To ask the Deputy Prime Minister if he will make a statement on the interaction between changes in aggregate external finance to local authorities and passporting of schools funding; and what arrangements are in place to ensure that the latter is not undermined by the former. [102033]

Aggregate external finance is distributed by formula (Formula Spending Share or FSS) and is not ring-fenced. All authorities with education responsibilities receive at least 3.5 per cent. more formula grant for 2003–04 than they did for 2002–03, on a like-for-like basis. Setting budgets is a matter for local authorities. The Government encourage them to increase spending on schools by an amount equal to the increase in their education FSS. Authorities who have difficulty with this are encouraged to discuss with the Department for Education and Skills. Increases in education FSS were themselves constrained between 3.2 per cent. and 7 per cent. on a per pupil basis, by means of a formula floor and ceiling.