HC Deb 22 November 1995 vol 267 cc616-25 12.30 pm
Mr. A. J. Beith (Berwick-upon-Tweed)

We have plenty of water in Northumberland. It is funds for schools that we are short of. I am tempted to offer to trade one for the other because we are in such a desperate state and the Minister has so far not been able to offer us much. We intend to seek more from him today.

In September, a leaked memo from the Secretary of State for Education and Employment acknowledged that there is a perception that schools are underfunded and that peace in the classroom threatened. If that is true at national level—and it is a remarkable admission—it is even more true in Northumberland because of specific difficulties about the funding of education in our county.

In the already underfunded education system, there are authorities which have been placed in an especially difficult position by the failure of the standard spending assessment mechanism, which does not take adequate account of regional differences and the additional pressures that face some areas. That problem is made worse by the capping system. Some authorities threatened to set deficit budgets because they felt unable to make yet more cuts.

Perhaps one of the greatest sets of difficulties is that faced by Northumberland, which lost about £7 million when the SSA replaced the former system of education funding. The authority was particularly disadvantaged by two factors. The first was the additional educational needs factor. Northumberland lost about £5 million because of the large increase in the percentage of the SSA formula that was devoted to additional educational needs, which are needs different from those prevalent in Northumberland. The other factor was area cost adjustment, which was also increased substantially when SSAs were introduced, and affected Northumberland especially badly.

Northumberland is geographically the largest of the shire counties; its population is the smallest except for that of the Isle of Wight. That means that it has lowest population density and all the problems that that brings. Sixty out of the county's 146 first schools have fewer than 100 pupils. A number are very small, with fewer than 25 pupils, but are in remote places where it is necessary to retain a school. Small schools are expensive to maintain.

Distance is another problem. Pupils in some parts of the county have to travel 15 or even 25 miles each way to school, which is a major cost to the budget. The extra cost arising from small rural schools is about £1.3 million; rural school transport costs £3.7 million. Of course, if more schools are cut, the transport bill will go up. The sparsity factor in the SSA does not adequately compensate the county council for the extra costs.

As well as the initial losses, Northumberland county council has experienced four years of budget reductions which, according to its calculations, have wiped another £13.4 million from the education budget in real terms, based on a standstill budget. Considered year by year, in 1992–93 there was a £3.8 million cut against a standstill budget; a £4 million cut in 1993–94; a £4.6 million cut in 1994–95; and a £1.235 million cut in 1995–96. That last figure would have been higher if the county had not cut its reserves to £4 million. An auditor's report the year before said that letting the reserves fall below £6 million would be imprudent, but the county felt obliged to take that action.

In money terms between 1992–93 and 1995–96, the total education budget for the county rose by 5.7 per cent., taking account of the changes in further education, when the retail prices index grew by 11.8 per cent. and the number of pupils in Northumberland schools increased from 45,960 to 48,454. At the same time, teachers' salaries, which make up four fifths of the budget, have increased by 28.5 per cent.

School budgets have been hit badly. Although in cash terms some schools have had their budgets increased since 1992, that increase has been undermined by inflation, teachers' salary increases and the additional costs of local management. The Office of Standards in Education warned that further cuts at one school would seriously affect its ability to meet the statutory requirements of the national curriculum. Pupil-teacher ratios in Northumberland have been deteriorating at an alarming rate compared with the average in the rest of England; compared with Scotland, the situation is worse still. We make the comparison with Scotland because it adjoins us.

Mr. Jack Thompson (Wansbeck)

I congratulate the right hon. Member on obtaining this Adjournment debate. There is another element that needs to be recognised in respect of Northumberland. I am told that, in a rural area in the right hon. Gentleman's constituency, there is a class of seven. That is fine, because it is a small rural school and it is the only service available.

In my part of Northumberland, we now have classes of more than 30 to 35 on some occasions. The big problem in Northumberland is that four fifths of the population lives in the south-east corner and the rural areas are sparsely populated. They still require education services, but they have to be provided on a two-level basis. We have a shortage of spaces in the south-east and a surplus of spaces in the rural parts.

Mr. Beith

I am grateful to the hon. Gentleman for underlining the point that I made earlier about the cost of maintaining schools in scattered rural areas. It is an essential cost because it would not be reasonable to remove schools altogether from areas as remote as some of the places concerned.

