HC Deb 19 December 2002 vol 396 cc1104-14

Motion made, and Question proposed, That this House do now adjourn.—[Joan Ryan.]

6.59 pm
Mr. Peter Luff (Mid-Worcestershire)

I am enormously grateful for the opportunity to raise this important matter again in the House. In this season of good will it is right that I should follow the example set by hon. Members in the previous debate and wish a happy Christmas to all those present in the Chamber, and to all those beyond who have served hon. Members so well in the past year.

Not everything is bad in Worcestershire. Our police, fire, and social services, as well as our schools, may all be underfunded, and our hospitals may be at breaking point, but tomorrow morning will find me at the opening of the Wyre Piddle bypass. That road is a great Christmas present to my constituents from this Government and, specifically, from the hon. Member for Streatham (Keith Hill), whom I am delighted to see in his place. I thank him publicly once again for that road, and I thank his ministerial successor for the money to begin the other crucial link in the strategic route from junction 6 of the M5 to Evesham, known as the Squires link. For that, the Government have my sincere thanks. After all, this is the season good will.

But—and there is a but—the education spending settlement announced two weeks ago was nowhere near as welcome as those two roads. This debate is about giving Worcestershire's children an equal opportunity to succeed, and that is what they are being denied.

I am grateful for the presence in the Chamber of my hon. Friends the Member for Bromsgrove (Miss Kirkbride) and for West Worcestershire (Sir Michael Spicer), and of the Minister of State, Department of Health, the hon. Member for Redditch (Jacqui Smith). It is good to see them here. I know that the hon. Member for Worcester (Mr. Foster) wanted to be here, but he chose today to move home. Anyone foolish enough to move six days before Christmas deserves our sympathy, not our condemnation. In any case, he is a Parliamentary Private Secretary in the Minister's Department, so he could not have spoken in the debate. That is a shame, as I should have liked to hear what he had to say—but that will happen another day.

The hon. Member for Wyre Forest (Dr. Taylor) had hoped to be here, but now finds that he cannot. In a letter of apology to me yesterday, he wrote: All I want is the truth stated using comparable figures. If you can get this you really will have achieved something. I am indeed in search of the truth, and my colleagues and I will listen carefully to what the Minister says in his speech later.

Of course, we acknowledge that there have been real-terms increases in funding for education across the country. The golden economic inheritance of this Government from their Conservative predecessor made that possible. However, this debate is not about how much more Worcestershire may or may not have got in absolute terms. It is about the county's position in the funding table relative to other similar and neighbouring education authorities.

I welcome today's announcement on capital for access measures, but I am concerned about revenue—the year-on-year funding for the education that our children need.

This debate must also be set in the wider context of the extraordinary demands placed on teachers, across the country and in Worcestershire. Local teachers feel under great pressure. As Heather Staite, who works at St. Egwins middle school in Evesham, said to me: Schools are not given enough time or resources or money to 'implement' all the strategies that they are bombarded with. That is the subject of another debate on another day. Critically—and it is the central reason for this debate—Worcestershire has continued, and looks set to continue, to get less than its fair share of national increases in education funding. For schools in Worcestershire, a 4.2 per cent. increase per pupil is basically a standstill budget. With the employers' national insurance contribution increase coming into effect from April next year, the upper pay scale 2 payments and a likely teachers' pay settlement in excess of 2.5 per cent.—some say it will be as high as 3.5 per cent.—Worcestershire will end up with something very close to zero in real terms.

All that is in complete contradiction to the assurances given by the former Secretary of State, then the Schools Standards Minister, the right hon. Member for Birmingham, Yardley (Estelle Morris). Replying to a debate initiated by my hon. Friend the Member for West Worcestershire, she said: I cannot in all honesty explain why children in Worcestershire get less money than children in Wiltshire … the system is irrational … It is a historic system, which does not serve us well. Later, she added: I am not seeking to defend a formula that ill serves the children of Worcestershire—that would be dishonourable and dishonest. I am saying that we are trying our best, with all reasonable speed, to change that. We are the Government who have given a pledge that that will change."—[Official Report, 1 February 2001; Vol. 362, c. 562–564] In a debate that I initiated on 24 October 2001 in Westminster Hall, the Parliamentary Under-Secretary of State for Education and Skills, the hon. Member for Bury, South (Mr. Lewis) said that the Department for Transport, Local Government and the Regions has … now clearly committed itself to introducing a fairer formula on 1 April 2003. That is not a possibility or an aspiration but an unequivocal commitment that there will be a new, fairer and more even SSA formula not only for education, but for local government generally. It will make a significant difference to the hon. Gentleman's constituents and to mine."—[Official Report, Westminster Hall, 24 October 2001; Vol. 373, c. 128WH.] In fact, the gap between Worcestershire and Wiltshire—and between Worcestershire and all the counties and metropolitan authorities bordering it—has grown.

