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Education Funding (Suffolk)

Volume 407: debated on Wednesday 18 June 2003

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3.30 pm

I thank the Minister for being here to reply to the debate. I begin by paying tribute to the dedication and effectiveness of the director of education at Suffolk county council, Mr David Peachey, who is about to step down from his role and will be greatly missed. It is rare for a local education authority to have such an exemplary relationship with governors, head teachers and other teaching staff. The LEA has tried to minimise the bureaucratic nightmares that affect our schools, and which have such debilitating consequences.

Non-core schools funding is central to schools' budgetary viability, and there is a huge price to pay. On Friday, a head teacher in my constituency received a cheque for e-learning credits. He had no idea when it was going to arrive and how much it would be for; such uncertainty is frequently replicated. He told me that he had had to release his school's special needs co-ordinator to spend two weeks away from the classroom, just to deal with the paperwork for securing funding. Micro-management of schools has reached grotesque proportions.

I also pay tribute to Tom Sherb, who is the area education manager for the western part of Suffolk that covers my constituency; he deserves recognition for his hard work and commitment. This debate will involve no criticism of the LEA's officers—quite the reverse. They have to deal with a schools funding crisis that was described to me by a head teacher of long standing as being of "unique severity" in her teaching career. A schools budget briefing for 2003–04, provided by the LEA, states:
"There has … been a fundamental redistribution of education funding nationally. We have been told that the funding released by the ending of a number of significant specific government grants has been channelled into the general local authority settlement. However, the formula for the Education element of the new Formula Spending Share (FSS) distribution has not favoured Suffolk as we have not regained our share of the grants that have ended. The result is that Suffolk schools' shares of specific grants have reduced in real terms".
The briefing continues:
"Put simply, money through the Suffolk formula has increased broadly in line with cost increases, but other elements of school funding (e.g. Standards Funds grants) have not".
In a letter to Catherine Roberts, of the Department for Education and Skills, Mr Peachey concludes:

"What has caused the problem in Suffolk is the poor share we have received under the new Education Formula Spending which has meant that resources previously targeted via Standards Fund have not been recycled pro rata in our favour. Furthermore, at a 3.2 per cent. overall increase, this falls significantly short of the increase schools needed to stand still to cover pay cost increases and general inflation."
There have been enormous increases in council tax in Suffolk in the past few years. The county hall administration has passed tax rises that are a massive 40 per cent. higher than the national average. In 1997, the council tax bill for an average band D property was about £612. The latest bill is a shocking £1,164, yet there has been no remotely proportionate improvement in support services. Suffolk has received a £28.3 million increase in its formula spending share, which has been passed on in full to support spending on pupil-related services. Despite the apparent increase in revenue, parents, governors and teachers have expressed enormous anxiety because of the impact on schools of budgetary crises.

Unusually, Suffolk operates a three-tier system of primary, middle, and upper schools. In the past few weeks I have visited, or been in contact with, primary schools in Stanton, Kedington, Wickhambrook, Exning, and Gazeley; with Scaltback, St. Louis, Ixworth and Riverside middle schools; and with Newmarket upper school. After some frank discussions with head teachers and governors, it became clear that none of them was optimistic about the future; they face acute and challenging budgetary problems. Teachers' and teaching assistants' places are under threat, and several teaching assistants have already had their hours reduced. Many schools are able to continue to employ certain staff only because of reserves that they built up in previous years. Those reserves will certainly not be in place next year. One of the most distinguished middle school head teachers in my constituency informed me that she is retiring early specifically because she cannot face further budgetary crises.

I have nothing but the greatest admiration for head teachers. It is well known that a school's success depends on their ability and judgment, but the strain and anxiety that many of them experience is intolerable; they have to face redundancies, budgetary deficits and larger class sizes. I want to read a passage from a letter to the LEA from Mr. Terry Forrester, chairman of governors at Kedington primary school, in my constituency. By my doing so, I hope that the Minister will realise the seriousness of the situation. Mr. Forrester wrote:
"Our teachers and non teaching staff are constantly working very hard in areas such as drama, local issues, educational visits, music tuition, swimming instruction, and numerous other activities which they do for no other reward than the satisfaction of seeing our children develop as responsible and informed people. Their reward for all that dedication, loyalty and effort? The Governors now have to tell them that because of the budget we will have to reduce their hours and consider redundancies."
Others tell me that they will be reducing the scope of their schools' curricula.

