§ The Secretary of State for Education and Skills (Mr. Charles Clarke)With permission, Mr. Speaker, I should like to make a statement about the funding of schools in the years 2004–05 and 2005–06. I am placing the details in the Library. On 17 July this year, I set out to the House the principles that I would follow to restore confidence in the school funding system, deliver stability in school budgets and give certainty for head teachers and governors. I promised a further update in the autumn.
Responsibility for school funding is shared between the Government, local education authorities and the governing bodies and head teachers. We all want to ensure that schools can plan and manage their resources effectively to achieve the highest possible standards. I want today to express my appreciation of the commitment of all the education partners to those ambitions and for the very constructive way in which representatives of schools and local government have worked with us. I am confident that that will continue.
As I said in July, I intend to support schools in three ways: a minimum increase in every school's budget; additional resources to help every LEA to support schools with additional pressures; and targeted transitional support to help all schools to achieve balanced budgets. I promised to introduce for 2004–05 and 2005–06 a minimum per pupil funding guarantee for every school, taking account of the average cost pressures facing schools in those years. I intend to achieve that by increasing both LEA core funding and the funding received from Department for Education and Skills grants.
My officials have examined the relevant cost pressures, including increases in teachers' pay, where we have assumed an inflation-led settlement. Those pressures naturally vary between schools. However, following extensive consultation with our education partners, my best estimate for next year is that the combined effect of those factors on the average school will be about 3.4 per cent.
Each school receives funding through LEAs in two main ways: funding directly related to pupil numbers and funding related to fixed costs. We have concluded—again, after careful consideration with our education partners—that pupil-led elements should rise by 4 per cent. per pupil and fixed elements also by 4 per cent. in cash, so a school whose pupil numbers stay the same between 2003–04 and 2004–05 will be guaranteed a 4 per cent. per pupil increase in its overall budget next year.
A school whose pupil numbers decline will receive a funding increase of more than 4 per cent. per pupil to help cover fixed costs. However, because of declining pupil numbers, the number of primary schools with reduced cash budgets—and, therefore, possibly staff numbers—will be significant, as there are around 50, 000 fewer primary pupils this year, with a similar reduction next year. Secondary schools with falling rolls will be in the same position.
Schools whose pupil numbers are increasing will be guaranteed at least a 4 per cent. increase for all their existing pupils. Those schools will be guaranteed a rise of at least 4 per cent. in their cash budgets and an overall per pupil increase of at least 3.4 per cent.
306 I said in July that we would consider carefully the position of very small schools. Those will receive an increase of at least 4 per cent. if their pupil numbers do not change. However, our general approach may not be appropriate for very small schools with much higher than average fixed costs. Therefore, funding for schools with 75 pupils or fewer will be determined according to their LEA's own school funding formula. For special schools, whose funding is normally based on places rather than pupil numbers, the guarantee will be a minimum 4 per cent. increase in funding per place. LEA funding for specified costs, such as rates, will continue to be funded at cost and will be apart from the guarantee.
The 4 per cent. level at which I have set the minimum schools guarantee already takes some account of cost variation around the 3.4 per cent. average. I stress, however, that that guarantee represents only the minimum increase that a school might receive next year. Across the country, many schools will receive per pupil increases of more than 4 per cent., since the overall increase in education formula spending will be more than 5.5 per cent. per pupil. The final budgets will be determined by LEAs, in conjunction with school forums, after the local government finance settlement has been announced, but today's announcement should—subject to pupil numbers—give schools an early indication of the minimum increase in their budgets. For 2005–06—the year after—my expectation is that the minimum schools guarantee will again be at least 4 per cent. for a school with unchanged pupil numbers. I will keep that under review and will announce the final figure in due course.
Other elements of schools funding will also be increased on the same basis. Thus the Learning and Skills Council will increase all its funding rates for school sixth forms by 4 per cent. in 2004–05, and it will also increase current school sixth forms' allocations for the period April to July 2004 by 4 per cent. Similar arrangements will apply in 2005–06.
The changes to the standards fund caused significant problems for some schools this year, so in July I undertook to reverse the cuts that had previously been announced for the next two years. That additional spending is reflected in the standards fund allocations that are being issued to local authorities today. In 2004–05 schools will generally receive a cash increase of 4 per cent. on this year's standards fund allocations. There will be some limited exceptions: those include grants where the amount of funding is directly related to actual costs; specialist schools, where I increased the funding rate in September this year and will make a further increase to £129 per pupil in 2005; and grants, where funding is being especially targeted for policy reasons. For example, we are uprating the ethnic minority achievement grant by 4 per cent., but are also taking the first steps towards a fairer distribution under which no school will receive less EMAG in cash terms in 2004–05 than they are receiving this year.
Moreover, next year, schools will receive either a 4 per cent. increase in their per pupil school standards grant, or the value of their announced SSG band for 2004–05, whichever is higher. Both standards fund and school standards grant will be uprated again—in line with the minimum schools guarantee—in 2005–06. I am also adding resources to revenue support grant to reflect in 307 LEA baselines the budget support grants paid to some authorities in 2003–04.
The total additional funding to maintain and uprate the standards fund and school standards grant, and to mainstream the budget support grants, will be £435 million in 2004–05 and £520 million in 2005–06. I am placing full details in the Library.
I can also confirm that threshold pay costs will be fully funded next year. As at present, schools will be able to draw down well over £500 million from my Department on a demand-led basis. In addition, the £205 million that we have allocated this year for performance-related pay will be uprated at least in line with the headline pay settlement for next year. If proper arrangements for point 3 of the upper pay scale can be settled, further resources will be allocated in September 2004.
