Expenditure (Hansard, 12 November 1984)

§ Sir Keith Joseph

As my right hon. Friend the Chancellor of the Exchequer announced in his statement today, provision for education and science will be increased by £210 million to £13,590 million from the figures in Cmnd. 9143 after allowing for the abolition of the national insurance surcharge from April 1985. Three-quarters of the programme is local authority current expenditure which, after allowing for the transfer of funds to the Manpower Services Commission, is increased by nearly £300 million. There is a net reduction of £24 million in vote expenditure.

2. The level of services that can be afforded within the cash plans will again depend on the ability of local authorities and others to contain their costs, including those of pay settlements. The policies outlined as follows are compatible with the Government's assumption of pay increases of 3 per cent. in 1985–86 for those groups for which the Government are responsible.

LOCAL AUTHORITY EXPENDITURE ON EDUCATION, SCHOOL MEALS AND MILK

3. Within total relevant planned current expenditure in England in 1985–86 of over £21,000 million, it is for local authorities to decide the balance between services, taking into account their statutory obligations and Government policies. The total allocated to education in the Government's plans is £10,259 million. This represents an increase of about 6 per cent. in cash over the sum allocated to the service in 1984–85 after allowing for the abolition of the National Insurance Surcharge and the transfer of some funding to the Manpower Services Commission. In addition, as in the last two years, part of total current expenditure will be treated as an amount not allocated between services. This is in recognition of the fact that some local authorities will spend more than the Government consider to be desirable on services including education and need more time to bring spending into line with Government plans. The size of the sum in 1985–86 will be £600 million.

4. Within the planned total for expenditure on education, the level of spending by individual local education authorities will depend upon their local decisions and upon their success in containing costs. If local authorities with education responsibilities spend at their provisional 1985–86 targets, their expenditure would in aggregate increase by about 2.7 per cent. compared with 1984–85 budgets at a time when school rolls are continuing to fall.

5. The figure of £10,259 million includes £280 million for school meals and milk. A number of local education authorities have been able to make substantial reductions in net expenditure under this head. I look to authorities to review the provision that they make for school meals in order to secure savings in line with the Government's plans thereby releasing resources to support policies more directed to the educational benefit of pupils and students.

Schools

6. Overall, school rolls will continue to fall and the plans assume that authorities will secure a further reduction in the number of school teachers they employ. Provided the cost of employing staff can be contained, there should be scope for a 56W continuing modest improvement in pupil-teacher ratios, compared with January 1984. This would give authorities the opportunity to make some progress with the implementation of policies for schools outlined in my speech at Sheffield earlier this year. The situation will vary between authorities, depending on factors such as their expenditure targets and their ability to redeploy teachers quickly in response to falling rolls. I look forward to discussions with the local education authorities about the paper "Schoolteacher Numbers and Deployment in the Longer Term", which the Department made available last September.

7. Authorities are continuing to make significant savings through taking surplus places out of use and remain on course to take over 1 million places out of use by March 1987. I have agreed with the local authority associations that new targets should be adopted for taking further surplus places out of use by 1987 and for future years and I shall be discussing with them what these should be.

8. The latest firm information on expenditure on books shows a significant increase in the level of provision per pupil between 1981–82 and 1982–83. If costs can be contained and savings made elsewhere — for example, in caretaking and cleaning cost — there should be scope for some further improvement in expenditure per pupil compared to 1982–83 levels in many authorities both in the provision of books and equipment and expenditure on repairs and maintenance.

Non-Advanced Further Education

9. The overall level of resources proposed should enable authorities to respond to the growing and varied demand for NAFE. There are inevitable uncertainties about student numbers. The plans assume some limited increase in the participation rate of 16 and 17 year olds in future years.

10. The student: staff ratio slackened by about 2 per cent. between 1982–83 and 1983–84. The expenditure plans as they relate to NAFE imply some limited tightening of the SSR between 1983–84 and 1985–86. It should be possible in aggregate for the 1982–83 level of provision per student on books and equipment to be maintained in the great majority of local authorities if other non-teaching costs can be restrained.

11. The plans for net expenditure on NAFE assume the transfer of £61.75 million to the Manpower Services Commission following the White Paper 'Training for Jobs' (Cmnd. 9135) to enable it to purchase a more significant proportion of work-related non-advanced further education.

