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18 Jan 2006 : Column 291WH—continued

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Education Funding (Staffordshire)

4.10 pm

Mr. David Kidney (Stafford) (Lab): It is a delight to see you in the Chair, Mr. Bayley. I am also very pleased that my right hon. Friend the Minister for Schools, whom I hold in high regard, is to reply to the debate.

There is great interest in Staffordshire in this debate. The hon. Members for Lichfield (Michael Fabricant) and for Stone (Mr. Cash) are present, as are my hon. Friends the Members for Burton (Mrs. Dean), for Newcastle-under-Lyme (Paul Farrelly) and for Tamworth (Mr. Jenkins). Education funding is an extremely important subject for our constituents.

I bring good news about educational achievement from Staffordshire and from my Stafford constituency. The results achieved by seven-year-old pupils at key stage 1, 11-year-old pupils at key stage 2 and 14-year-old pupils at key stage 3 are above the national average in an area where average household incomes are only about 80 per cent. of the national average. The results of 16-year-old students at key stage 4 are below average, but last year they achieved their best improvement for seven years and their best GCSE results ever.

Inspectors have praised our targeted approach. With better funding, we would be able to target more resources to raise the achievements of looked-after children and children from economically deprived backgrounds—[Interruption.]

Hugh Bayley (in the Chair): Order. May I say to those in the Public Gallery that we can hear what they are saying? I apologise to the hon. Member for Stafford (Mr. Kidney).

Mr. Kidney : Thank you, Mr. Bayley. I would just like to mention that my hon. Friend the Member for Cannock Chase (Dr. Wright) has also joined us for this debate.

In our area the staying-on rate for 16-year-old students is also above average and our A-level results are at or above the average. If I sound as though I take a propriety interest in our schools, it is because I really care about them. I regularly visit schools in my constituency: last Friday, for example, I was at St. Patrick's Roman Catholic primary school, whose pupils and staff work hard for their enthusiastic new head teacher, Mrs. Goodison, and where there is a warm and positive learning environment. I am also proud of the Stafford collegiate, which brings together all the town's secondary schools, a purposely developed sixth-form centre and the college of further education. The result is a wonderfully broad range of courses for 16-year-old students to choose from, which no doubt helps to explain the good staying-on rate. We are currently working on developing the Government's 14-to-19 agenda, including our ability to offer apprenticeships to 14-year-olds.

My own latest project is an attempt to partner individual secondary schools with individual local employers. That is in addition to the excellent work that the schools and employers have already done with Staffordshire Partnership, but I foresee additional benefits for schools and local businesses from that additional partnership working—for example, more
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mentors for students in their schools and improved recruitment and retention for employers in their businesses.

Mr. William Cash (Stone) (Con): The hon. Member for Stafford (Mr. Kidney) is my successor in that seat, and I am glad to hear such a good report to give of the constituency. My constituency also has some excellent schools, but St. Mildred's in Whiston, St. John's in Alton and Draycott Manor school have all closed. Those closures, which have caused my constituents serious concern, are directly related to the failure of school funding in my constituency.

Mr. Kidney : Staffordshire local education authority sets a very good example in managing surplus places to get the best value for money, and I am sorry to hear of the problems that my honourable neighbour has experienced.

We have done well in Staffordshire, but much more remains to be done. One fifth of 11-year-olds still cannot read and write at the level expected for their age, and more than two fifths of 16-year-old students are not achieving five good A to C-grade GSCE passes.

Mrs. Janet Dean (Burton) (Lab): Will my hon. Friend comment on the response of one head teacher in my constituency to the Government's recent education White Paper? The head teacher supports the Prime Minister's comment about fair funding following the pupil, but suggests:

Mr. Kidney : I hear exactly the same message from head teachers. The view is the same nationally.

There are still weaknesses in rates of achievement that harm students and our economic performance as a nation. That is why we have a new White Paper, "Higher Standards, Better Schools for All".

Paul Farrelly (Newcastle-under-Lyme) (Lab): I am sure that my hon. Friend will make this point later. He is obviously aware of a somewhat controversial White Paper that is all about standards—at least, we hope that the legislation will be. Staffordshire schools already do well, as he says, but does he not agree that they would do much better if there was fair funding? I have in mind the £5,211 per pupil that will go to Kensington and Chelsea in the coming year, 2006–07, as opposed to the £3,381 per pupil that will go to Staffordshire. The difference is nearly £2,000 a head.

