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30 Mar 2010 : Column 655

Ed Balls: I think that the hon. Gentleman will find that we had a decade of stability, with low interest rates and low inflation, because of the great leadership and prescience of an independent Bank of England. That was opposed by the right hon. and learned Member for Rushcliffe (Mr. Clarke), who said that Bank of England independence was a mistake and should not have been introduced. I expect that he has recanted now, but he can set the record straight when he speaks. He can probably tell us his views on VAT, the winter fuel allowance and free bus travel as well, although I think that he was contradicted fairly quickly by the Leader of the Opposition when he gave his views on those matters a week or so ago.

Ms Sally Keeble (Northampton, North) (Lab): I very much welcome my right hon. Friend's commitment to protect the schools budget. In the course of his speech, will he explain how the extra £6 billion in cuts advocated by the Opposition would impact on it?

Ed Balls: I will turn to that very subject now. I hope that I can give some comfort-

Mr. Simon Burns (West Chelmsford) (Con): Will the Secretary of State give way?

Ed Balls: No, I will not. I hope that I can give some comfort to my hon. Friend the Member for Northampton, North (Ms Keeble) about our plans, after which I shall set out the opposing choice. After that, I shall be very happy to give way, but I want to make some progress first.

The pre-Budget report and the Budget set out how, consistent with reducing the deficit steadily, we can maintain and in fact increase spending in our priority areas. For my Department, the Budget confirmed a real-terms rise in funding of 0.72 per cent. a year in 2011-2012 and 2012-13 for Sure Start, 16-to-19 education and schools, which account for around 75 per cent. of my overall budget.

Teachers' pensions make up a further 17 per cent., of my budget, but I am not proposing to touch them at all. That leaves 8 per cent. of my budget unprotected, money that covers programmes such as short breaks for disabled children, sport, music and looked-after children, as well as funding for our non-departmental Government bodies.

I have committed to finding £500 million of savings from that 8 per cent. unprotected portion of my budget. That is a 7 per cent. cut on £5 billion worth of savings in 2012-13, and-unlike the shadow Chancellor, let alone the shadow Education Secretary-I have also identified where those savings will be made.

So far, I have set out £300 million of savings in my Department. The £135 million that will come from non-departmental Government bodies will include £45 million from cutting funding to Becta, and £55 million from the Training and Development Agency for Schools. Also, £100 million will come from ending start-up funding for extended services, while £50 million can be saved by scaling back bursaries for initial teacher training, given that we now have a flow of new teachers coming through. A further £21 million will be saved in communications and back-office functions.

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That all adds up to £300 million in savings, but I still have to find a further £200 million. That will be hard, but I am determined to do so without cutting into front-line spending programmes such as the support for music and sports, and for looked-after and disabled children.

Mr. Philip Hammond (Runnymede and Weybridge) (Con): The right hon. Gentleman said a moment ago that teachers' pensions were part of his budget. Will he confirm that teachers' pension contributions are funded not from his budget but directly from the Treasury?

Ed Balls: A total of 13 per cent. of my budget covers pensions. The document that the Government published a few days ago showed our overall spending, and it includes a footnote making it clear that pension contributions are part of our departmental expenditure limit. I included pensions in the description of my budget because the shadow Education Secretary always includes them when he explains how easy it would be to find cuts. He always refers to our £60 billion-plus budget, so- [ Interruption. ] But if they are not in my budget, I have to say to the shadow Business Secretary that they are not available for the shadow Education Secretary to cut. That is the point. If only the shadow Education Secretary were here, he could set the record straight. Unfortunately, however, he is not here.

Mr. Burns: Will the right hon. Gentleman give way?

Ed Balls: I said that I would take an intervention, and I will do so in a moment.

