HC Deb 02 July 2003 vol 408 cc105-29WH

2 pm

Mr. David Laws (Yeovil)

I am pleased to have secured this important debate on schools funding. It will mean a lot to many people, not least given this year's funding settlement, which has caused problems in schools throughout the country. I welcome the Under-Secretary of State for Education and Skills, the hon. Member for Enfield, Southgate (Mr. Twigg), to the debate. I am slightly disappointed that the Minister for School Standards is not present. He gave a widely reported speech yesterday in which he promised to be "self-critical" when examining the causes of this year's schools funding crisis. I should have liked him to be here today to be self-critical and to admit the source of some of the problems experienced by schools this year. However, I am sure that the Under-Secretary will explain the Government's position excellently.

Before I raise some of the more uncomfortable points, I wish to welcome the fact that it was announced yesterday that two schools in my constituency, Holyrood school in Chard and Wadham school in Crewkerne, have been granted specialist school status. I welcome the additional money that will, as a consequence of that, go into the two schools. I congratulate their head teachers and staff on the hard work that they put into the bid, especially Mr. Maurice Hicks, the head teacher at Holyrood school and Gillian Gee, the head teacher at Wadham school.

On a gloomy note, I talked this morning to other head teachers in my constituency, among them Mr. Jones, the head teacher of Preston secondary school. If the Under-Secretary has been especially well briefed for today's debate, he will certainly know that Preston secondary school and Westfield school were awarded specialist school status last year. Preston secondary school was tremendously enthusiastic about that because it means that additional capital and revenue funding comes on stream. The school was optimistic, anticipating that this year it would be able to expand budgets, spend more on capital projects and deliver better education as a consequence. We can imagine the disappointment felt at that school now, after discovering that its budgetary position means that it has to implement staff cuts, such as four teacher redundancies this year and the non-replacement of several staff who may be retiring. In addition, some of the school's plans for expansion have had to be put on hold, and £50,000 of capital funding has had to be taken out of the budget to protect this year's budget for the other teaching staff. Moreover, a £50,000 deficit on the school's budget this year will create carry-forward problems into next year.

The problems experienced by Preston secondary school, in spite of the new money received as a consequence of gaining specialist school status, have been experienced by many other schools throughout the country this year. Those problems will have a real impact on the delivery of education. However, this debate is not designed primarily to focus on the problems created by this year's funding difficulties. It is designed to enable us to consider the effects of the spending review for the next two financial years, 2004-05 and 2005-06, and to find out what the Government will constructively do to deal with the problems in schools.

Mrs. Annette L. Brooke (Mid-Dorset and North Poole)

Does my hon. Friend agree that it is essential that in their funding plans for the next two years the Government deal with issues relating to the lowest-funded authorities, such as Poole and Dorset, to make sure that the base funding per pupil is sufficiently high that the teacher and classroom assistant to pupil ratios are restored?

Mr. Laws

It will not surprise hon. Members to learn that I entirely agree with my hon. Friend. She makes powerful constituency points in the same robust way as she always does. I hope that the Minister has heard her comments and takes them on board in the funding settlements for the next two years.

Before we consider the funding problems facing the Minister in 2004–05 and 2005–06, we must examine the impact of this year's financial problems if we are to understand the nature of future challenges. I shall touch upon the problems in finances of many schools, and explore some of the causes of those financial difficulties.

When the issue of funding first arose, the response of Ministers was intriguing. Initially, their response was to deny that there were any funding difficulties in schools; then, it was to blame local education authorities; at least now there seems to be some degree of acceptance by Ministers that it is the way in which they allocated funding and did not understand the pressures on school budgets that led to difficulties. In what is likely to be a pre-election year next year, we hope that Ministers will pay attention not only to the head teachers and school governing bodies complaining about the funding settlement, but to the impact on public opinion of the downturn in school budgets this year.

The Minister is no doubt as aware as anyone of recent opinion polls, such as that in The Guardian on 25 June this year. The article stated:

"Labour has dramatically lost its reputation with voters for improving schools and education in the past three months … Back in March, when the Guardian carried out its annual public services survey, education was the only area where the voters said they could see real improvements coming through. But the results of this month's ICM survey show that the impact of the schools funding crisis and the row over tuition fees has led to a sudden loss of confidence in the government's record on education."

I hope that that, combined with representations from head teachers, will help to concentrate the Government's mind on schools funding over the next year. I expect that most hon. Members who have similar experiences to mine in their constituencies would agree that the widespread perception in schools and among the public is that the Government have made a mistake with schools funding this year and lost some of their reputation for improving funding.

I dare say that in the time that the Minister has been at the Department for Education and Skills, he has visited a good many schools. I, too, have visited some, although they have mainly been in one part of Somerset. I suspect that the Minister has been further afield—I certainly hope so. My experience of visiting schools since the Labour Government came to power is of head teachers and teachers saying two things: first, that there is too much bureaucracy in the Government's education reforms; and, secondly, that the funding position is gradually moving in the right direction. This year, however, they are not saying that. The change is reflected in today's press, in which I read that one Labour MP has been forced to donate one day's wages to ease the financial crisis at his local primary school. One article states:

"The staff of Ashby Primary in Leicestershire said the plan had started as a joke but had taken hold when it emerged that there was no money for school library books."

This year that school faces a £38,000 shortfall.

Those types of problem are reflected throughout our constituencies. Preston secondary school in my constituency is having to make redundancies. It is not the only example its problems are reflected in other secondary schools in the constituency. I shall briefly quote from a letter that I received from Mr. Glynn Ottery, the head teacher at Stanchester community school in my constituency; he has also been chairman of the Somerset Association of Secondary Heads. In the letter, dated 28 April—as the crisis in schools funding was beginning to emerge—Mr. Ottery wrote:

"The situation in Somerset is very poor indeed-the worst school budget I have had in 12 years of Headship! I would estimate that two thirds of secondary schools in Somerset are in real difficulties."

The letter continues:

"There will be some teacher redundancies in the secondary sector in Somerset this year … many schools are avoiding redundancies by raising class sizes-often above 30."

Mr. Ottery goes on to explain that the effect of this year's financial problems is not being felt in terms of reductions in teacher numbers alone. Many schools are trying to cushion the effects of this year's crisis: in the hope that the Government will resolve the situation between now and next year, they are cutting other items of the budget. Mr. Ottery's letter describes some of the cuts at his school. He says that there will be less money for books and equipment in some departments, significant cuts in teacher professional development and training, a reduction in learning support assistants for children with special educational needs, and cutbacks in other capital expenditure, including on ICT.

Mr Ottery's letter continues:

"This year's budget is desperate, and for the first time I simply do not have enough money to run my school. There is no doubt we will significantly overspend by the end of the financial year. More worrying is that the Government's budget is for a further two years."

He worries greatly about how schools such as Stanchester will make up next year for the deficit that has been created this year.

Mr. John Horam (Orpington)

One problem that exacerbates the difficulty is the number of centrally funded schemes—many of which are important to a school, such as support for exclusivity problems—that have suddenly ended so that there is no longer any central funding. If they come to an end when a school is struggling for the reasons that the hon. Gentleman is outlining, that is a double difficulty.

Mr. Laws

I entirely agree. I will describe later what I believe to be the sources of this year's funding problem. I wanted to start by identifying some of the impacts that that has had on the education sector.