Sir Michael Spicer (West Worcestershire)

My hon. Friend makes a vital point about the growing gap between expenditure in Worcester and in comparable counties. Does he accept that the effect is beginning to be felt, certainly in my constituency? School sports and drama facilities are now worse in many cases than those of comparable counties nearby. That is a direct result of the gap that my hon. Friend has so brilliantly described.

Mr. Luff

My hon. Friend is entirely right and, if time permits, I will cite some examples of what that has meant for individual schools later in my remarks.

Miss Julie Kirkbride (Bromsgrove)

I do not want to interrupt my hon. Friend's flow, but I want the Minister to understand that it is not just a question of comparing us with the shire counties. My constituency abuts Birmingham and many head teachers in my constituency who have worked there tell me that they had so much money in Birmingham that they did not know where to spend it. We have 4.2 per cent. and Birmingham is getting 7 per cent. on top of an already much bigger budget, which gives high schools in excess of £500 per pupil per year extra. I should be grateful if my hon. Friend would take that into account in his excellent speech on which I congratulate him.

Mr. Luff

I will be dealing specifically with the Birmingham question later. However, my hon. Friend is right—the comparison with Birmingham is becoming very difficult to sustain or justify.

The pledges that the Government made in debates in the Chamber and in Westminster Hall have been broken. Worcestershire has been awarded a 4.2 per cent. increase in funding per pupil. The average for the shire counties was 4.4 per cent. For England as a whole it was 5.2 per cent., for Gloucestershire—our neighbour—5 per cent., for Warwickshire 7 per cent. and for Birmingham and Dudley also 7 per cent. As Worcestershire was not getting much to begin with, that means that the cash gap between us and the English average will have increased, not reduced as Ministers promised. Worcestershire is now 33rd out of 34 counties on education funding per pupil.

Today's debate has been made more complicated by the introduction of the new formula, which makes comparisons with past settlements more difficult to draw. So let us remind ourselves what the new formula was supposed to achieve—stability, simplicity, robustness and, most importantly, fairness.

The new system will prove to be unstable. It is amazing that a new formula has had to have such floors and ceilings in it to slow the amount of change that it is generating. This will lead to a clamour from the winners to remove the ceilings. Bradford should have had an increase of £21 million, but it got £14 million. It feels short-changed to the tune of £7 million. Similar considerations apply to Birmingham. Because of the way that it is made up, the winners will continue to have their position reinforced year on year. No one knows what the long-term effects of the system will be.

As for simplicity, I challenge the Minister, even with his considerable intellectual skills, to stand up in front of a group of parents, governors and teachers and explain in, say, 15 minutes, exactly how the new formula works. He would have to explain, for example, how income support interacts with the working families tax credit, and its successor in the spring, as a deprivation indicator; what met and unmet educational needs are; why, in meeting these needs, the Government have gone for the medium threshold when the F40 group sent 53,000 letters asking for the high threshold; why Worcestershire does not receive the area cost adjustment when Warwickshire and Gloucestershire do, and so on. Worcestershire county council has asked these questions of the Government and has had no answers.

As one head teacher said to me: For a formula that is supposed to be transparent the data produced by the ODPM and the DfES is at best opaque and one might suspect has been made so detailed as to obstruct understanding. As for robustness, there are already many rumours circulating in local government that Ministers are planning to engage in tweaking the formula in future years, hardly a sign of strength or belief that what they are doing is correct.

As for fairness, the most important element, how can a system be fair that values my constituents' children as needing £333 less than the top county of East Sussex, £176 less than the average county of Lincolnshire and £98 and £90 less than our neighbours in Warwickshire and Gloucestershire? All children in similar circumstances should be equally valued. That is the point.