Mr. Kidney : I will deal with that directly. We in Staffordshire want to join with the Government and contribute significantly to an overall increase in standards of achievement. If only our education service had something approaching the average level of funding from the Government to pay for that effort. Instead, we consistently receive a level of funding that falls further behind the best-funded local authorities. If Staffordshire received resources that were more like those received by the better-funded authorities, it could have more teachers, support staff, computing back-up, textbooks, tools and equipment, and we could then swiftly raise standards still further.
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We in Staffordshire have not simply felt sorry for ourselves; we have tried to overcome the obstacles that the low funding presents. Staffordshire local education authority has consistently added to the funding of the education service from its own resources. Few LEAs are doing that this year. That is surely a sign of Staffordshire's tenacity in doing everything in its own power to raise standards in its schools.

The other positive action that Staffordshire LEA has taken is to support the campaigning organisation F40. Staffordshire is not alone: a number of LEAs languish at the bottom of the league table for central Government funding year after year, and that is why F40 was started.

Michael Fabricant (Lichfield) (Con): Does my hon. Friend—I say that advisedly—at least admit that with the new funding formula Staffordshire is doing a little better than before? It was previously fifth from bottom and is now 18th from bottom out of 149 LEAs, excluding the Isles of Scilly, in England.

Mr. Kidney : I praise the hon. Gentleman for helping in the campaign with the information that he unearths in parliamentary questions and answers. F40 presses for fairer education funding, and I declare a pertinent interest in it, because last year I was elected to chair it. The Minister knows all about F40. The organisation has responded energetically to the Department's various consultations on funding and lobbied for changes that will benefit the poorer LEAs. Some aspects of the changes to funding that the Department made three years ago reflected and addressed concerns that we had raised.

A delegation from F40 met the Minister last year, and I thank her for her willingness to engage with us and to discuss the problems that we believe exist and how they can be resolved. We were pleased by some of the Government's recent decisions on the dedicated schools grant, which is to start from this April. The two-year settlement, with advance notice for schools of the 2007–08 figures, is helpful for planning budgets and spending decisions. Future settlements will be even more helpful, as they will give notice of the next three years' funding.

I warmly welcome the Government's decision to establish the baseline for the dedicated schools grant based on what local authorities were spending in 2005–06. Schools in areas such as Staffordshire, which has a strong recent record of commitment to education, are not now facing an immediate reduction in resources. In fact, Staffordshire schools will have an extra £10 million—an increase of almost 3 per cent.—to spend as a result of that decision. The guaranteed minimum increase in per pupil funding is also welcome, although obviously it builds on the historical levels of funding for local authorities, which I hope I have demonstrated are an unfair base from which to start.

As we look forward beyond the next two years, there are aspects of the current funding system that continue to disadvantage areas such as Staffordshire. The Government rightly adjust funding to reflect the additional challenge that schools face in overcoming deprivation, which affects the ability of pupils to learn. The adjustment is calculated according to where pupils live, whether or not that is also where they go to school.
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In places where there is considerable cross-border travel to school, the schools that are faced with the challenge of deprivation are not receiving the additional funding given for deprivation. With the advent of local area statistics, it is now possible for schools to know precisely how many pupils they have on roll from the areas that attract the additional funding.

The Government also adjust the funding for additional cost pressures. Staffordshire gets no additional money through that factor and resents the level of funding that goes to those areas that benefit from it. After all, the main expense of any school is teachers' salaries, which are paid according to a national scale. Will the Minister confirm that the Department will continue to reflect on the justification for those adjustments, their levels and their practical application?

Dr. Tony Wright (Cannock Chase) (Lab): I agree that it is right that funding should follow deprivation. One of the problems in Staffordshire is that it has been hard for schools in deprived areas to get the funding they need because of the way in which the county as a whole is funded. Does my hon. Friend agree that as well as increasing across-the-board funding we should ensure that schools in the tougher areas of Staffordshire get more direct funding?

Mr. Kidney : Indeed I do. My hon. Friend does not have to look too far from his constituency to Walsall and Wolverhampton, where the local authorities are getting larger sums for deprivation than his area does, even though teachers in his local schools face similar challenges as a result of deprivation.

The Government also add an amount to the formula for rural factors—for example, an education service in a rural area has extra costs, not least in transport. However, that factor seems to attract much smaller sums than the other two factors that I have mentioned. As long as we have those other factors we should certainly have as significant an amount of funding for rurality.

