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Session 1999-2000
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Delegated Legislation Committee Debates

Local Government Finance (England) Special Grant Report Nos. 70

Seventh Standing Committee on Delegated Legislation

Thursday 23 November 2000

[Mr. Bill Olner in the Chair]

Local Government Finance (England) Special Grant Report (No. 70)

9.55 am

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. 70) on Threshold Payments (HC Paper No. 963).

The Chairman: With this it will be convenient to consider the Local Government Finance (England) Special Grant Report (No. 71) on Leadership Group Payments (HC Paper No. 964).

Ms Morris: This is the first time that I have had the privilege of serving under your chairmanship, Mr. Olner, and although I very much look forward to it, I am happy to make the experience a short one.

There is a little overlap between this Committee and the Committee that considered similar grants, so one or two of us have been through these matters before. However, I should remind Committee members that the special grants replace those that were considered in the previous Committee, but withdrawn in the light of the judicial review in September.

Of course, the background to both reports is our drive to strengthen the teaching profession. Central to any increase in standards must be a good and well rewarded teaching profession with a career structure and pay structure that attracts, retains and motivates people who make good teachers. That fact was reported in the Green Paper on reform of the teaching profession, the proposals arising from it, and the special grants.

As hon. Members know, the High Court judgment in July required that we put the performance threshold arrangements for teachers on a statutory footing, and we have worked hard to do that. I pay tribute to those who have been engaged in the consultation process since the school teachers review body reported. Their willingness to work quickly is enabling us to get the system back on track.

The pay and conditions order that was made yesterday—22 November—establishes the new upper pay scale for classroom teachers. Nearly all teachers on that scale will be promoted to it by passing the threshold.

We want to give schools the confidence to retain and recruit experienced and effective teachers. We remain committed, therefore, to providing additional funds to cover the extra costs resulting from teachers moving to the upper pay scale. That is the purpose of the threshold grants that are described in report No. 70.

Payments are based on the number of teachers who have applied for assessment at the threshold, rather than the number who were successful at the threshold. We have always said that there will be no rationing of threshold success—the number who pass will be the number who will be funded. Therefore, at the moment we cannot assume a pass rate, and we can base payments only on the number of teachers who have applied to cross the threshold. At a later date, we will make the necessary adjustments to the finance in the light of those who are successfully assessed.

Mr. Richard Allan (Sheffield, Hallam): Can the Minister tell us how many people currently pass the threshold?

Ms Morris: No, I cannot and it would be wrong to do so. There is no quota, and we do not instruct assessors to allow either a minimum or maximum number through. Like the teachers, we await the results of the assessors' deliberations. That is why the decision in today's order is to fund local authorities according to the maximum number of teachers who can get through. The clawback arrangements will be made a little later on.

Each local authority will receive a monthly payment reflecting the number of full-time equivalent teachers in those schools that have applied. You will notice, Mr. Olner, that the report sets out the relevant information according to each local authority. The sum will be based on the £2,001 salary increase awarded to teachers promoted to the upper pay scale, together with a 17.8 per cent. allowance for related national insurance and pension contributions.

If the initial payments are made in December, local authorities will receive four times their monthly amount in that month. So LEAs will have enough money not only to provide schools with the December payment, but to make payments backdated to 1 September, the date from which the pay increase will take effect.

Payment based on applicant numbers also explains why the grant period is so short. Threshold assessment starts again this week, and assessors will be working flat out to cover as many schools as possible in the next few months. In our judgment, by the end of February sufficient applications should have been validated to produce a reliable estimate of the pass rate in each LEA. Having reached that point, it would not be right to continue payment on the basis of applicant numbers. That is why the provisions of special grant report No. 70 conclude at the end of February, and the second report, mentioned in annexe B, comes in. The second report will provide for grants based on emerging and actual success rates, to bring the money paid to LEAs into line with what is needed to pay actual threshold costs. In doing so, it will of course take into account what LEAs will have already received under special grant report No. 70. We want to do our best to ensure that local authorities have the extra money as soon as the pay order establishing the upper pay scale comes into force in mid-December. That is why this report is being debated now.

In order to draft a report that also provided for payments adjusted in line with success rates, we would have needed to be pretty sure about the number of successful teachers. Our challenge was to begin consulting on the first payments as far back as October, so that the report could be approved now. We shall therefore need to discuss the second grant as part of another consultation process and in the light of estimated success rates, so that we can lay a further order before the House.

Special grant report No. 71 is equally straightforward. Its purpose is to help schools to create a broader leadership group by contributing to the cost of appointing teachers to the new grade of assistant head. It contributes a payment of £2,000 plus on-costs to the cost of appointing assistant head teachers in the current school year. In other words, it is a pump-priming grant to help schools that want to create such new management posts.

