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The Parliamentary Under-Secretary of State, Department for Education and Skills (Baroness Ashton of Upholland): My Lords, we welcome the report, which recognises the action we are taking to address many of the priority issues it identifies. We will publish next year a programme of practical measures to improve outcomes for children with special educational needs through earlier intervention, better co-ordination of education, health and social services, support for inclusion and action to raise the attainment and recognise the achievement of children with special educational needs.
Baroness Walmsley: My Lords, I thank the Minister for that Answer. Is she concerned that the Audit Commission report showed that many parents of children with statements were finding great difficulty in getting those children into the school of their choice, with the implication that schools are excluding children with special needs in order to protect their position in the league tables? Given that the report also states that,
Baroness Ashton of Upholland: My Lords, there is evidence from the Audit Commissionlargely anecdotalof the unwelcoming attitudes of some schools towards children with special educational needs. Noble Lords will recall that from July 2002 there is a requirement for education authorities to publish their arrangements for monitoring the admissions of children with special educational needs. This will be part of the discussions of the statutory admissions forum in order to ensure that we are dealing with the needs of these children. Many schools are inclusive and achieve high standards. The introduction of value added measures will help to support schools which are inclusive and which work well and hard with children of differing needs. We hope that they will give a more rounded picture. We are looking at ways in which we can recognise the wider achievements of schools and pupils as part of this action programme.
Baroness Ashton of Upholland: My Lords, work has gone on between the Department for Education and Skills and the Department of Health which has produced guidance to help promote good practice and work with local education authorities. However, this is an area in which we have more work to do. In considering an action programme, I am concerned to ensure that we are supporting children on the autistic spectrum effectively. That means working closely and as well as we possibly can with local education authorities and organisations which support these children.
Lord Renton: My Lords, will the Government bear in mind the vital, overriding factor that a high proportion of children with special needs are in need of special education? To send them to mainstream schools not only deprives them of that, but obstructs the general giving of education for normal children in mainstream schools.
Baroness Ashton of Upholland: My Lords, there is much evidence to support the fact that many children who have special educational needs can be taught well in a mainstream school, to the benefit of all the children in that mainstream school. We have 1,098 maintained special schools. A working group is currently examining how best the department and the Government as a whole can support special schools, working closely with heads and others involved in special schools, to see what more we can do to ensure their rightful place. I agree with the noble Lord that they are valuable for our children with complex needs who are best educated in special schools.
Lord Addington: My Lords, Recommendation 8 in the Audit Report in regard to the monitoring of the progress of special needs is probably one of its most damning because it suggests that we do not know when we are getting it right and getting it wrong. Will the Minister give an undertaking that we shall shortly have enough information to be able to make assumptions on all the legislation on this issue that we have passed through Parliament? Without it, we shall not know whether we have wasted at least half our time.
Baroness Ashton of Upholland: My Lords, I can give the noble Lord the assurance that he seeks. The information currently coming through from the data identifies, first, the special educational needs of children within a framework; and, secondly, the attainment of those children. So from next year, for the first time, we shall have the kind of detailed information that will help us to work out the right level of support; to enable us to ensure that schools are more
Baroness Blatch: My Lords, does the Minister recogniseI am almost certain that she willthe very real increase in the number of young people who are now diagnosed as having autism? Some of the difficulties they are having, both with local authorities as well as with schools, has more to do with the lack of support in the classroom for the teacher, who ultimately has to cope. Any disruption which arises from that will impact on the other children in the class. Does the Minister agree that the real issue is more to do with support in the classroom to enable teachers to cope and less to do with league tables?
Baroness Ashton of Upholland: My Lords, I agree wholeheartedly with the noble Baroness. More children are being diagnosed with autism or with being on the autistic spectrum. From the evidence that I have seen, this is in large part to do with the fact that we are more able to recognise the three areas that denote someone who should be on that spectrum. We are looking very carefully at how we can support these children. I agree that it is a matter of what more we can do in the classroom. We are looking at how we can better support our teachers, particularly in their induction year as they begin teaching. We are looking also at how we can provide support through additional resources, including extra support on behavioural issues. We want to identify children with behavioural problems associated with special educational needs, including autism, in order to help them and to make sure that the support is there.
