Examination of Witnesses (Questions 720-739)
MR DAVID
MILIBAND MP
23 JUNE 2004
Q720 Mr O'Brien: They were not passported.
The Audit Commission is just referring to the principle of passporting
and they said this created an increase of 12.9% in Band D council
tax.
Mr Miliband: It is certainly not
the case that the passporting of the 5% increase in education
funding on average above previous levels was the cause of a 12%
increase in council tax. The cumulation of decisions about spending
on other services and about central grant lead to council tax
rises and that is the combination of spending pressures and spending
investment which in the end produces a council tax rise.
Q721 Chris Mole: Is the DfES not effectively
telling people in a local area that it has a better understanding
of the relative need to spend on schools or personal social services
than the local authority?
Mr Miliband: No. That would only
be the case if every local council was spending exactly what we
told them to spend on education, but they are not. Wandsworth
spends 93% of the EFSS on education and the top spending education
authority, which I think is Bristol though I stand to be corrected,
spends 110% of EFSS. So there is actually a wide variation in
education spending by local government.
Q722 Chairman: Would you like those variations
to increase or decrease?
Mr Miliband: I would always like
authorities to spend more on education. I do not really want to
get into a ding-dong with Wandsworth here about their commitment
to the schools in the area, tempting though it is, but I certainly
applaud those authorities who are seeing education investments
as absolutely critical to the future of their areas.
Q723 Chris Mole: When we had universal
capping and passporting there was a general convergence between
the spending on education and what is now the SF. Does that not
implicitly mean that you are going to limit the scope for local
authorities to determine what they could spend on environmental
and cultural services which are more discretionary in nature?
Mr Miliband: Obviously if you
spend on one thing you cannot spend on another, subject to the
size of the government grant increase and what decisions are made
about council tax. The priority that the national government gives
to education is symbolised in part in the investment which the
national taxpayer makes in education and then it is legitimate
on that basis to expect the increase which is being given to local
government to be at least matched by the decisions which local
government makes. Does that mean that there are implications for
other services? Yes.
Q724 Chris Mole: You were talking about
regeneration in inner urban areas. If you want to achieve joined-up
local government, then councils have to have some flexibility
on their discretionary spend in order to achieve those. Does passporting
not make it more difficult to deliver joined-up local government?
Mr Miliband: First of all, passporting
relates to the revenue side of the equation. There is a significant
investment on the capital side and that is key when one is thinking
about the link with regeneration and educational provision. It
is important to say first of all that it is not only on the revenue
side that you see those links. Secondly, the fact that we are
now moving to more schools having extended services before school
and after school was a significant contribution to the sort of
area renewal which is important. Yes, it would be absurd to deny
that there are choices to be made, but there is a balance to be
struck and the national priority which has been given to education
in the last seven years has actually been to the benefit of the
country.
Q725 Chairman: Yes, but it has ceased
to be local administration, has it not? It is really that government
is now saying this has to be spent on education. You are putting
in passporting and now you have the minimum funding guarantee.
Local authorities are getting less and less discretion, are they
not?
Mr Miliband: As it happens, if
you think about the developments in relation to children's trusts,
if you think about the role that the LGA is embracing in relation
to 14 to 19 provision, where it is setting out its stall very,
very clearly in a recent publication to be the advocate of the
pupil, wherever they are learning, whether it be at school, college
or work. Those are important ways in which local authorities are
playing a key role in championing the interests of citizens in
their area. Funding is obviously important, but passporting relates
to the increase in spending, not the total spend. As a basis for
moving forward it is very, very important, because the taxpayer
expects to see at least the increase in their taxes which is being
levied for education going on education.
Q726 Chairman: Why then do we need the
minimum funding guarantee and passporting?
Mr Miliband: The minimum funding
guarantee has been critical to underpin the longer-term stability
which we want to see in the education system. It is clear, despite
the detailed work which was done in advance of the 2003-04 settlement,
that significant numbers of schools were not fully protected and
the minimum funding guarantee is there to provide that degree
of protection. At a time when the floor is 4% and the ceiling
is seven to seven and a half %, there is significant variation,
certainly in a minority of schools which were on the funding guarantee
and above that obviously significant discretion is being applied.
Q727 Christine Russell: Earlier you conceded
that there had been errors in calculating the LEAs' costs for
the last financial year. Why do you think that happened and how
are you going to ensure it does not happen again?
Mr Miliband: I am not sure that
I said there had been errors in calculating the LEA costs.
Q728 Christine Russell: Just in education
services. We had the ping-pong between DfES and local authorities
saying there was a difference, did we not, that there was a shortfall
in the funding?
Mr Miliband: I think I am right
in saying that there was universal agreement that the increase
in funding of about £2.7 billion exceeded the increase in
costs by about £250 million. I do not think there is a dispute
between central and local government about that. What was the
case was that there were significant changes in the cost structure,
notably in relation to pensions for example which ate up £500
to £600 million of that increase. I think that the diagnosis
of what happened, the narrowness of the gap between costs and
investment, is not actually very strongly disputed.
Q729 Christine Russell: What about teachers'
pay? Can you not accept that inflation in providing education
services has grown at a faster rate than in the rest of the economy?
Mr Miliband: It was certainly
modelled carefully and now that we have effectively a two and
a half year teachers' pay deal from the schoolteachers' review
body, that puts us in a much, much stronger position. Most people
would say that it was not the headline increase in teachers' pay
itself which was the main problem in 2003-04, it was the significant
other costs around the system.
