§ Andrew George (St. Ives)I am delighted to have secured this debate, which is very important to Cornwall. Many difficult decisions need to be taken on the budget and planning for the next financial year for schools in Cornwall. From his correspondence with the local authority, the Minister seems fully to understand the nature and climate of the debate, and I do not intend to make it combative. There is a shared interest between the Liberal Democrats and the Government. Making the essential investment in education can sometimes mean that taxes need to be increased. We fully support the Government's generosity shown by the global figures for education. I congratulate them on that.
Now that those budgets are being devolved and passported to schools in Cornwall, some hard decisions will need to be taken. It may have to be drawn to the Minister's attention that the Government may not have foreseen the problems that many schools are facing. It may be a question of bedding in or fine tuning. Now that the new funding package is in place, and with local authorities such as Cornwall looking closely at the impact of the budget on their schools, the Minister may want to reflect on the difficult decisions that will need to be made.
I intend to speak first, and primarily, about school funding. It appears that we are facing a perverse situation. This year, schools are going to have to tighten belts, sack teachers and increase class sizes, yet the Government are telling them that they have never had it so good. Secondly, I want to speak about parity of funding between colleges of further education and sixth forms attached to schools. Thirdly, I want to highlight the important progress that has been made and to congratulate the Government on their contribution to t he combined universities in Cornwall but also to draw attention to the many challenges that that project faces over the next couple of years.
Cornwall has 283 schools, 241 of which are primary schools. It is inevitable that Cornwall should have a large number of small schools because of the county's geography and the way in which its population is dispersed among small peninsulas. My constituency has its share of those problems, and we have little option but to ensure that provision is made for those communities, because it would otherwise mean transporting very young children long distances to school. The cost of providing those extra schools needs to be borne in mind, just as much as the large transport budget for a county such as Cornwall.
Cornwall is the poorest region, as proved by European figures on gross domestic product—hence our success in obtaining objective 1 status. Social exclusion is a significant problem among families whose children go to Cornish schools, especially as many of them are on low incomes. However, despite having below-average settlements for education under Conservative and Labour Governments, the county achieved good results.
The latest figures show that Cornish secondary schools received about £126 less per pupil and primary schools received £220 less per pupil than the average in England. Some authorities obviously have to be below 310WH average; if formulae are set, we must accept that some will be above and others below the average. The Government are no doubt used to those who are below the average complaining about the fact. However, despite those problems, Cornwall is a three-star authority. It is also a beacon council in respect of its local education authority. It received a further award this week for transforming secondary schools, which the secretary for education came to London to collect, and the Office of the Deputy Prime Minister gave it an excellent billing as a local authority. However, the settlement this year is a problem. The portfolio holder for education, Councillor Mrs. Doris Ansari, has written to the Minister; I have a copy of that exchange of correspondence, which is enlightening. No doubt further work will be needed on the matter, subsequent to this debate.
We accept, and are pleased with, the global increase, but many schools that I have visited recently face the stark choice of sacking staff and increasing class sizes or going into debt. They may not go into debt this year but they will do so next year, because although some of them have reserves, those will not last for more than 18 months. Those schools simply want to maintain their current staffing levels so as to maintain their current class sizes, and to keep their classroom assistants, whom they believe to be important in maintaining educational standards, which I am sure the Minister agrees is important.
In cash terms, the increase in Cornwall is approximately 4.4 per cent. per pupil; I believe that the Minister accepts that figure. The Minister notes that, in authorities where pupil numbers continue to rise, that will be reflected in the 2004–05 settlement. Cornwall has experienced a decrease in composite primary school pupil numbers and an increase in composite secondary school pupil numbers. The composite numbers are used for budgetary purposes and are composed of the actual numbers for January 2003 and the estimated numbers for September 2003. The increase in per pupil funding is passported to schools by the county council. This year, that has been equivalent to 5.8 per cent. per pupil for the primary sector, and 5 per cent. per pupil for the secondary sector.