I shall explain what I have protected. The settlement in the protected 75 per cent. of my budget is for Sure Start funding to rise in line with inflation, which will mean that we will meet our commitment to having 3,500 children's centres, or one in every community. For 16-to-19 learning, there will be a 0.9 per cent. real-terms rise, year on year, in 2011-12 and 2012-13, which means that we can pay for our guarantee-for every school leaver, a school, college or apprenticeship place for the next three years.

Finally, for schools, there is a real-terms overall rise in funding of 0.7 per cent., which, combined with efficiency savings, will mean that schools can meet their front-line cost pressures. After paying for 80,000 projected extra pupils, per pupil funding on our plans will rise, on average, in cash terms, by 2.1 per cent. in 2011-12 and 2012-13, on top of 4.3 per cent. in the coming financial years.

That is a tougher settlement than we have been used to, but the per pupil rise in cash terms-2.1 per cent.-is a real-terms rise in budget. It is more than our projected cost pressures, as we set out in the document. It means that we can deliver our guarantees of one-to-one tuition to every child who falls behind. It means that we can keep additional teachers and support staff in the classroom. It means that we can continue to invest in Building Schools for the Future. These are guarantees to the public from this Government, in legislation and based on rising budgets for Sure Start, school leavers and schools-guarantees not matched by the Conservative party, for reasons I shall explain.

Several hon. Members rose -

Ed Balls: I give way to the right hon. and learned Member for Rushcliffe.

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Mr. Clarke: I am grateful to the right hon. Gentleman. May I refer him to page 90 of the Red Book and paragraph 6.16? Referring to the Secretary of State's Department, the last sentence of that paragraph says:

With great respect, he has just given the most muddled and confused description of where any of that money is coming from, and he has wound up announcing a cash increase that is less than inflation, so it is a real-terms cut. As he has conceded that education spending rose under the Thatcher Government because of our choice of priorities, does he agree that this is indeed tougher and deeper than anything the Thatcher Government ever did?

Ed Balls: No. It is not fair to the shadow Business Secretary: why should he be here answering on the details of education policy when he does not know the facts? The £1.1 billion of efficiency savings are efficiency savings within the overall schools budget, which are being recycled from the back office in schools to the front line in schools. They are not reductions in school budgets; they are recycled efficiencies within the overall budget. The only reductions in budget that I have agreed to are the- [Interruption.] I will finish the point. I do not think that the right hon. and learned Gentleman should intervene from a sedentary position. He is much more experienced in the rules of the House than I am, and he knows that he has to intervene if he has something to say.

I have a half a billion pound cut, and I have told the House how I am finding £300 million of that. The £1 billion of efficiency savings are going back to the schools, not being taken away from them. Schools are seeing their funding rising per pupil in cash terms by 2.1 per cent. a year. And when we add in 80,000 extra places, we have made it clear in the document "School Funding 2010-13"-the right hon. and learned Gentleman will not have read it; why should he?-that projected cost pressures are 1.6 per cent. in schools over that period. That is a real-terms rise; it is not a real-terms cut. It is a real-terms rise compared to inflation as well. We are raising spending, and I shall come in a moment to what the choice is after taking an intervention from the hon. Member for West Chelmsford (Mr. Burns).

Mr. Burns: I am extremely grateful to the right hon. Gentleman for giving way. Despite all the waffle and the meanderings we are getting, will he now, so that we can put his speech in its proper context, answer the original question put to him by my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) about the Chancellor's comments on cuts and the Thatcher Government?

Ed Balls: I did answer it, but I will say it again. When we came to government in 1997, the schools capital building programme was about £700 million, and today it is £7.8 billion. That is how we have managed to rebuild and refurbish 4,000 secondary schools. Over that 18 years, schools capital was decimated. Schools' current spending, as I said, rose in the early part of the Thatcher Government. There were cuts in '85 and cuts in '89. I have to say that the biggest spending cuts did not occur under the Thatcher Government; they occurred under the Major-Clarke Government between 1992 and
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1997. What happened with the Thatcher Government was not spending cuts. Let us not forget that they had North sea oil revenues, which they were squandering. VAT was up to 15 per cent., the link with pensions was broken, child benefit was frozen and child poverty doubled. If my constituents are wondering whether they want to go back to a Conservative Government, when they look at that record they will say no, no, no.

