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Matthew Green : With the benefit of hindsight—I acknowledge that the Minister did not set out to create this year's problems—would he say that making so many changes in one year should be avoided in future because of the problems that it has created now?

Mr. Raynsford: It has always been our objective to try to provide local government with as much certainty as possible. I am saying clearly to local government that we do not intend to make any changes to the methodology of the grant distribution formula—other than where it is absolutely necessary when a change of service occurs—for the next two years, which should provide a period of consistency and certainty. However, the hon. Gentleman will recall the strong calls to change the old standard spending assessment. The SSA was discredited; people knew that it was not an accurate reflection of the need to spend; there was a strong argument for a review. Such reviews are always difficult because of the different competing claims from different elements among the local government family. There is a huge amount of lobbying with all groups seeking their own advantage, and it is hard to find a way through. In fact, it is difficult to please anyone because almost everyone finds something wrong with what is finally proposed.

We do not relish making such changes often and I am pleased to say that there will not be another change of that nature for some time. I accept the hon. Gentleman's point that the change happened at the same time as the other changes that I have described and that it contributed to the turbulence that caused the difficulties. We are now trying to minimise the risk of it happening again.

Mr. Brady : One of the reasons that the Minister advanced to explain the difficulties in some local education authority areas was the above-inflation increase in the cost of special needs education, which is a significant problem. Are the Government proposing to ring-fence provision for special educational needs funding, given that measures are being taken to require a per pupil increase in mainstream schools? Is there a danger that it might squeeze special needs education?

Mr. Raynsford: No, the Government want to see funding for special educational needs, pupil referral units and so forth continue to grow where there is a demand for it. However, the Secretary of State for Education and Skills has made it absolutely clear that the increase in funding for that sector should not exceed the increase in funding for schools. That is a perfectly fair wish—to ensure that schools funding is not used to fund central services, but that there should be scope for both to continue to rise in line.

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I was dealing with our attempts to tackle the problems of the current year and to ensure that next year's arrangements work much better and provide the greater certainty to schools—and, indeed, to local authorities—that we all want to see. One key element will flow from the lack of change to the local government formula, which I described in response to the question asked by the hon. Member for Ludlow (Matthew Green). That will help. Further certainty will be provided by the commitment of my right hon. Friend the Secretary of State to continue the standards fund. We have accepted that it will involve the continuation of a ring-fenced grant. That is a concession on our part, because our objective is to reduce the overall level of ring-fencing—[Interruption.] No, it is a pragmatic approach to deal with a problem that inevitably caused difficulty. A ring-fenced grant such as the standards fund is targeted specifically at a certain area. If it is rolled into the general grant, the distribution is inevitably different. That was one of the problems that caused last year's difficulties. Recognising that fact, we want to ensure that the problem is not replicated. That is why we are going to continue with the grant for the moment.

A third element is giving earlier indications of the minimum per-pupil increases. That is a clear commitment by my right hon. Friend the Secretary of State for Education and Skills to ensure that schools have much greater certainty at an earlier stage, because last year the figures emerged relatively late in the budget-making process and that was a difficulty for schools. Of course, we also want to see earlier decisions on the local authority settlement. That is difficult, because—as with so many other issues, a tension exists.

Local authorities tell us repeatedly that they want the earliest possible indication of the provisional settlement. That is not surprising. They also tell us that they want us to use the latest available data. However, much of the data only becomes available late in the process. One of the key elements, from the education point of view, is the secondary school pupil numbers, which are being collated only now. By the time they are collected, checked and passed to us, it will be later in the process, and that is an inevitable constraint.

We could, of course, give earlier provisional settlement figures if we worked on figures that were a year out of date, but local government wants us to use up-to-date figures. I understand that. It is a reasonable request and we try to accommodate it. That is why our aim will be to produce the provisional settlement by the middle of November. We are working hard to make that possible. It will not be easy and it will require enormous hard work by my officials to achieve it, but we are committed to do it to help to provide greater certainty.

Additionally, my right hon. Friend the Secretary of State for Education and Skills has pledged additional funding and we have given a similar pledge to ensure that all authorities are able to passport 100 per cent. of the schools funding requirement without having to take funding from other areas or increase council tax disproportionately. Increases in council tax have been far too high in recent years and it is essential that councils moderate their demands in future. The public

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are far from happy with the excessive increases, which came predominantly from Conservative authorities. We will watch very closely the average increase in council tax, which was significantly higher—by five or six percentage points—in Conservative areas than in Labour areas and, indeed, Liberal Democrat areas. It is Conservatives who have driven up the council tax, and we will watch that closely in the coming months.

Mr. Edward Davey: Will the Minister give way?

Mr. Raynsford: I do not have time to give way.

All the issues that I have mentioned have involved detailed discussion with local education authorities, schools, local authorities and relevant Departments. For those reasons, we have not been able to make full announcements on all the points about which the hon. Member for Altrincham and Sale, West asked me. We are discussing them with local authorities and schools. That is the right approach to ensure agreement and engagement, and to get the mechanisms right.

The hon. Gentleman acknowledged—I thank him for doing so—that we are making an honest attempt to ensure that the problems that occurred this year will not be repeated next year. That is what we are determined to do. He asked about the certainty of the provisional settlement. The answer is that we publish the provisional settlement and give local authorities a period of time to respond to it and make submissions. We will consider those and then confirm the final settlement. However, I can say that the practice in recent years has been that the final settlement has not differed from the provisional settlement to any marked degree. I hope that that provides some certainty.

We have also introduced a system of floors and ceilings to give local authorities confidence that they will not face a wide variation in the amount of funding with which they have to budget. All those changes are designed to improve the arrangements and give a better settlement in the coming year. The final question the hon. Gentleman asked was about the teachers' pay settlement. That is still in the hands of the School Teachers Review Body and we are awaiting the outcome.

The hon. Member for Kingston and Surbiton raised wider issues of local authority finance. He knows that we are conducting the balance of funding review, and that is the right formula to address those wider issues. This year, we are not concentrating on the longer term issues but on getting the mechanisms right to overcome the practical problems that occurred with the distribution of the 2003–04 settlement and the impact on schools. Getting that right for 2004–05 is our fundamental objective. We are working hard at it and we will continue to do so. Our aim is to achieve a proper framework that provides certainty for schools and ensures that the additional money that the Government are putting into education finds its way to the right places.

Lords amendment agreed to.

Lords amendments Nos. 44 to 56 agreed to [One with Special entry].

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Committee appointed to draw up Reasons to be assigned to the Lords for disagreeing to their amendments Nos. 3, 6 and 19: Paul Clark, Mr. Edward Davey, Linda Gilroy, Mr. Philip Hammond and Phil Hope; Phil Hope to be the Chairman of the Committee; Three to be the quorum of the Committee.—[Paul Clark.]

To withdraw immediately.

Reasons for disagreeing to certain Lords amendments reported, and agreed to; to be communicated to the Lords.


Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6)(Standing Committees on Delegated Legislation),

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