The schools guarantee must of course be backed by adequate resources for local education authorities. Next year I will therefore set the minimum increase in the schools formula spending share at 5 per cent. per pupil by contrast with the 4 per cent. guarantee for schools. Again, that is a minimum—most increases will be higher. The provisional SFSS increase for each authority will be confirmed at the time of the local government finance settlement, but we expect the ceiling increase to be at least 6.5 per cent. per pupil.
As I said in July, every authority will receive sufficient grant in each of the next two years to cover its formula increase in education spending. Given that commitment, my right hon. Friend the Deputy Prime Minister and I will be writing to authorities to set out the Government's clear expectation that every LEA passports in full its SFSS increase to a matching increase in its schools budget, unless there are wholly exceptional circumstances. I have statutory powers to require LEAs to set a minimum schools budget and I will be ready to use those powers if necessary.
I also expect local education authorities' spending on their central education budgets to rise no faster than spending on schools. I am confident that most LEAs will concentrate on increasing schools' delegated budgets over the next two years, but the draft regulations that I have issued reflect my determination to achieve this. Under my proposals, LEAs will be able to seek an exemption in exceptional local circumstances, but the generality is clear. I will confirm the minimum increase in SFSS for 2005–06 next autumn, but if the minimum schools guarantee were 4 per cent., I would expect the minimum increase in SFSS to be around 5 per cent. again.
My proposals have been drawn up to support schools, but that support will not be at the expense of other services. In line with the commitment that I made in July, the Government will provide additional resources for other services, including children's social services, to support spending in those services. The full details will be announced as part of next month's local government finance settlement.
My statement in July emphasised my commitment to sustaining school work force reforms. That commitment stands, and I see it as important. Much progress can be made by schools managing their total 308 resources—people and money—more strategically and working in different ways. Over the next two years, the increase in resources for schools, through schools formula spending share and Department for Education and Skills grants, and including the additional resources that I am confirming today, will provide headroom over the average cost pressures that schools face to help schools to make the most of the national agreement.
Primary responsibility for maintaining sound financial management rests with schools themselves and their LEAs. I acknowledge that LEAs need more flexibility to help schools to balance budgets over the next two years, so I am amending the regulations to enable LEAs to target their resources at schools with particular problems, whatever their source. It is the responsibility of LEAs to use that flexibility. I expect them to do so, and am confident that my expectation will be fully shared by the communities that they serve.
However, I do recognise that there are a limited number of cases where balancing budgets is beyond the capacity of individual schools and LEAs in the short term. That is most likely in the LEAs that have received the lowest increases in education formula spending and DFES grant between 2002–03 and 2004–05. For those LEAs, I therefore propose to make a targeted transitional grant available over the next two years, and I am issuing indicative figures today. These assume that grant will be available to take the increase in funding for all authorities over the two-year period from 2002–03 to 2004–05 up to a minimum of 12 per cent. per pupil—well ahead of our best estimate of unavoidable pressures for those years. I estimate that that will cost around £120 million and benefit around a third of LEAs. The final allocations will be confirmed at the time of the local government finance settlement.
However, that additional resource will be provided only when I am convinced that the LEA has made every effort to support its schools from within its own resources by passporting its SFSS increase in full, directing its resources to delegated schools budgets as far as possible and intending to target schools in greatest difficulty. It will be a condition of grant that each LEA prepares, with the schools concerned, a costed and credible plan to bring its schools' budgets into balance by 2006–07. In 2005–06, I propose to make further grant available to the same authorities at around half the level of that provided in 2004–05. Again, I will confirm detailed figures next autumn.
LEAs with increases between 2002–03 and 2004–05 greater than 12 per cent. per pupil should be able to resolve local difficulties within their own resources. However, I recognise that there are individual schools that spent above their income this year and may therefore face difficulties in getting their budgets back into balance. So where an LEA can put forward a compelling argument that additional transitional funds are needed in the short term, above and beyond those already available to the LEA, to avoid real damage to children's education, I am prepared to consider bringing forward DFES grant payments. So the LEA will have funds available in 2004–05 for that purpose, with the expectation of a consequential reduction to what they receive in future years. I will confirm the maximum amount that I might be prepared to make available to each LEA in that way following the local government finance settlement, but I expect the calculation to be 309 based on a maximum grant of £300, 000 per authority, or 0.2 per cent. of the authority's total education resources in 2004–05 if that is higher. Such grant would be subject to conditions similar to those for the targeted transitional grant.
I am confident that the measures I have outlined today will help to create stability for schools. We will do all we can to help LEAs work with their schools where necessary to get budgets back into balance over the next two years. That is because, for any school, an annual excess of spending over income is not sustainable. I acknowledge that getting back into balance may mean difficult decisions. Where school spending varies significantly from the average—where 80 per cent. is spent on staff costs and 20 per cent. on non-staff costs—or from their income, they need to act to get back into balance.
It is therefore vital that schools are well able to plan and manage their resources effectively. More and better support for schools is needed in achieving that, so I am announcing that my Department has commissioned KPMG to work with the National College for School Leadership and the head teacher associations to design and develop a varied menu of support and guidance to help schools' budget management. That support will be available from the turn of the year and it will prioritise schools in those LEAs that are in receipt of the targeted transitional grant.
