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Education and Skills Spending Plans
4.10 p.m.
The Parliamentary Under-Secretary of State, Department for Education and Skills (Baroness Ashton of Upholland): My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Secretary of State for Education and Skills. The Statement is as follows:
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"In July, my right honourable friend the Chancellor announced the outcome of the 2002 spending review. He stated that education spending will increase by an average of 6 per cent a year in real terms over the three years beginning in April 2003.
"Following that announcement, my predecessor, the right honourable Member for Birmingham Yardley, published our agenda for change, Investment for Reform. This set out how we would match those extra resources with sustained reform to achieve our objectives of a world-class education and training system that meets the needs of individuals and the economy.
"I now want to tell the House more about these investment and reform plans. With the exception of higher education, about which an announcement will be made next January, I am today announcing the details of our three-year settlement for the whole education and skills sector. I begin with the early years.
"This Government remain of the view that a strong early start is vital to continued educational success. So, as the Chancellor announced in July, we will continue our substantial investment in the early
- years, including our Sure Start programme, and will fund a further expansion of 250,000 childcare places.
"Working together with my colleagues in other government departments, particularly in the Department of Health and the Department for Work and Pensions, we will continue to expand our Sure Start programme and to mainstream the approaches in those areas which we believe have been successful.
"As the Chancellor announced in July, expenditure on early years and childcare will rise from about £1 billion this year to some £1.5 billion in 2005–06. Next year, £300 million will be transferred to enable local authorities to provide universal nursery provision for three year-olds.
"I turn now to the subject of schools, which will form the majority of my Statement today. The reforms that I am announcing will provide a simpler, fairer system. Alongside those, we are seeking a continued drive to raise standards in every school in the country.
"Last week, my right honourable friend the Minister for Local Government and the Regions announced the outcome of the review of local authority funding. As he announced, the national average increase in overall funding for schools and local education authorities is 6.5 per cent. Moreover, every local authority will next year receive an increase in funding per pupil of at least 3.2 per cent.
"The new system provides every local authority with a basic entitlement per pupil, plus more money for authorities with significant deprivation or recruitment and retention difficulties. Our three-year funding announcement means that we are giving local authorities certainty about their budgets in future years, so they can in turn give schools indicative three-year budgets, and we expect them to do so. This will enable head teachers and governing bodies to plan and implement longer-term reforms.
"As my right honourable friend the Minister for Local Government and the Regions announced last Thursday, the Government are committed to allowing local authorities more freedom over the use of resources. Ring-fenced grants will form a reducing proportion of local spending.
"So, on top of the £4.3 billion increase by 2005–06 in local authority general education funding which we have already announced, substantial funds will be moved from central Department for Education and Skills spending to local authority spending. This will be an extra £500 million in 2003–04, and a further £800 million in 2005–06.
"That means that, by 2005–06, over 92 per cent of all schools funding will be allocated through local authorities in accordance with local priorities. Thus we will end the ring-fenced grants from my department for the following programmes: in 2003–04, grants for nursery education for three year-olds; funding for infant class sizes; the school
- improvement grant; school inclusion—pupil support; performance management; and induction for newly qualified teachers.
"In 2004–05, in addition, we will do the same with grants for: special educational needs; study support; 'Golden Hello' payments; advanced skills teachers; school support staff; drugs education; and teacher sabbaticals. We shall also focus grants for the national literacy and numeracy strategies and the key stage 3 national strategy.
"The substantial increases in local authority funding that I have set out will enable them to take over the delivery of these important programmes in ways that meet local needs. We shall of course closely monitor the effects of these changes.
"From 2005-06, we are also reforming the system for rewarding those good, experienced teachers who pass the performance 'threshold'. The money for teachers who pass the threshold will be devolved to the schools budget. In the New Year, we shall announce further measures to strengthen performance management in schools and cut associated bureaucracy. We shall also discuss with all stakeholders measures to ensure that the allocation of the money meets the cost of the threshold payments made by schools.
