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Baroness Trumpington: My Lords, speaking as a lonely elderly person who is aware that her birthday cards have gone astray, may I ask the Minister what he considers normal? Does he consider it normal that, when a parcel is delivered, the postman no longer rings the bell but simply leaves a card? While paying huge tribute to the postal services in the Palace of Westminster, will he ensure that, while the conversations are going on, more attention is paid to the efficiency of the Post Office as it works at present?

Lord Davies of Oldham: My Lords, it is in the interests of Royal Mail to ensure that it offers the best possible service. However, the noble Baroness will recognise why some aspects of past practice are inappropriate in this day and age. We can all recall the times when packages were left on our doorstep, or with friendly neighbours. It is much more difficult these days to distinguish people, when all sorts of material is sent through the post. It is important that items are collected by the individual concerned, that proper regard is given to security, and that items are not simply left outside the house.

Lord Brookman: My Lords, I speak with my old trade union hat on. Are the Government satisfied with the progress being made, bearing in mind the report of the noble Lord, Lord Sawyer, about the industrial relations situation as it has developed in the Post Office? Does the Minister agree that the huge fat-cat salaries being paid at the top end of the structure are unhelpful?

Lord Davies of Oldham: My Lords, salaries at the top level are related strictly to performance-related agreements, and payment is made only on the basis of achievement. The House will recognise that the disputes and difficulties will affect the hitting of such targets.

More generally, my noble friend, with the vast trade union background which he brings to bear on these matters, will recognise that there have been improvements in industrial relations in Royal Mail. This setback has sprung from difficulties over one issue alone—the question of the London allowance. In other parts of the country, great progress has been made, with the assistance of my noble friend Lord Sawyer. All is not

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gloom. At present, we are in difficulties, but I reiterate the point that the two sides are meeting again today. We hope for a successful outcome.

Children: Contact with Separated Parents

3.9 p.m.

Baroness Buscombe asked Her Majesty's Government:

    What plans they have to introduce a legal presumption for parents to have continuing contact with their child following a divorce or separation.

The Parliamentary Under-Secretary of State, Department for Constitutional Affairs (Lord Filkin): My Lords, generally it is in the best interests of the child to have a continuing relationship with both parents following separation. We will encourage contact where it is safe and we will look at ways of diverting more cases away from the courts.

Where one parent refuses to comply with court-ordered contact, we want to look beyond the courts' current options of fine or imprisonment. We shall publish our proposals for improving contact in November.

Baroness Buscombe: My Lords, I thank the Minister for his reply. However, does he accept that it is only right that separated parents should each have a legal presumption of contact with their children; that is, real parenting time? Surely that would ensure that both parents could continue to contribute to their children's family life and that those children would benefit from care by both their parents and any grandparents and extended family members who were able and willing to play a role in their upbringing. Does the Minister agree that while children's safety should not be put at risk, it is cruel, inhuman and plainly wrong to keep fit parents from their precious children without a compelling demonstrative reason, and that it is cruel and damaging to the children as well as to the parents and the grandparents?

Lord Filkin: My Lords, as I indicated in my reply, it is the Government's view that it is strongly in the interests of children that they have such continuing contact with both their parents when it is safe to do so. However, we believe that the Children Act 1989 quite rightly put the responsibility for making decisions on contested contact issues with the courts, with the focus being on what is in the best interests of the child. We continue to think that it is right that the courts have a wide discretion to exercise judgment on what is in the best interests of the child looking at the particular circumstances of each case that comes before them. Having said that, we are strongly of the opinion that we need to try to find ways of encouraging increasingly successful contact arrangements because we share the view that it is desirable in the vast majority of cases that children have contact with both parents as part of their growing up.

Lord Northbourne: My Lords, if the noble Lord means what he says about the Government's

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presumption that what we are discussing is in the interests of children, why will he not accede to the suggestion of the noble Baroness, Lady Buscombe, that there should be a presumption? The courts would still have the opportunity of going against that presumption if it seemed appropriate to do so, but the presumption would be a great help in achieving the objectives the Government appear to endorse.

