Expenditure Plans (Hansard, 29 November 1994)

§ Mrs. Gillian Shephard

As my right hon. and learned Friend the Chancellor of the Exchequer announced in a statement today, the Department for Education and Ofsted's spending programme in 1995–96 will total £10,958 million. That total is £427 million or 4.1 per cent. higher than equivalent expenditure in 1994–95.

Capital Expenditure on Schools

Total central Government provision for capital expenditure on county, voluntary and grant-maintained schools is £621 million, £672 million and £661 million in 1995–96, 1996–97 and 1997–98 respectively. In the first two years, this is an increase of £14 million and £27 million respectively over the figures announced at the time of the last Budget. I also expect the private finance initiative to make an increasing contribution in the schools sector. I shall shortly announce further details of the allocations of grant to voluntary aided schools, and annual capital guidelines to local education authorities. The Funding Agency for Schools will in due course announce the allocations to grant maintained schools.

GM Schools

More than 1,000 schools are now grant-maintained. The Government's expenditure plans provide for further expansion. The GM sector's rate of growth will continue to be determined by parents' decisions in ballots at individual schools; the Government will ensure that every school which becomes grant-maintained receives the necessary funding.

The great bulk of recurrent funding for GM schools is found within the totals for local authority expenditure. Central Government's recurrent expenditure on GM schools is planned to be £83 million in 1995–96. This will be increased in 1996–97 and 1997–98 in line with the increase in GM school numbers.

Further Education

The Government continue to give a high priority to further education, as the key to enhancing the competitiveness and prospects for growth of the economy. Our plans will deliver the national targets for education and training, taking the United Kingdom to the top of the international league for participation in education and training among 16–19 year olds. We have been encouraged by the success of the new FE sector in increasing its student numbers, and intend to extend its 677W period of growth: with continued efficiency gains from colleges, that will continue up to and including 1997–98.

The total grant for the Further Education Funding Council is planned at £3,029 million, £3,133 million and £3,128 million in 1995–96, 1996–97 and 1997–98 respectively.

The contribution towards capital expenditure within those totals is planned to be some £480 million over the next three years. In addition to maintaining planned funding levels, we are introducing new flexibility in capital and recurrent funding so as to enable colleges to make the most effective use of their resources, and to borrow against the security of Exchequer-funded as well as other assets. This should promote effective estate management and encourage the use of private sector finance, so making possible a significant acceleration in colleges' capital programmes.

The Chancellor of the Exchequer's statement of 14 September 1994 set out the Government's approach to public sector pay in the year now beginning. I shall set as a condition of my grant to the FEFC that it requires institutions in the further education sector to take account of the principles set out in the Chancellor's statement. Any failure by institutions to observe these principles may be expected to have an adverse effect on the level of grant made available to the Council in 1996–97. I shall also withhold £50 million of grant against certification by institutions in the sector that they are continuing to make flexible contracts with lecturers.

Vocational Qualifications

High quality vocational qualifications are central to our future economic development. We introduced general national vocational qualifications to meet the needs of hundreds of thousands of young people who seek a first class alternative to academic examinations or work focused national vocational qualifications. GNVQs are a great success. We must now consolidate early progress and ensure that concerns about retaining standards are addressed. We therefore plan to allocate £23 million to this area over the next three years. These additional resources will be used to ensure that all GNVQs meet the same high standards as we continue to expect of traditional academic qualifications, and to develop the part I GNVQ, a new vocational qualification of high quality designed for 14–16 year olds of all abilities, which we shall be piloting in schools from 1995.

Higher Education

Student Numbers

The forecast number of students in higher education has been revised to take account of final enrolment figures for 1993–94. The plans also allow for additional EC students arising from the enlargement of the EC with effect from 1 January 1995. The net effect of these changes is that planned total student numbers are reduced by 2,000 and 7,000 in 1995–96 and 1996–97 compared with the figures underlying last year's Budget; numbers in 1995–96 will still be 2 per cent. higher than in the previous year. Within the planned totals, it should be possible for universities and colleges to expand further the number of part-time students and to keep the participation rate for young people at over 30 per cent. through to 1997–98.

The Teacher Training Agency will be responsible for initial teacher training courses from the academic year 1995–96 onwards. I have asked the Higher Education Funding Council and the TTA to work together to 678W continue to control the number of students in higher education over the next three years.

Tuition Fees

The maximum tuition fees reimbursed through mandatory awards in 1995–96 will be the same as for 1994–95:

	£
Classroom-based courses	750
Laboratory and workshop-based courses	1,600
Clinical elements of medical, dental and veterinary courses	2,800

Grant to the funding Council and the Teacher Training Agency

The total grant for the HEFCE for recurrent and capital expenditure is planned at £3,613 million, £3,596 million and £3,561 million in 1995–96, 1996–97 and 1997–98 respectively. The total grant for the TTA for recurrent and capital expenditure is planned at £126 million, £174 million and £170 million in these three years; this includes funding for all the functions of the Agency, including the promotion of teaching as a career, as well as grant support for courses of initial teacher training.

The HEFCE and TTA will now have more flexibility in their planned total grant to manage their recurrent and capital allocations. As with the parallel change for the FEFC, this is intended to promote effective estate management by universities and colleges and to promote increased opportunities to borrow from the private sector to fund capital projects, in line with the Government's private finance initiative. The allowance for capital expenditure within the HEFCE grant is £350 million in 1995–96, £393 million in 1996–97 and £388 million in 1997–98. When taken together with the increased flexibility, this should enable higher education institutions to increase their capital investment as compared with previous plans. The TTA grant includes provision for estates formula and equipment funding related to the provision of courses of initial teacher training. All higher education institutions are eligible to apply to the HEFCE for capital funds for major projects.

I have set as a condition of my grant to the HEFCE and TTA that they require institutions in the higher education sector to take account of the principles set out in the Chancellor's statement on public sector pay of 14 September 1994. Any failure by institutions to observe these principles may be expected to have an adverse effect on the level of grant made available in 1996–97.

Student support

The plans allow for the level of student support through the main rates for grants and loans to be increased over the next three years in line with inflation. In 1995–96, loan and grant together will increase by 2.5 per cent. in line with the forecast change in the retail price index, exclusive of mortgage interest payments. Planned expenditure in the financial year 1995–96 is £644 million on loans and £1,102 million on maintenance grants. Access funds are being increased to some £28 million a year.

The main allowances, including dependants' allowances, will also be increased by 2.5 per cent. in 1995–96. However, I have decided to phase out the means-tested allowance payable as part of the maintenance grant to students over 26 who had previously 679W been in employment. I have also decided to introduce a new rate of loan. This will apply to students who are studying in London and living away from the parental home but who could conveniently live with their parents while studying. There are already special arrangements for grant for such students.

The Government decided last year to accelerate the shift from grant to loan so that by 1996–97 the main rates of grant and loan will be broadly equal. The new plans provide for the main grant rate to be reduced by about 8 per cent. in 1995–96 with a corresponding increase in the loan rates. The parental contribution scales under the awards regulations will be adjusted so that, for parents who residual income has risen at the same rate or slower than the rise in national average earnings, the assessed contribution will continue to fall in real terms.

Ofsted

Expenditure provision for the Office for Standards in Education is planned at £98 million, £116 million and £121 million in 1995–96, 1996–97 and 1997–98 respectively. This will enable Ofsted, the non-ministerial Government Department which monitors standards in schools in England, to complete the implementation of the new school inspection arrangements, which started in September 1993 for secondary schools and in September 1994 for primary and special schools.