"However, we will continue with ring-fenced funding to provide national drive in some key areas. Three key grants will contribute to this aim. The first is the leadership incentive grant with £175 million a year for each of the next three years. We will provide £125,000 to each of 1,400 secondary schools in the inner cities and in challenging circumstances beyond. This money is being provided because it is clear that a good head teacher and leadership team is the key to raising expectations and achievement in schools. This grant will support them.
"This money will be used in a variety of ways; for example, including strengthening poorly performing departments, helping strong departments to help other schools, buying in specialist advice on leadership, or working together with other schools to provide leadership training. And, particularly in the weakest schools, the money can be used to change the leadership of the school.
"One purpose of this money is to encourage local schools to behave in a more collaborative fashion, and it will be for local schools to decide how best to use the money to strengthen their leadership teams. But I will reserve powers to ensure that the weakest schools make effective use of the money.
"The second is the school standards grant, which will provide £800 million in 2003–04 rising to £875 million by 2005–06. This money will be paid direct to schools and is intended to drive forward reform of the school workforce. It will allow more and better trained teaching assistants to be employed to help the school team to work together more effectively. As we made clear in July, our substantial extra investment in the school standards grant must be matched by a commitment from unions and employers to a restructured teaching profession and
- a reformed school workforce—more flexible, more diverse and more focused on raising standards. We are making good progress towards an agreement, but the resources will not be released until a satisfactory agreement is reached.
"Thirdly, the standards fund, which will provide about £1.5 billion in each of the next three years, will enable schools to galvanise reform on standards, behaviour and choice. In 2003–04, this will allow us to support the following programmes, among others: key stage 3 strategy, £120 million from DfES in 2003–04; ethnic minority achievement, £80 million; music services, £60 million; Excellence in Cities and Excellence Clusters, £290 million; and school support staff and training, £170 million.
"For specialist schools, we will, as I announced a couple of weeks ago, provide sufficient funding to enable every secondary school that meets the required standard to become a specialist school. And it will provide support for primary literacy and numeracy. We are determined to build on the outstanding improvements that our primary schools have made since 1998.
"The national literacy and numeracy strategies have transformed standards, but we know that there is much more to be done to achieve the ambitious targets that we have set. We will therefore continue to provide funding and support focused on those schools that are underperforming in comparison to similar schools.
"Schools will have the freedom to spend their standards fund budget on any purpose provided that they deliver the improvements in standards, behaviour and choice that we need. We have already given the details to local authorities and we are looking for significant improvements in outcomes.
"I am also today publishing details of the capital funding that schools will get to improve and modernise schools buildings. A typical secondary school will get £75,000 of devolved capital funding next year, rising to £87,000 by 2005–06.
"This is part of a total investment in school buildings that, including Private Finance Initiative credits, will rise from £3 billion in the current year to £3.8 billion in 2003–04, £4.5 billion in 2004–05 and over £5 billion by 2005–06.
"Though this represents a seven-fold increase on capital spending since 1996–97, it remains true that the condition of too many school buildings has suffered decades of underinvestment. The extra resources which I am announcing today do mark very substantial extra resources to provide clean, modern, secure places for children to learn.
"I have today announced a real terms increase in school funding of over 7 per cent from 2002-03 to 2003-04, which will be followed by annual real terms increases of more than 4 per cent and 5 per cent, a total over the three years of the spending review of over 17 per cent in real terms. This means an average
- real terms increase in revenue funding per pupil of over £1,000, from some £2,840 to £3,850 in the 10 years between 1996-97 to 2005-06.
"Finally, I turn to further education and skills. The importance of this area cannot be overstated: developing the skills of our people is critical to improving our productivity, and therefore to the economic and social future of this country.
"We have to transform the performance of the learning and skills sector. We need to make it far more responsive to the needs of learners, employers and communities. We need to raise the quality of the sector and increase the achievement of those studying and learning in the sector.
"The document I published last month, Success for All, sets out our work on the further education reform strategy, and our challenge to the further education sector.
