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Lord Livsey of Talgarth: I thank the Minister for that reply. A lot of ground has been covered, and there has been a very detailed response. I shall certainly wish to read Hansard and the detail that she has given us this afternoon to evaluate what she has said.
There is an issue about the second bite of the cherry, which we feel should not be given an opportunity. That relates to Amendment No. 144A, concerning the schools forums. We feel, particularly with regard to the Minister's later comments, that there seems to be no enormous confidence in the operation of the schools forums at present; they are finding their way. The Minister was, rightly, happy to relate details of good circumstances on schools forums, when there was a range of representation. However, the uncertainty with which the role of the forums is being addressed at the moment means that it needs to be defined rather more clearly.
With regard to best practice and representation, given the range that is desirable, which the Minister mentionedindeed, she gave a very good example of the range of people that might be found on a schools forumI do not quite see why it cannot be laid out in best practice, so that we know the type of people who ought to be on the forum. That would be desirable with
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regard to the whole issue of special needs. Obviously, we welcome what the Minister has said in that regard, and the provisions that are being made. That is a good example; but the voices of those concerned with special needs need to be found on the forum as well. I am sure that some authorities would need a little push in terms of guidance to ensure that we have a fair balance on the forum.
"( ) in sub-paragraph (b)(i) after "factors or criteria" insert ", including in particular factors and criteria relating to the ages, abilities, aptitudes and needs of pupils at each such school and the provision which may be made to meet such needs,"
The noble Baroness said: This amendment was devised to probe the issues concerning schools funding and in particular to propose a model of activity-led funding for both England and Wales. As we know, and as we heard at great length earlier today, the Bill allows for the Government's proposed changes to the way in which schools are funded to take place. Those include all the issues that we debated at great length earlier.
In its report on public expenditure published on 7 January 2005, the Education and Skills Committee said that the changes made by the DfES to the funding system had resulted in the loss of LEAs' ability to make any executive decisions about school funding and would inevitably lead to far greater involvement of the DfES in day-to-day management of the school funding system. The committee argued that the DfES did not understand the problem on which it based its decision to centralise funding. There was no proper evidential base for the view that change was needed and no confidence that the changed system would address any problems. You do not have to agree with every word of the Select Committee's report, but you do have to take note of that level of concern and the level of concern that has been expressed in Committee today.
I think that there is far too much of that. There has so far been no consultation with local authorities, as mentioned earlier, on the way in which their role is to be changed. A consultation paper is promised very soon, but it will be some time after the Government are committed to this legislation. I think that that is putting the cart before the horse. We have far too much of that with this Government.
According to the LGA, most local authorities continue to pay more into funding their local schools than the amount given them by the Government. The most reassuring thing that I heard earlier from the
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noble Lord, Lord Filkin, is that the basis of the new direct schools grant will be the amount currently being spent, at least initially, including the extra money that is coming from the LEAs. I am a little concerned that that will gradually disappear over the years. At least initially, however, I was most reassured that that money will be there.
The NUT and the LGA have briefed us about their concerns that these proposals will significantly reduce local democratic control over school funding, and that has been reflected today by leaders of local authorities in the Committee. Under the proposals, funding will be determined not on an objective basis but on the basis of historic spending patterns, including the extra money that local authorities have until now been putting in. LEAs that have historically spent less than others would be under no pressure to increase spending.
It would be fairer for all schools and children to have an activity-led model of funding. That is the intention behind this amendment. This model determines the basic entitlement of schools to funding by identifying the cost factors involved in the delivery of the national curriculum. An activity-led approach seeks to identify the real costs faced by schools and represents a bottom-up approach to quantifying school funding. The current system, by contrast, is a top-down approach.
The use of pupil numbers as the central determinant for funding can cause problems for schools. Apart from problems related to cost pressures which may not be related to pupil numbers, there is the problem of falling rolls which has also been mentioned today. Between 2004 and 2012, full-time equivalent pupil numbers in England and Wales are expected to fall by half a million. This is a rare opportunity to keep the funding stable and to improve teachers' working conditions and the quality of educationbut one which I am afraid is likely to be missed under a system where funding is based on pupil numbers alone. That is why my amendment proposes an activity-led model. I beg to move.
