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§ Mr. Mark Hoban (Fareham)I am grateful for the opportunity to raise this matter before the House rises for the summer recess—and, indeed, before the local schools' summer term ends.
The experience of head teachers in Fareham is that the increase in school funds this year has not met the higher salary costs that were incurred because of the Government's actions. As a consequence, teacher vacancies have remained unfilled, learning and support assistants' places are being cut, and school reserves are being used to maintain the status quo. Also, the prospect for the next financial year looks bleak.
All the schools that I have spoken to acknowledge that there has been a significant increase in school funding in recent years. In Hampshire, the Government spending per pupil has increased by £1,040 in the past six years. As a consequence of that funding increase, schools have been able to expand their teaching staff and recruit more learning and support assistants.
It would be appropriate to register schools' concerns about how that funding increase has been brought about. A good proportion of the increase comes from funds that schools have had to bid for to tackle particular issues. Schools have told me that they have concerns about that. Once the initiatives have been entrenched in the school and the funding streams have ended, they are left to meet the cost of those initiatives from their own budget. Schools have also found that the funding streams are unpredictable. Often, the bidding for additional funds takes place during the course of the school year, and schools have found it difficult to respond to that. However, I recognise that the Government have heard those messages from head teachers, and have listened to them. That is to their credit.
There should be increased certainty of funding for schools to enable them to budget to meet their priorities. Given that the Government have a three-year comprehensive spending review, they should be able to give schools an indication of their funding for that period. Yesterday, at the hearing of the Select Committee on Education and Skills, the Secretary of State suggested that that would happen. Fareham schools would welcome that.
Schools in my constituency face a funding crisis. In answer to a question asked by the hon. Member for Huddersfield (Mr. Sheerman), the Secretary of State for Education and Skills said that
the funding of schools is a shared responsibility between national Government and local government…Local education authorities take decisions of various kinds—how much to distribute to individual schools, how much is operated centrally, and so on. I believe that both the national Government and local authorities should take responsibility for the effects of those decisions on the funding of individual schools."— [Official Report, 26 June 2003; Vol. 407, c. 1187.]Hampshire county council received one of the lowest financial settlements of any shire county this year; it was significantly—just under 4 per cent.—below the national average. That, of course, is a consequence of the redistribution of resources away from shire counties such as Hampshire. Despite that settlement, Hampshire 59WH county council decided that it could not allow schools to suffer because of the redistribution of funding. In response to the findings of the Government's questionnaire, which tried— unsuccessfully, in my view—to pin the blame on LEAs, the county education officer wrote:The County Council, however, gives a very high priority to the education of its pupils and decided to exceed the pass porting target even though this was met from local resources and contributed to a council tax increase of 15% . This increase flowed through to schools. Schools, therefore, received more than the Government specified.Hampshire county council certainly recognises its share of responsibility together with the Government. Not only did it passport 105.1 per cent. of the target to schools, but it was one of only four councils in the southeast that increased the amount devolved to schools by a greater amount than the increase in the schools budget. That was a clear policy initiative by Hampshire county council.It is fair to say, and I hope that the Minister will recognise it in his remarks, that Hampshire county council and council tax payers in Hampshire have fulfilled their responsibilities towards local schools. That is the background against which I shall set out my remarks.
I shall explain what head teachers in Fareham consider to be the cause of the funding shortfall and discuss their response to it. They have attributed their financial problems to significant rises in salaries and related costs. Those costs account for a significant proportion of their budget. One local secondary school said that salary and related costs accounted for 85 per cent. of its budget. Ten to 12 head teachers in my constituency cited four reasons for the increase in those costs.
First, head teachers cite the hike in national insurance contributions: in one secondary school, that accounted for about £27,000. Secondly, they cited the increase in contributions to teachers' pension funds: in the same school the increase was £105,000—a significant amount in a school of any size. Thirdly, heads have cited the funding of performance-related pay as a factor in the shortfall. They recognise that that factor will recur as teachers progress through the criteria for each threshold, improving their performance and becoming entitled to further performance payments, which must be funded. This year, head teachers felt that there was a shortfall in the Government's calculations of how much money should go to schools in Hampshire. Fourthly, the collapse of the nine salary grades into six has led to grade creep, in the sense that, in the new structure, if a salary point is not included in the grade below, teachers have had to move up to the next grade, with the consequent increase in salaries.
