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Baroness Walmsley: I thank the Minister for his reassurances in this respect. However, it strikes me that the control over the admissions policy relies to a very great extent on the funding agreement and the funding contract with the academy. What sanctions are there if the academy should move away from that in a few years' time? For example, what sanctions does the department intend should be placed on the schools in Bristol and Haringey that I gave as examples? It is quite clear that they have targeted students from particular areas where academic attainment is likely to be higher than in the poorer parts of the catchment area.

Lord Filkin: I will chance my arm and no doubt correct what I say in a letter. Essentially, I would not have expected that the literalism of a sanction was enormously necessary. To put it another way, we have a body set up under statute as a charitable body, which is utterly reliant on central government for its funding. It cannot survive without that. If, as part of its foundation agreement with that totally dominant funding body—the central state—it has a set of clear agreements that it has to behave in a certain way, it is my experience of public or charitable bodies that it will not lightly ignore those issues.

I suspect that there is a more specific answer which, I guess, is that withdrawal of funding is one possible sanction. No doubt there are others, and I shall give the noble Baroness chapter and verse on that.

Baroness Walmsley: I thank the Minister for that. I am interested to know whether the department will be asking any questions of the schools in Bristol and Haringey—the examples that I have given. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 141B not moved.]

Schedule 16 [Funding of maintained schools]:

[Amendment No. 141C not moved.]
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Lord Livsey of Talgarth moved Amendment No. 142:

The noble Lord said: Amendments Nos. 142, 143 and 144 address the whole question of the Secretary of State in relation to local authorities and in particular to schools forums. In moving this amendment, I am asking a simple question. Does a local authority which has failed to obtain authority from its schools forum then have a second bite at the cherry by seeking authorisation from the Secretary of State? We see no justification at all for that. This is a simple set of amendments that deal with that problem, which we feel is inappropriate.

The intention of Amendment No. 144A, which is in the same group, is to probe the extended powers of schools forums. The Bill allows for an increased role for schools forums which will be given decision-making powers in addition to their current advisory role. We want to focus on this and see the extent of it. During the passage of the Education Bill 2002, there was much debate about the role of schools forums. The main concern was that the Bill would allow schools forums to determine whether some school support service budgets should be delegated to schools. In effect, that would give the forums de facto employer capacity over employees in those services without any of the accountabilities to which LEAs are subject.

At the time, Opposition Peers won a vote by 161 to 130 in favour of removing the provision for the establishment of schools forums. The then Minister, the noble Baroness, Lady Ashton, came back with a helpful amendment which led to the current position whereby schools forums can now perform only an advisory role and cannot take any binding decisions on LEA's central retention of funds. This Education Bill, under Schedule 16, will give limited decision-making powers to schools forums. The purpose of this amendment is simply to probe exactly what those powers are.

The DfES memorandum to the Delegated Powers and Regulatory Reform Committee refers to regulations under Paragraph 3(7) and Paragraph 6(3)(d). Paragraph 6(3)(d) provides that regulations may set out the circumstances in which a schools forum or the Secretary of State may authorise changes to the operation of an LEA's school funding formula to take account of local circumstances. Paragraph 109 of the memorandum states:

the circumstances in which this should occur,

By tabling this amendment, we are seeking some of that detail. Will the Minister oblige us by giving us some of that detail?

The other issue of concern in 2002 was whether schools forums were suitably representative. Many governors remained concerned about the low level of governor representation on some LEA schools forums falling well short of the proportionality originally envisaged as well as the need for training and good
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practice guidance. I understand that similar concerns are shared by the Audit Commission. Indeed, similar concerns were raised at a schools forums conference organised in conjunction with ConfED, NASG, NGC, NAHT, SHA and the LGA on 22 October in London. One delegate from Buckinghamshire reported:

He continued:

There is little to require schools forums to consult and obtain views from those that they purport to represent. The next sentence is important. School governors, who are volunteers and already give heavily of their spare time to their schools, are unlikely in many cases to seek or play an additional role in schools forums. Head teachers in one particular sector, whether primary or secondary, may come to dominate their proceedings by virtue of the demographics or inequity of representation. What impact are such situations likely to have on the operation of the extended powers of schools forums? I beg to move.

Baroness Andrews: I am grateful to the noble Lord for giving me the opportunity to explain, as he has invited me to do, some of the implications of the powers that we seek and the impact that his own amendments will have on the proposals. I will start by saying, because this is the way that he started, that this is in no way a second bite of the cherry that was snatched away from us in the 2002 Bill. The decision-making powers that we are proposing to give the schools forums are very different from the powers that were proposed in that Bill. This is important to the noble Lords on the Liberal Benches—in this Bill we are proposing to take away powers that are currently held by the Secretary of State and not elected members. There is no intention to transfer powers from elected members. I will explain that in some detail.

However, I will first turn to Amendment 144A, which would remove the ability of the schools forums to acquire powers which we want to provide them with in order to replace central and local control. As I said, we have no intention of taking powers away from the LEAs. The powers would allow the schools forum to agree to certain types of proposals which themselves come directly from LEAs. These are proposals that would hitherto have had to come from the Secretary of State for approval. We aim to make what is a cumbersome process easier to operate but also allow local decisions to be taken locally.

Amendments 142, 143 and 144 would remove the powers of the Secretary of State to agree to variations in the budget and school funding regulations. I stress that these are existing and important powers. If they were removed, we would either have to devolve
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existing powers to schools forums or reduce the flexibility of LEAs to adapt regulations to reflect local circumstances. I am sure that neither of those things would meet the approval of the noble Lord.

