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Education Funding (Poole)

Volume 404: debated on Wednesday 30 April 2003

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3.30 pm

I am pleased to have the opportunity to speak on behalf of Poole local education authority and Poole schools at what has proved to be an opportune time. I should declare that I am currently a Poole councillor—although not for much longer—and that my daughter teaches in a Poole school, but to the best of my knowledge her job is not at risk.

In my role as a councillor, I was chair of education for Poole when it first became a unitary authority in 1997, and I wish to spend a few minutes setting the scene. Poole's schools had previously come under Dorset county council, and there is a long-standing record of underfunding, in both capital and revenue terms. Dorset used to be proud to boast that it was a debt-free authority, and it used to recycle its basic credit approvals to district councils, which—to be fair—did help to support social housing, but did nothing to address the state of school buildings. In 1997. Poole had two secondary schools whose science and technology facilities were akin to those provided to the school that I attended in the 1960s. In one of those schools, special needs provision was located in a poorly converted cloakroom area.

The Minister recently said to me during Education questions that he thought that I would be thanking the Government for this year's capital investment programme of £13 million for Poole's schools—and I do, from my heart. Generations of children in Poole have been educated in substandard buildings and with inferior equipment. particularly in the two pyramids that are now receiving attention. Without the current Government's commitment to education, I do not believe that the improvements in buildings in Poole's schools would have been made. However, there is still more to do, and more funding is needed.

I remember that in the 1980s—before the introduction of standard spending assessments—the then political administration used to boast about the academic results that were achieved in Dorset with some of the lowest spending in the country. Because it is a large rural county, there were high costs in keeping many rural schools open, and I believe that Poole's schools were starved of funds and that that historic low spend led to the low education standard spending assessments that all authorities in Dorset were given.

It was therefore welcomed as good news that the Government were reviewing the formula that determined those standard spending assessments. However, the outcome of the review is that Poole has fallen from being the 137th worst-funded authority to the 145th worst-funded. Inevitably, there will always be gainers and losers in any review, but it seems particularly harsh that an already low-funded authority should be pushed further down the scale. Poole is protected by the floor this year, so unless changes are made there will be even worse news in years ahead. The morale of head teachers and all school staff has been dealt a devastating blow.

Poole LEA has recently been awarded 4 out of 4 for education in its comprehensive performance assessment, and it has also received a good Ofsted report. I wish to quote from that report, which was published in January 2002:
"The Standard Spending Assessment is extremely low by national standards. Education has been designated as the highest priority by the council and has been funded slightly above SSA for the last 2 years."
I will return to that point.
"High levels of delegation mean that individual budgets are close to national norms, but some central services are thinly staffed."
I think that the Minister should return the congratulations.

I have another quote:
"Poole's education SSA is below unitary authorities' and statistical neighbours' averages and overall the sixth lowest for the primary and secondary sectors in England. However, its spending since local government reorganisation has increased in real terms from 98.6 per cent. SSA to 101 per cent. in 2001/2002. In 2001/2002 the SSA per secondary pupil for Poole was £2992, the Unitary Authority average £3262, and for statistical neighbours £3159."
Parents, teachers, local residents, MPs and councillors cannot understand why Poole's children are valued at nearly £300 per secondary pupil less than their neighbours.

In the LEA's Ofsted report, the Government's inspection team ranked the funding available to the LEA for strategy for school improvement as 7, a very low grade, whereas value for money of services to support school improvement was graded at 3. The LEA is playing its part well, but clearly more support is needed from the Government.

Poole is a small education authority. In 1997 it inherited an unusual situation, in that four of its seven secondary schools were grant maintained—more than 70 per cent. of secondary school pupils were in GM schools—leaving the borough's three secondary modern schools under the control of the LEA. The prime motivation for applying for GM status was to improve the financial status of the schools. Although I was personally deeply opposed to GM schools, I could understand the motivation, given the extremely low level of funding for our schools.

