HL Deb 14 January 1999 vol 596 cc340-53

7.14 p.m.

Lord Hunt of Kings Heath rose to move, That the draft regulations laid before the House on 3rd December be approved [2nd Report from the Joint Committee].

The noble Lord said: My Lords, these draft regulations were considered by the Joint Committee on Statutory Instruments on 8th December and by Standing Committee in the other place on 15th December. They cover England and Wales, with variations which have seemed appropriate in the light of differing national circumstances.

The enabling powers are contained largely in Sections 46 to 48 of the School Standards and Framework Act 1998. As enacted, these sections relate to the new school categories—community, foundation and voluntary—which do not take effect until 1st September. However, the sections have been modified so as to apply, between 1st April and 31st August, to the existing categories of school—county, voluntary and grant-maintained. This modification was achieved by the School Standards and Framework Act (Modification) Regulations, made on 30th October under Section 144 of the Act.

The regulations give effect to our aim of establishing a single, equitable funding regime for all state schools in place of the divisive dual system which has existed since introduction of grant-maintained status. Our proposals were originally set out in the consultation paper Fair Funding. This was published in England at the end of last May, shortly before the relevant clauses of the SSAF Bill were considered in Committee by this House, and it was often referred to during the debates in Committee and at later stages. A similar consultation paper was issued in Wales in June.

The House looked in some detail at the clauses, and the ground will therefore be fairly familiar. But it may be helpful to recall our key objectives before turning in slightly more detail to the content of the regulations. There are three main points.

First, we want to put in place a framework which aligns funding with the respective responsibilities of schools and LEAs and promotes greater transparency in funding arrangements. Secondly, we want to give all schools the fullest scope for self-management by requiring significantly higher levels of financial delegation than have been normal up till now in LEA schools; but we want to do this without forcing schools to take on responsibilities before they think they are ready. Thirdly, we want to ensure equitable treatment as between community, voluntary and foundation schools; and at the same time we want to give grant-maintained schools a smooth transition to the new funding framework.

The regulations are the outcome of an extensive, two-stage consultation. There were about 3,000 responses to the consultation paper in England and over 500 in Wales. In the light of these responses, decisions on the main issues were announced by the Government on 23rd September, both in England and in Wales. In England those decisions will mean that around £1 billion more can fall within the total of funds going directly into the classroom; but this shift will be achieved in a way that allows schools to feel comfortable with their extra responsibilities.

Since then, detailed consultation with LEAs and national organisations has led us to modify the regulations in ways which provide valuable local flexibility without losing the essential features. The consultation has been most constructive and I know that my right honourable and honourable friends are grateful to those who contributed to it.

I shall now review briefly the main features of the regulations. They deal with three important matters. The first is the balance between funding retained centrally by LEAs and funding distributed by them to schools. These matters are dealt with in Part II and in Schedules 1 and 2 which relate respectively to England and Wales. The second is the methods to be used by LEAs to allocate the funding which they are required to distribute to schools. These are regulated by Part III and by Schedules 3 and 4.

Finally, the regulations deal in Part IV and Schedule 5 with the content of the "schemes" which will regulate the financial relationship between LEAs and the schools they maintain and ensure that governing bodies and heads can run their schools without unnecessary LEA intervention.

Part II, made under Section 46 of the Act, has attracted most attention during the consultative process. This is not surprising. It is through this part of the regulations that we have to get the balance right between pushing forward the frontiers of self-management and ensuring that schools have access to essential services. In the event, the two-stage consultation process has led us to make certain changes in the proposals originally published in the summer. Thus we have revised the delegation timetable to give LEAs more time to work out suitable arrangements in consultation with schools.

We have also reconsidered the range of items which may be centrally funded. For example, LEAs will not now have to delegate funding for meals and milk to all primary and special schools, although they will be able to do so if they wish and our intention is that LEAs in England will be required, from April 2000, to delegate funding to individual primary or special schools where they request it. LEAs will be able to continue funding outdoor education centrally if they wish, and we have also made some other marginal adjustments to our proposals on such matters as support for the arts and the funding of supply cover. But this still means much higher delegation for schools currently maintained by LEAs. For example, funding for a wide range of financial, personnel and other administrative support must be delegated by April 2000. Schools will take responsibility for all non-capital building repairs and maintenance from April 1999 in England and April 2000 in Wales. Funding for secondary school meals must be delegated by April 2000, or April 1999 in England if there are no contractual problems.

