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Baroness Darcy de Knayth: As I have put my name to this amendment, I give it my wholehearted support. The noble Lord, Lord Swinfen, has already covered the matter very thoroughly. As he said, Amendment No. 159 ensures that LEAs can retain enough money centrally to provide preventive SEN services. It is very important to hold back enough money to deal with helping in areas outside the school's competence to judge what is needed. The Special Educational Consortium says that it is aware that nearly all initiatives that are concerned with helping children with, for example, behavioural difficulties, are funded from outside.

It is interesting that on the chart of the Centre for Studies on Inclusive Education, two of the LEAs which are highest on its list of those providing an inclusive mainstream education for children with special educational needs, are Newham and Cornwall. They are at the bottom of the league of the delegators. It is very necessary to have support from the LEA. Newham is very successful because as its numbers of pupils included in the mainstream have increased, so, interestingly, its number of excluded pupils has decreased.

As the noble Lord, Lord Swinfen, said as regards Amendments Nos. 164 and 165, it is essential to be very clear what is delegated for SEN and just how it is being

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spent. Ofsted's report remarks on the confusion and lack of information. My noble friend Lord Rix also has his name to these amendments. He has asked me to give his apologies as he has had to go to an important meeting. As he has sat and spoken alone from these Benches far into the night just lately, and I have not been here at all, I am sure that the Minister will agree that he need send no apology. When speaking in earlier debates he spoke about the anxiety that if money is delegated to help pupils with special needs, it might be bundled into one large parcel and be spent on other things.

In moving this amendment we hope that local authorities and schools will have clear strategies on how money for pupils with special needs will be allocated. I hope that the Minister believes that these amendments are indeed sensible and will be able to respond positively to them.

Lord Addington: I support these amendments. Amendment No. 159 is effectively the substantive amendment. I read them as being about ringfencing for a vulnerable area. As the noble Baroness, Lady Darcy de Knayth, has said, if one has a central body of money it will always be fought over. There is the experience of Parliament and the Treasury when everyone tries to get a certain amount of money and the money is pulled in various directions. That is a much bigger example of what happens when everyone is competing for money.

The provision for special educational needs is often seen as a Cinderella service. It often depends on having teachers of sufficient power and personality within a school or local education authority as to how the funds are allocated. This type of ringfencing will mean that it will be seen where the money goes.

As the noble Baroness also mentioned, if one deals with educational problems it is very likely that one will reduce the number of exclusions because social problems often arise from educational problems. There may be someone in the classroom who is not coping well with the situation because he has an education problem. If it is not dealt with or it is dealt with very late, one has a pattern of established behaviour which is necessary for basic survival in the classroom among the children themselves. That means that the particular child will try to disrupt the classroom to avoid having to face up to the work level. That is a pattern which is accepted by virtually everyone who has anything to do with work in this field. If this kind of amendment or approach is adopted, it will be one step further towards making sure that the correct resources are spent on what was intended in the first place.

Lord Whitty: I apologise to the noble Lord, Lord Swinfen, that I was momentarily out of the Chamber when he began his speech. That was partly due to the fact that the noble Baroness, Lady Blatch, speeded up dramatically in dealing with the last batch of amendments compared with earlier ones. It was also partly due to the fact that I bumped into the noble Lord, Lord Rix. He conveyed his own apologies, but I agree with the noble Baroness that that was completely unnecessary. We know of his deep interest in this area and I am sure that he would have wished to be here to move this amendment.

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As the noble Lords, Lord Addington and Lord Swinfen, have said, much of this matter is to do with transparency so it is clear what are the levels of funding on special education and where they fall. We thought at some length about the place of SEN in the new funding framework. As the noble Lord, Lord Swinfen, said, the consultation document has a quite substantial appendix which deals specifically with this point. The final arrangements will depend to a large extent on the feedback to the proposals. In the meantime I hope that I can give some reassurance on the points raised by noble Lords as regards the objective and the way we believe SEN expenditure should be covered in the new situation.