Together, such increases are significant: a primary school in my constituency said that the increased salary costs this year were £36,000. In another, much larger school, the increase is £98,000. From time to time, Ministers have blamed the decline in pupil numbers for the deficits of individual schools, but those deficits are despite flat pupil numbers in the first case and a rise in pupil numbers in the second.
60WH What have the consequences been for local schools in tackling these deficits? I have received feedback from nearly half the schools in my constituency, and I base my comments on how individual heads and boards of governors have decided to balance the books.
In several schools the governors have used reserves to meet the shortfall, but that option is not cost free. Often, those reserves have been intended to contribute towards a building plan, and such plans have had to be deferred or cancelled to meet the funding shortfall. That is clearly a one-off exercise, as the piggy bank can be emptied once only. A continued squeeze on funding next year will have serious consequences in those schools. They will experience a double whammy: they will not only have to claw back the funding deficit from this year, which they met through reserves, but will have to cope with any funding decreases.
What other impacts have there been on schools that did not have reserves? Vacancies that have arisen because a member of staff has left have not been filled, or have been filled on a part-time basis, with other teachers increasing their teaching time to meet the shortfall. In a couple of schools, non-teaching positions have been converted into teaching positions, and the administrative work load has been shared among other staff members. Several teaching staff on temporary contracts have had their contracts terminated early or not renewed; again, their teaching time has been passed on to other staff members, increasing their former colleagues' work load.
Hampshire county council advises me that at least one primary school in my constituency is making 1.4 teaching staff redundant. Schools are trying to save money on supply teachers, and either the head or the deputy head fills in for lessons. That means that they spend less time giving the school the leadership that it needs and the staff the support that they need. Schools are cutting back on buying textbooks. One school has cut expenditure on textbooks by 65 per cent., and expenditure on staff professional development by 80 per cent., to avoid making teachers redundant.
We have seen the end of contracts for some learning support assistants, while others have had to reapply for fewer jobs. In one case, a school dropped from six to four LSAs.
The question from head teachers is: how can they implement the work load initiative if they are cutting back on the people to whom teachers should be transferring their work load? That is a problem that many will have to wrestle with this year and next. At another school, the senior teacher leading the learning support unit for children with particular education needs was redeployed to fill a vacancy elsewhere in the school, leaving the unit without a full-time leader. Schools are cutting back in other areas too, whether that is the maintenance of grounds and buildings or information and communications technology costs.
I have been impressed by the resourcefulness of heads and governors in trying to close the gap in their budget. Their primary focus is to avoid compromising the education of their pupils, and they are committed to maintaining the diversity and richness of the curriculum and carrying out some of the initiatives specified by the Government. I want to take the opportunity to thank them, teachers and parents for all their hard work to 61WH mitigate the impact of the funding shortfall. They have done a sterling job, as have the county council and council tax payers, in trying to fill the gap left by the shortfall in Government funding.
Where do we go next? One chair of governors has written:
The cuts we have made cannot be repeated in another year and will damage the life of the school…Smaller teaching groups, better support for less able pupils, inclusion measures to help disaffected pupils, stimulation for more able pupils…more administrative staff to reduce teacher workloads must all become unaffordable.Schools in Fareham are concerned that this will be the first of several difficult years for school funding. That concern is shared by Hampshire county council, whose county treasurer wrote to me recently to say that if the general grant floor and schools formula spending share per pupil are both set at 2.5 per cent., there would be an estimated funding shortfall of £11 million next year, which is equivalent to 2 per cent. of this year's budget.In the same letter, the treasurer pointed out that school spending nationally is set to rise by 5.2 per cent., so clearly some LEAs will do well if Hampshire is going to get only a 2.5 per cent. increase. In answer to an oral question by me last month, the Minister said:
We are committed to ensuring that every school receives a reasonable per pupil increase for next year and the year after that."— [Official Report, 26 June 2003; Vol. 407, c. 1195.]My concern is about what the Minister views as reasonable, and whether he will agree with the view of heads, teachers and governors in Fareham schools. Will schools locally see a 5.2 per cent. increase in school funding, or will it be more like the 2.5 per cent. increase suggested by the county treasurer? Will they get a raw deal again next year?Based on the Government's track record, Hampshire schools can expect to receive a below-average increase. Last year, the average national increase in spending per pupil was 6 per cent, while in Hampshire it was 5.2 per cent., and in the previous year national spending again increased by 6 per cent. per pupil, but in Hampshire the Government's contribution increased by only 5.5 per cent. Will the Government rectify that trend?