Why has this happened? Put simply, Suffolk has been short-changed—an appallingly familiar theme that is not confined to education. Since 1997, there has been average increase in LEA funding of 47 per cent. throughout England and Wales. Suffolk received a 41 per cent. increase, which was lower than that for the neighbouring counties of Cambridgeshire, Essex and Norfolk. That increase ranked it 136th out of a list of 150. Had Suffolk been funded at the national average level, it would have received an extra £14 million this year and an extra £45 million over six years.

This year, Suffolk has received the equal lowest cash increase per pupil nationally, reaching the national minimum of 3.2 per cent. only after an £108,000 emergency handout from the Government, out of a total of £28 million. That may appear to be a modest real-terms increase, but it is nothing of the kind when seen in the context of the various increased costs that schools will have to bear this year. Those additional costs include a 1 per cent. increase in national insurance contributions, a 2.9 per cent. pay award for teachers, and increased expenditure arising from the transfer from the Treasury of responsibility for teachers' employer pensions contributions. Those costs clearly exceed the 3.2 per cent. increase that Suffolk has received.

There has also been a change in the way that funding is organised. Several specialist grants that were given to Suffolk schools have been stopped, and the formula for the education element of the new formula spending share distribution has not favoured Suffolk; it has not regained the money lost through the ending of those grants. My constituents will feel aggrieved when they compare Suffolk's situation with the substantially greater increases in parts of the north of England, with which the Minister will doubtless be familiar. There is a limit to the size of the national cake, but I am asking only for the fair treatment that simply is not happening.

I am sick to death of Suffolk's being short-changed. We have record council tax increases, low levels of NHS investment—Suffolk West primary care trust has the lowest per capita funding in the eastern region—and now a schools crisis. I am left in total exasperation that Suffolk continues to be discriminated against. Complementing the impact of central Government, Suffolk is burdened with a county council that seems incapable of speaking up on the issues that it faces. I am dismayed that county hall continues to let the people of Suffolk down by failing to fight for adequate resources for our county. Such lack of action by Suffolk county council is the reason why I secured today's debate. In early April, I wrote to the leader of the council, councillor Jane Hore—she has just retired—asking her what she had done to argue Suffolk's case directly with the Government. Characteristically, her reply did not answer that question.

The crisis in our schools has been predicted for some time. Sir Jeremy Beecham, chairman of the Local Government Association, wrote to the Secretary of State for Education and Skills as long ago as 9 January, expressing strong concerns about school spending plans that could lead to councils having to make cuts.

I should like to quote from a letter from the head of Ixworth middle school which sets out the situation in her school, and is entirely symptomatic of the situation. She states:
"I am writing to you with my concerns about this year's school budget and its potential impact on standards here at Ixworth Middle School.
Our delegated budget for 2002–03 was just over £1,078,000. This was based on pupil numbers of 470. This year we have just under £1,091,000, an increase of only 1.7 per cent., based on 473 pupils. With a reduction in standards funding from the LEA, the increase in the standards grant has effectively disappeared completely.
We have not been able to finally set this year's budget, although I am now in discussion with the LEA about a licensed deficit. We have had to announce redundancies and have discussed this with the personnel department and the unions.
Following this discussion, we will be having one voluntary redundancy, and are not replacing another teacher who is leaving … In order to reduce the need for staff cuts, we have reduced planned spending on repairs, educational supplies and services and extra hours for support staff. We have reduced staff training and the allocation of funding for supply. One key member of staff is to lose a temporary management allowance which has been given in recognition of the valuable work he has done on ICT and in particular training staff.
All these cuts have direct implications on our ability to uphold the agreement on teacher workload, which I support. It also makes it very difficult to provide training for staff in the new KS3 strategy, and means that our plans to improve ICT facilities in school will be severely curtailed. The school building is old and expensive to heat and to maintain, and I am not sure that our planned expenditure on repairs is sustainable.
The uncertainty about redundancies and cuts in support staff hours has led to anxiety amongst the staff, and I now have one full-time teacher off ill with stress as a direct result of the discussions about redundancy. It also means that our school development plan, which aims to raise standards in all aspects of school life including curriculum, is not funded. Much of it will rely on the goodwill of staff."
And she concludes:

