Mr Stephen Timms (Minister of State (School Standards), Department for Education and Skills; East Ham, Labour)

I welcome you back to the Chair, Mr. Griffiths.

I beg to move amendment No. 206, in clause 39, page 25, line 4, after 'budget', insert 'for a financial year'.

This is a purely technical amendment to remedy a defect in the drafting. In clause 39, after the phrase ''LEA budget'' and ''schools budget'' in paragraphs (1) and (2) of subsection 45A there is the phrase ''for a financial year''. That phrase has been missed out after the expression ''individual schools budget'' in paragraph (3). Amendment No. 206 rectifies that omission, to bring paragraph (3) into line with the preceding two paragraphs. It also allows the reader to make sense of what is being referred to.

Amendment agreed to.

Mr Graham Brady (Altrincham & Sale West, Conservative)

I beg to move amendment No. 267, in clause 39, page 25, line 8, at end insert—

'( ) provide for information to be collected by the Secretary of State including the annual per capita revenue budget of each maintained school and specific elements of school funding relating to curriculum changes or other initiatives of the Secretary of State.'.

I join the Minister in welcoming you back to the Chair, Mr. Griffiths. I am sure that you are as delighted to be with us as we are to have you as Chairman.

The amendment, like the previous Government amendment, is largely technical and is intended purely to remedy an oversight in the Bill as drafted.

The Government want to impose new requirements on local education authorities and schools seeking to take powers relating to a school's budget and to how LEAs choose to distribute the funds available to them among schools within their area. I hope that the Minister agrees that the proposal would improve the climate of knowledge and information available to parents and schools and inform Ministers of the reality of school funding. The amendment would allow a new power providing for information to be collected by the Secretary of State, including the annual per capita revenue budget of each maintained school, and specific elements of school funding relating to curriculum changes or other initiatives of the Secretary of State.

The Minister, who is a bright and able man, will already have sniffed out the motivation behind the amendment. He will have realised that there is considerable anxiety among hon. Members and in schools about the discrepancy between Ministers'

intentions to do good and to assist schools in their endeavours—as a generous man, I am prepared to accept their positive intentions—and what actually happens. There are two clear examples. First, there is the position of numerous former grant-maintained schools, which, as the Minister will know, were given a pledge when their grant maintained status was taken away in the School Standards and Framework Act 1998 that their funding would be protected and that the Government's intention was to level up the funding of other schools. That has not happened in practice and, however much Ministers tell me that education and schools expenditure has increased during the past four years, numerous schools in the country—indeed, in my constituency—currently have a smaller annual revenue budget than they had in 1997. As the Minister will understand, that is causing various difficulties.

Whenever I have raised those concerns with Ministers, sometimes through written questions, I have frequently been amazed at the lack of information that Ministers appear to have on the subject. One recent example that may be in the Minister's mind concerns schools with sixth forms after the new sixth form curriculum was introduced. Ministers rightly accepted that making such widespread changes to the curriculum would result in costs to schools, including for public examinations, and have staffing, resource and teaching material implications. They made available some money in the first and second years of implementation to cover the changed burden of cost that would fall upon them. However, as the Minister will know, if only from anecdotal evidence, the reality in much of the country is that the additional funds, earmarked by Ministers and said to be available for a specific purpose, were not passed on to schools. I suspect that the Minister has some sympathy with the bones of my point, given that the purpose of clause 39 is to deal with instances in which local education authorities do not deal properly with the schools that they fund.

By way of illustration, I will read the response that I received to a written question that I tabled in October. I asked the

''Secretary of State for Education and Skills what estimate she has made of the number of schools with sixth forms which have received no funding from their local education authority for the new sixth form curriculum in each of the last two years.''

The response, which came from the Under-Secretary, said:

''No such estimate is available. Decisions on distribution were a matter for each local authority in the light of local priorities.''—[Official Report, 15 October 2001; Vol. 372, c. 992W.]

There is simply no point in announcing that a sum of money is available to schools for a specific purpose if that money can be spent in any way whatsoever. It is dangerous if Ministers introduce important and far-sweeping changes, perhaps to the curriculum as in that example, but no funding is provided to schools for implementation. It is a serious problem that has affected the ability of schools to implement the curriculum changes and had a serious affect on wider budget planning and staffing situations for other year groups in maintained schools.