The average pupil-teacher ratio in England was 17.4 per cent. in 1993. It was 15.4 per cent. in Scotland; in Northumberland, it was 19.4 per cent. Since then, it has worsened. The Fairshares campaign, which is an independent group of parents in Northumberland who have united to campaign for adequate funding, produced a detailed report on the issue. It carried out a survey of Northumberland schools and found that among respondents, 85 per cent. of schools had experienced an increase in the pupil-teacher ratio between 1991 and 1995.

Class sizes are similarly bad when compared with other areas. The average for England and Wales is that around one quarter of primary pupils are in classes of 30 or more; in Northumberland, approximately half are. That figure relates primarily to the towns and the urban, south-eastern part of Northumberland; classes have to be smaller in rural areas where pupil numbers are low. On top of that, schools have to rely on parents to raise money for essential equipment and to continue the employment of existing staff. The vast majority of schools surveyed made use of money raised by parents for such purposes—almost a quarter of it for essential items.

The leadership of the county council responded to the crisis in which it was placed by proposing earlier this year to close 10 first schools, six of them—Hipsburn, Acklington, Linton, Milfield, Horncliffe and Thropton—in my constituency. A number of those 10 are popular schools whose pupils cannot satisfactorily be accommodated elsewhere. Others are village schools in places distinct or remote from the nearest community that would still have a school. It was an unwise response to an admittedly difficult situation. Indeed, the county council has now dropped the proposals and is concentrating on trying to get better funding.

The funding changes have placed Northumberland towards the bottom of the spending tables for education. The Chartered Institute of Public Finance and Accountancy statistics show that Northumberland is ranked towards the bottom of the table of potential schools budgets per pupil in English counties. Oxfordshire has more than £200 more potential schools budget per pupil than Northumberland.

This week, I received a letter from the head teacher of King Edward VI school in Morpeth, in the constituency of the hon. Member for Wansbeck (Mr. Thompson), which takes many pupils from my constituency and has an outstanding record. She used to be the head of a school in Cleveland. She calculated the different funding that would have been available to her school in Cleveland. The difference amounted to more than £450,000. She asked: Would you please explain to me why I need so much less money to run my school in Northumberland? I was recently told about a school which was forced to ask parents to raise £25,000 to bring its facilities up to the standard expected under the national curriculum. The school failed in three areas when it was inspected by Ofsted and all of them were due to lack of funding.

Mr. Ronnie Campbell (Blyth Valley)

I congratulate the right hon. Gentleman on getting this debate because it is a matter that needed to be debated. Can he develop the argument about nursery vouchers? The Government are going to give £1,000 per child throughout the land. If that goes for nursery school pupils, should not the figure apply to all pupils throughout the land? Would not that be a better system of financing local schools?

Mr. Beith

I am not sure that I would want to construct the funding system on that basis. The fact remains that the amount available per pupil, which is what the hon. Gentleman was getting at, in Northumberland is very much less than in comparable areas and much, much less than in places such as inner London. Northumberland is being asked not just to make efficiency gains, but to make cuts, time and time again. Schools are struggling desperately in the face of that. The chairman of governors of one high school wrote to tell me that his school has been forced to make several part-time and full-time teachers redundant to balance the budget. He pointed out that that would have been avoided if Northumberland had only half as much extra per pupil as some authorities receive.

Another constituent has written to tell me that in her first school, caretakers and meal supervisors are doing extra duties for no remuneration and giving up their complimentary lunch to save the school £5 per head per week. The school is dependent on the charity and good will of its staff. Another high school lost three teachers, a caretaker, out-of-school activities and staff preparation time. There was an increase in class sizes and the school could not repair its heating system, all as a result of recent cuts.

There is enormous strength of feeling. More than 3,500 people in Northumberland have written to the Secretary of State for the Environment about the standard spending assessment as it affects education funding. I could find many more examples of the way in which schools have had to cut staff, deliberately taking on far less experienced staff in an attempt to reduce costs. Perhaps the final word should go to the constituent who wrote to the Secretary of State for the Environment: I challenge you Mr. Gummer to go into a class of 42 reception children and get them changed and organised for a physical education lesson. I am waiting for the Secretary of State to avail himself of the opportunity and to see just how difficult the task is. Large class sizes do not mean only the problems mentioned by my constituent, but half as many books again to mark and half as many parents again to see. All those problems make it impossible to give the level of attention teachers see as required.

