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Opposition Day

Volume 405: debated on Thursday 15 May 2003

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School Funding

I should say to the House that Mr. Speaker has selected the amendment in the name of the Prime Minister. A 15-minute limit has been placed on Back-Bench speeches during this debate.

2.6 pm

I beg to move,

That this House condemns the Government's handling of the school funding crisis; regrets that the jobs of teachers, teaching assistants and other support staff have been put at risk; further regrets that these teacher redundancies, together with other cut backs imposed by the funding crisis, will have a negative impact on the education of school children; notes that Labour councils have been as badly affected as Conservative councils by the funding crisis; condemns the Government for seeking to blame local authorities for this crisis; further notes the statements of head teachers and governors across England who no longer trust the Government's ability to administer school funding; recognises the impact of the funding crisis on the Government's teacher workload agreement; believes that the Government's flawed reforms of school funding are to blame for the crisis; and calls on the Government to simplify the school funding system, giving more money direct to schools and giving head teachers more control over how to spend that money.
I am delighted that the House and its proceedings are impinging on this Government for once. We called for this debate because the crisis in our schools is serious and wide-ranging, and the Government were forced into a response this morning in an attempt to provide themselves, prior to the debate, with a fig leaf. I welcome the fact that the House can still have an effect.

Sadly, however, what we have seen today is a panicky short-term response that takes money out of one pocket in a school's budget and inserts into another pocket. What we should he hearing from Ministers today is an apology to heads, teachers, local authorities and parents for the spectacular cock-up that they have made of this year's education budget. Instead, they seem determined to lay the blame anywhere else.

Since the Secretary of State has been forced into rushing out the announcement of the various pieces of sticking plaster that he is trying to put over this wound, can he answer some specific questions when he addresses the House? He is telling schools to raid their capital budgets and reserves to try to avoid teachers and teaching assistants being sacked. Can he tell the House what happens to a school facing a huge budget deficit that it cannot cover from reserves or capital, that has a central heating boiler that has just failed or a roof that is leaking directly into the classroom, and that does not therefore have capital available to try to pay salaries?

I am sorry to intervene on my hon. Friend so early. On the point of capital expenditure, however, is he aware that a school in my constituency, Reffley county primary, which is a beacon school and one of the best and biggest primaries in Norfolk, will be short of £93,000 just by standing still? It has no money in its capital budget, and no surplus funds, and it will have to get rid of five teaching support staff. What kind of signal does that send to hard-pressed teachers and parents in Norfolk?

My hon. Friend raises a serious point. All over the country, in his constituency and elsewhere, schools will be looking at the detail of what the Secretary of State announced this morning, just as they looked at the detail of the spending announcements that he made some months ago, and they will realise that whatever hype comes from the Government, they will be worse off. If the measures that he announced this morning actually work in the schools facing the worst problems, the effect will be random.

If we assume that the hon. Gentleman does not want to see any resource removed from any local education authority, how much more money does he think that he would need to commit, as a representative of the Opposition, to make it all the better?

I would commit that when the next Conservative Government spend money on education, we will spend it in schools rather than on bureaucracy.

I will make some progress. I know that the hon. Gentlemen will have many problems in their constituencies, from which their schools are suffering, which I am sure that they will wish to draw to the House's attention.

In the meantime, perhaps the hon. Gentlemen would like to listen to the very sensible comments of the National Association of Head Teachers on the Secretary of State's announcement this morning:

"Converting capital into revenue and licensing deficit budgets could help some schools but these measures, that are akin to `rearranging the deck chairs on the Titanic', will not provide the relief that all schools in trouble desperately need now."
In addition to the fact that raiding capital budgets is not really a solution, it will cause immediate problems. I am especially worried about the effect on special needs provision. If the Secretary of State tells schools to spend their capital on teachers' salaries, what will happen to schools that need to rebuild classrooms to provide proper access for pupils with disabilities? That is now a legal requirement, as he knows, so I hope that the Government have thought through all the implications of today's announcement, especially the way in which they will affect some of the most disadvantaged children in Britain today.

I am astonished to hear the hon. Gentleman speak in such terms because the previous Conservative Government's term in office was characterised by crumbling schools. Is he aware that under John Major's Government, schools in my constituency lost money every single year? Since 1997, Cambridgeshire has received a 16 per cent. increase in cash funding for schools.

If the hon. Lady is worried about crumbling schools, does she support her Secretary of State who has today proposed to raid the capital budgets of schools throughout the country? Her logic escapes me.

I am grateful to my hon. Friend for giving way because rather than being given history lessons, most people in education want to know what will happen this year and what the effect will be on their jobs. I received a letter from Turnditch primary school, which is a small primary school, commenting on the changes that the Secretary of State has made to the standards funds, among other things. It says:

"In other words, our total budget has gone from"
£179,000 to £180,000, or
"an increase of … 0.62 per cent."
The school does not know where the extra money that the Secretary of State talks about has gone.

My hon. Friend makes a powerful point. I shall address directly the point about the capital budget The Secretary of State knows that when we approve of things that he does, we do not indulge in knee-jerk opposition. Before today, such approval was given to the way in which he took seriously the need for steady flows of capital to keep the fabric of our schools up to date. The fact that that sensible part of the Government's education strategy has been ditched is a sign of the level of panic in the Department for Education and Skills. Schools will suffer in the long term.

I shall make some progress.

The Secretary of State rightly sets great stall by the development of specialist schools. He knows that schools in deficit cannot apply for specialist status, yet he has today encouraged schools to go into deficit. He is firing an accurate torpedo into his plans for a rapid expansion of the specialist school network.

The written statement that the Secretary of State put before the House today fascinatingly says:
"2003–04 is a unique year, because of both the extent of changes in the system for funding schools, and one-off pressures relating to teachers' pensions and National Insurance."
He knows that announcements on taxes are a matter for the Chancellor of the Exchequer. Is he committing the Chancellor not to impose further national insurance increases for the rest of the Parliament and if he is, has he told the Chancellor? If he is not saying that, his reassuring written statement has no value at all. I know that relations around the Cabinet table are worse than ever but if spending Ministers start pre-empting future Budgets, we ain't seen nothing yet.

My hon. Friend is making an excellent case. Does he agree that the absurdity of rip-off government is shown by the fact that many of the taxes wrongly imposed on the British people have been a boomerang on the public sector and have made it impossible for schools to spend what they want? Schools are not receiving the money that they should because so much is wasted, while money that they do get is used to pay taxes.

There is a circular flow of money from taxpayers' pockets into the Chancellor's pocket, but it never seems to reach the public services on which the British public want the money to be spent. That is one of the Government's central failures.

How does the hon. Gentleman envisage the future of local education authorities, and would he abolish them? They have been successful and Kent local education authority, which has secured £60 million of private finance initiative credits, has been especially successful. One of the five schools affected by that is the North school in the hon. Gentleman's constituency. What would be the future of LEAs under the Tories?

I am happy to join the hon. Gentleman in paying tribute to Kent LEA, which is run by an extremely good and successful Conservative council.

It is worth analysing how on earth the Government found themselves in this predicament. They have introduced more than 60 tax rises since 1997 and they spend more than £50 million every hour. Even in my most oppositional mood, I would not have expected our schools to be plunged into what the head teacher Michael Chapman, who was speaking on behalf of head teachers in east Yorkshire, said was

"far and away the worst budget settlement I have had to manage as a head teacher".
What a contrast there is between the problems faced by schools and colleges throughout the country and the jubilant words that surrounded last summer's spending announcement. Let us remember the incredible hubris displayed by Ministers at the time of the spending review. The Chancellor had raised taxes a few months earlier and the record £12.8 billion increase promised for the next three years would, according to the then Education Secretary, the right hon. Member for Birmingham, Yardley (Estelle Morris),
"deliver higher standards, better behaviour and more choice".
She promised:
"investment will be matched by radical reform".
The edifice that the Government lauded at the time has fallen apart so spectacularly and quickly that it should embarrass even the Minister for School Standards, who bears direct responsibility for the relevant part of the Department for Education and Skills' budget.

My hon. Friend is making a powerful case. Does he appreciate the concerns of people in schools such as Collingwood college in my constituency, which was a flagship grant-maintained school under the Conservative Government? Its chairman of governors, with all-party support, is writing to me to protest not only that Surrey local education authority has effectively received almost no funding increase, but that any increase that it passports to schools is more than wiped out by the increased cost of national insurance payments. Collingwood college and other schools in my constituency and south-east constituencies have experienced a net loss. Unless the Secretary of State does something about the situation, redundancies will be made next Wednesday morning. Surely that reinforces the urgency of the matter.

It does reinforce the urgency of the matter and it is a shame that Labour Members do not seem to take that seriously.

We need to know why the situation occurred. The school funding system has foundered on the three vices that the Labour Government cannot resist: hype, centralisation and a refusal to accept responsibility when things go wrong. The promises of investment and reform have proved to be as empty as they were grandiose. There is no doubt that the Government are taxing and spending more than ever but what they give with one hand, they take away with the other.

The £2.7 billion extra for schools to which the Prime Minister still referred yesterday has proved to be an incredible shrinking pot of money. By last December, it had been scaled down to £1.4 billion. Two months ago, the increase—classed as "missing"—was just over £500 million. According to the Minister for Schools Standards, it then became £250 million. Today's announcement means that we can assume that the Government are finally and belatedly admitting that the trumpeted increase was in fact a cut and that schools are being encouraged to raid other budgets to fund their basic spending.

I award the hon. Gentleman grade A for effort for sketching out a higher education policy after 604 days in office. Will he use today's debate to sketch out a policy on secondary education? Would he match the Government's investment in secondary education, or will he tell us where he would make cuts?

I am grateful to the hon. Gentleman for mentioning our policy on higher education, although I was not planning to do that. I am sure that the policy is more popular among Labour Members than the Government's policy on higher education. I dare say that at some stage we will put that to the test in the House.

No, I must make progress.

The Secretary of State then told the Secondary Heads Association that he did not believe that schools had budget problems and that schools' complaints were just "a game". The previous day, he responded to the concerns of the Association of Chief Education Officers by saying:
"I don't listen to what you say quite frankly."
That was not worthy of the Secretary of State.

It is not just that the Government have fundamentally mismanaged the funding crisis. They have wilfully fiddled the local government funding settlement in a way that has made the problem in our schools worse. The Government argue that they provided an above-inflation grant increase for all councils. Such an argument is at best simplistic and at worst simply wrong. Local authorities' costs have risen faster than central Government funding as they have imposed countless new regulations, obligations and red tape. We know, and schools know, that the pay, pensions, national insurance increases and standards fund changes have taken away most of the extra funding for every school and more than the total of the extra money for too many schools.