Where will the funding shortfall leave Fareham schools? The schools that have emptied their piggy bank this year will need to consider some of the same budget cuts that other schools have made, particularly in the largest element of costs—staff. The schools that have already made cuts may need to consider fresh cuts next year unless their funding position stabilises. Short-term measures such as saving on maintenance cannot continue indefinitely, and at some point they will need to be reversed. To reverse those cuts, cuts will be needed elsewhere. That is not scaremongering; those concerns have been expressed to me by head teachers and chairs of governors in my constituency.
The solution is in the Government's hands. As Hampshire has proved this year, authorities can increase the burden on council tax payers to protect school budgets, and the Government will need to consider by how much they are prepared to increase their contribution to Hampshire schools to protect the quality and diversity of their education. The closer the increase is to the national average increase of 5.2 per cent., the lower the risk that teacher and learning 62WH support assistant numbers will need to be cut. The smaller the increase, the greater the likelihood that schools will once again have to consider more reductions in staff costs, putting at risk the quality and diversity of education in local schools. It is time for the Government to recognise that Fareham's schools need a fair deal on funding.
As the Secretary of State for Education and Skills said in the House in June, councils and the Government have to take
responsibility for the effects of those decisions on the funding of individual schools."— [Official Report, 26 June 2003; Vol. 407, c. 1187.]Given the county council's track record on school funding, without a fair deal for Fareham schools next year the spotlight will be on the Government, who will be held responsible by parents, teachers and governors for their decision on the funding of schools.
§ The Minister for School Standards (Mr. David Miliband)It is conventional on these occasions to congratulate the hon. Member concerned on securing the debate. Today I do so sincerely, because the hon. Member for Fareham (Mr. Hoban) has made a thoughtful and serious speech. We have shared several debates in this Chamber, and I hope that I shall not do irreparable damage to the hon. Gentleman's political career when I say that his speech was the best use of an Adjournment debate in which I have been a participant. I may worry him even more when I say that I agree with much of what he said.
The hon. Gentleman explained matters with a fair degree of generosity to the present Government, and also assessed some of the difficulties in the system in a reasonably fair-minded way. As I have said, I do not want to end his political career, so it is just as well that not too many people are present to listen. I hope that the hon. Member for Gosport (Mr. Viggers), who has just arrived in the Chamber, will keep the secret. I hope also to give a serious response to the points that the hon. Member for Fareham made.
In the time available to him, the hon. Gentleman could not mention the progress that has been made in Hampshire schools. in both primary and secondary sectors. I am sure that he has seen that progress when he has visited schools. I was interested to dig up the statistics; there are statistics on everything, but these show that the percentage of children in Hampshire who are doing well at English at age 11 is above the national average. For maths the figure is at the national average, and for science it is above it.
For GCSEs, the performance of secondary schools is not, interestingly enough, as far above the national average as one might think. There are no doubt relevant educational issues that we could discuss at another time, but none the less there is clear evidence of teachers, heads, governors and the wider community working in a committed way to fulfil the potential of all pupils in Hampshire. The hon. Gentleman's remarks made it clear that he has great admiration for the work that those people do, and that is shared by the Government.
The hon. Gentleman was generous enough to refer to the increase of about 36 per. cent. in funding to Hampshire through the local formula over the past five 63WH years. He made reference also to the increase in the school standards direct grant, which has been significant. He was not able to touch on the capital position, about which I asked my officials to find out. It is striking that Hampshire's capital budget for this year is £71 million, whereas it was £15 million to £20 million in 1998–99. I hope that that makes a long-term contribution to the education of pupils in his constituency.