The process for the approval of education development plans will require LEAs to refocus their expenditure for school improvement. In doing so, they will need to consider very carefully the role, and the cost, of inspection and advisory services. Funding for such services will, in general, have to be delegated from April 1999 in England and April 2000 in Wales if it cannot be justified by reference to LEAs' approved educational development plans.

I need only add that we shall be keeping a close eye not only on school improvement expenditure but also on central expenditure more generally. Addressing the North of England Education Conference last week, my right honourable friend the Secretary of State for Education and Employment made it clear that he will be publishing tables early in the summer to enable the performance of individual LEAs to be compared. He also made it clear that he will not hesitate to use the power, conferred by Section 46, to set limits to the amounts which LEAs may retain for particular purposes, if this appears necessary. I ought to add at once that, if he uses these powers, my right honourable friend's target will be wasteful bureaucracy, and he will not be seeking to restrict essential central expenditure on special educational needs and other vital support services.

Part II contains special provisions for GM schools. Our aim all along has been as far as possible to level LEA schools up, in terms of delegation, rather than levelling GM schools down. So we have made it our general principle that, where funding for a particular service must be delegated eventually, LEAs must delegate it to GM schools from April 1999. This is reflected at various points in Schedule 1 for England and Regulation 5 for Wales. I shall have more to say about GM schools in a moment.

Finally, there is one specific outcome of our consultation which might have been noticed by noble Lords opposite. The English consultation paper suggested that schools might be invited to determine the future funding arrangements for some services by majority vote. However, in the light of consultation, we have decided not to proceed with the majority voting proposal.

Part III and Schedule 3 deal with the way in which the individual schools budget is distributed to schools through LEAs' funding formulae. Here, we attach a good deal of importance to continuity. LEAs have a good deal of flexibility to reflect local circumstances and priorities in their formulae, and we do not want to force them to make major changes if they themselves see no good reason to do so. So Schedule 3 to the regulations offers LEAs an extensive à la carte menu of factors from which they can select to meet local requirements. However, 80 per cent. of primary and secondary school funding must be allocated on a pupil-led basis, essentially as at present. The rule has been the subject of some debate, but at the end of the day we believe that 80 per cent. is right.

It is important that formulae are fair to all categories of schools and take full account of the schools' views. The regulations accordingly prevent LEAs from discriminating between different school categories, unless there is an acknowledged difference in the functions of their governing bodies. They also require LEAs to consult all schools, including those which are currently grant-maintained, about their formulae; and to do so in time for responses to be taken properly into account when the LEA takes its final decisions. That requirement includes consultation on certain matters—for example, the age-weightings used in the formula—on which LEAs have not been statutorily required to consult in the past.

We do not wish GM schools to experience unmanageable changes in their budgets on entry to the new framework. The "levelling-up" principle which I mentioned earlier should go a long way towards achieving this. But we intend also to protect the amount of funding per pupil received by GM schools in England at its 1998–99 level, in cash terms, for 1999–2000. In Wales, the number of GM schools is much smaller and the funding system has differed in certain respects from the English GM funding regime. The upshot is that the difference between GM and LEA school budgets has been less marked in Wales than in England. Having considered the position, my honourable friend the Minister for Education in Wales has decided not to introduce transitional arrangements for GM schools in Wales.

I think it fair to note that these arrangements for managing the transition of GM schools' budget arrangements continue a process of aligning their budgets with other schools which was begun by the previous government, who had set in hand a phased removal of the unfair cash protection which had applied, in England, to the so-called "central" element of the annual maintenance grant.

It may be convenient to take this opportunity to comment on certain concerns expressed in a note which I received yesterday from the Grant Maintained Joint Monitoring Group. It is fair to say that that note registers general satisfaction with the regulations as they have turned out. The concerns which have been put to me both relate to certain responsibilities which will rest by law with the governing bodies of foundation schools but with the LEA in the case of community and voluntary controlled schools, just as they rest with the LEA in the case of county and controlled schools now.