Let me quote from another letter, which I received from a primary school in my constituency, to show that these problems are reflected not only in particular sectors such as secondary education, but right across the board. The problems at South Petherton Church of England infants school are very similar to some of the problems identified in the secondary sector in Somerset. The effects of the school's financial problems are that it is having to balance its budget by cutting teaching assistant time by 15 hours immediately, decreasing the amount of time the head spends on activities in which the head would normally take a leadership role, cutting back on training and supply cover, and putting on hold capital plans for the school. Many schools are having to cut their capital expenditure and use that money to plug the gap. Mrs. Grazette, the head teacher of South Petherton infants school, explains at the end of her letter:

"The reality in our School is quite different from the rhetoric in the National Agreement and it is my experience, in talking to other Headteachers, that this is their reality too.

I am a dedicated educationalist and went into Headship because I believed I could make a positive difference to children's learning. I believe that teaching can be the best job in the world but my dedication and conviction are being sorely tested at the moment!"

The letters I have quoted offer examples from a couple of schools. There will always be schools that lose out in particular budget rounds, but if we look at the situation in the schools right across Somerset, we find that those that were able to respond to a survey by the National Association of Head Teachers a couple of months ago provided evidence that in Somerset there had been 28 full-time teacher redundancies, that teachers were not being replaced—another problem that schools are facing—equivalent to almost 28 full-time posts, that there were 14 redundancies among support staff and a reduction in support staff hours equivalent to 895 hours. That is happening even though schools are taking action this year to try to minimise the staffing impact of the funding problems. Many schools are running down their reserves and transferring capital funding from other projects to cushion the blow this year, hoping that the Minister will produce a resolution to this problem by next year. That is why it is vital that Ministers consult over the next few months and resolve the problem, including making up the deficits, before we find ourselves facing much worse problems next year.

Mr. David Heath (Somerton and Frome)

Does my hon. Friend agree that, particularly in smaller schools, one of the results of teacher redundancies or not filling posts is a dramatic increase in class sizes, which is contrary to the Government's stated policy?

Mr. Laws

My hon. Friend is, as ever, right. We will see the effects of this year's financial pressures not only in teacher redundancies but in rising class sizes, which cannot be good, especially as our country already has high primary school class sizes compared with other countries.

If we are to address the problems next year, we must understand what caused them this year. I think that the Government are now willing to accept that there is a serious funding problem this year, which has set back the improvements that they seek in the education system. However, it has taken a long time for them to acknowledge the cause of the problems—their first effort, after trying to pretend that there were none, was to blame the LEAs. The Minister for School Standards attended one of the teachers' conferences a couple of months ago and said that the problems arose because the LEAs were squirrelling away £500 million, not spending it. He said the Government would chase that matter up and discover which authorities were irresponsibly holding on to the money. Having considered the matter, the Government have backed away from that explanation. The Minister for Schools Standards wrote to me on 15 June. Having implicitly criticised Somerset county council for its policy and having blamed its financial mismanagement for locally created problems, he wrote:

"we did not set out to give the impression that LEAs were holding back funding from schools."

He could have fooled a few of us. That was the impression the Government gave. I am, however, glad that they have now acknowledged that that is not what has happened.

There were various reasons for the funding problem this year, the main one being that the Government completely miscalculated the higher costs coming to bear on the sector, especially pay costs. The increase in national insurance contributions should have been easy to anticipate and build into the calculations. It would perhaps have been less easy to build in the higher threshold payments, which many schools had to fund, the increase in pension costs and the teachers' pay award, which was not anything special in relation to inflation, but that should have been possible.

The NAHT provides a clear summary of the main reasons why this year the Government misjudged so badly that only a few hundred million at most of the £2.7 billion extra cash that they put into the education system is getting through to schools after the cost changes. The NAHT lists the areas in which the Government have misjudged things this year:

"An under estimate of teachers, and support staff, pay increases over the 3-year period…An under estimate of the cost of the pension increase this year…An under estimate of the losses from the Standards Fund over the 3 year period…An inappropriate inclusion of Standards Fund money in the third year…An under estimate of Performance Related Pay increases not covered by Government grant"—

which is important for many schools with more senior teachers—

"No allowance for the cost of shortening the main scale over the 3 year period…Inflation calculations pitched"

at the wrong level, and incorrect assumptions about the leadership incentive grant. I see the Minister shake his head, but I assume that the Government have accepted that some of those items were among the causes of this year's problems. I hope that he will deal with that on summing up. It is time that we moved on from the matter of who to blame for this year to what our schools are interested in, which is how we are going to sort things out next year, but if we cannot figure out a common position on what has caused the problems, we will never get anywhere next year.

I am grateful to staff at Somerset county council—the director of education, Michael Jennings and his group manager, Susan Fielden—for providing a note about other pressures facing LEAs and schools, some of which are dealt with in the NAHT paper. There are other matters outside the domain of pay—inclusion, for example, is a growing cost for schools. Although we welcome the efforts that the Government are making to enable children to attend mainstream schools, there is often a significant capital cost in getting such programmes off the ground. There are transport costs, not least in rural authorities throughout the country, many of which have lost out under the new funding formula for schools introduced by the Government this year. Somerset county council tells me that

"inflation in this sector continues to run considerably higher than average levels".

Therefore, the Government's assumptions about transport costs may not always be borne out in practice. There is a growing responsibility on LEAs to provide a wide range of early-years education support, and many authorities will need an increase in provision as a result. In Somerset, that will come to some £500,000 in 2003–04.

There are falling rolls in many primary schools, but often school budgets will not decrease as fast as Government funding; a large and increasing gap will be generated, because although the pupil-related funding may fall off, schools will still have to meet teacher costs and operational costs, which are easy to ignore in national formulae. Also, of course, there are issues relating to standards funds, work force reform, performance pay and ICT, all of which were mentioned by the NAHT and all of which are serious problems to many authorities and schools across the country.

Schools funding is a major challenge for the Government. This year, there has been a change in the national funding formula and responsibility for standards funds and threshold payments has shifted. There have been several changes to other formulae as well as a national insurance increase. I therefore accept that what might initially have appeared to the Government to be a generous increase for schools has turned out, at best, merely to meet the higher costs that schools now face. We hope that the Government will now engage in an active debate with LEAs and the teaching profession to make sure that next year they get the judgments right, not only for the education system as a whole, but for particular parts of the country. Even though most parts of the country have had real problems this year, there is no doubt that there has been considerable diversity of experience between regions and counties, and even within counties. That is probably one of the factors that have made it so difficult for the Government to address the problem this year.

What are the Government saying about the measures that they will take to tackle the problem? The Minister for School Standards, in response to a written question asked by my hon. Friend the Member for Harrogate and Knaresborough (Mr. Willis) about the funding problems caused to schools, set out the Department's position on how to address the difficulties. He wrote:

"My Department is working with representatives of local government and schools to consider what changes to the schools funding system are needed from 2004–05 to ensure that every school receives a reasonable per pupil settlement next year."—[Official Report, 23 June 2003; Vol. 407, c. 554W.]

