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Lord Filkin: My Lords, I am not certain that it is clear how much the amendment was focused on our previous debates about activity-led models for constructing funding formulae proposed by the NUT and how funding streams are handled. Let me just put some points on record.

In Committee, we considered an amendment that would have required school funding regulations to specify that factors relating to the age, ability, aptitude
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and needs of pupils be included in the formulae that LEAs use to calculate school budget shares. I tried to explain that that probing amendment was unnecessary because the current regulations already allowed education authorities to use the activity-led model in constructing their funding formula. Indeed, some do so, and they are welcome to. That is different from thinking that we should somehow insist that all local authorities act in that way if they do not want to. It can be a useful local tool, but there is no need to force it on other education authorities, so we were a little sad to see the amendment return in this form.

Clearly, the equitable distribution of resources must be a continuing goal of government, but there is no simple answer to that, as the noble Lord, Lord Hanningfield, will know as well as I do. There are many happy years to be spent debating standard spending assessment formulae or distribution mechanisms. That keeps many statisticians happily engaged. There is no simple answer. To have a statutory body, as the amendment appears to propose, inquiring into every authority's arrangements for funding schools and giving advice that would have no particular status strikes us as undesirable. We cannot see what value that would add, but it would certainly lead to costs and could lead to confusion and dissent locally.

If what is proposed is not a quango but something softer—a review body—I must say that we have worked intensively on a partnership approach in working up policy on school funding with the local authority associations and others. The proposals issued for consultation only last week were developed after extensive discussion with local authorities, teacher associations and other partners on the school funding implementation group. We expect to continue to use that approach as we move towards 2006–07. We have in our ears the words of the noble Lord, Lord Hanningfield, that we must prove that we will do it well, and we intend to.

To provide in statute for a body such as that proposed seems inappropriate. If the argument is to merge the LSC and LEA income streams, I must say that, in 2000, we decided to set up the LSC to enable a coherent approach to post-16 funding throughout all sectors and, through the LSC's planning functions, to ensure that provision for post-16s in each area properly met their needs. It would not add value to start unpicking that or holding an autopsy on it.

So it is not really clear what is behind the amendment. Perhaps it is the belief that if we have enough statisticians considering an activity-led set of costs and needs and prove that we need a bigger pot of money, that means that the Government will provide a pot of money. Would that life were that simple or naive. It is not. Of course, anyone who has been in a managerial role knows the answer that one receives by looking at elements collectively. Saying, "You need that much", does not necessarily mean that you need that much. There are ways in which one can use wit and wisdom to acquire more value by the collective use of resources rather than by looking at them just on an activity level.
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I shall not drone on as that will weary the House. I hope that I have said enough about why we shall not be persuaded on the NUT's proposals in this respect.

Baroness Sharp of Guildford: My Lords, I thank the Minister for his response. He is correct to say that we tabled this amendment at the behest of the NUT. He has convinced me that there is little need for such a review body to pursue the issues suggested in the amendment. We have two sets of review bodies in relation to the funding. As regards local government, I suppose the Audit Commission is the appropriate review body. It seems to me that there is a strong case for the Audit Commission to look at school funding arrangements after a while to see how they are panning out. I am not sure that it is necessary to establish a separate quango. Therefore, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 99 [LEA targets: England]:

Lord Hanningfield moved Amendment No. 108:

"( ) The Secretary of State shall have due regard to published data and evidence from each maintained school or special school and other inspection reports for the local authority's area before modifying a proposed target or requiring an LEA to modify a proposed target in regulations made under subsection (2) above."

The noble Lord said: My Lords, Amendment No. 108 ensures that if the Secretary of State wishes to modify LEA targets or request the LEA to do that itself, those targets should be devised with due regard to evidence of attainment and from inspections.

The rationale behind the amendment is simple and straightforward. Local authorities wish to know whether the regulations referred to in Clause 99(2) will ensure, particularly with regard to Clause 99(2)(c), that targets are realistic, appropriate and linked to inspection findings as per Clause 5 inspections and as regards those findings from the proposed joint reviews and the annual performance assessments. It is neither sensible nor helpful, in the context of supporting improvement, for the Secretary of State to set targets that do not bear reference to inspection regime findings. That is where the school inspection regime must again be joined up with the wider children's services and local authority inspection regimes. I shall not say any more as it is quite simple. I hope everyone understands that and I am sure that the Government must accept that. I beg to move.

Baroness Walmsley: My Lords, Amendment No. 109, standing in my name, is grouped with Amendment No. 108. It is almost identical and has exactly the same purpose. In the context of supporting improvement, it is neither sensible nor helpful for the Secretary of State to set targets that do not bear reference to the inspection regime findings.
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In the past there has been concern that targets have been arrived at with no clear rationale, no reference to local circumstances or consideration about how the targets would be reached; for example, many feel that about the key stage 2 targets. If the clause is not amended, central government could set targets that bear absolutely no relevance to local needs or priorities.

Of course, there is a wider point about the usefulness of targets and outputs in a climate in which we are surely agreed that outcomes for children and young people, notably the five Every Child Matters outcomes, are what fundamentally count. Simply setting educational attainment targets alone is too narrow a view of what a local authority's remit for children should cover and how elements across the five outcomes need to interplay and cross-refer. There needs to be a requirement on the face of the Bill that the Secretary of State should consult with LEAs, as it says in the Explanatory Notes, and take full account of local needs, circumstances and crucially existing baseline data. I support the amendment moved by the noble Lord, Lord Hanningfield.

Lord Filkin: My Lords, in Committee we had a debate about the importance of the utility of targets, and I believe there was broad acceptance, although I have heard what the noble Baroness, Lady Walmsley, has said about the wider context of the targets following the Children Act measures. We talked about the ability of the local authority to carry out its job of providing a challenge function to schools in its area and we talked about the need, as we saw it, of the Secretary of State to be able to hold local authorities to account over targets to improve. Therefore, at Report stage, the focus is tighter and narrower. It is about whether those discussions challenge that debate between the Secretary of State and local authorities and, where it is judged necessary to have such a debate, it is to be based on reality.

I can assure the House that the department and its advisers have a wealth of information about local education authorities. It is used to inform the discussion about their targets—data on past performance of schools and pupils, including those from ethnic minorities and those with special educational needs; data from the Fischer family trust, which takes into account pupils eligible for free school meals, gender and age of pupil; reports from Ofsted both on schools and local authorities; and support from the national strategies programmes aimed at improving attainment in low attaining schools or in particular subjects.

In addition to looking at the large amounts of data—we are probably one of the most evidence-based and richly provided for countries in terms of our understanding of what is happening in the educational system, built on the good work of the Ofsted over the past dozen years or so—the department's advisers hold a stock-take meeting with every local authority towards the end of the autumn term. Again, this is intended to be
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an intelligent discussion between officials about what the data are showing, what they are making of the data and what that implies for action in the future.

Advisers also hold regular meetings with local education authorities throughout the year on a wide range of issues, and standards in schools are a key priority for those discussions. The knowledge enables those involved to make informed judgments about an LEA and how effective it is in supporting its schools.

These discussions should be informed by evidence. They should not be informed by prejudice. We have a rich welter of evidence and we do not therefore believe that it is necessary to legislate for this purpose. The department is not trying to second-guess local education authorities, but have an informed and mature dialogue with them. I hope that it is self-evident, but I am happy to confirm that such a dialogue is always based, and always will be based, on the available information, and on nothing else. I hope that that is helpful both to noble Lords who are listening and those who might read Hansard subsequently.

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