Mr. Brian Binley (Northampton, South) (Con): The Secretary of State is moving at an amazing speed and sometimes it is a little difficult to keep up with his flow of words. He intimated that he favoured the increase in the higher rate of income tax. He thought it was a good idea-at least, that is the impression I got. Will he therefore recommend to the Chancellor that he should keep that as a permanent increase?

Ed Balls: That is a matter for the Chancellor of the Exchequer, not for me. I am not going to start telling the Chancellor what his tax policy should be. I will not say, "Cut national insurance," when there are not the cuts to pay for it, and when I know in my heart that we will end up raising VAT to pay for it, which is what the shadow Chancellor proposes. I am not going to start telling the Chancellor what to do in future on tax policy. But when the country is faced with a pre-Budget report from the Chancellor of the Exchequer, my right hon. Friend the Member for Edinburgh, South-West (Mr. Darling), or from the Chancellor of the Exchequer, the hon. Member for Tatton (Mr. Osborne), I know which Chancellor the British people will choose.

Mr. Barry Sheerman (Huddersfield) (Lab/Co-op): Does my right hon. Friend agree that many of the Conservative Members who usually come to the Chamber when education is being discussed do not seem to be here today, including the Front-Bench education spokesman? It is no wonder that the shadow Business Secretary seems unable to keep up with the momentum of my right hon. Friend's speech. Is it not a fact that there is good news on the education budget, excellent news on children's centres and Sure Start, and excellent news on the protection of looked-after children? Will he just clarify one point? Are there sufficient resources for raising the age of participation to 17 and then 18?

Ed Balls: My hon. Friend has a strong track record of contributing to education debates. I have to say it is rather good to have a different crowd in. I will try not to speak too quickly. I will try to talk a little slower for the benefit of the hon. Member for Northampton, South (Mr. Binley).

In 1997, we had leaking roofs, photocopied text books, demoralised teachers, two thirds of children not making the grade, and more than half our schools not at our basic performance benchmark. Now, we have 4,000 schools rebuilt, funding per pupil doubled, 42,000 more teachers, 120,000 more teaching assistants, half of pupils making the grade, not a third, and not half of schools not making the grade, but fewer than one in 12. That is a Labour record of investment and reform that we are truly proud of.

The commitments that we are making to rising funding in the years ahead mean that, yes, we can pay for our one-to-one guarantee; yes, we will continue with Building
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Schools for the Future; and, yes, we will continue with Sure Start children's centres in every community. We will not be cutting Sure Start children's centres as the Conservative party proposes, because, as my hon. Friend's Select Committee report said, what a retrograde step that would be for children and the future of our country. That is not something that people will see from a Labour Government.

Miss Anne McIntosh (Vale of York) (Con): The Conservative party will not abolish Sure Start, and I wish that the right hon. Gentleman would take this opportunity to correct that for the record. Will he give the House an assurance today that pupils in North Yorkshire, and particularly in the Vale of York, receive as much per capita funding as those in his own constituency?

Ed Balls: The hon. Lady is a contributor to our education debates, so she will have studied in detail the consultation on the future of the dedicated schools grant. We are looking to ensure that we reflect rurality, deprivation, need and per pupil funding. I hope to make some progress. My constituency is in one of the F40 areas as well, so I understand the issues that she raises. I want to come on to the funding of education now on the basis of a different approach.

I must say to the hon. Lady that, as I understand it, the Opposition do not propose to abolish Sure Start, but if the shadow Chief Secretary to the Treasury would like to stand up today and say that the Conservative party will match my commitment to rising budgets in cash terms and in line with inflation for Sure Start this year, next year and the year after, he is very welcome to do so. However, he is not going to, because unfortunately Sure Start is not in the protected areas-health and international development-that the shadow Chancellor set out.