"We are currently working on our plan for recovery from this position. For the next two years our pupil numbers are predicted to rise, and cutting staff now is likely to create problems in the future. With so much unknown about funding for schools in the future, including the funding of teacher pay above the threshold, I cannot see how we can plan effectively.
I would like to think we can maintain academic standards despite these problems, but with the added workload for teachers and larger class sizes, it will be difficult. I know that my teachers work hard already. I am concerned about next year and the pressures that are likely to be put on the staff."
That situation is typical. The National Union of Teachers made a comprehensive analysis of section 188 proposals at the school. It concluded that

"a comparison … shows that the disappearance of the Schools Standards Grant heading … has not been replaced by alternative forms of funding. As a result, the overall delegated budget total this year is only 1.2 per cent. higher than last. This is clearly totally inadequate, in view of the county's admission that an increase of 6.9 per cent. is required for a standstill budget."
In reality, the problem is caused by the 3.2 per cent. increase, which falls significantly short of what schools need to stand still, if they are to cover pay increases and general inflation. We have heard a lot about commitments to education. To repeat in Suffolk any slogan involving the word "education" would now be a cruel joke to many parents, teachers and governors, who are terribly disappointed about this year's arrangement. They face extremely hard and unpalatable choices, and unless the arrangements are quickly changed for next year, the consequences will be truly catastrophic. I hope that the Minister will be honest enough to admit that the shortfall in schools funding is due to the Government's miscalculating the real costs faced by schools this year, and not to local authorities' squandering the extra investment.

I reserve my most specific criticism for the county council, which, for reasons that escape me, will not stand up for the people of Suffolk. It repeatedly spurns or ignores the attempts of my colleagues and I to get it to speak out and work assertively with us to get fairness for our constituents. There has been a shameful silence in the county over council tax and the bed-blocking crisis, and now there is a shameful silence over education. There has been meek acquiescence in wholly unfair central Government settlements. The county council—not I—should be hammering on the Government's door to defend and promote the interests of the people of Suffolk in any area for which it has statutory responsibility. It is beyond my understanding—and that of the many head teachers, governors and parents who have spoken to me—that the county council does not do so. It is through it and the Government that this wholly unacceptable situation has come about.

I hope that the Minister can offer some comfort to my constituents and to the people of Suffolk as a whole, and that he will confirm that this is a temporary situation that he will seek to address in the next two years.

3.46 pm

I hope that I can start my response to the hon. Member for West Sussex on a consensual—

I hope that I can start my response to the hon. Member for West Suffolk (Mr. Spring) on a note of consensus. First, I congratulate the hon. Gentleman on the debate. Secondly, I am happy to second his strong words of support for Mr. Peachey, the departing chief executive of the council.

The hon. Gentleman did not find time in his remarks to highlight the improved achievement of school pupils in Suffolk. There has been a steady rise in the number of children achieving good A to C grades at GCSE, and a strong improvement in primary school performance in the area. I am sure that, at a time when many people are too ready to disparage the teaching profession, he would happily join me in paying tribute to the excellent work that teachers have done and to the hard work of pupils.

I fear that our mutual agreement may begin to erode there. Part of the hon. Gentleman's speech sounded as if he wanted to have someone else answering the debate: local politicians who could speak up for the county. I will give him a national perspective.

Does the Minister agree that a good example of what has been achieved by the county council in Suffolk is last December's acknowledgement by the Ofsted report that the Suffolk local education authority is one of the top six in the country?