We need to examine how much central Government actually fund of what they estimate each local authority should be spending. According to research from the House of Commons Library, that ratio fell from 76 per cent. in 1997 to 73 per cent. in 2002–03. In other words, the Government are funding less of local authority spending needs from the centre and the shortfall has to be made up in higher council tax.

There is nothing fair about the local government settlement this year, but even with the gerrymandering that the Government have gone in for they have managed to create acute funding crises even in Labour local authorities. The fact that they have managed to do that owes much to the complexity of the system that they have created and the obvious flaws that have now been revealed. The Minister for School Standards, with whom I have debated the matter in the media over the past few weeks, claims that he understands it—but judging by the crisis that he has presided over, he does not—and that mere mortals cannot understand it. The fact is, however, that it clearly does not work.

There has to be a better way. When local authorities, such as Wandsworth, which has much deprivation but also an excellent Conservative council that works hard to deal with its problems, suffers because it is too successful and has too many pockets of relative affluence, then something is wrong. There are rich people in poor areas and poor people in wealthy areas. The current system, for all its complexity, fails to deal with those problems in any adequate way.

The hon. Gentleman is right to say that schools have been under enormous pressure in the past few weeks. Will he explain why Tory-led Essex county council has held on to £21 million in those weeks and told my schools that it has no money to give them? Why has it sat on that money and kept those schools under so much pressure?

The hon. Gentleman should keep up. His Secretary of State stopped trying to blame local authorities for the crisis a few weeks ago.

The Government's policy is over-hyped and over-centralised. The next phase is to deny responsibility, as the hon. Gentleman just sought to do, but that will not wash because the current situation is the result of a breakdown in communication from the centre. The Government and Labour Members know that scores of schools around the country report that they are going into budget deficit. A good example of that is the Fairway middle school in Norwich, where the chair of governors, Alison Black, made it clear in a letter to the Secretary of State—her Member of Parliament—that her school was facing the distinct possibility of having to make all seven of the school's teaching assistants redundant. It is surely a strange situation when only months after the Department announced that it saw a greater role for teaching assistants, they are under the threat of redundancy.

Just to inform the House that I met my constituents to discuss that and they are making no redundancies at Fairway middle school.

This year possibly. Perhaps the right hon. Gentleman would like to respond to Richard Arrowsmith, the head teacher of Grove school in Market Drayton, who summed up the situation perfectly. He said:

"We have lost confidence in the Government over the way in which school finance is administered … With cuts outstripping the funds available for extra support staff, it will also be difficult for us to reduce excessive workloads on teachers."

My hon. Friend is aware that the Secretary of State is the Member of Parliament for Norwich, South, and he just replied to a specific constituency point. Does he know that in a conversation that I had with Norfolk education committee last night, it stressed that it is working hard with local schools but still anticipates 92 redundancies? Teachers and governors are in no doubt where the blame lies—it lies with the Secretary of State. It has been documented in dozens of letters and e-mails through the local Eastern Daily Press. The buck stops with him.

My hon. Friend is right. There is a crisis in the Secretary of State's constituency and crises in many other constituencies, too. In the week when the Government launched their new strategy for London schools, we hear reports of the man that they have in charge, Tim Brighouse, saying:

"this is the worst of times"
"It is the worst dislocation of funding we have all experienced in our own working lifetime."
When the London schools tsar criticises the Government like that, Ministers' complacency is completely out of place. That man has been brought in by Labour to lead education reform in the capital.

On top of all that, Sir Jeremy Beecham, a leading Labour councillor and leader of the Local Government Association, said:
"Local councils are not holding back millions of pounds. Much of these funds are being allocated to a range of educational needs and some are due to be distributed in the year."
Rather than the Department leading the partnership with all those people, we instead have confrontation and a breakdown of communication that has succeeded in alienating teachers, heads, local authorities, teacher unions and the Local Government Association. The problem is not just a one-year problem. It will continue to haunt schools in future years. Making them dig into their reserves to fund the Department's mistakes will only make matters worse and it attacks the financial security of all schools that have to do that.

One long-term effect of the Government's policy is that it will damage their so-called historic work load agreement, which has promised so much and, on current progress, will deliver so little. Only last week, the National Association of Head Teachers, one of the teacher unions that signed up to the agreement originally, said that it would be "impossible to implement" because of the Government's cuts and that it was considering pulling out of it. On top of that, reports last week showed that the work load agreement will only continue to add to the pressures that schools face, with costs of teaching assistants expected to rise by up to 40 per cent. in some local authorities. So those schools that are short of cash now will have to contend with even more problems in the future.

The long-term solution is a radical simplification of the funding system. The Government can no longer introduce dozens of different funding streams, each one representing a new gimmick to provide a ministerial press release. Even when they are good and useful gimmicks, the cumulative effect of the constant fiddling is to leave schools unable to take decisions. Let us take power away from Ministers and give it to heads and governors so that they make the key decisions about priorities in their schools.

Ideally, we need to introduce a national funding formula so that never again are schools forced into a situation like the current crisis. Schools should know where they stand with regard to their funding and should be able to set budgets accordingly, securing their financial future. Instead of that, we have a classic new Labour crisis, which goes through several phases: the grand announcement, the ministerial boasting, then the investigation of the small print, the rumblings of discontent, the explosion of the crisis, the desperate search for a scapegoat, and eventually the humiliation of the ministerial climbdown. We saw it with individual learning accounts; we saw it with the A-level crisis; and now we have seen it with school funding.

But this crisis is too important to remain with Ministers. For once they do need to accept responsibility. Let me give them one last example from a head who phoned me less than an hour ago, Mrs. Maureen Martin of Coloma convent girls school, a comprehensive in Croydon. Her school is short of £400,000. It has no reserves and her capital budget, which the Minister wants her to raid, is £77,000. Today's announcement does not lift the cloud over her excellent school, and she, for one, is not being taken in by the ministerial spin.

I hope that Ministers reflect on their work. If one teacher or one teaching assistant is made redundant as a result of the present crisis, one Minister should follow suit. I suspect that the Minister for School Standards is first in the queue, but I dare say that those who are trying to rescue our schools system will not mind. The Government have let down heads, parents and teachers throughout the country, and it is time that Ministers took responsibility for their failures. I commend our motion to the House.

2.30 pm

I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:

"applauds the increased funding that the Government has made available to LEAs since 1997, which is up in real terms from £2,800 per pupil to £3,600 for 2003–04, with further planned increases to almost £3,800 by 2005–06; notes that the increase in funding for 2003–04, at £2.7 billion, more than covers the additional cost pressures from pay, pension and price increases; recognises that the new LEA funding formula constitutes a welcome move towards a fairer distribution between LEAs, but coupled with the changes to the Standards Fund has resulted in some turbulence in the system; endorses the action the Government has taken in response, namely to provide a further £11 million to London authorities and £28 million to authorities with the lowest overall increases; further notes that the performance pay grant for 2003–04 has been increased to meet all of schools' commitments arising from the grant provided in 2002–03, and to cover the costs of similar progress for teachers becoming eligible for performance pay in September; welcomes the decision by the great majority of LEAs to pass on in full the increase in schools funding to their schools budgets; supports the work the Government is doing with LEAs to understand the decisions they have taken in distributing their funding between central services and the individual budgets of schools; welcomes the further measures the Secretary of State is taking to provide LEAs and schools with flexibilities to avoid excessive instability within schools; and calls on the Government to consider what changes are needed for next year."
I am delighted to have the debate. I am sorry that the hon. Member for Ashford (Mr. Green) was not able to persuade the shadow Cabinet to hold it two weeks ago, as he announced to the National Union of Teachers conference, but it is important to be able to debate the subject fully and directly. We ought to start with the origins of the situation.

Not medieval history, but practical politics today.

The funding of schools is a shared responsibility between national and local government, and we have shown over the recent period, and will show in future, a determination to work together to resolve the issues. I take the national level first. We allocated an increase in spending of £2.7 billion to schools in this year. The funding pressures, including teachers pay, pensions and national insurance—the various issues highlighted by the hon. Member for Ashford—were about £2.45 billion nationally, so we had an excess over the funding pressures of £200 million to £250 million.

The funding was at a level of about 11.6 per cent. per pupil increase in that year—a significant increase. It was, by the way, the continuation of a long record of education investment since 1997, which has led to an extra 20,000 teachers across the country, an extra 80,000 support staff, and 20,000 schools benefiting directly from investment in them—a sharp contrast with the 20 per cent. cuts in education proposed by the Opposition.

There were two national changes.—

On a point of order, Mr. Deputy Speaker. The Secretary of State may have inadvertently told an untruth to the House. As you know, no such cuts are being proposed.

I am happy to respond. On "The World at One" on Radio 4 on 30 December 2002, the Leader of the Opposition said that his colleagues, including the shadow Chief Secretary,

"are looking at the target of 20 per cent. savings across the board in Government spending. That's what we are looking at, and we are beginning to come up with figures that will build towards that total."
That is 20 per cent. right across the board. If the Opposition want to come off that figure, they should do so, but they have not.

Has my right hon. Friend noticed that the Tory policy on higher education involves a 20 per cent. cut? Has he noticed that the Tories have guaranteed the defence budget and the international development budget, but not the education budget? Is it not, therefore, the height of hypocrisy for them to call a debate on funding, when they are secretly planning to cut it?

My hon. Friend is right. We hope that the hon. Member for Ashford might win some of his battles in the shadow Cabinet and get a commitment to education spending, alongside those to other Departments.

Can the Secretary of State confirm to the House that the funding pressures on Kent, which has received an increase in its education budget that amounts to only just over half of the funding pressures, will be repeated under the local government settlement plans for next year and the year after, so that the remarkable achievement whereby Kent has managed to passport through all the money that the schools need this year will be impossible to repeat for the next two years?

I shall come to that point in a moment. There is well over £10 million still to be allocated by Kent to individual schools, and I hope and am confident that it will do so.

As the hon. Member for Ashford said, there were two significant changes in the distribution of the national resource this year. The first is the change in the local government funding formula, to which he referred, whereby we introduced a 3.2 per cent. floor for all local education authorities to deal with the situation. The second was the decision to shift the standards fund to local government, for which colleagues in local government had pressed for a considerable time. Those changes have led to distributional effects that, as I have long acknowledged, give rise to particular issues. But the national funding has been more than enough to cover the funding pressures.

Given the Secretary of State's unwise fulminations against local education authorities, and the fact that £1.2 million in leadership incentive grant has not been allocated by Buckinghamshire county council because he has not given permission to the authority to do so, does he understand why, on 23 April this year, I received a letter from a teacher in my constituency who wrote that if there were A-levels in bullying, arrogance and incompetence, he would pass all three with flying colours?

I am grateful for the compliment from the hon. Gentleman. I shall deal directly with Buckinghamshire, to answer the point that he raises.

