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Baroness Ashton of Upholland moved Amendment No. 170:

"(3A) Regulations made under section 45A(3) or by virtue of subsection (3)(b) may include provision requiring relevant authorities to consult schools forums in relation to prescribed matters or before taking prescribed decisions."

On Question, amendment agreed to.

The Lord Bishop of Blackburn moved Amendment No. 171:

    Page 27, line 31, at end insert—

"( ) Regulations shall secure that the membership of a schools forum includes representatives of the governing bodies and head teachers of any voluntary aided schools maintained by the authority."

The right reverend Prelate said: I must say that I am disappointed by the Minister's response, because I was one of the Members of the Committee who she might have converted to her enthusiasm. I am deeply troubled, because in the name of the introduction of good practice, we risk removing existing good practice and we underestimate a tension that may arise if voluntary-aided schools are not properly represented in the forums, if we are to have them.

However, I take some comfort—because I was given half a loaf rather than a whole one—from the promise of guidance and of the appointment of a non-schools member, which I take to be someone from a diocese or other parent body of a group of faith schools. I shall study carefully what the Minister had to say—in particular, her offer to meet those of us who are deeply concerned about the matter for further discussion to find a way forward. With those brief words, I beg to move.

Lord Alton of Liverpool: I rise to support the right reverend Prelate the Bishop of Blackburn. I, too, am happy to be moved between now and Report by any arguments that the Minister may advance to convince me to join her in the Lobby next time. I supported the noble Baroness, Lady Blatch, because I did not feel that the arguments so far advanced went far enough. I strongly believe that we should treat voluntary-aided schools in precisely the same way as we treat the maintained sector. The arguments made today as to why we should not do so were unconvincing.

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I look forward to hearing why it is impossible to achieve that objective by the more simple route of putting all schools on the same footing, which would be much better and easier, and which the right reverend Prelate seeks to achieve by the amendment. Between now and Report, I look forward to the discussions that the Minister has offered us today.

Baroness Ashton of Upholland: I, too, look forward to those discussions. We are searching for what is the right footing—we agree on that. I am sorry to have given the right reverend Prelate only half a loaf. I failed him on Ascension Day; I have failed him yet again; but I live in hope. I look forward to those discussions and continuing our debate.

The Lord Bishop of Blackburn: I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 41, as amended, agreed to.

Clause 42 [Accounts of maintained schools]:

Baroness Sharp of Guildford moved Amendment No. 172:

    Page 28, line 22, at end insert ", and

( ) to provide information to the local education authority and the parents of pupils on roll at the school, reasons for holding reserves, if at the end of the financial year the statement of account indicates that such reserves are in excess of 1 per cent of the school's budget"

The noble Baroness said: I shall not detain the Committee long on this amendment. The clause is about how school accounts should be drawn up. The amendment provides that where schools are holding substantial reserves, not only should account be given of the reserves but information should be provided to both the local education authority and the parents on why they are holding such large reserves.

One or two schools hold reserves of well over £1 million; at least one school has reserves of more than £2 million. There appears to be no particular reason for those schools to hold those reserves, and the amendment would require them to account for why they are doing so. If there is a particular reason, they should provide it to both the local education authority and the parents. It is clear that money being held in reserves is money that is not being spent for the purposes for which it was allocated: supporting the education of the pupils at the school.

Some schools may well be holding reserves to support a particular long-term project. However, whatever their rationale, it is evident that both LEAs and parents are entitled to an explanation of why such large reserves are being kept—why the money is being retained. That is why I tabled the amendment. I beg to move.

Baroness Blatch: The noble Baroness referred to at least two schools that she knew to be holding considerable reserves, and said that some schools—although not those schools in particular—have no particular good reason for holding on to reserves.

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I have sympathy with what the noble Baroness seeks through the amendment in that any reserves held by a school should be a matter of public information. The governing body should certainly make that information available to parents. Parents should know what reserves are held.

I also have no objection in principle to that information being available to the local education authority, but I was unnerved when the noble Baroness mentioned there being no particular good reason for holding reserves. Some schools may just be concerned to save a rainy day—for that terrible teaching crisis that may loom without notice; or for a dearth of something fairly expensive that needs to be replaced, such as technical equipment or books and other equipment. They may have no particular reason but have reason to believe that holding a reserve is a good thing.

Other schools are saving for a non-revenue recurring expenditure that they can meet only by accumulating money year on year until they can purchase what they want. Or they may be using the money on an instalment basis to pay for something rather larger than could be met from normal annual funding.

We should leave schools free to accumulate reserves, if they wish to do so. I have no objection to making that a matter of public information, available to parents and covered in the annual report. I have no objection, in principle, to making it a matter of information—no more—for the local education authority, but I hope that it will not lead local education authorities to take a view about whether it is right or wrong for a school to do it and seek powers to limit the amount held or interfere, in some way, with a school's priorities. I do not know whether it is the noble Baroness's intention that the amendment should extend to giving local authorities such powers.

I am strongly in favour of schools being master in their own house in this area, but I have no objection to making it a matter of public information.

7 p.m.

Baroness Sharp of Guildford: My wording was too loose. There may be good reasons why a school would wish to hold reserves, but it is important that there should be transparency about the matter. The LEA and the parents, through the governing body, should know how big the reserves are and why they are held.

Lord Lucas: On the second time around, I support the noble Baroness, Lady Sharp of Guildford. She was agreeing with my noble friend Lady Blatch on what the amendment is about.

For some schools, 1 per cent is nothing. A little primary school with 80 pupils will want reserves of 5 per cent. Such a school has no flexibility with regard to its teaching staff. What happens if a family moves out of the area? Such schools need a high percentage

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reserve. However, it should be public, it should be explained to parents, and it should be treated in an up-front manner by the governors.

Lord Davies of Oldham: Amity has broken out all around. The Government share the general views expressed in the debate on the amendment. We have some reservations about the amendment itself, however, and that is why I shall ask the noble Baroness, Lady Sharp of Guildford, to withdraw it.

The noble Baroness spoke about substantial reserves. It would not be right to say that a school operating on just 1 per cent of surplus had substantial reserves. We would consider a figure closer to 5 per cent, the figure that we expect local authorities to use when they check out such matters. We do not quarrel with the thinking behind the debate or with what noble Lords have said. We are carrying out a pilot project relating to information for parents, and we will consider the situation positively and constructively.

We recognise the virtue of the arguments presented so well in the debate, and we shall consider the matter further. However, we disagree about the detail and would, therefore, like the amendment to be withdrawn.

Baroness Sharp of Guildford: I thank the Minister for his encouraging reply. I am delighted that the Government intend to think further about the matter. I agree that 1 per cent is too low a level; it would be more sensible for it to be about 5 per cent. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 42 agreed to.

Clause 43 agreed to.

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