The Minister should at least be sympathetic to the amendment's objective. I hope that he will accept that it would make provision for his Department to be informed of the budgets for schools.

The amendment is not prescriptive: it would not oblige LEAs, schools forums or schools to disburse funds in a particular way. It would remedy a situation in which Ministers are apparently ignorant of what happens to schools' funding. I am sure that the Minister—an assiduous man—will assure me that he intends to do something about the black hole in the Government's knowledge of schools throughout the country, specifically the former grant maintained schools and changes in the sixth form curriculum. I hope that the Government will obtain that information and treat it as important in informing any decisions that might be taken under the wider powers provided by the clause.

Mr Stephen Timms (Minister of State (School Standards), Department for Education and Skills; East Ham, Labour)

I listened with interest to what the hon. Gentleman said about the amendment. I was surprised to hear that he believes that some schools in his constituency have a smaller revenue budget now than they did in 1997. I should be grateful if he would send me details of those schools. The amount paid to every local education authority for its schools has increased substantially over the past four years, and will increase significantly this year, next year and the year after. We have also successfully increased the proportion of those budgets that is delegated to schools. I will examine with great interest the information that the hon. Gentleman sends to me.

In moving the amendment, the hon. Gentleman may not have taken account of our existing powers, for example, under section 52 of the School Standards and Framework Act 1998. The section 52 budget statement shows how much transitional funding is received by each former grant maintained school, so that information is already provided. Section 52 requires LEAs to produce annual budget and outturn statements containing such information as the Secretary of State may prescribe, and clause 42 of the Bill enables us to require schools to produce accounts containing such information as we may prescribe.

The extra funding for sixth forms was a local decision, but I can tell the hon. Gentleman that we have taken the amount we provided for sixth forms into account in determining the amount transferred to the learning and skills council for each area for 2002–03. That funding is clearly earmarked for sixth forms under the new arrangements.

In the light of what the hon. Gentleman said, I hope that he will welcome several elements of the Bill. I am sure that he would welcome the power of the Secretary of State to set a minimum schools' budget, which we will debate shortly. I hope that he would also welcome the introduction of the schools forums, which will provide a forum in every local education authority for discussion about budgets and other matters concerning the schools and the LEA.

Clause 42 would, in theory, enable us to require schools to provide details of funding they have received and expenditure that they have incurred in connection with specific initiatives. It would not be reasonable to do that; the Opposition have rightly raised some concerns about the work load in schools. It would be an enormous task if every school had to report the amount of money that it spent in relation to every curriculum change or every other initiative of the Secretary of State. I hope that on reflection the hon. Gentleman will agree that it would not be appropriate to impose that additional burden.

We have simplified the standards fund in a way that we estimate will save a great deal of time: 2.6 million hours a year across all the schools, or two and half weeks of someone's time in a typical school. We have significantly reduced the amount of paper that we now send to schools. We have made a pledge that 1,000 more trained bursars will be appointed during the lifetime of this Parliament. However, to impose an additional requirement of this magnitude would not be appropriate or helpful.

The Bill already includes powers to collect all the information that is necessary. I cannot agree with the hon. Gentleman that it would make sense to collect the detailed information that he has in mind. There is a principle that many of the detailed decisions about where funding should be allocated should appropriately be made at local level. That is the principle that informed many of the changes that we have made. Certainly, it underpins much of this part of the Bill. I think that the hon. Gentleman agrees with it, but it places a limit on the amount of prescription that should be imposed centrally about precisely how each element of funding is spent. I think that we have got the balance about right and I hope that the hon. Gentleman will agree.

Mr Graham Brady (Altrincham & Sale West, Conservative)

I am grateful to the Minister. His response has been helpful. He said that the burden that the amendment would place on schools would be too great, but he also alluded to the balance that must be struck. The balance is between the burden of reporting and administration and the new powers that the Minister seeks to take. If Ministers do not have detailed knowledge of what money is finding its way into schools, they will not be able to make informed judgments when exercising their new powers in the clauses to direct the activities of LEAs with regard to the schools' budget.

