HC Deb 05 November 2003 vol 412 cc326-36WH 4.14 pm
Mr. Andy Reed (Loughborough)

Thank you for warning us that the Division Bell may ring, Mr. Deputy Speaker.

I am grateful for the opportunity to speak about education funding in Leicestershire. When the Minister's team saw that in their in-tray early last week, I fear a groan must have gone around the Department for Education and Skills. There is a feeling that we have been here before.

Unfortunately, many of the problems in Leicestershire have not gone away, and it is necessary to return the debate to the Chamber. I declare a personal interest. My four-and-a-half-year-old son will start at St. Bartholomew's school in our home village, Quorn, in January next year. I was a governor of my local schools, first the school that I attended and, more recently a school in Sileby. I was educated in the local state schools, hopefully with reasonable success.

I wanted a balanced and open debate today, avoiding a lot of the clichés and soundbites traded over the last couple of years. I do not want to let either side off. The Minister knows me as a fair-minded person who will ask some searching questions. I am sure that he will answer them. I recognise the great advances in Leicestershire education since 1997, and I shall start by talking about some of those.

The policy is extremely complex and difficult for people to understand. I could almost bore for England on area cost adjustment and the standard spending assessment funding formula. I did not expect to have to do that when I first arrived as a Member of Parliament. However, those of us who joined the E8, as we were known in the early days when only eight of us moaned about local education authority funding, rapidly became the F40. I have attended many meetings both in the House and in my constituency to discuss the issue and, for something that is so complex, it creates a great deal of passion.

It is important to recognise that education funding is only part of the wider picture. Only yesterday, I was involved in a debate in this Chamber, in which we heard that research carried out in the London School of Economics had found that the most important factor in predicting whether a child would do well at school was not whether his parents were well educated, whether he was from a middle-class home or whether his school was well funded, but whether his parents were actively involved in his education. Given that billions are spent in an effort to drive up educational attainment and standards, the single most cost-effective thing that the Government could probably do is take action to ensure that parents can do more and spend more time with their children.

I hope that there is some joined-up thinking in Government. That phrase was over-used a few years ago, but it is vital that we still look at it. The full picture, in terms of educational funding between 1992 and 2001, needs to be shown. I have asked over 85 parliamentary questions—I checked the figure on the web yesterday—both written and oral on the issue, and I have a wealth of statistics in front of me. I will try to keep those to a minimum, but they are important.

Between 1992 and 2001, we have seen both year-on-year increases and decreases in education funding in Leicestershire. The year 1992–93 saw a 7.2 per cent. increase in funding. That was an election year, so one would expect that. In 1993–94, we saw a decrease of minus 9.7 per cent.—a real-terms cut for Leicestershire; in 1994–95, we saw a 0.9 per cent. increase—with inflation running at around 4 per cent., that represented a year-on-year real-terms cut; in 1995–96, we saw a 0.8 per cent. increase; 1996–97 showed a little improvement, with a 5.5 per cent. increase—again, probably linked to the election year. Following 1997–98, we have seen increases of 7.1, 6 and 5.6 per cent. I think that 2001–02 saw another 5.6 per cent. increase.

We have seen some great improvements in cash terms since 1997. Later I will quote some head teachers who recognise that that cash increase has started to feed through to schools. It is also important to recognise that the real-terms increase in spending per primary school pupil between 1997 and 2003 has been £600 per pupil in Leicestershire. For secondary pupils, the increase has been £530 per pupil. There have been year-on-year improvements from the base.

The biggest improvement is in our capital programme. That comes across strongly when one talks to local heads, or if one is involved in education in the county. I am sure that the Minister will know the figures off the top of his head. In 1997–98, capital expenditure in Leicestershire was £2.9 million; it rose to £6.5 million, which was quite generous; that even went up to £9 million, and to beat that we have now reached a figure of £25 million per annum. That is something to celebrate and it is sometimes lost from the overall debate when we focus on the formula spending share and the standard spending assessment. It is important to treat those as a basis from which to start.

I could talk about the summary of cash and the rest., but the key to what I am talking about is the difference that it makes to children. We have a positive story to tell in Leicestershire about what we have achieved with our money. At key stage 3, which covers 11 to 14-year-olds, we are in the top 25 per cent. At key stage 2 we are in the top quartile. Our GCSE and SATs results have improved—in the case of SATs from 65 to 76 per cent. Primary class sizes in particular—for five, six and seven year-olds—have reduced. At the school of which I was a governor in 1995–96, every class had more than 35 or 36 children. Those numbers are all reduced.