I have a copy of the Minister's letter of 15 March to Councillor Ansari acknowledging that the council has set the schools budget
consistent with passporting in full the increase in schools funding.The local education authority is, therefore, doing nothing wrong. It is not holding back money that the schools should receive, and I think that the Minister has now accepted that point. However, the inflationary salary increase of 2.9 per cent. for teachers and 3.5 per cent. for support staff, plus the estimated increase in teacher on-costs of about 6 per cent., will require a total increase in funding of about 7.5 per cent. per pupil.Moreover, if one adds in the leadership spine increases, which are only part funded, the fact that most eligible teachers are successful in progressing from one spine point to the next, which is also only part funded, and the stable teaching population, of which Cornwall is proud but which is generating incremental drift up the salary scales, the actual increase required will be in excess of 8 per cent. per pupil. The exact amount would depend on schools' individual circumstances.
311WH The local education authority tells me that, under those conditions, the schools budget represents, at best, little more than a standstill budget, especially in the secondary sector. Schools with a reasonable turnover of staff to set against incremental drift, and with fewer staff progressing on to the higher spine points, may feel that the budget is not so bad, but Cornwall has a fairly stable staff population.
The significant impact of the loss of the standards funds, on top of the issues already identified, may be the straw that has broken the back of many schools. The increase in base budgets for schools covers only inflationary costs and increases to employers' superannuation and national insurance contributions. The impact of the standards funds losses is therefore experienced in its entirety. The net effect is a reduction in school income in real terms.
The increase in budgets, taking account of the standards fund and the standards grant, is 8.2 per cent. per pupil for the primary sector and 5.5 per cent. for the secondary sector. The loss of the standards funds—some £3.7 million for Cornwall—has been covered in total by the increase in the standards grant of £1.5 million. The impact on secondary schools of the net loss of standards funds and the net gain of standards grants is therefore clearly disproportionate in relation to the impact on primary schools. That net effect has resulted in budget settlements for secondary schools in Cornwall that are well below inflationary pressures.
The council also raised with the Minister its concern about the unanticipated increase in pupil numbers from 500 last year to 800 this year. That increase is costing the local authority some £1.5 million a year, which equals 1 per cent. of the schools delegated budget. Although that is compensated for, the LEA tells me that the situation is not entirely satisfactory.
I have spoken to several schools, and have corresponded with the Minister about Connor Downs primary school in my constituency. The head teacher, Allan Lawrence, wrote to me about the school receiving the reducing infant class sizes fund. It has had the full benefit of that fund and is grateful to the Government for it, but it will not receive it in future. Thanks to that very welcome grant, it could maintain its current average class size of 25 pupils. However, if there is no increase in that money, or if it is lost, as I anticipated in my correspondence with the Minister last year, its reserves will probably be entirely taken up in maintaining staff over the next 18 months and it will have to lose an extra member of staff. Its average class size will then increase to 36 pupils. That is unacceptable, and it will not help that school, the LEA or the Government to meet the standards and to make the improvements that I believe we all want to see.
I recently received a letter from Richard King, who is a parent governor of Cape Cornwall school, a small secondary school near Lands End in my constituency. He wrote:
As a parent governor at Cape Cornwall School, I am horrified that we face a 2.7 per cent. CUT in our budget for 2003–2004.The school anticipates that the cut will result in the loss of four teachers in a school with a stable population. It is important for the Minister to accept that the LEA is doing all that it can, and is doing nothing wrong when passporting all the money that the Department is giving 312WH it. He should also accept that schools must now make stark choices about their future. I am not suggesting that the Government are doing anything wrong, but there is a need under the new system for a review of the way in which the funds are being given to schools. We have had the opportunity to assess the impact of the funding on schools, and we now know that a reduction will have a severe impact on many schools in Cornwall.I assure the Minister that Cornwall is not crying wolf. It does not do so by nature and does not complain. However, it has always had lower than average funding, despite which we have managed very well.
