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Lord Graham of Edmonton: Graham.

Baroness Blatch: My Lords, I was going to call him Lord Ted. The noble Lord, Lord Graham of Edmonton, is in his place. The important message is that central funding and centrally controlled funding should form a greater proportion of schools' core

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funding. Convert the burgeoning of national bureaucracy into funds for schools. Abolish the command-and-control system. I can say categorically at this Dispatch Box that we have no plans as a party to reduce expenditure by 20 per cent. But we believe that there is enormous scope within the system to convert money spent on bureaucracy and unnecessary projects to put into front-line services. That is where our energies will be spent.

The Government promised simplicity, transparency and fairness. They have failed on all counts. The level of anger and frustration in our schools shown by staff, parents and governors is considerable. Teachers feel betrayed. Greater honesty, a little humility and even an apology would not go amiss.

6.52 p.m.

Lord Graham of Edmonton: Go on, sock it to them!

The Parliamentary Under-Secretary of State, Department for Education and Skills (Baroness Ashton of Upholland): My Lords, I am grateful to my noble friend "Lord Ted" for his comment. I thank the noble Lord, Lord Hanningfield, for securing the debate. I am very aware of the strength of feeling about the issue that has arisen since we announced the settlement for 2003–04. I accept, as the noble Baroness, Lady Blatch, would expect me to, that there are problems in schools and that we need to look for ways to resolve them. I understand the particular interest of the noble Lord, Lord Hanningfield, in his role as leader of Essex County Council. I recognise how the arrangements are affecting schools in Essex.

I am grateful to the noble Lord, Lord Henley, for offering me a change of role. Perhaps I can look forward to debating foundation hospitals with noble Lords. But I can assure him of my sanity, or at least I hope I can. It is always a delight when the noble Baroness, Lady Byford, participates in debates. The noble Baroness is eminently qualified to participate, as are all noble Lords, in this important discussion.

As noble Lords have said, it is a year of change for the schools funding system. I say to the noble Baroness, Lady Cumberlege, that it has been a year of radical change. The local government funding formula has changed. There have been significant changes in the balance between central and local discretion. There has been an end to some ring-fencing of central grants by central government. We are not micromanaging, as the noble Lord, Lord Hanningfield, said, but looking to develop that relationship. Many local authorities and schools have criticised ring-fencing for a long time. There have been changes to the distribution of the money.

There has been a significant drive by the Government to encourage three-year budgets for schools of the type that the noble Baroness, Lady Byford, mentioned, in the context of schools which, I recognise, have fluctuating pupil numbers and related issues to deal with. I agree with all noble Lords that, as schools begin to plan, it is important for their confidence and planning that they have as much notice

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as possible of the three-year horizon. That view is widely shared in your Lordships' House and, perhaps even more importantly, in schools and education authorities.

In response to the noble Baronesses, Lady Warnock and Lady Seccombe, my right honourable friend does not propose a return to grant-maintained schools. Eminent though our press reports can be—I can perhaps speak with some authority on the subject—not all journalists get everything right all the time.

In response to the noble Lord, Lord Henley, the important issue is performance in schools and delivery. Noble Lords have heard me speak often on the quality of education that we have. I agree with the noble Lord that it is very important that we see the results of our expenditure. I believe that the rise in standards in primary and secondary education are a testimony to that. I know that noble Lords will want to join me in supporting what the noble Baroness, Lady Byford, said about the absolute importance and value that we must all place on our teaching profession. In response to the noble Baroness, Lady Cumberlege, I do trust teachers. They almost perform miracles every day on behalf of our children.

I wish to try to shed some light on some of the issues raised. I apologise now if any noble Lord feels that I have not done that as adequately as I might in the time I have. I give my usual assurance that I shall write to any noble Lord who feels that I have not adequately answered any point. I am very conscious, given the knowledge and experience around the House, that many noble Lords have had long experience of funding issues both in local and central government. I listened with great interest to the noble Baroness, Lady Cumberlege, who gave an exposition of the history of the issues surrounding local government finance, and to many noble Lords, not least the noble Lord, Lord Hanningfield, who has personal experience of dealing with the issue at local authority level. I pay tribute to all that experience. I am humble in the remarks that I make in your Lordships' House.

It is universally accepted that there has been an increase in revenue funding for schools. All the teacher conferences recognise that we were talking about an increase of the order of 2.6 billion. In that context, there is no mirage. We agree that that has happened. It is an increase of 11.6 per cent, which is 250 million more than the pressures that we calculated from pay, pensions, national insurance and the ending of grants. We calculate that nationally those pressures represent an increase in costs of 10.5 per cent.