Mrs. Mulryne, head teacher of Pebworth first school—a school with a Warwickshire postcode—told me: The mismatch between Worcestershire and Warwickshire funding is striking and very disappointing. Mike Appleby, head teacher of Broadway first school, shares this view. Broadway is a limb of Worcestershire that juts into Gloucestershire, surrounded on three sides by its neighbouring county. He wrote to me to say: All schools are judged by their results—such as Ofsted inspections—but all schools are not being given an equal chance of providing the necessary equipment or staffing because of the disparity in the funding arrangements. Schools that are only two miles apart should receive the same funding per pupil, however this is not the case. Surely Worcestershire children are worth the same level of investment as a child in Gloucestershire or Warwickshire…If this government believes in giving everyone a fair and equal chance to better themselves then this system of funding must be changed. As my hon. Friend the Member for Bromsgrove has already pointed out, the comparison with Birmingham and Dudley is even worse. Another local head teacher wrote to me: Staggeringly the gap between ourselves and the Birmingham schools actually increases. The gap between my school and a similar size school in Birmingham looks to be even larger under this funding system than the previous one. Indeed, it now looks to be in excess of £750,000. That is for one school, each year.

We all acknowledge that Birmingham has deprivation that must be addressed with extra resources: it is how much extra that is at issue. After all, there is plenty of poverty, drug abuse and social exclusion in Worcestershire, too, so what that head teacher went on to say is important. I have heard other head teachers say it, too—it reflects exactly the point made by my hon. Friend the Member for Bromsgrove. The head teacher said: It is galling in the extreme to hear from colleague headteachers in Birmingham that they have so much money they don't know what to spend it on next, when we in Worcestershire are having to increase class sizes, make do and mend with outdated computer equipment and most galling of all, lose our best staff to Birmingham schools. Basic pupil funding has now been introduced and should be welcomed; it is a step in the right direction, but it could have made things much fairer. For example, top-ups, especially the area cost adjustment, still irrationally disadvantage Worcestershire. Actual teaching costs in areas that receive the adjustment are less than 3 per cent. higher than ours—indeed, sometimes they are lower—yet they receive between 12 per cent. and 16 per cent. higher funding. The cost of employing teachers, which is about three quarters of all educational costs, is higher in Worcestershire than in 61 other council areas, including Oxfordshire, East Sussex, West Sussex, Hampshire and Surrey—all counties that receive extra funding because their costs are supposed to be higher.

In July, I analysed a document deposited in the Library that shows that Worcestershire teachers are, on average, paid more than their counterparts in England. Excluding the very high salaries paid in London, but adding in all the city areas such as Birmingham and all the counties of south-east England, the average salary paid to teachers last year was £25,103. In Worcestershire, the figure was £25,110—£7 more than the English average, excluding London.

Ministers argue that those other areas face higher recruitment costs, but, apart from London itself, the argument is not sustainable; it just does not hold water. Salaries paid are in accordance with scale rates and I do not believe that schools are finding other ways of spending so much extra cash on boosting teachers' salaries that do not feature in measures of actual teaching costs. I am sure that the Inland Revenue would be interested if they were!

The only fair formula should reflect three things: the real cost of employing teachers; the relative poverty of the area, as measured by average incomes in the area; and any necessary adjustment for special needs, for example, of ethnic communities. That is the only basis for a fair formula.

Locally, some of the county's MPs have been describing the settlement as a victory. If this is victory, I would hate to taste defeat. Even more monstrously, some of them said that, as some local schools had not done well at key stage 2, it might be wrong to give them extra resources. I hope that the Minister does not concur with that argument.

In the recent comprehensive performance assessment, Worcestershire county council scored four out of four for the use of resources. There is precious little waste in Worcestershire. Although I am sure that there is always room for improvement, the taxpayer's pound goes about as far as it can in my constituency, thanks to the county council.

My grievance is not a new one. I challenged the last Conservative Government on the same point. However, things have got worse, both relatively and absolutely, since 1997. What we have been asking for during the past five years—and appear to have been promised by Ministers in successive debates—has not been delivered; expectations have been raised and cruelly dashed.

I accept that there are welcome technical features in the new formula. As I said earlier, a basic entitlement is a good idea, although it should have been given greater weighting. However, there are serious technical objections, too; above all, the application of the area cost adjustment.