Lord Filkin: My Lords, I do not fully understand that argument because as the law currently stands the courts have the duty as their prime obligation to consider the interests of the child. In our experience the Government, the family courts themselves and the judiciary recognise the desirability, where it is safe to do so, of a child having continuing contact with both parents, as common sense tells us. They have full liberty to reach the objective that the noble Lord indicated. We think that is a correct principle. Having said that, we have to pursue mechanisms to increase contact wherever we possibly can.

The Lord Bishop of Guildford: My Lords, does the Minister accept that the key to ensuring the welfare of children in these circumstances lies with the parents jointly agreeing how they will fulfil their responsibility to their children, and that any introduction into the process which encourages a battle around the rights of either or both of the parents would be disastrous? The system, including the provision of family mediation services, ought to work to encourage parents to fulfil their responsibilities. Will the Minister encourage us to believe that the Government will seek to increase support for such services in support of parents in this situation?

Lord Filkin: My Lords, the right reverend Prelate put his finger exactly on the central issue—how one can try to motivate parents to be more successful in reaching agreements for effective contact in the interests of their children. The evidence is that those cases that go to court appear to be less satisfactory in reaching outcomes that both sides think work than those that are dealt with by agreement between parents. Therefore, the whole thrust of our policy is: first, to try to ensure that when the court makes an order it is enforced and enforceable, which is not always the case, and, secondly, to try to push processes to mediation before they get into a court process, which does not appear always to be the best way of resolving these very difficult disputes. I strongly endorse what the right reverend Prelate said.

Earl Russell: My Lords, I thank the Minister for the spirit of the answers that he has given so far. If the Question had mentioned "presumption", it would have received a warm and wide welcome on these Benches. However, it mentions "legal presumption". Since the man of property is still with us, it raises the need for equal security against the risk which is sometimes underestimated of physical or sexual violence either to the child or to the woman. As we agree that the interests of the child are paramount,

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does the Minister agree that this is often best discovered by the use of a genuinely independent advocate for the child?

Lord Filkin: My Lords, there are circumstances when it is right and necessary that the child has an independent advocate both in child contact cases and more often in child protection cases. I recognise and agree with that. I also take the thrust of the noble Earl's point about it being desirable that both parents have continuing contact without unduly fettering that by making it a specific legal obligation. There is no conflict between those objectives in practice in most cases because in practice it is desirable for the absent parent to have contact and, therefore, one wants to work towards making a reality of that both in the interests of the child and in the human interest of the absent parent.

Baroness Knight of Collingtree: My Lords—

The Lord President of the Council (Baroness Amos): My Lords, I am sorry but we are out of time.

School Funding 2004–06

3.17 p.m.

Lord Davies of Oldham: 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:

    "Mr Speaker, with permission, I would like to make a Statement about the funding of schools in the years 2004–05 and 2005–06. I am placing the details in the Library of the House.

    "On 17th July this year I set out to the House the principles which I would follow to restore confidence in the school funding system, deliver stability in school budgets and give certainty for head teachers and governors. I promised a further update in the Autumn.

    "Responsibility for school funding is shared between government, LEAs and the governing bodies and head teachers. We all want to ensure that schools can plan and manage their resources effectively to achieve the highest possible standards. I want to express my appreciation today for the commitment of all the education partners to these ambitions, and for the constructive way in which representatives of schools and local government have worked with us. I am confident that this will continue.

    "As I said in July, I intend to support schools in three ways: a minimum increase in every school's budget; additional resources to help every LEA to support schools with additional pressures; and targeted transitional support to help all schools to achieve balanced budgets.

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    "I promised to introduce for 2004–05 and 2005–06 a minimum per pupil funding guarantee for every school, taking account of the average cost pressures facing schools in those years. I will achieve that by increasing both LEA core funding and the funding received from DfES grants.