Each local education authority has taken four decisions about distributing money to schools in its area: first, whether to passport the money through; secondly, how much to keep in its central schools budget for the LEA as a whole, and how much to distribute to individual schools; thirdly, how much to allocate from its own revenue to capital; and fourthly, what local formula the money is spent on.

The Government position on each of those aspects is clear. First, the money should be 100 per cent. passported. Secondly, the money that goes should be passed on to individual schools, and that is where it should be spent. Thirdly, the revenue should be spent principally on revenue, because there is other capital funding. I shall deal in a moment with the point raised by the hon. Member for Buckingham (Mr. Bercow). Fourthly, the local formula should be fair and not give very high increases to certain schools, and very low increases or even decreases to others.

My right hon. Friend will know that Buckinghamshire county council has demonstrated a 10 per cent. variation in the funding that it gives to different schools. He will also be aware that in attainment in schools in Buckinghamshire, there is an extraordinary fourfold difference in the percentage of pupils in secondary schools gaining five GCSEs. Has he looked to see whether the variation in funding is aimed at improving performance in the schools performing poorly, or the opposite—giving even more money to schools that are already favoured and taking money away from less favoured schools?

My hon. Friend is right. I shall come to Buckinghamshire in a moment, as it illustrates the point that she makes to articulately.

I hope that the Conservatives and Liberal Democrats will make clear their positions on these issues, as I have done. Conservative Westminster has passported only 73.8 per cent. of its budget. Conservative Wandsworth, which the hon. Member for Ashford favoured, has passed on only 92.9 per cent. of its increase. It is a bit of a nerve to cite Marylebone school when it is his own Tory friends in Westminster who are not providing the funds for Marylebone schools. I hope that the Lib Dems will explain why Liverpool city council has passported only 94.9 per cent. of its budget through.

My position is clear. I urge all authorities to passport 100 per cent. of their money. My challenge to the Conservatives and the Liberal Democrats is for them to commit themselves to the same approach in relation to their political colleagues. With reference to Westminster and Wandsworth, I draw the attention of the House to the fact that the band D council tax for Wandsworth is £584, and for Westminster it is £570, compared with £1.082 for Lewisham and £1,034 for Southwark, but still they will not passport the money to fund the schools properly in their areas.

May I draw the Secretary of State's attention to a press release from Labour-controlled Croydon council entitled "Education Secretary—Climbdown on Croydon Passporting"? It states that he accepted Croydon's proposal for the schools budget, which allowed a 90.2 per cent. level of passporting. That is an acknowledgement that he agreed to £1.7 million being taken out of the schools budget and used on social services and other things.

I have directly intimated to Croydon that I believe that it should be passporting much more than 90.2 per cent. I acknowledge the point that the hon. Gentleman makes. In my opinion, Croydon, which is Labour-controlled, as he said, should be passporting in the same way as others. However, my challenge to the Conservative party and Liberal Democrat leadership is to ask whether they are prepared to join me in saying that the money should be passported in that way.

I thank the Secretary of State for giving way. He has spoken with disapproval about authorities that have failed to passport the full amount to schools. Would he care to comment on Norfolk, where the full amount has been passported, in addition to extra funds, by the Conservative-controlled county council? As has been mentioned, however, we are also facing 92 teacher redundancies, two of which are at the Old Buckenham high school in my constituency. Is he aware that the deadline for finalising those arrangements for redundancies is the end of this month? What can he say to reassure those teachers and the governors, parents and people of Norfolk that those redundancies will not take place?

I am happy to pay tribute to the Conservative-run Norfolk county council—I have done so on many occasions, including in the Eastern Daily Press, which I think the right hon. Lady will read—for carrying out the passporting as it has done. Moreover, to be fair to the county, when we allocated extra money to deal with the 3.2 per cent. floor, it allocated still further money. It is trying in that respect, but the question arises about the allocation of resources at the local education authority to individual schools. That has been the subject of debate.

No—I wish to deal with school budgets and individual schools. I shall say again what I have said previously about passporting: the Government are absolutely committed to money being passported out to individual schools. However, in Conservative-controlled Cambridge, 3.3 per cent. less is going to individual schools than the budget; in Conservative Cheshire, the figure is 2.8 per cent.; in Conservative Kensington and Chelsea, 3.6 per cent.; and under the Liberal Democrats in their new position in Bournemouth, 2.9 per cent. I ask again whether the leaders of the other parties will commit themselves, as I do, to saying that the money that local education authorities have should be passed on to individual schools and not held simply for central services.

I agree that the other parties have much to answer for. However, I am dealing with my local authority, Lewisham. As my right hon. Friend knows, it is a beacon authority that is working well with the Government. Unfortunately—I hope that we will get some help on this—it tells me that it needs another £3 million to stave off cuts. It has done everything that he has asked it to do, but it is unable to supply moneys from the capital budget, which is needed to keep our schools safe and open. Does he agree that there is a special case in some London boroughs?

I acknowledge the points made by my hon. Friend. I have discussed those specific issues both with her chief education officer and with chief education officers for London as a whole. It is true that there have been particular pressures in London. I believe that the way in which we should deal with the situation is through the London challenge approach that we announced the other day.

I am glad that the Secretary of State has referred to Norfolk and recognised that it has passported as much money as it can. Has he considered the case of St. Edmund's community foundation school? Some 60 per cent. of its pupils are in special needs, it has had a £98,000 cut in its budget and the 1.6 million extra that he has allocated to Norfolk schools will give it another £4,000. A £94,000 deficit will remain and one and a half full teaching posts will be cut, as well as 100 hours of support services—25 per cent. of the total—that were going to the 60 per cent. of pupils in special needs. Surely, he can do better for North Lynn in my constituency.

I can do better for everywhere in the country, as I shall explain. I am ready to consider the Norfolk cases, like every other case, but I do not want to make this a Norfolk debate. The issue is how local authorities behave, just as the issue for the Government is how they behave.

On local education authorities, I wish to highlight the very sharp differences between authorities in the inter-quartile range in the distribution of money between schools. The hon. Member for Buckingham and my hon. Friend the Member for Milton Keynes, South-West (Dr. Starkey) mentioned Buckinghamshire. As my hon. Friend said, there is a 10.2 per cent. difference in the funding per pupil between schools at the top end and those at the bottom end in Buckinghamshire. In nearby Bedfordshire, the difference is 11 per cent., and in Cumbria, it is 10.1 per cent. Those variations are much larger than those of other authorities. Again, the point that I make to the other political parties is that they should make their position clear to their colleagues in local government. Are they for these massive differentials or against them? The great virtue of the process that we have been going through is that we have exposed all the decisions to public debate, enabling much greater local discussion of the issues in a very specific way.

No; I wish to make some progress.

That is why we have analysed extremely carefully the response of local education authorities. I thank the authorities that are distributing more money and ask them to continue the process of discussion to ensure that money gets to schools. In my Department's preliminary analysis of LEA responses, it is clear that many local authorities have taken action to manage local problems and ensure that their schools have received reasonable year-on-year increases in funding. A number of LEAs have chosen to increase their spending on schools by significantly more than the additional resources made available by central Government. Others have managed the pressures on central spending so that they increase the budgets of individual schools.

LEAs have also confirmed that a significant proportion of the budgets that they had not allocated to individual schools by 31 March has now been allocated. For example, Bath and North-East Somerset has confirmed an additional £2.3 million; Bradford £3.6 million; and Birmingham £12.5 million. Where LEAs have indicated that they cannot yet make allocations, they have guaranteed that all the money will be received by schools during the year and confirmed that they are ensuring that all schools are notified of the sums that they can expect to receive. I think that that is a major step forward, and I thank local education authorities for it.

However, in order to ensure that the circumstances that I have described do not adversely affect schools, I have decided that, for 2003–04 only, local education authorities and schools will be given the additional flexibility to use their devolved formula capital funding from my Department to support revenue expenditure. The decision to use a school's capital funding in that way will need to be made jointly by the school and its local education authority and should be taken only in circumstances in which failure to do so would lead to excessive instability in the school.

No—I wish to turn to the specific point made by the hon. Member for Ashford about capital.

First, he has a bit of nerve to complain about the use of devolved funding to schools. Before 1999, when we introduced in the system, under his Government, there was zero devolved capital funding for schools in the maintained sector. It did not even exist. We have introduced it, but he then complains. If he looks at capital more widely, he will see that the increase in capital spend in LEAs, which will pay for many of the things that he mentioned, such as special needs, started at £800 million in 1997–98 and has risen in successive years to £1.1 billion, £1.4 billion, £2.1 billion, £2.2 billion and £3 billion. In 2003–04, it will rise to £3.8 billion. That is a massive increase in capital funding for LEAs that supports the school investment that is being made. The Conservatives never went for such a policy at any time.

I wish to make a final point about the issue of capital, to which the hon. Member for Ashford specifically referred. According to the responses that we have received, about £190 million is being allocated from revenue spending by LEAs to capital in their areas. That is a choice that they are making, but his trying to accuse us of ignoring capital or stealing from the capital pot is extraordinary when it comes from a party such as his.

Does my right hon. Friend not think that it is remarkable that the shadow Secretary of State recognised the dramatic increase in capital spending that this Government have introduced, but in each year and every Budget, he voted against it?

My hon. Friend is absolutely correct. It really is incumbent on Conservative Members to think seriously about the integrity of the political positions that they take on these matters.

As far as the current situation is concerned, I announced today that local education authorities should bear it in mind that they can commit schools to set a deficit budget, which they are likely to be able to repay over the next few years, and that with local agreement the collective balances of their schools can be used to cover the funding of such agreed deficits. In addition, as I have already told LEAs, I will be willing to give sympathetic consideration to proposals from local authorities to set aside restrictions on existing fair funding regulations and schemes, or on the conditions of grant for the standards fund, where the authority thinks that that would assist them in alleviating funding difficulties in particular schools.

The Secretary of State started his speech by telling us how much extra money is going into education. Presumably, he knew that these pressures were coming on to schools when he made his decisions, so why, two months into the new financial year, has he had to make these announcements about capital repairs? Did he get his sums that wrong?

Every local authority takes decisions in setting its budget—from the level of council tax, to passporting, to the formula—in shared responsibility with ourselves. The answer to the hon. Gentleman's question is that we knew very clearly what the situation was in respect of overall funding pressures and proceeded accordingly.

I hope that we all welcome the flexibility that will be given to head teachers as a result of my right hon. Friend's announcement. Will he comment on the possibility of a London schools challenge fund, which would help to alleviate some of the pressures in schools—even those in boroughs such as mine, where pressures remain despite the fact that we were given quite a generous settlement to begin with?

We made an announcement last Monday about the London challenge, and I am happy to tell my hon. Friend that we are considering whether there is merit in such a proposal. I made reference to that in my written answer today.

Many schools will welcome the discretion that my right hon. Friend will build into this year's funding process. However, it makes sense for a school to move into a deficit budget this year only if it is able to anticipate funding flows for future years. Can he give some comfort to schools in that respect? Perhaps the most important thing that he can say today concerns not this year but future years.