On the one hand, there are certain responsibilities which derive from the fact that staff in foundation schools will be employed by the governors and not the LEA. This has implications for the governors' responsibilities in certain fields such as health and safety. As I understand it, the concern of the Grant Maintained Joint Monitoring Group is that LEAs will retain expenditure centrally in respect of these responsibilities, even in relation to schools for which the relevant responsibilities lie with the governing body. It does not seem to me that paragraph 25 of Schedule 1 permits this. It deals with expenditure in relation to the LEA's functions, not anyone else's. Moreover, in the particular case of health and safety, the regulations are designed to ensure that funding is delegated as far as is practicable even in the case of schools where the LEA is the employer.

As regards compliance, particulars of an LEA's central expenditure will be included in the statements which LEAs will be required to produce under Section 52 of the School Standards and Framework Act 1998 which we audited under Section 53. More generally, the performance tables that I mentioned will show which LEAs are retaining excessive amounts for administration. But if schools see continuing grounds for concern once the new system is in place, I am sure that they will make these known to us and we will consider what further action may be required.

The other matter arises from the position of foundation schools as admission authorities. The suggestion is that these schools should receive additional delegated funding in respect of this responsibility, which rests with the LEA in the case of community and controlled schools. We have considered this with care, but it has to be borne in mind that the position of foundation schools as admissions authorities is no different from the long-standing position of voluntary-aided schools. As far as we know, the latter have not received additional, delegated funding from their LEAs for their admissions functions, although we understand that many LEAs have provided various forms of admin support for the admissions process in voluntary-aided schools. Of course, that can be done without infringing the prerogative of voluntary-aided governing bodies on matters of policy.

It is clear that we have to treat foundation and voluntary-aided schools on the same basis under the new framework. To insist that all foundation and voluntary aided schools should carry out all their own admission arrangements with delegated funding would have the effect of disturbing existing local arrangements which have worked well. Accordingly, our aim in the regulations is to allow for appropriate arrangements to be negotiated locally.

Paragraph 17(c) of Schedule 1 contains a flexible definition of the admissions-related expenditure which LEAs may choose to retain. If, in the event, LEAs decide to retain funding centrally in respect of admissions administration at some kinds of school but not others, Regulation 13 will require them to reflect this in their formulae. Paragraph 5 of Schedule 3 specifically allows LEAs to include factors in their formulae which reflect the extent to which admissions costs are being centrally funded.

This, as I say, provides a framework within which suitable arrangements can be worked out locally by LEAs, taking account of the views of both foundation and voluntary aided schools. The implication is that foundation schools seeking to persuade LEAs to change established arrangements will need to work closely with voluntary aided schools to get them on their side. However, as I have said, any other approach could mean upsetting existing local arrangements even where they are regarded as satisfactory by most of the schools affected.

Part IV and Schedule 5 deal with the contents of the schemes for the financing of schools which LEAs will have to draw up in accordance with Section 48 of the Act and Schedule 14. Each scheme will define the financial relationship between an LEA and the schools which it maintains, and will require approval by the Secretary of State.

The purpose of the regulations is simply to identify the topics which must be covered. Statutory guidance to be issued by the Secretary of State under Schedule 14 will indicate in more detail how we expect LEAs to cover them. A draft of that guidance has already been issued in the form of an "outline scheme", to help LEAs undertake consultation in good time.

I think I need make only two more general points. First, the outline scheme—and the schemes which LEAs themselves will submit—cover ground already covered in greater or lesser detail in existing schemes for the local management of schools. The arrival of the new school funding regime provided a timely opportunity to review LEAs' financial provisions after nine years of LMS.

Secondly, an LEA's scheme is as binding on the LEA as it is on the schools. It is the means of securing crucial rights for schools—for example, in the right to a bank account, and, even more fundamentally, the right to determine spending priorities. We will also expect schemes to define carefully the circumstances in which LEAs may charge particular costs against a school's budget. Part IV sets out publication requirements to ensure that schemes will be available for reference by parents and others interested.

In conclusion, these regulations are the outcome of a consultation process which has been thorough, even though it has undoubtedly been rapid. There is still work to be done to set the new system in place for 1st April, but the efforts made by all concerned in the past few months have shown that we were not asking for the impossible. The regulations strike a fair balance between the legitimate requirements of LEAs and schools, and I commend them to the House.

Moved, That the draft regulations laid before the House on 3rd December be approved [2nd Report from the Joint Committee].—(Lord Hunt of Kings Heath.)

