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Page 34, line 27, leave out first ("special school").

On Question, amendment agreed to.

Clause 42, as amended, agreed to.

Baroness Young moved Amendment No. 157:

After Clause 42, insert the following new clause--

Statement on spiritual, moral, social and cultural development of pupils

(" . The governing body of every maintained school shall publish, once in each school year, a statement on the spiritual, moral, social and cultural development of its pupils which shall--
(a) describe how the school intends to promote such development;
(b) describe what targets the school has set for this development;
(c) describe what means of assessment will be used to monitor this development; and
(d) report upon the achievement or otherwise of those targets.").

On Question, amendment agreed to.

Clause 43 agreed to.

[Amendment No. 158 not moved.]

Clause 44 [Maintained schools to have budget shares]:

Baroness Blatch moved Amendment No. 158A:

Page 36, line 21, after ("is") insert ("calculated to reflect--
(a) the number of children in the school;
(b) the general education needs of those children; and
(c) any special costs associated with the area where the school is based,
and which is").

4 Jun 1998 : Column 494

The noble Baroness said: I beg to move Amendment No. 158A. As the Committee begins to discuss the finance clauses of the Bill it will be of assistance if the noble Baroness is able to answer the straight question: under the new proposals of what is the 100 per cent. a delegation?

Baroness Blackstone: It is a 100 per cent. delegation of the budget for schools that is not designated as the core budget of the local education authorities. That was defined and set out in the document published on Friday.

Baroness Blatch: Schools can be forgiven for the feeling of euphoria around the country. Thanks to the Minister making it available, I have had the opportunity to read in detail the fair funding paper. The news release of the Department for Education made reference to "Byers outlines plans for new 100 per cent. delegation". The expression "100 per cent. delegation" appeared in all newspapers and throughout the press release. I looked very hard at what that meant. I shall return to that in some detail when speaking to these amendments.

In moving Amendment No. 158A I should like to speak also to Amendments Nos. 158B, 158D, 158H and 164A. The first amendment is fundamental and I do not believe is contentious among any party. The principle is that funding for schools should reflect the numbers of children in those schools and their educational needs. Amendment No. 158B is about restricting hold-back. My amendment reflects precisely what was in the Labour Party's general election policy document which stated that no local education authority should withhold more than £50 per pupil centrally from the school's budget. Therefore, I have codified that in an amendment.

Amendment No. 158D refers to the present aggregated schools budget system, and Amendment No. 158H refers to the individual school's budget, which is the new terminology. It does not take a genius to see that there are two different figures there. I shall not move Amendment No. 158D. I prefer to consider Amendment No. 158H, my first amendment having been overtaken by the publication of the paper and my second look at the percentage of delegation to schools by local education authorities which gave rise to Mr. Byers' comment in the first place. He found that the amount of money delegated to schools varied greatly from 85 per cent. in one authority, which was the basic amount, to 96.3 per cent. in another authority. cent. The variation is considerable.

If one takes a 95 per cent. delegation, only 79 of the 131 local education authorities have to delegate between 0 and 5 per cent. more. A further 52 per cent. of the authorities have to delegate between 5 and 10 per cent. more. One is considering relatively modest sums of money that need to pass down to the schools. Those sums are modest in terms of the amounts held by the local education authorities but very significant when they are translated into money for schools. For example, if a local authority delegated at the level recommended in the amendment, it would give £214 more for each child in each school. The figures go down to zero in the case of the best authorities. They are already giving over

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the 95 per cent limit. For many authorities it means a good deal more for each child in the school. I have taken the figure recommended by the Labour Party.

Amendment No. 164A seeks to remove the terms on which service and facilities are provided by the authority for schools maintained by them. That gives enormous scope to circumscribe the money that schools do not get as opposed to the money that they do get. For the sake of the record, I should like to put some flesh on the bones of the press release of the Department for Education and Employment and put into perspective the expectations of schools and those who have welcomed this statement as to what must be top-sliced from the money that eventually finds its way to the schools.

