issues about how best to divide funds? Such issues do not have to be dealt with in a simple, straightforward budget.

We need to think through the logic of moving towards central funding. The complexities and confusions that bedevilled the SSA system will eventually be transferred to any other form of Department for Education and Employment direct funding. That is inevitable if the aim is to ensure that funding follows need. Need is of course, relative to a complex range of factors and cannot be established solely through assessments of school sizes. Other factors must be brought into the equation. Will the Minister clarify the Government's intentions in that respect?

As to the school budget support grant, we are interested in the Government's approach to passporting and their intentions regarding delegation to schools. Present discussion is confusing because it is based on a picture of school funding that pre-dates local management of schools. It suggests that the LEA spends all the money, but for many years following the introduction of LMS—it was pioneered by my political colleagues in Cambridgeshire—the vast majority of funding has gone directly to school governing bodies and teaching staff to spend. It is no longer direct funding by the LEA.

The school budget support grant is clearly a means of trying to nudge LEAs to passport more money through that route. Will the Minister clarify the Government's intentions on the promotion of LMS and delegation? We want to enable schools to continue to decide where their resources should go. The background is of a political debate that seems wide of the mark in suggesting that local education authorities have not settled individual funding decisions in schools for several years.

With regard to the grant maintained transitional grant, the Minister has mentioned categories of local education authority—those that have moved beyond the transitional phase, those that will meet a 5 per cent. or 6 per cent. target for achieving the grant and those that will not meet the target. Will the Minister say how many LEAs have gone beyond the-transitional phase? How many met the target last year and are expected to do so this year? How many did not meet the target according to the percentage delegation?

When does the Minister expect transitional funding to end? When does she expect a return to a unified funding regime that does not require further transitional funding to support the former GM schools? We would support a move to such a regime because we were most opposed to schools entering the differential funding arrangements originally. We look forward to transitional funding no longer being required and to all schools in all areas—former GM schools or otherwise—having sufficient funds to meet their needs. It will be interesting to learn when the position will end and for how much longer we must expect to have to return annually to make a specific grant in respect of the relatively small number of schools.

5.1 pm

Ms Estell Morris: I thank the hon. Members for Hertsmere and for Sheffield, Hallam (Mr. Allan) for their comments and questions; I will try to deal with as many of the questions as I can now. I will try to make it clear when information requested is not yet available.

I will clarify the details of the money announced in the Budget. Of the £1 billion announced, £837 million was allocated to England. Of the £837 million, £325 million was for capital. If you will allow me to indulge myself for half a second, Mr. Wells, I will comment on the remaining sum. I have not referred to the remainder, as it is not part of the special grant that we are discussing today. Of that money, £58 million is for an extension of excellence in cities areas, and £20 million is for catch-up tuition for literacy and numeracy in primary schools. There is to be an additional £5 million for our key stage 3 strategy, £70 million extra for teacher recruitment, £53 million extra for the extension in educational maintenance allowances and £20 million to improve adult basic skills. The deal is not bad in terms of additional expenditure across education. I am glad for the opportunity to clarify the situation.

Consequently, £286 million was left from the £837 million allocated to England, which is the subject of the grant. The Department put in an extra £10 million sum from departmental resources to make the sum £296 million. The figure announced was rounded up to £300 million. I hope that the hon. Member for Hertsmere will be satisfied by the breakdown. The figures total £837 million; with the Department's £10 million, that may be rounded up to £1 billion to include expenditure for other parts of the United Kingdom.

It is interesting to reflect on what the allocation means in terms of methods of funding schools; I will do no more than that. It is well known that the Secretary of State and I are not entirely happy with the funding formula covering local authorities and schools. We were not happy with it in opposition and are no happier with it in government. There is a tension between the natural and right autonomy of local authorities to decide the way in which they spend their money and the priority that they give services, and the natural determination of a Government elected on a firm manifesto commitment to prioritise education to ensure that the money gets through.

We want transparency. A concern in recent months has been that there is every opportunity to blur the figures in the battles within and between political parties and between central Government and local government. The trouble is that the average teacher, pupil or parent is left not knowing the truth. We have tried in the past two to three years to make it clear where money is going. When we publish the second tables of local authority expenditure in June, parents and teachers will be able to see what money was kept back by local authorities, on what the authorities spent money and what money was carried through to schools.

That is progress. For the first time, we cannot blur the distinction between what money is passported to schools. The hon. Member for Hallam made a valid point. There is the idea that local authorities control all the money and that what they keep back is wasted because it is not spent on education. Often, however, it is spent on good quality services, such as transport, special educational needs and support services generally for schools. The problem was that there was no way of finding out from the figures what money had been kept back legitimately and what could have been transferred to schools. It was not possible to judge whether each local authority had genuinely done its best to passport as much money as possible to schools.

Our guiding light is that local authorities should keep back the money that they need to carry out their responsibilities as outlined in the Government's legislation. We should not moan about that; it is legitimate education expenditure. However, local authorities could do more to passport extra money to schools. There is too big a difference between what is passported by local authorities that serve similar areas. The pressure that we have put on local authorities is twofold: to ensure that they secure the money to the education budget and that it goes into school budgets where possible.

I mentioned that only six local authorities have not passported the money to education. Make no mistake about it, my right hon. Friend Secretary of State used every lever he could to put pressure on some of those local authorities to ensure that the money was passported through. But I am not being generous. I congratulate local authorities on politically securing that money for education. I understand the pressures that they are under.

The hon. Member for Hallam asked how many local authorities would meet the increase in delegation levels. We expect most to do so, as most did last year. I do not mean 51 per cent.—I mean most. We will not know the success of that until we receive section 52 returns and others. We will publish the results in June. Most local authorities have tried very hard and the vast majority will achieve the increased delegation in funds, which schools will welcome.

On the future funding of education, the Government will produce a Green Paper in summer. We do not want to fund every school directly from Westminster. No political party would want that. I value the local authority contribution. In the dark days of Conservative education expenditure, it was only because of local authority determination to spend money on education that many schools managed to survive without more redundancies and a further lack of resources. It was only through local authority determination to spend money on education that many under-fives in the most deprived areas had the opportunity of participating in nursery education. Local authorities have been defenders of education budgets. I would not want to remove that local discretion, but we want fairness and clarity. We want to get rid of sloppiness and for the figures to be visible and understood. As much money as possible should go to schools. I want to be able to say openly that money kept back at the centre is money that is spent on education.

When the debate moved on to grant-maintained schools, it was interesting to hear the hon. Member for Hertsmere say that we had reached an important issue. We certainly had—it was the 1,000 grant-maintained schools to which he has devoted more Hansard column inches than he has on the 23,000 other schools that suffered under his Government. I do not want equality of misery and for all schools to suffer. It is timely to remind the hon. Gentleman that, although he talks about funding for grant-maintained schools, why was he not as worried when spending on education fell in real terms in each of the last three years of the Tory Government? Was he not aware in his constituency of non grant-maintained schools that sacked teachers; where class sizes rose; where roofs leaked; where no money was spent on information communication technology and where the continuous professional development budget was cut year after year? I do not mind the hon. Gentleman being precious about protecting and talking about grant-maintained budgets, but I will not take from him any suggestion that those schools have been treated similarly to the way in which the Conservatives treated the 24,000 maintained schools for each of those years in government. The Committee should remember what we have done for grant-maintained schools. The other 23,000 schools would have been grateful for that level of protected funding during the three years before the general election.

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