Baroness Blotch

My Lords, I thank the Minister for setting out the details of the regulations. Delegation to schools and scope for autonomy at school level has proved successful over the past decade or so. I must tell the Minister that LMS is considerably older than nine years. In Cambridgeshire it goes back some 19 years. Indeed my own local authority in Cambridgeshire, together with Conservative controlled Solihull, were the first LEAs to delegate financial control to their schools in the face of vociferous opposition from Labour Party members. Therefore it is to be welcomed that such a change of heart and policy has taken place.

When the fair funding paper was produced last year much was made of 100 per cent. delegation. We asked then—I ask this again now—100 per cent. of what? My reading of the regulations is that it is 100 per cent. of what is left after LEAs have subtracted significant items of expenditure. Schedule 1 contains no fewer than 89 areas where the LEA can hold back expenditure, including such areas as the preparation of the endless plans for approval by the Secretary of State and the incredible level of bureaucracy that will be required to fulfil the additional obligations set out in the School Standards and Framework Act. Organisational committees and adjudicator provisions will have to be funded by LEAs, as will many other matters.

I have worked in local authorities and I know of the constant pressure to hold back resources at the centre, and just how determined one has to be to contain central expenditure. What penalty will be incurred by a local authority that holds back more than the Secretary of State considers necessary? Given that LEAs will have legitimate reasons for increasing central expenditure because of the additional burdens set out in the School Standards and Framework Act, it will be difficult for the Secretary of State to take issue with local education authorities on this front.

I have read carefully all that the Minister, Estelle Morris, said about these regulations in another place. I was particularly struck by the number of times the Minister sympathised with points of concern that were made by both my colleagues in another place and indeed by the Liberals, and yet she responded by saying that the Government would have to monitor such areas carefully. There appeared to be a great deal of uncertainty about much of the detail and how it would work. For example, paragraph 23 of Schedule 1 states, Expenditure which enables pupils to enhance their experience of the visual and performing arts other than music". That appears to me to be a licence to local education authorities to retain yet more resources from schools. In addition, the bureaucracy involved in negotiating the financial implications of every school production and every cultural lecture etc., will be considerable. Can the Minister explain how local education authorities must interpret paragraph 23 of Schedule 1?

I also wish to pose the same question in relation to library and museum expenditure, especially as such expenditure in many LEAs comes under another budget head altogether. Also in Schedule 1 at paragraph 32 local education authorities can hold back, Expenditure on establishing and maintaining electronic computer systems … in so far as they link, or facilitate the linkage of, the authority to schools which they maintain, such schools to each other or such schools to other persons or institutions". This is yet another area of reduced autonomy for schools. I also wish to ask the Minister what the impact of the parental leave directive will be. For example, will paragraphs 34 and 35 of Schedule 1 need to be adjusted to take account of the directive?

Regulation 14 sets out that local education authorities may not discriminate between schools by reference to category. Why then should we have different categories? That was a point made by the Liberals in another place. Mr. Don Foster argued for no differentiation between categories of schools. I heartily disagree with that but, if there are to be different categories, those will comprise different schools with different needs. The needs and levels of responsibilities as between schools will be different. For example, ex-GM schools will enjoy in the early years of the new proposals greater levels of responsibility. Therefore funding will need to reflect that. What will happen with regard to education action zones with perhaps one or more governing bodies? Education action zone schools are in a very different category from the other mainstream schools. How do these regulations relate to action zones? The Minister has said little about that.

The Minister in another place, when replying to a question on the use of cheque books by schools, gave a highly unsatisfactory answer. On what basis will interest forgone be charged to any school wishing to have its own cheque book? For example, will the assumption be made on the basis of interest gained on the whole LEA account which will clearly be much greater than the relatively smaller amount relating to a single school account? Why charge interest anyway?

Regulation 22 needs clarification. The 80 per cent. of funds to be allocated—the figure is not now 100 per cent., but 80 per cent.—is said to be allocated, in one or more of the following manners". It does not appear to be allocated solely on pupil numbers. For example, reference is made to the reservation of places for reception, nursery and special school pupils. If this is to be included in the 80 per cent. delegation, it would certainly mean that some schools would receive sums greater than the 80 per cent. figure and others less. Is that the case?