When pressed, the Government say that it is not their fault; they claim that the fault lies with the local authority and its decisions on funding priorities. They say that the county council could solve the problem by managing its school budget more efficiently and they say that the schools could solve the problem by spending their contingency funds. None of those arguments holds water in Northumberland's case.

Northumberland spent more than the SSA levels on education, yet its education spending is one of the lowest in the country. It is prevented by capping from raising any more money. Between 1993–94 and 1994–95, Northumberland's SSA increased by 4.4 per cent. The Government were saying, "Yes, you do need to spend more money," yet Northumberland was allowed to spend only 1.75 per cent. more, so the Government were saying at the same time, "No, you cannot spend it." It is like saying to someone, "You can have £5 a week more pocket money, but I am inventing a rule that says that you cannot spend it." In this case, we are talking not about pocket money, but about essentials.

I am hardly a fan of the Labour administration in the county hall—indeed, I am often a critic of some of its decisions and spending priorities. However, it is accepted on all sides, including the Conservatives on the county council, that the problem cannot be resolved just by changing the county's spending priorities. Indeed, in 1990–91, the Audit Commission's view was that Northumberland was not mismanaged. The commission said: Our overall impression is that the Authority is well managed at both member and officer level. Since then, the costs of education other than in schools have been reduced by almost a quarter. Comparisons with other areas on this point are favourable. In a sample of comparable counties, including Buckinghamshire, Lincolnshire, North Yorkshire, Norfolk and Cumbria, Northumberland's costs were the lowest. Administrative costs as a percentage of the potential schools budget were, at 1.93 per cent., only slightly higher than those of Cumbria and Lincolnshire, and lower than those of the other authorities mentioned. Given the lower pupil numbers, that suggests that education administration in Northumberland is efficient.

The contingency funds are largely mythical. Schools have no more than two weeks' operating costs, if one averages it across the board, kept as contingency funds. Any small business would regard that as a small margin, especially when some of the funds are earmarked for essential projects. In a very small school, one family leaving the area can slice more than that two weeks' contingency fund from the school's budget for a year. Schools have to keep something in reserve.

The Government and the Prime Minister claim that education has become a priority. This is the opportunity for them to match words with action. The Government should bear in mind the £7 million that was lost through changing the funding arrangements and consider restoring that funding. I urge them to review the standard spending assessment formula to give a fair allocation to Northumberland. The Department of the Environment is reviewing the area cost adjustment, but the review needs to consider the particular problems highlighted by underfunding in Northumberland. We need action sooner than the time scale of the review will permit.

I fear that if we find in the Budget in a week's time that there is some more money for education, it will all be eaten up to match the existing amount that local authorities spend over their standard spending assessments and to deal with new responsibilities, such as the extra costs for special needs which are now required—that is estimated nationally to be more than £400 million—new rules on seat belts in school transport, EC legislation on part-time staff, new school transport entitlements and local government pension scheme costs. In those areas, any new money over and above inflation that the Government promise will be eaten up, not just in Northumberland, but in other places.

In Northumberland, we have a large need over and above those other needs. I plead with the Minister to recognise that need and to realise that it is accepted across the board, by people in all political parties on the county council and here in the House. There are Northumberland Members from all three political parties present in this debate. I urge the Minister to respond to the plea.

12.44 pm
The Parliamentary Under-Secretary of State for Education and Employment (Mr. Robin Squire)s

I am grateful to the right hon. Member for Berwick-upon-Tweed (Mr. Beith) for initiating this debate, thus giving the House an opportunity to consider how education is funded in Northumberland. I also welcome hon. Members on both sides of the House to the debate. I make one introductory comment in response to an introductory comment by the right hon. Gentleman concerning a certain memorandum. I reiterate what my right hon. Friend the Secretary of State for Education and Employment has said more than once. She did not devise, write, sign or use that memorandum. Although we never comment on leaked alleged memoranda, it is only fair to put that point on record in light of the right hon. Gentleman's opening comment.

Inevitably, what I say today can, in part, be only a curtain raiser for the announcements that will be made next week by my right hon. Friends. Tempting though it is to say much more, I must decline invitations, however kindly given by the right hon. Gentleman, to say more about funding for education in Northumberland for 1996–97.

The first education expenditure matter on which we all need to be clear is that Northumberland county council, like every other local authority, is responsible for setting its education budget and deciding the priorities between and within services. The council has the final say on how much is spent on education and how much is spent on other services.