The proposals I have announced today are designed to help restore confidence in the school funding system and increase stability in school budgets. I am very grateful for the help and advice we have received from our education partners. I have set out the framework for the school funding system over the next two years. It is now for LEAs to address the needs of every school and for heads and governors to ensure that the resources they receive are used effectively. We all share responsibility for school funding and we must continue to work together to get it right. I commend the statement to the House.
§ Mr. Damian Green (Ashford)As always, I am grateful to the Secretary of State for advance sight of his statement and for his exquisite sense of timing in making it today. When he looks back at his 12 months in the job, I am sure he will agree that coming to the House to try to rectify the school funding crisis caused by his Government should not be a necessary duty for him. Let me explain what his non-transparent statement meant.
The Secretary of State's predecessor presented the Government's plans for education spending as a triumph, but instead of that, heads, teachers and parents across the country have spent months trying to cope with the effect of huge deficits, teacher redundancies and crumbling school buildings. Many schools have been forced to dip into their financial reserves or capital budgets to ensure that they make ends meet. Schools across the country have deficit budgets and LEAs are suffering huge shortfalls. Hertfordshire estimates a £15 million shortfall, Surrey has spent £12 million of its reserves and my authority of Kent has an estimated £22 million shortfall. I need not remind the right hon. Gentleman that in Norfolk the shortfall is £14 million.
The effects of the crisis have been most acute in the classrooms. Only two weeks ago, a report commissioned by the National Union of Teachers found that a quarter 310 of primary schools and a third of secondary schools cut staff this year because of financial shortages. Furthermore, the funding problems make a mockery of the Government's claim that class sizes have got smaller. In practice, classes are having to double up to save money that is usually spent on supply teachers. Planning, preparation and marking time are being reduced as a result.
So today we have the Secretary of State's rescue package. He has made much of the extra money going to the worst-hit local authorities. That will be welcome, as will the fact that some of the relevant information for schools and local authorities is coming out earlier than in previous years. But as ever we need to dig beneath the surface of the statement to find the new victims of the Government's failures in this area.
Some of the money that the Secretary of State is giving away is reported to come from the budget for teachers who have earned it through the performance-related pay system. Can he confirm that? He skated round it in his statement. What is the point of performance-related pay if teachers perform but do not then get the pay? Can he explain to teachers and the House how that is fair? Since he is penalising precisely those teachers who have worked hardest, can he imagine how much damage he is doing to morale in staff rooms today?
On the general issue of teachers' pay, the right hon. Gentleman announced an annual rise of about 2.5 per cent., and he told the House today that that means an increase of about 3.4 per cent. for school budgets. Is he aware that that calculation is regarded with great suspicion by many people in our education system? They feel that schools will face cost pressures much higher than 3.4 per cent. In particular, can the right hon. Gentleman give schools a guarantee that they will face no more increases in employers' national insurance contributions? What effect does he think that that will have on the teachers' work load agreement, by which he rightly sets much store?
The Secretary of State has today announced a per pupil increase of 4 per cent., but the House needs to unpick that figure and what lies behind it. I assume that it is an increase for every pupil in every school, regardless of that school's financial position. If so, is he not in danger of failing to compensate the worst-hit schools enough because he is spending the same amount in every school? He will be aware that the effects of the previous blunders have not been felt in a uniform way across the country, and indeed his £120 million fund is designed to address that. Can he give the House a guarantee that the extra grants and loans that he has announced will mean that every school will be able to return to the staffing levels that it had before this year's crisis? If he cannot, this announcement is just another piece of spin.
On the wider implications, can the Secretary of State be more explicit about how far he wants to go in removing LEAs' ability to use local discretion on funding? I suspect that he deeply regrets his Government's abolition of grant-maintained status for schools, but if he is planning to bring it back for all schools by the back door, perhaps he could share that momentous change with the House.
311 More particularly, if the right hon. Gentleman is removing some financial discretion from LEAs, can he tell us what will be the impact on special educational needs provision? He spoke briefly about that, but it was not at all clear what the ultimate effect would be. Earlier this year he accused some local authorities of spending too much on SEN provision—one of the most extraordinary statements that I have ever heard from an Education Secretary. Has he now decided that he wants to be in direct control of all SEN funding as well?
The statement promises a minimum funding increase, but of course one of the key things that will matter to local authorities is where all the extra money is coming from. How much will come through the SFSS? The Government announced earlier that they were cutting central Government funding through the standards fund to give more freedom to local authorities; they are now reversing that process. But at the same time, they are trying to claim that the extra money that will, after today, come through central Government is new money. It is not; it is reshuffled money, so some of the real money will have to come, as ever under this Government, from the council tax payer.
Can the Secretary of State tell the House the full implications of today's announcement for council tax levels and other services? If councils are told, as they have been, that they have to spend as much on education as the Government demand and that they will be capped if they put up their council tax too much, they will have to slash other services.
The Government have spent months trying to dig themselves out of the hole that they created last year. This statement shows that the means that they are using are unfair to hard-working and successful teachers and threatening to council tax payers, and they do not even guarantee that the worst-hit schools will be enabled to recover quickly. The effects of that will be felt early next year when schools come to set their budgets. That is when today's statement will really be judged. Schools know from this year's experience that a generous-sounding Government statement can turn into a reality of cuts and redundancies. I hope that we do not see a repeat of this year's funding crisis in schools, but I fear that we will.
§ Mr. ClarkeI was interested to note that the word "children" never found its way into that response.
The hon. Gentleman refers to my exquisite sense of timing. I was grateful that the Conservative party decided to have its leadership election today, but I assume that it is only to hide the good news in my statement.
