Local Government Finance (England) Special Grant Reports (Nos. 118 and 119)

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Dr. Ian Gibson (Norwich, North): How would the hon. Gentleman explain the fact that the county in which the Secretary of State for Education and Skills holds his seat has come out rather badly in terms of total sums of money and yet was named as one that has not passed money on? Is the hon. Gentleman not being selective in which area he picks from the list?

Mr. Brady: Not at all. I know that the hon. Gentleman is a fair man and that he will accept, on reflection, that I have already said that the means of calculating which authorities receive the grants is unfair. It does no favours to areas such as his, where the LEA covers large rural areas that are unlikely to qualify as conurbations and urban areas as described in annex A of report No. 119. I do not know the hon. Gentleman's part of the country as well as I know some others. However, it may be a typical example of a place that has some pockets of considerable deprivation but which misses the threshold because of the average performance across the LEA area. Perhaps his county contains neither the most affluent areas in the country nor the poorest.

Dr. Gibson: We have Delia Smith.

Mr. Brady: The hon. Gentleman has Delia Smith, and I wish him well with that. I am not sure of the relevance of his remark, although perhaps he had it in mind that paragraph 3 of annex A provides a facility for match funding of any sponsorship that may be given to schools or particular schemes by wealthy, generous—undoubtedly generous—residents.

Dr. Gibson: Cooks.

Mr. Brady: Cooks, as the hon. Gentleman says. That funding would, of course, be welcome.

In paragraph 7, we again see that in all the LEA areas that I have mentioned, no conditions are imposed on how the money should be spent. I ask the Minister again whether that is an admission that the Department for Education and Skills was wrong to criticise the LEAs. Does the Department now admit that its allegation was false and that those LEAs are doing their best to pass money on to schools? Does the Minister therefore believe that these additional funds can be passed to the LEAs and will reach the places that he would wish them to reach, or does he expect that some of the money may not be passported to schools?

Eligibility is a serious concern. Why should an authority be ineligible for support under excellence in cities partnerships or the excellence clusters scheme, if only part of its area suffers from the levels of deprivation that the Government require as a trigger for that kind of subvention?

Furthermore, on the point raised by the hon. Member for Norwich, North (Dr. Gibson), the threshold for the excellence clusters has again been set according to what Government Members used to describe as the blunt instrument of free school meals take-up. However, since that has been settled on as the appropriate measure of deprivation, why has the threshold been set at a 24 per cent. take-up over a three-year period for excellence in cities, whereas a higher threshold has been set for excellence clusters,

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which may occur in less urban areas, including the sort of area to which the hon. Gentleman referred? The threshold for excellence clusters is set at 35 per cent.—11 per cent. higher than that for excellence in cities. It also seems odd that for the excellence in cities areas, the 24 per cent. applies over a three-year period, whereas for excellence clusters the 35 per cent. appears to be a snapshot just for this year or last year. I do not understand the logic of considering the two types of allocation in different ways.

Annex B of report No. 119 goes into great detail about the purpose of the grant. I will not read it into the record, as I am sure all members of the Committee have already read it avidly, but it contains a fairly detailed exposition of the types of expenditure for which the special grant is paid. It goes into detail about the three phases of the excellence in cities programmes, about the number of schools at secondary and primary level that are involved, and about the key strands of the programme, including learning mentors, city learning centres and the excellence challenge in school leadership.

The annex goes on to explain that the key strands in the primary pilot are learning mentors, primary learning support units and enhanced opportunities for gifted and talented pupils. It then reviews some of the many commendable projects in those areas where the activities are already being run. In paragraph 2 on excellence clusters, we see the core strands of gifted and talented pupils, learning mentors and learning support units to tackle disruption. Paragraph 3 gives a similar description of city learning centres. It, too, however, appears to run into the same overall problem that afflicts the other grants.

We are given a considerable degree of detail about what should be done with the money, but no conditions are attached to how it should be spent. The Minister knows that I take a rather laissez faire approach to such matters and that I like to see people being given the freedom to innovate and to work in the ways that they think most effective. How can the Minister be confident that the activities set out in annex B are those on which the funds will be spent? If they are not spent on those activities, what is the point of going into the detail contained in the report?

