HC Deb 21 November 2001 vol 375 cc131-8WH 1.30 pm
Mr. George Stevenson (Stoke-on-Trent, South)

The problems associated with the standard spending assessment formula did not start at the 1997 general election. The problems and the basic unfairness of the SSA, especially as it applies to education, have been with us for a generation. I do not want to give the impression that the problems affecting education funding in Stoke-on-Trent began when the Labour Government were elected. Nevertheless, the issues—the challenges and the unfairness—are still with us, and are certainly having an increasingly serious effect in Stoke-on-Trent.

For example, in 2000–01, the education SSA in Stoke increased by 4.6 per cent. That contrasts with the lean, dark years of Conservative Government when we experienced year after year of cuts. However, that 4.6 per cent. must be compared with a national average increase in the education SSA of 6.1 per cent. In 2001–02, the education SSA in Stoke is increasing by 3.8 per cent., compared with 4.8 per cent. nationally.

The point I need to drive home to my hon. Friend the Minister for School Standards is that, although the Government are rightly providing additional resources for education, the gap is getting wider due to the inequities of the SSA system, especially as it applies in areas such as Stoke-on-Trent. We are very much aware of that. Indeed, the SSA in the current year was so low compared with the national average that the Government agreed to provide Stoke-on-Trent with an education support grant of £140,000, which of course we welcomed. The result of that education SSA is that Stoke is, and has been for many years, rooted in the lowest third of all local education authorities.

Another example is to he found in the local schools budgets, which provide the interface between the local education authority and the schools—where the Government rightly want the money to go. One definition of local schools budgets is all expenditure relating to schools. The Government's target for 2001–02 is that the percentage of the local schools budget that should be delegated should increase from 85 per cent. to 87 per cent. in April 2002. I can report that in Stoke, 88.3 per cent. of the budget was delegated last year, so we are way ahead on the delegation. We are not dragging our feet on Government policy.

If we compare the percentage of delegated local schools budget in Stoke-on-Trent with the unitary authority average of 86.3 per cent. and the national average of 86.5 per cent., we see that Stoke-on-Trent is doing very well on the implementation of Government policy, despite the problems of its relatively low SSA.

The position on delegation continues to improve. The Government target for 2001–02 is that there should be a minimum increase of 5 per cent. per pupil in the delegated budget. That target has been more than met in Stoke-on-Trent: the figure was no less than 9.9 per cent. I realise that the Minister may question the strictness of the reference of some elements of that delegation to the SSA issue, but the figures are further evidence of the success of Stoke-on-Trent LEA's policy of maximising the delegation of resources to schools.

As far as the LEA has the capacity to do so, it ensures that money goes to the schools and is not retained by the centre. I make that point to show that Stoke-on-Trent LEA has a good record on the use of its resources, no matter which comparator is used.

If we consider the delegated budget in Stoke-on-Trent in absolute terms—the delegated funding per pupil—we see that the figure was £2,466 per pupil in 2001–02. The unitary authority average was £2,523 per pupil and the national average was £2,546 per pupil. I do not want to trip out a series of statistics, but the figures that I have given make the point vividly. If schools in Stoke-on-Trent received the national average amount of delegated funding—nothing special, just the national average—we estimate that an additional £2.9 million per year would be available to schools.

If we consider the amount of resources per pupil in the local schools budget as an inclusive figure, comprising the delegated and non-delegated resources—the funding kept by the centre to ensure that the LEA can implement its responsibilities—the situation is even starker. Using that base of comparison, the amount per pupil in Stoke is £2,793; the unitary average is £2,922 and the national average is £2,944. Using that yardstick, if Stoke-on-Trent LEA were funded at the national rate—nothing special, just the national average—it would receive an extra £5.5 million a year.

We should not think that one of the elements in this is the money held centrally by the LEA—I am sure that the Minister understands that. The central administrative costs for Stoke-on-Trent LEA are £46 per pupil. That compares with a Government target for this year of a maximum of £60 per pupil, and with an average for all unitary authorities of £50. Stoke is doing very well on central administration compared with not only the Government target, but with the unitary authority average.

That is the picture. It shows the direct result of the injustice and unfairness of the present SSA system.