I am sure that it was my hon. Friend's modesty that prevented him from referring to his record as a leader of the council for nine or 10 years. Ofsted gave a very positive report on the work of the LEA, and I am happy to pay tribute to that.

Let me address funding, as well as cost pressures and the distribution of resources to schools—issues that the hon. Gentleman raised. He will know that the Department shares joint responsibility with local authorities for the distribution of money to schools. We distribute money to local authorities—the hon. Gentleman raised a number of questions about how that is done—and it is for local authorities to distribute money to schools according to their own formulae. He also raised issues about that.

I will not rehearse for the hon. Gentleman the overall rises in education spending this year but, when he talks about the despair that he feels at the funding position in Suffolk, he does not do justice to the significant improvement in the funding position of Suffolk schools over the past six years. My statistics suggest that there has been a £74 million increase in funding in Suffolk. That is significant, but does not include the money paid as school standards grant direct to schools. A 250-pupil primary school might receive £10,000 more this year than last year, a rise from £40,000 to £50,000. A typical secondary school of 1,000 pupils might receive an extra £50,000.

The hon. Gentleman touched briefly on capital spending and I am honour bound to point out that, in 1998–99, capital funding in Suffolk was £8.7 million and is now £35 million, so there has been significant investment. I am interested to hear that he believes that there is a long way to go, but I am happy to confirm that the Government's plans include rising funding for capital expenditure throughout the country.

The hon. Gentleman raised his concern about the way in which the funding system distributes money to different parts of the country and I want to address that point directly. This has been a unique year of change in the Government funding system. Partly in response to demands from local education authorities and schools, we have introduced a number of changes to the system. He will know that the old system was based on the 1991 census and was out of date, unfair and did not deliver a good deal for significant parts of the country.

The principles of the new system should commend themselves to the hon. Gentleman. They are based on three simple indices. First, an amount is paid per pupil: £2,000 per pupil in primary education and £2,500 per pupil in secondary education. That is clearly established. In making our decision about that, we listened to many responses, including those from the education funding strategy group on which LEAs were represented. However, there were other factors and he would agree that they are important.

Secondly, there should be recognition of the different costs in different parts of the country. Thirdly, there should be recognition of additional education needs. The changes to the area cost adjustment mean that 99 authorities rather than 50 benefit from that adjustment. The fact that Suffolk does not is a matter of regret to the hon. Gentleman, but I assure him that the area cost adjustment is calculated on an independent and scientific basis. It reflects local labour market costs, which are lower in Suffolk than in other parts of the country.

I want to address additional education needs. The new system, which contributes significantly to the amount of money that Suffolk receives, places particular emphasis on two items: The first is the number of children from families on income support. The figure in Suffolk is around 11 per cent. compared with a national average of 17 per cent. That is a significant contributor to Suffolk's funding position. The second change is also significant. For the first time, the system recognises the number of pupils who come from families with low-paid work and the number of families in which parents receive the working families tax credit. That benefits Suffolk.

I was pleased that the county council lobbied me on the distribution of local government finance last year and I was able to meet the Minister for Local Government, Regional Governance and Fire, my right hon. Friend the Member for Greenwich and Woolwich (Mr. Raynsford). I was also pleased that that point was acknowledged by the Government and taken on board. That allowed an increase of those elements in which there is a multiplier. However, it was disappointing that the changes to the resource equalisation factor led to a significant reduction in overall finance.

I am grateful to my hon. Friend for making that point.

The hon. Member for West Suffolk did not mention the sparsity element that now exists in the formula. That reflects the cost of home-to-school transport in rural areas such as Suffolk and is specifically designed to recognise some of the special needs that exist there. I know that a number of sparse authorities, one of them is Suffolk, wanted us to introduce a sparsity factor for secondary schools. We examined the issue in detail but found no evidence of a connection between secondary school size and sparsity.