The Minister knows that the F40 group has devised a system to account for education spending that allows for accurate and instant evaluation of different policy options and spending priorities. There is no longer any excuse for guesstimates and assumptions in the Department's funding system. I thank my right hon. Friend the Minister for Schools for offering to arrange for her officials to meet members of the F40 group to discuss the new system.

My right hon. Friend should also be thanked for drawing together the various additional funds into one standards fund and for ending the requirement for matched funding from LEAs. The recent announcement on personalised learning is an early measure from the White Paper. I hope that the additional resources for the personalisation of learning are soon incorporated in the mainstream formula. The proposal to use prior attainment data can be only a short-term measure; otherwise there will be almost a perverse incentive not to improve standards.

Whichever way one looks at the figures, Staffordshire does badly. The Minister's written answer to the hon. Member for Lichfield on 15 December last year, at
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column 2200W of Hansard, showed that Staffordshire's funding per pupil under the new dedicated schools grant for 2006–07 will be £3,381. As the hon. Gentleman rightly said, that puts Staffordshire 18th from bottom of the league table of funding for the 150 English LEAs. Staffordshire's funding per pupil is £197 less than the mean of £3,578 and £382 less than the average of £3,763. If we restrict the comparison to the shire counties, of which there are 34, Staffordshire receives £63 per pupil less than the average, which on its own makes a £7.5 million difference to the local authority's funding for its schools.

At LEA level, the Government say that the national settlement for local authorities will provide a 6.8 per cent. increase in 2006–07, but in Staffordshire the increase will be 6.5 per cent. Staffordshire is losing out in every way. If that were the result occasionally, no doubt Staffordshire could ride out the lean years, but the fact is that Staffordshire loses out every year. I looked back to the figure for funding per pupil in Staffordshire in 1997–98 and it was £2,640. That was the total spending per pupil, including all revenue grants. That year, the average was £2,940 for an English authority so Staffordshire was getting £300 less than that.

When presenting a legitimate complaint about the system for distributing the Government's money it is easy to lapse into a completely negative whinge. I note, however, that the Government I support have raised the average funding per pupil from that £2,940 in 1997 to £4,110 this year—an increase of more than £1,100 per pupil. The Minister knows the arguments well. In fairness, she and her Department have engaged constructively in attempts to mitigate the harshness that the Department's formula visits on areas such as Staffordshire. Sadly, although changes have been made with the sincere intent of making the funding system fairer, they have not halted the slide towards greater disparity. In fairness to the Department, the new White Paper makes a welcome commitment to

That quote is from the Prime Minister's foreword to the White Paper.

A system of fair funding for Staffordshire would provide adequate resources compared with other authorities, taking into account the total resources available, to enable us to do better than we are already doing. I regularly meet people engaged in education in my constituency, including local authority staff, teachers, other school staff, governors, parents and, most importantly, students. I detect an appetite to go further to achieve more.

Staffordshire will continue to support the F40 campaign. We will be represented at its conference in Nottingham on 11 March and we will continue to contribute to the debate on school funding, including through the new direct schools grant which has been established from this year. I look forward to an open debate on the future of the dedicated schools grant formula from 2008 onwards. We shall take part in the comprehensive review of education spending that the Department and the Treasury are to conduct shortly. The new formula should ensure that priority is given to a basic entitlement for every child, built on sound evidence on costs.
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Will the Minister give a clear signal to Staffordshire's broad and enthusiastic education community that there is official recognition that Staffordshire has performed extraordinarily well with limited resources—I would say unfairly limited resources—and deserves credit for its achievements to date? I ask also that the Government commend Staffordshire's schools and its authority for their performance. We want our schools to do even better in future. While recognising that such improvements cannot be delivered on a shoestring, will the Minister hold out the prospect that Staffordshire will receive fairer funding in the coming years? We support the Government's agenda of higher standards and better schools for all; we just cannot go on delivering more with less.

4.26 pm

The Minister for Schools (Jacqui Smith) : I congratulate my hon. Friend the Member for Stafford (Mr. Kidney), not only on securing this debate, but on the persistent and committed way in which he campaigns for increased funding for his authority. I also welcome the commitment shown by the other hon. Members representing Staffordshire constituencies who are here today.