Lord Bassam of Brighton: My Lords, with the leave of the House, I shall now repeat a Statement made in another place on local authority revenue finance for England 200304. The Statement is as follows:
"Today I am announcing details of the allocation to individual authorities of the £39.9 billion of revenue support grant and business rates. When taken together with the police grant, this represents an increase of 5.9 per cent cash over this year's allocation.
"We announced last year that, from 1st April next year, we would introduce a system for distributing grant between authorities which is fairer, more transparent, and more just. Honourable Members will know that we have taken a long, hard look at the grant distribution system. We had no doubts on the need to replace the outdated and discredited SSA system. However, developing a robust, appropriate and fair replacement has been a challenging task, not least because of the many competing claims from different categories of local authorities. We have held very detailed discussions with local government and those with expertise in this area as we looked at all the current formulae and the options for change. We held 15 meetings of the technical group in just over a year. In addition, many more meetings were held with those with an interest, covering education, police, personal social services and other council services.
"We have then carried out a wide-ranging consultation on those options, including useful seminars and debates in this House, where Members let us know their views. The consultation paper included 47 specific options, and another 52 exemplifications were done at the request of local authorities.
"We received some 55,000 responses to the options on which we consulted over the summer. Over 1,000 of these responses were from councils, members of the public, Members of this House, business organisations and others with an interest. The others were sent in response to various campaigns. Several petitions were also received.
"One of the major problems with the old SSA system is that it attempted to take a view on what authorities needed to spend. This was unrealistic, and inconsistent with our approach towards devolving responsibilities, so we will not continue with it. Notional spending allocations do not imply anything about the budget or spending choices that will need to be made. Those are decisions that should properly be taken by councils in consultation with their council tax payers. The one exception is in respect of the Government's key priority of education, where we have said that we want to see authorities pass on increases to schools. In summary, the purpose of the new system will be to distribute grant according to authorities' relative circumstances and relative ability to raise resources from council tax.
"We have worked hard to make the system less complex and difficult to understand. This was never going to be easy. The sheer size of the sums of money going to local authorities, the wide-ranging responsibilities undertaken by councils, and the differing circumstances faced by those authorities across England mean that there will still inevitably continue to be a degree of complexity in the formulae used. However, we have simplified the structure of the system, which can be summarised as a basic allocation to each authority with top-ups reflecting particular circumstances facing councils such as deprivation, high wage costs and sparsity.
"The formulae also no longer include the sort of perverse incentives and inadequate indicators that were present in the old systemfor example, the old fire formula was based on the number of calls each authority received. That meant that it had little financial incentive to improve fire safety and safety education and so reduce the number of calls. It is that kind of anomaly which we have tried to remove from the new system.
"I know many honourable Members will have a particular interest in the decisions we have taken on the area cost adjustment. We have concluded that pay costs should be recognised within the system, but the ACA has been re-designed to minimise the 'cliff-edge' effect. It will in future better reflect the different circumstances in London and the South East and those authorities with differing pay costs. It will also reflect the needs of areas outside the South East with high pay costs.
"The other aspect which I should highlight is that we have increased the extent to which the system takes account of councils' relative ability to raise council tax'resource equalisation', in the jargon. This means that we make a more realistic assumption about average council tax. It does not mean that we simply reward high spending.
"Turning to other formulae, we have made good the promise to ensure that no authority's schools will lose out in real terms from the changes. The new education formula ensures that every education authority's per-pupil allocation goes up by at least 3.2 per cent cashwell above inflation.
