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Session 2000-01
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Delegated Legislation Committee Debates

Local Government Finance Report (No. 79) on School Standards, Support of Educational Budgets and Costs of Transitional Funding

Fourth Standing Committee on Delegated Legislation

Monday 2 April 2001

[Mr. Joe Benton in the Chair]

Local Government Finance

(School Standards)

4.30 pm

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

    That the Committee has considered the draft Local Government Finance Report (No. 79) on School Standards, Support of Educational Budgets and Costs of Transitional Funding.

I welcome you to the Chair, Mr. Benton. Some members of the Committee discuss regularly the grants that will be payable to schools as part of the Government's drive to raise standards. I wish to itemise the three grants under discussion today and refer first to the school standards grant. Members of the Committee will be aware that this is not the first time that the grant has been paid. It has been much welcomed by schools. My right hon. Friend the Secretary of State announced on 18 July 2000 that £540 million would be available to schools from April 2001 to help them improve standards. The grant is a continuation of the considerably increased level of the grant payable in 2000-01.

I was delighted when my right hon. Friend the Chancellor of the Exchequer announced on 7 March 2001 an increase in the amount available to £640 million. I reassure the Committee and schools that the Government have already announced that the school standards grant itself will be increased by 2.75 per cent. in 2002-03 and the following year. I hope that that announcement gives schools the security that they need to use the money in whatever manner they see fit.

The grant for school standards will be paid to all local education authorities when they have provided the relevant section of their budget statements. The amounts will depend on the numbers of schools of each size in a local education authority. We will pay from £7,000 to £48,000 for primary schools; from £58,000 to £82,000 for secondary schools and from £20,000 to £28,000 for special schools. Nursery schools, pupil referral units—and outside the local authority sector—non-maintained special schools and city technology colleges will also benefit from the grants.

We have already made regulations requiring LEAs to include those sums in school budget shares. We expect schools to have access to their share of the grant from mid-May. I reassure members of the Committee that the authorities will not be able to top slice any of the grant. It will be paid through local authorities because that is the most sensible approach to take, but in every sense of the word it will be paid directly to schools.

The second grant is the education budget support grant. My right hon. Friend the Secretary of State announced on 29 January that he would make available an extra £52 million to provide support to help some LEAs in England to manage funding changes in 2001-02. The extra funding has been distributed with three aims in mind: to give additional funding to authorities that have not received funding through the neighbourhood renewal fund that was announced by my right hon. Friend the Secretary of State for the Department of the Environment, Transport and the Regions; to give more to authorities facing a gap between their resources and pressures from pay and prices, and to help authorities that are most affected by the transfer of adult education funding to the Learning and Skills Council. The criteria and method used are described in part II of annex A.

The grant will be paid to authorities at the same time as the school standards grant. It has to be applied to the authority's local schools budget, which is subject to the rules set out in the Financing of Maintained Schools (England) Regulations 2001. That means that money may either go into schools' delegated budgets or be applied in some way to central spending on schools.

The third grant that is itemised in the report concerns transitional funding. As in previous years, it will be paid to those authorities with former grant-maintained schools that will receive transitional funding in 2001-02. Transitional funding is the difference between a former GM school's protected level of funding—based on the annual maintenance grant that it received in 1998-99—and the budget that it would receive through its local authority's allocation formula. Its purpose is to prevent unmanageable fluctuations in the budgets of former GM schools as fair funding spreads the benefits of increased delegation.

In November 2000, we announced that transitional funding would continue, and that the protected budgets of former GM schools would be increased by 2.5 per cent. for the current financial year. That places an extra burden on local authorities that are responsible for former GM schools. The grant is intended to support that increased cost, although, in most cases, it fails to meet the entire cost of transitional funding.

Authorities should be encouraged to increase the per pupil funding for all their schools as that will help to narrow the gap between the protected levels of funding for former GM schools and the local education authority budgets. In 2000-01, more LEAs eliminated transitional funding so that only 50 per cent. of schools received it, and the Government hope that that trend will continue in the current financial year.