We want the Government to acknowledge the funding problems that have been caused this year, to identify why they were caused, and to work seriously with LEAs and the teaching profession to make sure that they do not happen again. We would also like to know the Government's objectives for next year in terms of the impact of the funding settlement. What does "reasonable" mean? Does it simply mean that the higher costs will be covered by next year's settlement? Does it mean that the higher costs that will affect next year's budgets will be met but the deficits that are being created this year will not be tackled? If so, there will be real problems and schools will not even be able to maintain the teaching staff that they have this year. Does "reasonable" mean what most schools and most of us want it to mean—that the Government are planning for expansion in the schools system and that they intend to get it back on course next year? Will schools be able to recruit new teachers and teaching support assistants and expand capital programmes? I am sure that the Minister would agree that for a Government who aspire to improve education a reasonable settlement would not be a standstill settlement that simply covers the higher costs and makes good one year of problems.

Those are some of the issues that the Government must address seriously today. I hope that the Minister will acknowledge that there are many other problems with the schools funding system that we simply cannot touch on in the time we have today. Such problems relate to the distribution of funding across different parts of our country and the difference between deprived communities and those that are not deprived to such a significant degree. There are also issues connected with the funding of special educational needs and the necessity of long-term funding in the education system. Instead of experiencing every year ridiculous funding uncertainties that mean that teachers do not know what will happen next, we should follow through the logic of the comprehensive spending review, so that not only do the Government wisely set three-year targets centrally, but schools have a better understanding of their budgets for two or three years ahead.

2.24 pm
Mr. Andrew Dismore (Hendon)

I congratulate the hon. Member for Yeovil (Mr. Laws) on securing this debate on such an important subject at such an opportune time. I am sure that my hon. Friend the Minister will think that I sound like a broken gramophone record because of the number of times I have made these representations to him and to his departmental colleagues. However, I can assure him that neither I nor my head teachers, parents and governors will go away until the problem goes away.

We in Barnet have very good schools. Since the Labour Government came to power, we have had consistently improving results at all key stages and in GCSEs and A-levels. I pay tribute to the very good work that head teachers, staff and teaching assistants do in our schools to achieve those continuing improvements. However, I am very concerned that unless we do something dramatic to tackle the funding crisis this year and in future, the prospects for our being able to continue to maintain that improvement year on year will become remote.

The starting point for the problems that we are experiencing in Barnet was the 2001 census, which showed a 9 per cent. decrease in population. Those of us who live in the area find that incredible and unbelievable, bearing in mind the amount of building work that is taking place in the area. It seems that every time one turns a corner, a building has been knocked down and a bigger block of flats is going up. Even if the census is correct for the adult population, there is certainly no sign of any fall in school rolls. The number of children we must educate remains the same, but the amount of money we have has been dramatically reduced.

We have also been significantly affected by the general changes in the funding regime, particularly the changes in the standards fund. In terms of funding, the changes translate as follows: the Department for Education and Skills said that we should passport 7.8 per cent. of funding into schools' budgets—that equates in cash terms to £14.5 million. However, somewhere along the line, the Department cannot have been talking to its colleagues in the Office of the Deputy Prime Minister, or not communicating as effectively as it might, because Barnet, which was on the ceiling for DFES passporting, was put on the floor for cash. We received only £7 million for the whole council—only half of what we had been told by the DFES to passport to schools. We have had a major increase—24 per cent.—in council tax and it is not realistic to expect local taxpayers to pay any more.

The LEA has been able to passport the 7.8 per cent. to schools, but significant budgeting problems remain because of rising costs, which the hon. Member for Yeovil identified. They include national insurance contributions increases, pension increases, the teachers' pay award and other rising costs that we know about. The problems are having a serious and deleterious effect on a number of secondary schools in my constituency. Only yesterday I received a copy of a letter sent to my hon. Friend the Minister for School Standards from St. James' school. Mr. McSharry, the head teacher, writes:

"We are a very good school."—

I agree—

"Our students come from a corridor of deprivation including Burnt Oak, Grahame Park, West Hendon, Cricklewood and Kilburn"

but the

"deprivation is not reflected in the appearance"


"behaviour of the students, or…their examination results."

It is a high-achieving school given its intake. Mr. McSharry continues:

"I would be the first to applaud what this Government has done for education."

He makes some nice comments about me which modesty forbids me to read out, then points out that

"this financial crisis is having a deleterious and corrosive effect on morale and will undermine, indeed wipe from the collective memory what has been achieved."

He comments on the £451,000 budget deficit facing the school in the current year, even after a staffing reduction of five teachers. That has probably been achieved by natural wastage, but part of the problem is caused by the need to employ agency staff to fill vacancies, which is a common problem in London—I am sure that my hon. Friend the Under-Secretary has the same problem in his constituency—and which has a major impact in terms of increasing costs. Mr. McSharry also makes a point about the standards grant, which for St James' school was reduced by £114,000. The recruitment and retention element, which was included in that amount, was reduced by more than £30,000. That is why the school is facing serious problems.

The deficit goes beyond that, because the school is trying to obtain specialist school status in science. It is very good at science, maths and ICT, but the Mr. McSharry and I understand that a school in deficit cannot apply for specialist status. I hope that when my hon. Friend the Under-Secretary replies to the debate, he will make it clear that schools that are facing a deficit this year will not be penalised in applications for specialist status, which might actually help them to get out of their difficulties.

The DFES has reviewed Barnet's education budget—as have I, during many long, tortuous meetings in which I had a wet towel wrapped around my head to assist my efforts to understand the figures. We have come up with various ideas and solutions about what should be done. The DFES talked about the centrally retained element of the education budget. I met my right hon. Friend the Secretary of State for Education and Skills at the beginning of June to discuss the matter. He felt that there was no need for the Department to revise the central budget corrections that had been made for the current year. The budget includes, for example, £1.1 million that has been retained as a contingency. It will be disbursed to schools during the current year, mainly to primary schools, which have very little scope to deal with this year's budget problems. The pupil referral unit, which the DFES approved, should be transferred from the adolescent psychiatric unit to the education budget—that is £700,000—and there is an increase in the SEN budget of £750,000. Last year's deficit of £900,000 was a historic overspend caused primarily by the substantial increase in costs for non-maintained schools. Those costs have skyrocketed: last year, they increased by an average of 15 per cent., with some increases of up to 25 per cent. Day schools' costs are up by 6.8 per cent. in the current year, and residential schools' by 10.1 per cent. Although there are only 112 statemented kids in non-maintained schools—almost the same number as last year—the costs have increased dramatically; something must be done to correct that.

I was very pleased that my hon. Friend the Under-Secretary wrote to Barnet's cabinet member for education in these terms:

"We recognise that you have not deliberately withheld money from schools and that centrally held budgets can be justified and/ or were agreed with schools through the forum."

That argument has been addressed, but the problem remains. There is no central money left that can be passported that is not already earmarked for schools.

We have been told that schools can consider the revenue use of capital funds, but there is very little money of that type available. I shall give an example of that shortly. We are told that schools can consider licensed deficits, but I understand from the education authority and head teachers that licensed deficits can be achieved only through redundancy programmes. By the end of the calendar year, Barnet faces between 15 and 20 teacher redundancies, with a similar number of teaching posts not filled and, of equal importance, similar numbers of redundancies and unfilled teaching assistant posts. I fail to see how we can implement the agreements on work-life balance in schools that the Government have made with the various unions against a pattern of unfilled vacancies and redundancies for teachers and teaching assistants.