The Minister should bear in mind the fact that this is a three-star LEA and a beacon council, which has been given an award of excellence. I hope that he will accept that we are doing everything that we can to passport the money. We need to ask him whether Cornwall has done something wrong. Will he consider the matter and say what it has not done? Are its calculations incorrect?
§ Matthew Taylor (Truro and St. Austell)My hon. Friend asks whether the Minister believes that the LEA has done anything wrong. Perhaps he can put it to him that there is a fundamental flaw in what the Government have done. They decided the increase in costs to schools in relation to awards for teachers, which no one is against, but they have not allowed for funding to meet those awards. That increase in costs to schools is higher than the fully passported increases that the Minister agreed, incidentally, not only in Cornwall. The education unions put that point to Ministers, but the Secretary of State seemed to be unaware of it.
§ Andrew GeorgeI am grateful for that intervention. A new funding regime is bedding in and I hope that the Minister accepts the fact that that there may be different effects across the country. Some LEAs will be extremely happy; others will be less happy. The subject needs to be reviewed.
The Minister said that he is too busy—I am sure that he is extremely busy—to meet the LEA in Cornwall in the foreseeable future. Given the nature of the questions that I have raised, I hope that, if we do not arrive at satisfactory answers this afternoon, he will welcome a delegation from the LEA to go over some of the figures.
A number of FE colleges are concerned that they are not receiving parity of funding compared with schools. I am not suggesting that schools are getting too much funding, but the colleges have a justifiable argument in respect of the funding that they receive from the Learning and Skills Council and their case for parity.
I congratulate the Government on the money that they have put into the combined universities in Cornwall. The project is excellent and is doing well, but some difficult decisions need to be taken in respect of the next phase in 2005. I hope that the Minister will look favourably on the project and give the board team all the support that he can.
§ The Minister for School Standards (Mr. David Miliband)I look forward to being kept in order and on time under your careful chairmanship, Mr. O'Brien.
313WH I congratulate the hon. Member for St. Ives (Andrew George) on securing the debate. I know that it is a competitive process. I am happy to participate in the debate and welcome what I think he described as the non-combative tone. His acknowledgment that taxes need to rise to pay for public services may have raised some eyebrows behind him. The hon. Member for Truro and St. Austell (Matthew Taylor) may have thought that the hon. Gentleman was about to venture into a spending commitment when his party is donning the cloak of prudence.
I hope that I can respond in a suitably co-operative and helpful way. Obviously, the Government have the interests of students in Cornwall at heart. If I may chide the hon. Member for St. Ives, perhaps it was a little ungenerous not to congratulate my hon. Friend the Member for Falmouth and Camborne (Ms Atherton) on the outstanding work that she has done and the campaigns that she has led on behalf of parents and pupils in Cornwall. My understanding is that the highly innovative combined universities in Cornwall have most of their facilities in my hon. Friend's constituency. She has been a tireless campaigner not just for school pupils but for higher education pupils.
As the hon. Gentleman mentioned, I have been having an enjoyable and, I hope, fruitful exchange with his friend the lead member for education in Cornwall. That exchange has included phone conversations.
This is a year of change for the schools funding system. The local government funding formula has changed. There have been significant changes in the balance between central and local discretion. There has been an end to some ring-fencing of central grants by central Government; many Liberal Democrats criticised ring-fencing for a long time. There have been changes to the distribution of the money.
There has also been a significant drive by the Government to ensure that there are longer-term budgets for schools. The hon. Gentleman did not mention that, but it is significant that the Government, who have three-year budgets for their Departments, are giving three-year budgets to local authorities and encouraging three-year budgets for schools. When schools consider their budgets for this year, it is important for their confidence and planning that they have as much notice as possible of the three-year horizon. That view is widely shared.
The hon. Gentleman did not dwell on this point, but when we speak about education in the House, it is important to recognise the outstanding performance of many schools. He touched on that. I asked for the figures to be dug out for this debate. Since 1998, the percentage of young people leaving primary school in Cornwall who are doing well in English has risen from 66 per cent. to 74 per cent; in maths from 62 per cent. to 71 per cent; and in science from 74 per cent. to 86 per cent. Many people are ready to disparage the education system, but I am glad that he was ready to congratulate the schools of Cornwall on what they are doing. He would recognise that Cornwall now has 3,880 teachers in its schools, compared with 3,590 in January 1998. Those teachers are to be congratulated on their outstanding work.
