HC Deb 30 June 1999 vol 334 cc304-11 12.30 pm
Mr. Desmond Swayne (New Forest, West)

I wish to draw attention to the £100 million that has been lost to the budgets of grant-maintained schools this year. In so doing, I shall focus principally on south-west Hampshire, because six of the nine secondary schools in the New Forest area are grant-maintained schools. They have become models of efficiency. Despite the fact that many of them have a very mixed social intake and have sought out and addressed special needs, they include some of the most successful comprehensive schools in the land.

On Monday, a BBC journalist approached me, preparatory to this debate, and suggested that the disproportionate success of grant-maintained schools in my constituency was a consequence of their rather generous funding, and that fairness required that that advantage be withdrawn and that all schools be placed in the same funding boat.

I would always suggest that the grant-maintained schools had enjoyed better funding, but I do not think that that equates to more generous funding. Grant-maintained schools—[Interruption.] If the Minister for School Standards will allow me, I shall point out that grant-maintained schools enjoyed a replication of the local education authority's locally managed schools budget, with a central add-on to cover the costs that would otherwise have been provided by the local education authority but which the schools were then required to provide for themselves. That gave the schools the liberty to spend that central add-on on their own priorities rather than on priorities determined for them by the local education authority.

Locally managed schools, under the local education authority, continued to receive quite significant discretionary grants throughout the financial year. However, they never enjoyed the principal benefit of being able to budget and plan on the basis of receiving that financing.

That form of funding for schools has now been brought to an end and replaced by fair funding. If by "fair" we mean equal, the Minister has achieved an objective, because all schools will indeed now be funded according to the same formula. Nevertheless, the grant-maintained schools have suffered a very significant fall in their budgets this year—so much so that the Minister has had to introduce a measure of cash protection to cushion them from the effects of that fall. The very existence of cash protection is a recognition of the less favourable environment that grant-maintained schools now enjoy, and that was not a Government objective.

That is a failure of the Minister's policy because, as the right hon. Member for Tyneside, North (Mr. Byers), the then Minister for School Standards, said, the Government's objective was not to cut the amount being spent on pupils in GM schools, but to increase the funding for pupils in other schools. He said that he was engaged in a policy of levelling up."—[Official Report, Standing Committee A, 12 February 1998; c. 461.] Levelling up is not the experience of grant-maintained schools in south-west Hampshire. I have in my hand a statement issued on 15 April 1999 by the headmasters of those schools. It may help to clarify the issue if I quote at a little length: We understood that one of the purposes of the Government's 'School Standards and Framework Act' was to extend the successful practices of the current Grant Maintained schools to all schools and the local education authorities were to be accountable for enabling schools to raise standards. Critical to the new Framework was the concept of Fair Funding … Fair Funding should have extended the local management of schools formula to provide delegation of funds for almost all services to all schools, in effect incorporating elements of the Central Grant. As 8.7 per cent. was…agreed as the sum to be held back by the local education authority for such services, it would have been reasonable to expect that the local management of schools formula would provide additional delegation of this order. Far from it. The extra delegated amount is nearer 2.8 per cent. and Grant Maintained schools typically find their income 5.9 per cent. short of their…commitments…Indeed, the reduction in real terms is so great that the extra delegation together with inflationary increases would give some Grant Maintained schools a cash income for this year some 4 per cent. lower than they received last year. This situation triggers a measure of 'cash protection' which … leaves the schools funding this year's, incremental drift, pay rises and inflation from the equivalent of last year's income. These schools will need to lose teachers and support staff, reduce expenditure on educational resources and postpone improvements. Classes will be larger, computers fewer, books older and buildings less well maintained. The position is reflected also in the reductions to other 'special grants' where, for example, income for training teachers and regular income for capital improvements will halve. In 2000–1, if cash protection ends, the position for some will become even more serious and an additional wave of budget cuts, typically 4 per cent. equating to 3 or 4 more teachers, will be necessary. That statement is signed by the head teachers of Applemore college, the Arnewood school, Burgate school and sixth form centre, Ringwood school, Testwood school and Hardley school and sixth form.

Dr. Julian Lewis (New Forest, East)

Several of the schools that my hon. Friend has listed are actually in my constituency. I have a copy of a letter from Mr. Underwood, headmaster of Hardley school, to the chairman of the county council. Elaborating the thesis that my hon. Friend has advanced, he says: It is our contention that all schools"—

Mr. Deputy Speaker (Mr. Michael J. Martin)

Order. Interventions must be brief.