In-Service Training

12. Both the Government and the local authorities attach importance to in-service training as a means of further developing the skills of teachers in schools and in further education in response to changing demands and priorities. I have agreed with leaders of the local authority associations that the scheme of in-service training grants first introduced last year should be further enlarged in 1985–86. Grant of £17.5 million will be available in the 1985–86 financial year, and three new priority areas will be included in the scope of the scheme. These will apply to a special programme to support the introduction of general certificate of secondary education; the teaching of craft, design and technology in schools; staff development associated with professional, industrial and commercial updating (PICKUP) programmes in further education, and the updating of staff on work-related courses.

Education Support Grants (ESGs)

13. The Education (Grants and Awards) Act 1984 comes into operation for the first time in 1985–86. The Government intend to support some £30 million of expenditure on activities in support of national priorities through £21 million of grant The choice of activities to be supported follows detailed consultation with the local authority associations and the breadth of support is reflected in the fact that all but one authority have bid for support in 1985–86 and that each of the eleven activities for which bids were invited was oversubscribed. Decisions on the allocations to authorities of expenditure to be supported under the Act will be announced next month.

Capital Expenditure

14. Provision for local authority capital expenditure on education will be £272 million. This represents a reduction on plans of £18 million. The reduced provision should permit continuing progress with the removal of surplus school places and with selective re-equipment in further education. The 57W Department will be writing as soon as possible to local education authorities to inform them of the allocations within the education block.

Higher Education

15. The cash available for each sector is set out below. The figures allow for a tuition fee of £520 for home full-time and sandwich course students on courses designated for mandatory student awards. The UGC and NAB plans for student admissions in 1985–86, together with admissions to direct grant institutions, are likely to satisfy the revised lower level of demand for higher education, as indicated by the projection in the "Report on Education No. 100".

Student Awards

16. There will be a net reduction in the previously planned level of spending on student awards in 1985 and the parental contribution scale will be adjusted upwards in line with earnings in the past year; this means that some 10,000 families who would otherwise have been drawn into contributing will be relieved of the need to do so. However, minimum maintenance awards will no longer be made to those whose parents would otherwise be liable to meet the full cost of maintenance and contributions from those in the middle and upper reaches of the income scale will be increased. In addition the income scale will be extended, for those most able to pay, to include a contribution up to the maximum of the designated tuition fee. Details of the new rates of award and revised contribution scales will be announced later.

Universities

17. Subject to parliamentary approval, the total of recurrent grant for universities in the UGC list for 1985–86 academic year will be £1,309 million. This total has been set at a level consistent with previously planned economies and with the Government's 3 per cent. assumption for pay. To the extent that the academic year falls partly in the 1986–87 financial year the grant is subject to review in the normal way.

18. The revised grant for the 1984–85 academic year will be £1,262 million. This takes account of the revised pay assumption for the period 1 April to 31 July 1985.

19. Equipment grant for the academic year 1985–86 will be £90.4 million, a cash increase of 3 per cent. compared with 1984–85. In addition, I intend, subject to further discussion with the UGC, to make available £10 million in each of financial years 1985–86 and 1986–87 to enable them to operate a scheme for the improvement of laboratory and equipment provision in a few carefully selected centres of research.

Advanced Further Education

20. Followng consultation with the local authority associations, I have determined under regulations made under the Local Government Planning and Land Act 1980 the quantum of advanced further education (AFE) expenditure within the predetermined pool in 1985–86 at £620 million. After allowing for the abolition of the national insurance surcharge, this represents an increase of over 7.5 per cent. compared to the size of the quantum for 1984–85. The revised total provides for a further overall increase in student numbers and a shift in the balance of students towards science and engineering in 1985–86. Compared to existing provision the total implies continuing reductions in unit costs and in lecturer numbers, leading to a student : staff ratio averaging 12 : 1 in the 1985–86 academic year. The National Advisory Body is at present considering the method of distributing the quantum for 1985–86 between authorities including the possibility that a limited sum from within the quantum might be used to support some modest new initiatives. I will decide on each authority's share of the quantum later in the year in the light of the NAB's advice.

21. Following consultations with the Voluntary Sector Consultative Council I have determined the quantum of AFE expenditure at voluntary colleges grant-aided solely by my Department at £41 million. I will decide its distribution between the colleges later this year in the light of NAB's advice.

The Science Budget

22. The Science Budget for 1985–86, from which the research councils receive their grants in aid, will be £587 million, an increase in cash of £14 million over previous published plans for that year. Of this, I am setting aside £6 million to be used, in the light of advice from the ABRC, to assist research councils to make progress with the plans for major restructuring on which they have embarked. These plans will as they are implemented release substantial resources for redeployment to areas of high scientific promise. The remaining £8 million of the £14 million 58W increase will be distributed following advice from the ABRC. My hope is that this will enable Councils to fund more university research projects of the highest quality.