Q730 Christine Russell: Would it not
just be better if you set out an annual estimate so everyone could
see, parents could understand, exactly how much funding was coming
from central government, local authorities and in turn exactly
how the local authorities were spending the money on education?
Mr Miliband: It would be helpful
for ministers as well as citizens probably. This is certainly
a system with significant complexity in it and that can be frustrating.
Q731 Christine Russell: It is very confusing
for parents to be told that a child in Hertfordshire, for instance,
gets X amount of funding per year and a child in Cheshire gets
considerably less.
Mr Miliband: But the reason for
that is that local government plays an important role in deciding
how much extra money it wants to put into education. As central
government, we give the same amount per pupil, for similar pupils
in different parts of the country. Whether they live in Hertfordshire
or Herefordshire primary pupils get £2,100; if their family
is on income support they get an extra £1,300. That is fixed
around the country. However, Hertfordshire and Herefordshire make
different decisions about how much extra they want to put in.
We defend that system because it respects the constitutional role
of local government in making a decision about whether it wants
to put extra in. That does mean we are trading off that balance
of power with local differences.
Q732 Mr Clelland: But that constitutional
role is quite restricted in terms of educational spending, is
it not? Certainly in my experience and in the evidence we have
had to this Committee, those authorities which do have educational
responsibilities put education as their number one priority. I
am sure you would agree with that. I cannot think of an education
authority which does not say that. So why can they not be trusted
just to have the freedom to spend according to what they see as
their local priorities?
Mr Miliband: What I would say
is that above that which they are given by central government
to meet the increase in the FSS, they are and significant numbers
of them do. It is also the case that increasing numbers of local
authorities put education first. I think I am right in saying
that about 95% of authorities passported the increase without
demur in this financial year and that is obviously significant
and I hope that reaches 100% in the next financial year.
Q733 Mr Clelland: Do you think that your
department can actually specify the appropriate budgetary requirement
for every school in England?
Mr Miliband: Surprisingly many
of the head teacher associations have a touching faith in our
ability to model the particular needs of 24,000 schools, indeed
the Opposition have sometimes had a touching faith in the ability
of central government to have a formula which denotes all the
variety of urban and rural, small and large settings. We have
not had that sufficient confidence to make that move because we
think there are advantages in the current system, which does allow
the balance of responsibility, the shared responsibility which
we think is important.
Q734 Mr Brady: Given the process of passporting
the whole amount on an annual basis, given the minimum per pupil
funding increase, is there not a logic which is driving towards
DfES making direct payments? It may not be the whole of the funding
which goes to schools. It would still be free for local authorities
to pay more if they wished. Is there not a logic in what the government
is already doing, which is driving towards direct payment?
Mr Miliband: The logic of the
government's position is to recognise and improve on the shared
responsibility which exists and that is the balance we are trying
to achieve. We do have responsibility for setting the framework,
setting the guarantees for parents and pupils, but we have to
do it in partnership with local authorities because there are
different situations in different parts of the country and that
is reflected in how much they spend and how they spend it.
Q735 Mr Brady: The percentage of funding
going to schools which local authorities must pass on to schools
will increase every year if government continues to follow its
current policy.
Mr Miliband: The passporting requirement,
as you recognise, is a minority aspect of the system. The shared
responsibility I talked about is the right basis on which to think
about the future of it. There are some direct payments at the
moment to the school standards grant, which goes direct to schools;
actually it is paid through local authorities which is interesting,
given the way some people talk about logic and simplicity in the
system.
Q736 Chris Mole: Annually schools do
a tango around the redundancy processes with teachers. Last month
the Prime Minister told the NAHT that after this year's spending
review, school budgets will cover three years and be based on
the school rather than the financial year. When is this actually
going to happen and what benefits do you believe it will bring?
Mr Miliband: The benefits are
huge. When head teachers say it is very difficult for them to
plan with confidence on the basis of year on year changes to budgets,
they are absolutely right. So the benefits are obvious, the benefits
to local government as well as to central government are obvious.
We are now working with colleagues in government and around the
school system, including local government, to put it into practice
and we are determined to do so. The current spending review runs
up to 2005-06 and we are working hard on an implementation timetable
which meets the need, but is also practical and prudential.
Q737 Chris Mole: How will you actually
switch from a financial to an academic year? This is a very big
slice of local government funding which is currently organised
April to April.
Mr Miliband: It is significant.
Further education colleges are paid now on an annual basis, although
in a different way and they used to be on a different system.
We have to make sure it is done in a way which works. The key
step forward we now have is the schoolteachers' review body making
two-and-a-half, three-year pay settlements for teachers, because
without that we are completely lost. We then have to recognise
that different schools have different pupil numbers and there
are things to work through in that process. I do not see it as
impossible.
Q738 Chris Mole: Do you think that will
resolve the redundancy problem?
Mr Miliband: What you have at
the moment is an annual process which anticipates redundancies
which in 90% of cases do not actually happen, but they are done
as protective notices and that is certainly a process which frightens
parents as well as politicians—or excites them sometimes—and
that is not very healthy. If we can get over that, it would certainly
be good.
Q739 Mr Sanders: Further education was
taken out of the hands of local government in the 1980s. The LSC
actually funds sixth forms and that has now effectively been taken
out of the control of local authorities. Why do we bother retaining
anything within the local authority which is connected with education?
Why does central government not take that over completely.
Mr Miliband: The answer to that
is surely the LGA document on 14 to 19, where they show a key
role for local government as the guarantor for pupils and that
is important as well.
Chairman: On that note, may I thank you
very much for your evidence.
The Committee suspended from 4.30pm to
5.27pm for divisions in the House
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