Lord Filkin: I agree with one of the objectives outlined by the noble Baroness, Lady Walmsley: the concern to ensure that the funding which a school receives should reflect the different cost basis that the school experiences, often driven by differences in the age, abilities, aptitude and needs of its pupils. However, we do not believe that this amendment is necessary. Let me try to explain why.
Section 47 of the School Standards and Framework Act makes provision for regulations that specify the factors or criteria to be used by an LEA in calculating the school's budget share. As we know from our previous discussion, the role of the LEA as the distribution decision-maker for the school grant continues. At present, Section 47 enables the Secretary of State or the National Assembly to put into those regulations permission, or a requirement, to use any reasonable factor or criteria. The regulation-making
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power is drawn widely. In our view, it is therefore not necessary to insert specific factors on to the face of the Act. The regulations are reviewed regularly after consultation with our school and local government partners to reflect current policy and the needs of the school. They already deal with most of the factors listed in the amendment.
In one technical respect the amendment is flawed. It seeks to widen the scope of the regulations to include the provision to be made to meet the needs of pupils, but these regulations are specifically about the calculation of schools' budget shares, as Section 47(1) makes clear. It would be contrary to that for the regulations to say anything about provision, for example, by specifying staff levels or class sizes. Decisions on the use of a school's budget share are a matter for the governing body, subject to the restriction that they must be used for the purposes of the school. We think that it is fundamental that the governing body and the head, working with it, should retain that discretion.
As the noble Baroness signalled, activity-led funding is what the NUT was after on this. I think that it has been after that for a number of years. The regulations do not refer specifically to activity-led funding. If they had, I am sure that the amendment would not have been moved. Activity-led funding is a model that uses an attempt at a detailed assessment of the cost of delivering education to pupils at particular key stages by reference to teacher time and other measurable input costs.
In fact, some authorities have used activity-led funding assessment to revise their funding formulafor example, to check whether their balance of funding between primary and secondary is correct. The age-weighted funding per pupil contained in most authorities' funding formulae is based on assumptions about the relative staffing costs. But as the noble Baroness indicated, those may have a historical basis that may have become distorted over time or not fully reflect the changes in schools.
So, activity-led models can be one of a number of useful tools to assess and challenge the validity of the formulae to allocate resources between schools. There is nothing in the Section 47 regulations to prevent an LEA going down this road, although in doing so it will have to have regard to overall affordability. On the other hand, we see no justification for seeking to impose this method of funding on schools. As I am sure the noble Lord, Lord Hanningfield, and others will agree, the attempt to find universal agreement on the distribution formula between local government or between schools is a bit of a will-o'-the-wisp. We have been debating SSA for many happy decades, but there is never a single right answer. So we think that, consistent with the framework of national guidance, local authorities should have the freedom to make their decision on these issues.
Local authorities should by all means use activity-led models as a mechanism if they think that it is useful as a way of checking the validity of some of the inbuilt assumptions in those distribution practices. However,
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I do not think that it is helpful for us as the centre or state, or for Parliament, to tell them that they have to use such a method. They should use the method that they think is most sensible, consistent with their statutory obligations. That is why we think that it is not necessary to go this far in this respect.
The noble Baroness made one or two comments about consultation and what the Government are seeking to do. As I think I said, we are not seeking to remove LEA influence over decision-making on school funding. In fact, the local authority is absolutely central. The new dedicated school grant will simply ensure that the increases in central government funding intended for the schools actually reaches them.
As has been signalledI think the Prime Minister gave an indication in May 2004, and as I indicated earlierthis move is a clear and logical extension of the movement of government policy over time. As regards consultation on the detail, while we have not yet formally published a public consultation paper, but hope to do so shortly, there has been very detailed engagement with local government finance specialists and others in schools about these issues. They are very much involved with them.
There has also been considerable discussion with local government about the changes in roleI have been part of those discussionsthat the Bill is making; in other words, affirming the enormous leadership role of local authorities over the totality of the children's agenda of which education is part. I believe that the noble Baroness was a little harsh on us in that respect, but be that as it may. Essentially, local authorities can use such methods if they want to, but it should not be for us to tell them that they must.
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