Mr. Alan Duncan (Rutland and Melton)

To make this debate even more fruitful than the hon. Gentleman is already making it, I want to ask whether the case that the Minister must answer is the charge of the inequity and disparity that Leicestershire and Rutland face, compared with other counties—not just the overall level of funding.

Mr. Reed

That is perfect timing by the hon. Gentleman. As hon. Members will have seen, I have turned the page and reached the "but": what he explained is exactly what I want to point out. The year-on-year percentage and cash increases have been delightful for us, but the problem has been that we have had the same funding formula since the early 1990s. We started in 1997 from a position of inequity. That is one of the reasons why I joined the E8—later to become the F40—and asked so many parliamentary questions aimed at teasing out the problem.

One of my more recent questions was about the average. It is difficult to compare county with county in every case; we should look at comparable counties or areas. One of the starkest figures is the difference between Leicestershire and Slough. That example is not exactly the same as a county, but I was trying to identify the bottom and top levels of funding outside London. There are other figures that would demonstrate that Leicestershire falls well behind even the average comparable county. However, I shall give figures in relation to Slough. For three to 15-year-olds in Leicestershire the average sum is £2,939, but for Slough, at the top, the figure is £3,828. That is a 30 per cent. difference in funding. I accept that Slough is completely different; but can deprivation and area cost adjustment alone explain such a wide gap?

When I was working on the figures relating to the area cost adjustment, I found that the problem seems to lie there. Hon. Members present today who support my argument have been fairly active in the F40 group; on looking at the relevant tables we recognised that even when Leicestershire was second from the bottom of the funding formula under the previous Government and in the first few years of the Labour Government, when residency numbers, sparsity, additional educational needs and free school meals were taken into account, the cost of the difference between us and some other counties that were averagely funded was slight—that even applied to Hertfordshire, which was usually cited as way out at the top. The difference between Leicestershire and the bottom of the table was only about £40 or £50 a head, but when the area cost adjustment was built in, it jumped to about £250 or £300. That is where much of the problem lies.

I want to ask the Minister about the work that was done on the funding formula review, which I recognise was thorough, and which led to some beneficial changes. However, Leicestershire really needed change in respect of area cost adjustment. I have gone through the figures, and it appears that one problem was rejection of the idea of taking a variety of costs into account; it seems that the vast majority of what is taken into account is still based around wages and salaries.

Leicestershire Members will know that although the east midlands region has high productivity and employment, it has relatively low wages compared to some parts of the country. Compared to other regions, many quarters, especially south Leicestershire, are close to parts of what I would call the outer London commuter belt. Many of my constituents commute to London daily.

I am not necessarily seeking a funding formula that means that every one is the same. I am the first to recognise that there will be differences. There is even a funding formula in the county council's distribution to schools. Many heads have argued for the funding formula for Loughborough to be much fairer at county, rather than at national, level and I have taken delegations to county hall on that. We have many of the same problems on a smaller scale—they are important to the town itself—including English as a second language and deprivation. Two of the richest wards in the county are next door to two of the poorest, just outside the city; Shelthorpe and Leamington Hastings wards are surrounded by Nanpanton and Outwoods. That means that figures are skewed in the whole and little pockets of deprivation can almost be missed. I am not looking for a miracle, but we want to try to narrow the gap between us and the best funded, or even the averagely funded, authorities. The disparity seems too great.

My hon. Friend the Member for North-West Leicestershire (David Taylor) wishes to speak in more detail on what happened in the change from the SSA to the FSS—the formula spending share—and our disappointment at that. To compound the problem, as my hon. Friend the Minister is aware, last year, we had the additional problems caused by the change in the overall settlement. I have met most of my heads during the past 18 months or so in numerous meetings. In a typical middle school—I shall not name the head or the school—last year's funding problems has meant increased class sizes for key stage 4 for maths and science, a rise in average class size from 22 to 27, the use of non-specialist teachers in various subject areas, fewer admin and technical side staff and additional staff not being available.

The head of that school commented, on the positive side, that the school has seen real budget increases in the past four years, enabling it to repair and improve dilapidated buildings, improve the working conditions of the staff and, most importantly, raise educational standards. However, he also said that it had been promised on several occasions that there would be more funding for education to carry out necessary reforms and improvements. Under the last Tory Government, at least he had known that there would be a cut in the budget year on year and could plan accordingly; last year had made things really difficult. That school is very well managed, but is now having to work with a deficit of £300,000.