The hon. Gentleman devoted a significant part of his remarks to analysis of the problem, and to his solution to the way in which the funding formula distributes money to Hampshire as a whole, and then raised points about how money is distributed from Hampshire local education authorities to schools. I shall deal with those matters. This has been a year of significant change in the schools funding system—notably with respect to the way in which central Government distribute grants to LEAs, and the way in which the LEAs distribute grants to schools. I shall deal with that topic.
I think that the hon. Gentleman would agree that the old system for the distribution of funds from the Government to the LEAs was fatally flawed. It was out of date; it was based on the 1991 census. It was even more complicated than the current system, and impossible to explain. It did not reflect the division of responsibilities between LEAs and schools. The hon. Gentleman will know that under the current system there is real clarity about the LEA block of funding and the proportion that is available to schools. I think that he would accept that that is a step forward.
Our aim with the new system has been to ensure that central Government will attach a similar amount of money to similar pupils in different parts of the country. That is why every LEA receives three blocks of funding for each pupil. First there is an entitlement for every pupil: just over £2,000 for a primary pupil and just over £2,650 for a secondary school pupil. Secondly, there is a top-up for deprivation and additional educational needs. Thirdly, there is recognition of higher costs for salaries, recruitment and retention.
The new system is based on the evidence that we have about extra costs arising from deprivation, and other extra costs. The hon. Gentleman will know that, in relation to additional educational needs, we have used a wider definition of poverty than has been conventional in the past. Instead of simply using the income support indicator to recognise poverty, we have ensured in the new system that the funding formula recognises families in low-wage work, and that should rebound to the benefit of Hampshire where employment is high but where there are significant pockets of low wage-work.
The hon. Gentleman will also recognise that the additional costs of education in London and the southeast notably impose particular pressures on schools. The new system recognises 99 authorities that face those additional costs, and we have tried to recognise that in the system.
The hon. Gentleman did not discuss sparsity, so I shall not dwell on that, but move to this year's funding difficulties. He started by talking about problems in areas where pupil numbers are falling, as is notably the case in the primary sector. Nationwide, there is a fall of 64WH about 50,000 in the number of pupils in the primary sector. My back-of-the-envelope calculation suggests that that is not a problem in Hampshire. It has an increasing population, which explains why its overcall cash increase of 5.9 per cent. translates into a 3.2 per cent. increase per pupil. That shows a significant increase in the number of pupils, which brings its own problems, and I have just completed a statutory instrument with the hon. Member for Altrincham and Sale, West (Mr. Brady) about the way in which the system copes with rising numbers.
My constituency has the opposite problem, which also imposes its own burdens. The hon. Gentleman probably knows more about South Shields than many other hon. Members because of his former candidacy. He is not the only Opposition Member who has fought South Shields. The hon. Member for Lichfield (Michael Fabricant) cast a blazing trail in South Shields during the 1987 general election, so there are at least three of us who can testify to its joys.
I shall dwell on the situation this year, because it has been a uniquely difficult year for school funding. It has been unique for the amount of extra money that central Government have put in, but also for some of the costs that schools have faced. The hon. Member for Fareham referred to the increased cost of the teachers' pension scheme. It is important to put on the record that that cost has been taken care of separately from the per-pupil increases to which he referred. He will know from answers that I have given that those increases are conducted on a like-for-like basis. The cost of pension increases is factored into the system on top of that at, from memory, about £587 million nationally, and that has been fed into the system. He also referred to increased national insurance contributions, and it is true that schools have had to pay those increases for their workers.
The hon. Gentleman spoke about the upper pay scale, which has risen in a number of contexts as a significant cost for schools. The upper pay scale is not just a cost that arises as a matter of course; it arises as a matter of choice. He will know that the pay system for teachers has two key elements in addition to the basic uplift. Recognition of competence—the so-called threshold agreement—pays an extra £2,000 to teachers outside London and an extra £4,000 to teachers inside London.