"The environmental, protective and cultural services formula has been greatly simplified, and now better recognises the basic costs that all authorities face. We have made some detailed changes to personal social serviceswe have simplified it so that there is now a single formula for residential and domiciliary care for older peoplethough as PSS was reformed comparatively recently the changes here are less extensive than elsewhere. And we have listened to the argument put to us by small authoritiesparticularly shire districtsthat they face a fixed 'cost of being in business'. So we have allocated a flat-rate £300,000 element to most classes of authorities, to recognise that cost.
"As I have already promised, the system will incorporate 'floors and ceilings' to safeguard authorities from excessive short-term variations in grant. For the last two years we have guaranteed that no authority received less grant than it did in the previous year on a like-for-like basis. Those councils with education and social service responsibilities did, of course, significantly better, and last year we were able to ensure that all councils received a grant increase at least in line with inflation. Honourable Members will know that we have already made clear that no local authorities will receive a cut in grant next year in cash terms.
"These floors ensure that every authority within the scheme gets a reasonable level of grant increase, given the overall distribution and the total level of funding available. To pay for the floor, we impose a maximum on grant increases, and scale back the rises received by authorities between those two levels.
"I am pleased to be able to announce that I am setting the floor levels so that in 200304 all authorities will receive a grant increase on a like-for-like basis well ahead of inflation. That means a real terms increase in grant for all authorities.
"The floor increases in cash terms for police and fire authorities and shire districts will be 3 per cent and the floor for unitary authorities, county councils, metropolitan districts and London boroughs will be 3.5 per cent.
"To pay for these floor increases, we will be setting a ceiling of 4.9 per cent for single-service police and fire authorities (including the Greater London Authority); 8 per cent for unitary authorities, county councils, metropolitan districts and London boroughs; and 12.5 per cent for shire districts.
"Increases above the floor but below the ceiling will be scaled back by 5.4 per cent for police and fire authorities, 1.3 per cent for shire districts and 4.6 per cent for authorities with education and social service responsibilities.
"In addition, as I said earlier, we will phase in the new education formula in such a way that no authorities' schools will lose out in real terms. The education formula will incorporate a floor of 3.2 per cent in cash terms and a ceiling of 7 per cent per pupil.
"In addition to the increases in funding for local authorities' general grant, we are also providing further increases in grants for specific initiatives. Of key importance will be the Neighbourhood Renewal Fund, which will allocate £400 million of grant via local strategic partnerships to help support and kick-start public services in the most deprived areas£100 million more than this year. On a like-for-like basis, local authorities will receive £1.3 billion more next year in special and specific grants.
"Our plans for next year provide local authorities with good increases in grantincreases that mean that since 1997 we have raised government grant to local authorities by some 25 per cent in real terms, compared to a 7 per cent reduction in real terms in the last four years of the previous administration. There could be no clearer illustration of our commitment to supporting and helping local authorities to deliver the strong local leadership and quality public services that local residents rightly expect and that local government wants to provide.
"Given the significance of the review we have undertaken, local authorities have, understandably, been awaiting today's announcement with some anxiety. Some authorities have been predicting a settlement under which councils will have to make cutbacks or impose significant council tax increases. I am glad that today's announcement demonstrates that those fears and the scaremongering about cuts in grants from our political opponents were unfounded and unjustified. The good increases in funding provided by the spending review, the realistic levels of floors and ceilings we have been able to set, and the decisions we have taken on the distribution of grant to local authorities mean that there is no reason why councils cannot continue to improve services while sticking to reasonable council tax increases. Today's proposals are good news for local government. As such, I commend them to the House".
Baroness Hanham: My Lords, I thank the Minister for repeating the Statement. It is nice to form up to him again. I declare my usual interest as a member of a London local authority. The local government finance settlement has for years been about as opaque as a dense fog. We learn today that there is to be a change in the system, which, according to the Statement, will no longer rely on past spending patterns but will reflect up-to-date spending patterns, where appropriate, with a simplified structure. Hooray to that, if that is what it is.
Having read the Statement, and from what I have seen of the vast tomes of documents on the subject, only the terminology seems to have changed. Standard spending assessments (SSAs) have become total formula spending (TFS). SSAs for individual authorities have become formula spending allocations (FSSs). Standard tax elements have now become share of assumed national council tax (SANCTs).