I welcome last week's statement announcing an additional £3.7 million for Leicestershire as part of the transitional relief, but can the Minister assure me that he will meet a delegation from Leicestershire if we honestly feel that that was not quite enough? I know that everyone always comes to the Department saying that there is not quite enough, but I shall look around the schools and the deficits that have accrued as a one-off from last year—although there are very good teams of governors, heads and teachers—to see whether that £3.7 million is adequate.

Mr. Andrew Robathan (Blaby)

I am grateful to the hon. Gentleman for so generously giving way during his Adjournment debate. Has he, like me, been told that Leicestershire schools do not think that £3.7 million is enough for this year?

Mr. Reed

As the Secretary of State said in his statement, many schools—even before they knew the figures nationwide—had already said that the amount or package was not enough. My automatic reaction to that was to sit down, look at the £3.7 million and quickly think through the schools in my constituency and the size of their deficits. A quick calculation made me realise that the amount would probably not be sufficient, so I make my plea to the Minister. I always try to be fair. I moan when necessary and praise when necessary, and I shall work through the figures carefully with others in the county. If there is a genuine case for coming back to the Department, I would appreciate it if my hon. Friend allowed us to meet him.

I want to be positive. There have been many positives for Leicestershire. There is still the problem of the funding gap, as it has been called, but I want to move on from that debate. We recognise that there will always be a formula and some discrepancies; we want only to decrease the size of them. Will my hon. Friend the Minister accept that it is difficult for people in Leicestershire to understand why there is such a gap between us and average counties, which have similar make-ups? I admit that last year was difficult, but we must be positive and say that a £2.7 million increase for education is something that we should welcome.

The Treasury has taken a good approach, but I want to know why that increase can be turned into a disaster at local level. At what point did Ministers realise that there was little headroom when all the other matters had been taken into consideration? However, we must not be negative. Investing in teachers' pay, pensions and working conditions is a real assistance for schools, but we must recognise the difficulties that it caused.

In conclusion, I wish to say that we have seen a positive change in Leicestershire. We have problems and we wish to work together with the Department to ensure that there is fair and equitable distribution of the moneys that are available. Will the Minister look again at the area cost adjustment element of the funding source? Will he confirm that he would be happy to meet us if we had a problem with the £3.7 million transitional relief for this year? So that we do not have to debate such matters again, will my hon. Friend ensure that, at every opportunity when such matters pass his desk and statements have to be made about funding, he will consider specifically the problems of Leicestershire and ensure that we achieve a fair deal? I am sure that he will do that. Over the past 18 months in which he has been in post, he has been aware of Leicestershire's problems and has done his best to alleviate them.

David Taylor (North-West Leicestershire)

rose—

Mr. Deputy Speaker

Order. I am unable to call the hon. Gentleman. The hon. Member for Loughborough took 17 minutes to make his contribution. He has now eaten into the Minister's time. I call Mr. Miliband. [Interruption.] The Standing Orders are simple to understand. We are holding an Adjournment debate, which is held to allow the hon. Member to receive a reply from the Minister. The Minister's time must not be eaten into.

David Taylor

On a point of order, Mr. Deputy Speaker. I have sought the sanction of my hon. Friend the Member for Loughborough, who initiated the debate, and that of the Minister. I wrote to the Speaker's Office, which seemed to be the way to comply with the requirements.

Mr. Deputy Speaker

Order. The Standing Orders are simple. An Adjournment debate involves an hon. Member who is seeking a reply from a Minister. If the hon. Member concerned wishes to give up time to another hon. Member, he or she is entitled to do so, but taking 17 minutes, which is two minutes out of the Minister's time, does not leave time for any other hon. Member to speak. I call Mr. Miliband.

Mr. Alan Duncan

On a point of order, Mr. McWilliam. Is it not a convention under the Standing Orders that hon. Members call the Adjournment debate and that there is no strict time set for the Minister to speak?

Mr. Deputy Speaker

The hon. Gentleman is quite right, but under the basic Standing Order, it is for the Minister to reply to the hon. Member. The hon. Member for Loughborough said that he would give up time to another hon. Member, but spoke for 17 minutes, which is more than half of the time for debate. It is only fair to the Minister to allow him to come in at this time. I call Mr. Miliband.

Mr. Duncan

This is absurd.

Mr. Reed

On a point of order, Mr. McWilliam. I wish to be of assistance. I had discussed the matter beforehand and considered that if I were to take 15 minutes and my hon. Friend the Member for North-West Leicestershire took five minutes, the Minister would be more than happy to speak for 10 minutes. Can we proceed on that basis?

Mr. Deputy Speaker

Order. I cannot be privy to those decisions. I call Mr. Miliband.