My hon. Friend is entirely correct. I was coming to that point. My remarks have three elements: first, we must continue the process of encouraging working with LEAs to get the money out to schools; secondly, we must ensure flexibility on devolved capital; and thirdly, as my hon. Friend said, we must ensure that schools have some certainty about the funding settlement for next year, 2004–05.

I shall not give way for the moment: I want to deal with the matter in hand.

Our key priority in securing the change for 2004–05 is to work closely with local authorities and the Local Government Association to achieve an agreed position that takes the situation forward. The critical goals are: first, to get sufficient education funding increases for every LEA; secondly, to get the right balance between support through the general grant and through ring-fenced and targeted grant; thirdly, to give schools and pupils the confidence that they will receive the money that is intended for them, which is a key element in the comments of my hon. Friend the Member for Manchester, Central (Mr. Lloyd); fourthly, to get the right balance between in-school and out-of-school provision—there are important out-of-school provision issues, for example in relation to special educational needs and pupil referral units; fifthly, to ensure that variations in the budget increases received by different schools within each LEA are appropriate and fair, which touches on my point about the inter-quartile range; and finally, to achieve our proposals on work force reform in line with the national agreement so that they can be sustained. My Department will work with local education authorities to improve and clarify procedures, so that all LEAs are able to distribute their funds—notably the standards fund—to schools in a timely way.

Can the Secretary of State offer some advice to the 12 schools in the city of Portsmouth that are facing budget-related redundancies, many of which do not have any significant balances? If they were to use devolved capital, they would lose the opportunity to use that capital in future, because there would be no opportunity to replace it. The local education authority has in fact passported the full 3.2 per cent. across to schools. What advice can he give to those schools and to teachers who are facing the sack?

My advice to all schools and LEAs is to work together in precisely the way that I described—using LEA resources, considering the use of devolved capital and considering any existing balances—to try to solve problems of the type that the hon. Gentleman raised. It is clear from the large number of letters that we have received that in most LEAs a very positive and constructive dialogue is taking place to address the issues directly.

What advice has the Secretary of State given to LEAs, for not only this year but forthcoming years, about classroom assistants? He will be aware that many classroom assistants are in post because of the statementing of children in a particular class, and there is a statutory obligation on an LEA to honour a statement that requires a classroom assistant. Can he reassure the House that he is advising LEAs that they should honour their statutory obligations as regards classroom assistants and special educational needs pupils?

My advice to all LEAs is to obey the law, as should be the case. If the hon. Lady is asking me to do that, I am happy to do so.

The Secretary of State generously said that Norfolk county council had passported on nearly all the money, but that still leaves us a problem, and he knows it. What does he therefore say to the chairman of governors and the headmaster of Buxton primary school, who had calculated that this year they would have a surplus of £22,000, but in fact have a deficit of more than £72,000? The figures do not add up. His credibility—I say this, as a parliamentary neighbour, with some regret—has been absolutely minced locally, mainly by Labour councillors. What will he do this year, rather than planning for next year?

I take very seriously the regret expressed by the hon. Gentleman. I am weeping for it, as he will be. I am continuing to work with Norfolk county council. The issue is not the passporting percentage that he mentions: it is the money that Norfolk local education authority has and whether it has been passed on to schools directly. I am discussing that with the chief education officer and others.

Several Opposition Members referred to the National Association of Head Teachers. Today, I received a letter from the signatories to the work load agreement asking us to act on the situation. The letter is from the NAHT, all the other teacher unions, the non-teaching unions and the employers organisation for local government, and it is signed by Graham Lane, on behalf of those organisations. It says that the joint signatories want to emphasise
"The need to identify possible short-term remedial measures, including relaxation of regulations to allow devolved capital to be transferred to revenue",
which I announced today,
"enabling schools to borrow from consolidated school balances",
which I announced today, and
"allowing local authorities to 'licence' schools to set short-term budget deficits with clear exit strategies, which will heavily depend on their confidence in the level of funding for the next two years",
which I announced today. It goes on to ask that we encourage schools to
"consider these options in consultation with the local authority."
The second major measure for which the letter calls is
"an urgent look at the impact of the next 2 years, especially Standards Fund and PRP transfers and SSG and LIG roll out. Assurances are sought that the current difficulties will not recur in 2004/05 and 2005/06."
That is precisely the import of what I said a moment ago.

I cite the letter because of the various quotations that the hon. Member for Ashford gave, and to give the House an assurance, which I believe and hope that most hon. Members want to hear, that we intend to work with the teacher trade unions that are signatories to the agreement and the Local Government Association to resolve the matter constructively and deal with the problem precisely as we have been asked to do. There is a long way to go. We especially need to discuss how we get a system that ensures the achievement of our goals.

The Government, unlike the Opposition, are committed to funding schools. We could not be clearer about that, and we are determined to work together with all parts of the education system to ensure that our schools are properly funded and our children properly educated.

3 pm

We hope that the Secretary of State recovers from his mincing. The Liberal Democrats are grateful to the hon. Member for Ashford (Mr. Green) for choosing the subject of the debate. It clearly affects all our constituencies.

We risk being returned to the bad old days when I was a head teacher: the Conservatives were in power and there was an annual round. It is interesting to note that, despite some valid criticism, the hon. Member for Ashford did not present an iota of an idea for a way to resolve the crisis in our schools this year. All the teachers whose letters were cited could therefore go on the redundancy list, because that, rather than dealing with the key issues, would suit Conservative Members' party political purposes.

If we leave the Chamber without sending a clear message to schools, heads, teachers and governors that there are some solutions to the problem and that the Government are actively seeking them, we will all have failed. Our amendment called for devolved capital to be released to schools and we are grateful to the Secretary of State for picking up that point. My hon. Friend the Member for Portsmouth, South (Mr. Hancock) was right when he said that many schools will have already committed their capital. That is part of a continuing process and they will not have flexibility.

One in four schools have balances of almost zero. There is no solution for some in either promise that the Secretary of State made. It is therefore important to find other solutions.

I am sure that the hon. Gentleman would not want to give the House a misleading impression. He suggested that the position occurred every year under previous Conservative Governments. I wonder whether he agrees with the findings of Mr. John Atkins, who stated in a report that was commissioned for the National Union of Teachers this year:

"This is unprecedented since the implementation of LMS"
in 1990. I hope that the hon. Gentleman accepts that and apologises for the impression that he gave.

I do not accept that and I do not apologise. Unlike the hon. Gentleman, I was a head teacher from 1979 to 1997. From 1988 onwards, I had to cut budgets and get rid of staff every year despite increases in my pupil numbers.

In those years under the Tories, were not many redundancies hidden by the fact that teachers were put on temporary contracts year after year? When they lost their jobs, they were not counted as having been made redundant.

Exactly the same is happening today. Tens of thousands of classroom assistants will lose their jobs this year, and they are all on temporary contracts. They are expendable. We cannot simply view our schools in terms of teachers. All members of staff are valuable in providing education.

We must be honest and admit that 2003 was always going to be difficult. Changes to local government funding, the new schools formula, national insurance and employer pension contributions, radical changes to the teachers' main pay scale as well as the post-threshold scales, changes to the standards fund, which we largely welcome, and the introduction of work-load agreements all had an impact on devolved school budgets.

The changes involved three major Departments: the Office of the Deputy Prime Minister, the Treasury and the Department for Education and Skills. That increased the complexity. However, it now emerges that no Secretary of State, Minister or ministerial team was in overall charge of the process, despite the three large Departments coming together. No effective modelling of the outcomes for local education authorities happened apart from an attempt by the Minister for School Standards to produce four models in June last year, all of which failed miserably. The Minister subsequently took his bat home and would not produce another model.

No assessment was made of the impacts on individual school budgets, although we knew that they would be diverse because of the set-up. No assessment was made of the impact of the new funding arrangements on age-weighted pupil units. The more a formula approach is taken to distributing funds, the more huge discrepancies within as well as between authorities are likely to occur.

The hon. Gentleman mentioned the importance of honesty and giving clear messages in the House. I wonder whether he shares the anxiety of a chairman of resources at one of my lower schools who sent me a copy of column 558 of Hansard for 17 April 2002. The Chancellor, in his Budget speech, said that direct payments would be made to every school in the country. He stated that

"payments to a typical primary school will rise from £33,700 last year to £39,300 this year—money that can be spent on the school's priorities, by the school and by the head teacher and the staff themselves."—[Official Report, 17 April 2002; Vol. 383, c. 588.]
The chairman of resources of one of my lower schools said that it had received less than half that amount—

The hon. Gentleman has made his point. I am sure that the Minister who responds will pick up the point and provide the answer, which I do not know.

There is a lack of joined-up thinking, of which I hope the Secretary of State will take account. When things went disastrously wrong, Ministers did not go back to LEAs or schools and say what had happened. They engaged in a process of misinformation that would have embarrassed the Iraqi Information Minister. The Minister for School Standards told the Association of Teachers and Lecturers conference on 15 April that LEAs were withholding £500 million from schools, but he did not have a shred of evidence to back that up. He had not spoken to a single local authority to get the details. His statement was predicated on returns from 70 local authorities, which he made up to get out of the conference with his life.

When the Secretary of State attended the National Association of School Teachers and Union of Women Teachers conference, at which the hon. Member for Ashford and I preceded him —[Interruption.] We went down brilliantly. The hon. Member for Ashford nods. We were a duo of great quality. However, the Secretary of State made the same assertions about the missing £500 million. He then said, to great cheers, that if he did not find the answers to his questions, he would clip wings. He has the answers, and at this point he needs to clip someone else's wings.

An article in this morning's Yorkshire Post, which is my local paper, reported that the Secretary of State had attacked the chief officer of East Yorkshire council for being explicitly political in attacking the Government for the Budget settlement. Yet the Secretary of State went through the whole pre-local election programme on a party-political ticket, attacking local authorities for not passporting money.

We now know from a leaked memo from the Secretary of State's office to the No. 10 office, which appeared in The Times Educational Supplement on Friday 2 May, that the Secretary of State and the Prime Minister both knew that this record investment was an illusion, yet they continued with the charade. They knew that, of the £2.7 billion that was promised to schools, £2.44 billion had already been earmarked to meet additional costs imposed on the schools by the Government. Indeed, the Secretary of State acknowledged this morning on BBC television that that was exactly the case, and that this huge sum of money did not exist. The Government knew that those LEAs with a 3.2 per cent. floor in their budgets would not be able to meet the financial pressures imposed on them. That is the level of dishonesty that lies at the heart of this debate today.