I want to speak about this year in particular because, as well as raising questions about the general distribution of funding around the country, the hon. Gentleman referred specifically to the difficulties that some schools are facing this year. I cannot respond on a school-by-school basis but, if he would like to write to me with details of any school in his constituency, I shall endeavour to address the points that he raises.

This has been a unique year for the school funding system, not just because of changes in the local government finance system, but because of at least two other significant changes. First, the hon. Gentleman knows that for a long time there has been pressure from local government and schools to reduce the amount of money that is spent centrally by the Department to reduce the amount of ring-fencing in the system. Reductions in the proportion of funding for LEAs and schools provided through specific grant funding have occurred in the spending review, which has resulted in a significant change in the distribution of the standards fund and a reduction in the amount of Government money that is spent centrally.

The second change that the hon. Gentleman referred to, which is important, is that additional costs will arise this year not just from the national insurance change, but more significantly from the additional costs arising from the changes to teachers' pensions. I am sure that he would agree that it is important that, when the Government Actuary makes recommendations in relation to the teachers' pensions scheme, the Government respond in a responsible way. I am pleased that we have been able to put extra money into the system to recognise the extra costs that have arisen as a result. That has been of equal benefit to schools in Suffolk and those elsewhere.

The hon. Gentleman, in his description of the situation facing schools, mentioned the role of the county council. It is obviously a matter of pleasure for me that the county council passported in full the money that was allocated to it by central Government. There are issues for all local councils about the money that is passported to education and that is then devolved down to school level.

The hon. Gentleman will know that we have been in discussions with local authorities all over the country about the amount of money spent centrally on matters such as special needs and the provision of pupil referral units, and about the money that has been shifted from revenue accounts in some parts of the country—not in Suffolk—into capital. That discussion is ongoing with all councils and LEAs across the country.

In Suffolk, there are particular pressures on the special needs budget. There are also some significant contingencies for which Suffolk local education authority needs to plan. The hon. Gentleman will know that the impact of movement by armed forces personnel is a significant issue in the county. Therefore, it is prudent for the LEA to budget for those changes, and to be ready to represent them. My statistics show that forces children can represent up to 50 per cent. of the roll of a local school. I do not know if that tallies with his local view. That has a significant impact on schools when families move on.

I want to put a final issue on record. Around the country, local education authorities, and a significant number of schools, are struggling with the effects of declining numbers of primary school pupils. For the first time since the introduction of local management of schools in 1990, we are seeing significant reductions in the primary school population. There are 50,000 fewer primary school pupils this year than last year. Next year, there will be another 50,000 fewer, and an additional 50,000 fewer the year after. That means a fall in the primary school population of 150,000. That has significant effects around the country, and I would be interested to see whether some of the schools that the hon. Gentleman cited are suffering from the difficulties that are raised by declining primary school numbers. It is a significant issue.

I conclude by explaining how we want to move forward. The hon. Gentleman will know that, at the time of the Government's submission to the School Teachers Review Body last year, we were keen to ensure a three-year settlement for teachers' pay, which would give predictability and stability to schools in planning their budgets for future years. The STRB did not grant us that recommendation, but I can assure the hon. Gentleman that we seek the stability and predictability for which he was asking. A two-year budget would be extremely desirable for all schools.

I know that schools in Suffolk and elsewhere in the country are looking for reassurance for the next two years. I would like to highlight how we are approaching the problem. The Secretary of State has made it clear that he would like a reasonable per-pupil increase for every school in the country, which requires our Department to consider carefully some significant issues. For example, we need to examine not just the allocation of funding to LEAs, but the right balance between support from general grant and specific ring-fenced grants from the centre. We must strike the right balance between in-school provision and out-of-school provision. There must be fair and appropriate variations in the budget increases received by different schools within an LEA, which are dependent on the formula used, specifically the amount of damping that exists in a local formula to protect schools. Finally, we must ensure that the agenda for the devolution of responsibility to head teachers continues. From our point of view, a two-year settlement on pay and other issues would help that.

I hope that I have answered the points raised by the hon. Gentleman. I look forward to continuing the debate with him.