Mr Stephen Timms (Minister of State (School Standards), Department for Education and Skills; East Ham, Labour)

I just want to make a point that I perhaps should have made earlier. In clause 42 we are looking at the introduction of consistent financial reporting, which will allow us to benchmark in a way that has not been possible in the past, and to compare the amounts that are being spent in different schools on different things. I do not accept the hon. Gentleman's earlier description of a black hole.

Mr Graham Brady (Altrincham & Sale West, Conservative)

My description of a black hole applied to the existing situation and Ministers' apparent lack of knowledge about the money that is finding its way to schools. If the financial reporting requirements under clause 42 would give Ministers precisely the

information that I seek for them in my amendment, it would give me considerable comfort.

Mr Phil Willis (Harrogate & Knaresborough, Liberal Democrat)

Is the hon. Gentleman arguing, as the Conservative party did at the last general election, that there should be a national per capita formula for all children in all schools that would clarify where the money comes from and where it goes. Does that remain the policy, and is that behind the amendment? If it is, there is a clear contradiction between what the Government want, what the Liberal Democrats want and what the Opposition want. Does he believe that, even in an LEA such as his own, there is a need for someone to determine that schools and children who are greatly disadvantaged in accessing the education system should receive more than those who have particular advantages, such as the students who go to the grammar schools in his area?

Mr Graham Brady (Altrincham & Sale West, Conservative)

I am wary of going too wide of the amendment, and we may have a constructive debate on another related amendment that my hon. Friends and I tabled. I will simply point out to the hon. Gentleman that if we had implemented a national funding formula for schools, it would have made provision for those from disadvantaged areas or backgrounds to attract a higher weighting. Therefore, the two points are in no way inconsistent. The hon. Gentleman would have had no worries about that issue under a Conservative Government, who sadly the nation are missing.

Mr Phil Willis (Harrogate & Knaresborough, Liberal Democrat)

I am enormously relieved.

Mr Graham Brady (Altrincham & Sale West, Conservative)

I know that the hon. Gentleman is relieved.

The Minister's response to my amendment suggested that existing legislation requires that transitional funding should be reported. Part of the difficulty that arises is that transitional funding may be reported and Ministers may be aware of it. However, if they are not aware of the overall funding picture, they have only part of the information that they need to make a decision.

The Minister said that schools' funding for the sixth form curriculum would inform the LSC funding. Ministers have told me that they do not know what that funding is, and so I cannot see how the Minister can maintain that that information will inform the funding decisions for the learning and skills councils. I would be interested to hear how that funding has been decided. I understand that the baseline figure for the sixth form funding under the learning and skills council is based on last year's funding picture. However, some schools have received no new funding to take account of the increased responsibilities and activities necessary under the new sixth form curriculum. If last year's funding is taken as the baseline, Ministers will be locking in a pattern of underfunding for such schools.

There are real questions that need some answers. I may have sympathy with some of the objectives behind the clauses, but I am keen that Ministers should exercise them in a well-informed, responsible and transparent way. The clauses leave open the danger that Ministers may be forced to make decisions in the

dark according to criteria that are not public and that have not been debated or agreed outside ministerial offices.

The hon. Member for Harrogate and Knaresborough (Mr. Willis) asked me whether the intention behind my amendment was to introduce a national funding formula. It is not. My intention is simply to ensure that Ministers can obtain the necessary information if they are to exercise the powers responsibly. The Minister sought to reassure me that that information would be available. I hope that it will be.

I am grateful for the Minister's offer to examine figures from schools in my constituency. I will not detain the Committee with local matters but will provide the information for him. On balance, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr Phil Willis (Harrogate & Knaresborough, Liberal Democrat)

I beg to move amendment No. 219, in page 25, line 22, leave out—

'or the authority's schools forum'.

We now come to contentious proposals and sensible amendments to overcome the problems. I think that the Minister accepts that it is difficult to debate amendment No. 219 without having first debated the make-up and purpose of the schools forums. Thus, if I stray into discussion of membership, it is only because it is important to consider it in discussing the amendment.

By including schools forums in the clause, the Government are trying to achieve what the Conservative party did not achieve in the last election. They are trying to bypass the autonomy of local authorities and respond to head teachers and governors in a way that suits their purpose. I agreed with many of the Minister's comments on the previous amendments, which were about reducing needless bureaucracy to do with accounting systems in schools and local authorities. The school standards fund is a good example: there has been a huge reduction in the work load. That was a good Government initiative. However, we now have a Government pledge to reduce bureaucracy by introducing a new layer of bureaucracy into the system. Fundamentally, that is what the measure will achieve.