"In all this, we will work closely with the Department of Trade and Industry to co-ordinate the work of the departments more effectively.
"We are investing to match our ambition. I have already announced £1.2 billion for reforms to further education at the Association of Colleges' conference on 19th November. This forms part of the Learning and Skills Council's budget which I announced last week, which will increase by £1.4 billion, reaching a total of £9.2 billion by 2005-06. This means an increase on total spending on skills from £8.6 billion in 2002-03 to over £10 billion in 2005-06. This represents a real terms increase over the spending review period of almost 12 per cent.
"As the Chancellor made clear in his Pre-Budget Statement a fortnight ago, at a time when we face economic uncertainty it is more important than ever that we continue to invest and reform to drive up the skills of our people and improve our productivity as a nation.
"The very substantial investment in education and skills funding, which I have announced today, is a necessary but not a sufficient condition for raising standards in our schools and colleges, tackling the attainment gap and creating a world-class system of education and training at all ages.
"These will be achieved only if, in addition to investing, we also reform our schools and colleges so that they genuinely meet the aspirations of every child. That will be the ultimate test of our success at the end of this spending review period.
"I am confident that, with the help of all those millions of people throughout our country who are committed to our educational success, we will pass that test".
My Lords, that concludes the Statement.
4.24 p.m.
Baroness Seccombe: My Lords, I thank the Minister for repeating the Statement. In the past few days my noble friend Lady Blatch skilfully exposed the attempts by the Chancellor on 27th November to give an impression that spending on education would
increase by £45 billion by 2006. We now know that the actual figure is to be £15 billion. Let us hope that our ailing economy can sustain increased spending even on that scale.Before she replies on LEA points, will the Minister say nothing about cash for higher education in 2003–04? Can she not say what percentage of the £9 billion funding gap identified by UK universities she hopes to fill? Can she confirm that top-up fees have been ruled out, as stated by the Prime Minister?
I turn to nursery education. Previous ring-fenced payments for nursery children are now to be subsumed in general grant funding. Can the Minister give a categorical assurance to the House that money still will be provided to each local authority to pay for the actual number of three and four year-olds in their areas, as Ministers pledged in the past? Will she publish a table showing a hypothecated element paid for nursery education for each LEA? If she does not agree to do that, many will fear that the Government are quietly abandoning their commitment to fund fully-fledged nursery education for every child.
I turn to schools. Has the noble Baroness seen the widespread concern expressed by local authorities about the settlement this year? The LGA has commented that whereas in the past elements in the overall school grant were weighted according to established local spending needs, from 2003–04 they are set by ministerial judgment. Is not that jargon for politics taking the place of need? Is not that why so much money in the settlement has been channelled away from authorities in the South, which serve their children well, to incompetent and high-spending Labour councils facing elections next year?
We broadly welcome any move that leaves more money to local discretion and reduces central control. So, we welcome the fact that Ministers are dropping the running of 12 ring-fenced grants by the DfES. Can the Minister tell the House how many civil servant posts will be saved in the DfES as a result of those changes? Can she assure the House that in the event of any regional assemblies being set up, those assemblies will not have the power to ring fence money in that way?
Among the central initiatives being pruned is the much vaunted literacy and numeracy strategy. Does that mean that the Government accept some of the recent criticisms of the defects of that strategy? If not, why is spending being reduced at a time when figures still show desperately worrying levels among young children of an inability to read and add up? Is not that shuffle from centralising gimmicks back to local funding making up policy on the hoof? Can the Minister say more about the so-called leadership incentive grant, a title which in itself suggests Ministers still think they know more about how to run a school than governors and head teachers?
