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Lord Lucas: My Lords, I entirely agree with my noble friend. It is fascinating to watch the Government bearing down on the individual pet projects of local education authorities while multiplying their own. It should be that what is sauce for the goose is sauce for the gander. I know it is hard when in government and thinking that at last there is a chance to do something to resist the opportunity to pocket all the money that might be going to schools and use it as you wish. It is a discipline which Ministers ought to be rather better at in exercising on themselves.

I particularly support Amendment No. 68 in this group of amendments. It is unacceptable that an unelected schools forum which, as the right reverend Prelate has said on previous occasions, may well not

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include important elements of the local school set-up because they are not seen to be sufficiently significant in that particular area and may have a very partial view of what is going on—it is certainly not elected— should set the budget. It should advise, yes, but it should not put local education authorities in the position where, if they reject the advice, they are in public trouble or in the middle of a public argument. I remember what it was like even to dare thinking about going against the advice of SEAC when we were in the middle of the BSE crisis. You could not do it.

If a committee is properly constituted and representative and represents the views of schools and others around the local education authority, the LEA will not be able to go against its advice to any degree or will do so at its peril. But to have the statutory final responsibility given to an unelected body rather than to the elected body is entirely wrong. I do not believe that the Government would do it to themselves and they should not do it to LEAs.

6.30 p.m.

Baroness Ashton of Upholland: My Lords, if I had not already guessed, I am aware that when we reach Clause 41 there will no doubt be a good deal of debate on the role of schools forums.

Amendment No. 68 arises at this point because, as noble Lords have indicated, one of the proposed functions of the schools forums is to take decisions as to whether certain categories of expenditure should be retained by the local education authority or be delegated to schools. As will become clear when we reach Clause 41, the schools forums are primarily advisory bodies. They are in no sense a replacement for the local education authority and neither will they have the scope to usurp its functions or accountability. However, we do believe that it is appropriate to give the forums a limited role—

Baroness Blatch: My Lords, I am grateful to the noble Baroness for giving way. She has just said that schools forums are purely advisory. My understanding is that they have been given a power to determine an aspect of the budget.

Baroness Ashton of Upholland: My Lords, I am sorry; I said "primarily advisory" and not "purely advisory". I hope that clarifies it for the noble Baroness and I apologise for that. I shall speak more clearly.

As I have said, in no sense are they a replacement for the local education authority, but we do believe that it is important to give them this very limited role.

We are in consultation about our proposals. We have listed the areas of expenditure which we propose should be remitted to the forums for decisions on delegation. The most significant of these is primary and special school meals. It is important to note that such a decision might be in the direction of taking such expenditure back into central control where it has already been delegated. Primary and special schools can already opt for meals delegation on an individual

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basis and we believe that it is acceptable that the forum should be able to take a collective view on whether this is right for that item of expenditure. The other expenditure items are much smaller: museum and library services and licence/copyright fees. Again, there are often local reasons for schools to prefer one outcome or the other and the forum can usefully address these. This is a modest exercise in giving schools a little more responsibility. On that basis I hope that the noble Baroness will feel able to withdraw her amendment.

Amendment No. 69 is more or less a duplicate of Amendment No. 68. We have considered this amendment and wondered whether it had been tabled in error because, if agreed to, it would leave the new Section 45A(4)(c) simply reading,

"enable any prescribed determination to be made".

Baroness Walmsley: My Lords, we had intended to withdraw that amendment.

Baroness Ashton of Upholland: My Lords, in that case I hope that the noble Baroness will not mind if I do not speak to it.

In considering Amendment No. 71, which seeks to delete the whole of Clause 39, I hope that we can focus on what this clause is really about. There are links with Clauses 40 and 41, but the role of the schools forums in the context of Clause 39 is really a self-contained issue, while Clause 40 is the subject of a separate amendment.

The essential purpose of Clause 39 is to modify the budgetary framework within which local education authorities fund their schools. The present "fair funding" framework, based on a broadly defined local school budget, was introduced in 1999 and has worked well. The level of financial delegation to schools has risen sharply. Local education authorities on average delegated over 86 per cent of their school budgets last year, compared with 79 per cent in 1998. There have also been improvements in the transparency of the system.