Those circumstances led to a very divided education community, as one can imagine, with the GM schools having healthy school balances, but with Poole LEA inheriting a situation in which the schools balances added up to just £26,000 overall. I believe that one half of the LEA schools were running deficit budgets. All three of the LEA secondary modern schools were in great need of capital investment, two because of the age of the buildings and the third to provide better for a growing school population.

Since 1997, overall school balances have increased, and ironically, a problem identified in the LEA's Ofsted report is their high level. Perversely, the district auditor continues to identify that as a weakness in his reports. I mention that because I hope that the Minister will deal with it. Last year, the school balances were in the range of £4 million to £5 million, which is too high in relation to the LEA's overall budget of some £50 million. It is important to note that relatively few schools hold large balances. The foundation schools accounted for £1.5 million at the end of March 2002.

My personal belief is that although the LEA has worked hard to achieve a successful relationship with the majority of foundation schools—that was very difficult, as the former GM schools had to readjust to lower funding levels—there is still a feeling among some of them that they are independent of the LEA. In addition, given the historic low funding, there is still an understandable caution among many head teachers, and there are instances of schools saving up to make the most of match funding.

I believe that the education scrutiny committee is not working as well as it might—that point was identified in the Ofsted report—and that it must bear in mind that money held idle is not being spent on the current generation of schoolchildren. However, some head teachers have told me that they are just getting by on this year's settlement because of their reserves, but that the future is grim. That is what today's debate is about.

I have case studies of 30 schools and shall quote just a few points from them:
"We would be running a deficit of £30,000…lost 1.5 Teaching Assistants."
"We anticipate running a deficit of £40–45,000 on the 2003/4 budget…training will be very limited…temporary teaching contracts will not be renewed."
"As a result of cutting back hard on books, equipment…staff training …strategic development, I am taking a budget to the governors which only recommends a deficit of £25,000."
Obviously, I could go on with those at great length, but I have much more to say to the Minister.

How did the situation arise? In December 2002, the Government said that the per pupil increase for Poole would be 4.3 per cent., far below the English average. I believe that the Minister has now accepted that Poole's actual increase was only 3.5 per cent., when one takes on board the cut in the standards grant. However, the increase is on a low base and is obviously insufficient to cover the increased costs, which have been clearly identified by many others, in national insurance contributions, teachers' salaries and pensions.

Based on Government figures, the position of Poole's education funding has significantly worsened. The gaps have widened. By comparison with the average level of funding, Poole is £47 worse off. The gap was £293; it is now £340. That is equivalent to £900,000, which would be a very useful sum for the authority. Poole is £103 worse off than the best-funded and £49 worse off than the worst-funded authority.

From the perspective of Poole parents, governors and teachers, the new education funding system appears no better, no more equitable and no more easily understood, and now a widening funding gap exists between Poole and other authorities. A particular problem with the application of the new formula is that Poole and Dorset have relatively low-wage economies but high house prices. In the Ofsted report for the LEA, the inspectors commented that
"the borough is relatively prosperous and the cost of housing is high. There are pockets of deprivation. Unemployment is well below national averages but this makes a low wage economy generally."
Poole has high average house prices. A recent survey has placed Poole at No. 14 in a list of places most expensive to buy a home by comparison with average wages in the area. That means that more has to be offered to public sector workers to attract them to Poole in the first place. Poole and all Dorset authorities are losing out from resource equalisation and not benefiting from area cost adjustment. I request that in reviewing the impact of the new formula, the Government give urgent consideration to the effect of high house prices combined with a relatively low-wage economy outside the public sector.

I congratulate my neighbour in Poole on securing this important debate. I assure her that those of a different political persuasion—and those of none—fully support the powerful case that she is making for a better deal for our borough's parents and children.

I thank the hon. Gentleman.

A further local issue is that many of Poole's schools have a relatively high proportion of experienced staff, which is really good, but they are more costly in terms of salary and making up the shortfall on their threshold payments. Poole is a beautiful place to live and work.