314WH The picture on funding is striking. Since 1997–98, Cornwall's education standard spending assessment has increased by more than £52 million, an increase of about 5.5 per cent. a year. [Interruption.] I hope that I will be allowed to run through the changes that have occurred since 1997–98, because they are relevant. The funding increase of £52 million is only part of the picture. The amount that Cornwall received through the standards fund has increased from £3.4 million in 1997 to almost £21 million this year. The school standards direct grant, which goes directly from the Government to schools, is now more than £6 million. It is because we have chosen not to deliver the direct grant through the formula that more of it goes to Cornwall's schools.
It is worth pointing out that the capital investment figures for Cornwall are striking. I am sure that the hon. Gentleman will agree that the decline in the quality of the capital stock was shameful. In 1997–98, capital expenditure in Cornwall was about £8 million. Last year, it was £16.6 million and this year it is £24 million. For 2003–04, we have already provisionally allocated about £27 million to Cornwall. I am pleased to say that two private finance initiative projects have been agreed in Cornwall, the total value of which is no less than £130 million. That money is needed and will be well spent. I am sure that he will agree that it will make a major difference.
Let me deal with the serious issues that the hon. Gentleman raised about the distribution of funds. He rightly says that it is all very well for the quantum of funding to increase but that distribution is important. I hope that he will agree that the old funding formula, based on the regression from 1991 census figures, was not adequate. The new system may not give everything to everyone. I was pleased to hear him recognise that some authorities have to be below average. Sometimes, hon. Members are loth to accept such a basic mathematical principle. However, the new system aims to be simpler and fairer. I never claimed that it was perfect, but it is fairer than the old one.
I wish to say a word about how the new system works. Our simple aim, and I hope that the hon. Gentleman shares it, is that similar pupils in different parts of the country should have a similar amount of money attached to them by central Government. Our aim is for funding to recognise the separate responsibility of schools and of local education authorities. That is why the schools and the local education authorities blocks are separate in the new system. There are three basic funding entitlements for all pupils: first, £2,000 in a primary school and £2,600 in a secondary school; secondly, a top-up for deprivation and additional educational needs; thirdly, a recognition of extra costs.
I shall run through the last two elements and explain Cornwall's position on them before I address the matter of sparsity, to which the hon. Gentleman referred. There has been a significant change on additional educational needs, which should benefit Cornwall. The present system is based on the 1991 census, and there are two problems with it. The first is that the pattern of expenditure is not accurate for today's needs. Secondly, the pupil characteristics that were used in 1991 are not good indicators of educational need. The Government had a major decision to make in defining additional educational needs. In our consultative paper, we said 315WH that we could base need on income support or we could add in a recognition of the working families tax credit when we define educational need.
That is particularly relevant to Cornwall, because about 29 per cent. of families there receive working families tax credit—nearly a third of all families. That is well above the national average of 19 per cent. We have embedded in the new system a recognition that children who come from low-wage families as well as from families in which the parents are unemployed have additional needs. Those needs are now recognised in the new system. That is a significant change that will benefit the hon. Gentleman's constituents.
The hon. Gentleman asked about cost adjustment. There are now 99 authorities that benefit from the operation of the area cost adjustment. Many schools, particularly in London and the south-east but also in the 99 authorities, face extra costs in recruiting and retaining staff. That is not related to the pay scales, which are national in the education system, but arises from high turnover. We have recognised that some authorities have to adopt special measures to tackle the problem. I am sorry to have to tell the hon. Gentleman that Cornwall did not appear in the top 99 authorities. It was one of the 51 that did not gain, but it is important to put on the record why that was.