The Minister has made much during recent debates about the dual funding system. However, funding for grant maintained schools reflected their additional responsibilities. Can I ask the Minister where a school takes on additional responsibilities ahead of other schools, will that be recognised in the funding? If so, what is the difference between that and the present system? If not, then what will be the incentive for any school to accept additional responsibilities?

A moment ago the Minister referred to grant maintained schools which will receive funding on a cash basis as of this year for 1999–2000. If grant maintained schools are to be sustained in cash terms, then funding will be different from non-grant maintained schools. Is that so? That is another example of differential funding. If this level is to be sustained for 1999–2000, what plans do the Government have for the years beyond 2000, especially where some schools accept different levels of autonomy? I understand from what the Minister has said that it is conceivable that different schools will have different levels of responsibility. If they do, will funding reflect that?

Will the Minister explain Regulation 23, which states that the Secretary of State, where it appears to him to be expedient, can authorise a local authority to determine or redetermine budget shares to such an extent as he may specify. What can the Minister give as an example of a situation where the Secretary of State would wish to use this power?

I suspect that delegation will be no more, and may be even less, than at present when this scheme is up and running. It is clear that it is a far cry from the 100 per cent. delegation promised in the publicity blurb. Certainly the bureaucracy will be difficult to control given the considerable extra burdens laid upon local education authorities.

As I have said, even the Minister has had many doubts about how this system will work in all its detail. What matters to schools is that they receive the maximum amount possible from the local education authorities, that bureaucracy is held to a minimum and that the promised transparency claimed by the Minister will be evident. We shall watch the introduction of these new arrangements with interest.

7.42 p.m.

Lord Tope

My Lords, I too should like to thank the Minister for his very full explanation of the regulations. I also thank the noble Baroness, Lady Blatch, for her several references to the many concerns and comments made by my honourable friends in another place. Your Lordships will be relieved to know that I do not intend to repeat tonight all that was said in another place, but merely to note that those concerns and comments were expressed.

I start by giving a broad welcome to these regulations. I have a few points to make, but we certainly welcome the thrust of the regulations. On these Benches we have always supported the concept of delegating both financial and operational control from LEAs to schools. I will say very carefully in the presence of the noble Baroness, Lady Blatch, that the Liberal Democrats were among the earliest pioneers of local management of schools.

Baroness Blatch

No, you were not.

Lord Tope

My Lords, one day I shall make a comment on this with which the noble Baroness, Lady Blatch, can agree.

We believe we were among the first pioneers of local management of schools and have certainly always supported it.

It is good to note that arrangements under Part III will enable LEAs to target funding at schools with particular needs or problems. We are pleased to note that at a time of crisis in teacher recruitment and retention, a wider range of supply cover may be funded centrally where such flexibility might be helpful. It is also good to see flexibility in the funding arrangements for "low-incidence" SEN units in mainstream schools and in the delegated funding for meals and milk. Your Lordships are aware that we greatly favour local determination and professional independence. Any small changes in that direction are certainly to be welcomed.

I turn now to the first of my concerns. I remain uneasy about the Government's attitude to the role of the LEAs in monitoring the quality of education provided in their areas. I have long believed that the use of high quality advisers for subject areas, advisers who can evaluate, support, assist and train teachers in their schools, is more likely to raise standards than the Ofsted "name and shame" strategy. On these Benches we prefer "praise and raise".

I looked hard and unsuccessfully to find in the regulations where it is prescribed that LEAs can include the salaries of such advisers in the budget that they retain at the centre. I understand from the Minister's speech this evening that they cannot retain it at the centre and that it must be delegated. Perhaps the Minister will clarify that when he responds. If that is the case, it causes me some concern. I know that already in some areas advisory service and in-service training are bought back. But experience has already shown that this pseudo-market actually puts advisory services at risk. Schools often dare not spend funds on what is really optional when they can barely afford what is compulsory. I hope that the Minister in his response will indicate whether the Government still support the concept of LEA quality control for their schools.

I have one or two other more detailed queries. It is splendid to find a requirement in Regulation 10(2) of Part III that LEAs should determine a funding formula which is, simple, objective, measurable and predictable in effect, and clearly expressed". I hope very much that that is the practice. I shall be interested to know from the Minister how the DfEE will monitor this. I urge him that when he finds a funding formula that is simple, objective and clearly expressed, he gives it great publicity and wide circulation as a model of good practice. It is certainly a desirable aim, even though, with a little experience, I have some doubt about its achievement.