To backtrack a little, I know that noble Lords on the Liberal Benches were sceptical about the schools forums and I trust that they are open minded enough to recognise that they are growing in capacity and confidence. I will return to the issue of representation later. Certainly, the conferences to which the noble Lord referred have shown that there is a great deal of exchange of best practice and information and there is a general sense that they are coming to terms with and doing the job that they were intended to do.

We propose to extend the powers of the schools forums in only two limited areas and to strengthen local accountability in so doing. The powers will apply to two sets of regulations, the first of which govern the composition of the LEA, schools and individual budgets and the second of which governs the determination of the individual schools' budget shares.

Under existing legislation, the Secretary of State and the National Assembly in Wales must make amending regulations to vary the operation of the budget regulations for an individual LEA. However, Section 47(2)(g) of the School Standards and Framework Act 1998 already allows the Secretary of State and the Assembly to vary the operation of the school funding regulations without the need to lay amending regulations. It is true that those powers have been used sparingly in recent years; however, in the current financial year they have been used to a greater extent and in two key situations, which I shall outline.

Our intention is to streamline the process further so that schools forums can agree to these types of proposals from LEAs, without the need to trek over to the Secretary of State for approval. There are only two types of proposal to which we intend that forums will be able to agree. The first is applications for an extension to the limits placed in regulations on central spending by LEAs—that is, for example, funds spent directly on provisions for SEN or PRUs, rather than delegated to schools. We know that the limit on central items of expenditure in an LEA is necessary to ensure that expenditure does not rise from year to year at a faster rate than do individual school delegated budgets.

That limit was introduced in England in response to the fact that in 2003-04 there were significant increases in LEA central spending at the expense of individual school budgets. We propose to continue to have such limits under the new funding arrangements, as we feel that it is right that schools themselves should receive their fair share of increases in the schools budget. We have debated that, too, at some length this afternoon. But there will sometimes be exceptional circumstances which mean that the limit set for an individual LEA should be higher than the one prescribed in regulations—for example, as a result of the reorganisation of LEA-funded SEN provision.
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Currently, applications for a higher limit have to come to the Secretary of State, who, if she agrees, then has to make amending regulations. To date, the great majority of cash applications from LEAs have been supported by the schools forums. We have no evidence that these are areas in which the schools forums and LEAs disagree and fall out. We think that in future—reflecting that fact not least—those should be matters for LEAs and their schools forums to resolve on their own.

The second instance involves variations in the detailed application of the minimum funding guarantee for individual schools, to avoid anomalous budget outcomes. For example, that would apply when, because of the change in circumstances of a school, such as the addition of a special needs facility, which would obviously have a major impact on the budget, making a like-for-like comparison of the school's budget share to calculate its guarantee is not possible. In that case, the new funding for the facility is excluded from the guarantee calculation and then added back to the school's budget share. This ensures that the school gets the full benefit of the guaranteed per pupil increase and the new funding for the facility. Again, we believe that LEAs should be free to make such decisions in future without reference to the Secretary of State, so long as the schools forum agrees. Again, those are areas in which one would expect full resolution between the schools forums and the LEA.

Two benefits come from pursuing this approach. First, it is right for decisions to be made at local level—we all agree about that—by the people who are best placed to judge the impact, and schools forums are well placed. Secondly, by allowing schools forums to agree to these kinds of local variations in national arrangements, we are reducing burdens on LEAs, reducing bureaucracy and reducing time.

To reiterate, it is not the case that we are seeking to introduce powers that we did not succeed in introducing in 2002. There is no power in the Bill to transfer powers which currently sit with elected members in local authorities to schools forums. These are very limited powers, and can be exercised only when an LEA itself puts a proposal to the forum. Schools forums will not be able to initiate the exercise of this power on behalf of the schools forum, and limitations will be placed on what they can agree to, which will mean that we have consistency across all LEAs. We believe, quite sincerely, that that enhances the democratic process.

I turn, very briefly, to Amendments Nos. 142, 143 and 144, which would remove the powers of the Secretary of State to agree to variations. Again, all our evidence is that in the vast majority of cases, a consensus is reached by the LEAs and schools forums about these issues, and there has been and will be no need to intervene. There may be occasional cases in which agreement cannot be reached, but in those cases we do not believe it would be right to give the schools forums a veto over the local authorities' proposals, which would be the effect of the amendment.
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There is another knock-on effect: as well as retaining the powers of the Secretary of State to make a decision in the event that agreement cannot be reached between an LEA and a schools forum, we also need to retain those powers to consider requests for a variation to the regulations which fall outside the scope of a schools forum's decision-making powers. In England, for example, that might be agreeing to an LEA delegating funding to schools through a method that is not currently approved in the regulations; or altering, in a more fundamental way than the forum can agree to, the workings of the guarantee to ensure that it reflects local circumstances. So there are difficulties with the amendments, both from the point of view that noble Lords are expressing and in principle.

I turn, finally, to what the noble Lord said about representation and the way in which the schools forums are working. We should congratulate schools forums on undertaking a new role during their operation, and on doing so successfully. Our evidence is that they are working well. The department is doing all that it can to enable sharing of good practice, to enable training and support and to be alert to the need to continue to do so. The membership is not only drawn from head teachers and governors but can include representatives of childcare partnerships, special needs organisations, dioceses and staff associations. Those people bring knowledge and expertise from different aspects, which is all extremely important when considering the issues that schools forums are there to address. They are evolutionary and we hope very much that people will continue to commit their time and energy to them to make them even more successful.

I hope that I have succeeded in giving the sort of detail that the noble Lord was seeking and that on that basis he feels able to withdraw his amendment.

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