The hon. Gentleman mentioned issues relating to rural schools. Particular problems are faced by authorities with sparsely populated areas. That is why the new formula contains a sparsity element to reflect the costs of home-to-school transport in rural areas and to help rural primary schools. I am sure that hon. Members will appreciate that. Sparse authorities wanted us to introduce a sparsity factor for secondary schools, too. My hon. Friend the Member for Broxtowe (Dr. Palmer) nods his head, as does my hon. Friend the Member for Wirral, South (Mr. Chapman). This is not restricted to Cornwall. We examined the issue in some detail and found no evidence of a connection between secondary school size and sparsity: small secondary schools are as likely to be found in densely populated metropolitan authorities as in shire counties such as Cornwall.
We recognise that secondary school pupils often have to travel further to get to school in sparse authorities, so we have examined the transport expenditure of each LEA to assess the impact of sparsity. In the new formula, 60 per cent. of the transport element of the LEA block has been distributed through the sparsity index and 40 per cent. through the numbers of pupils living in the authority. I hope that the hon. Gentleman agrees that that recognises some of the additional transport needs that exist in a place such as Cornwall.
The hon. Gentleman mentioned that this year was a transitional year and asked what additional help central Government would provide. The system of floors and ceilings that has been introduced in the new system has offered considerable protection at considerable cost. When we published our consultation paper on the new system last summer, we received a lot of correspondence from authorities and schools expressing concern about the overall effect. That is why there is a floor in the system of 3.2 per cent., paid for by a maximum of 7 per cent. Cornwall's increase this year is 4.4 per cent. After taking account of pupil number changes, the increase is 6.4 per cent. On top of that, following the recent 316WH spending review, education formula spending will rise nationally by 6 per cent. per pupil in 2004–05 and 7 per cent. per pupil in 2005–06.
§ Andrew GeorgeThe Minister has explained how the formula is made up and broken down, but he has not addressed the fundamental question. Is there something that the local authority is doing wrong that is resulting in schools, having passported all the money to which they are entitled, facing the prospect of sacking staff and having larger classes?
§ Mr. MilibandThe hon. Gentleman has taken 20 seconds away from my opportunity to deal with precisely that question, which I want to do before I touch on the issue of the combined universities project. I take seriously reports from any school anywhere in the country that, as a re cult either of what we or others have done, their budgets are falling, at a time when national budgets are rising. I urge the hon. Gentleman and any other hon. Members to ask such schools to write to me. We are collecting all data from all LEAs and all schools to scrutinise the issues carefully.
There are two important factors. First, although we have a national system, we do not have a single national funding formula under which money is paid to each school in the country. We have LEA funding formulae and they are obviously important in the distribution of funds to schools. I cast no aspersions on Cornwall's formula, but how that formula is structured has an effect on each school. Secondly, there is an issue about how money that is for pupils but not spent by schools is allocated—for example, for special educational needs.
That may not be an issue in Cornwall, but in some parts of the country there is pressure on the special educational needs budget, which competes with other priorities at school level. The matter has been raised by other local authorities and it may be relevant in Cornwall. I cast no aspersions on the way in which the authority is working, but it is an issue in other parts of the country.
§ Mr. Ben Chapman (Wirral, South)Will the Minister give way?
§ Mr. Bill O'Brien (in the Chair)Order. The hon. Gentleman cannot intervene unless he has permission from the hon. Member who secured the debate. That is the rule of the House.
§ Mr. MilibandWe cannot break the rules of the House, so I shall carry on.
I am happy to consider any of the issues raised by individual schools.
The Government have supported phase 1 of the combined universities project to the tune of £28 million. The Higher Education Funding Council has also given some support. My hon. Friend the Minister for Lifelong Learning and Higher Education is today visiting Cornwall to see the progress that has been made and to look at the proposals for phase 2. I am sure that she will join other hon. Members in giving those proposals a fair wind.
317WH The CUC will have its first students in September. We have made it clear that a proper evaluation of phase 1 is needed before considering phase 2, but the energy, enthusiasm and commitment—
§ Mr. Bill O'Brien (in the Chair)Order. We must move on to the next debate.