In concluding, I make the following points. We have a national pay scale, a national curriculum and a national inspection system. In other words, teachers are paid the same amount to teach the same things and are inspected in the same way, yet all schools receive vastly different amounts of money.

I could quote from many letters that I have received on the subject from teachers during the past few weeks and months: Charlie Lupton of St. Barnabas Church of England first and middle school; Jenny Batelen of Hartlebury Church of England first school; Gerry Hughes of Chawson community first school; David Coll of Witton middle school; Gerry Burgess of Simon de Montfort middle school; David Kelly of Evesham high school; Bernard Roberts of Prince Henry's high school; David Braham of Bengeworth first school and the chair of Governors of Harvington Church of England first school, Brian Tarling. They have all written broadly to say the same thing.

I want to end by putting on record my deep appreciation of a tireless campaigner for the schools in our county, Mr. Cledwyn-Davies, headteacher of Droitwich Spa high school, who moves to a new position in Swindon in January. His last words to me on school funding in Worcestershire will also serve as my last words in this debate. He says: I regret to say I feel disillusioned, disappointed and frustrated by this new formula. It perpetuates iniquities of the past and apart from setting a baseline funding for students across the country it does nothing for the children of Worcestershire. I do feel badly let down by politicians in the Government who promised much and asked us to trust them and be patient. We were certainly patient and had no other option other than to take their word but that has now been found sadly wanting.

7.15 pm
The Minister for School Standards (Mr. David Miliband)

In the spirit of Christmas cheer, I offer my congratulations to the hon. Member for Mid-Worcestershire (Mr. Luff) on securing this debate at a much more reasonable hour than the Summer Adjournment debate I answered at 1.50 am in July when you, Madam Deputy-Speaker, were in the Chair and looking much more sprightly than I was. Perhaps I may take this opportunity to offer good Christmas and new year cheer to you.

It was generous of the hon. Gentleman to acknowledge the outstanding work done by the Minister of State, Department of Health, my hon. Friend the Member for Redditch (Jacqui Smith) and by my hon. Friend the Member for Worcester (Mr. Foster) and their campaigning zeal, which has helped to deliver a big change in Worcestershire over the past few years.

I want to address the hon. Gentleman's challenge that I explain why the current system is fairer, simpler and more transparent. That is precisely what I will do in the time available. I am sure he will not mind if I take the opportunity to put on record my thanks to and gratitude for the work of teachers in Worcestershire who have been responsible for significant improvements in the quality of education in the county. For example, since 1998 the percentage of young people leaving primary school reading, writing and counting well has risen from 66 per cent. to 75 per cent. in English, from 56 per cent. to 71 per cent. in maths and from 69 per cent. to 86 per cent. in science. At a time when many people are ready to disparage the teaching profession, I am sure the hon. Gentleman will agree with me that that represents outstanding work in primary schools. In the early years of secondary education there is impressive evidence of what is happening in Worcestershire in terms of pupils reaching level 5 at aged 14: results are up from 63 to 69 per cent. in maths, and from 61 to 70 per cent. in science. We all hope that that can be translated through into continuing rises in achievement at GCSE, A-level and in vocational qualifications.

The hon. Gentleman robbed me of the chance to rib him by acknowledging that there had been increases in funding in Worcestershire over the past five years. We may disagree about exactly why that has happened and what choices have led to it, but it is worth putting on the record that since the 1998 local government reorganisation Worcestershire's education SSA has increased by over £42 million. That is up 22 per cent. in the space of four years. That formula funding is only part of the picture. The amount that Worcestershire gets through standards fund grants has also increased from £4 million in 1998 to over £20 million this year. The allocation so far for 2003–04 is over £12 million. That can be allied to the increase in school standards grant. I recognise the hon. Gentleman's point about the importance of revenue as well as capital funding. That money, going directly to schools in the same proportion around the country, has more than doubled from £3.7 million in 2000–01 to over £7.7 million this year. It is also worth remarking on the improvements in capital expenditure; in 1998–99 capital expenditure in Worcestershire was about £9.6 million, last year it was £17.7 million and this year it is over £24 million.