The new system looks heavily at councils' ability to raise council tax, which is a form of equalisation. The Minister says optimistically that that does not mean rewarding higher spending but that well-run authorities that have been prudent and kept council tax down will be penalised. It is instructive in this respect to look at the shifts in grant, not the broad averages, nor the nearly incomprehensible floors and ceilings that the Minister had difficulty in explaining. The actuals should be looked at. Inner London councils will receive an increase of about 3.5 per cent. Kent, Essex and Hampshire will receive 3 per cent. By contrast, Durham, Cumbria, Derbyshire and Cheshire will all have rises of some 12.5 per cent. Presumably, less additional council tax will have to be raised there than in other areas.
If anyone can understand the complexities and rationale of that, it will not be the residents of London and the South East; nor will they know about credit given for higher pay claims as in the newly-revamped ACA. People in Leicestershire, which will receive £85.48 less per child than Lancashire, and in Buckinghamshire, which will receive £83.20 less per child than Durham, will not understand it. Why does the formula ignore rural poverty? The front-page headline of The Times in July was right when it predicted that Labour would tax Tory voters to fund its own heartlands.
Burdens will be imposed not only as a result of the shift in grant to the North and East from well-run councils in London and the South East, but the inequity resulting from the shambles that was caused by the inadequate census. Figures for areas where no returns had been attained were guessed, attributing to many council areas, including my own, a ridiculously reduced population. That is extremely relevant, as grant is based on population as well as on spending and specific need. What is being done to assist the many authorities for which figures were made up?
Last year, average council tax in England rose by 8.5 per centthe biggest increase in the history of council tax, inflation being just 2.5 per cent. The small print of the Pre-Budget Report predicts that in 200203 and 200304 council tax receipts will rise by 7.2 per cent against an inflation rate of 2.25 per cent. In two years, council tax will have risen by almost 16 per centa staggering figureagainst the background of what was said by the Deputy Prime Minister; namely, that the munificence of the grant settlement meant that there was no reason why councils could not continue to improve services while sticking to reasonable council tax increases.
This Government do not protect ordinary families, who will be affected even further by the proposed rebanding and the introduction of new bands heralded in the Local Government Bill. This year, an average band D tax will be over £1,000, which will increase the burden on ordinary families with ordinary incomes and ordinary homes.
I should not perhaps end my remarks without welcoming something in the Statement. I welcome the proposal and promise by the Deputy Prime Minister to reduce the proportion of specific grant, which has risen remorselessly since this Government came to power. Directing local authorities on how to spend the money is a bad way to deliver grant. It is, therefore, with relief that I note that it is at least proposed to reduce the figure to 10 per cent by the year 2005.
I have a few questions for the Minister. Does the noble Lord agree with the estimate of the Chancellor of the Exchequer that council tax will increase by 16 per cent over two yearsfigures taken from the pre-Budget review? By how much does the noble Lord expect council tax to rise as a result of revaluation and rebanding? What control can the Government put on the Mayor of London to prevent London's council tax payers being soaked? What will the Government do to recompense the 32 local councils, which, under the flawed census, have "lost" more than 5 per cent of their populations?
Baroness Hamwee: My Lords, I, too, thank the Minister for repeating the Statement. I begin by declaring an interest as a member of the Greater London Assembly. The Statement relates to what is termed the local government finance settlement. It occurs to me that this is a very particular use of the word "settlement". I do not believe that it can be regarded as an agreement with local authorities, a meeting of minds, or even a compromise. Although we welcome certain aspects of the announcement, perhaps the Minister will acknowledge that that is the case for this year in particular.
