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Baroness Blatch: My Lords, those are very different words to those in the Statement. The Statement says that the schools forums will agree, not that they will discuss it. As far as I remember, when the Bill went through, we had an amendment which the Government accepted that the schools forums would not have power to determine those matters.

Baroness Ashton of Upholland: My Lords, I was about to read out what I said in the Statement. I said that schools forums would have a key role to play in helping to secure local consensus and distribution. Those are the words of the Statement and that is what I read out. That is what I agree, and it is in keeping with what was said in the Education Bill.

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The noble Baroness asked about the Learning and Skills Council. The guarantee will apply to both the real terms guarantee and the formula amount for each school, which brings it completely into line with what will be happening at school level. The noble Baroness makes the point that school budgets must be thought of in the round. That is why we have worked with our partners in the Learning and Skills Council to ensure that that will happen.

Noble Baronesses have raised concerns about special educational needs. I clearly said that there is a need to think about local flexibility, and that would apply also to special educational needs. It is important to ensure that we support our children with special educational needs effectively. When we look across the pattern of the returns on Section 52 that the local authorities have put forward, there is a wide variation in the way in which money is held centrally for special educational needs. It is important that we ensure that as much money goes into schools as is necessary to support children effectively at school level. We believe that by talking about the rate of increase, we are able to support that and ensure that schools actually get the rate of increase that they need.

In terms of the STRB timing, the noble Baroness, Lady Blatch, asked a specific question, as did the noble Baroness, Lady Sharp. The STRB will report on 3rd November. The Secretary of State will publish the findings a week later and there will be a four-week consultation. That addresses the issue of ensuring that there is time for the information to be out in the system.

Overall, it is important that we recognise that this is a concrete move forward to enable our schools to plan for the future. With regard to the Local Government Bill, my noble friend Lord Rooker will make a statement on that at another time.

Baroness Blatch: My Lords, before the noble Baroness sits down, the Local Government Bill has completed its passage through the House of Commons and is almost completely through this House. Is the Minister saying that we will amend it at the very last stage without full knowledge of what that change will be well in advance of it being discussed?

Baroness Ashton of Upholland: My Lords, I am quite sure that my noble friend Lord Rooker intends to contact both Front Benches to discuss the matter in detail. It would be inappropriate, as the noble Baroness says, to introduce something without discussion. I understand what will happen very shortly. I will leave that in my noble friend's hands.

3.25 p.m.

Baroness Thomas of Walliswood: My Lords, as no other noble Lord is getting to his feet, I shall do so. As someone whose experience in local government is in a traditionally low-spending authority, I know that we can pretty well bet that Dorset and Surrey will compete to be the lowest spending authorities—which therefore get least support from government. I am concerned about the idea of average cost pressures, minimum

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funding and how that will impact on counties' education authorities which traditionally are not given as much money as other authorities because of their place in the traditional spending tables. How will that be worked out?

There has been only one mention of real expenditure—in the second paragraph in which the Statement mentions the past. Are the minimum increases for schools to be real increases? If so, will they take on board something else that the Statement does not mention—the impact of increased national insurance expenditure by schools, as by other employers?

Baroness Ashton of Upholland: My Lords, as I said earlier, we can only ensure that there is a minimum guarantee for each school if we ensure that we give education authorities the necessary resources. I hope that I have made clear that we intend to do that by providing a level within the school funding formula spending share that will cover the school level guarantee, when that figure is worked out. That figure will be worked out by looking across the cost pressures—of which, as the noble Baroness, Lady Thomas, will know, teachers' pay is the biggest part. That is why the STRB is reporting early and we are doing this work. That will address the concerns most effectively in order to ensure that we deal with them in the most appropriate way.

Forgive me, but I have forgotten the last point raised by the noble Baroness.

Baroness Thomas of Walliswood: My Lords, it was whether the minimum increases will be real and take on board things such as the increases in national insurance expenditure.

Baroness Ashton of Upholland: My Lords, I am grateful to the noble Baroness. The proposal is to look across the cost pressures and to be very clear. As I said, teachers' pay and associated costs are the most critical part of that. We must establish the average cost and translate that into a minimum guarantee for each school, work with our partners in education and ensure that the schools forum, in its consultative way, makes and supports those decisions effectively. Schools must be very clear about what they are getting.

Baroness Howe of Idlicote: My Lords, I wish to follow up on two points. First, I hear what has been said on the issue of teachers' pay, and that there are funds. However, compared with many other salaries, teachers' pay is extremely low. Can we be sure that, within the sums allocated, there will be enough to be at least commensurate with raises in other parts of the economy?

Secondly, nursery education was included as one of the targets, but it would be helpful if we could have some idea of how much expansion within the sums allocated we could expect.

Baroness Ashton of Upholland: My Lords, the specific reason why we asked the STRB to think about a two and a half year settlement is to ensure that we can

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look at the issue of pay as the critical factor in the cost pressures facing schools. However, the Government have done a huge amount to increase the salary levels of teachers. I am very proud of that. As I described in the Statement, since 1997, we have had teachers with six years' experience for whom the real terms increase has been 13 per cent, which I believe is an important figure. So we will await the STRB recommendations. Of course, I am sure that your Lordships will be keen to be informed of all those details.

On nursery education, the Government have a commitment that, by April next year—the commitment has been brought forward by six months—every parent who wishes to have nursery education for their three year-old will have it available to them. We are on track to do that and it will be met.

The Lord Bishop of Chester: My Lords, the Secretary of State's Statement concluded with the acknowledgement that it had been a difficult year. Others in the House might feel that a more honest assessment of the mess of recent months would have been more welcome. However, we acknowledge the considerable increases in expenditure that have taken place as well as the increases in staffing, which will need to continue in the future. The upward pressures on public expenditure across the board—the Armed Forces, public order, the NHS—are greater and greater.

The Minister did not mention the backlog of building repairs in schools. The inflationary cost in the building industry is well ahead of the average level of inflation. In order to do the same amount of work on our vicarages in Chester, we currently need to budget for 6 per cent to 8 per cent more per year, not 2 per cent to 3 per cent. Will the Minister comment on the impact on the funding of repairs on school buildings as well as on salaries and other things?

Baroness Ashton of Upholland: My Lords, I do not know what I can say other than that it has been a difficult year. Perhaps I might be able to say more, but that sums up what schools have experienced.

I forgot to mention the point that the noble Baroness, Lady Sharp of Guildford, made about modelling, which is relevant in the context of what the right reverend Prelate said. The noble Baroness asked me where we would be modelling: we will be modelling down to school level with some education authorities. The noble Baroness will agree that that will be an important factor.

In the Statement, I said that, by 2005–06, we would be investing 5 billion in new buildings and repairs. I could not agree more with the right reverend Prelate about the value and importance of that. If schools have used devolved capital funding this year, we will look to support them, in the context that I described in the Statement. It is important that we have a school stock fit for purpose and that our children should enjoy the highest quality buildings. That is our objective.

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