I counsel the hon. Gentleman to be careful in quoting Conservative-controlled authorities such as Hertfordshire. Surrey, Kent and Essex, which are scaremongering in their schools with totally false figures. I say to the hon. Gentleman, as I said to the Conservative leader of Kent and other Conservative council leaders: "Look at this statement, analyse it and understand what it means for every LEA and school, and then make a judgment. Don't try to scaremonger without having the facts in front of you."
312 I know that the hon. Gentleman was speaking from an NUT brief, but it is not true that performance-related pay has been raided for this money. We gave our evidence to the pay review body, and we will see what it has to say. It is not true that the 3.4 per cent. figure is regarded with suspicion by other people in the education world. In fact, it was derived specifically from a series of discussions with, among others, local government and the head teacher associations precisely because I desired some consensus on what would be an appropriate figure.
It is not the case that more increases in national insurance are in the pipeline. It is not the case that we are failing to compensate schools in the worst position; in fact, we are giving local authorities the flexibility to do that. None the less, I was interested that the hon. Gentleman appeared to be saying—no doubt he will correct me if I have got this wrong—that he is against a per pupil guarantee for every pupil in every school. The implication of what he said is not to have such a guarantee.
It is the case that pupil numbers will be the principal determinant in school funding, so where rolls are falling, there will be consequences. I have made that clear, and it is the case throughout the system. It is not the case that we are removing LEA flexibility; in fact I am publishing regulations that will increase their flexibility to deal with the greatest issues.
I acknowledge that important issues arise from special educational needs, and we have discussed those with local government. It is not the case that we are increasing the standards fund with money taken from the SFSS. The reverse is true: we have gone right through our budgets to increase that fund and the SFSS is left untouched by that approach.
Finally, it is not the case that council tax will have to go up to achieve these increases. My statement and the statement that will be made by the Deputy Prime Minister in due course do not require council tax increases in order to maintain essential services.
It is important that even the Opposition, in their current parlous state, have a discussion about these proposals on a factual, honest basis, rather than reading out a litany of allegations that are either wrong or simply taken from the NUT's brief.
§ Mr. Patrick Hall (Bedford)Is my right hon. Friend confident that there will be sufficient additional support for those schools that have agreed deficit budgets this year and may not have the capacity to recover in the next financial year? Is he also confident that as a result of his statement the many schools that have avoided a deficit budget this year by dipping into their reserves and making cuts in training and maintenance, for example, will be able not only to recover in the next financial year but to resume the considerable progress that has been made since 1997?
§ Mr. ClarkeI am confident that the arrangements that I have made today on the transitional fund and other issues will permit LEAs working with schools in the position described by my hon. Friend to deal with that situation and restore their budgets to the proper basis.
313 The combination of grant for some authorities and loans for others means that I can assure my hon. Friend that we can sort out those problems.
§ Dr. John Pugh (Southport)I thank the Secretary of State for advance sight of his lucid and informative statement. It did not altogether help but much of it is very welcome.
Liberal Democrat Members feel that although this is, superficially, good news, we have been here before. Last year, the Government genuinely put money on the table—more money than ever before—but the Secretary of State has acknowledged that there were severe problems arising from increased school costs and the distributive effect of the new local authority formula and its effects on the school formula in turn. That was described as a failure of modelling. There was a marked difference between the Government's intentions, which were good, and the real-world effects, which were bad. This year, it is very much a case of déjà vu for Liberal Democrats. The Government's intentions are good, but it remains to be seen whether the long-term effects are good. We will know only when the details are available and the budgets start to be constructed in 2004. The Secretary of State is to be congratulated on his intentions, but the road to hell is paved with good intentions, and the announcement may be another road to the financial chaos that we had last year. I seek reassurances, clarification—by gosh, we need clarification—and evidence that the modelling skills of the Department for Education and Skills are slightly better than they were last year.
I have a highly specific question about how much new money—not top-sliced or recycled—has been announced today. How much money from the vaults of the Treasury that was not there in April will be available to give LEAs and schools as a direct result of the announcement? On the 4 per cent. uplift promised for every child and school and the mandatory increase in the SFSS, how much will be cash in hand for the LEAs, how much will be cash in hand for the LEAs to give to schools, and how much has to be found from the council tax payer? The way in which that is divided up really does make a difference.
On the modelling, does the right hon. Gentleman accept that last year there were losers and some winners? This year, according to him, everyone gets a prize, but inequities will be perpetuated. Schools with severe problems that fell back on their capital last year do not get differential treatment. LEA flexibility is not noticeably assisted. He has made £120 million available as a grant—am not sure whether it has to be repaid to LEAs—but where have those resources come from? Is that new money from the Treasury, and what strings are attached to it?
Finally, has the new modelling taken proper account not only of the forthcoming teachers' pay settlement but of the progress of the workload agreement and the September uplift in pay spines? The right hon. Gentleman was supposed to have taken account of that, and told the House on 17 July that
the commitment that I give is to make that announcement when we know the teachers' pay settlement following the proper review".—[Official Report, 17 July 2003; Vol. 409, c. 460.]314 That is not what is happening today, and I wonder which aspect of the commitment he does not understand. Either he is psychic, as well as being a good modeller, or the pay review is his poodle, or we cannot trust ministerial statements.
§ Mr. ClarkeThe statement addresses many of the issues that arose last year. One of the three key issues that arose then was the distribution of resources between local authorities. Today's announcement establishes floors to deal with that situation directly and explicitly. A second cause of the problems was the reduction in the standards fund. I have reversed the cuts in that fund to put the money back, which was not the case in the current year. A third issue was the way in which local education authorities decided to allocate money to individual schools and their central funds. I have put a cap on central funds and I require a per pupil minimum guarantee for schools.