Once the funds are provided to an LEA, and assuming that they are spent on the specific headings contained in the report, the fundamental question is what confidence the Minister has that expenditure on those specific items will be additional to the expenditure on activities that are already taking place. It seems paradoxical to fund those activities by making endless grants for specific items but not to require expenditure to be used for the purpose for which it is made available.

It seems particularly absurd to provide those funds when, over the past few weeks, schools in many parts of the country—including many of the places mentioned in the reports—have had a significant budgetary shortfall. In many areas, teachers are facing redundancy and head teachers are threatening to resign if the problems are not tackled. There is confusion about whether it is the Department's responsibility or that of the Treasury, because it

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piled additional taxation on to the school payroll, or whether the LEAs are responsible for holding back the money.

The reports offer a little additional money, but it falls far short of the shortfall faced by a number of authorities. Croydon comes to mind; it will receive nearly £1 million in additional funds, but its budget for next year is several million pounds adrift. That is a cause for concern because, although the money is welcome, it may not find its way to schools.

The Minister may want to consider a similar problem, that of the work load agreement. If it is not keeping him awake at night, it will be causing him some concern, as many schools will be unable to implement the agreement because of next year's budget arrangements. He may find that schools do not have the core funding to pay their staff, and they may have to cut back on the maintenance of grounds or buildings; they may even have to cut back on essential parts of the day-to-day educational provision for which they are responsible. The grants may simply disappear into the black hole that is being opened up by those other costs, so they may not be available for the specific purposes that the Minister has in mind.

3.19 pm

Mr. George Howarth (Knowsley, North and Sefton, East): I have a few brief observations on the comments of the hon. Member for Altrincham and Sale, West (Mr. Brady). Perhaps I missed part of his speech when I was out of the Room, but as he appeared to be speaking about tugs of war, I do not think that it was a significant part. I am particularly exercised about the fact that he has made the mistake of moving from the general to the particular by arguing that some areas, presumably mostly those that are not Labour controlled, will suffer because, although they have pockets of deprivation, the overall character of the LEA is not one of deprivation. If I have mistaken his argument, I am sure that he will correct me.

I am pleased to thank the Minister for the fact that the two boroughs that I represent benefit in report No. 119 from what seem to be generous sums. Knowsley is a typical Labour borough. With the exception of the estates of the Earl of Derby, it is entirely urban. It has one or two small towns and villages and some large council estates, many built outside its own boundaries by Liverpool city council. Consequently, it suffers the amount of deprivation that is associated with an area of that kind.

I also represent three wards in Sefton, the larger part of which is represented by the hon. Member for Southport (Dr. Pugh). It is exactly the sort of borough that the hon. Member for Altrincham and Sale, West said should miss out, yet it appears in the list in report No. 119. The three wards in my constituency are very stable. They are residential areas with little industry and three excellent schools. I shall not presume to speak about the constituency of the hon. Member for Southport—he is much better able to do that than I am—but it is not a classically urban area in the sense that Knowsley is. The pocket of deprivation in Sefton

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is all in Bootle, and that has been properly reflected in the settlement in report No. 119.

I cannot say that the hon. Member for Altrincham and Sale, West would never do anything for political purposes, but the general thrust of his argument is wrong, as evidenced by the example of Sefton.

3.23 pm

Dr. John Pugh (Southport): I shall talk about the reports in reverse order. Report No. 119 seems to involve significant sums of money—up to £15 million—being spent on good intentions to address a problem of underachievement, which occurs largely in urban areas. As a strategy, it appears to be relatively flexible. The remit of the grant extends to many things, such as reducing disruption, encouraging talent and setting up city learning centres.

I wonder whether all the initiatives are the product of proper consultation with the schools; I fear that some of them may be the brainchildren of civil servants which wait to be tested. None the less, in a sense, the expenditure is good. Theoretically, I should welcome it, not least because I have taught in the deprived part of Sefton and understand what money spent there can and will achieve. I do not begrudge the £3.2 million that is allocated to it.

