Mr. Timms: I shall first set out what the Government intend to achieve through the reserve power that the clause introduces. It is one of the most contentious aspects of the Bill, and there has been much debate about it outside the Committee. As we made clear, the new funding system for local authorities and schools that we shall introduce for the financial year 2003–04 will replace the current single spending assessment for education with a
Column Number: 320separate assessment for the schools budget and for the central budget of each local education authority. The schools figure will be announced publicly. Under existing local government finance legislation, we shall provide that each authority must make a clear and simple statement to its council tax payers of how its schools budget compares with its schools assessment.
We are therefore relying principally on transparency in the new system to ensure that LEAs provide appropriate funding for their schools sector. However, our experience in recent years has been that although the great majority of LEAs have been willing to pass on annual increases in funding to their schools, a small minority have not, as the hon. Member for Harrogate and Knaresborough said. We do not want schools to face cuts instead of the funding increases for which the Government have provided, so we are establishing a reserve power under which my right hon. Friend the Secretary of State can, if necessary, set a minimum level for an authority's schools budget. We do not want to use the power, and I hope that we shall never have to use it. It will certainly be used rarely, if at all, but we would be failing our schools and pupils if we did not provide for the power as a back-up.
I shall respond first to the couplet of amendments Nos. 193 and 269. As the hon. Member for Altrincham and Sale, West hinted, they contradict each other, although he expressed that differently.
Mr. Willis: The Minister made an important point about what he is attempting to do. I think that few of us would disagree with his intentions, but he has not committed himself to ensuring that, no matter where a local authority is located, it will receive a minimum entitlement. That is Liberal Democrat policy, so I am delighted that the hon. Member for Altrincham and Sale, West has come on board. The average primary education funding per pupil is £1,934. The minimum that some authorities receive is £1,551, and the maximum is £4,939. At secondary level, the minimum is £1,420, and the maximum is £5,157. The average is £2,483. Before the Minister can realise his vision and before he ever has to use his powers, that fundamental discrepancy between what students receive in one part of the country and what they get in another needs to be addressed.
The Chairman: Order. This is a long intervention. It is more like a speech.
Mr. Willis: I have made my point.
Mr. Timms: The hon. Gentleman is asking me to describe the funding system that we will introduce for 2003–04. Of course, I am not in a position to do that today. However, we have made it clear that an element of the system will be an amount per pupil, which will apply throughout the country. We envisage that amount being increased when there are clear grounds to do so, such as circumstances in a local area that would incur additional costs and therefore warrant additional spending. By the sound of things, the hon. Gentleman will support the new system when we describe it in detail, which I hope to be able to do in the spring.
Chris Grayling: Before I make my substantive point, I draw the Minister's attention to the days when we
Column Number: 321were younger when the team to which the hon. Member for Harrogate and Knaresborough appears so attached were noted for dressing themselves all in white yet were known as the dirtiest players on the pitch. There could be an odd parallel.
Will the Minister assure me that when he does the work that he mentioned, he will take account of significant regional differences in costs for schools, such as teaching and facilities costs? I am sure that the Minister is aware of my worries about costs in the south-east, and I want reassurance that that will be reflected in his work.
Mr. Timms: Yes, indeed. We intend to reflect in the new formula, when it is published, the significant additional costs that are incurred for reasons that the hon. Gentleman mentioned or because of other issues that arise in schools, such as pupils' needs.
I turn to amendments Nos. 193 and 269. We set out in the explanatory notes some of the circumstances to which the Secretary of State will have regard when deciding whether she should set a minimum level of budget for schools in an authority. Page 18 of the notes mentions such circumstances as how a local education authority's proposed school budget compares with its school funding assessment, the performance of an LEA's schools, pressure from other services and the degree to which the authority fails to pass on increased funding that is provided for its schools. I accept entirely that local education authorities should know how they can avoid the risk of the Secretary of State setting a minimum schools budget. The answer to that is simple. Any authority that passes on the annual increase in its schools assessment to its schools budget may be certain that it will not risk the power being invoked.
Mr. Willis: The Minister is saying that if an authority does not pass on the element that the Secretary of State gives for education, the Secretary of State may invoke these powers. If the authority spends more than its standard spending assessment, would the Secretary of State use the powers?