In those three specific cases, I have made changes to try to deal with the situation that arose this year. I acknowledge that the subject is complicated for all of us, and it is difficult for colleagues who have only just seen the statement to make a detailed analysis. However, I do not accept the charge, because it is not true, that we have not sought to address the issues that arose this year. In fact, we have set out specifically to do so. In addition, we have sought to address a point made to me by many teachers and people in local government: that one of the core problems this year was the short time scale for addressing the issues and changes that were taking place, which affected their ability to plan school budgets effectively. I am establishing today a time framework for the solution of those problems that will allow schools and local authorities to plan, which is a positive development.
I am grateful to the hon. Gentleman for saying that the implications of the announcement remain to be seen. That is a fair point, and it is fair, too, for local authorities and schools to ask what the statement means for them and how they should analyse it. My political request, which he may or may not be prepared to go along with, is that he and his Liberal Democrat colleagues do exactly what he said—look and analyse before drawing conclusions. My criticism of the Conservatives is that they have jumped the gun. The Liberal Democrats have not behaved like that to the same extent, so I hope that the hon. Gentleman is prepared to look directly at the situation.
The extra money will go into the standards fund and the transitional fund, as we have said, and comes from DFES budgets. There is substantial LEA flexibility. The difference between the 4 per cent. minimum per pupil for schools and the 5 per cent. minimum rising to 6.5 per cent. for LEAs represents a significant resource, and the regulations that we are publishing will give LEAs more capacity to use it to target particular problems. May I tell the hon. Gentleman and his colleagues in local government that it is important that LEAs take on that responsibility, analyse the problems in the LEA and use the flexibilities that I have outlined and the extra resources that they can draw down in certain circumstances to address them? That is the LEAs' responsibility, and it is one that they should welcome, as it is the right way to move forward. We have made assumptions about the final position of the pay review 315 body, but I do not have any inside information. Like everybody else, I await its announcement later this year to see what its proposals will be.
§ Mr. George Stevenson (Stoke-on-Trent, South)In spite of the Opposition's negative carping, may I warmly welcome the positive way in which my right hon. Friend addressed fundamental issues in his statement?
I have three brief questions for my right hon. Friend. First, can he assure me that needs and deprivation will figure prominently in the consideration of affected areas? Secondly, on pupil numbers, will authorities such as my own in Stoke-on-Trent that are addressing that issue through the closure and amalgamation of schools be given every encouragement and direct assistance to create modern, 21st-century facilities? Thirdly, on LEA flexibility, is it not about time that we considered rolling some of the standards fund into LEAs, which, after all, are required to match funding?
§ Mr. ClarkeI am grateful for my hon. Friend's general support, and can give him the assurances that he seeks. Needs and deprivation will continue to be a major consideration in funding for all the reasons that he gave. We will work with authorities that have to deal with falling rolls to try to assist them. My hon. Friend the Minister for School Standards is keen in his capital programme to focus on getting brand new schools to deal with those problems, and I am sure that he will pay particular attention to Stoke's needs.
§ Mr. Edward Garnier (Harborough)The right hon. Gentleman will know that Leicestershire LEA is at the bottom of the funding table. Consequently, schools in my constituency are among the worst funded in the country. What are the implications of the statement, both for our relative position in the funding league and the absolute funding from Whitehall to schools in Harborough?
§ Mr. ClarkeI met an all-party delegation of colleagues from Leicestershire to discuss those precise matters, and I have tried to respond to their concerns in today's statement on transitional funding. Leicestershire is one of the third or so of authorities that will benefit from the settlement.
§ Claire Ward (Watford)My right hon. Friend will be aware that schools and parents in Hertfordshire have been led to believe by the Tory-controlled county council that they face significant budget cuts next year. Can he give them an assurance that that will not be the case? Can he assure my constituents that the funding plans that he outlined today will ensure that they have continued improvement in education in Watford?
§ Mr. ClarkeI think that I can give that assurance. I am disappointed by the material that Hertfordshire county council has put out. On its website there is a range of information, but it is full of "ifs", "coulds", "shoulds" and "risks". None of it is based on genuine information and assessment. I urge my hon. Friend and her colleagues in Hertfordshire—I do not mean her political colleagues but colleagues throughout 316 Hertfordshire—to give my statement a fair assessment, as I think that I can give the assurance that she is seeking.
§ Sir Nicholas Winterton (Macclesfield)A little earlier this year, the Secretary of State kindly met me, the education chairman of Cheshire county council, Councillor David Rowlands, and the schools manager, Joan Feenan, to discuss the Macclesfield learning zone, which is warmly and strongly supported by all its partners and stakeholders, including the county council, the borough council, the learning and skills council, local schools and the local college. As that project is critically important to my constituency, will he tell me how his very informative and encouraging statement will affect it?
§ Mr. ClarkeI enjoyed my meeting with the hon. Gentleman and his colleagues. The assurance that I have given today means that his county council and local education authority can discuss their future plans in a much more structured way, and therefore look at the Macclesfield project with a sense of confidence about future funding. I hope that that reassures the hon. Gentleman.
§ Linda Gilroy (Plymouth, Sutton)I welcome the fact that my right hon. Friend's announcement covers the next two years. That will help schools to plan ahead. Last year, Plymouth schools were among those facing the most significant difficulties in making ends meet. I therefore welcome the targeted transitional help in the hope that it might be available to some of them. Can he assure parents, students and teachers in Plymouth that he will, as he helpfully did last year, listen to our representations on the continuing challenges that lie ahead?
