DUTY OF LOCAL EDUCATION AUTHORITY TO DISCLOSE DEBT CHARGES (Hansard, 21 October 1986)

§ Mr. David Madel (Bedfordshire, South-West)
I beg to move, That the clause be read a Second time.

§ Mr. Deputy Speaker (Sir Paul Dean)
With this it will be convenient to take the following amendments: No. 119, in clause 27, page 30, line 26, leave out from second 'the' to 'a' in line 31 and insert 'governing body to prepare and publicise once in every year'. No. 120, in page 30, line 38, at end insert 'and (iii) comparable figures for all other schools for which the local education authority are responsible.'. No. 227, in page 30, line 38, at end insert 'and (iii) debt charges relating to the school for which the authority is responsible.'. No. 121, in page 30, line 42, leave out from 'discretion' to end of line 2 on page 31 and insert 'such sum to any amount up to the total running cost of the school in the previous year adjusted by the percentage change in the average allocation of resources to schools of that class within the local education authority for the budgeted year, the proportion of such sum to be allocated to be at the sole discretion of the governing body'. No. 122, in page 31, line 3, leave out paragraph (c).
No. 123, in page 31, line 14, leave out subsection (2).
No. 125, in page 31, line 16, after 'authorities', insert `and teachers' associations'.

§ Mr. Madel
I was grateful when, on Second Reading, my right hon. Friend the Secretary of State said that clause 27 virtually incorporated my Education (School Budgets) Bill, which I presented in the 1984–85 session.
New clause 32 and amendment No. 227 would ensure that the hidden large costs of running a school—debt charges — are published annually so that it is made crystal clear to parents and ratepayers what the costs are. Clause 27(1)(a)(i) provides: expenditure incurred or proposed to he incurred by the authority in meeting the day to day cost of running the school (itemised as the authority think appropriate)". I happen to think it very appropriate that we write into the clause what I have proposed in new clause 32 and amendment No. 227.
The Government are anxious about the growing cost of surplus school places. My hon. Friend the Member for Hertfordshire, West (Mr. Jones) has referred to Hertfordshire's difficulty. Like many other shire counties, Bedfordshire has the same problems. It should not be forgotten that surplus places alone are not causing increased spending—we must include debt charges that fluctuate in size with interest rates.
It might appear that some local authorities are spending a great deal on education, but they inherited recently completed or partly completed school building programmes in the mid-1970s after reorganisation, which carried big debt charges. When the Conservative Government reformed local government in 1974 a number of local authorities were in the middle of huge and expensive comprehensive reorganisations which carried with them the debt charges to which I have referred.
1050 Nothing causes greater uproar in some areas than proposals to close schools, either because they have become too small or because there has to be a reorganisation. Parents and ratepayers have the right to know the full costs involved in running a school—that is provided for in clause 27 — and the current debt charges. A number of county councils and their education committees are hung; the alliance often, alas, holds the balance of power. In those circumstances parents and ratepayers, have the right to know the different costs of shutting school A rather than school B. They have to weigh up what they think is best and information on debt charges would be helpful and enlightening for them.
There is an annual problem with the rate support grant. The Government are in the thick of deciding what should he done for 1987–88, but I believe that in the current RSG insufficient attention was paid to the debt charges that some authorities, including Bedfordshire county council, have to carry. Debt charges for a school are unavoidable as long as it is used by a local authority.
New clause 32 and amendment No. 227 would be helpful to the Government, local authorities and, above all, to parents and ratepayers. The object of my Bill, which is virtually incorporated in clause 27, was to give parents and ratepayers an unfettered right to information about what it costs to run a school. We often hear talk about teachers' salaries swallowing the lion's share of expenditure and about schools that have not had enough spent on books or repairs. When clause 27 is the law of the land we shall all know what has been spent, what is being spent and what it is proposed to spend. My new clause and amendment No. 227 will ensure that maximum information is provided to parents and ratepayers about the cost of running a school.

§ Mr. Dunn
I acknowledge the influential contribution of my hon. Friend the Member for Bedfordshire, South-West (Mr. Madel) to our thinking on financial information for and about schools. Much of the spirit of his private Member's Bill is reflected in clause 27 and the House owes him a vote of thanks.
It is central to clause 27 that as much information as possible on the day-to-day running costs of schools should be made available to governing bodies, without unnecessarily overburdening the LEAs. That is why required information is restricted to current expenditure and there is a discretion to include capital expenditure. My hon. Friend seeks to extend prescription to information on debt charges and he wrote to the Department earlier this year to express his great interest in such an extension.
Debt charges are an important element of an authority's central continuing costs, but the Government believe that such central costs, seldom attributed to a particular school, would not furnish governing bodies with information that was pertinent to their making sound decisions on the best use of the resources allocated to them. However, if an LEA believes otherwise it will be free to include such information on a school-by-school basis. In the light of that, I ask my hon. Friend to accept that the problem is better treated with discretion than with prescription and I hope that he will seek to withdraw the motion.

§ Mr. Michael Forsyth
I have no desire to detain the House, but I wish to mention amendment No. 120, the 1051 purpose of which is obvious. It is to ensure that if schools are to be provided with financial information they should also be provided with comparative information from which they can assess the implications. I hope that my hon. Friend can accept that principle because it will be difficult for schools to interpret information if they have nothing with which to compare it.

§ Mr. Norris
I endorse the remarks by my hon. Friend the Member for Stirling (Mr. Forsyth) about amendment No. 120. Clause 27 is to be a great advance, in that it provides school governors with information with which to manage their finances. The Bill's aim is to improve accountability and to make it more real than apparent. It is a matter of management practice that in requiring a local education authority to provide details of expenditure incurred or proposed and details of capital expenditure, schools should be provided with comparable information with which to evaluate the performance of their school. I invite the Minister to consider that in any industrial complex in which performance indicators are employed the key is comparison. I commend amendment No. 120.

§ Mr. Dunn
I appreciate that my hon. Friends seek to extend the minimum list of items for which some spending responsibility is to be devolved and the information about that. However, there are real and practical reasons against what they seek to do. For example, in many authorities minimum charges will not be allocated to schools but will relate to blocks of capital grant for primary school or general modernisation programmes. Some may be longstanding and relate to up to 60 years of programming for land, and to not much less time for buildings. There are particular problems in relating them to one school. The different methods of financing capital programmes make debt charge information variable and an imperfect measure of exactly what a local authority is spending on a school.
If a local authority wants to provide information on capital cost it will be free to provide it, bearing in mind that such a commitment might involve that authority in a great deal of work. We are talking about a discretion. We are not forbidding the provision of information. It is up to the local authority to provide the information that it cares to provide about capital cost and works on schools. I hope that the amendment will not be pressed.

§ Mr. Madel
My hon. Friend the Minister invited local authorities, if pushed, to respond positively and to supply information about debt charges. I accept that it will take some time before they get into their stride and provide that information under clause 27. It will take time for that to become law without hiccups. I hope that local authorities will read our debate and respond constructively to what the Minister said about the need to supply financial information, if required. I believe that that information will be required by ratepayers.
In view of the spirit in which my hon. Friend responded to the new clause, I beg to ask leave to withdraw the motion.