We heard—I expected it—a lot from the right hon. Gentleman about reductions, past, present and future, in Northumberland's education budget. I have already made it clear that I can say nothing about next year's financial settlement except this. Neither hon. Members nor Northumberland county council can yet have a clue about the level of that settlement. Any talk, therefore, of budget cuts must be purely speculative. Frankly, it is irresponsible for local authorities to ring alarm bells at this time of the year when they cannot know how much money they will have in 1996–97. I make it clear, for the avoidance of doubt, that a number of local education authorities, including Northumberland, Lancashire and East Sussex, have indulged in that practice. At the very least, it does not assist in rational discussion of these matters.

Mr. Jack Thompson

Is the Minister aware that I am chairman of governors of one of the schools in my constituency, Newbiggin middle school? Last Friday, the board of governors had a meeting. In our budget preparations, we had to take into account the possibility of having a reduction of between 1 per cent. and 3 per cent. That is the simple logic that one must use in planning and preparing for an academic year for a school. We also have to consider the next year, the year after and the year after that. We have to take into account the welfare of the pupils, the staffing levels, the provision of resources and the building itself—the whole gamut of running a school. One has to prepare and consider those factors and take them into account, otherwise one is caught with one's pants down.

Mr. Squire

I am grateful for the hon. Gentleman's work in his capacity as chairman of governors. Of course I endorse the point that all governors and all local authorities must plan ahead. My point was specific. I speak as the recipient of many letters, from across the country, which have been caused by local education authorities describing now, in advance of next week's settlement, exactly the cuts or whatever they will face. I repeat for the hon. Gentleman and the House that those figures cannot yet be known and that such talk is, at this stage, alarmist.

The right hon. Gentleman said that Northumberland has been forced to cut millions of pounds from its education budget this year. That is not true. Northumberland has been able to increase its education budget by some 2 per cent. this year and is able to spend over £200 million on all services. That, I submit, is not bad in a year in which local authorities face a tough, but fair, settlement.

Mr. Beith

Will the Minister give way?

Mr. Squire

I wish to make progress. The right hon. Gentleman made a number of points and in fairness to him I would like to reach them. If I have time, I will willingly give way. As he knows, I do not refuse to give way.

So from where does the talk about cuts come? The county council is not cutting what it is actually spending; it is drawing up a shopping list of additional spending, fully uprating for all price and income movements, and then cutting back on what it would ideally like to spend if it could buy all the items on that list.

We have to recognise the wider background to the financial settlement for Northumberland. The Government have made it clear all along that this year's settlement has been tough. That is necessary to constrain increases in public expenditure, since local authority expenditure accounts for roughly a quarter of all public expenditure. The whole of the public sector should be looking to meet pay and price pressures, and to make efficiency savings. The long-term future of funding for education in Northumberland depends on ensuring that the economy is placed on a firm footing and that Government keep a firm grip on inflation.

We should give more attention to what Northumberland county council is doing with the funds it receives from central Government. There are important questions which schools and parents will want to ask the county council. Is it achieving value for money? How many surplus places are there in Northumberland schools and what does the county council intend to do about them? I shall not exchange comparative figures because that would be tantamount to telling Northumberland exactly what it should do, but I shall say that the county council has some way to go to catch up with what a number of LEAs are already doing.

The right hon. Gentleman mentioned class sizes in Northumberland schools. Despite the horror stories that appear about class sizes of 30, 35 and more, the facts are that the latest available data show that the average class size in Northumberland schools is 27 in the case of primary schools and 23 in the case of secondary schools. If there are individual class sizes of over 30, it is up to the county council in the first place, and those managing school budgets in the second, to explain to parents why those particular class sizes are so far above the Northumberland average. There could be any number of reasons: the level of teaching done by the head teacher and deputy—

Mr. Beith

The rural factor.

Mr. Squire

I fully concede that and I will say more on the rural factor if time permits.

Other reasons include the degree of non-contact time, a bulge in the pupil population, the physical size of classrooms and the general organisation of teaching and learning at the school.

I remind the House of the main finding in the recent Ofsted report based on inspectors' independent observations. There is no simple link between the size of class and the quality of teaching and learning within it. The selection of teaching methods and forms of class organisation have a greater impact on learning than the size of the class. For example, how well classroom assistants are used alongside teachers is an important factor influencing the quality of teaching and learning.

It is interesting to compare the quality of education in Northumberland with schools elsewhere with smaller class sizes. Look, sadly, for instance at Hackney Downs school, where spending is two and a half times the national average per pupil, and the pupil-teacher ratio is 8:1. That illustrates my point, particularly as the coincidence of small class size and failing schools is by no means limited to Hackney Downs.