Mr. Swayne

I thank my hon. Friend the Member for New Forest, East (Dr. Lewis). Of course I am aware that Hardley school is in his constituency. He will be aware that, this year, as a consequence of this funding settlement, the school will have to function with 4.2 per cent. fewer teachers. It will be implementing a cut of some 20 per cent. in its funding of educational resources and it will have to spend its entire reserve, built up over nine years. Next year, if it loses its cash protection of £85,000, those problems will be compounded.

Mr. Christopher Chope (Christchurch)

Does my hon. Friend agree that the same points apply to Highcliffe comprehensive school in my constituency, which is attended by many of his constituents?

Mr. Swayne

That is indeed the case. The principal problem that is highlighted by the headmasters is that the key central add-on is not being fully replicated in the new extension of the local management of schools settlement. The money is not being passed on to the schools.

Dr. Julian Lewis

Will my hon. Friend give way?

Mr. Swayne

If my hon. Friend will allow me, I must make progress.

This issue touches on the bureaucracy surrounding the local education authority, which I shall attend to in a moment.

When I drew the Minister's attention to the problem on 10 June 1999, I said that some schools had even introduced a measure of charging for lessons, which gave her an opportunity to lecture me on the nature of the law and gave rise to some very unwelcome press attention on those schools. On that occasion, I referred to charging for keyboard musical skills, which one school in my constituency had had to introduce as an understandable but regrettable consequence of the settlement. It is not breaking the law.

I now draw attention to the problems of the Arnewood school in my constituency. The Minister will be aware that we have a shortage of secondary schools in south-west Hampshire. It is very difficult to get into the Arnewood school, despite all sorts of expedients in the past few years to increase the capacity of the school. Even children living at the gates of the school who meet all the high priority criteria for entry to that school must be bussed to the constituency of my hon. Friend the Member for Christchurch (Mr. Chope) and cannot get into the school.

On 7 April, the headmaster wrote to me: I would like to draw your attention to the very significant funding difficulties that the Arnewood school is facing at the start of the new financial year. In general terms, we anticipate a drop in income this financial year of some £400,000, this with a level of protected funding without which in 2000–01 we can expect a cut of a further £200,000. In crude terms, this is a total loss of £600,000 over two financial years, which would mean losing 25 teaching staff. I know, and the Minister knows, that not all those problems arise from the change in the funding of the schools. For example, £185,000-worth of the problem is the consequence of a mistaken formula used in the past for predicting the capitation of the Arnewood school. Nevertheless, the bald facts that the headmaster sets out in his letter are true.

In addition to the loss of funding, the damage done to grant-maintained schools is compounded by their finding themselves back under the dead hand of the local education authority's bureaucracy, from which they thought they had escaped. To give the House a taste of that, I shall treat it to a vignette, for which I am indebted to the headmistress of the Burgate school, who provided me with it. The letter is from Hampshire education authority.

Mr. Deputy Speaker

Order. I gave the hon. Gentleman some leeway in allowing him to read out the entire contents of a headmaster's letter. I would not appreciate another letter being read into the record. Perhaps the hon. Gentleman will paraphrase the letter from the education authority.

Mr. Swayne

I shall be brief, Mr. Deputy Speaker.

The letter is about the need to measure the floor space of grant-maintained schools. It explains why it is necessary to measure the floor space and adds, happily, that this feast of floor measurement will be an annual occurrence.

Before headmasters resign in horror, they should thank their lucky stars and count themselves fortunate that they live in Hampshire, which, despite the absurd machinations of the floor-measuring department, is a very good local authority. Hampshire emerged rather well from the statistics published last week. It passes on more than the entire standard spending assessment to schools. Administrative costs are only £76 per pupil in Hampshire, compared with the national average of £82. Hampshire consulted widely before deciding what proportion of its funds would be delegated to schools and what it would retain. The Minister must appreciate, however, that, last year, grant-maintained schools enjoyed 100 per cent. of their budgets and not, as this year, 85.2 per cent., with some services in kind, which the schools may not require and may not value.

Nothing could illustrate more graphically the policy blunder into which the Secretary of State has stumbled than the release last week of statistics and the attempt to name and shame local authorities. The principal instrument of raising school standards chosen by the Government is local education authorities. Their record on school standards is not a glorious one. Although the dispute has degenerated into an argument between the Secretary of State and the Local Government Association about how accurate the figures are, it is clear that the Secretary of State has a measure of reserve about the competence and motives of education authorities. Why did he bring grant-maintained schools, which were enjoying an efficient means of funding, back into the less efficient method of funding of local authority schools?