There is talk in the Statement of up to £175 million per year being used to buy services from other schools or alternatively to sell them. Will that involve Ministers investing taxpayers' money in companies being set up by schools? Can the Minister assure the
House that reserve powers will not be used to force schools to buy services from companies backed with public money?The Statement boasts of over £5 billion of PFI credits in 2005-06. Will that count against totals for public borrowing? Can the Minister give the House some idea of the scale of the extra money that will be needed to make up the value of pension funds for teachers and other LEA staff, which the Chancellor has done so much to erode? Can she tell the House the cost to schools and local authorities of the 1 per cent national insurance charge coming in next April?
Perhaps I may also ask about plans for teachers' pay. The Statement refers to £875 million going to schools only in the event of,
- "a commitment from unions and employers to a restructured teaching profession and a reformed school workforce".
What is meant by the claim that:
- "Schools will have the freedom to spend their standards fund budget on any purpose providing they deliver the improvements . . . that we need"?
4.31 p.m.
Baroness Walmsley: My Lords, I thank the Minister for repeating the Statement. We on these Benches always welcome any extra money for education, and the basic entitlement principle is certainly to be welcomed. The new system is slightly clearer. The distribution data are more up-to-date, relevant and reliable. However, ambiguity remains—a point to which I shall return in a moment.
Long-term planning is always a good idea. When people know how much is coming in future years, they can spend money more sensibly. So three-year budgeting should help schools, but how can it if they do not know how much they will have to pay staff? Again, I shall return to that point.
How much of the 7 per cent increase will come from PFI capital? Can the Minister confirm whether LEAs will now have to pay the full liability for meeting the needs of the teachers' pension fund?
However, despite that welcome, the Government have not given up their addiction to spin. When we read the figures carefully it is clear that, when additional liabilities and reductions in grant are taken into account, next year investment in education will be lower than was announced in the Comprehensive Spending Review by not £250 million but £400 million. What undertakings can the Minister give about the remaining years—the second and third years? Will there be further cuts? If so, how will that affect schools' ability to plan?
As the money will not be coming from the Government, will the Minister confirm that the level of spending assumed by Government will require an increase in council tax of about 9 per cent? Council tax payers will have to pay for that increase in educational spending. That is a bit like me announcing to my children that their pocket money is to be increased, but that they must go to the man down the road to get the extra money.
Although we welcome the devolving of distribution of funding to local authorities, too much is still provided through centrally managed initiatives, such as the leadership incentive grant and the specialist schools programme. The Government have missed an opportunity to drop the entrance fee for specialist school status. However, we should have liked one grant to be ring-fenced. The transfer of threshold management and performance related pay removes any pretence that that scheme can deliver a fair deal for teachers. Can the Minister continue to guarantee that performance related pay will be paid on the basis of actual performance rather than pressure on local budgets? If not, she must expect a great deal of unhappiness among teachers, as the Government will have broken a key pledge made to them when the scheme was introduced.
The standards fund grants are still dependent on matching funding, have bureaucratic, political strings attached and are still distributed in crude tranches. Do the Government have any plans to improve accessibility to that money? There will be new cliff edges as a result of the new system. For example, for all area-based initiatives, such as Excellence in Cities, there is a risk that neighbouring schools with similar needs will receive very different levels of funding. The leadership incentive grant will be available to Excellence in Cities schools and schools chosen on the basis of low attainment at GCSE and free school meals. That is a fudge. Vulnerable schools outside Excellence in Cities areas will have every right to resent schools in easier circumstances inside those areas receiving larger grants.
Unfortunately, the Statement represents too many missed opportunities. The Government have not taken the opportunity to ally financial and academic years. They have not brought forward the School Teachers' Review Body pay recommendations, so that schools and LEAs will know what the numbers will mean. How can they plan for three years unless they know
that? The Government's explanation of why they dropped three years' work on an activity-led formula is wholly unconvincing.The Minister mentioned the commitment to a restructured teaching profession and negotiations with unions and employers. As the noble Baroness, Lady Seccombe, mentioned, the Government's recent track record on negotiation with public servants is not a happy one. How will the Government ensure that the negotiations will result in a more, rather than less, motivated teaching workforce?
4.36 p.m.
Baroness Massey of Darwen: My Lords—
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