I should like to put on record, as my hon. Friend has asked, my gratitude and respect for the work of teachers and pupils within the authority in Staffordshire, who have been responsible for significant improvements in the quality of education in the county. Those achievements reflect the hard work of teachers and other staff across the county. Staffordshire now has 10 per cent. more teachers than in January 1998 and 80 per cent. more support staff. They are certainly working effectively.

Turning to education funding, it is worth reflecting on the increases in funding for Staffordshire since the Labour Government came to power. Since 1997–98, total revenue funding in Staffordshire has increased in real terms by £1,040 per pupil—almost 40 per cent. In the other important area, school capital, which tends not to be the subject of fair funding representations but which is important for ensuring that the environment within which children are learning is as we would expect it to be, spending on school buildings in Staffordshire has also increased dramatically, from £3.7 million in 1996–97 to more than £29 million this year—a sevenfold increase.

Despite that, there are concerns about the level of funding in Staffordshire, particularly when compared with other areas of the country. My hon. Friend has made representations to me on a number of occasions. I wish to discuss the county's position in what I suppose we might call the funding league tables, and the reasons why Staffordshire does not always have access to some specific grant funding—although I note that my hon. Friend acknowledges the way in which the new funding arrangements will bring together those sources in the school development grant.

Some have argued that levels of funding per pupil should be more or less the same for authorities across the country. That would be the only way to ensure that no authority was below the average. However, I do not
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believe that there should be a uniform rate of support, and I do not think that my hon. Friend was arguing in favour of that. Let me explain why.

Michael Fabricant : Will the Minister give way?

Jacqui Smith : I will, if the hon. Gentleman realises that I will not necessarily get through everything if I do.

Michael Fabricant : Does not the Minister also accept that there is a problem of transparency? The problem is not just the difference in funding between shire counties, let alone the gamut of education authorities. There is also the problem of people not understanding why the differences occur or how the calculations are made.

Jacqui Smith : I hope to be able to address that when I deal with the reforms that we have made to the distribution method.

Mr. Cash : The issue that seriously teases us is whether there is like for like. That is one of the crucial issues on which I have campaigned for nearly 20 years.

Jacqui Smith : I was about to say that it is because of differences in children and structures that there is differential funding for authorities. Our aim is to give all pupils an equal opportunity in life, and, as my hon. Friend the Member for Stafford acknowledges, pupils from more deprived backgrounds are likely to have additional educational needs and to require additional help if they are to have an equal chance to succeed. That is why the current—or old—formula funding system gives funding additional to the basic entitlement to authorities with a higher number of pupils from deprived backgrounds. Staffordshire has fewer pupils from deprived backgrounds than many other authorities, and that is a key reason for the difference.

However, as my hon. Friend said, although additional educational need is the main reason why Staffordshire receives less funding per pupil, the current formula funding arrangements also give extra funding to sparsely populated authorities such as Staffordshire, which benefits to a certain extent from sparsity funding—I heard his request that it should be a larger portion. There is also extra funding for authorities in high-cost areas. I do not accept the contention that there are similar employment costs in all parts of the country because of the national pay system. The evidence of the differential and higher costs in some parts of the country are the justification for the area cost adjustment, which, as my hon. Friend said, is one of the additions that Staffordshire does not receive under the existing formula.

I understand the concerns of individual schools such as those highlighted by the hon. Member for Stone (Mr. Cash). I hope that he will be reassured by Staffordshire council's latest provisional out-turn figures, which show that net school balances in the county stood at more than £27 million at the end of the financial year 2004–05. There was £7 million more in school balances in Staffordshire at the end of 2004–05 than at the end of 2003–04, which represents an increase of 35 per cent.. The national average increase was 16 per cent.

That deals with the current situation. As my hon. Friend the Member for Stafford said, the Government are making some important changes to school funding
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arrangements from the beginning of April this year. They are designed to ensure that the money intended for schools in every area of the country reaches them, and to give head teachers and governors stability and certainty about their funding so that they can make better plans. We shall ensure more stability for schools through multi-year budgets. As my hon. Friend knows, the dedicated schools grant is a new ring-fenced grant from the Department for Education and Skills to each local authority. It will cover funding for schools and other provision for pupils.

As my hon. Friend recognised, we consulted widely on the new school funding arrangements, including our proposals for distributing the DSG among authorities, in the spring last year. Schools and authorities in areas such as Staffordshire that spend more than their formula funding allocation told us of their concerns about the proposals. They were worried that, over time, their relative funding levels would be reduced. Staffordshire was one of the authorities that made that case. We listened carefully to those concerns, and in summer last year we consulted on a modified method for distributing the DSG that will put stability at the heart of local authority funding allocations. A majority of the people who responded to the new consultation supported the modified method, and that is what we shall use to distribute the DSG in 2006–07 and 2007–08.