I want to praise the Government, however, because much progress has been made. There has been much Government action. Despite the difficulties in Stoke-on-Trent, there has been excellent progress in educational achievement. The Minister is very much aware of that. That progress is manifest and can be illustrated by referring to two of its elements.

We have three beacon schools. Janet Worthington, the head teacher at Adderley Green infants school, and her staff do an excellent job. Weston Coyney infants school, where Janet Phillips is head teacher, is an excellent school, with excellent staff doing ground-breaking work, and the same is true of Sandon high school, where Barbara Hall is head teacher. I visit those schools regularly, as all three of them are in my constituency, and I am very happy and proud about that. Excellent work is being done—they are some of the best schools in the country, and they are all in areas of significant deprivation. That shows what can be done, with the Government's support, and we are grateful to them for that.

Stoke-on-Trent LEA met the maximum class-size target of 30 for five, six and seven-year-olds a good 12 months before the date on which it was due to do so. We have a progressive LEA. which has been groundbreaking in some respects, and the private finance initiative for schools is one of the best in the country. We are grateful to the Government for that, but the ideas came from Stoke-on-Trent, and we are proud of that.

The Government have given us a positive response to the difficulties—it would be wrong and unfair to say otherwise. In Stoke-on-Trent, the standards fund has been increased significantly, but the Minister will know that the LEA's ability to match the standards fund resources is becoming critical simply because of the problems of the base funding of the SSA.

In conclusion, I wish to offer one or two points, to which I hope that the Minister will be able to respond. First, the House was told earlier this year that the Government intended to produce a White Paper on local government finance and reform. Indeed, in a press release, dated 16 October, from the Department for Transport, Local Government and the Regions, the Minister for Local Government was quoted as saying that the forthcoming White Paper will set out measures to build on the modernisation agenda already under way. On the same day, a parliamentary written answer referred to: The Local Government White Paper due to be published later this year".—[Official Report, 16 October 2001; Vol. 372, c. 1173W.] However, I began to get worried when I read a letter, dated 5 November, from the Minister because he said: The work that we have done so far with external partners has shown that we need to put in more time to get the new education formula right. On 16 October, we were told that the White Paper was imminent; on 5 November, I was told that the Government wanted more time. I hope that the Minister can not only confirm that the White Paper will be published this year, but give us some idea when it will be published.

Secondly, the Government have announced that, unfortunately, they have had to delay any change in the local government resource formula until 2003–04. That is a great disappointment, because the situation is critical in Stoke-on-Trent now. A delay until 2003–04 poses really serious problems for us, and it will mean that we shall have had almost two Labour Governments since 1997, but this important issue will not have been tackled effectively.

Thirdly, I wonder whether the Minister would care to consider rolling the standards fund into the SSA. There are precedents for that. My understanding is that, in Stoke-on-Trent, ring-fenced funding in social services has been rolled into the SSA when it had been available for two or three years. That has been enormously important. Will the Minister consider doing that, or at the very least exercising some flexibility on the need for match funding?

There is a real danger in Stoke-on-Trent that, because of the SSA, we will not be able to provide the funds to match the standards fund, which would be a tragedy. There should be no increase in the area cost adjustment. There is no reason why any increase in SSA should be reflected in the area cost adjustment, as that would simply widen the problem.

Finally, the Minister said in his letter of 5 November that he could not meet us for all sorts of diary reasons. I repeat that request today, because the issues that affect the LEA in Stoke-on-Trent are so critical that a meeting with the Minister would, I hope, prove useful. We have some concrete suggestions to make, and I hope that he will reconsider that request.

1.45 pm
The Minister for School Standards (Mr. Stephen Timms)

I congratulate my hon. Friend the Member for Stoke-on-Trent, South (Mr Stevenson) on securing this debate. I am very much aware of the strength of feeling about this issue in Stoke-on-Trent and, indeed, in Staffordshire. I am aware of it from his letters to me, and if I was in any doubt about it, he has made it very clear in this debate.

I join my hon. Friend in paying tribute to the schools in his constituency for their achievements and those of the LEA as well. For example, he has drawn attention to the early achievement of the class-size target. That achievement is important, and I gladly join him in paying tribute to those involved.