4.33 pm
The Minister for School Standards (Mr. David Miliband)

Thank you, Mr. Deputy Speaker. Obviously, I congratulate my hon. Friend the Member for Loughborough (Mr. Reed) on securing such an important debate. He suggested that perhaps the Department did not have unalloyed delight at the prospect of another discussion about education funding. I wish to put him completely at ease about that. We are delighted to have the opportunity to debate funding in Leicester as well as anywhere else. I am certainly happy to receive comments from hon. Members during the 11 minutes that remain, if they want to say anything.

It is important to recognise the outstanding work that my hon. Friend has done to put the case for funding for schools in Loughborough. I want to put on the record that he has been tireless in such work. I am glad that he mentioned in passing the outstanding work that is done by many schools in his constituency and in the rest of the country. He will know that, over the past five years, teacher numbers have increased by about 10 per cent.

The January 2003 teacher count of 5,290 for Leicestershire was 490 teachers up on the position in 1998. They have produced some outstanding results. I was pleased that, over the past three years. Leicestershire schools have produced a rate of improvement for GSCE at about twice the national average. It was highlighted in the May Ofsted inspection report that, at key stage 3, at the age of 14, there was a particular strength of schools in Leicestershire. My hon. Friend will know that the primary schools are also doing well at key stage 2.

I want to focus on funding. We have discussed it before, but there are new elements to consider, given the Secretary of State's announcement last week. My hon. Friend was generous in recognising the outstanding improvements that have been made in funding throughout the country as well as in Leicestershire. My figures tally with his, showing that in cash terms the increase in funding in Leicestershire has been about £950 per pupil during the past six years and that capital investment is now £28 million a year. That is up from £2.9 million in 1996–97, which is a tenfold improvement that can only be of benefit to pupils in Leicestershire.

I appreciate that people in Leicestershire are concerned that their county is the lowest funded on a per-pupil basis of the 150 local education authorities, and it is up to the Government to justify that position. One LEA will always be 150th, as one will always be first, and we must ensure that we have sound grounds for the distribution of money to local authorities.

My hon. Friend will know that the old system for calculating the local authority grant—the standard spending assessment—was out of date and based on the 1991 census. It was even more complicated than the current system and widely seen to be unfair, as it was based on historic spending patterns rather than set amounts per pupil for additional educational needs and to take account of area costs. That is what the new system does; those elements mean that similar pupils in different parts of the country are funded by the Department for Education and Skills in the same way. It is then up to local government to raise money for education and to distribute it in their area.

David Taylor

There is no doubt that the new formula is more transparent and has the potential for greater equity. Nevertheless, when the figures came into the public domain, it was clear that the disparity between counties had widened rather than narrowed, despite what counties and LEAs had hoped for and expected.

Mr. Miliband

I recognise the outstanding campaigning that my hon. Friend has done over the years, but I assure him that any changes are the result of population changes among counties. I could explain further in writing, if that were helpful.

I said that it was the Government's commitment to ensure that, as far as DFES funding was concerned, similar pupils in different parts of the country were funded in a similar way. That is why every primary school pupil is funded this year to the tune of about £2,100 as a basic entitlement. Extra money of up to £1,300 is available for additional educational needs, which is the same whether the pupil lives in Leicestershire, Lancashire or Leeds. There is also recognition of extra costs, which I will come to.

The reason for differential funding is that the English average for income support is 19.8 per cent. of pupils, but in Leicestershire it is 9.2 per cent. We take account of that relative prosperity in Leicestershire when we distribute the grant for additional educational needs. English as a second language is also considered.

David Taylor

My hon. Friend is right to point out that Leicestershire is a relatively prosperous county, but in the absence of an adequate formula within the country to recognise deprivation, the schools in the less well-off areas—which tend to be in my constituency and that of my hon. Friend the Member for Loughborough—are not receiving the benefits.

Mr. Miliband

My hon. Friend makes a profound point, but one that is outwith my powers. As he notes, it is the joint responsibility of central and local government both to raise and to distribute fairly money for education. We distribute money fairly among LEAs, and it is then for each LEA to ensure that its funding formula recognises the different needs within its boundaries.

In Leicestershire, which is a large and diverse county, there will be difficult issues in the construction of any formula, but if my hon. Friend feels that pupils in his constituency or that of Loughborough are getting a raw deal from the Leicestershire funding formula, I am afraid that I have to point him towards local democracy and decisions made in county hall in Leicestershire. I do not decide the funding formula that local authorities use for the distribution of money to schools, but I can assure him that similar pupils in Leicestershire are treated similarly for the distribution DFES grants.