    "My officials have examined the relevant cost pressures—including increases in teachers' pay where we have assumed an inflation-led settlement. These pressures naturally vary between schools. However, following extensive consultation with our education partners, my best estimate for next year is that the combined effect of these factors on the average school will be of the order of 3.4 per cent.

    "Each school receives funding through LEAs in two main ways: funding directly related to pupil numbers and funding relating to fixed costs. We have concluded, after careful consideration with our education partners, that pupil-led elements should rise by 4 per cent per pupil and fixed elements by 4 per cent in cash.

    "This means that a school whose pupil numbers stay the same between 2003–04 and 2004–05 will be guaranteed a 4 per cent per pupil increase in its overall budget next year.

    "A school whose pupil numbers decline will receive a funding increase of more than 4 per cent per pupil, to help cover fixed costs. However, because of declining pupil numbers, the number of primary schools with reduced cash budgets—and so possibly staff numbers—will be significant, as there are around 50,000 fewer primary pupils this year, with a similar reduction next year. Secondary schools with falling rolls will be in the same position.

    "A school whose pupil numbers are increasing will be guaranteed at least a 4 per cent increase for all its existing pupils. Those schools will be guaranteed a rise of at least 4 per cent in their cash budgets and an overall per pupil increase of at least 3.4 per cent.

    "I said in July that we would consider carefully the position of very small schools. Those will receive an increase of at least 4 per cent if their pupil numbers do not change. However, our general approach may not be appropriate for very small schools with much higher than average fixed costs. Therefore, funding for schools with 75 pupils or fewer will be determined according to their LEA's own school funding formula. For special schools, whose funding is normally based on places rather than pupil numbers, the guarantee will be a minimum 4 per cent increase in funding per place. LEA funding for specified costs, such as rates, will continue to be funded at cost and will be apart from the guarantee.

    "The 4 per cent level at which I have set the minimum schools guarantee already takes some account of cost variation around the 3.4 per cent average. However, I should stress that that guarantee represents only the minimum increase that a school might receive next year. Across the

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    country, many schools will receive per pupil increases of more than 4 per cent, since the overall increase in education formula spending will be more than 5.5 per cent per pupil. The final budgets will be determined by LEAs, in consultation with schools forums and after the local government finance settlement has been announced. However, today's announcement should—subject to pupil numbers—give schools an early indication of the minimum increase in their budgets.

    "For 2005–06, my expectation is that the minimum schools guarantee will again be at least 4 per cent for a school with unchanged pupil numbers. I will keep that under review and announce the final figure in due course.

    "Other elements of schools funding will also be increased on the same basis. Thus the Learning and Skills Council will increase all its funding rates for school sixth forms by 4 per cent in 2004–05, and will increase current school sixth-form allocations for the period April to July 2004 by 4 per cent. Similar arrangements will apply in 2005–06.

    "The changes to the Standards Fund caused significant problems for some schools this year, so in July I undertook to reverse the cuts which had previously been announced for the next two years. That additional spending is reflected in the Standards Fund allocations which are being issued to local authorities today.

    "In 2004–05, schools will generally receive a cash increase of 4 per cent on this year's Standards Fund allocations. There will be some limited exceptions. Those include: grants where the amount of funding is directly related to actual costs; specialist schools, where I increased the funding rate in September this year and will make a further increase to £129 per pupil in 2005; and grants where funding is being especially targeted for policy reasons. For example, we are uprating the ethnic minority achievement grant by 4 per cent, but also taking the first steps towards a fairer distribution. However, no school will receive less ethnic minority achievement grant in cash terms in 2004–05 than it is receiving this year.

    "Moreover, next year schools will receive either a 4 per cent increase on their per pupil schools standards grant, or the value of their announced SSG band for 2004–05, whichever is higher. Both Standards Fund and school standards grant will be uprated again— in line with the minimum schools guarantee—in 2005–06. I am also adding resources to revenue support grant to reflect in LEA baselines the budget support grants paid to some authorities in 2003–04.

