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Mr. Patrick Hall (Bedford): Is my right hon. Friend confident that there will be sufficient additional support for those schools that have agreed deficit budgets this year and may not have the capacity to recover in the next financial year? Is he also confident that as a result of his statement the many schools that have avoided a deficit budget this year by dipping into their reserves and making cuts in training and maintenance, for example, will be able not only to recover in the next financial year but to resume the considerable progress that has been made since 1997?
Mr. Clarke: I am confident that the arrangements that I have made today on the transitional fund and other issues will permit LEAs working with schools in the position described by my hon. Friend to deal with that situation and restore their budgets to the proper basis.
The combination of grant for some authorities and loans for others means that I can assure my hon. Friend that we can sort out those problems.
Dr. John Pugh (Southport): I thank the Secretary of State for advance sight of his lucid and informative statement. It did not altogether help but much of it is very welcome.
Liberal Democrat Members feel that although this is, superficially, good news, we have been here before. Last year, the Government genuinely put money on the table—more money than ever before—but the Secretary of State has acknowledged that there were severe problems arising from increased school costs and the distributive effect of the new local authority formula and its effects on the school formula in turn. That was described as a failure of modelling. There was a marked difference between the Government's intentions, which were good, and the real-world effects, which were bad. This year, it is very much a case of déjà vu for Liberal Democrats. The Government's intentions are good, but it remains to be seen whether the long-term effects are good. We will know only when the details are available and the budgets start to be constructed in 2004. The Secretary of State is to be congratulated on his intentions, but the road to hell is paved with good intentions, and the announcement may be another road to the financial chaos that we had last year. I seek reassurances, clarification—by gosh, we need clarification—and evidence that the modelling skills of the Department for Education and Skills are slightly better than they were last year.
I have a highly specific question about how much new money—not top-sliced or recycled—has been announced today. How much money from the vaults of the Treasury that was not there in April will be available to give LEAs and schools as a direct result of the announcement? On the 4 per cent. uplift promised for every child and school and the mandatory increase in the SFSS, how much will be cash in hand for the LEAs, how much will be cash in hand for the LEAs to give to schools, and how much has to be found from the council tax payer? The way in which that is divided up really does make a difference.
On the modelling, does the right hon. Gentleman accept that last year there were losers and some winners? This year, according to him, everyone gets a prize, but inequities will be perpetuated. Schools with severe problems that fell back on their capital last year do not get differential treatment. LEA flexibility is not noticeably assisted. He has made £120 million available as a grant—I am not sure whether it has to be repaid to LEAs—but where have those resources come from? Is that new money from the Treasury, and what strings are attached to it?
Finally, has the new modelling taken proper account not only of the forthcoming teachers' pay settlement but of the progress of the workload agreement and the September uplift in pay spines? The right hon. Gentleman was supposed to have taken account of that, and told the House on 17 July that
- "the commitment that I give is to make that announcement when we know the teachers' pay settlement following the proper review".—[Official Report, 17 July 2003; Vol. 409, c. 460.]
Mr. Clarke: The statement addresses many of the issues that arose last year. One of the three key issues that arose then was the distribution of resources between local authorities. Today's announcement establishes floors to deal with that situation directly and explicitly. A second cause of the problems was the reduction in the standards fund. I have reversed the cuts in that fund to put the money back, which was not the case in the current year. A third issue was the way in which local education authorities decided to allocate money to individual schools and their central funds. I have put a cap on central funds and I require a per pupil minimum guarantee for schools.
In those three specific cases, I have made changes to try to deal with the situation that arose this year. I acknowledge that the subject is complicated for all of us, and it is difficult for colleagues who have only just seen the statement to make a detailed analysis. However, I do not accept the charge, because it is not true, that we have not sought to address the issues that arose this year. In fact, we have set out specifically to do so. In addition, we have sought to address a point made to me by many teachers and people in local government: that one of the core problems this year was the short time scale for addressing the issues and changes that were taking place, which affected their ability to plan school budgets effectively. I am establishing today a time framework for the solution of those problems that will allow schools and local authorities to plan, which is a positive development.
I am grateful to the hon. Gentleman for saying that the implications of the announcement remain to be seen. That is a fair point, and it is fair, too, for local authorities and schools to ask what the statement means for them and how they should analyse it. My political request, which he may or may not be prepared to go along with, is that he and his Liberal Democrat colleagues do exactly what he said—look and analyse before drawing conclusions. My criticism of the Conservatives is that they have jumped the gun. The Liberal Democrats have not behaved like that to the same extent, so I hope that the hon. Gentleman is prepared to look directly at the situation.
The extra money will go into the standards fund and the transitional fund, as we have said, and comes from DFES budgets. There is substantial LEA flexibility. The difference between the 4 per cent. minimum per pupil for schools and the 5 per cent. minimum rising to 6.5 per cent. for LEAs represents a significant resource, and the regulations that we are publishing will give LEAs more capacity to use it to target particular problems. May I tell the hon. Gentleman and his colleagues in local government that it is important that LEAs take on that responsibility, analyse the problems in the LEA and use the flexibilities that I have outlined and the extra resources that they can draw down in certain circumstances to address them? That is the LEAs' responsibility, and it is one that they should welcome, as it is the right way to move forward. We have made assumptions about the final position of the pay review
body, but I do not have any inside information. Like everybody else, I await its announcement later this year to see what its proposals will be.
Mr. George Stevenson (Stoke-on-Trent, South): In spite of the Opposition's negative carping, may I warmly welcome the positive way in which my right hon. Friend addressed fundamental issues in his statement?
I have three brief questions for my right hon. Friend. First, can he assure me that needs and deprivation will figure prominently in the consideration of affected areas? Secondly, on pupil numbers, will authorities such as my own in Stoke-on-Trent that are addressing that issue through the closure and amalgamation of schools be given every encouragement and direct assistance to create modern, 21st-century facilities? Thirdly, on LEA flexibility, is it not about time that we considered rolling some of the standards fund into LEAs, which, after all, are required to match funding?
Mr. Clarke: I am grateful for my hon. Friend's general support, and can give him the assurances that he seeks. Needs and deprivation will continue to be a major consideration in funding for all the reasons that he gave. We will work with authorities that have to deal with falling rolls to try to assist them. My hon. Friend the Minister for School Standards is keen in his capital programme to focus on getting brand new schools to deal with those problems, and I am sure that he will pay particular attention to Stoke's needs.
Mr. Edward Garnier (Harborough): The right hon. Gentleman will know that Leicestershire LEA is at the bottom of the funding table. Consequently, schools in my constituency are among the worst funded in the country. What are the implications of the statement, both for our relative position in the funding league and the absolute funding from Whitehall to schools in Harborough?
Mr. Clarke: I met an all-party delegation of colleagues from Leicestershire to discuss those precise matters, and I have tried to respond to their concerns in today's statement on transitional funding. Leicestershire is one of the third or so of authorities that will benefit from the settlement.
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