I suggest to the Minister that it would be more appropriate to proceed from now on by providing a budget directly to schools on the basis of the locally managed formula. I suggest also that the Government should make separate provision for funding what the hon. Lady regards as the proper functions of the local education authorities. She could then be sure that schools would obtain the funds that she thinks it proper they should receive, without putting herself in the absurd position in which the Secretary of State has placed himself. The right hon. Gentleman is now to be seen standing on the touchlines shouting at the players—in this instance, the LEAs—in the hope that they will take notice of what he is saying. The Government have chosen local education authorities as their instrument, but the figures released last week show that there is a complete lack of confidence—or at least some lack of confidence—in the LEAs. I hope that the Minister will take up my suggestions, and I give her that opportunity now.

12.46 pm
The Minister for School Standards (Ms Estelle Morris)

First, I congratulate the hon. Member for New Forest, West (Mr. Swayne) on securing this debate and thereby giving me a longer time than I ever have when responding to Education questions to contribute to a debate that started with correspondence that has continued throughout the year.

Secondly, I acknowledge the interest shown by the hon. Gentleman's neighbouring colleagues, the hon. Members for Christchurch (Mr. Chope) and for New Forest, East (Dr. Lewis). I accept that they wish to do the best for the children in their constituencies. However we might differ about the different funding of education, I acknowledge a deep-seated commitment on both sides of the House in recognising that the future of our children matters. That is why it is so important to get school funding and what happens in school correct.

It was interesting to listen to the hon. Member for New Forest, West. There are 30 schools in his constituency, of which about half a dozen are grant maintained. It is interesting also that, although he spoke for slightly more than 15 minutes, he said not one word about any of the schools in his constituency that are not grant maintained. I applaud, as does the hon. Gentleman, the high standards that are attained by the GM schools in his constituency, and everywhere else. However, I wish to acknowledge—the hon. Gentleman failed to do this—the high standards that are achieved by many schools in his constituency that are not grant maintained, and have not had favourable funding in recent years. It is a cause for celebration wherever there is excellence, and not merely because excellence happens to be in GM schools. I regret that, in that regard, the hon. Gentleman's speech was somewhat one sided.

Mr. Swayne

Will the Minister acknowledge that local education authority schools in Hampshire are enjoying an increased settlement this year as a result of the improved locally managed formula? The problem is being faced by the grant-maintained schools, and that is why I dwelt on them.

Ms Morris

I an glad that my attack at least brought the hon. Gentleman to acknowledge the improved funding for most of the schools in his constituency and throughout the county since the Labour party came to government. He failed to say that the standard spending assessment in Hampshire has increased by almost £50 million during the first two years of the Labour Government, compared with a 5 per cent. increase over two years under the old county boundaries formula. That means that for children in the hon. Gentleman's constituency there has been a real increase of 6 per cent. for primary schools and 4 per cent. for secondary schools. That is to be welcomed.

When we took power, we were faced with a funding system that discriminated against children. That was not because some children were less important or needed less finance. They were discriminated against because their parents had chosen to send them to schools that did not have a GM label. The hon. Gentleman acknowledged—we must all do so—that, under the Conservative Government, there was a funding differential that was based merely on category of school. That Government had the necessary power and authority, and they could have found the resources to level up. They could have ensured that every school received the funding level that applied to GM schools. However, there was the ridiculous situation of budgets for GM schools increasing year by year in terms of revenue and capital, while real budgets for children in the vast majority of schools fell. I wonder how many angry words were spoken in the House by Conservative Members before the election on behalf of the vast number of children who were educated under the previous Government in schools whose funding decreased year by year.

Dr. Julian Lewis

Will the Minister give way?

Ms Morris

Yes, but I give warning that, because of the extra time taken by the hon. Member for New Forest, West, this will be the last intervention I shall take.

Dr. Lewis

I thank the Minister for giving way so that I can get in a completed comment. Is not the problem that the Government have said that they will level up and extend the funding advantages from grant-maintained schools to the rest, even though the effect of those changes is that over half the central funding, which was being distributed by the GM schools, is now being retained—by the county council in our case? That means that the funding environment for the GM schools is less favourable and, thus, the Government's promise has not been fulfilled.

Ms Morris

That is the crux of the argument made by the hon. Member for New Forest, West. I shall deal with that now.

The previous Conservative Government acknowledged that there was an element of double funding for grant-maintained schools—that point was first raised by the Select Committee on Education, which had a Tory Chairman—and, well before the election, they introduced a degree of parity to the funding mechanisms. To some extent, we have furthered that. The argument revolves around the addition that was made for central functions held back by the local education authority.