I defy the Minister to name a single local authority in England or Wales that does not have reasonable or excellent consultation arrangements with its heads and governors. If we refer to Ofsted's examination of local authorities—I accept that it has not inspected all local authorities—or the Audit Commission, which supported the inspection of local authorities, we find that 75 per cent. of head teachers and governors are satisfied with the consultation that they have with their local authority. That is a remarkable achievement.

Mr Chris Grayling (Epsom & Ewell, Conservative)

I am interested in the hon. Gentleman's comment. In broad terms, most governors and head teachers may be satisfied, but that is largely because the need for consultation is relatively limited in most of their lives. I assure him that many LEAs have a terrible record of consultation

in cases where there are major developments; for example, the London borough of Merton, with which I have been involved for the past four years, announced that schools were due to be closed as part of a reorganisation plan at a meeting of heads of all schools in the borough. It did not even take the trouble to talk to heads of schools individually. The overall figures to which the hon. Gentleman referred mask some seriously bad practice.

Mr Phil Willis (Harrogate & Knaresborough, Liberal Democrat)

I am grateful for the hon. Gentleman's comment, because I did not stress that every local authority, school or business is not perfect; that is obvious. The inspections by Ofsted and the Audit Commission made it clear that there is much cause for concern in a small number of authorities. The answer is not to create a new layer of bureaucracy but to sort out the problem. Giving every local authority a duty in legislation to consult heads and governors about x, y and z is perfectly reasonable. However, going to the nth degree by creating schools forums, for which I can find no justification from anyone, is overcooking the egg, if hon. Members will pardon the expression.

The amendment is designed to make the Committee consider a key issue for which the new schools forums will have responsibility or a responsibility. In proposed new section 45A(4)(c) of the 1998 Act, one duty is to

''enable any prescribed determination—''

on school budgets—

''to be made by the Secretary of State or the authority's schools forum.''

However, the regulations do not say that. Nothing in them makes that clear, yet the Bill clearly states that the schools forum can have responsibility for determining the budget.

Let us consider the make-up of the schools forum. Not every school will be represented. Even in the largest authorities such as mine, out of, say, 350 schools—many big metropolitan boroughs have that many schools or more—50 is the maximum number that can be represented. A quarter of places can be reserved for members other than schools, which leaves about 38. Two places are reserved for special schools, which takes the number down to 36. Those places are divided up according to the number of pupils in each school—primary, middle, secondary or special—which then get a number of places determined by the number of youngsters in the sector. The formula to assemble 36 head teachers or governors to represent those schools is complicated and bureaucratic.

Before the Minister contradicts me, I accept that that group of people will not make the determination in all circumstances, as the Secretary of State will not intervene in all circumstances. However, if those 50 people have the responsibility, as the Bill says, how will they make the decision?

The first responsibility of every governor and head teacher whom I have met is to their school. I have often argued to governors that we should consider our family of schools and how we distribute resources only

to be given short shrift by the chairman, who says that they are elected to look after their school and no one else's. When people go to the forum to debate these issues, their main responsibilities and liabilities will lie very much with their own organisations. What is to prevent a group of them in the forum from getting together to carve things up on their behalf?

The amendment would eliminate the role of schools forums in determining the level of schools' budgets at individual school level. It would mean that forums could advise on individual budgets, but could not have an authoritarian mandatory role. I hope that the Minister will see the sense in that reasonable request and respond to it in his usual positive and supportive way.

Mr Andrew Turner (Isle of Wight, Conservative)

Happy new year, Mr. Griffiths. I apologise for my absence this morning.

I have seldom heard such common sense from a Liberal Democrat, but on this occasion, there was a modest amount of common sense in what the hon. Member for Harrogate and Knaresborough said.

Mr Phil Willis (Harrogate & Knaresborough, Liberal Democrat)

I was really good this morning.

Mr Andrew Turner (Isle of Wight, Conservative)

Speak for yourself.