    "The total additional funding to maintain and uprate the Standards Fund and school standards grant, and to mainstream the budget support grants, will be £435 million in 2004–05 and £520 million in 2005–06. I am placing full details in the Library.

    "I can also confirm that threshold pay costs will be fully funded next year. As at present, schools will be able to draw down well over £500 million from my department on a demand-led basis. In addition,

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    the £205 million we have allocated this year for performance-related pay will be uprated at least in line with the headline pay settlement for next year. If proper arrangements for point 3 of the upper pay scale can be settled, further resources will be allocated in September 2004.

    "The schools guarantee must of course be backed by adequate resources for the local education authorities. Next year, I will therefore set the minimum increase in the schools formula spending share at 5 per cent per pupil. Again, that is a minimum—most increases will be higher. The provisional SFSS increase for each authority will be confirmed at the time of the local government finance settlement, but we expect the ceiling to be at least 6.5 per cent per pupil.

    "As I said in July, every authority will receive sufficient grant in each of the next two years to cover its formula increase in education spending. Given that commitment, my right honourable friend the Deputy Prime Minister and I will be writing to authorities to set out the Government's clear expectation that every LEA passports in full its SFSS increase into a matching increase in its schools budget, unless there are wholly exceptional circumstances. I have statutory powers to require LEAs to set a minimum schools budget, and I will be prepared to use those powers if it is necessary to do so.

    "I also expect LEA spending on their central education budgets to rise no faster than spending on schools. I am confident that most LEAs will concentrate on increasing schools' delegated budgets over the next two years, but the draft regulations that I have issued reflect my determination to achieve that. Under my proposals, LEAs will be able to seek an exemption in exceptional local circumstances. I will confirm the minimum increase in SFSS for 2005–06 next autumn but, if the minimum schools guarantee is 4 per cent, I would expect the minimum increase in SFSS again to be around 5 per cent.

    "My proposals have been drawn up to support schools. But that support will not be at the expense of other services. In line with the commitment that I made in July, the Government will be providing additional resources for other services, including children's social services, to support spending in those services. The details will be announced as part of next month's local government finance settlement.

    "My statement in July emphasised my commitment to sustaining school workforce reforms. That commitment stands. Much progress can be made from schools managing their total resources—people and money—more strategically and working in different ways. Over the next two years, the increase in resources for schools— through schools formula spending share and DfES grants, and including the additional resources that I am confirming today—provides headroom over the average cost pressures that schools face, to help schools make the most of the national agreement.

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    "The primary responsibility for maintaining sound financial management rests with schools themselves and their LEAs. I acknowledge that LEAs need more flexibility to help schools to balance budgets over the next two years, so I am amending the regulations to enable LEAs to target their resources at those schools which have particular problems, whatever their source. It is the responsibility of LEAs to use that flexibility. I expect them to do so and am confident that my expectation will be fully shared by the communities they serve.

    "However, I do recognise that there are a limited number of cases where balancing budgets is beyond the capacity of individual schools and LEAs in the short term. That is most likely in those LEAs that have received the lowest increases in education formula spending and DfES grant between 2002–03 and 2004–05. For those LEAs, I therefore propose to make a targeted transitional grant available over the next two years and I am issuing indicative figures today. Those assume that that grant will be available to take the increase in funding for all authorities over the two-year period, up to a minimum of 12 per cent. That is well ahead of our best estimate of unavoidable pressures for those years. I estimate that that will cost around £120 million and benefit around a third of LEAs. The final allocations will be confirmed at the time of the local government finance settlement.

    "However, that additional resource will be provided only where I am convinced that the LEA has made every effort to support its schools from within its own resources; that is, it should be passporting its SFSS increase in full; it should be directing its resources to delegated schools budgets as far as possible; and it should be intending to target the schools in greatest difficulty. It will be a condition of grant that each LEA prepares, with the schools concerned, a costed and credible plan to bring its schools' budgets into balance by 2006–07.

    "In 2005–06, I propose to make further grant available to the same authorities at around half the level of that provided in 2004–05. Again, I will confirm the detailed figures next autumn.