We start of course with non-school expenditure. As everyone will be aware, that includes education for children under five, adult and community education, life-long learning programmes, student awards, youth service, which can sometimes be dealt with nationally, and revenue funding of capital expenditure which is related to those services. That is one block of money that comes off schools' money.

The second block that comes off is what is called--it is an awful word that I do not like--ongoing school-related commitments. That includes servicing and repayment of school-related capital debts, early retirement and redundancy costs that flow from decision taking before April 1999, expenditure on recruitment and retention schemes and arrangements for personal salary protection instituted by the LEA before 1st April 1999. That is another block that comes off the sum of money before it reaches the schools.

Then we arrive at the local schools' budget. That is interesting. It will include strategic management, access, LEA support for school improvement and special education expenditure. That is a factor with which no one would wish to take issue. Let us look at that category in more detail. It covers some aspects of expenditure that LEAs do not have now. It covers preparation for the LEA's educational development plans, including negotiation of targets with schools, which will be a time-consuming business, monitoring and challenging schools' educational performance, implementation of the programme set out in the approved education development plans which of course includes support for schools causing concern, support to turn around failing schools, schools with serious weaknesses, and any other non-delegated activity. Of course it includes some local authority level activities--advising, inspection, and monitoring duties--and, I have not yet mentioned, organisational committees, adjudicators, accommodation for organisational committees and all the trappings for that which will have to be paid for. That is another block that will come off the money for schools. As the document says, all LEAs will continue to need funding for those roles.

We then move on to yet more money. We come to the heading "Strategic Management" I mentioned earlier. That is to pay for the LEA education chief officer, all the staff, its corporate planning for the service, administration of the authority, audit and monitoring functions, the statutory financial functions of

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a local authority and the revenue budget for the LMS schemes, all the preparation and administration of grants, the closure and reporting of accounts, the financial monitoring, the personnel management for staff funded by that expenditure, expenditure on legal services relating to the statutory responsibilities for the local authority, and, of course, cross-service statutory plans--there are many of them--children's service plans, inter-agency work, education business partnerships, asset management plans, and so on. One has to consider also grants funding and matched expenditure for cross-service programmes--for example, the single regeneration budget, in which much is involved--information technology systems, and of course the Standing Advisory Committee for Religious Education which will have its work cut out after the previous amendment. So it goes on.

We come to the sub-heading, "Access." I have not yet finished the items of expenditure that will have to come off the money before we get down to what is called 100 per cent. delegation. That includes preparation for the local authority's asset management plan and monitoring of the LEA's school performance against the plan, the management and implementation of the LEA's capital programme, the planning and supply of school places, including preparation of the school organisational plan, the admissions and appeals duties, and the powers of the LEA. I have mentioned the school organisation committees. There is home-to-school transport which has to be paid for, the provision and administration of clothing grants, boarding grants, educational maintenance allowance, and the welfare service and school attendance functions. There is much more.

Will the LEAs be funded to meet their obligations under the national minimum wage? There will be a cost for local authorities. The Minister knows that. It would be helpful to know if those costs will be met. Will local authorities be reimbursed for the costs that they will have to meet under the national insurance changes for all staff earning over £23,000? I did some research on a number of secondary schools, in particular. It would seem that there is an average of about 2 per cent. on salary bills because the national insurance changes for salaries below £23,000 come nowhere near offsetting the costs above £23,000.

Music is a fairly confusing passage in the Bill. It is to be top-sliced, again from the money that would find itself going to schools. What is the proposition in the paper? Is it that music will be paid nationally, because the money will be top-sliced by the department? Will it be fed back to local authorities on the basis of the provision at the time that the Bill is enacted? In other words, there will be a freeze of musical provision across local authorities at this time for three years to fund that level of provision. So school by school, where music education takes place and moneys are received from their LEAs today, they will continue to receive money at that level.

What about schools like the Oratory, for example, which is on a rising curve of expenditure on music because it has introduced a prep school department? Will it be expected to find that money or will that money

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be funded? At the end of the three-year period, with the move from guaranteed funding, there is to be a bidding system. Does that mean a free-for-all bidding system or is there any intention of continuing to build on what is there and perhaps move on and expand further?