It is made more difficult because the Government have not yet published the draft regulations—[Interruption.] Sorry, I understand that they have been published, but I have not yet had a chance to read those draft regulations on the composition of schools forums that the Government have so kindly provided. However, I want to support the hon. Member for Harrogate and Knaresborough.

It is difficult to envisage how a school can be both effectively governed by governors and involved in decisions at the executive level about the distribution of resources. It is also difficult to understand why the power is necessary for many local authorities. I agree with my hon. Friend the Member for Epsom and Ewell (Chris Grayling) that some are defective in respect of consultation with governors and head teachers. On the whole, however, local authorities are quite good at such consultation. The difficulty arises for a minority, which might not contribute the right amount, might lack the capacity for effective organisation of the education service or might not have the political will to take effective decisions in consultation with governors and head teachers.

What is the need for this power given to governors and head teachers collectively and what will be its consequences? In some circumstances, a majority on the schools forum could get together to outvote a minority. Surely it would be fairer for elected local authority representatives to take the difficult decisions between the majority and the minority. Is the process necessary for all local education authorities? In excluding the common council of the City of London and the council of the Isles of Scilly, the Government have already accepted that it is not necessary for all.

What should be the threshold? For the Government, it is one school. Why should an authority such as Rutland, with a small number of

schools, be governed by an arrangement in which a school instead of a local authority can take a decision?

Mr Chris Grayling (Epsom & Ewell, Conservative)

A further point arises. One important issue seldom properly addressed is cross-border educational planning. More commonality of issue often arises with schools just across LEA borders than with schools on different sides of the same educational area. If the Minister is going to impose mechanisms, should he not provide for cross-border dialogue as well?

Mr Andrew Turner (Isle of Wight, Conservative)

I have considerable sympathy with that view, especially when a border is artificial. Some borders are clear and defined; others—particularly in south London—have huge cross-border flows. About a third of the London borough of Southwark's secondary population is educated outside the borough and about a quarter of Lambeth's secondary population is educated within Southwark. Some local authorities differ about whether sixth forms are located within their areas. Oxfordshire has an interesting history in that respect: some parts have a three-tier system, others a two-tier one. The interests of middle schools would not necessarily be recognised by the majority of schools in particular areas.

The Government have taken insufficient account of those issues in drafting the amendment. Even accepting the principle—and I am unsure that I do—that local authorities should be overridden, we must ask more about the detail.

Mr Stephen Timms (Minister of State (School Standards), Department for Education and Skills; East Ham, Labour)

I can give the hon. Members for Harrogate and Knaresborough and for Isle of Wight (Mr. Turner) some assurances on their concerns. We all agree that schools should be consulted on financial matters. The National Association of Head Teachers certainly believes that there is a problem here. It recently carried out a survey of consultation arrangements, which concluded that a significant proportion of heads were dissatisfied with the consultation on financial matters. The sunny picture painted by the hon. Member for Harrogate and Knaresborough is not the experience of head teachers.

Mr Phil Willis (Harrogate & Knaresborough, Liberal Democrat)

The Minister and his Department spend millions commissioning Ofsted and the Audit Commission to carry out this work, and the Minister now quotes in defence the National Association of Head Teachers' survey. I find that ludicrous.

Mr Stephen Timms (Minister of State (School Standards), Department for Education and Skills; East Ham, Labour)

We take notice of evidence wherever it arises. The important organisation to which I referred believes that there is a problem. The hon. Gentleman argued that no one envisages any problem, but that is not the case. We all support consultation with schools on financial matters and the provisions provide the mechanism to introduce it.

Schools forums are not new in principle: some authorities already have fine consultative arrangements, but we want all schools to benefit from that approach. Good practice benefits all schools. When we reach clause 41, my hon. Friend the Under-Secretary will set out the detail of our approach to schools forums. Presently, I disagree with the suggestion of the hon. Member for Harrogate and Knaresborough that it is acceptable for bodies to comprise more than 50 people. As my hon. Friend will

explain more fully, it is appropriate to set a maximum size for the schools forums.