There is also an excellence element above the threshold—the so-called upper pay scale. There is a national scale, but the cost to each school reflects the decisions made by heads and governors on how many teachers to promote from one point to the next, and he will know that, nationally, about 90 per cent. of teachers progress from upper pay scale point 1 to 2, notwithstanding that the Government have argued strongly that the upper pay scale should recognise excellence rather than competence. That is why, when we submitted our evidence last week to the School Teachers Review Body for this year, we made new proposals to support the decisions of governors and heads in exercising their discretion over the upper pay scale points.
Many head teachers' associations have argued strongly that heads should be supported by stronger guidance from the centre, and we have made a commitment to provide that. We have also provided for every governing body to decide in April each year how 65WH many teachers the head should promote up the upper pay scale. As John Dunford of the Secondary Heads Association said last week, the current progression up the scale is unaffordable, and it is important that we play our part in supporting the decisions of heads and governors.
The hon. Gentleman referred to the cost of supply teachers. Of course that is a cost that we want to try to squeeze—not by having heads taking on those responsibilities, but by trying to minimise the amount of time that teachers have to spend out of the classroom, either on courses or through sickness. The extent to which we can squeeze that cost—which is a significant bill of, I think, about £950 million nationwide for the annual costs of teacher supply—releases money for other purposes.
Looking forward, we obviously need to reflect on and learn from the experience of this year. Perhaps I could address the hon. Gentleman's final two or three points by setting out how my right hon. Friend the Secretary of State plans to go forward. The hon. Gentleman will know that on 15 May my right hon. Friend set clear criteria for moving forward in 2004–05 and 2005–06.
The hon. Gentleman rightly referred to the importance of a multi-year planning framework. It is certainly our intention and aspiration to move to three-year funding of schools, but he will know that we do not fund schools directly—we require local authorities to engage in that process. There is obviously a particular difficulty in the schooling area because of changing pupil numbers in any one school, which pose a particular burden on any planning framework. None the less, we want to move to a three-year planning framework, as he does. The decisions of the School Teachers Review Body are absolutely critical to that. We argued to the STRB last year that a three-year framework for school funding was essential. Unfortunately, no one else supported us, not even the hon. Gentleman's hon. Friends, and we were unable to make any headway with the STRB last year. This year, I am pleased to report that the 2Local Government Association and the two head teachers' associations have argued for a two-year deal to the end of the comprehensive spending review period, and I hope that that will make a difference.
We also need to get the balance right between money that goes direct to schools from the centre and money that is fed through the local government framework. The hon. Gentleman referred to the difficulties faced by some of his schools through the reduction in standards 66WH funds. In this context, we face a clear dilemma. He and I would like to see more money distributed as necessary direct to schools through the LEA framework in a simple way that does not require any bidding and has no ring-fencing. That is what we have tried to do this year, but as he will know from his own schools, although many schools and LEAs argued for it, they do not like the way in which it has worked. We are carefully examining the stated plans for further devolution of funding and the reduction of standards funds grants, because there have been difficulties and turbulence in the system. I can assure him that we are looking hard at those plans.
The hon. Gentleman also referred to the importance of earlier budget notification to schools. He may have more of a business background than I, but even someone who has not run a business will know that if one knows one's budget only in February or March, it makes things difficult for the start of the financial year in April. That system is clearly badly in need of reform, so that we get much earlier notification to schools of their budgets as well as having longer-term budget setting. We are strongly determined to do that, so that schools know earlier what money they have to play with.
It is also important—this is not a matter that the hon. Gentleman was able to dwell on—that the balance between out-of-school funding for special needs or other collective services and in-school money should be right. Although Hampshire has a laudable record in that area, as it has in others, other LEAs have struggled to contain out-of-school costs.
I hope that I have responded in kind to the seriousness of the hon. Gentleman's speech. I felt in his speech a determination to seek greater funding for education because it is the most important priority for the nation. He will find no stronger supporter in that matter than me. The quantum of education funding that has been given to our schools over the past generations—the point applies to Labour Governments in the 1970s as well as Conservative Governments after them—has been too low. We must correct that in Hampshire, as well as elsewhere. I look forward to the hon. Gentleman's support as we try to argue the case for greater investment in our education system over the years ahead.
§ Question put and agreed to.
§ Adjourned accordingly at twenty-nine minutes past Four o'clock.