§ Mr. ClarkeI can give my hon. Friend that assurance. Her campaigning on behalf of Plymouth, like that of hon. Friends in other parts of the country, was one of the most effective factors in convincing me and my colleagues that we needed to address the transition issues as we have. Plymouth will be one of the authorities that benefit from that. I hope that that deals with her concerns, but I am of course always happy to listen to future representations.
§ Mr. David Tredinnick (Bosworth)I acknowledge that the Secretary of State met Leicestershire Members this year, but did not that meeting have to take place only because his Department so completely miscalculated the needs of the county? Is it not the case that 4 per cent. will not be enough for schools such as Barwell Church of England junior school and others in Hinckley in my constituency? Can he confirm that the targeted transitional grant applies to Leicestershire and that the most disadvantaged schools in my constituency will get the special relief to which he alluded?
§ Mr. ClarkeI can confirm that Leicestershire, like Plymouth, is one of the authorities that will receive the targeted transitional grant. The 3.4 per cent. figure for school costs increases is an average, so there is variety around it. I have set the minimum per pupil guarantee at 4 per cent., which is significantly above that. I have 317 also—this is most significant—given local education authorities the ability to deal with cases where there may be even greater variation from the 3.4 per cent. average as a result, for example, of the school's staffing structure. I do not know the details of the school that the hon. Gentleman mentioned. That will be a matter for the LEA within the framework that I have set; I hope that it will be able to take it up in the proper way.
§ Clive Efford (Eltham)I welcome my right hon. Friend's statement, and particularly its early nature, because that offers the opportunity for further consultation. The statement is inevitably complex because we were confronted with a complex situation earlier this year, so schools will take a cautious approach to it. Crucial to its success will be the reassurance that their problems and those of LEAs will be listened to in order to tackle the financial difficulties that they have faced this year. That is particularly true in areas such as London, where a considerable amount of the available resources had to go into employment budgets because of the difficulties caused by the cost of living, including housing. Those issues facing London need to be considered further as part of the complex problem that we face.
§ Mr. ClarkeMy hon. Friend is right. Like many in London, he will have welcomed the announcement by my right hon. Friend the Deputy Prime Minister about housing for teachers in London: that will help to move the situation forward. Let me be clear. Within the framework that I have set, it is the responsibility of the LEA to talk to schools in its area about the best way of dealing with their financial situation. My aim is that those discussions should be constructive. Meanwhile, we are happy to continue to consider the issues that he raised.
§ Mr. James Clappison (Hertsmere)Behind the byzantine complexity of the Secretary of State's announcement, is not there one straightforward fact—that the Government's new local government funding formula has created serious funding difficulties for authorities such as Hertfordshire, which next year faces a shortfall of £25 million, or the equivalent of 600 teaching posts? Can he do better than to dismiss that as scaremongering, given that earlier this month the Labour group of Hertfordshire county councillors joined in that scaremongering by taking part in an all-party delegation to complain to the Minister who knows all about this? Can the Secretary of State say to what extent his announcement will make good that shortfall?
§ Mr. ClarkeI urge the hon. Gentleman to ask his political colleagues in Hertfordshire to look at the statement and to analyse what it means before rushing to judgment. The Hertfordshire website says that schools might face a gap of as much as £25 million—a completely invented figure, by the way—that a £15 million gap could mean a funding shortfall, and that if schools have to make further cuts they risk a whole set of different consequences. That is a scaremongering approach that has been deliberately taken by the Conservative leadership of Hertfordshire county council. I urge them, as I would urge others, to analyse the statement and to come to a mature and considered 318 view about what it really means for the hon. Gentleman's local education authority and schools in his constituency.
§ Ms Karen Buck (Regent's Park and Kensington, North)Westminster city council, which is Conservative-controlled, found £21 million extra this year for a street cleaning contract and call centre, while failing to passport money to schools in the education settlement, which resulted in cuts and redundancies in schools. I welcome the minimum guarantee and the additions to the standards fund, but can my right hon. Friend assure me not only that he will ensure that that money is delivered to Westminster schools, but that—in recognition of the cost pressures in my boroughs and elsewhere in London—non-statutory, vulnerable and vital services such as early years and the youth service are protected when he negotiates with his colleagues in other Departments?
§ Mr. ClarkeI am delighted that my hon. Friend asks that question. I simply repeat for Westminster, in terms, what I said to the House. The Deputy Prime Minister and I will write to authorities, including Westminster, to set out the Government's clear expectation that every LEA passports in full its SFSS increase into a matching increase in the schools budget. That is a message for Westminster as much as—in fact more than—it is for many other local authorities, whose job it is to ensure that they do that. In addition, as I announced, we are protecting from central Government resources the amount of money allocated to children's social services, and rightly so. The spotlight will be on local education authorities such as Westminster to ensure that they deliver for children in their borough as they are obliged to.
§ Mr. Michael Fallon (Sevenoaks)Does the Secretary of State understand that he is simply trying to clear up a mess that he and his Government created by switching money from southern councils and imposing extra employer contributions? Does he accept that his 4 per cent. per pupil guarantee will be meaningless unless it means that no Kent school will be in budget deficit next year?