However, there is still too much "funding fog". In terms of the range of expenditure which it covers, the local schools budget which forms the basis of the school funding system does not match with the education standard spending assessment which forms the basis of the local education authority funding system, and the fairness of the present ESSA has been widely criticised. All of this makes it unnecessarily difficult to judge whether an education authority's spending is too low, needlessly high or about right.

We are therefore proposing to replace the education standard spending assessment with two separate spending needs assessments: a school assessment and an education authority assessment. The school assessment will relate essentially to the cost of making provision for pupils and the education authority assessment will cover the education authority's essential functions. This will reflect the differing needs of the local education authority in a fairer and clearer way than the present system.

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The new needs assessments will be introduced under existing local government legislation. Clause 39 brings the school funding system into line with the new education authority funding system by replacing the present local schools budget with a schools budget and a local education authority budget corresponding to the two assessments.

With the separation of the budgets provided for by Clause 39, schools and other interests will be able to see exactly how much their education authorities are spending on front-line provision for pupils as distinct from back-up services and regulatory functions. They will be able to compare their education authority spending on front-line provision with a needs assessment, which itself relates to front-line provision. This will make it easier to scrutinise education authority spending plans in an informed way and we believe it will thus promote improved accountability.

I hope that all noble Lords can agree that this is a worthwhile aim. Naturally, we believe that they will be even more effectively achieved if Clause 39 is supported by Clauses 40 and 41. But Clause 39 would bring about important improvements whether it is supported in this way or not. On that basis I hope that the noble Baroness will feel about to withdraw her amendment.

I turn now to Amendment No. 72. As noble Lords have said, this clause gives the Secretary of State a power, to be used in exceptional circumstances, to set a minimum level for an authority's school budget as defined by Clause 39 where it is considered that the budget is seriously inadequate. The level may apply to the next financial year or the financial year after that.

We are introducing this measure to help to ensure that funding increases for schools made available by central government are passed onto schools by local authorities. We expect that the proposals we have made to require local authorities to provide a transparent account of school funding will perhaps put a little pressure on authorities to pass on funding increases, but where that does not achieve sufficient progress we believe that we need a reserve power.

The way in which we look at what happens as regards adult education, and in response to the question from my noble friend Lord Jones, is that every year in January we check that local education authorities are passing on increases in the education standard spending assessment to education and we check through the budget statements of the local education authorities in April and May of each year. I am not in a position to give the noble Lord a list; and neither do I believe that it would be appropriate in this context. But we have said that we do believe that it is important to have this reserve power.

In setting the minimum level, I want to reassure noble Lords that the Secretary of State must have regard to all relevant circumstances. We have set out in the Explanatory Notes some of those circumstances: how the authority's proposed budget for schools compares with its school funding assessment; the performance of an education authority's schools;

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pressures from other services and the degree to which the authority has failed to pass on the increase in funding to its schools. That is not an exhaustive list. There may be other criteria that we want to consider. We do not want to list all such criteria in the Bill, only to find that we have admitted a criterion that we would not then be allowed to consider and which is of importance.

The clause sets out the timetable for use of the power. We shall be asking local authorities to let us know their proposed budgets for schools by the end of January. That is no earlier than this year and a little later than previous years when we have approached authorities early in January to ask them to indicate whether or not they intend to pass on increases in education SSA. We could not set a later deadline for authorities because that would not allow sufficient time for the rest of the process. If a local authority fails to let us know its proposed budget for schools by the end of January the Secretary of State will also be able to set a minimum level.

The timetable also allows authorities to make representations if they object to the level of budget set for their schools. For example, they will be able to explain the impact that the proposed minimum budget would have on other services run by the council. Where there is an objection, the clause allows, but does not require, the Secretary of State to make an order setting the level of budget to be subject to affirmative resolution in another place.

The Government believe that the clause is important for our plans on schools and local education authority funding. It allows for the dialogue between central and local government on the minimum level of the school's budget. On that basis, I urge the noble Baroness to withdraw her amendment.

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