Quite a lot of space is very properly taken up with funding arrangements for pupils who are either permanently excluded or being reintroduced into other schools. Can the Minister say if the Government are considering, or will consider, making schools financially responsible for the on-going education of pupils who they permanently exclude, at least until they are formally admitted to the roll of another school? We feel that that might be a powerful factor in controlling the rise in expulsions.

Your Lordships will know the importance which we on these Benches attach to proper provision for children with special educational needs. May I say how pleased we are to see acknowledged in Regulation 22(d) the needs of those pupils who have problems with their learning but do not have statements. Many schools have felt that the only way to get money for these people was to statement them. It will be good if we can avoid that bureaucratic nightmare wherever possible.

I should be grateful for an explanation of the effects of paragraph 18(2) of Schedule 1 on the school meals service provided by schools which were formerly grant maintained.

I have expressed our pleasure at the Government's recognition that music, drama and visual arts provision needs to be made at LEA level, or indeed by a consortia of LEAs, and that this is guaranteed by the provisions in paragraphs 22 and 23 of Schedule 1.

Can the Minister explain why there are significant discrepancies between the arrangements for England and Wales? I note that in paragraph 42 of Schedule 2, Welsh authorities can retain money at the centre for the repair, maintenance and cleaning of schools. Similarly, in paragraph 43, Welsh LEAs can retain the money to organise library and museum services throughout their areas. For some reason this desirable situation is not possible in England. Perhaps England should be pressing for its own national assembly? I should be grateful for some explanation of that.

Finally, a word about the arbitrary division between the maintenance of school buildings and plant—mostly revenue expenditure, I know—and capital replacement. It seems to me to be a recipe for schools to say "If we do not spend our money on maintaining our outdated central heating boiler it will blow up and then the LEA will have to pay for a new one". I have to say that this does not seem an altogether sensible way of doing things.

I end where I began by saying that we give a broad welcome to the measures which are set out in these regulations.

Lord Hunt of Kings Heath

My Lords, I thank the noble Baroness, Lady Blatch, and the noble Lord, Lord Tope, for their comments and for their broad welcome for these proposals. Perhaps I may also take this opportunity to commend the noble Baroness, Lady Blatch, on what I can only describe as the extraordinary athletic prowess she showed in running down the principal corridor during the recent television programme about your Lordships' House. It was a very good example to us all.

The noble Baroness raised the question of 100 per cent. delegation and expressed a little scepticism about the ability of local education authorities to push as much money downwards towards the schools. The 100 per cent. delegation was put forward as an attempt to achieve a major increase in delegation on the basis of a sharper distinction between those functions and services for which central funding is essential and those for which it is not. It is on that basis that the 100 per cent. delegation model was described. Taken as a whole, with the transparency that is being brought into the system, with the ability of individual schools to be closely involved in consultation with the LEA about how the individual school budget is to be allocated and with the reserve of the potential intervention by the Secretary of State, this will be enough to ensure that local education authorities act in accordance with the broad principles that we wish to see introduced. We wish to see as much resource as possible delegated to school level. I am convinced that this will enable all schools to give the kind of leadership and take the kind of responsibility which is so essential to improving what they do. I am also convinced that, by giving a much sharper focus to the strategic responsibility of the LEA, we will he able to enhance the LEA's performance. It must be in the best interests of individual LEAs to adopt not just the rules but the actual broad principles which we wish to see take place.

The noble Baroness referred to the response of the Minister in another place. Concerns were expressed in the debate in another place and what one might describe as worst case scenarios were presented. The reality is that many LEAs have shown the ability to operate the LMS scheme well. They are on their mettle to show that they can handle the new delegated powers. However, we will keep these matters under review and they can be addressed in the future if concerns arise. The LEAs' funding formula will be subject to year-on-year review by the schools within their districts.

The noble Baroness referred to the parental leave directive. I cannot say much at this stage, but we will keep under review what needs to happen when the time comes. The noble Baroness asked about the transitional funding for grant-maintained schools and asked in particular whether this transitional funding would continue after next year. At this stage we have taken no such decision. We wish to see how the arrangements for next year bed down before any such decisions are made.

