§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Clelland.]
10.28 pm§ Mr. Alan Duncan (Rutland and Melton)I am grateful for the opportunity to raise the issue of the way in which education in Rutland is funded. It may seem a rather parochial issue, and to many it may seem just another case of special pleading, but I hope to persuade the Minister that this is a straightforward case of unfairness which has arisen from the restructuring of local government—and, what is more, that it can be readily addressed if the will exists.
When in opposition, Labour Members used constantly to talk about underfunding. I am not in the business today of complaining about underfunding in general. In order to put my case to the Minister, I do not need to ask for any overall increase in the education budget, however desirable that might be. All I am asking for is a fair share for Rutland of the budget that already exists—and, indeed, of the budget that used to exist. The problem is that, when Rutland was separated from Leicestershire, it ended up with less money for education than it used to receive before it was granted unitary status. To put it simply, "We was robbed."
I am talking about primary education. Rutland has 17 primary schools. The dedication of teachers, supporting staff, parents, and, of course, the children themselves has put them top of the latest league tables. Little Rutland came out on top, and all those involved deserve the highest praise for their success. That does not mean that all will be rosy in future. Problems are looming, of which I have been warning Ministers for more than two years. I want to find a solution to Rutland's funding problem before schools are hit by the big problem that I see on the horizon.
The Minister for School Standards was kind enough to see me last year, with representatives of the council. I am grateful to him for giving us a sympathetic hearing. He is a furiously busy man, and given the number of tips that we read in the press, I am keen to secure some action from him before he moves on to higher things.
The problem of funding Rutland's education has nothing to do with county status as such. There is nothing inherently more expensive or awkward about granting county status to such a small administrative area as Rutland. I always argued—those who looked in detail at the economics of Rutland were similarly adamant—that a unitary Rutland would not prove more costly than a lower-tier Rutland working as a district in association with the larger unit of Leicestershire county council. If there were a problem, it would be caused by the funding formula failing to adjust to the specific requirements of a small unitary rural authority. That is exactly what has happened. The nub of the problem is very simple: the structure of local government has changed, but it has not been matched by a change in the structure of local government funding.
The restoration of county status was supported by the Labour party in opposition. The hon. Member for North-West Durham (Ms Armstrong), who is now the Minister for Local Government and Housing and responsible for local government finance, said on 6 February 1996, speaking on behalf of the then Opposition:
Community identity is important. I come from an area where we are fiercely proud of our identity, so I would not seek to undermine that elsewhere. It will be up to Rutland to demonstrate they are able 869 to meet the expectations of the local electorate. In the achievement of that local identity, the electorate must not be deprived and the services to which they are entitled must not be undermined or diminished.I agreed with her then, and I agree with her now.
At the same time that the hon. Member for North-West Durham was saying that, I was saying that Rutland could become a model council by pioneering ways in which services are bought and provided efficiently. Rutland was determined to be an enabling council. In its first year, I can honestly say that, from its track record, it has more than lived up to expectations.
Before 1 April 1997, everyone looking at Rutland thought that it would have to enter into about 80 joint agreements in order to function. In practice, it has managed much better on its own than anyone ever envisaged, and has relied on others only to the extent of entering into 30 joint agreements.
When people speak of economies of scale, they tend to mean that bigger is cheaper. That is not so in Rutland. The new county has found new economies out of being smaller. When it came to the school meals service, Leicestershire wanted to charge £118,000 for continuing provision in 1997–98. Rutland now runs a similar service in-house for £56,000. Leicestershire quoted £65,000 to provide an educational psychology service. Rutland does it itself for £35,000, and offers more school visits. Rutland operates its own concessionary travel scheme, with an improved service which costs £7,000 less than before. Small has proved beautifully efficient.
The council is working very well indeed. It has assumed all the responsibilities of the former county layer, and has shown itself to be more than capable of running services efficiently. However, its overall funding position is now anomalous. The funding regime under which it is being asked to live is ill-suited to the new structure that it faces.
Overall, its capping limit was £23,429,000 in 1997–98, and it will be about £24,500,000 in 1998–99. This may look like a satisfactory increase in the cap, totalling about £1,020,000, but it is pretty well all taken up straight away by items of expenditure such as nursery vouchers, increased pension costs, the cost of the local plan, offsetting cuts in the community care grant, recoupment for the secondary sector—which in Rutland is all grant-maintained—and inflation.