    "LEAs whose increases between 2002–03 and 2004–05 were greater than 12 per cent should be able to resolve local difficulties within their own resources. However, I do recognise that there are individual schools which have spent above their income this year and may therefore face difficulties in getting their budgets back into balance. Therefore, where an LEA can put forward a compelling argument that additional, transitional funds are needed in the short term—above and beyond those already available to it—and in order to avoid real damage to children's education, I am prepared to consider bringing forward DfES grant payments, so that the LEA will have funds available in 2004–05 for that purpose, with the expectation of a consequential reduction to what it will receive in future years. I will confirm the maximum amount that I might be prepared to make available to each LEA in that way following the local government finance settlement, but I expect the calculation to be based on a maximum grant of £300,000 per authority,

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    or 0.2 per cent of the authority's total education resources in 2004–05, if that is higher. Such grant would be subject to conditions similar to those for the targeted transitional grant.

    "I am confident that the measures I have outlined today will help to create stability for schools. We will do all we can to help LEAs work with their schools, where necessary, to get budgets back into balance over the next two years. That is because, for any school, an annual excess of spending over income is not sustainable. I acknowledge that getting back into balance may mean difficult decisions. Where school spending varies significantly from the average—where 80 per cent is spent on staff costs and 20 per cent on non-staff costs—or from its income, the school needs to act to get back into balance.

    "It is therefore vital that schools are well able to plan and manage their resources effectively. More and better support for schools is needed in that area, so I am announcing today that my department has commissioned KPMG to work with the National College for School Leadership and headteachers' associations to design and develop a varied menu of support and guidance to help schools' budget management. That support will be available from the turn of the year. It will prioritise schools in those LEAs that are in receipt of the targeted transitional grant.

    "The proposals that I have announced today are designed to help restore confidence in the school funding system and increase stability in school budgets. I am grateful for the help and advice that we have received from our education partners. I have set out the framework for the school funding system over the next two years. It is now for LEAs to address the needs of every school, and for heads and governors to ensure that the resources they receive are used effectively. We all share responsibility for school funding and we must continue to work together to get it right".

My Lords, that concludes the Statement.

3.35 p.m.

Baroness Blatch: My Lords, I am grateful to the Minister for that very long and extremely complicated Statement. If there are other Members of this House who have understood it better than I have, I will hand over my job to them.

We were promised transparency. However, the Statement reads like a Russian novel. One has to return again and again to previous references in order to track the promised money and to make a judgment whether schools will be better off as a result of the announcement. Transparent the Statement is not.

The Government told us in a convoluted way that schools, parents, children and LEAs will all be grateful for the Statement and that all will be well in the world of school-based education. At this stage, we must take the Government at their word; and at this stage, we do. However, it is important to record that much of the

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complexity of the announcement reflects the necessity for the department to address the chaos of last year, which was frankly of the Government's own making.

Last year, the Government blamed a failure of modelling and tried in vain to lay some of the blame on LEAs. The fact that a number of financial adjustments had to be made during the course of the year, and the conditions which created a legacy of uneven provision across the country, are testament to the ill thought-through and ill trumpeted settlement last year.

Children have suffered; teachers and headteachers have made huge sacrifices, many losing their jobs; and ancillary staff have also been affected. The Secretary of State in another place, when referring to the list presented to him by my honourable friend Damian Green of authorities with deficit budgets this year, accused those LEAs of scaremongering. Do the Government believe that the £14 million deficit of the Secretary of State's own county council, Norfolk, and the £22 million deficit of Kent County Council are merely figments of their imagination? If so, will the Minister provide some assessment of what he thinks those deficits are?

It is clear that more time will be needed to absorb the detail of the Statement. However, to help us understand it, will the Minister clarify the nature of the base measurement that was used for the 4 per cent-per-pupil increase? For example, those schools that were hard hit last year and those schools that benefited—some considerably—will remain in the same differential position. If there is a flat 4 per cent increase for all pupils, nothing will change. The schools that suffered most will benefit least and the schools that gained most will benefit greatly. I know that some money has been made available to address discrepancies. However, there was a threat in the Statement that that money will be clawed back over time.

