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Lord Lucas: Many of the matters that I wanted to raise on the Question of clause stand part have already been covered. If the noble Lord, Lord Whitty, can tell me that the information for which I asked earlier as to what data will be provided, and when, on the breakdown of the budgets of individual LEAs, and what work will be done by the Audit Commission or anyone else to ensure that the figures provided are consistent and comparable, I shall be delighted to withdraw any opposition to this clause standing part of the Bill. Perhaps the noble Lord can provide me with such information by way of a letter before Report stage.

Lord Whitty: Perhaps the noble Lord and I can have a word about exactly what information he will require before Report stage. I shall be happy to assist him.

Clause 45 agreed to.

Clause 46 [Determination of a school's budget share]:

Baroness Blatch moved Amendment No. 161A:

Page 37, line 24, at end insert--
("( ) Every maintained school shall have the right to receive and have control over its full share of the individual schools budget.").

The noble Baroness said: This is an amendment about which I feel extremely strongly, particularly given the reply of the noble Baroness a moment ago about grant-maintained schools which wish to continue to manage their own affairs but which will lose that right if they happen to be in an authority where most schools vote not to become self-managing. It is not inconceivable that that will continue to be the case. The noble Lord, Lord Tope, rightly said earlier that even when schools were completely free to opt to become grant maintained, many considered that option positively and then quite positively decided that they wished to remain within the bosom of the LEA. It is also conceivable that the economy of scale argument will be used persuasively by LEAs.

I return to the example of the Oratory School which is in an authority where 80 per cent. of the schools could easily vote to stay with the LEA. The Oratory School has proven beyond any doubt that it is able to manage its own affairs, but it may not be allowed to do so. That could happen in any other authority.

Grant-maintained schools have now become accustomed to running their own affairs. What will happen to schools in the foundation school category which, over time, build up expertise and are successful at, and philosophically enjoy, managing their own affairs? Eighty per cent. of schools in an authority may create a block of economically viable schools for which the LEA is to run the services. But are they then to deny the other 20 per cent. their right to be self-managing for no better reason than saying, "If the LEA controls 80 per cent., it might as well control 100 per cent.?"

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The amendment is now crucial. My understanding is that grant-maintained schools have enjoyed self-governing status. I believe that one of the reasons they have gone along with what the Government have been saying about foundation schools--I think that they are wrong; I do not think that they should have been quite so trusting--is that they believed that at least they would continue to be self-governing, but under the foundation school system. There is now a proposition that if 80 per cent. of schools decide that they would like to remain with the LEA, all schools would have to be subject to central provision from the LEA. I know that that is still a proposition and that the paper is out for consultation, but I think that it is now a point of principle that we must establish the right of every maintained school to continue to determine its own affairs. I am not speaking only about grant-maintained schools. I use grant-maintained schools as an example simply because they have visibly proven their worth at running and managing their own affairs. Any school in the maintained sector which opts to have a delegated budget and makes a success of it should continue to enjoy the right to run its own affairs.

If that cannot be guaranteed by the Government, we must question many of the things that have been said to the grant-maintained sector. The Government have said, "Don't worry; under the foundation school system you will continue to enjoy delegated functions and the system of self-governing at which you have been so successful." However, we now know that the Government are also saying, "That is subject to the other schools in your authority not opting for self-governing status".

The current system is voluntary. Any school in the land may opt to become grant maintained. By the next stage of the Bill I shall have done the arithmetic, but in many local authorities 80 per cent. of schools are still with the LEA. If they have already chosen positively not to have a full delegated budget, it is conceivable that they will continue to do that. They may wish to continue to stay with the LEA because they are completely satisfied with the LEA's provision. That will continue because nothing in the Bill forces schools down the road of self-regulation. That is why I believe that grant-maintained schools are at much more risk than has hitherto been judged to be the case.

I hope that tonight the Government will respond positively and give every school the right to receive, and to have full control over, its full share of the budget. I beg to move.

Lord Whitty: This amendment appears to be directed at the question of how under the new system LEAs conduct their relationship with all schools. I believe that it is a fairly broad brush amendment. I am not clear from the comments of the noble Baroness whether it is intended to be quite as broad brush as it appears. The noble Baroness dealt primarily with the situation of existing grant-maintained schools. Clearly, there is a serious difference of strategy and opinion here. The whole point of the new funding arrangements is that we wish to bring the current grant-maintained schools back into the overall umbrella of local education authorities

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while delegating budgets to all schools in a new relationship with LEAs with maximum funding ability in relation to all schools.

As to the 80 per cent. ballot, we are consulting. It is not intended to be an indiscriminate, across-the-board provision. We shall consider very carefully which services of the local authority are to be covered by it. We want all schools to be in a different relationship with the local education authority with the delegated financial arrangements that flow from that.