The report mentions North Sefton, however. That is in my constituency, which, although not generally deprived, contains pockets of deprivation that have in the past attracted single regeneration budget funds. The grant does, therefore, seem to accommodate some of the hard cases mentioned by the hon. Member for Altrincham and Sale, West. However, the diffuse nature of that set of arrangements slightly disturbs me.

We have all seen money spent in deprived areas to good ends. A certain part of Sefton, for example, was the recipient of funds associated with city challenge. The question that occurred to me after city challenge finished was what had been achieved. Schools were a prime target of the scheme in those days. Will the Minister say a bit more about how the scheme will be evaluated when everything is done and dusted and the grant expires? Under what circumstances will a scheme be regarded as a success or a failure? We are talking about areas that in many cases are criss-crossed by a number of grant regimes, so the process of evaluation is necessarily somewhat difficult.

The timing of the grants also concerns me. The money is welcome at the moment because the local authorities that are receiving it are short of cash. However, they might be tempted to substitute it for mainstream funding that they do not have. There is a tendency among authorities that receive very large grants to end up in a dependency situation without an exit strategy. Having received the money, they find some years down the line that they must make wholesale redundancies in order to live without it. Will the Minister say something about the soft landing that he plans for authorities that have received significant sums?

There is a problem this year precisely because schools are looking all over the place for extra cash.

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The causes of that will be established in the Conservatives' Opposition day debate on school funding in the Chamber tomorrow, although I do not want to discuss that now. However, I note that the hon. Member for Altrincham and Sale, West mentioned West Sussex. I went through all the authorities that received special grant No. 118 to see whether they had all passported the allocation for this year according to the Government's statistics, and I discovered that West Sussex had not—it passported only some 97 per cent.

I wonder whether people in West Sussex had agreed the final terms of the bid to spend the money when an evaluation was made. Perhaps the money that was not kept back was the money that was expected—in other words, people were expected to allocate sums that they had not yet received, and they were not entirely sure what the situation was. That would explain why the figure for West Sussex is 97 per cent.

We are familiar with school prize-givings, but in report No. 118 we now have ministerial prize-givings. I have always been dubious about school prize-givings, because to some extent they encourage the good to feel good about being good, without necessarily encouraging the bad to get substantially better. In the report, a specific grant appears to be given without a specific purpose. Will the Minister explain why money needs to be given to authorities that, on the face of it, are performing reasonably well?

I also have a problem with the mechanism that has been chosen. In deciding who is to get the grant, the Minister seems to have relied heavily on the comprehensive performance assessment. Anybody who has had any experience of this year's CPA will know that most authorities have found difficulties with it. There is a learning curve associated with the assessment, and it is not an adequate way of assessing the quality of a local authority. I had doubts on the matter, so I went through all the authorities listed in report No. 118. Given the nature of the CPA, I wanted to satisfy myself that those authorities were excellent and improving all the time.

I looked at the authorities' score for 11 to 16 education for 2001, and I compared it with the average for that year. In many cases, but not all, the authority performed better than average. Some deprived boroughs such as Camden had not performed as well as average, but they had performed pretty well compared with other deprived boroughs. However, I wanted to know whether those authorities had performed better in 2001 than in 2002, which, as I understand it, is the base year on which the grants are being awarded.

The Minister will accept, I am sure, that the improvement of children in the 11 to 16 age group is a key measure. It is a prime objective for the Government, and an improvement would be a good indication that the local authority was working well. I know that the CPA is based on more than secondary school performance, but one would expect the school's performance to be entirely in line with the assessment.

The Minister should consider the figures provided by his Department. I exempt the City of London,

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which is a small authority with only three schools, but include schools in what are regarded as the top-performing authorities. If we look at their progress from 2002 to 2002, we will find that seven of the 11 authorities have deteriorated when compared with the average for that year. In fact, we are rewarding not those who performed particularly well in 2002, but those who, by and large, suffered a marginal deterioration on that index, although other compensating improvements may have been made.

Not only is the grant muddled in intent—it is not obvious what the Government intend to achieve—but the mechanics for awarding it are muddled. Will the Minister explain why those authorities were chosen, and why indications such as the relative performance of 11 to 16-year-olds were not taken into account?

3.30 pm

 
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