The regulations to be made under Clause 45 will specify categories of expenditure which can and must be retained centrally by LEAs as opposed to being delegated to schools and place limits on other conditions concerning the amounts so retained. That will be dealt with by regulation, but this amendment seeks to ensure that certain SEN-related categories of expenditure are identified explicitly in primary legislation as being candidates for retention. Amendment No. 159 deals also with exclusions which we shall debate later in connection with another group of amendments.

Our whole approach to this matter under Clauses 45 to 51 is to construct in primary legislation a framework within which regulations, and not primary legislation, will be used to set out the detailed requirements. The Government's intention on this is clear as set out in the consultation paper and particularly in the appendix. As regards SEN, it is based on the view that responsibility for pupils with special needs is shared between schools and LEAs. Therefore, it is absolutely clear that the LEAs need to retain a significant amount of the funding centrally. Responses to the consultation paper will inform what are to be the final details of our approach, but it is clear that some of the expenditure on SEN will be delegated and some will be retained centrally. Putting that in regulations, of course, is a significant improvement on the present situation whereby the control of items retained centrally by LEAs is dealt with entirely by administrative action.

Under these new proposals schools will have responsibility and funding to meet most of the needs of most pupils with SEN. That is consistent with the SEN code of practice which refers to stages one to three being school-based. As the noble Lord said, the funding of stages one and two will be largely delegated and the funding of stage three will be partly delegated under these proposals.

It is also clear that the intention of Section 317 of the Education Act 1996 requires schools to use their best endeavours to secure that a SEN provision is made. However, we recognise that there will be circumstances when a school needs extra funds beyond what it can be expected to find from its budget to meet the needs of a particular child with special educational needs. The LMS consultation paper envisages that funding may be held back to meet specific or unpredictable needs and it allows LEAs to retain funds for support services for SEN. That will ensure that LEAs are able to meet

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schools' reasonable requests for support. Local education authorities can therefore hold back funds. There are measures to promote inter-school co-operation in relation to SEN, to promote the inclusion of pupils with special educational needs into mainstream schools and to provide for behaviour support.

I hope that what I am saying, and what is said in the consultation paper, will demonstrate that the Government are fully aware of the need for LEAs to retain some funding centrally for SEN and related purposes. Our approach to the drafting of regulations, as set out in the consultation document, will be informed by the feedback to that document.

Amendment No. 164 would add a specific provision that the regulations could require schemes to specify information to be provided to the LEA about the use of a school's budget share. I believe that that point also is covered by the Government's approach. There are already requirements on schools to do that. Although some have taken the view that the existing regulations are inadequate, the proposals in the consultation Green Paper should improve the situation.

We agree that schools need to know what is provided in their budget for SEN purposes. The regulations we shall be making under Clause 51, to which we shall come later, will specify the form of budgetary statements to be published by LEAs. They will be able to include a requirement that the funding formula used in relation to SEN should be fully spelt out in schemes for financing schools. In other words, schools will have made clear to them how much of their budget is for SEN purposes. Paragraph 5, the final paragraph of the appendix to which reference has been made, accepts that degree of hypothecation in the budget regime. So I believe that we have met that point.

Although we do not accept that this should be spelt out in primary legislation, I hope that what I have said, and what is said in the consultation document, indicates that the objective which lies behind the amendment is shared by the Government. The final form of the provision will be based very largely on the strategy set out in the consultation document and on the feedback to it. I believe that the regulations will meet most of the concerns expressed in this debate. On that basis, I hope that the noble Lord will withdraw his amendment.

7 p.m.

Lord Swinfen: I said at the beginning that this was a probing amendment to ascertain the Government's position and to seek reassurance. The noble Lord has, on the whole, given me the reassurance that I sought. However, if I may, I shall reserve my position because once my advisers and I have read and studied the noble Lord's response it may be necessary for me to return to the matter to seek further reassurances and make certain that we are on the right lines. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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[Amendment No. 160 not moved.]

[Amendment No. 161 had been withdrawn from the Marshalled List.]

On Question, Whether Clause 45 shall stand part of the Bill?

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