Barnet would have to deal with a licensed deficit of between £3.5 million and £4 million, which would have a significant impact. No doubt my hon. Friend the Under-Secretary remembers Copthall school, which he visited to present A-level certificates to sixth formers. A very high-achieving school, it was ranked the highest performing girls' comprehensive in the country in The Guardian value-added league tables. It has just won specialist status as a business school. My hon. Friend wrote to me when I raised the case of that school and suggested that the head teacher and the governors would need

"to fully consider the flexibilities"

that the Secretary of State had announced on 15 May. They have done that, but they are getting nowhere in dealing with the problem. They have already implemented a cut of £200,000, which is equivalent to 3 per cent. of the budget. They have considered using capital, but they have only £85,000 of capital this year, and that has already been committed to fixing leaks in the roof and windows. They are left with a deficit of £200,000.

The head teacher and governors are happy to set up a deficit budget and, in effect, that is what they have done. However, they cannot agree with the education authority on a licensed recovery plan, because such a plan would inevitably mean redundancies. A letter from Barnet's deputy chief education officer to the head teacher states that

"a licensed deficit in the order of £200,000"

would have to be on the back of

"a recovery plan which the LEA agrees is viable…over three years. The school should plan on the basis that future years increases in the School Budget Share will cover pay awards and inflation on other goods and services."

The letter states that

"The cost of staff at the moment"—

after the 3 per cent. cut—

"is 107 per cent. of the school budget share".

and that

"the key to a viable recovery plan lies in making sufficient redundancies or other staff reductions in 2003-04 which give a saving in that year but give a significant saving in 2004-05 and future years for the school to save what is initially a cumulating deficit."

The importance of that is that the cut might balance the books for this year, but will have an impact on staffing in future years unless we get the budget right for next year and subsequent years. The letter also comments on capital funding, but I have already referred to that. Therefore, for the school to get a licensed budget, the education department is demanding proposals for redundancies,

"including numbers and stage of process",

as part of the outline recovery plan.

Mrs. Gadd, the head teacher, has indicated that she and her governors are not prepared to set a budget that would be licensed because of that requirement of the recovery plan. She says that there is no slack available in the school and that it now faces several appalling options. By the end of the year, the school will either be sending all the children home one day a week, or it will have to send all the children in year 11—the GCSE year—home permanently after Christmas, to let them study for themselves. The problem is now starting to become serious. Who is going pay staff wages by the end of the year?

The two examples I have given illustrate the significant problems facing schools. Our head teachers have worked very hard to come to terms with the problems. They have not pressed the nuclear button and started to send kids home, but have worked responsibly to try to balance the books. St. James' school has made significant cuts and lost five teaching posts, yet still faces a shortfall of £450,000. Copthall school has made a 3 per cent. reduction in its budget, but still faces redundancies. That will undoubtedly have an impact on the schools in the current year and future years.

I can say to my hon. Friend the Under-Secretary, as I said to the Prime Minister during Prime Minister's questions the other week, that parents in my constituency are not interested in apportioning blame; they want the problem sorted out. We are not going to be able to sort the problem out with the remedies that have so far been offered by the Secretary of State. We have to have more money if we are to avoid education meltdown in Barnet—in the schools in my constituency—at the start of the next calendar year. We must have something to offer them to sort the problem out.

Significant cuts in spending have been made this year. Will next year's budgets for schools be sufficient to catch up the ground lost this year? If licensed budgets are set for the schools that have been able to achieve the requirements, will next year's budget provide enough to catch up that licensed deficit, so that we will not see year-on-year cuts as the schools run to stand still or to make up the budget deficit? What will happen when the schools standards fund changes, as was proposed last year? That has had a disproportionate effect in my constituency, with some schools losing significantly larger amounts of money than others, and the effect throughout the country has been patchy. Will my hon. Friend the Under-Secretary also tell us what will happen to specialist school applications, given the present position? That is the question raised by Mr. McSharry, the head teacher of St. James' school.

I am not crying wolf; this is a serious problem. My local education authority, Conservative controlled though it may be, has worked responsibly with the Department to try to get to the bottom of the story. The Department has worked responsibly with the education authority to look at various options, and my heads and governors have also worked well together. There has been a team effort to try to work through the problems, and I have done what I can to bring people together and hold the meetings needed to get to the bottom of the problem and sort it out. However, I think that we have now got to the bottom of it. The problem is that there is simply not enough money in the pot. Something has to be done.

2.39 pm
Mr. A. J. Beith (Berwick-upon-Tweed)

I am glad that my hon. Friend the Member for Yeovil (Mr. Laws) has secured and introduced this debate, which he has done from a background of constituency experience and also from a grasp of the Government's public expenditure plans that is unusually good among Members. In doing so, he has given me the opportunity to refer to the situation in Northumberland, which is particularly bad and desperately needs attention in the next two years. The problems in Northumberland have built up over a considerable period of time. They consist of not only the current problems of the standards fund losses, the additional expenditure on pensions and the pay settlement, but the impact of a decade of bad local government funding settlements.

I have gone with a mixed delegation of Members of Parliament from three different parties to both the previous Government and the current Government because year after year the formula, which was established by the Conservative Government and continued by this one, left Northumberland with less expenditure on local government services, particularly education, than other parts of the country. That has not been remedied by the changes so far made to the local government funding system and the effect has been severe.

Although the decision emanates from the Office of the Deputy Prime Minister, the Department for Education and Skills must have been closely involved in the decision and discussions. It should recognise the severe impact of a bad local government settlement on a local authority, the largest single responsibility of which is education. The situation in shire counties has been severe.

Northumberland has had significant setbacks in obtaining funds from the Department for Education and Skills, particularly by way of private finance initiative schemes. The authority has twice put up and twice had rejected PFI schemes for the Ashington area, which includes schools in my constituency, and for the Berwick area. On each occasion, it picked up hints that it was not far short of the conditions required for the approval of a scheme. It was suggested that if the authority put this or that right, it could hope to secure approval at a later stage. It has been through that experience twice and groups of schools, which desperately need investment, have been unable to secure it because of successive decisions on PFI schemes.

In the case of the Berwick area, the county is proposing a massive reorganisation of schools—the amalgamation on to one site of a high school and two middle schools—with no confidence whatsoever that PFI funding can be obtained for the conversion and construction of buildings. The county authority finds it difficult to convince anyone in Berwick of the merits of the scheme because everyone says, "You'll never find the money." Even if we put up with the loss of the existing schools—the middle schools are doing a particularly good job—we cannot have any confidence that a great new campus will have the necessary funding for it to have major compensating advantages.

The cost pressures have been so serious that the education authority had to ask head teachers to stop making people redundant because it could not afford the redundancy payments. The director of education sent a letter to heads earlier this year pointing out,

"There are 12 schools where normally we would approve the voluntary redundancy of permanent staff over 50. The cost of those redundancies…would be in the region of £3,000,000, yet the amount of budget available to fund redundancies is only £1,000,000. Over the last ten or so years a large amount has been spent on redundancies in schools, and we are still paying for this from the education budget. Rather than funding redundancies, we would prefer to provide more resources for schools."