I would like to support my hon. Friend's argument. Is he aware that on 2 May, the same day that the Secretary of State published a press release condemning LEAs, his colleagues in the Department were writing to LEAs asking them to clarify their position? He was making a statement condemning them without even giving them the benefit of allowing them to state their position with regard to section 52. How on earth could it be right for the Secretary of State to make such comments when he and his Department were far from clear as to the true position?

My hon. Friend makes a powerful point. We are used to such behaviour from every Minister who appears. They attack people without proper evidence, yet it is a different matter if anyone attacks the Government without evidence. [Interruption.] With respect, we have only to look at the Labour party's parliamentary briefing for this debate to see the level of misinformation that is fed to Labour Back Benchers. That is presumably why so few of them have come to support the Secretary of State today.

I will in a minute, but I want to make a bit of progress. I am enjoying this.

I want to make a further point to the Secretary of State and to the schools Minister. When we went through the charade of debating the Education Bill in 2002—we debated only a third of it—one crucial element that the Secretary of State insisted should go into the Bill was the setting up of school forums. Those forums were to be a mandatory device to discuss the resources coming into schools from the Department. There was to be no question of "could" or "should"—they were to be a mandatory requirement.

What is more, according to that legislation, before local authorities could set their budgets, they had to lodge with the Secretary of State a draft budget showing how they were going to spend the money. Having got those two devices in place, the Secretary of State now has the audacity to accuse local authorities of using their budgets improperly without any evidence, having had all the evidence sent to him earlier this year in order to make those decisions.

We have now been waiting for 13 minutes, and we have not heard a single policy proposal from the Liberal Democrats' Front Bench. Is that because the Liberal Democrats' shadow Chancellor has instructed his team not to make any further tax and spend commitments, because they would be "unrealistic"?

I saw that in the Labour Members' brief as well; they trot these things out. I say to the hon. Gentleman, whose company in the House I enjoy enormously: have no worries, I shall come to that in a second.

I do not have a brief in my hand, but I recall a Liberal Democrat brief in my own patch in Gloucestershire calling desperately for the changes to the funding formulae that the hon. Gentleman seems to be implying should not have come about, stating that they have added to the complications this year. The Liberal Democrats in Gloucestershire called for changes, and they got a 6.7 per cent. increase in the funding formula. After that, they said, "Well, we did not really want any changes this year. Could we have a little bit longer to think about it?" That is the Liberal Democrat brief.

I am delighted that the hon. Gentleman can be so complacent that, in his schools, everybody has the budget that they require and no teachers or classroom assistants are being made redundant. If that is the case, hallelujah, I am delighted for you, brother! For many people, however, that is not the case.

The Secretary of State challenged the hon. Member for Ashford and me to say what we would do about passporting. I am convinced—and the Secretary of State has brought no evidence to the Dispatch Box today to persuade me otherwise—that, having got in the section 52 returns and having got the letters back from the local authorities, every local authority has been able to account positively for every penny in its budget. That is the issue, rather than whether the Secretary of State should tell every local authority how to spend every penny.

I will just finish this point, then of course I will give way. The Secretary of State is always generous in giving way.

The Secretary of State has his school forums, his legislation saying that schools have to lodge their budgets and his section 52 returns. He can challenge every element of those budgets. Surely that is enough for him, without having to tell every local authority how they should spend every single penny. They are accountable to their local electorate for what they do, not simply to the Secretary of State.

My point is that the local electorate should ask themselves this question. If, in Knowsley, 104.4 per cent. can be passported; in Labour St. Helen's, 120.6 per cent. can be passported; and in Sefton, 100.3 per cent. can be passported, why is it that in Liverpool only 94.9 per cent. can be passported? That is a matter for the electorate and the council in Liverpool.

Of course it is a matter for the electorate in Liverpool. That is why they elect Liberal Democrats year after year, following the most decadent Labour local government ever seen in the history of local government.

May we talk about some of the non-passporting of which the Government accuse local authorities? Let us take the issue of special educational needs. The Special Educational Needs and Disability Act 2001 put huge pressures on local authorities to fund those provisions properly, because they now have a legal duty to do so. We fought in the House for a quantifiable code of practice. Yet now, when local authorities agree, through the school forum, to use their money in that way, they are pilloried by the Secretary of State.

Let us look at capital. Local authorities have to retain capital within the schools section of the budget for the national grid for learning and the rollout of broadband. They cannot do it any other way, yet they are pilloried for doing so. Let us look at money that has been kept back in individual schools' budgets for newly qualified teachers. How can they possibly allocate money for newly qualified teachers in April when they will not be appointed until September? How can they allocate money to a new school that is not due to open until September, or to a nursery unit that will not open until September, when the Secretary of State has transferred the money for nurseries from the standards fund through to local authorities? The Secretary of State is accusing local authorities of withdrawing money in circumstances such as these.

Money is released from the standards fund throughout the year to finance, for instance, advanced skills teachers, national literacy strategies, behaviour improvements, training for support staff—although there will not be any—beacon school awards and summer schools. It is shameful that a Secretary of State should know so little about his own funding arrangements. Rather than attacking local authorities as he has continued to do today, the Secretary of State should congratulate them on not only carrying out the Government's wishes, not only setting up the forums, not only lodging budgets, but trying to help schools deal with the current crisis.

Let us contrast that with what the Department is doing. Last year it failed to spend £1 billion. Can anyone imagine what would happen if that amount were allocated to local authorities and they did not spend it? No doubt their wings would be clipped, and there would be naming and shaming.

Why did Ministers fail to anticipate this year's budget problems? There were plenty of signs that things would go wrong. Surely the whole House will unite in resisting the Secretary of State's crude attempts to threaten local authorities with taking away their powers and saying that he will manage 24,000 schools centrally. If he cannot manage his own Department, how on earth will he be able to manage 24,000 departments?

Even today the Secretary of State claimed that since the issue had first begun to embarrass him some of the missing £500 million had arrived in schools. In fact, it was always in schools; it was being held in bank accounts, ready to be spent. It will continue to find its way into school budgets, and I am not aware—certainly the Secretary of State failed to give us an example—of a single local education authority that is changing its timetable for the distribution of allocations as a result of the right hon. Gentleman's threats and intimidation.

The tragedy of this crisis is that while the Secretary of State tries to blame LEAs for his funding crisis, our schools, teachers and teaching assistants are paying the price. According to research by the professional associations, more than 1,000 teaching posts will be axed in the coming months; and while not all will be axed as a direct result of budget cuts, a great many will. What is more, the redundancies are not confined to a particular type of authority. We have heard about redundancies in Norfolk, but Cumbria has issued 50 redundancy notices, Northumberland 17, Leeds 43, Shropshire 20, Staffordshire 60, Kent nine, Westminster 70, Plymouth 40 and Devon 30. In Wiltshire, 53 teachers and 26 teaching assistants face redundancy. That is the human cost that the Secretary of State must face up to. This is not just a personal crisis; it is having a serious impact on the education of our children.

It is not just a question of redundancies either. Somerset LEA has described the staff reductions that schools must make, saying that according to "anecdotal evidence"

"many schools … will not be filling vacancies when they arise, renewing temporary contracts when they expire and part time staff, both teachers and support staff, are having their contractual hours reduced".

I think that if they were honest with themselves, Labour Members would admit that their postbags contained similar letters.

Dame Jean Else, head of Whalley Range school—attended by the former Secretary of State—is offering to resign over a £600,000 deficit. She says
"I am faced with having to lose some of my incredibly valuable staff and cut aspects of the curriculum".

I will not give way any more. I have been incredibly generous.

In a letter to the Secretary of State, following a £155,000 loss, the chair of governors at Sir James Smith community school in Camelford, Cornwall, wrote
"The raising achievement and reducing teacher workload agenda will be completely stalled, morale and goodwill will plummet and parent confidence in the system will be adversely affected".
Primary schools in Minver in Cornwall are tearing up their curriculum plans and timetables because heads are having to teach two or three days a week to keep the schools running.

The deputy head of Stourfield junior school in Bournemouth has said
"I love my job and the depression and sense of despair I have felt these last few weeks have been a real shock to me".
His school faces a two thirds cut in its curriculum budget, and the non-replacement of all its specialist support staff. When the problems were put to the Minister for School Standards in Bournemouth during his visit to the town, he told the Daily Echo that a meeting would be "futile". We need to do something about that arrogant disregard for what people are feeling on the ground.

It is not just a question of what is happening this year. What will happen over the next two years? The Minister thinks that the present situation is unique to the current year, but it will get worse. We will see more redundancies. Class sizes are already increasing in both primary and secondary schools. What message does that convey to those whom we are trying to recruit into teaching and teacher training? They will not want to face redundancy after just a few years. I accept that there has been significant investment in buildings and repairs, but clearly using the money this year will make a difference.

There is a threat to the work load agreement with teachers. According to the Department, it has allocated £3 billion to implement the agreement over the next three years, yet an analysis by the National Association of Head Teachers shows that a projection of current spending trends and inflationary pressures from this year onwards will yield only £450 million. An average primary school will have £7,000 to implement the teacher work load agreement, and an average primary school only £35,000—a tenth of what the Secretary of State originally offered. There are things that we can do, and I want to be the helpful to the Secretary of State because he is generally helpful to me—or he was in the past. Releasing the devolved capital is a useful device, but many schools will not benefit from that at all.

Indeed. It is important that the Secretary of State looks at the 3.2 per cent. floor, and tries to raise it in the light of all the information that he has received from local authorities. We urge him to postpone the employer pension contribution transfer from the Treasury to the Department for Education and Skills. Clearly, the Treasury has to deal with what, in many ways, is a paper transfer but it may be the most effective way of getting £0.5 billion into the school budget this year. Will the Secretary of State use some of his reserves from the £1 billion underspend from last year to fund fully the incremental drift on the main teacher scale and the shortfalls on the post-threshold pay spines?

This year has been a tragedy, and the script was written in the preceding two years. The Secretary of State knew what would happen, but the arrogance of his Department meant that no action was taken. Blame has been heaped on local authorities, and our schools and teachers are feeling the pain. I hope that before the Secretary of State or the Minister for School Standards achieve their aspiration to become Prime Minister they will sort this problem out.

3.27 pm

It is wrong of the hon. Member for Harrogate and Knaresborough (Mr. Willis) to accuse my right hon. Friend the Secretary of State of dishonesty. Clearly, many of us were taken by surprise by what happened in this year's educational settlement because, since the Government were elected, there have been year on year rises in both revenue and capital, resulting in more teachers and better buildings. It was reasonable of my right hon. Friend to want to speak to local education authorities, having received representations from them, Members of Parliament and schools, so that he could find out how the money has been allocated.

I have always believed that there should be a combination of national and local funding, and that individual authorities should determine that sum. However, if my right hon. Friend is to respond to the accusations that have been made, it is reasonable that he should engage in that dialogue. Today's announcement shows that he has responded. He said that the solution that will be put in place is not a long-term measure but a short-term one. However, he has tried to find a solution to the problem instead of imposing year-on-year cuts. We heard about the problem from the hon. Member for Harrogate and Knaresborough, who was a distinguished head teacher in Yorkshire and, as a school governor in Kent and Medway, I, too, have had to deal with it.

