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Baroness Blatch moved Amendment No. 115A:

Page 37, line 21, at end insert--
("(1A) The authority, in allocating the budget share for maintained schools under subsection (1), shall retain for its own strategic management expenditure no more than a prescribed amount per pupil.
(1B) The amount prescribed under subsection (1A) shall not be increased by more than is required to maintain the value of that amount in real terms.").

The noble Baroness said: My Lords, in moving Amendment No. 115A, I shall speak also to Amendments Nos. 118A and 120A. My first amendment addresses the issue of restricting an LEA's ability to hold back money for strategic management. The hold-back must be prescribed and increased only in line with inflation. That is entirely in line with what has been said by the schools Minister in another place. Amendment No. 118A asks that,

Amendment No. 120A gives all maintained schools the right to have control over their full share of the individual school's budget.

Some disquieting events are taking place. The growth in the number of staff at the Department for Education and Employment is alarming and it will only be a matter of time before we ask for the details. If every pound that comes from the Treasury for education is top sliced at the education department, that means less money will go to local education authorities. Every reason the local education authority is given to keep the money at that level means less money for schools.

A chain reaction takes place. All the tough talking of schools Ministers to LEAs in relation to holding money back unnecessarily comes a little thinly from a department that is now growing at an alarming rate. In fact, the politicos in the department are enjoying the luxury of considerable support.

The Grant-Maintained Schools Advisory Committee--the three bodies which have come together--which represents all the grant-maintained schools responded to the fair funding report. It expressed support for some aspects of it, as we all do--greater transparency and more simplicity. Nevertheless, there are a large number of areas where it is still

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concerned. It believes that the department is sending mixed messages--which is correct--as to whether foundation and voluntary schools will receive additional funding in recognition of their additional responsibilities. It is interesting to read paragraphs 14 and 77 of the report to try to understand what that means. Does the department recognise that those schools have additional responsibilities?

Although the committee goes on to say that,

    "Although there is a firm commitment to exercise tight control on LEA funding for its strategic management function, the Government has rejected capping their expenditure"--
again, another mixed message--

    "at least, for the first year of operation".

The grant maintained schools find that very disappointing. They know that it gives scope for creative accounting by local education authorities. One has only to read the early clauses in the Bill to know that there are legitimate reasons for holding back money under the heading of school improvement. There is no commitment to fund local education authorities' new responsibilities with additional cash. If they do not get the money to cover those administrative duties and their new policy area functions, where will the money come from? It can only come from the money that would normally go to schools.

The local education authorities are to be responsible for strategic capital work, building work and large equipment purchases over a given and unspecified threshold. That will be unpalatable to the grant-maintained schools.

The concept of significant majority voting is a real cause for concern. A threshold of 80 per cent. is suggested. Where a significant majority of schools vote to allow the LEA to top-slice funding--for example, for library services--the dissenting schools will be compelled to suffer the top-slice. Again, the grant-maintained schools say that that is unacceptable.

If the economically viable number of schools needs to be whatever per cent. in order to provide a service, why should other schools that do not wish that service to be provided have to be part of that body? Why not accept the economically viable number of schools which have voted quite positively for the LEA to provide the service, and allow the other 20 per cent. of schools to do their own thing? That is not allowed for in the consultative paper. I hope that that will be addressed in the definitive paper.

The local education authority music services are to be a special case for top-slicing to protect service provision. It is difficult to believe that Whitehall knows better than the local education authorities or the schools themselves. The administrative burden that will be placed on the department to cope with the provision on a school-by-school basis is a very tall order--unless there are more armies of people doing the work. The GMSAC will argue against this arrangement and any extension--for example, to outdoor education centres. The argument for top-slicing conflicts with the acceptance that if a service is not financially viable it should disappear.

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Grant-maintained schools are also concerned about the national insurance scheme. When I first referred to this in a previous debate, I thought it was right that the Government should point up the issue of insurance because it has been a vexed issue. My understanding now is that, as it has developed, the grant-maintained schools sector has found very economical deals for insurance. That flexibility should be allowed to continue.

Local education authorities will be empowered to vet foundation and aided schools' maintenance of buildings and grounds. That will not be acceptable to grant-maintained schools, which have not been subject to regular inspection by the funding agency for schools, other than through the Hunter condition survey which was a one-off fact-finding exercise, and a very important one. The grant-maintained schools will vigorously oppose this. It provides scope yet again for LEAs to be heavy handed.

Financial monitoring by local authorities could be monthly. It would be helpful to know whether the Government intend to outlaw that. They should press for simple quarterly returns; certainly no more frequently than that.

The LEA internal audit will apply to all schools. The grant-maintained schools will maintain their line that external audit has been an instrument in helping schools achieve good value for money. This responsibility provides scope for local authorities to recruit additional staff and to interfere in schools' financial affairs on a regular basis. I hope that the Government will take on board that point.