The council scraped together £500,000 from its PFI funding and £1 million from elsewhere to put forward a proposal to stop the redundancies and keep the posts. The whole process was cost-driven. One or two teachers had probably hoped that they would get voluntary redundancy and were denied it, and the story illustrates the desperate snatching at one fund or another to deal with immediate cost pressures.

The pressure to close down village schools is largely derived from those cost pressures. Major reviews are taking place in two areas of the county and they will be followed by reviews in other areas. The proposals for the Ashington area are likely to include closing Linton school in my constituency. The school has massive and remarkable community support to which I pay warm tribute. I have watched how the community has cared for its school. In the Berwick area, a whole series of schools face the possibility of closure or amalgamation. They are Horncliffe, Norham, Scremerston, Cornhillon-Tweed, Ford, Milfield, Lowick and Holy Island. That large group could be reduced to two or three schools. Village after village would lose its school, contrary to the Government's statement that there is a presumption against village school closures.

Two factors are driving the proposals: the county's educational problems and the surplus places argument, which the Government are fond of using. The county administration fears that the surplus places argument works against it in its PFI bids. In seeking approval for major capital investment in schools, it has to meet the argument that it has too high a quota of surplus places.

What are surplus places in village schools? They arise primarily from two things. First, in a village school a teacher could be teaching 15 children of a wide age range. Theoretically, the teacher could teach 20 or 25 children in that class, but there may not be that number of children between the ages of five and seven in the village that year. It is in the nature of schools in small communities that teachers may take two-year groups, or, in some cases, all the year groups in the school, as happens in my constituency. Despite the versatility that teachers show, the problem remains. When surplus places are viewed in that way, the impact is to put under pressure of closure schools in villages that are active in their support and where it is certain that there will be pupils in future years.

The second factor in the surplus places policy is the fact that many of the schools were built to accommodate children between the ages of five and 15, or in some cases, five and 11, whereas the only children that they actually have are between five and nine, because the county has a three-tier system. That does not mean that the accommodation is wasted. In almost every case, spare classroom accommodation in schools is used for nursery classes or playgroups, which are often independently run, or for other community purposes that are welcomed in the communities that are served. It ought to be a sensible part of any rural policy to use community assets, such as village schools, as ambitiously and flexibly as possible to meet the various social needs of the community.

What is the process by which policies on education funding for the next two years, and the surplus places policy, are subjected to rural-proofing? How is it that that objective, which the Government and the Countryside Agency have set for themselves, is applied to policies that appear to have the opposite effect and work directly against rural areas?

Let us consider the village first schools that are threatened and those that will be threatened when the review moves on to other areas. The atmosphere in the first schools is positive. My description of the funding situation would not be readily apparent to someone who just went into a class in which young children were being taught because of the dedication of staff in our small schools. There is huge community support for the schools and they can rely on the community to fill some of the gaps by fundraising and coming in to help with activities. Great successes are achieved, but all that could be thrown away in the closure and amalgamation process.

The impact of the financial problems is more immediately obvious in middle and high schools. Subjects can no longer be taught and activities that were being developed have had to be abandoned or greatly reduced. The impact is severe. There has also been a serious impact on high schools, which include schools that are trying to invest in staff and facilities to raise standards that are not high enough at present. Berwick high school is trying to acquire the status of business school. Doing so against the current background and the PFI refusals seems a Herculean task. It is battling the tide of funding, which is going against it all the time.

When the Minister deals with the wider issues of education funding for the next two years, I want him to apply rural-proofing to those policies and examine their impact on village schools and smaller schools. I also want him to recognise that in rural and urban Northumberland the impact of a decade of school underfunding is making it virtually impossible for schools to tackle the problems that they want to resolve, which the Government are urging them to resolve. Northumberland's situation is serious and I ask the Minister to give it some special personal attention

2.50 pm
Mr. David Heath (Somerton and Frome)

I, too, congratulate my hon. Friend the Member for Yeovil (Mr. Laws) on securing the debate. I express my surprise that more hon. Members are not here to represent the views of their schools. If that gives the proceedings a slight Somerset bias it is no bad thing as far as we are concerned. I shall not rehearse the arguments that my hon. Friend has already made. My right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) faces almost exactly the same problems in his constituency as I do in mine. Our constituencies have a similar, rural outlook.

We have been here so many times before. Throughout the last Parliament we almost had a monthly repertory company talking about the worst funded local authorities in this country and making the case on behalf of our educational authorities. It was nearly always the right hon. Member for Birmingham, Yardley (Estelle Morris) who was deputed to answer our questions, and we knew each other's speeches off by heart. We knew exactly what we were going to say, and once we had finished the debate, we would agree that there was a serious problem that needed to be addressed, but could not be entirely addressed within the Department for Education and Skills. We have always understood that.

The holy grail that was before us was always the funding review and the change in funding formula. That was going to make the difference and end the decades of underfunding of the worst funded authorities in the country. I have to say that we are bitterly disappointed at what has happened this year, overall and in specific terms, to Somerset schools. We do not seem to have made the quantum leap that will take our children into the same funding league as those elsewhere in the country.

I often cite the fact that our children annually receive from Government £1,500 per child less than those in some London suburbs. I accept the points made by the hon. Member for Hendon (Mr. Dismore) as that clearly is not the case in his constituency, but that sort of disparity is impossible to justify. It is the root cause of everything else that flows from it. Until we have a genuine entitlement for our children we will be robbing Peter to pay Paul and making do in our education systems. We are not providing the level of funding that is appropriate for our very good schools, teachers and governing bodies, which are doing a superb job with the little that they have.

The inequity in the funding formula used to be dealt with by the standards fund, which was used as an unofficial DFES slush fund. Even that has now been cast into confusion, and as a result, schools face serious problems. There is no hope of a further review that will deal with the underlying deficit. We hear much from Ministers about the need for stability in education funding, and we absolutely agree. We have argued for that for years. We want there to be the certainty, at least in the medium term, of a three-year rolling programme of education funding. What we do not want is stability in deficit, which makes it impossible to plan effectively for the future, to make the necessary investments and to set aside funds. That applies both to revenue and to capital.

Somerset has a huge backlog of temporary buildings. At one point, well over 800 temporary classrooms were in regular use. Not only had some of them been put there 40 years ago, but they were being used for the education of children whose grandparents had been taught in them as children. That is a disgrace; it should have been dealt with years ago.

I accept that, because there is such an enormous requirement for resources and funds, it cannot be met overnight and the Government are making a start. However, that means that there is limited scope for progress on all the other things that schools should be doing. My right hon. Friend the Member for Berwick-upon-Tweed spoke about wider community use. That is one of the things that get lost when schools have no capital fund, because they do not have spare buildings to put to such use.

Mr. Mark Francois (Rayleigh)

Without wishing to deny anything that the hon. Gentleman has said about Somerset, is he aware that Essex had the worst grant settlement in the country? In both our counties, many are concerned that this year is not a one-off. The title of the debate signifies that it is the beginning of a process. Unless the Government can be persuaded to amend that process the problem will be magnified, for both pupils and teachers, in Somerset, Essex and many other counties.