Given the cry for greater transparency, let me describe how the DSG distribution will work. We shall take each authority's existing level of spending on the schools budget as the starting point, give every authority an increase of at least 5 per cent. per pupil over its current spending in each year, and then distribute the remaining grant according to the Government's priorities for education. Our priorities include personalised learning at key stage 3 and in primary schools and the provision of more practical learning options for pupils at key stage 4. That will enable precisely the sort of exciting work in the 14-to-19 age group to which my hon. Friend referred. The priorities also include covering the full-year cost of implementing time for planning, preparation and assessment in primary schools—that is the final stage of our work force reforms under the national agreement—and meeting the cost of increasing entitlement to free early years provision from 33 to 38 weeks.

Although we have earmarked sums for those priorities in every authority's allocation of dedicated schools grant for each year, decisions on the distribution of funding between schools continues to be a matter for local authorities in consultation with their schools forums. As my hon. Friend the Member for Cannock Chase (Dr. Wright) made clear, it is at that level that authorities should take into consideration the challenges of deprivation when distributing resources within a given authority.

What does the school funding settlement mean for Staffordshire schools? The county can expect an increase in dedicated schools grant of 6.5 per cent. on top of current spending per pupil in 2006–07, with a further increase for 2007–08 of 6.4 per cent. per pupil. That is an increase of more than 13 per cent. per pupil over those two years. We have heard what that amounts to in terms of guaranteed funding per pupil. The
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settlement gives the authority and its schools unprecedented predictability by providing guaranteed per-pupil funding for two years. That should give Staffordshire schools the confidence to plan ahead more effectively than ever before, making sure that their financial planning really supports the school improvements that my hon. Friend the Member for Stafford said they were so keen to ensure.

I believe that we have ensured a good settlement for Staffordshire schools and schools across the country, but as my hon. Friend says, and as I am willing to make clear today, from 2008–09 we are introducing three-year allocations of dedicated schools grant and three-year budgets for schools. Before that, we intend to review the operation of a number of aspects of the new school funding arrangements, including dedicated schools grant distribution. As my hon. Friend conceded, the new distribution arrangements for 2006–07 and 2007–08 already create some benefits for Staffordshire, but we want to review the arrangements in two years' time to make sure that the operation is going as we believe it should. We will want to consider what lessons can be learned from those first two years and will want to work up proposals for the distribution of DSG in the longer term.

Later this term, we will announce the terms of reference for the review and say how we propose to involve all local authorities and other stakeholders, including the F40 group of authorities. My hon. Friend is national chair of that group and works very hard for it.

Mr. Brian Jenkins (Tamworth) (Lab): Is my right hon. Friend saying, and can I tell parents in my constituency, that the young family who move from Sutton Coldfield—that area of high deprivation—to the leafy suburb of Fazeley in Tamworth, Staffordshire, will have exactly the same money spent on their child's education as will be spent on a child in the west midlands? Will the funding now be the same?

Jacqui Smith : No, it will not, for the reasons that I outlined earlier. I do not believe that the amount should be the same from county to county, regardless of levels of deprivation, costs or sparsity, and I do not believe that my hon. Friend honestly believes that either. However, it is of course important that the challenges of deprivation are recognised, not only in national distribution, but in local distribution, too.

I was grateful to my hon. Friend the Member for Stafford for bringing a delegation from the F40 group to see me last June. At our meeting, my hon. Friend and his colleagues made a helpful presentation on the funding model that the group supports, which my hon. Friend outlined. My officials recently invited the F40 group to an early meeting with them so that they can consider the F40 model and activity-led funding in some detail.

I thank my hon. Friend and other hon. Members for raising the subject of school funding in Staffordshire. I know that my hon. Friends, at least, recognise that there has been a considerable increase in funding for schools in Staffordshire over the past eight years, although they rightly challenge us to make sure that Staffordshire receives a fair share funding and resources that will enable it to carry on the good work that my hon. Friend
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outlined. I look forward to my Department's detailed report on the forthcoming meeting with the group, and I have no doubt that Staffordshire and the F40, ably led by my hon. Friend, will continue to make representations on fair funding. I shall continue to listen to them.

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