The hon. Gentleman was unwise enough to trespass into his own record during the last Conservative Government by claiming that he had pressed hard for improvements in education funding. What did I discover in my detailed researches of 1995, when central Government were cutting by 0.36 per cent in real terms the amount of money going to Worcestershire? Was the hon. Gentleman challenging the Government? I am sorry to disappoint the House, but I am afraid that he was not. He was attacking the county council. He said: Last year the county received one of the largest increases in the country for education"— that was the minus 0.36 per cent— and this year has done better than the average … if the county council has cash problems they stem from the mismanagement of that cash.

Mr. Luff

I should like to quote from an article that appeared in the Worcester Evening News on 21 September 1995: Worcester MP Peter Luff is pressing Whitehall to give Hereford-Worcester a fairer share of crucial Government grant aid next year. He claims the county has been getting a raw deal compared with other shires"— and so on. So, in 1995, I was pressing the then Conservative Government.

Mr. Miliband

I am grateful to the hon. Gentleman for that, but I think that he has just read out his own press release, even if the local newspaper faithfully repeated it. I am sure that the fact that the council was controlled by the Liberal Democrats at the time had absolutely nothing to do with the attitude that he took.

Let me move on to the aspects of the new system that the hon. Gentleman raises. It is important to restate why we changed the formula. The previous system was out of date and based on even more complicated criteria than those that he criticised in the current system. It did not reflect the division of responsibilities between schools and LEAs, and it was unfair because it was based on a regression of spending patterns from 1991.

The aim in the new system is to ensure that similar pupils in different parts of the country attract the same amount of funding. The system is designed to match the separate responsibilities of schools and LEAs and to be more fairly distributed according to three simple criteria: first, the basic need, to which the hon. Gentleman referred; secondly, the additional educational needs that may relate to poverty or having English as a second language; and, thirdly, the area cost adjustment. It is incumbent on me to address those points.

Of course it is important to say that representatives from Worcestershire and, indeed, parents and governors engaged, with some gusto, in the consultation exercise that we held on the reform of the system. Their representatives played a significant role in the education funding strategy group, which has met many times during the past 18 months. Four of the six local authority members of the group were from the F40 authorities. Of course they were working, as were the Government, on key data that were produced not by us, but independently by PricewaterhouseCoopers.

The hon. Gentleman perfectly reasonably refers to the area cost adjustment, from which Worcestershire, along with 51 other local authorities, does not benefit. The area cost adjustment is designed to recognise that many schools, especially those in London and the south-east, face particular pressures from the extra costs of recruiting and retaining staff. Under the new system, we have recognised that other authorities outside that area face similar problems. That is why the system has been refined to take proper account of local circumstances.

The system recognises that there can be high-cost areas outside the south-east, which is why 99 local authorities now benefit from area adjustment, not 59, as under the previous system. We have been driven by data. I cannot help the fact that the data reveal that Worcestershire is not one of the top 99 high-cost authorities; it is one of the 51 with the lowest costs, based on wage rates, which, we believe, form the right basis on which to calculate local costs.

The allowance is not based on teachers' pay scales—the hon. Gentleman referred to that fact—because they do not reflect differences in the cost of recruiting and retaining staff in different areas of the country. Our system is based on wage differentials in general, which represent a better proxy.

The hon. Gentleman talked about additional educational need. In introducing the new system, we also took account of the additional costs that different pupils face all over the country. The current system, which we are reforming, is based on evidence that is completely out of date and on criteria that are not relevant to different educational circumstances.

I thought that the hon. Gentleman would mention the fact that we have a wider definition of poverty under the new system. The number of children of parents on income support, which has been the basis for the definition of poverty, is now supplemented by the number of children with parents in receipt of the working families tax credit. So we recognise that the children of those in low-paid employment have extra needs. We do not recognise them in the same proportion as those on income support who have extra needs, but there is significant recognition of the working families tax credit in the new system. That is an important step forward in how we understand the nature of deprivation and need.

Sir Michael Spicer

If regression analysis is no longer used, why is the gap between comparable counties and Worcestershire growing at almost exactly the same pace as it was before the Minister's new ideas were introduced?

Mr. Miliband

I am happy to go through each of the counties that the hon. Gentleman believes is comparable, but the reason is that the data show them not to be comparable. He may have his own impression about what constitutes a comparable authority, but the two reasons for differences between the new funding arrangements for LEAs are the number of pupils or their circumstances. The system has been driven by data throughout.

