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Mr. Robathan: The hon. Gentleman is right; we always got on well. Those achievements are fantastic, but could he explain why there is a differential between Leicestershire and Leicester city?

Mr. Reed: As I said, there are three parts to the question: where have we come from, we are we now, and where are we going? The positive part of the picture is the amount of funding. However, the hon. Gentleman, or perhaps the hon. Member for Rutland and Melton (Mr. Duncan), intervened when I was about to come to the "however" or "but". There is a problem with the funding formula and the hon. Member for Blaby highlighted part of that problem. It is sometimes difficult for Members of Parliament to explain the differential to constituents and others. I often have to try
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to do so to other parents when I walk to school regularly with my son. It would be interesting to know exactly how the Conservative party's proposed formula would make a difference, because it is almost exactly the same. I shall explain exactly how it is made up because I have done some research.

As the hon. Member for Blaby knows, I have asked hundreds of parliamentary questions on the subject and I have a breakdown of how Leicestershire's funding is made up. For those of us who are awful at algebra, it is horrendous to look at the table. It has 11 columns of different funding levels, and funding per pupil in 2003 was £2,111. That is the same for a child anywhere in the country. That is the basic entitlement for that age group—primary school pupils. Additional funding for each additional educational needs pupil is £1,370. However, Leicestershire is a wealthy county because the city was taken out during the local government organisation. Although I have patches of deprivation in my constituency, there is not a lot in the county as a whole. We receive only 1 per cent. in additional money for the level of deprivation in the county, which adds £9 per pupil.

David Taylor: This morning I went to a school in Coalville, which is a less well-off area, to speak to David Lloyd, head of Warren Hills community school. Does my hon. Friend agree that it would be a good idea if the Conservative administration at county hall, Glenfield weighted the internal distribution formula to reflect those pockets of deprivation in an otherwise well-off county?

Mr. Reed: I was about to come to that. The hon. Member for Blaby referred to Leicestershire county council and the part that it plays. It is a reasonable authority—although I have to say that, because I worked with the people there for many years and would not want to have a go at them. Two matters are worth mentioning now. The council plays a role in the distribution. There may be difficulties in the funding formula from the Government to the council—I hope that we can address the technical details—but the funding formula in the county also needs to be addressed. It would be worth while for the county's Members from both sides of the House to take the message to county hall that that needs to be addressed.

It is also important to recognise that although the county has topped up the amount it gives to schools through the council tax—lots of other authorities have done that, and I believe that Leicestershire is in the bottom third of authorities that have done so—there are additional problems at local level, not just at national level. It is important to put on the record how the formula is arrived at and why we suffer particularly in Leicestershire.

On top of that, there is the sparsity issue. Leicestershire has pockets of sparsity, including my area. We get 0.3805 for sparsity, which gives us additional funding per unit of sparsity of 175, which gives us—in pounds per pupil—£67. On sparsity, Leicestershire does reasonably well, compared with other authorities. The hon. Gentleman mentioned Lincolnshire, but it is probably not the best direct comparison; that is probably Nottinghamshire. If he has the figures to hand, he may be able to put me right on that.
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The killer blow lies in the additional cost allowance—the payment that tries to recognise the additional costs of London weighting and south-east weighting. It tries to address the very real problem that costs are higher in London, outer London and some parts of the south-east. Part of the problem is that since the last funding review Leicestershire has been right on the margin. Cambridgeshire used to be right at the bottom of the funding formula, alongside Leicestershire, and my hon. Friend the Member for Cambridge (Mrs. Campbell) and I worked closely on some detailed proposals for changing the system. It worked well for Cambridgeshire, which was brought within the area cost adjustment area because of the increased costs associated with the M11 corridor and the Cambridge phenomenon.

So Leicestershire gets its basic funding entitlement, with which we all agree—

Mr. Robathan: The hon. Gentleman was not listening earlier. I do not agree with the basic funding entitlement, because it should be higher—especially as pay scales for teachers are determined nationally, so all teachers are paid the same, and staffing costs account for some 80 to 85 per cent. of schools' costs.

Mr. Reed: The hon. Gentleman did say that he believed in a basic state entitlement—

Mr. Robathan: No. It should be higher.

Mr. Reed: If the hon. Gentleman would let me finish, my proposal, in the letter I sent as part of the consultation process, is to raise the basic entitlement—

Mr. Robathan: So we agree.

Mr. Reed: Exactly. It is a pity that the hon. Gentleman did not let me finish, because if he had he would have learned that some time ago. He gave the percentage differences, and Leicestershire's funding is 13.6 per cent. lower than the average for shire counties. However, to take one example in London, schools in Camden get an extra £991 for running costs through the ACA, because they are in inner London. That is where Leicestershire is hit by the funding formula. I can accept that we will never score highly on the deprivation measure, although we do okay out of the sparsity factor. However, I would like more information about how the ACA is calculated to address the problem that the hon. Gentleman and I both have with the funding. This is a technical matter, not necessarily a party political one.

In such circumstances, it is much better if we can work together. We need to address the level of the ACA and the basic entitlement. If we can change those, we can narrow the gap. Not even the hon. Gentleman would mind being the lowest funded LEA—someone has to be at the bottom of the table—if the size of the variation were reduced. Even members of Leicestershire county council have said that they are pleased with the overall increase in their funding. Ivan Ould was quoted as saying that he did not mind Leicestershire being the lowest funded authority, as long as it was well funded. We probably all share that sentiment.

I broadly accept the proposals in the recent consultation, but we need to review the funding formula. It is slightly disingenuous to suggest that if we
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moved up to the average, we would be £X better off, because the overall budget would not change. If we increased the funding for Leicestershire, the money would have to come from somewhere else. Rightly, therefore, the London MPs and others are battling hard to retain the formula. That is why we welcome the floors and ceilings proposal made by the Office of the Deputy Prime Minister as the best way to achieve our aims over the short to medium term. However, it is important, in the present consultation period, to press for an acceptance that it is worth reconsidering the operation of the funding formula and its impact on places such as Leicestershire.

I have visited all the 36 schools in my constituency, some of them several times. Funding is always one of the first issues to be raised, and it is an easy headline— the lowest funded education authority in the country. Unfortunately, by the time one has explained the education funding formula most people have usually switched off, especially on the doorstep. People ask why there is education funding. We can tell them that it is sensible, that it works in a particular way and that there is a reason for it, but trying to explain the size of the variation is extremely difficult.

I make a plea not just on behalf of all 36 schools but also for my son's school, in which I declared an interest, where we face a deficit budget this year. The problem is genuine. In the past, people might have dismissed it by saying that educationists, teachers and heads would always say that everyone wants more money. We all want spending in our constituencies, and we could easily double the public sector budget in our constituencies from the bids that we receive daily. However, there is a genuine and serious problem, despite the additional welcome funding that we have received from the Government. The problem is technical, and we need to reduce the disparity.

My hon. Friend the Minister is relatively new to his post. I urge him to bring fresh thinking and a fresh pair of eyes to the debate. I trust that over the next few weeks he will listen carefully to our representations and that he will realise, despite the way in which the speech by the hon. Member for Blaby ended, that there is general cross-party consensus on how we can move forward. The matter is technical, but it can be resolved and it will make an enormous difference. On behalf of all teachers, and especially the hard-working governors who are trying to put together their budgets this year, I urge my hon. Friend to find a way to ensure that if we are to have three-year budgets, they are good three-year budgets for Leicestershire, not poor ones. His school report reads pretty well, but he could do slightly better.

9.1 pm

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