If local education authorities are found guilty of excessive retention of funds for school improvements, that could lead to a refusal by the Secretary of State to approve the educational development plan. However, there is no definition of "excessive". It is a subjective judgment, but it would be helpful to know what the Government believe to be excessive.

There is a worrying reference in paragraph 75 to the possible introduction of FEFC-type funding for post-16 education. If that is to be a policy move, it will mean considerable loss of moneys to schools. What justification is there for that policy? If the policy is implemented, what will be the transitional arrangements for schools which have robust and high numbers in their sixth forms?

It is suggested in paragraph 82 of the fair funding paper that different arrangements will apply in different categories of schools for local authorities to charge against the schools' budget share. The grant-maintained schools will resist any charging by local education authorities. Although there is a commitment to allow schools to maintain their own bank accounts, the document gives no guarantee that the schools will be able to receive the interest without penalty from the local education authority. There are considerable concerns about this aspect, which is absolutely crucial to schools.

We debated in a previous amendment the importance of high quality teaching staff and non-teaching staff. They cannot be secured without resources. These

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amendments go to the absolute heart of the schools' concern about whether in future they can sustain and, where possible, improve standards of education at school level. I beg to move.

Lord Swinfen: My Lords, grouped with the three amendments that my noble friend has moved and spoken to is my Amendment No. 121, the purpose of which is to ensure that local education authorities can build into their schemes for delegation the requirement that schools provide them with information on particular aspects of their expenditure. As the House will realise, I am particularly interested in expenditure on special educational needs.

The consultation paper, Fair Funding: Improving Delegation to Schools, outlines the Government's proposals for the future framework of delegation. The proposals in the paper will lead to much greater clarity about what is to be delegated to schools and what is to be retained by local education authorities. The new arrangements will allow LEAs to provide key special educational needs support services from the centrally-held budget. There will be greater clarity for schools about the notional amount attributable to SEN in that delegated budget.

However, there is nothing in the paper to ensure the accountability of schools to the local education authority for the delegated SEN funding. There is nothing in the requirements that will enable local education authorities to require schools to give them an account of their special educational needs expenditure.

There is, however, a requirement on governing bodies to set out in their SEN policy how they allocate resources to pupils with SEN and to report annually to parents on the way in which the resources are used--to parents, not to the local education authority. It is perhaps this requirement to which the noble Lord, Lord Whitty, was referring when he replied to me at Committee stage.

However, Ofsted, in its reports on the implementation of the code of practice, clearly identifies this element of schools' SEN policies as a weakness. In its first report on the implementation of the code of practice in 1996, it pointed out that the governors rarely knew how much was in their budget for special educational needs or how it was allocated. In its later report, two years on, that continued to be a weakness. That was 1998, and it would appear that there is still a weakness today. The requirements of schools' SEN policies say nothing about what schools should say as regards their allocation of resources. I am concerned that LEAs should be able to hold schools to account for the way in which they use their delegated SEN funds.

In replying to this concern in Committee the noble Lord, Lord Whitty, said:

    "I believe that that point also is covered by the Government's approach. There are already requirements on schools to do that".--[Official Report, 4/6/98; col. 524.]
Can the noble Baroness clarify what "requirements" were being referred to? If this is the schools' SEN policies requirements, is it open to the LEA to specify to schools how they should present the information on the allocation of resources in their policy and in the

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annual report of governors to parents? If it is not open to the LEA to do this, what information can the LEA require from schools about their use of delegated funds?

It is particularly important to be clear about what the LEA can ask for from schools in the light of the more hands off relationship between LEAs and schools that is envisaged in the consultation draft of the code of practice on LEA/schools relationships.

In the normal rules of procedure of the House I shall be unable to respond at the end. So I have taken this opportunity to let the noble Baroness know that, if I am not happy with her response, I shall refer to this matter again at Third Reading.

6 p.m.

Lord Addington: My Lords, I should like briefly to comment on the amendment spoken to by the noble Lord, Lord Swinfen. This is one of the most sensible ideas to have been put forward in dealing with SEN. In all budgets, money tends to be swallowed up. With SEN, extra funding can be put into the system for specific tasks but may then be swallowed up. For instance, I have heard accounts of a child with a statement who was given sufficient support for three hours extra specialist tuition. The school came back to him and said, "Why don't you have 15 hours of basic support from a helper in the classroom?". The school had the helper in the classroom as part of the school staff and so it was more convenient for the school. Unless that helper is properly trained--the child was dyslexic--the school will not be able to give the appropriate help. Unless greater transparency is involved in this area you cannot make sure that you are getting the correct help and not merely paying for more effective tea and sympathy. In this area we have to have the direct approach and the appropriate type of help and not merely provide someone's extra time. As this is so important, I suggest that either this amendment or something very like it should be added to the Bill. That will help us to show exactly what we are trying to achieve.

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