The Government published a consultation document in July for response by the end of September. We have heard that 55,000 responses were received. The report on the consultation rather dismissively says that the great majority of those
The problem is this: how do we know and, more importantly, how does the world know what the changes will be? Is it right to wrap up the response to the consultation on principles with an announcement of cash? That is, perhaps, the opposite of "transparent". Does it not leave the Government entirely open to the accusations made by their political opponents and those they call "scaremongers"? Why have these two concepts been wrapped up and announced together? Does this meet the guidelines from the Government's Cabinet Office about consultation; and, indeed, about the spirit of good consultation?
Further, would the Government themselves be able to plan on such a basis? For example, local authorities are being told to plan for three years ahead, but thenI appreciate that it is historical, but this Government have not changed the positionthey are faced with a timetable that includes digesting what the noble Baroness just described as an enormous amount of material with almost no time to do so, after which they have to apply such detail to their plans, consult their own communities, and come to decisions as early as next February. If the Comprehensive Spending Review was so close to decision time, would the Government be able to make such plans?
More specifically, the Government make much of reducing ring fencing. I am afraid that I cannot be quite as welcoming as the noble Baroness, Lady Hanham, in this respect. Although the Government have abolished seven special grants, can the Minister confirm that 16 new ones have been introduced? The noble Lord referred to excellent councils receiving additional freedoms, but does he not recognise that that is a highly centralised approach? I believe that there is a large number of ring-fenced grants in the police budget. As I understand it, the Home Office is one department that appears not to be reducing its ring fencing.
Can the Minister comment further on "floors"? In order to assist local authorities to plan ahead, can the noble Lord say when the Government will announce the floors for years two and three? I well understand
Can the noble Lord tell us anything more about London? In particular, can he say whether there will be a single floor across all the functional bodies, including the police and fire services? The Statement indicates that there is a single ceiling, so I assume that there is a single floor. If sothis is one for the aficionados, I am afraidhow will the Government protect the fire authority in London when, on any basis of the consultation, it was set to lose very substantially? That is a real issue in London. Indeed, I shall be surprised if we do not hear some reassurances in that respect this afternoon.
We are all aware of the resource issues, especially in the social services sector. We are also aware of the extra responsibilities that will be placed upon local authorities. Bed-blocking is just one example. We realise that money will be going into the service, but I have been told that the fines system that the Government are set to impose could lead to a downward spiral in places where there is simply no capacity to provide extra service and where it will be cheaper to pay fines than to provide the service. That does not seem to me to be the right way forward. Your Lordships recently gave the Licensing Bill a Second Reading. This will put a cost on local authorities as regards dealing with the transfer of the licensing system from magistrates.
I turn, again, to London. On education, can the Minister tell the House whether the working families' tax credit data have been used as a measure of deprivation? That is not something that one can readily find in the swathes of material. I should add that the take-up of that benefit is very low in London, because of high housing costs and the interaction of the credit with housing benefit. I use that rather complicated example simply to demonstrate the complexity of all these issues and how much digestion they will need.
Finally, can the noble Lord tell me how I should answer a point that was made to me today by someone working in the field of partnership between local government and business? The Government are promoting the new business improvement district proposals (BIDs), which are being sold on the basis of additionalitythat is, additional funds being made available. How can I assure those whom we are asking to support this venture that the Government really will treat such funds as additional?
Lord Bassam of Brighton: My Lords, I was perhaps expecting rather more warmth from the noble Baroness, Lady Hanham, after repeating this Statement. None the less, I was pleased to receive the welcome that she gave at the conclusion of her remarks for the changes to specific grants. That touches on a point made by the noble Baroness, Lady Hamwee. Indeed, I believe that there will be both recognition
The noble Baroness, Lady Hamwee, made the point that there are still many areas where specific grants apply. That will continue to be the case, and rightly so. In some areas of public service activity we want to ensure that we drive up standards and fully reflect the needs of different communities for certain services to be provided in a particular way. Therefore, while there is a welcome freedom and flexibility involved, we are committed to that change. However, it is a change that will take time to introduce.