What is the split between the Treasury and the LEA? More particularly, what will be the impact of the settlement on the local taxpayer? How much new money is planned to come from the Government?

What flexibility will there be for LEAs? What flexibility will they have if the only way in which they can meet all the demands and government guarantees that go with the settlement is by raising more local taxes? If the Secretary of State has threatened to use his powers to stop them raising those taxes, that money can come from only one other place and that is from other services. The Secretary of State has give a guarantee that that will not happen. Is there therefore a guarantee that the cash which will come from government will allow local taxpayers a fair deal and will allow LEAs properly to meet the obligations set out in the Statement?

Teachers are very concerned that funding will be inadequate to meet the pay awards to those who qualify under the performance-related pay scheme. Can salary increases be funded? Have the Government taken on board the fact that as pay increases, so, too, will national insurance? It will increase not only for individual employees throughout the education sector, but also for employers—the local authorities—as the pay bill increases.

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The long Statement contains only two lines about special educational needs, indicating that it is to receive the same 4 per cent increase. However, there is no mention of the additional costs incurred as a direct result of the Government's legislation. Special educational needs have had a raw deal from the Government. Earlier this year, the Secretary of State said that some LEAs were spending too much on SEN. How much is too much? What comfort is there in the Statement for children with SEN?

Will the Minister tell the House how the 3.4 per cent increase, deemed to be the cost increases faced by schools, is made up? What are the constituent elements? Will the learning and skills councils allocate a 4 per cent increase in funding to all students, including those additional students in sixth-form school-based education? Is the additional money allocated for under-achieving ethnic minority children announced in the Statement to be new money met by the Government, or will it come from the overall education budget?

Meanwhile, we have to take the Government at their word. Like the local education authorities, the parents, the teachers and other staff, but most especially the children, we will be vigilant in examining how the proposal works in practice. Once again, the Government have raised the stakes. Throughout education, expectations are high. Last year, those expectations were cruelly dashed and government Ministers passed the buck to others.

Only when the detail of the settlement is completed by the Deputy Prime Minister will we be able to make a judgment as to the merits of the Statement and the degree to which children in the classroom will benefit—and, of course, the degree to which local taxpayers, who are suffering sorely from past settlements, are treated more reasonably.

The Secretary of State claims that this settlement will restore confidence, deliver stability and give certainty. Following the debacle of last year, there is a mountain to climb. Much is now in the hands of the Secretary of State and the Deputy Prime Minister.

3.43 p.m.

Baroness Sharp of Guildford: My Lords, I, too, am grateful to the Minister for repeating the Statement. I echo the comments of the noble Baroness, Lady Blatch, on the complexity of the Statement.

The Statement was necessary because government announcements made in April about the funding of schools came unstitched during the summer. As the noble Baroness, Lady Blatch, mentioned, it was initially blamed on local authorities. However, it became clear that ultimately the fault lay with the department for failing to do its sums. That became clear once the Select Committee for Education and Skills in another place looked at the matter in detail.

In July, the Minister made a second Statement in order to explain what had gone wrong and he then promised this follow-up Statement. He then said that he would wait until the teachers' pay review commission had reported but it has not yet done so. He now says that the Government anticipate the pay

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settlement taking place, but I am surprised that the Statement has been made before the review has been announced. I hope that the figures incorporated in the Statement mirror those which will come forward in the pay review. Presumably, the Secretary of State has prior knowledge of that.

We on these Benches welcome two other aspects of the Statement. First, it gives schools longer to plan next year's budgets. Last year, everything came unstitched at the last moment but this year they will have more time. However, they must still wait on the local government settlements, which will take time to put together. In the next month, most LEAs will be rushing around trying to sort out precisely what the Statement and its implications mean.