The real problem lies with education. The SSA for education in 1997–98 is £10,646,000. In 1998–99, it will be £11,247,000. This apparent increase of about £600,000 will not even meet the additional requirements caused by changes in Government funding requirements, and new demands on the existing budget. Rutland, rather than the Treasury—as it used to be—will now have to pay £270,000 for the reinstatement of nursery vouchers; the amount recouped from Rutland to pay for its grant-maintained secondary schools will be £135,000; and special educational needs and the contributions to the standards funds will more than take up the balance. At the end of the day, there will be no new money for Rutland's primary schools.
According to the Audit Commission, Rutland spends about£20 per head of population less on all education provision than our nearest similar neighbours. If Rutland were to spend in line with similar authorities, a further £730,000 should be available. Looking at 1997–98, 870 it would mean spending £1.2 million above SSA to bring education expenditure in Rutland on to a par with residents in other areas. At the moment, Rutland spends—and can afford to spend—only £479,000 over SSA.
The key point is this. When Rutland was deemed to be part of Leicestershire, the various anomalies in the county's funding formula were lost in the wash. Twists and turns in the system were evened out by cross-subsidy over the larger county. However, when Rutland was set apart from the rest of Leicestershire, the spending was disaggregated and apportioned between the two.
That left Rutland with a completely cock-eyed funding formula, and an education SSA that had no bearing whatever on the historic spending patterns previously enjoyed by its schools. If one compares the actual spend in Rutland on its primary schools with the SSA for Rutland on its own, one finds that the schools have been asked to take a significant cash cut in spending. The historic spending patterns prior to unitary status were at a higher level than is actually allowed in the new unitary Rutland. In 1995–96, the actual spend was £11,490,000. In 1996–97 it was £11,819,000. In 1997–98, the actual spend is£11,125,000, against an SSA of£10,646,000. In 1998–99, the SSA will be £11,247,000. I am well aware of the point that the Minister is likely to make, which is that the SSA does not necessarily reflect the amount actually spent on education. However, in the case of Rutland, it is so far adrift, it defies logic.
One of the problems Rutland faces is that the existing formula does not in any way reflect the extra costs incurred because of sparsity. The county may be only 100 miles north of London—and it may lie within a circle of surrounding towns such as Stamford, Corby and Leicester—but it comprises a large number of small villages, and lots of fields in between. Last March, I met the then Parliamentary Under-Secretary of State for Education and Employment, Robin Squire, to impress on him the concerns I had about the effects that the disaggregation of Leicestershire's funding would have on what was left for spending in Rutland.
In his letter to me of 17 March 1997, the then Minister said:
When we met, we discussed whether the education SSA system correctly estimates spending needs in Rutland. As I said then, I confirm that we intend to look at this issue. Rutland is something of an exceptional case. Barring the Isles of Scilly, Rutland has the lowest scores of any LEA on the 'Additional Educational Needs' indicator, and the highest score on the sparsity indicator. Overall, it receives the seventh lowest SSA per pupil in the country. We recognise that actual budgeted expenditure on education in Rutland for 1996/97 is 9% more than Rutland would have received as an education SSA that year, had local government reorganisation taken place a year earlier.Mr. Squire went on:I note that Rutland's education budget for 1997/98, at £11.15 million, represents a substantial cash reduction from the spending on education in Rutland in 1996/97. As I said on 6th March, I am keen to look further at Rutland's SSA. Once we have the council's analysis, we will be able to see whether Rutland does have a good case for change; and if it does, we can then start to consider rectifying any problems identified.Rutland does indeed have a good case for change. The transport costs in 1997–98 from home to school were £507,000; and 3.4 per cent. of children have statements of special need—the national average is 2.8 per cent.—and specialist provision has to be bought from outside the county.871 There are two military bases in Rutland: RAF Cottesmore and RAF North Luffenham. The latter is running down this year and is due to be replaced by an Army base, so Rutland has to bear the cost of empty school places until the Army actually moves in. It is not as if anybody can attack the education department in the council for being expensive: it is not. Spending on the education directorate and information services is £123,000, or 1.3 per cent. of the education budget, which compares very favourably with larger authorities.
Rutland has a group of 17 primary schools, in a sparse rural area, that have attained the highest literacy targets in the country; is the highest achieving authority at key stage 2; and has the highest percentage of any local education authority of children achieving level 4 or above; but it is facing a severe squeeze.
The whole of the secondary sector has decided to go grant maintained. Rutland has no responsibility for 16–19 provision, which is funded by the Further Education Funding Council, but it still has to pick up the tab for some residual duties. It has to deal with special educational needs for the over-16s; youth provision; mandatory student awards and grants; and matters such as liaison with the further education sector and careers provision. The current cost of post-16 provision, excluding special needs and youth provision, is £268,000 a year, but the post-16 element in Rutland's education SSA for 1997–98 is only £90,231.