The noble Baroness asked whether some schools would receive more than the 80 per cent. on pupil numbers and some would receive less. The answer is yes. The requirement is that 80 per cent. of the total primary and secondary funding is allocated on pupil numbers, including the categories listed in regulation 22. That means 80 per cent. across the LEA, but it could mean different levels in individual schools. For instance, large secondary schools could attract higher levels of pupil-led funding and small primary schools less than that.

The noble Baroness asked about library and museum services. The regulations allow hold-back by LEAs in 1999–2000 for centrally funded services. From 2000, the regulations will change to make them devolve funding on an earmarked basis. Such funding must include expenditure on services applicable to school pupils—

Baroness Blatch

My Lords, I am grateful to the Minister for giving way. I wish to ask a question about 80 per cent. funding. As I read the regulations, it is conceivable that of two schools with exactly the same number of pupils one could receive greater than 80 per cent. delegation and the other less than its share of 80 per cent. simply because the LEA deemed a number of places for nursery, special and another category of schools. It is possible that schools with exactly the same number—not just a large secondary school versus a small primary school—could be treated differently.

Lord Hunt of Kings Heath

My Lords, because of the way in which pupil numbers are weighted, there could be differences between schools with the same number of pupils. However, if it is argued that this is a point of concern, we shall need to review these matters when we see what comes out of the first allocation to schools.

The noble Baroness asked about the role of LEAs regarding computers. It covers the network infrastructure but not the computers in individual schools which are plugged into it. There are good reasons for the central infrastructure to be funded centrally, but we shall be alive to any suggestions that LEAs are using central funding to fund items which ought to be left at school level.

The noble Lord, Lord Tope, asked about supply cover. As he will know, supply cover for circumstances such as trade union duties, jury service, staff undertaking public duties as councillors and magistrates, and Territorial Army service, is at present funded centrally by most LEAs. In many cases a statutory right to time off is involved. Total expenditure is modest but its distribution as between schools is often uneven and unpredictable. There may be ways of delegating funding while protecting individual schools from excessively large bills, but we consider that those arrangements could be very artificial. In the light of the consultation, we thought it best to let LEAs retain the funding if they wished.

The noble Lord, Lord Tope, asked about advisory and inspection services, particularly in relation to school improvement, the whole area of educational development plans and the role of the LEA. The position is that LEAs will undoubtedly need to retain money for some advisory and inspection services in order to promote school improvement. However, I am clear that education development plans are not a licence for expanding centrally funded services. We shall be scrutinising those plans carefully to ensure that LEAs hold back only sufficient funds to support activities which are clearly needed to raise standards in their area. Any advisory services which are not covered by the educational development plan and are not required to enable LEAs to carry out essential functions, such as in relation to special educational needs, should be funded from school budgets on a buy-back basis and not by top slicing.

The noble Baroness, Lady Blatch, raised the issue of Regulation 23, dealing with additional arrangements approved by the Secretary of State. That power is intended to allow a local education authority to meet an emergency situation where the authority may not have sufficient time to produce an allocation formula in accordance with the regulations; for example, if a group of schools in one area needed special treatment due to, let us say, abrupt population loss.

The noble Lord, Lord Tope, referred to the words, "simple, measurable and clear". I thought that they must have caused amusement to parliamentary draftsmen at the time. However, we should remember that these regulations are replacing very detailed matters. I have seen a number of documents produced by LEAs in an attempt to explain the implications of the regulations to individual schools in their areas which are then used in the consultation process. I have been impressed by the way in which they have been able to do that. I hope that, despite the occasional difficulties of understanding parliamentary language, we shall, at LEA and school level, produce a document that is clear to those who must operate the provisions. My experience in the health service in terms of funding formulae is that, while we all started with the aim of simple, easily understandable formulae, we then completely destroyed them by producing arguments for slight changes in sensitivities. It is very difficult to arrive at an exact balance.

The noble Lord, Lord Tope, raised an interesting point about the funding of permanent exclusions. He suggested that a school that undertakes the permanent exclusion of a pupil should have to pay the costs. I am not in a position to respond directly to that point now. It is a matter to which we should wish to give some thought.

Having thanked noble Lords for their general support for the proposals, I commend the regulations to the House.

On Question, Motion agreed to.