It will be up to each school, in the light of its size and management responsibilities, to decide how many teachers should be assistant head teachers. Head teachers will take that decision in the light of competing demands on their management structure and financial resources. Management and leadership is key to the success of schools, and we want to encourage them properly to use the post of assistant head. That is why we provided pump-priming money of £2,000 plus on-costs for this year. Of course, a demand-led payment that continues year after year is not the same as the threshold assessment, for which there are external standards and assessment procedures. The heads must decide how to allocate resources in terms of staffing structure, but it has been our task this year to encourage and assist them in moving towards the new management structure by contributing £2,000 plus on-costs under special grant report No. 71.

Both special grant reports provide essential support for the new career and pay structure for teachers, and the new structure itself makes a vital contribution to strengthening the profession and raising standards. I commend both reports to the Committee.

10.2 am

Mrs. Theresa May (Maidenhead): May I, too, say what a pleasure it is to serve under your chairmanship for the first time, Mr. Olner? I should tell Committee members that that pleasure has been afforded me because the wife of my hon. Friend the Member for South Holland and The Deepings (Mr. Hayes) is giving birth, perhaps even as we speak.

As the Minister will know, we have some concerns about the way in which the Government have introduced this performance-related pay scheme for teachers, as well as its operation. It is cumbersome and overly bureaucratic, and is in many ways a civil servant's idea of a national performance-related pay scheme that bears little relevance to the way in which such schemes operate in the private sector.

Nevertheless, we believe that good teachers should be rewarded, and it is important to give schools the flexibility to ensure that classroom teaching is recognised and rewarded. The attempt to move away from a system that rewards teachers purely on the basis of taking on extra responsibility is important. A way must be found of recognising and rewarding good classroom teachers. We have reservations about the overall scheme and the bureaucracy and cost involved in running it. Nevertheless, I recognise that the special grant reports introduce the performance-related pay scheme that has now been agreed. I say ``now agreed'' because the Government have had one or two little local difficulties on the matter, to which the Minister alluded in relation to the High Court judgment in July. That little local difficulty would not have arisen had the Government not been so keen to bypass Parliament and proper scrutiny and discussion of their proposals. I trust that the Secretary of State has taken to heart the comments made by the judge in his decision. He clearly set out his concerns about the way in which the Government are bypassing Parliament and not allowing proper time to debate and discuss issues as important as the pay structure for the teaching profession. We must ensure that high-quality people—and more of them—enter the teaching profession. The continuing recruitment problems and vacancies are causing considerable practical difficulties for schools. We wait to see whether such a bureaucratic scheme will solve those problems.

Special grant report No. 70 relates to the basic cost of moving teachers across the threshold into the upper pay scale. I have several questions about the practicalities of that. The Minister referred to the fact that grants will be based on applications rather than on the number who successfully cross the threshold. Will she say when she expects the first teachers to receive additional money as a result of payments to local authorities? Is it expected that as soon as somebody has been deemed successful in passing through the threshold, he or she will transfer to the new pay scale and be paid, regardless of whether there are other teachers at the same school whose cases have not been determined or are subject to an appeal? Will that be done on an individual basis or on a school basis, regardless of whether decisions relating to certain schools within a local authority have yet been taken? Some teachers might know where they stand while other teachers do not.

In terms of basing the figures on applicants rather than those who successfully pass through the threshold, I recognise the Minister's dilemma. However, that raises two issues. First, if a local authority is given extra money on the basis of the number of applicants, some of whom may not be successful, it will be necessary to claw back money from the authorities. Annexe C refers to overpayment of grant being repaid by the authority to the Secretary of State. Will the Minister say when that repayment would be expected to take place? Secondly, the implication is that the Government expect all applicants to be successful, therefore it is easy to base grants on the number of applicants because the vast majority of applicants, if not all of them, will pass through the threshold, and the amount of overpayment will be small.

Head teachers have told me that they are concerned about their training in the procedure. I use the word ``training'' loosely, given some of the comments that I have heard about meetings at which those doing the training could not answer head teachers' questions. They rang up the Department for Education and Employment, but the staff there were also unable to provide answers. That is hardly high-quality training. I have been told that some head teachers were concerned about the attitude that was taken during the training sessions and about comments implying that all applicants were expected to go through the threshold and on to the upper pay scale. That would make life difficult for head teachers who have approached the matter properly by assessing their staff to determine those who should go through the threshold and qualify and those who are not yet ready, although they may wish to apply in future. In some cases, heads will tell all those who want to apply to do so; in others, they will discourage applications from those whom they do not believe would get through—perhaps suggesting that they wait another year and work on certain development issues.

If a head teacher sees that all applicants from other schools get through, their authority in their own school will be undermined. Teachers who were discouraged from applying because the head told them that they were not ready will say, ``Everyone in the school next door applied and got through—why did you stop me?'' I am worried about the practical impact on head teachers if all applicants in a certain area get through.