I do not see it as my job today to defend the current system of standard spending assessments. Our commitment is that the system will be reformed. We are working on the new formula, together with others who represent local government and other education interests, such as the Local Government Association, the teacher unions, governors' organisations and other schools bodies.

Our aim is to create a new system that reflects fairly, on the basis of up-to-date evidence, the needs of authorities in different parts of the country. I have listened carefully to what my hon. Friend has said about Stoke-on-Trent, but, of course, it is by no means the lowest funded authority under the present system. It comes 80th out of 150 authorities—about the halfway mark in terms of education funding. The national average figure for SSA per pupil is £2,911, compared with a figure of £2,845 per pupil in Stoke-on-Trent. So the figure is somewhat less, but the figure for some other areas is approximately £2,600—significantly less.

Our view is that, where differences in funding exist—there will inevitably need to be such differences—they should be considered on the basis of the educational needs of the children affected. I accept that that is not the case under the current system, but the task of devising a new system is not straightforward. It is an important priority for us, but we need to ensure that there is sufficient time to develop proposals and to consult on them before a new system can be introduced. It is not just a case of reviewing education funding; we also need to consider the impact of the proposed changes on other local government services and to look at the broader picture.

The work we have done so far shows that—my hon. Friend touched on this—we need to put in more time to get the new education formula right. That is why we have decided to introduce the new system in 2003–04, as he said. We believe that that will give us the time that we need. That decision has disappointed authorities such as Stoke-on-Trent, which had hoped for earlier reform, but it will give us more time to get the new arrangements right. We do not want to change the system every year, as has happened before, especially under the previous Government.

It is important for local authorities to have confidence in the system and for us to ensure that we do not return to the unpredictability that was a problem in the past. We have already brought about greater stability in the system, by freezing formula changes and introducing floors and ceilings. Local authorities have welcomed the additional stability, and we certainly do not want to throw it away.

My hon. Friend may also know that we tried to change the system in our first year in office. He said that there had been a Labour Government for some time now, but this is certainly not the first time that we have addressed this issue. We got everyone together—from the LGA, the counties and the urban areas, including London. He will not be surprised to know that not one local authority leader admitted to doing well under the present SSA structure. That is where the problem lies. Some people—not my hon. Friend—have argued that London is particularly well funded, but it faces many of the toughest recruitment pressures in education. London authorities can point to the especially strong challenges that they face.

Mr. Stevenson

I realise that time is short but, before the Minister moves off that point, will he confirm or otherwise that the White Paper will be published this year?

Mr. Timms

I can confirm that the local government White Paper will be published as announced. However, it will not contain the new SSA formula. The formula is being drawn up on a different timetable from the White Paper, which is going ahead.

The current SSA system has been in place for more than 10 years. My hon. Friend and others have been very assiduous on behalf of their constituents in pressing to get the formula changed, and we have accepted their case that the system needs to be altered.

We have said that the new formula will have two separate elements: one for schools and another for an LEA's central core functions. I join my hon. Friend in paying tribute to the extent of delegation that has taken place in Stoke-on-Trent. That is to be commended. The split between schools and LEAs' core functions will be a feature of the new formula, and it will be assessed on the basis of data in authorities' budget statements for 2002–03. It will thereafter be updated annually on the basis of the most recent data.

There will need to be an element to reflect levels of deprivation in an area and an enhancement for areas that need to pay more to recruit and retain teaching staff. However, we want those enhancements to be decided on the basis of evidence in pupil characteristics, of data on costs and of achievements rather than on a regression analysis of historic spending. That is the basis on which the formula has operated in the past. I anticipate that we should have a more detailed set of proposals by next spring and we should then be able to start discussions with authorities about whether the initial proposals are right.

My hon. Friend has drawn attention to a major difference. Under this Government, we have substantially increased the funding going into schools. Between 1992–93 and 1997–98, average recurrent funding per pupil fell by £120 or 4 per cent. in real terms. Since then it has risen by an average of £540 or 20 per cent. in real terms to £3,250 this year. If one considers all the funding for education—the SSA and other elements—going into Stoke-on-Trent, one sees that the figure per pupil is above the average and comes to £3,360 per pupil this year. There will be further increases during the current spending review period and following the Budget announcement last March. By 2003–04, national spending per pupil will have increased by around £750 in real terms—compared to £540 so far—since 1997–98.