Every October, the county would advise us that there would be cuts next year, and to start taking account of that fact. That is what we did every year—it was the norm. That is the contrast, perhaps, between then and now. Did such debates take place then? No, because that was the norm for school spending the length and breadth of this country. The situation now is different, because there have been year on year increases. I welcome my right hon. Friend the Secretary of State's response. It shows that he wants to find solutions, and next year is obviously going to be extremely important.

There is no doubt that the Government have made the most sustained investment in our schools for a generation. It is worth remembering where we were, and where we would certainly have remained if we still had a Conservative Government. Some might say that that would be a miracle, but it is no miracle that we have seen a transformation since 1997. Before then, our children had to use the most basic facilities, such as outside toilets. [Interruption.] The Tories may yawn, but that was the reality and all that has been abolished.

Does my hon. Friend agree that there is a distinct possibility that those days could come back if we had the 20 per cent. cuts that the Conservatives promise—unless, of course, this is an area where they would not apply? Perhaps they could explain where the cuts would fall.

The Conservatives have a lot of explaining to do between now and the next general election. Back then, there were not only outside toilets but leaking roofs and walls that appeared to have an aversion to paint. However, the only aversion was the Tories' aversion to investing in our schools. Such examples existed across the board.

Members have asked about matters such as boilers and windows, but there is no doubt that we are dealing with them, and examples can be found in all our constituencies. A school that I visited recently had to wait 20 years—20 years—for a school hall. It has now got not only a school hall but a new music department and a new drama suite, thanks to £1.3 million of investment from this Labour Government. We are seeing such improvements throughout the country.

A redundant and inadequate Victorian village school in my constituency is being replaced by a beautiful, shining new school, thanks to £1 million from the new deal. Indeed, the Tory education spokesman from Kent county council took part in the opening ceremony.

[Interruption.] Oh yes. He welcomed the investment, as did the local Liberal Democrats, yet back here they voted against the windfall tax. Such things are happening all the time. We see Conservatives welcoming, and taking great pleasure in, new investments in their constituencies, as the hon. Member for Ashford (Mr. Green) undoubtedly will. Kent county council is one of 15 authorities that have just received £60 million of private finance initiative credits. Of the five schools that will benefit, two are in my constituency and one—the North school—is in that of the hon. Gentleman.

The North school will get its share of the £60 million, and the hon. Gentleman will doubtless take great pleasure in watching the opening of the new buildings. We will surely see his beaming face in the local paper as he proudly says, "This is marvellous." But a transformation will take place as he leaves the school, gets on the M20 and heads to Westminster. Back here, the Tories vote against investment in our schools time and again. They tell their constituents that they are battling away for more resources for schools, hospitals and police, but they come back to Westminster and vote against investment time after time. When it comes to school funding, the Opposition must answer to the electorate for their actions.

I turn now to the revenue funding measures. The announcement by my right hon. Friend the Secretary of State is very welcome, but my hon. Friend the Member for Manchester, Central (Mr. Lloyd) was right to suggest that next year will be crucial. My authority, Medway, had to dip into reserves this year. That shows the commitment of all councillors to ensure sufficient funding for schools. We were given an increase of only 3.2 per cent., but I welcomed the additional £1.3 million announced recently by my hon. Friend the Minister for School Standards. It has meant that there will be no teacher redundancies in my area, although some learning support assistant hours could be reduced. That matter has yet to be resolved, and I hope that today's announcements mean that that reduction will not happen.

I very much welcome today's statement. The matter needs to be resolved, and I know that Ministers are determined to resolve it. The huge investments being made at present are very different from what happened in all the time that I was a school governor in Kent, when we had to make cuts every year.

3.36 pm

I should make it clear at the start that, if there is a Conservative briefing note on this matter, I have not read it, as the House will not be surprised to learn.

We are discussing a matter in respect of which all hon. Members are used to the waving of bloody stumps every year. Indeed, part of what is taught at local authority training school is that bloody stumps should be waved. Sometimes that happens in response to a synthetic crisis, and sometimes in response to one that is genuine. This is a genuine crisis, and it has been made by the Government.

The first problem is that the announcement of the Government's public expenditure figures was accompanied by a ludicrous amount of hype. The besetting sin of this Government is that they over-egg every pudding; they exaggerate what they are doing, and announce the news on several occasions. As a result of the enormous overselling, every head teacher in the country saw, like a ray of heaven above their schools, a figure of 10 or 11 per cent. in real terms written in the firmament. That was what they thought that they would get for their schools. The result, of course, is bathos.

When it turned out that schools would not get that much, we were treated to bluster. The first set of bluster came from the Minister for Local Government and the Regions. He talked about capping local authorities that put council tax up by such a wicked amount. However, the council tax rises were introduced partly to cover education, for which spending authorisation had been increased without the necessary grant to cover it. To his great discomfort, the right hon. Gentleman discovered that half the authorities that he wanted to cap had been rated E for excellent according to the Government's own Audit Commission standards. He could not touch them, and the Government have retreated from capping. I notice now that, happily, they are also retreating from the prospect of capping next year.

That bluster was replaced by bluster from the Secretary of State, who decided that it was all the fault of the wicked local authorities, because they were withholding funds. The heart of the problem is that two sets of formulae are being applied that are not wholly compatible. The Deputy Prime Minister and the Secretary of State for Education and skills are like two large, clumsy puppeteers getting their wires crossed as they try to present the Punch and Judy show. They blame the audience when they cannot get to the end of the performance because both of them have been knocked out.

In the argument in Government about the distribution of funds, it is increasingly evident that a Hobbesian fight is being conducted between Departments. I do not know whether the Secretary of State is familiar with Hobbes. If he is, no doubt he will want wish to eliminate his recollections as rapidly as possible, on the ground that they are an out-of-date and arcane preoccupation.

I want to touch on an important matter. We have been talking about passporting through education money, but local government funding is based on the principle of non-hypothecation. The Government talk about being friends with local government, and about unwinding direct grants to give local authorities more discretion. Yet, for Government after Government—and I include the Conservative Government—Education Ministers have adopted a Stalinist attitude, determined that their funding goes through, without caring a hoot whether social services or other sectors suffer in consequence. It was exactly the same with Home Secretaries: as long as police funding was satisfactory, they could not have cared less if the rest of the country collapsed in a heap. We can only wait to see whether the Department of Health will decide to join the game in respect of social services. We might as well wave goodbye to any pretence that there is genuine autonomy in local authority expenditure.

As usual, my right hon. Friend makes a powerful case. Does he agree that the Government have a duty to explain their double standards, whereby they are in favour of hypothecation of local government expenditure, but opposed to hypothecation at central Government level?

My hon. Friend makes an extremely powerful point.

What happened on this occasion? Education received a 9 per cent. increase nationally, but some capital was held back for higher and further education, so the increased allocation to local government through the revenue support grant was about 6.5 per cent. Two sorts of floors and ceilings were then applied. The first was the Deputy Prime Minister's minimum and maximum grant changes, which were intended to ensure that no one lost out in the new formula, but it was done through a process of topping and tailing. We then had a separate rule from the Department for Education and Skills that no local authority should have a formula spending share of less than 3.5 per cent. or more than 7 per cent. for education. Quite frankly, the two concepts are inconsistent and we have not seen joined-up government in respect of them.

Is it not extraordinary to reflect that the global settlement agreed by the Treasury was not that bad? The way the Government have managed to turn a reasonable global settlement into such a shambles beggars belief. In my constituency, the budget of the Fairstead county primary school, on which I conferred an Investors in People award, is £80,000 short.

I am grateful to my hon. Friend for providing such a powerful example of what has happened in practice and I am going to illustrate it, too. The allocation of about 9 per cent. overall, which becomes a little more than 6 per cent. through the funding formula, ends up at between 3.5 per cent. and 7 per cent. at the level of the individual school. Local authorities divvy up that amount through their fair funding formula. Generally, schools that are gaining pupils do well, and those that are losing them have to shed teachers. No one objects to that, but it is not so simple, because some schools that are doing very well also lose out. Many individual schools have been mentioned and I am going to cite one.

Ripon college started out as an old-fashioned secondary modern school. In 1998, it had 342 pupils, but it now has 549. The percentage of pupils gaining five or more A to Cs in GCSEs has increased from 8 per cent. to 31.5 per cent. over that time. It is doing everything that the Government could want in an environment where selective education is tough for the college. Notwithstanding its achievements, it faces a budget deficit of £88,000 and has to consider making six staff redundant—15 per cent. of its teachers—closing its social inclusion unit, cancelling the literacy and summer school programme and running on a minimum capitation for departments to balance the budget. The school's advances are clearly being threatened. I have received similar letters from other schools in my constituency.

Additionally, some schools have been dependent on the standards fund, and it is a matter of record that if a direct grant is devolved into a formula, there are bound to be winners and losers. Costs were higher than expected. The national insurance contribution increased by 10 per cent. People talk about 1 per cent., as if it were only I per cent. extra on the employers' bills, but it was 10 per cent. The headline rate was 1 per cent., but pensions and teachers' pay become especially onerous where teachers are clustered at the top end of the spines, which applies in many parts of the country.

Another dislocation is resource equalisation, which takes us back to the Deputy Prime Minister. For some blocks of expenditure, the Government stopped pretending that local authorities would spend down to their notional need, and increased the spending plan without increasing the grants to cover it. That is what led to the major council tax increases, because authorisation to spend and an expectation that money will be spent is not the same as providing grant to cover it. Some local authorities have been criticised for not devolving 100 per cent. to schools—not 100 per cent. of the money that they received, but of the notional amount. They devolved only by dint of council tax increases.

The new formula spending share is much more dependent on political interference than standard spending assessments ever were. There is much more political interference and manipulation of this formula than there was in the past. That is where the dislocations have been set up—at the heart of the Government.

I have some seriously happy news for the Government: next year, things will get worse. The spending plans published in Command Paper 5570 show a declining rate of increase and we all know how serious the constraints on the Chancellor may be. The standards fund effect will continue as it is devolved into the formula. Furthermore, if there is council tax rebanding and local authorities with a large number of band A properties subdivide that category, they will receive lower revenues from some of those council tax payers, without compensatory increases from their relatively small volumes of high-value houses. Resource equalisation will thus have to be applied more effectively, otherwise the nearly poor will be paying for the poor through their council tax bills.