Mr. Heath

Obviously, I cannot speak for Essex, but I know that at least 40 local authorities face the situation every year, and have done for decades. Because it is recurrent, problems are exacerbated rather than getting better. On top of the root cause of the problem, we are now experiencing the immediate issues set out so clearly by my hon. Friend the Member for Yeovil. They affect schools in my constituency, such as Bruton primary school, which I visited last week. It is a superb school; it received a wonderful Ofsted report, is doing everything right and has an enthusiastic head and other staff. It also has very enthusiastic governors who had gone about financial planning in a sensible way: they knew that the roll would fall over the next year and then recover, so they set aside money in order to maintain class sizes and ensure that staff remained. However, they now face the unhappy prospect of reducing their staff numbers and massively increasing class sizes—and it is not their fault. They do not blame the local education authority—they have worked closely with it—but they do blame the Government. Bruton primary is not the only school affected; there are Nunney first school and Horsington school and I could list many more.

If the situation is not dealt with at source, at Government level, it cannot be dealt with by the local authorities. As the hon. Member for Hendon says, there is a limit to the tolerance of our electorate for council tax increases. They cannot continue paying more and more and, by the gearing effect, receiving less and less. They cannot keep on cross-subsidising education out of social services and roads maintenance and all the other things that a county council funds.

Mr. Beith

Let me give an illustration. Northumberland county council found that, even with a council tax increase of 12.8 per cent., it could not achieve the level of education spending presumed by the Secretary of State.

Mr. Heath

That does not surprise me. If there has been one recurrent theme over many years, it has been that whatever the Department for Education and Skills wants to happen, the Department for the Environment as was, now the Office of the Deputy Prime Minister, does not allow the system enough elasticity for it to work. Education authorities that are committed to education and people in the schools system who are committed to schools find themselves the losers. That must not persist. The education system reminds me of a dangerous road where somebody is required to die before an improvement is made. One feels that our schools will have to fail before anybody is prepared to acknowledge that there is a funding problem. I am not prepared to see our schools fail. They are good schools and deserve our support. They should not have to support themselves through jumble sales and raffles. They should have the education service funding what they need.

Last Thursday, at Education questions, I asked the Secretary of State why he had not found time to discuss the immediate problems with Somerset education authority. He replied, I believe, that he would be happy to do so. Will the Minister confirm that so that a meeting can be arranged? Although officials from the authority and the Department are to meet, I should still like to sit round a table with the Secretary of State, my hon. Friend the Member for Yeovil and the authority's representatives so that we can thrash out the issues. I hope that we can co-operate on finding solutions.

Finally, I invite the Minister and his colleagues to visit Somerset. During my time as an MP, no Education Minister has ever visited the schools in my constituency. It is about time that Ministers came to see the excellent work that is done in our schools and the problems that they face. If they will not do so, we shall continue to have Adjournment debates about Somerset's education funding every year, if not, as my hon. Friend suggests, every month. The Minister can be assured that we will not let up until we have a fair deal for our children.

3 pm

Dr. John Pugh (Southport)

I congratulate my hon. Friend the Member for Yeovil (Mr. Laws) on securing the debate and on his excellent introduction. I also commiserate with the Minister, who seems to have been set upon by posses of Liberal Democrats. When he and his colleagues drew straws on Monday morning, he must have got the short one, because there can be no subject that the Government would less like to talk about at the moment than school funding. At the very least, it is a public relations disaster. At the worst, it suggests that the Government are guilty of provoking a major redundancy crisis across the land. The problem is not confined to Somerset, Essex or London. Indeed, school after school, and LEA after LEA, have identified such problems. By and large, the ministerial response has been first to deny that there is a problem and then to distribute blame elsewhere. That has set LEAs against the Government in a rather unfortunate way.

I am glad to say that the Government seem to have backtracked, but they are still vulnerable to two charges. The more serious is that they are guilty of deceit because they have presided over underfunding while appearing to be generous. The lesser but more convincing charge is that they are guilty of incompetence because they intended to increase school budgets wholesale this year but provoked a financial crisis in some, although not all, schools and LEAs. In that respect, it is noticeable that those who have done well are always the slowest to complain.

I find the lesser charge more convincing, because I am sure that the Government genuinely do not want the flak and that the Minister does not want to be here answering questions on the issue. The Government do not want to resort, as they did earlier this year, to knee-jerk reactions, such as allowing schools to use their capital for purposes that were not previously intended. They do not want to put a strain on their partnership with LEAs.

The remarks of the Government's advisers before the Select Committee on Education and Skills last week also convince me that Ministers did not want to get into this mess in the first place and that they did not foresee it. Those advisers did not say that the Government had failed to listen to their advice, but that there was a problem with the modelling of school budgets. However, I think that there may have been a failure of anticipation and that it would be plausible to talk about a failure of modelling only where certain data could not have been foreseen. Most of the events that have caused schools problems this year have, however, been perfectly foreseeable. The increases in national insurance and teachers' pay were known, and the effect on school budgets of restructuring salary scales should have been. Pension contributions were also a known factor. The DFES certainly knew about the phasing out of the standards fund; indeed, it inspired the programme. The second-year effects of pay increases for non-teaching staff were known, as were overall pupil numbers.

The DFES advisers' only defence against the accusation that they should have taken account of such information was to say that they knew about it in general terms. They said that they knew the global figures, but that one could surely not expect them to work out specific outcomes. For example, they made play of the fact that they did not have their finger on the exact fluctuations in pupil numbers; and the extent to which LEAs would passport the funds was not easily identified, although they could have gone by previous practice, as most LEAs used to passport all that the Government asked them to do. Floors and ceilings may not come within the provenance of local authorities; and every local authority has a different distribution formula when handing out the money to schools.

Coming from the Department's advisers, that is a fairly feeble defence. They are not charged with not knowing exactly which schools would have problems; they are charged with failing to anticipate, because LEAs have different distribution formulae, different attitudes to passporting and different positions on floors and ceilings, that many schools would be seriously underfunded. If the advisers' modelling could not pick out a general failure, the Department needs to do one of two things. It should either scrap the model, as it clearly does not work; or it should sack the modellers.

The question is how the Government will progress out of that mess. I accept that next year will not be a repetition of this year in every respect. Certain variables will be better known. For instance, the local government settlement is stable for three years, although I understand that many hon. Members are deeply unhappy about that. Many costs, such as national insurance, are already factored into school budgets. The issue of school balances and of schools holding money unnecessarily will be addressed, and I hope that the switch in the standards fund will have started to bed down. However, I should like the Minister to say something about how it will be dealt with next year, and whether money taken from the standards fund will be returned to the general pot.

There are still imponderables. It is difficult to calculate the effect of regradings—wage negotiations are always an uncertainty on the horizon—and there is always the possibility that the new freedoms being given to local authorities will affect what they do with their funds. However, because it is an easier proposition for them, the modellers should look at the matter in the round. The figures shown to the Select Committee suggest that if we strip out the ongoing costs, there could be something like a 1.4 per cent. real-terms increase in school budgets next year.

Two questions remain—whether that sort of figure, which is relatively comforting, incorporates all the real costs that schools will incur; and whether the general figure lacks significant local variation. In order to prevent local variations presenting a different picture against the background of general increases, the DFES has a responsibility to try to firefight in advance. It needs to engage in significant consultation with schools, unions and heads. As the Select Committee said, it needs to liaise effectively, or more effectively, with the ODPM. It needs to clarify the position with regard to the standards fund in general, and to consult the Local Government Association, which still says that an extra £1 billion will be required.