The Leader of the Opposition says that he wants Sure Start to be only for the poorest communities, and two years ago the Opposition said that they wanted a £200 million cut to the Sure Start budget. That sends a message to parents throughout the country, and it sends a chill down their spine. That is why we will continue to highlight it.

Let me move on.

Mr. John Baron (Billericay) (Con) rose-

Mr. Gordon Prentice (Pendle) (Lab) rose-

Ed Balls: I shall give way in a second.

I should like to set out in more detail our policy on Sure Start, on 16-to-19 funding and on schools, but before I do so I must say that there is a choice about different priorities and the different ways in which we fund things. This Budget has at its heart different choices, and to be fair to the Opposition they have been setting out their very different choices in recent days. If the shadow Education Secretary were here, I would not ask him to match me on schools spending or on pupil guarantees. I know that that is difficult for him, because he has different priorities. There are also problems that he has to face, and I understand his dilemma, which I shall explain to the shadow Business Secretary. He could answer and guide the shadow Education Secretary on how he should navigate those complexities.

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First, the shadow Education Secretary has a free schools policy, which will be on all the leaflets of all Opposition Members, so it will be good for them to hear about the detail of it. The extra places in that policy will cost about £1.8 billion over the next Parliament-from within the schools budget or from my unprotected £5 billion. It will also lead to shifting about £4 billion from the Building Schools for the Future budget to pay for the new free schools.

Secondly, the shadow Education Secretary proposes to find about £2 billion to £3 billion, we think, for a new national pupil premium. Hon. Members-other than those who are experts on schools funding-may not know that, because they may not have followed the detail. As far as I have worked out, if the hon. Gentleman is to pay for the free schools policy and the national pupil premium, either he has to cut my unprotected budgets, which include those for sports, music, disabled children, short breaks-

Mr. Philip Hammond: They're not yours, by the way.

Ed Balls: My Department's budgets.

The shadow Education Secretary will have to cut either those budgets by about 50 per cent. or the schools budget. That was his dilemma before, and that is why up to now he has not been willing to match me on the school leaver's guarantee. He cannot make that guarantee. He has not matched me on Sure Start children's centres; he will not match me on the schools budget; and the Opposition voted against the one-to-one tuition guarantees in our recent Children, Schools and Families Bill.

Now, however, the hon. Gentleman faces an extra complexity, as the shadow Chief Secretary to the Treasury will know: unfortunately, the shadow Education Secretary has been asked to contribute to the £6 billion of extra savings, which were announced yesterday, to pay for the national insurance tax freeze. The Institute for Fiscal Studies, as I am sure the shadow Chief Secretary knows, calculates that that would involve a 2.8 per cent. cut for unprotected Departments. That would mean cutting a further £1.7 billion a year from the Sure Start, schools and children's budgets-were the Conservatives to be elected. As I said, it is no wonder the shadow Education Secretary cannot match our pledges.

Mr. Hammond: As the right hon. Gentleman has studied our announcement yesterday in such detail, has he calculated the saving to the schools budget from the reduction in employers' national insurance contributions that we announced?

Ed Balls: I have just calculated that the hon. Member for Surrey Heath, the shadow Education Secretary, who is not here, will have to find £1.8 billion over a Parliament to pay for the free schools policy; £2 billion to £3 billion a year to pay for the national pupil premium; and £1.7 billion a year to make his contribution to the shadow Chief Secretary's spending cuts. So I am afraid that that massively outweighs not only the national insurance rebate for employers, but the whole £5 billion budget that, for me, is unprotected. There is no way the hon. Member for Surrey Heath can pay for those measures, other than by making deep cuts to the schools budgets: fewer teachers, fewer teaching assistants and larger class sizes.

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