We want the forums to play a significant part in local funding arrangements for schools. We want them to have mainly, but not entirely, an advisory role. The size of the school's budget and the nature of most centrally retained expenditure items will remain decisions for the LEA to take. The schools forums will not have a role in determining the overall size of the authority's schools budget, still less the size of an individual school's budget share. That should provide an important element of reassurance about the concerns expressed by the hon. Members for Harrogate and Knaresborough and for Isle of Wight. Many spending decisions—determining priorities for the use of the overall delegated budget, for example—remain for individual schools to take. However, with respect to the advantages of delegation or central retention, only a limited range of items should be decided collectively through the forum.

I am in the happy position this afternoon of having distributed the draft regulations. I am not always in such a happy position, but I am now. In fact, two sets of draft regulations relating to schools forums have been circulated. Not every member of the Committee may have read to the end of both. The heading of schedule 1 is ''Regulation X: classes or descriptions of planned expenditure which may be deducted from the schools budget of a local education authority''.

In other words, it is a list of things that the LEA can retain centrally. We propose to add four new items to that list, which is set out in regulations: school meals for primary and special schools, library services for those schools, museum services, and licences and subscriptions. As a result, the forum will be able to decide whether those four items should be delegated to each school. That is the extent of the decision-making powers that we propose should be conferred on the schools forums. It is a much narrower decision-making power than hon. Members suspected.

Mr Phil Willis (Harrogate & Knaresborough, Liberal Democrat)

Can the Minister confirm that there would have to be a resolution under affirmative procedure in both Houses to extend those powers and to include other items?

Mr Stephen Timms (Minister of State (School Standards), Department for Education and Skills; East Ham, Labour)

I cannot confirm that. However, it would require new regulations, not those that have been circulated to the Committee and, as the hon. Gentleman knows, those would be dealt with in the normal way.

Mr Chris Grayling (Epsom & Ewell, Conservative)

Just to clarify that, the Secretary of State would have the right under the legislation to assign broad-ranging powers to an education forum without coming back to Parliament, and to re-deploy many of the LEAs' supervisory functions to the schools forums.

Mr Stephen Timms (Minister of State (School Standards), Department for Education and Skills; East Ham, Labour)

The Secretary of State has the power to propose new regulations that would be published and consulted on in the normal way and, as we have discussed several times, if hon. Members have concerns about those regulations, we would consider any request for a debate. That is the appropriate way

to handle such a change to the proposed list. The decision-making power is restricted and is consistent with the character of the proposed schools forums.

Schools can already opt individually for delegation on school meals. The schools forum is in the best position to judge whether schools can benefit from further delegation, and the decision to delegate should be left to it. This is a modest exercise that allows schools under each LEA to have a greater say in their affairs. I hope that hon. Members will recognise that the move is helpful, sensible and welcome. I hope that the hon. Member for Harrogate and Knaresborough will withdraw his amendment.

Mr Phil Willis (Harrogate & Knaresborough, Liberal Democrat)

I am not satisfied with the Minister's response. I fully intend to press the amendment to a Division. I do not have huge difficulties with what the Minister is trying to achieve, but I object to the ham-fisted way in which he is going about it. The final insult was the response to my question about whether the forum could have extended powers. The Minister said that it would not require primary legislation, but could be done by regulation. Yet again, another aspect of the Bill leaves hidden powers. As I have said before, the Minister's assurance that we can pray in aid against the regulations and have a debate on them is a hollow gesture. Whether there is a debate, when it will take place and how much time will be devoted to it is entirely in the Minister's gift. It is totally different from the scrutiny of a Standing Committee and a resolution of both Houses of Parliament.

I do not belittle the survey by the National Association of Head Teachers. It is right to highlight what it sees as difficulties. However, if a group of head teachers were put in a room together and asked whether they were satisfied with what the local authority was giving them, they would not be satisfied, even if the amount were doubled. The primary heads will say that the secondary heads get too much; the middle school heads will say that the primary heads get too much and so on. Their job is to argue for as much as they can. However, if those heads were asked whether they wanted a group of them to be selected and for them to decide for the rest, they would go ballistic. That is the last thing that they want. They can at least attack the elected members of the local authority. They could hardly start to attack each other. Nevertheless, I take the point.

The other issue with which the Minister has not come to terms is the introductory clauses in part 1, which were all about innovation and allowing LEAs and schools to innovate. This is not innovating at all. St. John Fisher, a brilliant Roman Catholic high school in my area, has its own school meals service, as does St. Aidans. They do so because they feel that it is the best way to deliver the sort of service that they want. That is what I call innovation. In the north Yorkshire dales, however, where the primary schools mostly have fewer than 50 pupils, one would get a totally different response from head teachers if they were asked to make meals for their pupils. Yet the forum will make those decisions.