The Secretary of State for Education and Skills was speaking at a major conference in Bournemouth last week, and I want to spend my remaining time addressing some of the issues that he raised. First, I am reliably told that Poole did send its completed section 52 form ahead of time. Secondly, a large sum of money has not been held back in balances as far as Poole is concerned. I am told that about £180,000, or 0.3 per cent., is held simply as a contingency.

Thirdly, the Secretary of State mentioned that perhaps some areas with low council tax should increase it. Poole has put up council tax more than necessary because it has passported an extra £227,000. A political battle is going on out there right now, and the current council is blamed for the high level of council tax increase. It is difficult to increase council tax, even if it is low, because that impacts on pensioners and people with low incomes.

We also have to deal with deprivation. The Ofsted inspectors mentioned pockets of deprivation. Surprisingly, in two wards in my constituency, more than 30 per cent. of 0 to 14-year-olds live in households receiving benefit. The situation is highly variable. In my ward, that figure stands at 2.3 per cent. Relative deprivation is quite a problem. One head teacher told me:
"I have taught in London boroughs and we were all in the same boat."
That is quite a significant point.

The local authority has not diverted money to capital spending. It assures me that it has put all the special needs money into schools, and I really cannot find any of the faults that the Secretary of State was suggesting that other authorities might have. Another head teacher put it to me that there are many Government initiatives, but when they are stripped away the core funding is relatively low. The Minister needs to bear in mind the question of whether the core funding is high enough to provide basic education for an authority as lowly funded as Poole. It has relatively expensive teachers. There is a basic cost to education, and because Poole does not qualify for various pots of money, funding is too low.

We also have a further expense, of which I am really very proud. In Poole there are three excellent schools for children with disabilities. The Minister may well have heard of the Victoria school, which is obviously nationally famous. Not surprisingly, such schools attract families with children who have special needs to live in the borough. I would not want that any other way.

I am aware that Poole is just one of many local authorities where head teachers are concerned about the impact of this year's settlement. Poole works closely with its schools, parents and governors. No one believes that the authority has a secret hoard of cash or is diverting money for other purposes. One head teacher observed to me:
"I simply believe that a mistake has been made as far as Poole is concerned."
Another head teacher, as I mentioned earlier, wondered about core funding. In the speech in Bournemouth, the Secretary of State said that
"these changes do mean that each child now attracts the same level of basic funding wherever they live".
It really comes down to whether that basic level of funding is enough, given the special characteristics of an attractive area.

The schools and the LEA have major challenges ahead. For example, they have to make faster progress in improving key stage 2 results. The tight funding situation means that options for action to meet the challenges are limited. Far worse, after years of hard work obtaining excellent results on a shoestring, and a taste of life getting better, this year's settlement has devastated our teachers. All associated with Poole's schools are despondent. I trust that the Government will make it a matter of urgency to address their concerns. The Minister has agreed to a special meeting and I hope that my speech has persuaded him to have that meeting in Poole so that he can see what it is like at the chalk face in one of the lowest-funded authorities in the country. In Poole and the rest of Dorset, we need a better deal for our children.

3.46 pm

May I say what a pleasure it is to be under your careful guidance, Mr. Amess? I offer my congratulations to the hon. Member for Mid-Dorset and North Poole (Mrs. Brooke) and welcome the hon. Member for Poole (Mr. Syms).

I have only tentative family links to Poole. Some of my extended family spend large parts of their holiday there and insist that is a wonderful place. They do a large amount of water-skiing and other water sports. The offer of a ministerial trip to Poole is, needless to say, extremely tempting. However, I must balance that offer with equally tempting—or sometimes not equally tempting—invitations to visit other parts of the country.

I understand the hon. Lady's personal commitment to the education service and I should like to respond to some of her points. She mentioned one point in passing, relating to her personal link with the teaching profession in Poole. I am sure that we all want to recognise the enormous efforts that teachers, head teachers and governors throughout the country have made to raise educational standards. The fruits of those efforts in Poole are noteworthy and should be put on the record.