There are many more, but the final area of expenditure to which I wish to refer is that of the reorganisations that will flow from the demise of any grammar school that is unfortunate enough to lose the ballot that will be triggered by a petition. We all know that the paper insists that if a ballot is successful the local authority must produce reorganisation plans to remove selective education from those schools. Trafford LEA has already expressed some anxiety about that, because it knows that its capital moneys will be pre-empted because there will be a cost.

The land and buildings of many of the grammar schools are owned by trusts. Some establishments will be too small, catering only for single-stream ability, to become comprehensive or non-selective schools. There will have to be some physical reorganisation in those authorities. For authorities with a large number of grammar schools, the cost and expenditure will be considerable.

It is important that we hear from which pool the money will come. All the other heads of expenditure that I have mentioned will come from the overall budget for local authorities. The statement made in the fair funding paper uses Tory rhetoric, and uses it well. The spin doctors in this Government deserve an Oscar. They are past masters at producing the warm glow. They have done it this time. There were letters of congratulation, and favourable comment in the newspapers, although one newspaper, the Daily Telegraph, sussed it out, and did so rather quickly. I congratulate it. It saw immediately that no one had said 100 per cent. of what, and no one had itemised or categorised all the heads of expenditure that would have to be top-sliced or removed or deducted from the sums of money.

When one gets down to the basic information, one finds that there will be more costs centrally for local authorities. It is therefore likely that at the very best the delegation will be at about the level that it is at the moment, but, in practice, it could be worse.

I support this aspect very strongly. Much was made of LEAs being encouraged to produce as much money as possible to local authorities so that local authorities can decide whether or not they buy back services. However, there are a couple of stings in the tail. A school and governors may have proven beyond doubt that they can manage their funding extremely efficiently. The grant-maintained schools are praised somewhat in the document. In those LEAs--we all know where they are--where perhaps 80 per cent. vote to leave their money with the local authority on the ground of economy of scales and the persuasive information received from those authorities, the schools will lose the ability to control their budgets.

I shall later press the Minister very hard to accept one of my amendments. An ex-grant-maintained school, a new foundation school or a school which will become a

4 Jun 1998 : Column 498

foundation school has produced the evidence that it can manage its funding. Irrespective of how many schools in the authority decide that they would like the LEA to continue to provide services, if the department believe that the school is capable of doing so, the school should be free to control its budget. It should be free to purchase from wherever it wishes, whether from the local authority or elsewhere. That is important.

Returning to the point relating to the figure of 100 per cent., I believe that the headline and the genius of the spin doctors is a confidence trick. My authority gives schools an opportunity to purchase their services back from the local education authority. Quite a number of enlightened authorities do that already. It is not New Labour policy or new old Labour policy. It is existing Conservative policy. I support the fact that the Government agree that it is a good way to manage and that more schools should be encouraged to do that. However, at the end of the day, the figure of 100 per cent. comes very close to the current 85 per cent. to 90 per cent. of money delegated down to schools.

Finally, it is important to know the timescale. We know that the Fair Funding consultation document will not return to the department with responses until, I believe, 30th July. Then there are to be regulations. Then there are to be LEA indicative budgets. At some point schools will need to know precisely what order of additional funds they will receive. There is now a high expectation that schools will receive a great deal more money in the next financial year. If that is so, indicative budgets will be important to local education authorities. They will then be able to pass statistical information to the schools. It will be important to hear whether we shall know by the autumn of this year. Schools will then have some idea before Christmas exactly what their budgets will be.

We hear from the Chancellor now almost on a daily basis that limits will not change; it is the priorities within the policy areas that will change. If that is so, some redundancies will occur in the coming year. If LEAs and schools are to face that prospect, the sooner they know the better. The notices they have to give materially impact upon the costs that have to be found by the LEAs.

The schools have had what amounts almost to a confidence trick played on them. It is deeply depressing. I hope that what the noble Baroness says proves me entirely wrong. I can then join her in lauding the news that was passed down to schools earlier this week. I beg to move.

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