On overpayment, annexe C refers to the need for an audit confirming that the authority has used the grant solely for the purposes specified in the report. However, if the authority is sitting on a sum of money, some of which then has to be paid back and cannot be used for such purposes, to what use can it put the money while it has it?

I recognise the Minister's point about the need to finish the process in February. As she said, point 5 of annexe B states that a further special grant report will be produced to continue the scheme beyond the end of February. What period of operation would be stipulated by that report? Would it be the next financial year or more open-ended than that? I know that she will say that Ministers have made statements about the matter in the House. However, head teachers and local authorities want to ensure that money is available on an on-going basis, not merely for the two years for which the initial ring-fenced money was provided. The money should be not only nominally available, but actually available, otherwise it is possible that after the end of the ring-fenced period it could return to the standard spending assessment and would no longer be a ring-fenced sum.

Local authorities have had much experience of hearing Government claims about the availability of funding and then finding that it is not reflected in the rate support grant. Some authorities have recently been told that they will receive an increase of 5.5 per cent. for education expenditure. I dare say that the Secretary of State will be writing to education authorities—as he has for the past two years—about his hope and expectation that they will ensure that their education budgets rise by that amount.

For example, Wokingham district council's revenue support grant will increase by only 1.5 per cent.—it would have to find at least £2 million in order to increase education by the headline sum that was announced by the Secretary of State and the Chancellor of the Exchequer. The fact that a sum of money is in the SSA does not mean that it is actually available to local authorities. Many authorities fear that at the end of the ring-fencing of the money against which the grants would be drawn, funding will return nominally into the SSA and will not be available to them in a real sense, thus potentially causing them serious problems.

What will happen after the period of the report expires? How many people will be covered by it, given that it is based on those who apply, not on those who are successful in going through the threshold?

Will the Minister clarify how long she would expect the process to take for a teacher who has requested that their rejected application be looked at again? That will have an impact on the repayment of any overpayment of grant by the local education authority.

I listened carefully to what the Minister said on leadership groups and the new structure set out in special grant report No. 71, which are different from the grants given in special grant report No. 70. It is not an on-going grant for people who have gone on to an upper pay scale; it enables head teachers to take one-off decisions to appoint teachers to the new position of assistant head teacher. Leadership grants and the post of assistant head teacher raise practical problems in schools, first, because of the relative nature of the assistant head teacher's responsibilities and position, compared with other members of the senior management team, particularly deputy heads. The second reason is much more practical: as the Minister has made clear, the grant gives merely a one-off payment to schools to encourage them to kick start the process of appointing new assistant head teachers.

To return to a point similar to the one that I made in regard to special grant report No. 70, many schools and local authorities may well say, ``It is all very well giving £2,356 to kick start the process of appointing an assistant head, but what happens thereafter?'' The Minister said that it is for head teachers to decide how to spend their budgets, but head teachers' budgets are strapped and they often find it difficult to pay even the staff that they need and want. Many schools have real difficulties with their budgets because money is held back by central Government and local education authorities. Heads will look twice at the issue if they do not know how they will continue to fund the post of assistant head after they have been enabled to kick start it. If the Minister cannot give schools more comfort, she may find that many heads will be wary of taking up the opportunity and that the move towards the appointment of assistant heads may be held back.

There is also the question of how assistant heads will fit in with the overall structure of the senior management team within a school and the responsibilities that they will be expected to take on. The grant will run from now until August 2001. Does the Minister have any expectations of the numbers of assistant heads that could be appointed over that period and in what phases?

The Minister must respond to several practical questions if schools are to know confidently where they stand in relation to payments to teachers. As I have said, the Opposition feel that the scheme is cumbersome, bureaucratic, imposes a heavy administrative cost and, in terms of the payments that will be made this year, is less about performance-related pay than about getting some teachers onto a different pay scale. That is not simply my judgment but that of Professor Richardson, who did work for the London School of Economics and for the National Union of Teachers on that issue. Certainly in the initial phases, and potentially thereafter, it is not a performance-related pay scheme as most people would understand that; it does not allow for the payment of extra sums and rewards to teachers, or measurement of their performance against objectives that have been set.

The scheme is bureaucratic and the Government have got into difficulties with it. We would not have had to meet in Committee if the Government had not bypassed Parliament and had a High Court judgment against them. If the Government had taken the process through properly in the first place, teachers could have received their extra pay from September rather than having to wait to put the measure put through on the basis of applicants. Local authorities will be given money before they know how many teachers in their area will receive payments, and so will then have to pay the Government back. That is extra administration caused by the Government choosing to bypass Parliament and proper consultation, and to impose their decision on teachers and others. They should have discussed and consulted properly on the scheme to enable teachers to be rewarded, and should have ensured that it was right. Instead, we have an over-bureaucratic and cumbersome scheme.

10.19 am


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