I asked the Department to dig cut the figures. They focus on the primary changes in Poole over the past five or six years and are striking. Since 1998, the proportion of young people leaving primary school in Poole who are doing well in English has risen from 64 to 73 per cent. In maths, the figure has risen from 54 to 67 per cent., and in science, the figure has risen from 67 to 85 per cent. At a time when many people are only too ready to disparage the teaching profession—sometimes even those who represent the teaching profession—I am sure that Members across the House would say that that is good evidence of improvement and that we are all committed to seeing that improvement followed through in the secondary sector, in which there are big challenges at age 14 through to school leaving at 18. I hope that the improvements in primary schools can be translated into improvements in the secondary sector.

The funding picture is striking in a number of ways. I am certainly not going to argue with the hon. Lady about whether Poole is the 145th or the 143rd lowest ranked authority for funding. There is a small disagreement between the statisticians at the LEA and the statisticians at the Department over that. I do not want to quibble about it. The context is that between 1997–98 and 2002–03 Poole's education spending assessment increased by more than £13 million, as the hon. Lady said, but education formula spending is only part of the picture. The standards fund increase, to which the hon. Lady also referred, has risen from about £600,000 in 1997 to £4 million this year, although 1 recognise that certain issues, to which I shall return, apply this year. The school standards grant, which goes directly to schools without going through the formula and recognises pupil numbers—regardless of the spread of LEAs to which the hon. Lady referred—has risen to £1.5 million. Capital funding has also increased.

The focus of the hon. Lady's comments was on the situation this year and the changes that have come about from reform of the local government finance system. I should address that substantively. It is worth saying at the outset that Poole receives the amount that it does because of the characteristics of its pupils. The process involves scientific census and careful work, and involves no judgment by Ministers or anyone else. Poole, notwithstanding pockets of deprivation, is a less deprived authority. The percentage of children whose families are on income support is about 15 per cent. compared with a national average of more than 20 per cent. On the working families tax credit, I was pleased that the hon. Lady referred to the issues raised about the education of children from low-wage families. In Poole the proportion is just below the national average at 17.5 per cent. compared with 19 per cent., and I hope that she will understand in a moment why the changes to the system recognise, at least in one respect, the challenges of education for children whose parents are in low-wage employment.

As the Secretary of State said in Bournemouth, we believe that similar pupils in different parts of the country should have the same amount of money attached to them by central Government, and I am sure that the hon. Lady does not dispute that different pupils have different needs and that that must be recognised, preferably in a simple way, as we have tried to do. We can say with confidence that similar pupils, whether they live in Poole or in my constituency of South Shields, have the same amount of money attached to them; I shall try to explain why.

We all agree that the old funding system needed to be changed. It was based on the 1991 census, which is out of date; it included a number of capricious elements, not least a failure to recognise the division of responsibilities between LEAs and schools; and it was widely seen to be unfair. The new system is based on three simple elements. The first is a basic entitlement-the hon. Lady did not use this language, but referred to a quorum entitlement—of £2,005 per primary school pupil and £2,567 per secondary school pupil. Secondly, there is a top-up for deprivation and additional educational needs. Thirdly, there is recognition that some areas face particularly high costs for recruitment and retention of teachers. In the development of that new three-part system we received valuable help from LEAs throughout the country, including those such as Poole, which, I believe, is one of the smaller authorities.

Sometimes people worry that Government consultation is just a matter of form and that nothing comes out of it. One specific change that was not foreshadowed in the run-up to the review of local government funding was the recognition that small authorities face a particular challenge. In the final announcement of the conclusions of the review, we established a £400,000 grant for running costs for all small LEAs in recognition that they face particular challenges. I hope that the hon. Lady agrees that that is a good example of a minority of LEAs with a particular interest making their voices heard. Central Government listened and recognised the problems that they faced in running such local authority services. I know that she did not have time to say so in her speech, but I hope that she agrees that that is a good step forward and that authorities such as Poole are not penalised because of their relatively small size. That important improvement was brought about by the work of the education funding strategy group, largely populated by representatives of local education authorities and teacher representatives.