I enjoyed the comments of the noble Baroness, Lady Hanham, about the dense fog of local government jargon and terminology. When I was reading through these papers earlier today I was reminded of the first expression I came across in the allocation of funding to local authoritiesI believe it was "GREA". That must be some 20 years ago. I had to ask the borough treasurer, a crusty individual who did not like to be questioned, what "GREA" meant. He gave a long and impenetrable answer. Local authorities have been bedevilled by that tendency ever since and tend to make heavy weather of explaining how things work.
This is an excellent settlement for local government. I have not always said that about local government settlements. Like the noble Baronesses who have spoken today I have criticised more than a few of them. I understand the concerns over this year's allocation, not least because it comes at an unsettling time when there has been extensive consultation over the way in which the settlement will go in the future.
We have given a commitment on floors and ceilings. There will be a real terms increase in grant this year. There is a cash increase for all local authorities. I cannot remember many years when one could consistently say that that was the case. I remember making some severe criticisms when in real terms individual local authorities suffered considerable damage as a result of cuts in their real terms allocation.
I will try to deal with some of the points made by the noble Baronesses. The noble Baroness, Lady Hanham, raised an important question about census data. All I can say is that most local authorities want us to use the most up-to-date information. This is the best data we have on a consistent basis. The floors on grant guarantee all London boroughs a 3.5 per cent increase, which is well above the accepted 2.3 per cent inflation level.
The noble Baroness also raised the issue of council tax increases. If local authorities want it that wayand we all agree that they docouncil tax levels are to be set locally after consulting with the local electorate. It is not for us as Government to pre-announce their council tax increases for them. They must determine the increases themselves. We accept that there are indicative figures, but that is a matter of resource allocation.
I refute the point of the noble Baroness, Lady Hanham, about resource equalisation rewarding higher spending authorities. It does not. Resource equalisation is about the relative ability to raise council tax. It does not take account of individual spending decisions.
I do not agree with the noble Baroness's claim that we ignore rural poverty. The figures show that rural shire districts gain some 7.6 per cent in grant. That is not ignoring rural poverty; it is nearly three times the current level of inflation. She also asked whether revaluation would lead to large increases in council tax. It is too early for us to tell what the impact of revaluation will be. We should not trot around scaremongering. Some households will move to a higher band and some to a lower one, but there should not be any change to the overall amount of council tax collected.
The noble Baroness, Lady Hanham, referred to the mayor. The mayor and the GLA are accountable to their electors. They have to meet their electorate regularly. Electors will make up their minds based on a number of factors, of which council tax responsibility will doubtless be one.
I have tried to cover most of the issues raised. The noble Baroness, Lady Hamwee, asked about the increases in ringfencing. I explained that our long-term objective is to reduce that. We shall continue to consult and to take careful account of the points made by local authorities to us over the period.
Consultation this year has been detailed and thorough. We have published a response to it. Local government will rightly always want to make points about the formula. We will try to respond to those as best we can. We have secured more than adequate funding; it is a generous settlement for local government.
All local authorities will have an above inflation increase. Some of those increases will be larger than others as the formula has changed. We have tried to provide a fair system of floors and ceilings in changing the formula so that its introduction does not interrupt local services, as we have seen so many times in the past. I believe that the Statement will be welcomed.
Baroness Blatch: My Lords, the Minister claimed clarity and simplicity for the Statement. I join the two Front-Benchers who have already spoken to say that it scores no marks out of 10 for either clarity or simplicity. It is an extremely complicated Statement. The Minister prayed in aid the situation 20 years ago. The Government have been in office for almost six years. It is time for them to defend their own record and not constantly to go back 20 years.
The Minister was astonishingly sanguine about the census data. In case he has been asleep over the past few weeks, the census has been deemed the most unreliable that has ever taken place in this country. Because many aspects of the settlement are based on
What proportion of the so-called £15 billion per year until 2006 is included in the Statement for education? And, more significantly, how much of the global education budget is being held back by the Department for Education and Skills to fund its centrally controlled projects? In other words, how much of that money will not be going into the classroom to help with our children's education?
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