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Baroness Sharp of Guildford: My Lords, can the Minister clarify whether the amounts of £435 million and £520 million respectively are to be provided on top of that announced following the Comprehensive Spending Review?

Lord Davies of Oldham: My Lords, that is exactly right. They are increased sums of money. The precise point raised by the noble Baroness was whether some of the figures, which clearly require additional sums to be allocated, represent new money. The figures that I have just quoted are the global sums of new money available.

I recognise the validity of some of the points addressed to me by the noble Baroness, Lady Blatch, concerning the problems experienced last year by, for example, Norfolk and Kent. We have listened carefully to their representations. They are among a group of counties for which we are making specific proposals to increase resources in recognition of the fact that the deficits which they identified had some validity. It is not that we accept the total position which they present in any way, shape or form. We recognise that a quarter of the counties have experienced difficulties, and that is what we are seeking to address.

Baroness Blatch: My Lords, the Minister has missed my point. His colleague in another place, the Secretary of State, called those counties "scaremongering". Does the noble Lord agree with that? If they are not scaremongering, what is the assessment of the deficit?

Lord Davies of Oldham: My Lords, my right honourable friend indicated that the figures were subject to challenge in the department against a background of a number of authorities clearly needing extra resources this year. When I repeated the Statement, noble Lords heard clearly and explicitly that we are meeting some of those increases. However, we do not accept some of the more extensive figures quoted by local authorities. We have held discussions with them and my right honourable friend made it absolutely clear that, following this Statement, he would continue to hold discussions with local authorities in that category. The local authorities participating in those discussions have done so very effectively. They recognise that there is a conscious intention on the part of the Government to address the difficulties experienced last year by some 30 counties.

I turn to the question raised by the noble Baroness concerning students with special educational needs. I recognise her long-standing commitment to, and interest in, that area. We are proposing that the same 4 per cent should be allocated for improving the opportunities and support for students with special educational needs. We are merely indicating that expenditure by some authorities last year represented such a large percentage increase that it could not be

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sustained continually. There had to be recognition of the fact that improvements must be made. The 4 per cent will certainly be in addition to the base line created by those authorities when they were generous last year.

However—the noble Baroness herself has made this point from time to time—we also emphasise that part of the problem which arose last year was that money that we had expected to go into the general schools budget was directed by local education authorities to other priorities. We are insistent that the priorities of schools are properly identified. That is why, when local authorities apply for additional transitional support, we expect them to set out with great accuracy the particular needs of the schools and how they intend to spend that additional resource.

Therefore, in response to the general question of whether we have taken account of issues such as the pay review for teachers, the answer is "yes". However, we do not know the precise figure. We are genuinely in a chicken-and-egg situation. If we wait for teachers' settlements to come through, the announcement that we make about the overall position will delay schools' capacity to plan and budget. If we do what we are doing here and make an intelligent and, we hope, reasonably precise estimate of the additional costs, we can then make a Statement and provide schools and local authorities with such information that will be to their advantage as regards budgeting. I believe that that point has been recognised on both sides of the House.

The same issue relates to the question of the workload agreement. That has been taken into account in the figures which have been prepared, and I believe it will be seen that the Government have been able to make reasonable estimates of the impact upon schools. We all recognise that schools vary enormously, but we clearly have in place a model of the costs which schools should incur. As a general model, we believe that about 80 per cent of schools' expenditure should go on salaries for teachers and 20 per cent on other costs. Where schools depart massively from that position, that causes difficulties. Indeed, some schools have departed from it. We shall ask that they return more closely to that model with the advice that we hope to provide through the assistance we are giving to schools on budgeting.

4 p.m.

Baroness O'Cathain: My Lords, the Minister was rather sad about the fact that my noble friend Lady Blatch and the noble Baroness, Lady Sharp, gave a grudging—I think that was his word—welcome to the Statement. However, I have to say that it was the most convoluted 20-minute Statement in financial terms that I have ever heard. I pay a compliment to the Minister. After he finished repeating the Statement I received a copy and quickly read it. He made it sound less convoluted than it reads. It is an appalling Statement. I suggest that perhaps the department should ask the Plain English Campaign to cast its eye over Statements such as this before they are delivered.

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All the percentage figures are completely in the ether. I have three questions. First, does the Statement result in an increase in percentage of GDP spent on education in this country? I am bowling this at the Minister, but perhaps he could write to me stating how much other European Union countries spend on education as a percentage of GDP. Secondly, how much money will go on bureaucracy in attempting to get teachers and everyone else involved in the education system to understand the figures and to come up with managing them? Thirdly, how much will KPMG be paid for this consultancy? Will it be running around LEAs and training them in how to deal with financially convoluted processes? As a supplementary question, was the appointment of KPMG open to competition? Was this consultancy advertised or was it just plucked out of the air and given to KPMG as a nice juicy job?

Lord Davies of Oldham: My Lords, the noble Baroness is well versed in the nature of the British economy. She will recognise that against the background of growth which our flourishing economy provides, if the Government increase expenditure on schools by 4 per cent and have a target of 5 per cent for local authorities, generally the percentage expended on education in this country will rise over the lifetime of this period of our administration, as it did in the latter years before the last general election. So we are fulfilling our promise. That is why I chide noble Baronesses opposite who support positions which advocate tax cutting. They will recognise that there is a price to be paid in terms of the limits we can offer elsewhere. That is why we are determined to fulfil our priorities on education and health.

As to the extent to which by the end of this administration, after eight years of a Labour Government, we shall have moved up the league table as regards percentage of GDP spent on education, I merely indicate that I cannot give that precise figure. I do not know the performance elsewhere with great accuracy. However, we are moving up that league table. This is a commitment by the Government which is being fulfilled in this Statement. It is being fulfilled also in relation to the second question.

I apologise if, in the words of the noble Baroness, the Statement is convoluted. However, part of the difficulty is that we are seeking to guarantee that the money arrives in schools rather than, as she says, being wrapped up in bureaucracy. That involves very careful and selective targeting. Hence the difficulty.

As regards the noble Baroness's final point, I do not know how much KPMG was paid. I do know that this was put out to tender. It is helpful for schools to have assistance on effective budgeting.

Lord Sutherland of Houndwood: My Lords, I welcome the Statement and welcome unambiguously the prospect of additional cash for schools. Could any headteacher who is intelligent, who has read the

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Statement and who has passed the examination in it draw any deductions now about the state of his budget next year in specific percentage terms?

Lord Davies of Oldham: My Lords, no doubt some headteachers will find that more difficult than others. Some run much more complex schools than others. However, the position is clear. We intend to increase the resources available to schools. We were hopeful that last year's position would be one in which all schools would receive benefit from the allocations made. Because of difficulties over certain aspects of finances and relationships with local authorities, it was not always the case that every school benefited in the way in which we would have liked. Now we are guaranteeing a basic 4 per cent floor for all schools. We are ensuring that schools which are in particular difficulty, are disadvantaged and running deficits receive additional help. Headteachers will certainly recognise that.

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