The Minister must recognise that when groups of heads are put together in the way envisaged, it will be recipe for dispute. The school that has invested heavily in its library is hardly likely to want to put its hand up to give more money to other schools for libraries. Things do not work like that. I am sad that the Minister sees it that way. Local authorities are undergoing a heart bypass here. We will tell these forums, whose powers can increase, that a Labour Minister is happy for an unelected group of people to make decisions about budgets. Labour Members should recognise that we are asking local authorities what is the point of them raising £388 million, as they did last year, to put into school budgets when they will not have authority over how it is spent.

We are going down a dangerous slope without justification. Yes, there should be consultation and local authorities should be made more accountable to their schools, although it is difficult to imagine how they could be made more accountable than at the moment, but the idea of a schools forum is one step too far. It is clearly an idea that was provided by the No. 10 policy unit and the Secretary of State is desperately trying to find a justification for it.

Mr Stephen Timms (Minister of State (School Standards), Department for Education and Skills; East Ham, Labour)

The hon. Gentleman said that he welcomes the idea of making LEAs more accountable to their schools, but that that is not possible. His perception is not shared by many schools. Schools generally will agree that it is helpful to increase the amount of consultation on financial matters. That is essentially the role that the forums will play.

Mr Phil Willis (Harrogate & Knaresborough, Liberal Democrat)

Consult, yes.

Mr Stephen Timms (Minister of State (School Standards), Department for Education and Skills; East Ham, Labour)

Consultation will constitute most of the forums' activity, but there will also be decision-making powers in restricted matters. It will be possible for the Secretary of State to promulgate new regulations in the future to extend that list, but I should make it clear that it would not be possible under this primary legislation to make regulations to allow the forums to determine the size of a school's budget or its individual budget share. That was the hon. Gentleman's central concern in moving the amendment, although we have moved on to other concerns, and I hope that I have addressed that first one.

Mr Andrew Turner (Isle of Wight, Conservative)

Will the Minister give way?

Mr Stephen Timms (Minister of State (School Standards), Department for Education and Skills; East Ham, Labour)

I have finished.

Mr Andrew Turner (Isle of Wight, Conservative)

I wanted to ask the Minister—he may speak again—what he meant when he said that the forum will not be able to determine a school's individual budget share. We understand that forums will not be able to decide that one school should receive X pounds more or Y pounds less, because that would be determining a school's individual budget share. However, the adjustment of the value of elements in the formula, or the introduction of additional elements, may have the consequence of changing a school's individual budget share. We know from local authorities that they sometimes introduce new elements with the intention of changing a school's individual budget share. If the Minister speaks again, that is one point on which I hope he will be able to help us.

Perhaps this is for a later debate, but the Minister has not responded to my point about the effective representation of different kinds of secondary school. A local authority may have a two-tier system in the bulk of its area but a three-tier system in places where the middle schools are deemed to be secondary schools. The majority of secondary schools may be 11–18, but some will be 8–13 or 13–18 middle schools that are deemed to be secondary. The proposed system will put them all in one pot and call them secondary schools. However, it would be possible for middle schools not to be represented in the forum, even though it would be entitled to make decisions that affected their funding.

Similarly, a local authority area could contain only a few schools with sixth forms—Hampshire is an example. It would be possible for all the secondary representatives on the forum to represent schools without sixth forms, because the only definition included in the draft regulations is ''secondary schools''. The Minister would agree that such a forum would not be representative, so would it have the right to take the decisions that he is proposing in the clause?

Mr Stephen Timms (Minister of State (School Standards), Department for Education and Skills; East Ham, Labour)

The hon. Gentleman asked whether the forum could take decisions about the formula that is used for determining a school's individual budget share. The answer is no, and I refer him to the wording of new subsection (4)(a), which makes it clear that we are debating

''classes or descriptions of expenditure which are authorised or required to be deducted from an authority's schools budget''.

In other words, we are talking about which parts are or are not delegated. That is the context within which we are debating the amendment, so the forum does not and cannot have the wider powers that he is concerned about.