There is no doubt that funding has been part of the problem for education in Britain. In 1960, we spent a higher proportion of gross domestic product on education than most comparable countries. By 1988, however, an Organisation for Economic Co-operation and Development study of 24 members showed that our spending was the lowest of all those involved. The share of GDP committed to education fell from 6.5 per cent. in 1975–76 to 4.7 per cent. at the time we were elected. I came across the remarks of Howard Glennerster the other day. He said: The significance of this change should not be underestimated. No such previous reduction in education's share of the nation's resources had occurred this century … it is not to be found in the experience of any other leading nation. That is now starting to change. We have raised the proportion to 5 per cent. already. The Prime Minister pointed out at the Labour party conference that we were the only European country to be increasing the proportion of our GDP committed to education. It will rise to 5.3 per cent. over the next three years. We are committing unprecedentedly large additional sums to education this year, next year and the year after. Schools and head teachers can see the difference.

My hon. Friend referred to the standards fund, and there have been substantial rises in that for Stoke-on-Trent in the past few years. He mentioned the difficulties of providing match funding for the standards grant, but I am pleased that Stoke-on-Trent has been able to take in full its standards fund allocation for this year. Nationally, 99.5 per cent. of standards fund grant offered has been taken up by local education authorities this year, so they have been able to provide the match funding where that has been needed. Next year, LEAs' match funding requirements will be allowed for in the national increase in education standard spending.

One of the things that has changed between the previous Government and this one is that there are a number of different routes—not just the SSA—for funding to go into schools. Stoke-on-Trent's grant for revenue costs in the standards fund this year is almost £10 million, rising with the council's contribution to just over £13 million. Standards fund grant for individual authorities has yet to be finalised for 2002–03 but, at national level, the grant is increasing by more than £85 million next year compared to this.

My hon. Friend suggested that the standards fund should be rolled into the SSA formula. He has drawn attention to some of the difficulties with that formula. Some areas and some hon. Members, including him, think that it is unfair, so if we were to roll the standards fund into it, we would increase the difficulties that some see with the present system. We expect to announce at the end of this month the provisional SSAs for individual authorities.

Let me say a word about capital investment because it is an important part of the picture. The figures for Staffordshire local authority—which included Stoke-on-Trent before it became a separate authority—show that, in 1996–97, the capital expenditure was £3.5 million. This year, in Stoke-on-Trent alone, the figure is £8.3 million and, for the rest of Staffordshire, it is £25.4 million. Adding the figures together shows that the capital allocation for the whole of Staffordshire is almost 10 times what it was in 1997.

My hon. Friend also mentioned the private finance initiative credit support from which Stoke-on-Trent has benefited. As he said, £93 million has been used creatively to provide energy, energy management and repair and maintenance work to all 120 maintained schools in the area. Although the work will be completed over a period of five years, the benefits will last for the 25 years of the contract. This is the highest level of PFI credit that has yet been awarded to any LEA in England.

In making all those points, it is no part of my intention to seek to defend the current SSA funding formula. We are committed, with all reasonable speed, to changing the system on the principle that funding differences should be based on differences in cost, and not just on a regression analysis of how things were in the past. The system will change and we have set up consultative arrangements under which we will take those changes forward. It is important that we consult fully and carefully before we introduce the changes, so that we are as confident as we possibly can be that the new formula is right.

However, as my hon. Friend has said, children in Stoke-on-Trent receive significantly more money for their education than they have done in the past. Because of the investment that we have made, schools and buildings are certainly in better shape and are starting to look fit for education in the 21st century. What he said about the achievements of schools in his constituency reflects all that.

Of course, there is a good deal more to be done, and addressing concerns about the funding formula are an important part of that. However, I also want to draw attention to the substantial improvements from which Stoke has already benefited.

My hon. Friend has made the case for a meeting, as he did in his letter. We will shortly make announcements about the SSA, the standards grant and the capital grant. If, having seen the figures, he thinks that there is a problem of which I should be aware and which I should discuss with him and colleagues in his local authority, I shall be more than happy to accept his proposal for a meeting.

Question put and agreed to.

Adjourned accordingly at Two o'clock.