There is a core entitlement for every child and recognition of additional needs. It is worth dwelling on that for a moment, as the hon. Lady did. The old system used data on pupil characteristics from 1991 as the basis for distributing funding for additional educational needs. That included children of lone parents, who got special amounts of money, and children of parents who were born abroad. It used information about children from families in receipt of income support, too. The idea was that authorities with significant numbers of children in those categories spent more on education in 1991 and therefore will need to spend more in future. That was obviously an inadequate way of distributing money.

In the new system, there have been some significant changes, which are not just simplification. I shall dwell first on the definition of poverty that the hon. Lady mentioned. We agree that children whose families are on

income support or who are unemployed face special challenges. There was a big debate in Government and education circles about whether the recognition of poverty through income support should be supplemented by a recognition of the challenges for children whose parents are on the working families tax credit. Although Poole is not above the national average for the number of children whose parents are in relatively low-wage work, the hon. Lady is right to say that it is a high-employment area, but not necessarily a high-wage employment area. The recognition in the new funding formula of the needs of children whose parents are on the working families tax credit is a structural change that will be of long-term benefit to places such as Poole when they keep employment up. Even if that employment is not in high-wage work, they will get the benefits in the formula.

There is also recognition of the challenges involved in educating children who speak English as a second language. Poole benefits less than many other authorities from that factor for additional educational needs because it has about I per cent. of pupils with English as a second language or from a low-achieving ethnic minority group, compared with a national average of about 9 per cent. That is another reason why the funding formula produces the changes outlined.

To complete the picture, the third element of the funding formula relates to the extra costs of hiring teachers, especially in areas where recruitment and retention is particularly difficult. We tried to take account of the point that the hon. Lady made, that it is not only the obvious places such as London and the south-east that face recruitment and retention pressures. Under the old system, 51 local education authorities had their additional costs recognised. I am pleased for hon. Members on both sides of the House that the number of LEAs that we are able to recognise has increased to 99 from 51; the bad news for the hon. Lady is that Poole is not one of them, because the result of the investigation of wage rates did not make Poole one of the top 99 authorities for extra costs.

I heard what the hon. Lady said about housing and I take it very seriously. As she knows, in our consultation document issued last summer, two of the options used housing and two used instead the general employment measure, which is a measure of wages. In the course of the discussion about that consultation paper, the overwhelming body of evidence was not just that the general employment measure was a more sensitive indicator to use; it was also the strong view that it was more accurate. On that basis we took the decision to follow the rest of Government in using the general employment measure as our indicator of relative costs throughout the country. I hear what the hon. Lady has said on the matter and I shall bear in mind her point about housing, because we have tried to consider it.

I conclude by saying that I appreciate that any year in which there are major changes in the local authority funding system is a year of uncertainty, in which the changes that are under way need to be considered.

The hon. Lady talked about the positive working relationship that exists between schools and the LEA, notwithstanding Ofsted's report that the LEA school improvement services are not necessarily all that she or others would want. I am pleased to hear about that positive relationship.

The Secretary of State made it clear that, once the purdah restrictions of the local elections are out of the way, we want to encourage every LEA and every school that is now feeling the pinch to engage in a constructive dialogue about some important issues that arise from the submission of the so-called section 52 returns from the LEAs. There is significant evidence that about £500 million is not being withheld by LEAs from schools, but is money that they have still to allocate to schools. We are anxious that schools do not take decisions on the basis of a provisional budget comparable to last year's budgetary outturn when more money is coming to them. We will encourage schools to have a careful dialogue with their LEA about the full budgetary outturn. There are also significant issues about the amount of the schools budget that is not being passed on to headmasters, headmistresses and head teachers around the country, whether that money is going on special needs or other factors. The hon. Lady also referred to money that is being transferred from revenue into capital. Those issues will be out in the open as of Friday. I very much hope that they will lead to a serious dialogue at local level, not only in Poole, but throughout the country.