Mr. Peter Atkinson (Hexham)

Pupils in Newcastle get far more funding per pupil than those in schools in Northumberland. Newcastle gets £651 per head of population in grant while Northumberland gets £482. Northumberland is in the top half of local authority schools in the league table, but Newcastle is second from the bottom and is clearly failing its children.

Mr. Squire

My hon. Friend makes a very important point. I will deal with the SSA system on differential funding, but he must be right to say that, at any given level of funding, there is a considerable difference in the outturn as a result of that funding, as we have seen most recently in the tables published this week. In particular, schools in disadvantaged circumstances can perform tremendously while others in similar circumstances cannot currently do so. I know that heads and governors in those circumstances will revisit their own schools' experience.

I thought optimistically that I might get away without discussion of the standard spending assessment, but I understand why the right hon. Member for Berwick-upon-Tweed raised it. Next week, my right hon. Friend the Secretary of State for the Environment will announce his proposals just after the Budget, but I can make two points about the SSA methodology. Both will be familiar to hon. Members but they none the less concern two essential elements of a methodology which would purport to be fair.

The first is that the education SSA system does not set out to allow the same level of spending for each pupil, nor should it. That is the point raised by the hon. Member for Blyth Valley (Mr. Campbell). The system aims to provide funding for a common standard of service across the country, taking account of the fact that the costs of providing education vary from one LEA to next. As need varies from one council to another, so logically does poundage per pupil.

Each authority's education SSA reflects the relative costs of educating children in very different circumstances: in sparsely populated areas; in London and the south-east where labour costs are higher; and in areas of socio-economic disadvantage or with a high proportion of non-English-speaking children.

I know that the sparsity allowance is a particular concern to Northumberland, and the right hon. Member for Berwick-upon-Tweed mentioned the problem of running an education service in a scattered rural area. The fact is that, alone of all the factors in the education SSA formula, including the much-loved area cost adjustment with which I shall deal shortly, the weight given to the sparsity allowance is 50 per cent. higher than the raw statistical evidence would suggest.

Alongside all the representations I receive about a bigger slice of the SSA cake for rural authorities, I have to consider the position of those authorities that object to that 50 per cent. judgmental uplift. They might ask: why should the Government not reduce it, or increase the weight on additional educational needs, or even uplift the area cost adjustment by 50 per cent. as well? All those arguments have to be balanced against each other. Our aim is always to arrive at the fairest formula possible for distributing grant between authorities. In consultation with the local authority associations, we will continue to consider carefully the arguments for and against making changes.

I want to say a brief word about the area cost adjustment, since I know that it is a particularly controversial aspect of the formula that hon. Members on both sides of the House have raised with the Government. The right hon. Member referred to the level of support going to local authorities in the south. Everybody agrees that there has to be an area cost adjustment. Not even Northumberland county council would abolish it altogether. It is the unanimous view of the various local authority associations that some recognition of the factors that lie behind it must be made. Those LEAs that get it say that they need to spend even more, and those that do not say that the money needs to be redistributed to them. That is perhaps unsurprising.

The Government, however, want to make progress on this issue. As the right hon. Gentleman mentioned, my hon. Friend the Minister for Local Government, Housing and Urban Regeneration met leaders of the local authority associations on 16 October to discuss the area cost adjustment. My hon. Friend proposed that we should set up an independent review of the area cost adjustment to try to ensure that it receives uniform support among LEAs. I know that that review will be welcomed by many hon. Members even if, inevitably, the consequence of that review cannot reasonably feed into the announcement that the Secretary of State for the Environment will make immediately after the Budget.

The right hon. Member for Berwick-upon-Tweed briefly mentioned capping. I know that there is a wide range of opinions on that subject, but capping is important as part of the Government's wider economic objectives.

We should be clear in our minds about the way in which capping works. It does not force local education authorities to cut their budgets; rather it limits the rate at which they can increase them. As I mentioned at the start of my speech, there is little that I can say today about the role of capping in 1996–97. The right hon. Gentleman will have to wait—but only a short while—for the relevant announcement to be made.

This has been a short but wide-ranging debate and I am grateful to the right hon. Gentleman for allowing me the chance to put the record straight on several issues. I am sorry none the less, especially as a result of the coincidence of timing, that I cannot say more about the settlement for 1996–97 now.