Sir Michael Spicer

It is an extraordinary coincidence that the gap should be growing at exactly the same rate in those counties.

Mr. Miliband

I am happy to respond to the hon. Gentleman about any specific counties that he has in mind, and I shall write to him with full details of the data that have underlined that. The changes have been driven purely by the data that we have received about the different circumstances of children and the number of pupils, which is relevant in the Wiltshire case to which the hon. Gentleman for Mid-Worcestershire referred. I understand that the number of pupils in Wiltshire is growing fast, which is part of the explanation for the different system. I am happy to write to him about that.

I was saying that the new data on working families tax credit are of benefit to Worcester. That is an in-principle change at the foundation of our system, for which many people campaigned hard—[Interruption.] The hon. Member for Bromsgrove (Miss Kirkbride) is complaining from a sedentary position without being entirely clear what she is complaining about. This is good news for Worcestershire because it recognises that, even in areas of high employment, there can still be need. The fact that the system has recognised that should be applauded across the House.

Miss Kirkbride

I shall be sending the Minister's comments to the 1,000 parents, teachers and governors who have written to me on this matter. They say simply that it costs pretty much the same amount of money to buy books and computers and to supply teachers. A basic need therefore exists. Despite what he said today, they will not understand why the gap has got wider under Labour when it promised something different.

Mr. Miliband

We promised at every stage that similar pupils in different parts of the country would be treated in a similar way. The letter that I have sent to head teachers explains that.

It is also important to recognise the importance of the LEA's role in terms of the situation between different schools. When the money goes to schools, it is distributed on the basis of the formula adopted by the LEA. The LEA has responsibilities to ensure that need is recognised in its formula, as well as in the formula that we send out.

The hon. Member for Mid-Worcestershire did not mention sparsity in his remarks—I understand that he was short of time and that he has been concerned about the issue. Perhaps I can use the time remaining to put on record that there is now a significant recognition in the funding formula of the problems faced by sparse authorities. Sparse authorities wanted us to introduce a sparsity factor for secondary schools, which we were not able to do. We have recognised in the primary sector, however, the significant extra costs associated with that factor.

The hon. Gentleman also mentioned floors and ceilings. I have been impressed that the authorities on the ceiling have not been bombarding me with requests to get rid of that ceiling and to give them faster increases in funding, as they recognise that there is an inherent fairness in ensuring stability as we introduce the new system. The introduction of floors and ceilings has been an important part of ensuring a degree of consensus about the new system.

The Green Paper, which we published in the summer to kick off the process, promised that we would level up to a fair amount of funding per pupil. A fair distribution has to be arrived at, however, by considering the relative needs of children, not by arbitrary comparison with a particular authority or level of funding, or by levelling an authority with low levels of deprivation up to the same level as one with high levels of deprivation. I understand, however, that the effect of the changes to the education funding formula has not been as dramatic as Worcestershire had hoped.

I hope that my remarks at the beginning made it clear that significant funding increases are going into Worcestershire. I believe that we have a funding formula that is far clearer, far simpler and far more transparent. On that basis, it will command the respect of the education world and beyond, and will deliver the sort of stability that we both want.

Miss Kirkbride

As the Minister cut his remarks short, I am grateful to have some time to put our response to those remarks on the record.

While we have great respect for the Minister's intellect, what we heard was simply a load of waffle about the new formula. That simply does not satisfy our constituents, who genuinely feel that the gap has unfairly become wider, when it was wide enough ready, and that it costs pretty much the same to have books and computers and to employ teachers. The Government have not recognised basic cost per pupil in the school funding formula. I understand and support the idea that poorer authorities should have more money to give extra tuition to their pupils who may need it, but I very much resent the idea that just because a child comes from a poorer background, they must, by definition, be less clever and therefore need extra support in schools. That simply is not the case. It certainly was not the case when I was at school, and it is not what I see when I visit schools nowadays. Of course, the formula should represent in some ways deprivation, need, different languages and different ethnicity, but, ultimately, it is not right and proper—

The motion having been made after Seven o'clock, and the debate having continued for half an hour, MADAM DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned accordingly at half-past Seven o'clock.