I want to address some specific points made by my hon. Friend the Member for Loughborough, including the problems that have occurred this year and how we can get over them in the next two years, as they are obviously of central concern to teachers, governors and head teachers in the county.

My hon. Friend referred to the area cost adjustment. It is important to note the basis on which we distribute that money. We recognise that some local authorities have to adopt special measures to recruit and retain teachers, which means that they face extra costs, such as additional allowances to help recruit and retain staff, the cost of supply cover for vacant posts—it is worth noting that the vacancy rate in Leicestershire is now 0.6 per cent., relatively low by national standards—and the cost of recruiting and advertising for staff. The allowance is not based on teachers' pay scales, which are national—except for the inner-London allowance—because those scales do not fully reflect the differences in the costs of recruitment and retention. That is why we based the additional cost allowance on wage differentials around the country. I assure my hon. Friend that there is no political interference in that. The basis on which those wage differentials are calculated is a matter of national record.

I will now move on to some of the problems that have occurred this year, and how we propose to get out of them over the next two—

4.40 pm

Sitting suspended for a Division in the House.

4.55 pm

On resuming—

Mr. Miliband

I shall try to regain my flow and passion with as much authenticity as I can manage, having lost some hon. Members and our friends from the media, who have obviously had their fill.

It is important to recognise that schools in some parts of the country have suffered genuine problems this year. There were significant changes to the local government funding system, and the changes in the standards fund hit individual schools hard. We are trying to overcome that in moving towards our goal of ensuring that every school has a three-year budget on which it can rely and on which it can plan. That must be the aim for anybody interested in sensible budget management.

The way in which we intend to do things this year addresses the acute issue of the responsibility of local government not merely to raise money for education but to distribute it fairly within its boundaries. The whole point of a constitutional settlement that gives an important role to local government is that local government can recognise the pockets of disadvantage and the needs within an area of which it is impossible for central Government in Whitehall to take proper account. I hope that local government will take those responsibilities seriously.

David Taylor

There has been significant progress in education since 1997, but it is starting to stall in some areas, including my constituency. Class sizes are drifting up, old textbooks are not being replaced, there is less support and contact time for teachers and there are fewer extra-curricular activities. Those are the sorts of things about which I receive letters as, no doubt, do other Leicestershire Members.

Mr. Miliband

I understand the dangers, but I would urge the hon. Member to ensure that schools and the LEA are in serious dialogue about the distribution of funds. This year, we need to deliver a minimum per-pupil increase for every school in the country. That has never been done before, and it means that the variation within the county should be reduced. Every school is guaranteed a per-pupil increase of at least 4 per cent. We have given an LEA floor of 5 per cent. Last year, the per-pupil increase for Leicestershire was 3.2 per cent.; it was a floor authority. This year it is 5 per cent. That gives an immediate and significant infusion of extra funds to help in 2004–05 and beyond, because it is built into the baseline.

My hon. Friend the Member for Loughborough referred to the figure of £3.7 million. That is on top of the higher per-pupil floor for the LEA; in addition to the 5 per cent. increase, there is £3.7 million of transitional support designed to target precisely those schools that have an overhang from this year. We are fulfilling our responsibility to recognise some of the problems that have existed this year and to play our part in overcoming them. In addition, we have reversed the plans to reduce the amount of standards fund being distributed over the next two years.

We all wait with eager anticipation to hear from the School Teachers Review Body, which will next week reveal its conclusions about school teachers' pay for the next two and a half years. Anybody who claims to know what budget problems they will have in that period before the figures are known knows something that I do not. Nobody can say whether they have problems or surpluses until they know about teachers' pay.

In conclusion, I recognise the passion and conviction that hon. Members bring to the debate. My hon. Friend the Member for Loughborough will know that my right hon. Friend the Secretary of State met an all-party delegation from Leicestershire earlier this year to talk about the problems there, and numerous parliamentary and other questions have been asked. I appreciate the spirit in which he has suggested that those discussions should continue. There is close dialogue at official level, and if he tells me that there is a need for further dialogue at ministerial level, I shall respond well to his suggestion.

David Taylor

I hope that those discussions will address the serious point that 4,500 pupils a day from the much better funded city are educated in the county. Perhaps something ought to be done to bridge that funding gap. That will be very helpful.

Mr. Miliband

It will be an interesting discussion. I suggest that we focus our attention on how to help Leicestershire schools over the next two and a half years. Stability in our funding formula is an important element, but we are guaranteed extra money on top of that. That can be put to good use by Leicestershire schools and I look forward to working with hon. Members to achieve that.

Question put and agreed to.

Adjourned accordingly at one minute to Five o'clock.