Mr. Timms: I did not say what the hon. Gentleman said that I said. I shall put it the right way round. An authority that passes on the annual increase in its school assessment to its schools budget will not be at risk of the power being invoked. However, the converse is not the case. The Secretary of State will not set a minimum budget for every authority that fails to pass on the increase in its assessment. On the contrary, we expect the power to be exercised very rarely. Before it is exercised, the Secretary of State must take account of all relevant circumstances.
I have mentioned some circumstances that are referred to in the explanatory notes. That is not an exhaustive list. There may be other criteria that the Secretary of State should consider. The hon. Member for Altrincham and Sale, West commended to the Committee the virtues of having a fixed list—I think that that was his expression. However, I suggest that that is not the most helpful way to proceed in the interest of local authorities. If we listed every criterion through a formula in regulations or by some other device, at some point in the future we would find
Column Number: 322something that had been omitted, which the Secretary of State would not be allowed to consider in making a judgment. It is in the interests of local authorities that that process should not be prescriptive. The list commended by the hon. Gentleman may not include an exceptional pressing local circumstance, which everyone agrees should be taken into account. The clause ensures that the Secretary of State will have the flexibility to take such matters into account, which he would not be able to do if the criteria were set in advance.
Under new section 45C(5), any order prescribing a minimum schools budget, which is set out clearly in the clause, will have to be set out in draft and approved by a resolution in the House of Commons. Any exercise of that power will be subject to parliamentary scrutiny. The existing wording requires the Secretary of State to take account of all circumstances so that she cannot leave any relevant ones out. The amendments would not be to the advantage of local authorities.
Amendment No. 266 would require the Secretary of State to take the schools forum's advice before determining a minimum amount for an authority's schools budget. The problem is the timing: a very tight window in early February when the matter must be decided by the Secretary of State. It is not possible to build into the process a formal consultation with every schools forum. A forum would still be able to reach an immediate view on the LEA's budget plans and communicate that view to the Secretary of State, but it would not make sense to build that into the process.
Amendment No. 270 would allow the Secretary of State to specify minimum per pupil funding for different categories of school. In the new funding system, the Government will be concerned with the split of funding between the schools budget and the LEA budget and, in this case, with the minimum size of the schools budget. The distribution of funding between schools should remain a matter for the LEA in consultation with its schools. The LEA is best placed to take that decision, which needs to be taken locally and in the light of local circumstances. Given those assurances, I hope that the hon. Member for Altrincham and Sale, West will withdraw his two couplets of amendments.
Mr. Brady: I am grateful to the Minister for his remarks. As I indicated in my opening comments, amendments No. 266 and No. 270 were of a probing nature. I am somewhat satisfied with the Minister's assurances. I accept his point about amendment No. 266, which would create an unrealistic timetable for the Secretary of State, although it does clarify earlier points made about the difficulties that the timetable will create. I shall not press amendment No. 266 to a Division.
On amendment No. 270, we received some interesting enlightenment from the Minister about the framing of the new schools funding arrangements, which shows that a division of funding between schools, or at least a minimum funding level,
Column Number: 323features in the Government's thinking. I shall not press that amendment to a vote either.
Regarding the other amendments, I note that the hon. Member for Harrogate and Knaresborough complimented me on adopting Liberal Democrat policy—not something on which I have ever been congratulated before. Given his comments, I was surprised that he had not tabled amendments to what the Minister described as the most contentious clause of the Bill. I would be delighted if the hon. Gentleman were to support us when we press our amendments to a Division.
I said that I would be happy if the Minister were to give his blessing to either of the amendments. He said that the explanatory notes shed some light, but they are not binding in that instance. They cannot set out the criteria on which the Secretary of State will make any future judgment. The Minister also said that the powers would be used as reserve powers, and that he expects that they will be used infrequently. Neither we, nor schools, nor local authorities can rely on that. The Minister hardly reassures us when he says that the Government want this unlimited, unfettered power, but do not intend to use it. He cannot bind his successor or that of the Secretary of State. The powers can always be given wider use in future under the legislation.
The Minister went on to say that the use of the powers to direct schools' budgets would require a resolution of the House. That is welcome, but it does not deal adequately with the need for those bodies that will be affected by such an order to know in advance whether they will be subject to an order under the provisions.
Sadly, the Minister could not say whether members of the Government would be encouraged to support amendments Nos. 193 or 269. He leaves me with little option but to press both amendments to a vote to establish which one the Minister would like his hon. Friends to support.
Question put, That the amendment be made:—
The Committee divided: Ayes 5, Noes 11.
Division No. 22]
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