Following local government reform, Rutland has to pay more than £1 million of capital financing costs directly to Leicestershire county council, yet it has no control whatever over those costs. Our highly efficient, low-cost, enlightened unitary Rutland council has embarked on a new era with all the best will in the world, only to be handicapped by an archaic funding formula that leaves it in the lurch.
Rutland merely wanted to run its own affairs based on the perfectly reasonable expectation that it might continue to get about the same amount as before. It is pretty unfair, to put it mildly, that it should be asked to survive on less. I am complaining not about underfunding but about inequity.
Clearly, the current formula does not reflect the needs of the community in Rutland and, therefore, does not work for Rutland. To be fair, that may not be an event unique to Rutland. The Minister will no doubt have received representations from other rural authorities because, if press reports are to be believed—they sometimes are—rural authorities elsewhere are concerned that an extra burden is being placed on the residents of rural shire areas, who face larger council tax rises than their urban counterparts.
In the past year, Rutland has attempted to work with other councils to find common ground on which to lobby the Government about the inadequacy of the current funding formula. It has not altogether succeeded as no other council is quite like Rutland. However, the need for a review of the formula is clear. A Conservative Minister promised that it would be reformed. Now, we have a different Government and I hope that the new Minister will take the matter in hand and give me a firm assurance as a matter of some urgency that the shortcomings of Rutland's funding formula will now be tackled.
§ The Minister for School Standards (Mr. Stephen Byers)I congratulate the hon. Member for Rutland and Melton (Mr. Duncan) on securing this Adjournment debate so that we can discuss the funding situation in schools in Rutland, of which he has been a doughty champion. As he mentioned, he brought delegations to see me last year and, last March, to see the Under-Secretary in the previous Government, to argue the case for funding for schools in Rutland.
I join the hon. Gentleman in congratulating the primary schools in Rutland in particular on the excellent standards that they have been able to achieve. If all the primary schools in the country achieved such standards, I would probably not be required and would be redundant as a Minister for School Standards.
The figures are well worth disclosing to the House. In the 1997 key stage 2 test results for level 4—the level to which most children should aspire—the average in Rutland in English was more than 75 per cent., compared with the average in the country at large of just 62 per cent; in mathematics, Rutland achieved nearly 79 per cent., compared with the national average of 61 per cent; in science, it achieved more than an 82 per cent. success rate, compared with 68 per cent. nationally. Those figures are good and say a lot about the quality of education being offered in Rutland primary schools.
We must do all we can to ensure that that level of success is not put at risk by any decisions that the Government take, and that is why we welcome this opportunity to discuss the funding arrangements for Rutland. Before I do that, it is worth putting the matter in the national context of the additional funding that we have been able to provide for education for the financial year 1998–99.
In his Budget statement on 2 July, my right hon. Friend the Chancellor of the Exchequer announced additional new funding for our school system in capital and recurrent spending. On capital spending, we now have the new deal for schools, which means that in 1997–98 an additional £83 million is to be made available, from which schools in Rutland will benefit. Over the lifetime of this Parliament, we expect about £2 billion in extra capital to be spent in our schools—both from Government grant and from private and other public bodies. That is money which will be used to repair, renew and improve school buildings.
On day-to-day spending, we are allocating an extra £835 million in England alone for the next financial year, which is over and above the Budget provision made available by the previous Government, bringing the increase to more than £1 billion in recurrent spending for the financial year 1998–99. That is a good example of redirecting Government priorities within the overall public expenditure totals.
I agree with the hon. Member that, in many respects, Rutland is in a unique—certainly a highly unusual—situation: Rutland's education standard spending assessment for 1998–99 represents an underlying increase of 3 per cent., or some £330,000. The capping rules that the Government apply ensure that all that money can be passed on to its schools.
There has been an underlying increase in Rutland's capping level of £610,000 in the overall budget. I say underlying increase because, comparing like with like, 873 I do not believe that it is the £1 million to which the hon. Gentleman referred but, on a genuine comparison, more like £610,000. Within that overall increase in the capping level, there is an opportunity for Rutland to pass on the £330,000 extra that we have provided in education SSA.