§ Mr. ClarkeI cannot accept the premise of the hon. Gentleman's question. The 4 per cent. per pupil guarantee is not meaningless—it has great meaning for schools in Kent, as in every other part of the country. It is fully funded. The extra resources for LEAs—in this case, Kent—can and should be targeted on dealing with situations where budget deficits have arisen. Kent will take that decision. All the conversations that I have had with the leadership—dare I say it, the Conservative leadership—of Kent county council suggests that they will take those responsibilities seriously, and so they should. That is what shared funding means.
§ Mr. Ronnie Campbell (Blyth Valley)Last year, Northumberland's education authority had some trouble: I am keeping my fingers crossed that my right hon. Friend's statement will put all that right. On funding for free school meals, he may be aware that some of my hon. Friends and I tabled an early-day motion pointing out that people receiving working 319 families tax credit do not qualify for free school meals, even though they are below the £13, 000 threshold. That is giving with one hand and taking away with the other.
§ Mr. ClarkeI have seen the early-day motion that my hon. Friend and others tabled. I am considering its terms carefully to ascertain how we can deal with his points. More generally, I hope that Northumberland can work with schools in the county to tackle the issues effectively.
§ Mr. David Laws (Yeovil)I thank the Secretary of State for taking the time to see a cross-party delegation from Somerset a couple of months ago to discuss the subject that the statement covers. Although I accept his earlier comments that we must consider the detail before leaping to judgment, he will recall that Somerset local education authority said that it needed an increase of 6 per cent. not 4 per cent. next year to deal with cost pressures and accumulated deficit. Will his statement therefore disappoint the LEA or does it contain something that I am missing?
§ Mr. ClarkeMy lengthy experience of the hard wheel of politics shows that statements usually disappoint local authorities and I confidently expect representations about disappointment. However, Somerset will receive targeted transitional grant, which will help with some issues. I am also acutely aware of some of the sharp party political antagonisms in Somerset about the approach to such matters. The LEA will want to work closely with schools to deal with them.
§ Ms Oona King (Bethnal Green and Bow)I thank my right hon. Friend for a comprehensive statement. There is no doubt that the average school whose budget was affected by the 3.4 per cent. figure will be vastly assisted by the measures announced. Indeed, all schools will be helped, but some were hit harder than others. Those in Tower Hamlets have average cost increases of 12 per cent., despite the LEA passporting more than 100 per cent. Will my right hon. Friend assure us that any schools that continue to face serious budget pressures after the measures have been implemented will receive further help with funding so that we can continue to drive up standards, which have seen Tower Hamlets register the greatest educational achievement in the country?
§ Mr. ClarkeI join in with my hon. Friend's tribute to the tremendous achievements of the local authority in Tower Hamlets. We met a delegation to discuss the very points that she raised. As I said in the statement, resources—in the form of grant or loan—are available to address matters in schools in Tower Hamlets, but on condition that the local authority works with schools to deal with the financial issues in the appropriate way. I know that Tower Hamlets authority will work constructively on that agenda, but the qualification is important. The extra resources are available on the basis of the LEA working properly with schools to improve financial management and deal with problems.
§ Richard Ottaway (Croydon, South)Given the shambles in education funding in Croydon this year, the 320 Secretary of State will be interested to know that I managed to obtain a copy of an internal document from Labour-controlled Croydon council. It estimates that underfunding this year is £7.5 million and that an extra £8.5 million is needed next year after wiping out the reserves this year to pay the deficit. Will he confirm that his encouraging but complex statement means that Croydon will have the extra £16 million that it needs to make up the shortfall this year?
§ Mr. ClarkeI want to make two comments in response to that. First, the statement is complex and I hope that all political and other colleagues in Croydon will examine the precise implications for Croydon before reaching a judgment about the way in which to proceed. Of course, I acknowledge that there were difficult problems in Croydon this year; the hon. Gentleman raised them specifically. I hope that the announcement will enable them to be tackled effectively.
Secondly, I shall not simply take a figure that has been generated from an internal working document in a local authority and say, "Aha, all is as it should be." We should have a discussion and dialogue and I hope that that will take place—although I cannot guarantee it, given the hon. Gentleman's role—in a non-partisan way and in a spirit of doing our best for schools in Croydon.
§ Judy Mallaber (Amber Valley)Although I do not want cuts in other local authorities or schools, will my right hon. Friend assure me that the overall impact of the measures will not perpetuate the unfairness whereby pupils in authorities such as Hertfordshire and Hampshire get so much more money spent on them than pupils in equivalent schools in authorities such as Derbyshire? Will he continue to try to redress that balance?
§ Mr. ClarkeMy hon. Friend makes an important, powerful and true point. I am glad to be able to say that the variation between a floor for LEAs of 5 per cent. and a ceiling of at least 6.5 per cent. shows that progress to try to deal with some of her points continues, at least in education.
§ Mr. Andrew Lansley (South Cambridgeshire)Does the Secretary of State accept that the acid test is the accuracy and validity of his estimate of cost pressures on schools? He must recall that Philip Hodgson, chair of Cambridgeshire schools forum, wrote to him on 17 July and set out in detail the anticipated cost pressures. He said that the unavoidable pressures would mean an increase of 10 per cent. in the schools budget elements of Cambridgeshire's education formula spending. How does the right hon. Gentleman reconcile 3.4 per cent with the 10 per cent. pressures on the LEA? Even if Cambridgeshire is on the ceiling of 6.5 per cent.—I hope that it is—there will be a further funding gap in the coming year to add to this year's gap.