The Secretary of State offered one formula. He said that the Department for Education and Skills might take over direct control of the allocation of money to schools. I say to the right hon. Gentleman, please do it. Make my day. I can think of nothing that would give Opposition Members greater pleasure than being able to blame the Secretary of State wholly for the funding of every school, whether it has 15 or 1,500 pupils. If he is wise, he will do what he said that he would do, but is not doing; he will give a little more trust to local authorities and apply the new localism that we all talk about ad infinitum. He will apply all the trust and partnership that he keeps talking about and trust local authorities to devolve the expenditure.

Will the right hon. Gentleman comment on the remarks of his hon. Friend the Member for Altrincham and Sale, West (Mr. Brady)? In a Westminster Hall debate, the hon. Gentleman said:

"By adopting a national funding formula … we will create a system of school funding that is straightforward … and above all puts real control into the hands of … governors."—[Official Report, Westminster Hall, 29 April 2003; Vol. 404, c. 19WH.]

I am against anything that would centralise power in the hands of the Government. We need to have more confidence in the people we elect locally. We need to give local democratic responsibility a try. We need to experiment with it. Perhaps we should introduce it for the first time in a long time. It is no good for the Minister to look smug—he is not doing it. In relation to local government, the Labour Government are the most centralising Government in history. There is no point in pretending otherwise. There is still a chance for the Opposition to be converted and I shall work hard to make sure of it. The Minister is lost already because the two great puppeteers are on either side of him, colliding into each other and creating enormous noise and confusion.

That is dangerous, especially if other Ministers get in on the act. The Secretary of State for Health has been remarkably well behaved, but social services are massively underfunded at local authority level and that has a spin-off effect for schools—for example, in relation to adoption problems. We all know about the increasing pressure on local authorities to look after vulnerable children. That has an impact on education.

Unless we have a more sensible form of joined-up government that recognises the links between all those activities, we shall not end up with a sensible formula. The two puppeteers will become three; they will blunder about like drunks circling the same lamp post. There will be a great deal of noise, a great deal of illness and no light whatever will be cast.

The Government created the crisis. They have tried to bluster their way out, but they should look hard at functions within government and make sure that their systems are compatible, the mechanisms flow properly and the lubricant is in place. Responsibility can then be attributed to the people who ought to hold it. To attribute responsibility while in fact denying it is a dishonest form of government. I do not think that either the Minister or the Secretary of State wants that, but the current system condemns them to play that charade, and schools the length and breadth of the country are suffering as a result.

3.49 pm

I welcome the debate. The Secretary of State was right to say that he also welcomed it, because this is a serious and complex issue and it is absolutely right that the House gives it its attention.

I am not sure that the official Opposition gave due seriousness to the issue when they opened the debate. The combination of synthetic hysteria and mind-boggling hypocrisy simply served to emphasise how peripheral the Tory party is these days to any debate about education. Following the Tories' announcement this week on the tuition fees policy, I reflected that the more unpopular they remain, the more populist they feel they must become. That is the iron rule of Conservative politics in this country. I say this to them: it will get them nowhere.

Would the hon. Gentleman care to confirm that in 2001 he stood on the Labour manifesto that pledged not to introduce top-up fees?

I stood for Labour in the 2001 election and the 1997 election, and I have a very clear view on top-up fees, which I have expounded many times. When we get a more detailed opportunity to discuss the hon. Gentleman's views on top-up fees, I will happily engage him in debate on that again. I may be one of the very few Labour Members who were enthusiastic about the notion of top-up fees, and I am unrelenting in my support for the concept.

That exchange was a distraction but it is important, because it shows that whatever the Tories say today—[Interruption.] Whatever the Tories say today, no one in the education service will believe them, because, as the hon. Member for Harrogate and Knaresborough (Mr. Willis) has said, throughout his teaching career—I can vouch for this, as someone who had a small responsibility for managing the chaos of the public services during the Tory years—every year of Tory rule led to cuts in education budgets. Not only were there cuts in the size of the overall cake, but there was relentless redistribution away from those who needed it most to those who needed it least. Therefore it will be many, many years before the British people—parents, teachers and governors—forget the record of those Tory years, and whatever the Tories say on this issue cannot be taken seriously.

I was grateful for the fact that the hon. Member for Ashford (Mr. Green) did acknowledge the significant increase in the investment that Labour Governments have put into schools during the past six years. That was a measure of his generosity, but in demonstrating his generosity he simply exposed his hypocrisy because, as I said in my intervention, if he welcomed the increase that has made possible the current level of achievements in our schools and the current increase in capital spend in our schools, why did he vote against it every year? Budget of '97: the Tories vote against. Budget of '98: the Tories vote against. Budget of '99: the Tories vote against. They have done so every year and they will carry on doing so every year.

We all now know, because it is well documented, that the Tories' policy is to secure an overall cut of 20 per cent. in public spending. So however often they bring to the House cuttings from their local newspaper, and letters from parents and governors of their local schools, there is no way that they can justifiably criticise the Labour Government's record on investment in schools.

The picture across the country is, of course, hugely variable. I do not deny that this is a difficult year. The Secretary of State has described in detail, as other hon. Members have, the factors that led to the current particular difficulties. Some of those factors are not altogether to be regretted. It would have been very unusual if there had not been an increase in the teachers' pension fund, given the new projections provided by the actuary.

Will the hon. Gentleman acknowledge that the cost of staffing is the lion's share of any school's budget, and that if schools have, as the schools in Havering do, a very high proportion of long-serving, experienced teachers, that has a very significant effect? Even though Havering has passported 112 per cent. of schools funding, schools are still delivering deficit budgets because of their experienced staff.

I agree completely. During the passage of the Education Reform Act 1988, I was among those who pointed out that one deficiency of the then concept of local management of schools was that schools that happened to have more experienced staff would be screwed into the ground in their individual budgets. That effect has continued since then, although it must be said that the present Government have made greater allowance for the real costs of salaries, whereas, by contrast, under the previous regime notional costs alone were taken into account.

A high proportion of any school's budget is spent on staffing. That is important because we have to remember that, year on year since 1997, a large proportion of that significant investment has been used to raise teachers' salaries, quite apart from the one-off contribution to the teachers' pension fund this year.

It is dishonest for any politician, local authority member or officer, head teacher or governor somehow to pretend that an improvement in teachers' pay and conditions does not directly contribute to the quality of education, first, by offering greater motivation to the work force and, secondly, by sending the right kind of signals, so that young people entering teaching know that it is a worthwhile career. We have to recognise the important contribution that has been made by enhancing teachers' salaries and improving the teachers' pension fund.

As I was saying, the picture across the country is hugely variable. I met the chief education officer of the local authority in Bury two or three weeks ago to talk about this issue. There are variations between schools and some schools are still in deficit, but I am not aware that any school is making people redundant. However, following this year's changes to the funding formula, local authorities such as mine and many other smaller metropolitan districts, as well as unitary authorities, that have been at the bottom of the funding league table historically, are in a much healthier position.

This year, for the first time since 1990, the local education authority in Bury has received an increase above the national average. This year, schools in Bury can see the impact of the changes in the standard spending assessment directly in their budgets. That is not to say that no school has a deficit, but schools in my constituency have carried deficit budgets every year for the past 13 years.

The local authorities that are now squealing the loudest are often those that have made major gains under the previous SSA formula. We have to ask what they did with that money. Why was it not used to build up surpluses for when the system changed? Why did they not anticipate that the gravy train or the bandwagon of the previous SSA formula would come to a halt at some time? I do not criticise those head teachers, but I have to make the point that some local authorities in the United Kingdom have had an SSA per pupil at primary and secondary level two or three times greater than others. The schools at the bottom of the pile have been carrying deficit budgets for years and, thankfully, because of the courageous decision taken last year by the Government to reform the SSA formula, we are now getting a more level playing field.

Examples of individual schools have been quoted, one by the hon. Member for Harrogate and Knaresborough. I regret that he did not accept my attempt to intervene earlier; I simply wanted to ask him whether I could have a copy of our brief on the debate because he seemed to be the only hon. Member who had one. He mentioned several schools, one of which is in Manchester and I know it particularly well. He claimed that that school had a £600,000 deficit. He used that example to support his argument that this was the crisis year, but, as every hon. Member knows, schools with £600,000 deficits do not acquire them in a single year. He referred to the deficit, not a shortfall, and I know that there is a deficit, not a shortfall, in that case.

Many schools have carried deficits for a number of years, and we have to ask what have those head teachers, governors and LEAs have been doing about the deficit. Is it a matter of bad management in the school, or one of exceptional costs because of the nature of the physical structure of the school, or is it simply that the school does not have enough pupils and is operating at 50 per cent. capacity? I am not saying that any of the schools that have been quoted today fall into those categories. All that I am saying is that the enormous deficits that have been quoted are not the result of this year's changes alone—they are the result of historic factors.

We must also recognise that if we support the system of schools having their own budgets and those budgets being determined by formula, and that formula being largely, not entirely, determined by pupil numbers—given that we have a system, particularly in secondary schools and less so in primaries, that has a built-in volatility in respect of pupil numbers, and in which parents' preferences change dramatically year on year and school intakes change dramatically year on year—it inevitably follows that school budgets will vary dramatically year on year. That is the price that we pay for an extremely open, deregulated admissions system in secondary schools. It is really no good for individual chairs of governors, head teachers or Opposition politicians to start crying that there is a crisis when a particular school does not recruit to its numbers in one given year, when it has been quietly accumulating a surplus in the years in which it was full to capacity. I simply make that point.

There is a more profound and long-term issue that is worthy of further debate. Perhaps today is not the place to discuss the issue in great detail, but it was brought to our attention by the right hon. Member for Skipton and Ripon (Mr. Curry): the relationship between central and local government and the extent to which any central Government, in a nation of several million people, can directly influence at local level exactly what they wish to influence. The other week, the Secretary of State spoke about taking central control of school budgets. I did not think that he was referring to taking control of the management of schools, which would be unrealistic, but to the concept of whether a national formula should be distributed directly from central government to the individual school. A bigger and more serious debate is needed. The current system—some of the flaws in that system have been brought to a head this year, but they always existed in previous years, and they will always exist—is immensely unwieldy and hugely bureaucratic. It leads to enormous loss of time and energy and to arguments about who is to blame, and it does not, and cannot, enable the Government to deliver on the ground exactly the policies that they wish to deliver. We must therefore start reconsidering the whole relationship between central and local government in respect of school funding.

Clearly, the Education Reform Act 1988 represented the critical moment at which a historic shift was made. I suspect that in the next two to four years another moment will come at which we will need to complete that historic shift. Although the right hon. Member for Skipton and Ripon mentioned social services and the way in which the Secretary of State for Health may impact on them, there is no other area of the public services in which funding to a particular institution goes directly from central Government to a local authority, is jiggled about through additional formula, and finally reaches the end of the line with everybody dissatisfied. That is the central issue. We must therefore start the debate about whether the national funding formula—let us remember that the new formula spending share system is much fairer than the previous standard spending assessment system—should be distributed straight to individual schools. I think that doing that would involve huge risks, and the only solution, as the years go by, is probably a system of distribution through regional government, although that brings something else into the argument about which the Opposition will get excited. However, given that Wales manages to distribute money straight to local authorities and schools and that we can devolve power to Scotland, why can we not devolve power to the regions of England so that they can do exactly the same job?