I could describe those figures in many different ways. I shall give one other example to try to convey the information as simply as I can. The education formula spending share for 2003–04 has increased by 6.5 per cent, or 5.2 per cent per pupil. Noble Lords will know that there are different ways of looking at the figures. That is sometimes one of the difficulties. Those figures are in addition to compensation of 586 million for the bulk of the pension contribution increase and 500 million of grant funding transferred into general funding in 2003–04. The school standards direct grant

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is increasing by almost 150 million in 2003–04. I wish to make clear to the noble Baroness, Lady Blatch, that we did not promise an increase after inflation of 3.2 per cent. We promised an increase in cash of 3.2 per cent after taking account of the transfer of funds to pensions and for specific grants. I hope that that has clarified the position.

As noble Lords indicated, we have listened to representations from education authorities and schools. We recognise that the combination of a low increase in education formula spending share, coupled with a reduction in the grants through the Standards Fund, would lead to low budget increases for some schools. For that reason, we announced an additional grant of 28 million to ensure that the effective increase in education funding for all education authorities and their schools between 2002–03 and 2003–04 is no less than 3.2 per cent. The noble Lord, Lord Hanningfield, said that in Essex the figures were 3.02 per cent, I think, supplemented by 1,162,000 to bring the total to 3.2 per cent.

Taking those factors into account, 36 local education authorities received a share of that additional money. They are now at the level of 3.2 per cent per pupil for every local education authority. We have set as a condition to the allocation of the money that it must be passed on in full to schools. But it is for each local education authority to use its judgment and local knowledge to decide how much funding individual schools should receive.

The majority of education authorities have received more than the 3.2 per cent minimum increase. But I recognise what noble Lords have been saying about the issues for authorities who feel that the increases need to be considered in the context of what is happening in individual schools. I shall discuss that matter further in a moment.

I think that the noble Baroness, Lady Cumberlege, implied that the London costs did not include authorities that were on the floor because of the ODPM grant floor, as opposed to the DfES grant floor of 3.2 per cent. I checked with officials, and I can say that we have added those authorities to the list of those who received the 11 million.

Baroness Blatch: My Lords, we must be certain about this. It is important that the figure of 3.2 per cent is properly understood. If schools have lost substantial sums of standards grant and are given an increase of 3.2 per cent on what they had last year, will that be a 3.2 per cent cash increase on top of what would have been their budget last time, including standards grant, or does the standards grant, in many cases, invalidate the 3.2 per cent?

Baroness Ashton of Upholland: My Lords, I shall try to explain by going through the figures one more time for the noble Baroness and others. I hope that that will help.

We took the pensions, the class size grant and the nursery education grant. The total was 986 million. That was paid out before we sorted out the floors and

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ceilings, which, as noble Lords are aware, are between 3.2 and 7 per cent. Because of the 400 million changes in the other grant—I think that that was the point that the noble Baroness was making—what happened in some areas was that schools that had received more money in direct grants received less. That was where the 28 million came in. As a consequence, some local authorities slipped below the 3.2 per cent level. The 28 million was the amount required to bring everybody back to the 3.2 per cent level in the light of the way in which the allocation of the grants had affected funding. I hope that that clarifies the situation for the noble Baroness.

Noble Lords rightly raised the issue of special educational needs. I want to make a couple of points about that. To the noble Baroness, Lady Sharp of Guildford, I say that the schools access initiative is partly a contribution towards making sure that schools can manage the changes that have resulted from legislation. There is no criticism from my right honourable friend the Secretary of State. We can see how important it is, as the noble Baroness, Lady Blatch, said, to support those of our children who have special educational needs. I am also aware that next week is autism awareness week. I spoke to the All-Party Group on Autism yesterday and made the point that we will recognise the needs in the work that I will do as Minister responsible for special educational needs in the coming months.

When considering funding, we must ensure that we are clear about what funding is retained at the centre—rightly, I hasten to add—to ensure that children can be funded at special schools or that funding is available for low incidence special educational needs and so on, as well as funding that will, perhaps, go into schools but of which schools are not yet aware. That is an important element of the thinking that is going on.

Noble Lords will not be surprised to hear that I shall not dwell too much on the question of funding in Essex per se, although I have information for the noble Lord, Lord Hanningfield. The noble Lord covered many of the issues, but I want him to be aware that I have considered the matter carefully. In that context, I say to the right reverend Prelate the Bishop of Chelmsford that I was delighted to hear of the partnership between the Church of England and Essex County Council. I am sure that noble Lords will agree with me that Chelmsford will miss the right reverend Prelate's contribution. I gather that this is his final week of duty in your Lordships' House. We can all agree that we shall be the poorer when he goes.

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