The hon. Gentleman raised several important points about how the SSA regime affects schools in Rutland. I want to make two points about the SSA regime. First, all local education authorities accept that the key factor that should determine the overall national financial settlement that each authority receives is pupil numbers. If pupil numbers in an authority are increasing, it should be reflected in the SSA calculations. I think that most of us agree that the opposite should also apply. When pupil numbers fall, it is right and proper that that reduction should be reflected in the SSA calculations. That is part of the problem that Rutland experienced.
Pupil numbers in Rutland have fallen by some 2 per cent. while they have risen by almost 1 per cent. nationally. It is that difference in pupil numbers which led to Rutland's receiving a below average SSA increase. It also reflects some particular pressures that are unique to Rutland and that the Government want to address. I shall come to that later.
For the record, it is worth reflecting on the per pupil increase in Rutland. As a result of the additional £1 billion that we are putting into education for the next financial year, Rutland's primary and secondary education SSA will increase by more than £120 per pupil, providing in 1998–99 £2,065 of education SSA for each primary age pupil and £2,594 for each secondary pupil. That amounts to an increase of more than 5 per cent. over this year's education SSA per pupil—a real-terms increase, above the rate of inflation, of SSA for individual pupils.
The education SSA does not set out to allow the same level of spending per pupil but to take into account regional and local variations. As the hon. Gentleman said, Rutland receives less education SSA per pupil than most other authorities. Only 10 local education authorities get a smaller amount of education SSA than Rutland. It is worth noting that Rutland's average SSA allowance for education is 8 per cent. below the national figure. The present formula, which we inherited from the previous Administration, does not do many favours to schools in Rutland. However, we have an opportunity to review it.
It was impossible in the time available after the general election on 1 May to review the formula fundamentally in detail for this year's local government settlement. However, the Government are to embark on a wide-ranging review of the SSA regime. We hope to have a new system in place for the financial year 1999–2000. I want Rutland to give its views on the changes that should occur to make the system fairer. I would welcome the opportunity to meet the hon. Gentleman and a delegation from Rutland to go through in detail the changes that schools in Rutland feel would be appropriate to meet their particular requirements.
It is worth recording that the Government have also made available specific grant—additional money—to the schools in Rutland for the coming financial year. The hon. Gentleman said that the standards fund allocations require 874 an.additional contribution from the local education authority. That is true for all LEAs. Rutland has done better for next year than it has done this year and it has recently been allocated an extra £18,600 for the purchase of new books in schools. Even if we allow for the local authority contribution, that will be a real-terms increase.
The hon. Gentleman also referred to difficulties arising from the abolition of the nursery voucher scheme. It is true that Rutland's budget will have been reduced as a result of the changes for under-fives funding. The Government intend to make available nationally in England a further £125 million in the financial year 1998–99 specifically for early years funding. Rutland will be invited to apply for that money and it will be provided at the rate of 100 per cent. grant and will not count against the local authority's cap. Whereas Rutland has lost out because of changes in the education SSA methodology for under-fives provision, it will have the opportunity to make an application to fund early years plans. We can provide additional resources to Rutland from the £125 million that we have identified for that purpose.
I know that capital funding is also an issue of concern in Rutland and the rest of the country. In this financial year, we are pleased that, in the first phase of the new deal for schools, we have been able to provide additional funding for schools in Rutland. We have invited bids for the second round of new deal funding, and I shall be interested to see the applications made from Rutland.
In addition to the new deal, we have changed the way in which we allocate credit approvals in the form of annual capital guidelines. For the financial year 1998–99, more than £16,000 of credit approval has been allocated to Rutland. That arises from changes that the Government have introduced in the funding regime. It is worth noting that had the policies pursued by the previous Administration still been in place, Rutland would have received no more than £1,000.
Funding for schools in Rutland is an important issue. Particular matters are related to the grant-maintained sector, but, today of all days, I want to tell the hon. Gentleman that we want a fresh future for the schools in Rutland. It will receive a 5 per cent. increase in its education SSA per pupil and, this year, an extra £330,000 will be available for schools in Rutland. If it chooses to use some of that money to help its secondary schools, we will change the grant-maintained funding regulations to allow it to do that.
We recognise the unique position of Rutland and, when we review the SSAs for next year, we will be pleased to meet a delegation led by the hon. Gentleman. Education is a priority for the Government. We intend to get it right for the benefit of the children of Rutland and of the country. I welcome the opportunity that the hon. Gentleman has provided to discuss how we believe we can bring benefits to the children of Rutland. I would welcome a meeting with him so that we can go through in detail exactly how we can be of assistance.
§ The motion having been made after Ten o'clock, and the debate having continued for half an hour, MADAM SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
§ Adjourned at two minutes to Eleven o'clock.