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The Lord Bishop of Manchester: I regret that my friend the right reverend Prelate the Bishop of Portsmouth cannot be in his place today. In his absence I would like to add a Church of England perspective to the matter before us in relation to Clause 98. As the noble Lord, Lord Hanningfield, has noted, it is complex, but nevertheless, it goes a long way towards addressing a major problem that we in the Church of England know schools face on budgeting.

The Church of England manages over 4,600 maintained schools in England. Its national and diocesan officers are constantly aware of the difficulties presented to schools by the year-on-year unpredictability of both capital and revenue budget allocations. Much positive work is currently being undertaken between the Church of England Board of Education staff, other voluntary-aided school
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providers and the department's officials on revised and simplified capital procedures. We are grateful for those conversations.

However, they need to be matched by the provision for three-year indicative revenue budgets which this Bill seeks to put in place. Such a provision is very important to all our schools. It will provide a financial framework within which strategic planning may take place, leading to improvements in both behaviour and achievement for pupils, and creating a more stable environment for school staff.

As has already been indicated in the debate, some schools are facing falling rolls because of a declining local child population. Where housing increases are planned, the number of children of school age thereby generated is much less predictable than was the case only a few years ago. Furthermore, many new behavioural and educational strategies are being promoted in schools as they continue to improve. In all these cases, the consequent planning at the individual school level will be materially enhanced by the provision of sensible budget predictions. Individual schools need the maximum knowledge about and control of their budgets to provide cost-effective, efficient and effective learning.

Baroness Walmsley: We on these Benches, too, have major concerns about Clause 98 and Schedule 16 in so far as they take away the power of the local authority to do its best for its local schools. We see it as part of the incremental removal of power from local authorities and the further centralisation of power over education in the guise of giving schools more power to spend their own money.

However, there are things in these arrangements of which we approve—the school-year budgeting, the three-year budget and the year-on-year guaranteed increment for pupils. So I do not propose to oppose Clause 99 I just want to record our major concerns about the gradual withdrawal of power from local authorities.

Lord Dearing: In my local church on Sunday the first reading was from Proverbs, which extolled the virtue of wisdom. One of the wisdoms in this House is not to speak on a subject you know little about in the presence of those who are highly expert. I have listened with great respect and some awe to the speeches that have been made.

Reference has been made to the concerns of local authorities. I, too, have seen and thought about the representations by the LGA. Reference has not been made to the representations that I, at least, have received, from the Secondary Heads Association and the NAHT in support of this clause. Its deep concern has been about instability, uncertainty and confusion. It refers to it—I do not know whether it is true—as the annual dispute on who is to blame for the budget situation. Its representatives have written and spoken to me about its support for this greater certainty.
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As a former school governor, I like the idea of relating the provision to the school year, and—if it can work—a three-year indicative budget, as the right reverend Prelate said, with arrangements for flexing it in changing circumstances. That is difficult, but the principle is very good.

The ring-fencing is difficult. I very much understand the position of the primary and secondary heads. They want to know where they stand. But I should be concerned if there were not some room for manoeuvre. I can see the nexus between—indeed, in this Bill—the welfare side and the educational side coming together. If this clause stands part, could there be some provision for the Secretary of State to consider an appeal from the LEA that in its particular circumstances there were grounds for shifting some money, in the interests of the pupils in its schools, from such a movement? This is all very complex and needs time for thought. I hope that we shall not be driven to a vote this afternoon.

Lord Hunt of Kings Heath: Like my noble friend Lord Smith, I am interested in the impact that the changes in this Bill will have on the role of local education authorities, although I do not think that I have reached such a pessimistic conclusion as he has. It must be right in the current context of public services to want to give individual schools as much authority as possible. A three-year funding mechanism surely goes hand in hand with giving them more executive responsibility. So I very much support the thrust of this clause and hope that the Committee will also.

My own background, as noble Lords will know, is in the health service. We have seen a similar move in the past few years to try to give people running frontline services as much responsibility and control over their own destiny as possible. That must make sense. It is very important for parents, when they are concerned about a particular school, to be able to meet the people who are responsible for that performance and look them in the face. All too often in the past it has been easy for governors to put the blame on to someone else—either the Government or the LEA—and of course the resources made available by the Government are a very important component.

However, when one wants to point the finger of responsibility at people for the performance of a particular school, it is much better and more straightforward if one can point to the governing body and hold it responsible because it has now been given the tools, the ammunition and the resources responsibly to discharge its job. So I very much welcome the introduction of three-year budgets. It will give much greater flexibility to governing bodies and enable them to plan for the future. I accept that the noble Lord, Lord Dearing, is right in terms of in-year flexibility because of changes in school circumstance. I am sure that my noble friend will be able to respond on that point. In giving people the opportunity to make changes and develop policies, this must be the right direction in which to go.
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Like my noble friend Lord Smith I come from local government and saw the LEA in Birmingham, under the inspired leadership of Tim Brighouse, a few years ago totally turn around the ethos, quality and product of the schools. I do not think that it had much to do with money. There is no doubt that in the past few years we have seen a generous injection of funds into Birmingham's school systems, for which I am very grateful. But essentially the reason we have seen such an improvement in the quality and morale of people in our education system in Birmingham is because of leadership. We had a chief education officer who was an inspired leader. It did not depend on the LEA having micro-management control over the budgets of individual schools, it depended on leadership.

I do not think that moving to a three-year funding mechanism for schools, or the ring-fenced approach that is being taken, should necessarily impact on the leadership that the local education authority will still be able to give. Of course it will depend on whether the LEA is up to the task. I see no objection in moving to a situation where the LEA has to earn leadership and influence rather than simply accepting that it has that job, whether or not it does a good job.

I listened with great interest to the reference of my noble friend Lord Smith to outdoor pursuit centres. I certainly understand the point he makes. Outdoor pursuit centres are very valuable. In my own city of Birmingham we have something called the Young People's Parliament, which is funded by the LEA and encourages young people to become interested in politics and to have a say in the affairs of their city. I cannot guarantee it, but I imagine that it is centrally funded from the education budget. Like my noble friend, I would not want to see such initiatives being undone because money was being allocated straight to individual schools.

However, I should have thought it very likely that our schools, in wishing to contribute to outdoor pursuit centres, would wish also to contribute to the Young People's Parliament. It is not as though they are going to take leave of their common sense and suddenly decide to close the door and take no part in some of the inter-school activity which is so valuable. In any case, surely if schools took such a blinkered approach, that would be just the kind of issue that Ofsted would pick up in its inspection process.

My noble friend talked about health. I am well aware of the close working relationship between his local authority and the health service in his patch. In the health service we have the example of strategic health authorities which have a very strong leadership role, but no money because almost all the money is allocated to primary care trusts which do the bulk of the commissioning. That is another example of how you can have strong leadership of a public service but do not need to control a huge budget to discharge that leadership.

Overall, if the answer is yes to the question of whether it is right that we give more authority to individual schools—that, by giving them three-year budgets, we assist them in taking much greater
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ownership of what they do—we ought to support these measures. I hope that the noble Lord, Lord Hanningfield, will withdraw his opposition to Clause 98 standing part of the Bill.

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