On the element of double funding, the hon. Gentleman is right to say that that central annual maintenance grant gave schools extra money—I accept the figure of 8.7 per cent for schools in Hampshire—because they would no longer need the services of the local authority on which that money was spent. Hon. Members know that those schools were not charged for that money, but received the same service free from the Funding Agency for Schools. That is the element of double funding—it was delegated to those schools as central AMG, but not charged to them by the FAS. Central Government picked up the tab. We can debate that arrangement, but no hon. Member can justify it as fair and reasonable or as a funding system with which we should continue.

The previous Government remedied the error in the funding formula, and we have continued with that. I take the view that local education authorities need to do certain things, some of which concern managing the funding formula. When local authorities did not undertake such management for GM schools, the FAS did it. Someone has to manage the admissions system and the surplus places and make sure that there are sufficient places for children in LEA areas. That important measure, to which the hon. Gentleman referred, does not come free; it has to be paid for.

Schools do not want to have to manage those services by themselves—indeed, they cannot do so—so an element of what was central AMG has to be kept back by local authorities, and that has to be part of the education budget. Much of the dispute is about that remedying of the double funding element of central AMG.

Like the hon. Gentleman, I congratulate Hampshire education authority on the way in which it has delegated funding. Compared with other local authorities, it is to be praised. Although we always want more and are never complacent, I shall not criticise it on this occasion. It has delegated 85.2 per cent. of its funds to schools compared with 82.4 per cent. nationally and 83 per cent. for all shire counties. That increased delegation and the fact that Hampshire has passed the increase that the Government have secured on to the education budget means that every school in his constituency will benefit from increased funding, as he acknowledged.

I have two more points to make. On transitional funding, I admit that it is not easy to move from a funding system that was not fair and just to one that treats children on the basis that they are of equal value and have equal need for funding. Managing that transitional arrangement is not easy. We have acknowledged the contribution made by GM schools to the debate about schools' ability to run themselves. Much of the fair funding formula and much of the work that we have done take the best from the GM system as well as the best from the system of financing maintained schools.

Last year, we offered transitional protection at cash levels based on pupil numbers. Although the hon. Gentleman did not do so at Question Time, I am delighted that he acknowledged today that some of the difficulties of Arnewood school—and of another school, which may be in the constituency of one of his hon. Friends—arise from the difference between the number of pupils who attend the school and the number who were forecast to attend. Against the predictions of the LEA, the FAS decided to fund Arnewood school at such a level last year.

Whatever funding system was used this year, and even if the FAS had been managing the funding arrangement, there would have been a clawback from Arnewood school because pupil numbers were inaccurate last year. Indeed, it has come off better because transitional protection gave it protection based on its funding last year. The money that would have been clawed back in other circumstances was not clawed back. A bit of me says that the hon. Gentleman protests too much on behalf of Arnewood school, although I acknowledge the difficulty that transitional funding can offer

We have to remember that every school that receives transitional funding is receiving more money than a comparable school in the local education authority area. I say to Conservative Members that that is a criticism not of the funding that we have put into schools and the funding mechanisms that we have employed, but of the funding that most schools had to put up with in the years of Tory government. The key point is that such schools are receiving more than schools in similar circumstances. As we enter a period of increasing education budgets, the funding of all schools will increase to match the level that favourable funding gave to GM schools before the general election and beyond it.

Teachers have received an above-average pay increase in the past year, which I welcome, and, for the first time in many years, their increase was not phased, which meant an extra cost for school budgets. I have always been sympathetic to the position in which that put some schools—not some LEAs—so I am delighted to tell the House that, this morning, my right hon. Friend the Secretary of State announced in his speech to the inaugural meeting of the Association of Heads of Foundation and Aided Schools that transitional funding will be offered next year and will be uprated at 2.5 per cent. to take account of inflation.

We are being true to our word. We offered transitional funding for GM schools during our first year. We increased budgets throughout the local authority area so that the vast majority of schools in the hon. Gentleman's constituency could benefit. Transitional funding will continue next year and the budgets of GM schools will increase by 2.5 per cent. to take account of the pressures to which I have referred.

I was delighted to read a press release from Bob Lloyd, the chairman of the newly founded AHFAS, which says of my right hon. Friend's announcement: This is good news for all schools. We are delighted that David Blunkett has listened to the concerns raised … by AHFAS that the Government's increase in education funding was not being passed on to schools by LEAs. He is now taking action to ensure all schools are properly resourced. That was our pledge at the general election and it now comes not only from the mouths of Labour Ministers, but from people who have been properly elected to represent foundation and aided schools. Bob Lloyd's remark that the Government are now taking action to ensure all schools are properly resourced means that, for the first time, extra money will go to schools based on need, not on category. I hope that the hon. Gentleman will welcome that announcement.