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3.36 pm
Mr. David Curry (Skipton and Ripon): I should make it clear at the start that, if there is a Conservative briefing note on this matter, I have not read it, as the House will not be surprised to learn.
We are discussing a matter in respect of which all hon. Members are used to the waving of bloody stumps every year. Indeed, part of what is taught at local authority training school is that bloody stumps should be waved. Sometimes that happens in response to a synthetic crisis, and sometimes in response to one that is genuine. This is a genuine crisis, and it has been made by the Government.
The first problem is that the announcement of the Government's public expenditure figures was accompanied by a ludicrous amount of hype. The besetting sin of this Government is that they over-egg every pudding; they exaggerate what they are doing, and announce the news on several occasions. As a result of the enormous overselling, every head teacher in the country saw, like a ray of heaven above their schools, a figure of 10 or 11 per cent. in real terms written in the firmament. That was what they thought that they would get for their schools. The result, of course, is bathos.
When it turned out that schools would not get that much, we were treated to bluster. The first set of bluster came from the Minister for Local Government and the Regions. He talked about capping local authorities that put council tax up by such a wicked amount. However, the council tax rises were introduced partly to cover education, for which spending authorisation had been increased without the necessary grant to cover it. To his great discomfort, the right hon. Gentleman discovered that half the authorities that he wanted to cap had been rated E for excellent according to the Government's own Audit Commission standards. He could not touch them, and the Government have retreated from capping. I notice now that, happily, they are also retreating from the prospect of capping next year.
That bluster was replaced by bluster from the Secretary of State, who decided that it was all the fault of the wicked local authorities, because they were withholding funds. The heart of the problem is that two sets of formulae are being applied that are not wholly compatible. The Deputy Prime Minister and the Secretary of State for Education and skills are like two large, clumsy puppeteers getting their wires crossed as they try to present the Punch and Judy show. They blame the audience when they cannot get to the end of the performance because both of them have been knocked out.
In the argument in Government about the distribution of funds, it is increasingly evident that a Hobbesian fight is being conducted between Departments. I do not know whether the Secretary of State is familiar with Hobbes. If he is, no doubt he will want wish to eliminate his recollections as rapidly as possible, on the ground that they are an out-of-date and arcane preoccupation.
I want to touch on an important matter. We have been talking about passporting through education money, but local government funding is based on the principle of non-hypothecation. The Government talk about being friends with local government, and about unwinding direct grants to give local authorities more discretion. Yet, for Government after Government—and I include the Conservative Government—Education Ministers have adopted a Stalinist attitude, determined that their funding goes through, without caring a hoot whether social services or other sectors suffer in consequence. It was exactly the same with Home Secretaries: as long as police funding was satisfactory, they could not have cared less if the rest of the country collapsed in a heap. We can only wait to see whether the Department of Health will decide to join the
game in respect of social services. We might as well wave goodbye to any pretence that there is genuine autonomy in local authority expenditure.
Mr. Bercow: As usual, my right hon. Friend makes a powerful case. Does he agree that the Government have a duty to explain their double standards, whereby they are in favour of hypothecation of local government expenditure, but opposed to hypothecation at central Government level?
Mr. Curry: My hon. Friend makes an extremely powerful point.
What happened on this occasion? Education received a 9 per cent. increase nationally, but some capital was held back for higher and further education, so the increased allocation to local government through the revenue support grant was about 6.5 per cent. Two sorts of floors and ceilings were then applied. The first was the Deputy Prime Minister's minimum and maximum grant changes, which were intended to ensure that no one lost out in the new formula, but it was done through a process of topping and tailing. We then had a separate rule from the Department for Education and Skills that no local authority should have a formula spending share of less than 3.5 per cent. or more than 7 per cent. for education. Quite frankly, the two concepts are inconsistent and we have not seen joined-up government in respect of them.
Mr. Bellingham: Is it not extraordinary to reflect that the global settlement agreed by the Treasury was not that bad? The way the Government have managed to turn a reasonable global settlement into such a shambles beggars belief. In my constituency, the budget of the Fairstead county primary school, on which I conferred an Investors in People award, is £80,000 short.
Mr. Curry: I am grateful to my hon. Friend for providing such a powerful example of what has happened in practice and I am going to illustrate it, too. The allocation of about 9 per cent. overall, which becomes a little more than 6 per cent. through the funding formula, ends up at between 3.5 per cent. and 7 per cent. at the level of the individual school. Local authorities divvy up that amount through their fair funding formula. Generally, schools that are gaining pupils do well, and those that are losing them have to shed teachers. No one objects to that, but it is not so simple, because some schools that are doing very well also lose out. Many individual schools have been mentioned and I am going to cite one.
Ripon college started out as an old-fashioned secondary modern school. In 1998, it had 342 pupils, but it now has 549. The percentage of pupils gaining five or more A to Cs in GCSEs has increased from 8 per cent. to 31.5 per cent. over that time. It is doing everything that the Government could want in an environment where selective education is tough for the college. Notwithstanding its achievements, it faces a budget deficit of £88,000 and has to consider making six staff redundant—15 per cent. of its teachers—closing its social inclusion unit, cancelling the literacy and summer school programme and running on a minimum capitation for departments to balance the budget. The
school's advances are clearly being threatened. I have received similar letters from other schools in my constituency.Additionally, some schools have been dependent on the standards fund, and it is a matter of record that if a direct grant is devolved into a formula, there are bound to be winners and losers. Costs were higher than expected. The national insurance contribution increased by 10 per cent. People talk about 1 per cent., as if it were only 1 per cent. extra on the employers' bills, but it was 10 per cent. The headline rate was 1 per cent., but pensions and teachers' pay become especially onerous where teachers are clustered at the top end of the spines, which applies in many parts of the country.
Another dislocation is resource equalisation, which takes us back to the Deputy Prime Minister. For some blocks of expenditure, the Government stopped pretending that local authorities would spend down to their notional need, and increased the spending plan without increasing the grants to cover it. That is what led to the major council tax increases, because authorisation to spend and an expectation that money will be spent is not the same as providing grant to cover it. Some local authorities have been criticised for not devolving 100 per cent. to schools—not 100 per cent. of the money that they received, but of the notional amount. They devolved only by dint of council tax increases.
The new formula spending share is much more dependent on political interference than standard spending assessments ever were. There is much more political interference and manipulation of this formula than there was in the past. That is where the dislocations have been set up—at the heart of the Government.
I have some seriously happy news for the Government: next year, things will get worse. The spending plans published in Command Paper 5570 show a declining rate of increase and we all know how serious the constraints on the Chancellor may be. The standards fund effect will continue as it is devolved into the formula. Furthermore, if there is council tax rebanding and local authorities with a large number of band A properties subdivide that category, they will receive lower revenues from some of those council tax payers, without compensatory increases from their relatively small volumes of high-value houses. Resource equalisation will thus have to be applied more effectively, otherwise the nearly poor will be paying for the poor through their council tax bills.
The Secretary of State offered one formula. He said that the Department for Education and Skills might take over direct control of the allocation of money to schools. I say to the right hon. Gentleman, please do it. Make my day. I can think of nothing that would give Opposition Members greater pleasure than being able to blame the Secretary of State wholly for the funding of every school, whether it has 15 or 1,500 pupils. If he is wise, he will do what he said that he would do, but is not doing; he will give a little more trust to local authorities and apply the new localism that we all talk about ad infinitum. He will apply all the trust and partnership that he keeps talking about and trust local authorities to devolve the expenditure.
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