Above all, the DFES needs to ensure that no initiatives are adding further costs to the school budget. I take what my hon. Friend the Member for Somerton and Frome (Mr. Heath) said about stability in deficit, but schools need stability in funding and in practice. That may not be an attractive prospect for a hyperactive Minister, but I suggest that it is a good one.

3.8 pm

Mr. Graham Brady (Altrincham and Sale, West)

I warmly congratulate the hon. Member for Yeovil (Mr. Laws) on securing a debate on school funding not only because it is a matter of particular importance today and this year—we are in the midst of a major crisis—but because he picked a debate that looks forward. One of the biggest worries faced by schools throughout the country is that the funding problem is not one for this year only. The much-trumpeted stability and predictability in funding sounded attractive when that sounded like an increase in funding, but now that we have school deficits and teachers facing redundancy, it seems a much less attractive prospect.

The hon. Gentleman has therefore done a good job, not only for his constituents, but for the House, in bringing the right debate before us. He commented on the sadness caused by the absence of the Minister for School Standards. I was tempted to observe that it is infinitely better to have the Under-Secretary of State for Education and Skills, the hon. Member for Enfield, Southgate (Mr. Twigg), here with us in person than to have the Minister for School Standards appearing by videolink, which appears to be his habit at the moment—he addressed the governors' conference and the foundation and aided schools by videolink. Perhaps that is an indication—

Mr Deputy Speaker (Mr. John McWilliam)

Order. The hon. Gentleman is suggesting something that I doubt Standing Orders will ever allow in my lifetime.

Mr. Brady

You have been in the House far longer than I have, Mr. Deputy Speaker, but in the six years that I have been here so many things have happened that I hoped that I would never see that I wish that I could share your certainty.

Perhaps the Minister for School Standards is being self-critical somewhere else. Perhaps he is now absorbing the responsibility that he must bear personally for the problems that are being experienced in schools throughout the country. I have said before that I believe that the problem is the grossest betrayal of trust of which the Government are guilty, because they promised so much in education. People in the world of education, parents and children feel bewildered and let down by the sorry pass to which we have come due to the Government's education policies.

The hon. Member for Yeovil started by welcoming the successes of some of his local schools. I, too, could pay tribute to many successful schools in my area, but the tragedy is that such schools are now succeeding not because of, or even with the support and help of, but in spite of the Department for Education and Skills. It is important to consider briefly what the situation is now. It is easy to pluck examples out of the air. For instance, an example from my constituency is that the head of Bollin primary school, a colleague, has been pushed into not only organising a fête or auction—I think that another hon. Member referred to something similar—but jumping out of an aircraft in a sponsored free-fall parachute jump to raise money for the school budget. That should certainly not be necessary in any school in this country.

We have also all read in our newspapers today about the splendid example being set by the hon. Member for North-West Leicestershire (David Taylor), who, in common with the head, teachers and support staff at one of the schools in his constituency, is giving up a day's pay to contribute to that school's shortfall of £38,000. We read too of a Coulsdon high school in Croydon, where parents were warned on Friday that every pupil will lose one afternoon's school a week from September due to its £300,000 shortfall.

The Conservative group on the Local Government Association, which is now the majority group, has been surveying local education authorities and has received some worrying replies on the current funding crisis. About 67 per cent. of the replies from LEAs indicated that there would be some redundancies in local schools, while 22 per cent. of replies reported that teaching posts were being left unfilled owing to financial pressures. Croydon reported between 100 and 130 posts left unfilled, Leeds did not fill 78 teaching posts, and more than 35 contracts on the Isle of Wight will not be renewed. About 97 per cent. of the replies reported that at least one school in those LEA areas had been forced to set a deficit budget, which is a serious problem for those schools. If the Minister does not want to trust the Conservative group on the LGA—

The Parliamentary Under-Secretary of State for Education and Skills (Mr. Stephen Twigg)

Perish the thought.

Mr. Brady

Perhaps the hon. Gentleman will trust his old friends in the National Union of Teachers, which has also been surveying schools and LEAs. It has found that two thirds of the respondents in its survey reported that there would be reductions in staff due to loss of teaching or support staff posts. About 60 per cent. of respondents reported that teaching posts would be lost. There are serious problems not only in one or two localities, but throughout the country.

We have heard several good contributions to the debate. The hon. Member for Somerton and Frome (Mr. Heath) made some telling points about the problems faced by his local schools and said that no Minister in the present Government had visited one of his local schools. I do not know whether the Minister will respond to that comment in due course, but if he does not, I am happy to assure him that a Minister in the next Government will. Such a visit will be high in the list of priorities. The hon. Member for Hendon, North—

Mr. Heath

The sad fact is that, when I was chairman of the education authority at the time when there was a Conservative Government, the only school that a Minister visited was a public school.

Mr. Brady

Well, there we are. We used to hear about Punch and Judy politics from the former leader of the hon. Gentleman's party. Perhaps that was what was in mind. I give my personal assurance that we shall put matters right.

Mr. Laws

Will the hon. Gentleman give way?

Mr. Brady

I shall in a moment, but I want first to refer to the remarks made by the hon. Member for Hendon, North.

Mr. Dismore

It is just Hendon.

Mr. Brady

The whole of Hendon? The people of Hendon have great good fortune.

The hon. Member for Hendon (Mr. Dismore) referred to the danger of educational meltdown. His remarks are especially important because of the quality of schools in the borough of Barnet, which has some of the best schools in the country. It is a tragedy that that area is one of the places that has been hit the hardest during the current crisis.


As Lord Ashdown's successor in Yeovil, I am certainly not engaging in Punch and Judy politics, nor was my hon. Friend the Member for Somerton and Frome (Mr. Heath). We are having a constructive debate about education funding in future years and the distant possibility of having a Conservative Government. Under the Conservative party, there were two decades of the slowest growth in education budgets in the post-war period. It was only about 1.4 per cent. per year in real terms. If the Conservatives ever get back into power, will the hon. Gentleman make a pledge today that he will stick with the big increases in education funding that are in the current comprehensive spending review?

Mr. Brady

During the 18 years of Conservative Governments, we had sustained real-terms growth in education funding. The hon. Gentleman has already accepted that. What is unprecedented is what is happening now. Admittedly, the Government have put large sums into the budget, which is lifting large sums out of the pockets of our constituents supposedly to pay for the local services. However, the Government are still forcing schools and LEAs to fire teachers, which is taxing more and delivering less.

We have heard some telling points about why such problems have occurred. As I said at the outset, it is most important to look to future years, the problems that our schools will face and how we can solve them. I know that the Minister realises the importance of that. The first issue that schools that are being forced either to set deficit budgets or to spend their reserves this year are having to consider is how they will get out of that situation and recover their deficits. I am sure that they will be interested to hear the Minister's advice on the matter. The second problem is how they can deal with the black hole in capital funding, which is now being opened up. I do not like praising the Government but, in all fairness, I give them credit for increasing capital funding for schools in the past couple of years. However, the fact that schools are now being told to take the money that they were given for capital and spend it on teacher redundancies has left them utterly bewildered.

