Select Committee on Deregulation and Regulatory Reform Fourth Report

Appendix 4

Letter from the Chairman of the Committee to the Chairman of the Education and Skills Committee

The Regulatory Reform (Voluntary Aided Schools Liabilities and Funding) (England) Order 2002

As you may be aware, on 20 November the Secretary of State for Education and Skills laid before Parliament a proposal for a Regulatory Reform (Voluntary Aided Schools Liabilities and Funding) (England) Order 2002, together with a statement from the Department for Education and Skills. The Order would simply the arrangements for deciding liability, and thus funding, for premises-related work at voluntary aided schools.

The Deregulation and Regulatory Reform Committee considered the proposal for the first time at its meeting last week. Subject to a few outstanding issues on which the Committee has asked the Department for further information, and to confirmation from representatives of the parties affected that they are broadly content with what is proposed, the Committee does not anticipate having any great difficulty clearing the Order, which appears to offer a sensible and well-balanced approach to reform of the Byzantine structure of financial support for provision, repair and replacement of school property.

However, as non-specialists in the subject area, we would welcome any views your Committee may have on the proposal. There are two issues in particular where an informed view from your Committee would be particularly helpful to us in our deliberations.

Firstly, the Government has of course recently published, and the House has given a second reading to, the Education Bill. Ministers have described this Bill, not least, I note, in evidence to your Committee, as a "deregulatory" measure. We assume that the above proposal has been introduced through the regulatory reform procedure, rather than being included in the Bill, because it is intended that it have effect from 1 April 2002, by which time it is unlikely that the Bill will have completed its passage through Parliament. However, we have invited the Department to clarify how this proposal fits with the remainder of its legislative programme; and why no proposals contained in the Bill have been brought forward as regulatory reform proposals. In this regard, we note particularly that the Bill includes, for example, provision to give governing bodies the power to provide after-school childcare, one of the list of 51 examples of potential regulatory reform orders which the Government published during passage of the Regulatory Reform Act.

I will be particularly interested to see the Department's response to this request because it is my view, which I expressed during debate on the Regulatory Reform Bill, that regulatory reform proposals are subjected in many cases to much more thorough scrutiny than is the case for primary legislation. However, we also would be interested to hear any views which your Committee may have on the matter.

Secondly, there is a particular point of principle connected with the proposal on which your Committee may be well-placed to take a view. Currently, grant support to VA governing bodies from the DES for those items which are their liability is limited to 85%. We understand that the rate of support has been set down in primary legislation since the settlement reached in the Education Act 1944 (at which point the rate was 50%; it has been subject to change since then, most recently in 1974), and reflects the fact that VA schools retain specific rights in relation to the constitution of the governing body, the arrangements for pupil admissions, and the employment of staff.

This aspect of the proposal drew significant support from the vast majority of consultees. This is perhaps unsurprising given that those responding to the consultation were overwhelmingly either those with a direct interest in having the level of grant support raised (i.e. VA schools themselves, or Dioceses); or LEAs, which are not in a position to comment on the point of principle involved (although in fairness it should be noted that the main Churches have made it clear that, because of the link between governing body contributions and the rights enjoyed by VA schools, they would not want the standard rate of grant to be any higher than 90%). However, it was objected to by both the National Secular Society and the British Humanist Association, on the grounds that it was unfair for VA schools to receive the proposed increased rate of grant support whilst their rights remained in place.

The Government argue that the change is necessary for three reasons:

1.  to compensate for the additional liabilities which are being placed on VA governing bodies;

2.  to compensate for increases in VAT since the last change in the rate of support was made (1974); and

3.  to enable governing bodies to take advantage of the increased grant available from the Department (grant which is being made available entirely separately from this proposal).

It appears to the Committee that the first two of these are entirely reasonable grounds on which to raise the rate of support given to VA schools, and that it would be entirely appropriate to do so by means of this Order. The third, however, gives us cause to consider this aspect of the proposal further, since it could be argued that it confers additional financial advantage on VA schools over and above what is necessary as a result of the changes to arrangements for liability.

The Department argue that no additional funding is being made available over and above what has already been agreed for the VA sector for the period to the end of the 2003-04 financial year: the change will simply enable VA schools to access funding which is already available, but which they could not afford to take advantage of if they had to match it with 15% from their own funds, rather than just 10%. They argue that the change is necessary if the requirement for VA schools to make a contribution is not to prevent the achievement of Government policy to improve the condition of schools.

This may well be the case: but it could nevertheless be argued that, even if additional support would be provided from funds already allocated to the sector, VA schools should still, as a matter of principle, have to pay a contribution equivalent to that which they paid previously if they are to access the funds available. Further, although there may be no additional money for the VA sector as a whole in the period up to 2003-04, an increase in the rate of grant support could imply an increase in the support otherwise available to them after that period. Consequently, and given that 'faith schools' are the subject of some degree of controversy, the question arises of whether it is appropriate to introduce such a change by means of delegated legislation.

You may find it helpful to see the Department's response to these points before making your own reply, in which case I am sure that the Committee would be very happy to enable that to happen. In the meantime, if you would like to discuss any aspect of this letter, or of the proposal, further, please do not hesitate to contact either myself or Huw Yardley, Clerk to the Committee.

I am copying this letter to Liam Laurence Smyth, Clerk to your Committee.

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