The debate has raised interesting and complex issues. The Opposition have tried to manufacture a crisis, although there is not really a crisis but a series of problems that need to be resolved quickly. They have pretended that the whole country is affected, but it is not. Many parts of the country have done very nicely out of this year's settlement, although they might not have received the amount that they expected when the figures were first published. We have an immensely complex system involving a national formula that is devolved to local authorities followed by devolution to schools through a further local formula, which means that we will face such problems year on year. The time has come for a major review of the way in which we fund our schools.

4.6 pm

I am delighted to contribute to the debate and to follow my hon. Friend the Member for Ashford (Mr. Green). He led the debate extremely ably and exposed yet another Government crisis in education. The Secretary of State can be changed, but the Government do not seem to be able to solve the problems. I am also pleased to follow my right hon. Friend the Member for Skipton and Ripon (Mr. Curry), who made an excellent contribution.

It is always a pleasure to follow the hon. Member for Bury, North (Mr. Chaytor). He spoke with his customary seriousness and thoughtfulness on education, although I am not sure whether his assertion that the Opposition have manufactured the crisis will be truly welcomed by teachers, governors, parents and Labour local authorities. They would attribute their problems not to Conservative Members, but to the Government. I shall speak on behalf of many people in Bedfordshire who are connected with education—parents, teachers, governors and pupils—by expressing their deep disappointment, anger and concern about the current situation, which they consider to have been a shabby business.

There are two fundamental issues. First, the Government's miscalculation is at the heart of the crisis. The funding required to cover wage rises, superannuation rises and national insurance increases was miscalculated. No Conservative Member believes that the Government deliberately precipitated the crisis. They pulled the lever to ensure that adequate funding went through, but that patently did not work.

Secondly, after making that miscalculation, we saw the Government make what has been their continual error: after making a mistake, they never admit to it. They make only a desperate attempt to cover it up and then blame somebody else. On this occasion, their failure to admit their error led to local authorities being blamed.

There are two sides to the Secretary of State. [Interruption.] Well, there are many sides to quite a rounded Secretary of State, but I want to talk about his political characteristics. I saw his first side when I recently shared a television studio with him to discuss the local election results as they came in. We saw a contrite Secretary of State. He made no attempt to claim that it was a great night for Labour as the results of seats and councils lost came in from throughout the country. He was quiet and well mannered. He appreciated the scale of what had happened and presented a rather decent impression of a politician facing reality. That might well have been practice for the many nights in the next few years when he will be doing exactly the same thing.

The second side to the Secretary of State, which is probably more familiar to most of us, is shown by his extraordinary bluster when things go wrong but he cannot possibly admit it. The Secretary of State made a desperate attempt to blame local education authorities, but when that patently failed he used a subtle change in language to suggest that perhaps it was not local authorities that were at fault for holding on to the Government money, but the schools for being so wicked over the years to have built up reserves and to have capital moneys available that they should be spending. Either way, the crisis was manufactured in the Department for Education and Skills, and it is a shabby way to treat those who have been on the wrong end of that crisis to blame them rather than to accept the blame himself.

On Bedfordshire's specific problems, the county spends way above its standard spending assessment for education, which means that it spends more on education than the Government anticipate it should. The authority has a 100.1 per cent. passporting record, so it cannot be criticised for not doing its job properly. The problem in the county's schools was first made manifest when one or two other MPs for Bedfordshire and I recently met representatives of the local county council. We were told that some of our schools were thinking of losing teachers or were facing deficit budgets. That was quickly followed up by representations from those schools.

I can do little better than quote extensively from a letter from the head teacher, Colin Phelps, of St. Mary's V C lower school in Stotfold, who wrote to me on 24 April. He said:
"I am writing on behalf of Staff and Governors at St Mary's V C Lower School, Stotfold with regard to the predicament we find ourselves in concerning our budget allocation for 2003/04.
You will be aware that this issue is causing great concern in many schools across the country, and we at St Mary's have been particularly badly hit by the increase in National Insurance and Superannuation costs … In early March, when we received our budget allocation, there was no real hint that things would be so bad. My first draft Budget, merely a standstill budget, revealed that we would have a deficit of £69,000, around 9 per cent. of our overall budget. This is due to staff costs representing a greater proportion of the budget than previously. Even though we are popular school, often oversubscribed, we are having to make several cuts, making one teacher and probably two support staff redundant. Even these cuts will not allow us to set a viable budget. Any further cuts in teaching staff would mean that we could not meet the Class Size requirements or 30 Key Stage 1 classes.
We are a school which has received national recognition for excellence in Community Education and in our educational achievements over many years, but it is difficult to see how we can retain these high standards in the light of these savage cuts. There is no doubt that children's education will suffer … As a Headteacher of some 14 years experience, I can affirm that things have never been so bad. It gives me little comfort to know that many schools are experiencing difficulties, and I am concerned that staff morale, already low, is going to be severely affected. The very idea that the Government proposes to lighten Heads' and Teachers' workloads by providing extra funds, is like a macabre joke at our expense. We will be stretched as never before during the next year, and probably beyond."
Almost as soon I received those details from the head of that lower school, I received representations from an upper school. Its head told me this morning that its argument is not with the local authority, with which it has discussed the problem in depth, but with overall national funding. The school reckons that every school in the county could set a deficit budget ranging from £80,000 to £140,000. Wootton upper school has a deficit budget this year of £120,000. It could consider using grants to help it, but it does not think that it should have to go outside core funding for essential basic needs. For Wootton, staffing costs have increased by 9.7 per cent., whereas its budget has increased by only 3.2 per cent. That is the real reason for the cash crisis. It should not be dealt with by asking schools to go into reserves and the like.

After concerns were expressed and the Government's consciousness was raised to such an extent that they became aware that there were real problems, their response was to blame local authorities, as the House well knows. They tried to fix the blame by writing a detailed letter to them on 2 May asking for their responses to a series of questions that revealed an extraordinary micro-interest in the budgets of devolved local authorities. I do not criticise the Government for that—it is important for them to know what is going on but the exercise was designed not to gain information, but to shift the blame.

Let me pick out three things for which my county council was blamed which it rebutted, and I am grateful for its assistance in this matter. The first charge was that the percentage increase in devolved funding for schools in Bedfordshire was less than the overall schools' budget percentage increase. The council explained that that was caused by the reduction of Government support for standards fund projects, as other hon. Members have mentioned. I am sure that by the end of the debate, the Minister will have a copy of the letter from Bedfordshire available to him, as it is easily found. The local authority states:
"In 2002/2003 Bedfordshire's contribution to devolved Standards Funds was £5.293 million. In 2003/2004 this has reduced to £4.216 million due mainly to the LEA needing to find £ 1.472 million to support the continuation of Standards Fund projects for which government support has been withdrawn."
Funding for the targeted intervention strategy, LEA school improvement and intervention and newly qualified teachers are now recorded in a different pot, and all the extra money needed is due to the Government withdrawing their previous support. The LEA goes on to say that if these sums were properly accounted for as part of the devolved funding, a 7.5 per cent. increase in devolved funding would have been shown, as opposed to the 6.6 per cent. shown by Government.

The LEA's letter continues:
"This would also consequently impact on the £2.9 million suggested as increased funding not devolved to schools. On the basis of the revisions referred to above this sum would reduce to £1.3 million … all of this expenditure can be accounted for by the increased support for children with Special Educational Needs, none of it has been retained for other purposes."
The local authority was taken to task by the Government for spending more on special educational needs. That, the LEA tells me, was for
"new specialist provision for children with emotional and behavioural difficulties or with autism, increased funding for statements, covering reduced recoupment income where the number of children from other LEAs attending our special schools has decreased, and picking up the increased staffing costs associated with both teacher threshold payments and the teachers' pensions schemes."
Why should not the local authority spend its money on supporting special educational needs in that way? Do the Government think that that is wrong? If not, why did they criticise it for spending more money on such provision?

My hon. Friend makes a pertinent point. Is not the problem an absence of joined-up government? The Department for Education and Skills appears to disapprove of the SEN expenditure that my hon. Friend described, whereas the Under-Secretary of State for Health, the hon. Member for Tottenham (Mr. Lammy) has commended precisely such expenditure across the Floor of the House to me and to many others.

My hon. Friend makes an admirable point. The Government cannot have it all ways. They cannot pit Minister against Minister and education provision against education provision, and try to come out top on all occasions. In the present case, the problem has been caused by a miscalculation of what is needed and a desperate attempt to cover it up. That is what is so wrong. Governments do not always get it right in the allocation of resources, but the least that they can do in those circumstances is say, "Sorry, we got it wrong" and not try to blame everyone else.

The Government also criticised my local authority in respect of unallocated devolved funding, as it is called. As the hon. Member for Harrogate and Knaresborough (Mr. Willis) made clear, the money may be unallocated, but it is certainly earmarked. All the money is already designated and is needed by schools for anticipated expenditure. It is not money available, like some form of seventh cavalry, to dig out the local authority and the schools from problems of teacher wage rises, superannuation costs and national insurance. The Government cannot have apples and pears. It is grossly unfair to criticise local authorities for unallocated funding.

My local authority, like many others, has rebutted the charge made by Government. It would do all of us some good, and it would do the Secretary of State some good, if he showed the same degree of contrition in the House this afternoon as he did on the local television programme when he had to admit that the Labour party was losing so many seats around the country because of the Government's failure to deliver basic public services as well as people required.

I make two points in conclusion. First, the Government should be bolder in relation to local authority control. They should give greater freedom to schools and governors, and consequently to parents and teachers, to have more control over their own budgets. Secondly, they should end their demand that everybody should bid for more and more initiatives in order to qualify for extra money. That takes time, effort and money, and schools are sick and tired and have had enough of it.

Two issues have come together. First, there is the frustrated professionalism of teachers and those in schools who want to be left alone to get on with their job. They want the money to be given to them so that they can make the decisions about their needs. Secondly, there is a sense in Bedfordshire that schools, parents, teachers, pupils and governors are not getting a fair deal from this Government. The combination of miscalculation, failure to admit the error and blame heaped on local authorities has left a distinctly bad taste in Bedfordshire. The county, its teachers and those in schools are doing their very best. It would be appreciated if the Government could acknowledge that and make this one of the few times in their life when they say "Sorry for the mess that we have caused you."

Royal Assent

I have to notify the House, in accordance with the Royal Assent Act 1967, that Her Majesty has signified her Royal Assent to the following Act:

Northern Ireland Assembly (Elections and Periods of Suspension) Act 2003.