The grant that an authority receives depends on whether it met the Secretary of State's target of a 5 per cent. increase in per pupil funding. Authorities that fail to meet that target will receive a lower grant, and they will be expected to contribute.

The Government must complete the exercise to compile tables of early expenditure before we can send claim forms for the grant to local authorities. We expect to have achieved that by July. Local authorities would, therefore, face a return date of early September, and payments could be made later in September, and in October.

The report addresses a diverse range of grants, but they are all intended to support the Government's drive to raise standards by giving our schools more resources, and by funding them directly, so that they can decide how best to spend the money in the interests of improving standards for their pupils.

Therefore, the grants are an important element of the Government's programme for the coming year, and I ask the Committee to support them.

4.37 pm

Mr. John Randall (Uxbridge): First, I apologise on behalf of my hon. Friend the Member for South Holland and The Deepings (Mr. Hayes), who has been detained by heavy traffic. That has left me with the feeling that I am a member of the Rorke's drift wing of my party.

I will ask several questions, and some of them will be asked from a position of ignorance, as I have always believed that if one does not understand a matter, one should seek an explanation.

Why does the Minister propose that each school should receive a lump sum? Should not an assessment of individual schools' needs be considered? Such assessments might lead to more bureaucracy, and to schools vying with one another to secure funding, but, as most hon. Members will know from their experience of local authorities in their constituencies, some schools require more financial assistance than others.

With regard to part I, why are pupil numbers given as 100.5, 200.5 or 400.5? That is one of the questions that I am asking from a position of ignorance, as I am a simple man. However, I am sure that there is a sound statistical reason for such calculations.

Opposition Members support the principle that funds should be paid directly to schools, and I am glad that the Government agree with us. We also want school standards to improve. However, problems still arise. The London borough of Hillingdon, in my constituency, has experienced problems as a result of the grant. Hillingdon local education authority will receive about only £100,000, the lowest grant awarded. However, in Hillingdon the funding gap between the standard spending assessment increase and the rise in pupil numbers will mean that the LEA may not be able to accept all the standards fund allocation. Even if it can, it will not reach the Government's target of an increase of 5 per cent. per pupil in the total delegated and devolved funding for schools. The new grants will make a small difference to that, and will raise the increase by only £2.50 per pupil, or 0.1 per cent.

I have referred previously to the growing seriousness of recruitment and retention problems in Hillingdon schools, which are exacerbated by funding and greater priority for recruitment and retention initiatives, such as excellence in cities, for neighbouring LEAs. The combined effect of those two factors will put at genuine and imminent risk the maintenance, let alone the raising, of school standards in Hillingdon.

The Minister has visited Hillingdon and recognises that Hillingdon LEA—on an all-party basis; there is no dissension—has been working hard and is fully committed to the Government's standards agenda, including the fundamental raising of expectations for the least advantaged pupils. Much progress has been made. However, I am sure that the Department will, like me, find it disturbing that the director of education, Mr. Philip O'Hear, says in a letter to the Secretary of State that

    ``with the deepest personal and professional regret''

he had to report that

    ``DfEE decisions are likely to undermine''

that progress. Implementing the criteria for allocating extra funding will put the raising of standards at risk. Mr. O'Hear points out in the letter that two fundamental errors have been made relating to Hillingdon. The DFEE has

    ``not recognised that, set against demographic and data changes, Hillingdon's SSA increase is low in real terms and that school budgets will not be fully funded for similar pay and price pressures to all other authorities given the need to expand provisions to meet rising rolls.''

Mr. O'Hear also discusses the problem of recruitment and retention that I have already mentioned.

Like so many measures, the grants are ostensibly difficult to argue against. However, it would be foolish to believe that they are a panacea. In some instances, because they disadvantage some LEAs, they can have an adverse effect and not the one intended. However, as I promised, especially as the Room is so warm, I shall not detain the Committee further. We do not intend to divide the Committee.

4.43 pm


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