We also welcome the additional money which appears to be forthcoming. I say "appears to be" because it is by no means clear that there will be any new money. Will the Minister say whether there is any new money in the coffers? The only additional money I can identify as forthcoming is the £100 million to £120 million which will go into the transitional budgets. Equally, the Statement implies that the Government are withholding the increases for teachers moving up to the third level of the upper pay spine and perhaps that £100 million will be clawed back from the pay increase. Will the Minister clarify that issue and let us know whether the Government are expecting to save approximately £100 million in not paying the increases on that upper part of the pay spine?

Last year, the NUT survey estimated that 20,000 teachers and support staff had lost their jobs as a result of the mess in funding. Will the Minister clarify the situation in regard to primary schools, where rolls are falling? It has been mentioned that 50,000 pupils will be affected in each of the next two years because of that fall. My impression is that the guarantee does not fully apply to primary schools.

Some problems arise here. First, 1,000 extra teachers are being trained for the postgraduate certificate in education. Is the department confident that there will be jobs for them in primary schools next year? Is it confident that it will be able to meet the obligations to which it has committed itself? Secondly, will the Minister clarify the issue surrounding the pay spine? The Statement indicates that if proper arrangements for point three of the upper pay scale can be settled, further resources will be allocated in September 2004. What are those further resources? Where are they coming from? Is that new money or not?

In relation to the Standards Fund, the Statement makes clear—and it was clear in July—that the Government intend to reverse their previous decision and that the money will go directly to the schools instead of being merged into the general LEA budget. However, I would like the Minister to clarify one issue. There appears to be a reshuffling of the DfES budget in order to find some of the money which is to be forthcoming for the transitional arrangements, for example. As a result, those authorities worst hit last time will be somewhat better off this time. We mentioned, for example, Kent,

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Sussex, Surrey, Hertfordshire and Essex. Is the correct inference that the LEAs which did better under last year's settlement will be doing worse under this one?

Furthermore, although we were assured that the workload agreement is going forward, is there really enough money in the package for that? At present, the amounts available seem to vary enormously from school to school and, indeed, from LEA to LEA.

I have two further short questions. First, it is not clear to me how schools which were running deficits this year will cope. Transitional arrangements are in place but, so far as I can see, they are loan rather than grant arrangements. I wonder how far the Minister is confident that those schools will be able to recoup the necessary money and pay it back. I am also particularly concerned about schools which borrowed against capital this year in order to meet their expenses and whether that means that they will have to forgo capital improvements that they had hoped for.

Finally, I have a question concerning the money for sixth forms and sixth-form colleges which comes from the LSC budget. Again, will the Government put new money into the LSC budget for that or will other parts of the budget have to be cut back in order to meet those commitments?

3.51 p.m.

Lord Davies of Oldham: My Lords, I am grateful for the responses to the Statement from the two noble Baronesses. I agree that the Statement is complex but that does not mean that it is not transparent. It merely means that we have to work very hard to analyse carefully the exact implications. But it was ever thus with school funding and local authority funding. I shall certainly attempt to clarify the matters which have been the subject of questioning from the Opposition.

First, I believe that the welcome for the Statement has been a little more grudging than is justified. Let us take the question of new money. Effectively, as set out in the Statement, the Government are providing £435 million in 2004–05 and £520 million in 2005–06 for schools over and above the amounts previously announced. That meets some of the detailed points raised by the noble Baroness, Lady Sharp. She asked whether there was new money and the answer is "yes".

Secondly, in being critical of the Government, the noble Baroness, Lady Blatch, should recognise that we are putting additional resources into schools. We all recognise the problems that were created last year when certain aspects of the model by which schools would receive the money did not prove to be as valid as we had hoped. But that problem was created by an extremely generous government allocation to schools. The Government fulfilled their commitment to spend more on education to an extent that, in my view, neither of the other two parties can remotely match. That is certainly the case with regard to the party of the noble Baroness, Lady Blatch. As a tax-cutting party, it is looking for substantial cuts in public expenditure

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and should therefore be rather more cautious about challenging a government who are having some difficulties with their expenditure.

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