§ Mr. ClarkeTo be frank, there are a series of issues about Cambridgeshire's relationship with its schools that need to be examined in promoting good management. Staff salaries in some schools in Cambridgeshire take more than 90 per cent. of a school's budget. That is not the best position and the LEA needs to examine it. 321 Let us consider the assessment in the letter in July to which the hon. Gentleman refers. What assumptions does it make about teachers' pay and so on? I do not believe that my correspondent was in a position to know the detail at that point. As I said earlier, I hope that people will consider what we have said carefully, assess what it means for their authority and schools, and form their judgment.
The figure of 3.4 per cent. was reached after substantial discussion, including with local government representatives and head teacher associations, to try to get a shared view of appropriate average inflation. As the hon. Gentleman said, it is an average and there is therefore variation.
§ Jonathan Shaw (Chatham and Aylesford)I thank the Minister for School Standards for meeting a delegation from my constituency to discuss the schools budget earlier this year. I agree that Kent county council has discussed schools funding in an unhelpful way, scaremongering among head teachers. However, I agree with my right hon. Friend that we should enter into dialogue and discussion sensibly and maturely. Will he confirm that Kent and the Medway towns are among the authorities that receive additional support?
§ Mr. ClarkeAfter being advised by my hon. Friend the Minister for School Standards, I can confirm that Kent and Medway are on the list of authorities that will receive targeted transitional support. More important, I want to echo the comments of my hon. Friend the Member for Chatham and Aylesford (Jonathan Shaw) about the nature of the discussion now. It must be weighed, considered and based on the facts. I hope that Kent county council will behave in that way. I shall attempt to do that, too.
§ Gregory Barker (Bexhill and Battle)East Sussex has fared badly under the settlement in recent years. What hope does the statement hold for solving the chronic overcrowding in classrooms in my constituency? For example, at key stage two in Battle and Langton primary school, we have classes of 37 and 36 in temporary huts. In Seddlescombe primary school, there are three classes with a total of 86 children who share two small classrooms and an activity area. At King Offa school in Bexhill, an excellent new headmaster is struggling with an historic deficit and faces the loss of his entire information technology suite because the leases are up for renewal. Apart from simply incremental increases in pupil funding, what measures does the statement contain to tackle chronic overcrowding?
§ Mr. ClarkeFirst, I do not believe that incremental increases should be sneered at. Many schools have been exercised by not receiving a regular incremental increase. Establishing a per pupil guarantee for the first time is important. Secondly, I confirm that East Sussex will benefit from the transitional grant. Thirdly, the position of the specific schools, with which I am not familiar, is a matter for the LEA to consider directly and decide how to tackle. There are hard decisions involved, but I, as Secretary of State for Education and Skills, am not going to decide precisely how the funding arrangements should affect the particular schools in the hon. Gentleman's constituency. It is for East Sussex, 322 with the headroom that it has, to decide how to target its resources to deal with the ills that the hon. Gentleman has described.
§ Mr. Andy Reed (Loughborough)I welcome the statement and, in particular, its early nature, which will give schools in my constituency and elsewhere time to get to grips with the complexity of what has been announced today. I have also been reassured by the discussion on the transitional elements, but as my right hon. Friend knows, Leicestershire is the worst-funded local education authority in the country and it has had specific problems this year related to the funding formula and to difficulties that exist elsewhere in the country. Will he assure me that the transitional relief will make a substantial difference to many of the schools—not just individual schools in my constituency—that have enormous deficits from this year? That would not involve little 4 per cent. or 6 per cent. increases, because those schools have seen enormous changes. We would then get back to the position that we were in before 2002–03, because we have seen an enormous £630 per pupil increase since 1997. We want to get back to having those increases, rather than cuts.
§ Mr. ClarkeI can give my hon. Friend the reassurance that he seeks. As I said earlier, Leicestershire is one of the authorities that receive a transitional grant. However, I say to the LEA through my hon. Friend, rather than to him, that it is important to appreciate that Leicestershire has to manage its budgets well. It must work carefully with its schools, address the problem of deficit budgets and face up to these issues. Any local education authority can choose either to be a formula calculating machine through which money goes to its schools, or to be the leader of the education system in its area. I understand that most LEAS want to be leaders of their system, and what I have announced today will enable them to do that. They will, however, have to seize that responsibility and not regard themselves simply as a transmission belt either for complaints from schools to me, or for money going into schools. They will have to exercise leadership in transforming the education system in their locality.
§ Mr. Michael Jack (Fylde)I have just completed an exercise in writing to all the schools in my constituency, and all those that have replied have said that this year their budgets are too low to meet their cost pressures, and that they anticipate that being the case next year as well. The Secretary of State will therefore realise that a 4 per cent. increase at school level in budgets that are already deemed too low will not generate sufficient cash to get those schools out of their difficulties. However, in deference to his request that we consider carefully what he has said today, may I ask him whether he would willing to commit himself to coming back to the House early in the new year to debate these matters, once the schools have had the opportunity to work out exactly what his statement means for them?
§ Mr. ClarkeI am very happy to continue to debate this matter in a variety of forms. We have already had a variety of debates on the subject in the House and I am sure that we shall continue to do so. I do not know what 323 letters the right hon. Gentleman has been writing recently, but it is important that those that he writes to his schools should give a flavour of the actual situation. He used the word "anticipate", and I understand why people anticipate that bad things are going to happen when many people tell them that that is going to be the case. I urge him, however, to acknowledge the reality that anticipation needs to be based on facts and proper assessments. I repeat what I said earlier in that regard. I hope that he, as a former Treasury Minister, will acknowledge that it is important for his party to come clean about what it is going to do about school funding. A 20 per cent. cut in education funding, which is his party's policy, would not help schools in his constituency.