As Doug McAvoy of the NUT put it, what are we to do? If our boiler breaks down in the middle of the winter, should we sack the deputy head? Schools throughout the country are grappling with such problems. They will want to hear the Minister's views. Above all, there is the ticking time bomb of the teachers' work-load agreement. That will be introduced in September this year, and the biggest costs and increases in responsibilities for schools, particularly in staffing terms, will kick in not this September but next. Against a background of stable funding and stable deficits, that leaves the Minister with serious questions about how schools are to reduce teacher work load as the Government have promised they should be able to do. How are they to increase staffing levels against the backdrop of schools throughout the country either having to make staff redundant or facing an inability to replace staff who are leaving?

3.20 pm
The Parliamentary Under-Secretary of State for Education and Skills (Mr. Stephen Twigg)

I am pleased to have this brief opportunity to respond to what has been an important and constructive debate. I am delighted to hear that my hon. Friend the Minister for School Standards has undertaken to be self-critical, and I shall do my best to match him either in person or via videolink.

I congratulate the hon. Member for Yeovil (Mr. Laws) on securing this important debate. I thank him in particular for his comments about the specialist schools in his constituency. I join him in congratulating the two schools in his constituency on yesterday achieving their specialist status. I am also delighted to be able to inform him and the hon. Member for Somerton and Frome (Mr. Heath) that I shall be in Somerset next week, attending in person—not via videolink—two primary school conferences in Weston-super-Mare. At those events, about 500 primary head teachers will have the opportunity to raise all sorts of issues with me.

Mr. Heath

We are gladdened in the extreme to hear that the Minister will be visiting the historic county of Somerset, but would he like to visit the current county of Somerset as well? Weston-super-Mare lies in a different local authority area.

Mr. Twigg

I am suitably humbled. I checked in "Dod's", and the address for the hon. Member for Weston-super-Mare (Brian Cotter) is North Somerset, so I thought I was on firm ground. I accept the kind offer from the hon. Member for Somerton and Frome to visit his constituency at a suitable opportunity. I can also confirm that my right hon. Friend the Secretary of State would be happy to meet the hon. Gentleman with a delegation. He should write to my right hon. Friend and an undertaking will then be made.

In his opening speech, the hon. Member for Yeovil said that when he visits schools the improvements of recent years are pointed out. I shall briefly refer to those. The hon. Member for Altrincham and Sale, West (Mr. Brady) acknowledged some of the progress on capital that we have made in the past six years. It is worth reflecting on the figures for Government support for capital investment in school buildings. During the three years in the run-up to Labour coming to power, the figures were £0.6 billion in 1995–96, £0.7 billion in 1996–97 and £0.8 billion in 1997–98. The figures for this year and the next two years are £3.8 billion, £4.5 billion and more than £5 billion.

Mr. Brady

I am intrigued about why the Minister has given figures for only the last three years of the previous Conservative Government and three years of the present Government. Surely, it would be more accurate and realistic to compare the whole six-year period of this Government with the six years leading up to 1997.

Mr. Twigg

I am happy to do that and I shall write to the hon. Gentleman with those figures. I simply point out that the figure for every single year of this Government is higher than the highest of the three Conservative figures in front of me, but I am happy to write to him with further information.

The figures demonstrate that we are taking seriously the challenge, to which the hon. Gentleman rightly referred, of buildings that should frankly have been invested in by Governments of both parties for decades. It will take a long time to achieve that investment. During this Government, we have seen an increase of approaching 25,000 in the number of teachers in schools, and an increase of 80,000 in the number of support staff.

Mr. Brady

I am anxious that the Minister should not give any partial information. Would he acknowledge that the increase of 25,000 in teaching staff is closer to 1,000, if that is taken as full-time equivalents?

Mr. Twigg

I do not believe that that is the case, but I am happy to check it and to include the information in the letter that I have already undertaken to write to the hon. Gentleman.

I will move on to some of the specific questions that hon. Members asked. I will write to them if I am unable to respond to all of the matters that they raised during the debate.

My hon. Friend the Member for Hendon (Mr. Dismore) has pursued a vigorous campaign in defence of the schools in his area and in the London borough of Barnet. He raised a number of matters, which included schools applying for specialist status. The new guidance that was published last month states that the specialist money cannot be used to cover budget shortfalls, but there is nothing to stop a school with a deficit from applying for specialist status. I hope that that provides my hon. Friend with the reassurance that he sought.

The right hon. Member for Berwick-upon-Tweed (Mr. Beith) raised several issues around rural-proofing. As he is aware, the Countryside Agency has praised the Department for Education and Skills as the Government Department with the best record on rural-proofing. I have direct responsibility for that area and I have convened a rural schools group, which goes through a whole range of issues, including funding issues. In addition, the Secretary of State regularly meets with ministerial colleagues from the Department for Environment, Food and Rural Affairs and with the Countryside Agency to consider the full range of DFES priorities, including funding and how those can be effectively rural-proofed. The right hon. Gentleman also raised a number of other issues relating to PFI, about which I undertake to write to him.

On the central question of our debate, nobody disputes that there is significant extra money in the system from this financial year—a £2.7 billion increase—or that that coincides with a significant increase in the cost pressures that schools face. Taking everything into account, including inflation, we estimate that that sum adds up to about £2.45 billion. Therefore, there is about £250 million of extra money in the system. The impact of the changes this year has been variable because we have had so much change: in the mode of self-criticism, we failed to anticipate fully the combined impact of many different changes taking place at the same time. We are now learning lessons from that.

The hon. Member for Orpington (Mr. Horam), who is no longer present, raised an important issue, which he has raised with me before, about the ending of standards fund grants. My hon. Friend the Member for Hendon also referred to it. One of the difficulties with regard to that is that in the school system—as in other public services—people are against ring-fencing in general but are in favour of it in the particular. The shift from standards fund to mainstream funding has a huge differential effect. Some schools in some parts of the country have significantly lost out as a result. In tackling the funding challenges for the coming year, one thing we must do is try to ensure that there is not that type of differential effect in different parts of the country.

Mr. Laws

The Minister for School Standards said that there would be a reasonable settlement next year. Before the hon. Gentleman finishes, can he say what a reasonable settlement means?

Mr. Twigg

In my remaining two minutes, I shall attempt to deal with that issue. I have not been able to cover as much ground as I would have liked. However, I wish to make one point. We have to face up to the shared responsibility of central Government and local government to get this right. We are working with our partners in local government to address the issues for the coming years, having learned the lessons from this year. Our key priority is to ensure that all schools receive the reasonable per pupil settlement to which the hon. Gentleman referred. We are sitting down with colleagues in local government and the teachers' associations—including the head teachers' associations—to ensure that we can get a definition of what that reasonable settlement will be that will work across the country. These are the sorts of things that we are taking into account in defining that: the need to get a sufficient education funding increase for every LEA; the importance of striking the right balance between support through the general grant and through ring-fenced and targeted grants, and between in-school and out-of-school provision; and, the need to ensure that there is confidence that schools and pupils will receive the money that is intended for them, that there are fair and appropriate variations in the budget increases received by different schools in the same LEAs, and that work force reform, in line with the national agreement, can be sustained. That is an important priority for our partners and for us.

This has been a year of significant change. We want to secure the longer-term development of schools and the wider education service. That is about giving schools and LEAs more predictability and certainty. I welcome the opportunity, albeit briefly, to air some of the thinking in Government about how we can learn the lessons from this year to get things right next year and in the longer term.