Baroness Blatch: The Government are not delegating money to all schools but making it available to them. Schools can opt for self-government or pass the money back to the local authority to continue to run the schools. Unless the noble Lord is putting forward a new policy on the hoof, nothing in this Bill does anything other than allow money to be devolved down to schools, with a good deal of encouraging rhetoric from the Government. The Government would like to see greater delegation to schools, as would I and the noble Lord, Lord Tope, and his noble friends. The noble Lord is wrong in what he said. If, when the requisite number of schools vote to have their services provided by the LEA--the percentage may be 70, 80, 90 or some other figure--a school that is presently self-governing will lose control over its central finances.

Lord Skidelsky: I support my noble friend. Why should schools in an LEA wanting to remain self-managed be compelled to surrender that right because 70 or 80 per cent. want them to do so? The noble Baroness the Minister says that this is democratic. That appears to be the basis of the argument. I do not believe that democracies have any right to compel minorities to surrender liberties unless the exercise of those liberties injures the interests of those minorities. If 80 per cent. of people vote to pay taxes clearly the majority has the right to compel the minority because the 20 per cent. cannot be excluded from the benefits that are provided by the taxes. That is a very clear philosophical argument as to why the majority should prevail. What is the argument in this case? If 80 per cent. agree, why should 20 per cent. be brought into the system? I do not believe that that is democratic; rather, it is illiberal.

7.15 p.m.

Lord Whitty: To revert to the point raised by the noble Baroness, we are delegating budgets to all schools. We seek to introduce a regime that will apply broadly to all schools. In many situations former grant-maintained schools may wish to continue to provide internally services that would still be provided centrally by the local authority. Some schools will wish to buy into them and others will not. The 80 per cent. simply refers to the fact that in a very limited number of cases it will not be sensible for particular services to be provided unless 100 per cent. of the schools do so. We are talking about limited services, not local authorities controlling everything that grant-maintained schools previously controlled. If the vast majority of schools wish to buy back into a limited service in certain

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circumstances it will be sensible for all schools to do so. But we do not envisage that to be a broad-ranging power across services or areas.

Lord Skidelsky: Can the noble Lord give an example of the services he has in mind which have to be provided either to all schools or none at all?

Lord Whitty: We have had a lengthy debate about transport. It could be that there was a transport system run by a local authority and it was judged that that could not be provided centrally unless all schools bought into it. That is a hypothetical example, and there may well be others. If the noble Lord wishes, I shall ask for advice on what other services may be considered in these circumstances. I envisage that in certain small education authorities library services may be part of it. There may be a number of services that are not viable unless all schools buy into them. I believe that it is only in those circumstances that the 80 per cent. provision is intended to apply. However, we are still consulting on the whole area.

However, the general proposition--that is what I believed was addressed by this amendment until the noble Baroness spoke about the 80 per cent.--is that there will be delegated budgets for all schools, both ex-GM schools and ex-local authority schools, and control over those budgets by the local education authority will be as limited as possible. However, the amendment as drafted appears to be designed to deny LEAs the basic right to put in place safeguards over the deployment of those budgets or to do away with the right of LEAs to suspend delegation for mismanagement in certain circumstances under Clause 50 and Schedule 15. If the amendment is as wide ranging a prohibition as that, the Government certainly cannot accept it. I hope that the noble Baroness will understand that and on reflection withdraw her amendment. She may wish to consider alternative wording at a later stage. If the noble Baroness intends to achieve a more limited objective we are prepared to look further at that and consider the possibility of a more modest amendment at a later stage. The amendment as drafted appears to impose a very drastic limitation on the powers of LEAs.

I appreciate that there is some anxiety in parts of the former GM sector as to the balance between local authority control and their own delegated powers in future. We do not want the return of GM schools to the local authority sector to involve the re-imposition of unnecessary controls. But in the new circumstances there must be a degree of accountability, just as there was a degree of accountability for the management of the budgets of GM schools under the rules and procedures of the Funding Agency for Schools.

Inevitably, there will need to be changes in the way in which accountability operates. Because of the statutory responsibilities of local authority chief finance officers under the Local Government Act, LEAs will require a degree of flexibility to decide on such matters as accounting and audit requirements. We intend that they should be reasonable and clear to the schools when operating delegated budgets. We are considering how the best features of the package used in the GM sector--

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the rainbow pack system--can be transferred not only to ex-GM schools but across the board to local education authority schemes.

I believe that that provides some reassurance that local education authorities do not intend to be heavy handed in their exercise of what ultimately must be their accountability for the schools budget. Our aim is a light touch regime supported by no more restrictions than are properly necessary. We must safeguard propriety and accountability. We must ensure that LEAs are not exposed to unfair risks on their own resources and assets.

Action or inaction by a governing body could leave an LEA with a liability to pick up. LEAs are entitled to protection from that. We want to confine all this to cases where LEAs are genuinely at risk. That is the philosophy behind this proposal. We cannot accept the amendment as drafted because it appears to remove even that light-touch control that we envisage for LEAs under the new regime.

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