When we get to clause 41, we will further debate the membership of schools forums, but I will say now that we expect that sensible decisions will be made to ensure that schools are properly represented on the forums. The hon. Gentleman may have noted in the last set of papers circulated to the Committee that we will issue guidance on school forums, which will include points on membership. That should reassure him.

Mr Phil Willis (Harrogate & Knaresborough, Liberal Democrat)

We have had a good debate, and the Minister satisfied one of our prime concerns. However, I think that he was just about to confirm that the cost of the exercise will come out of every school's budget. It will be a huge, bureaucratic exercise, and the costs will include providing meals for people at lunch times and travel and other expenses. The small primary school in north Yorkshire will have to find a share of that cost, whereas at present the LEA provides the service and pays for it from its retained element at no cost to the schools. The Minister shakes his head, but that is the reality.

At present, the cost of the consultative processes that local authorities carry out—according to the Audit Commission and Ofsted, 75 per cent. of schools say that they do it well—comes out of the authorities'

retained share of the revenue support grant. Those costs will now be passed on. Sadly, Conservative Members do not see that as a major issue, but it is, so we will press the amendment to a vote.

Mr Graham Brady (Altrincham & Sale West, Conservative)

The official Opposition have considerable reservations about the schools forum model, and not least about the funding for schools forums, to which the hon. Gentleman alluded. That is covered in a later amendment that I have tabled.

My initial reaction to the hon. Gentleman's amendment was that schools forums surely must have a function. I am slightly agnostic as to whether the amendment makes sense. However, having listened to his comments and to the intervention of my hon. Friend the Member for Isle of Wight, I do not think that the Minister has adequately explained why the provision is necessary. My hon. Friend asked about representation on the schools forums and possible imbalances between different types of schools, but the Minister did not clarify the point satisfactorily. Therefore, I am minded to urge my hon. Friends to support the hon. Member for Harrogate and Knaresborough if he presses the amendment to a vote.

Question put, That the amendment be made:—

The Committee divided: Ayes 5, Noes 10.

Mr Phil Willis (Harrogate & Knaresborough, Liberal Democrat)

I beg to move amendment No. 220, in page 25, line 23, leave out 'end of January' and insert '15th February'.

Mr Win Griffiths (Bridgend, Labour)

With this it will be convenient to take amendment No. 192, in page 25, line 23, after 'year', insert:

'or not more than 21 days after the publication of the teachers' pay settlement, whichever is the later,'.

Mr Phil Willis (Harrogate & Knaresborough, Liberal Democrat)

Having narrowly lost the argument on the previous amendment for the time being—we shall return to it on Report—I hope that I can persuade the Minister of the sense of this amendment. If he cannot accept it, I hope that he will at least think about it.

The amendment would leave out 'end of January', which is the current deadline set by the Government, and insert '15th February'. Although allowing an extra two weeks might not seem terribly important, I hope to persuade the Minister that it is. The amendment would bring the timetable required for the so-called reserved power into line with the existing DTLR timetable for setting local authority budgets, which seems to be a reasonable proposition. The amendment would also allow the schools budget to be set after variables such as the teachers pay award and revenue support grant settlement are known.

One of the great bugbears for those of us who have been involved in local authorities, and for heads and governors of schools, is securing budget certainty as early as possible. I recognise that the present Government have tried hard to create certainty for schools, particularly in the three-year settlements. They have also recognised that schools need certainty about budgets in order to appoint staff and carry out initiatives. The amendment would provide a wonderful opportunity to enable some cross-departmental thinking on the setting of school budgets.

Local authorities are likely to have received their indicative RSG allocations before Christmas, and once they have, they undergo the traditional to-ing and fro-ing with the Department. Despite the Deputy Prime Minister's statement that no one would be listened to, that has not been the reality—thank goodness—and many local authorities, including my own, have made representations to the Department. This year, the Government accepted that there were some glaring errors in what was proposed, and local authorities eventually secured changes. It is not normally until mid-January that that process is completed. During that time there is a lot of to-ing and fro-ing as treasurers and elected members decide how to allocate the budget.

One of the most crucial tasks left to local government is the annual round of budgets, and hon. Members will know that a variation of about a quarter of 1 per cent. in one of the variables can make a significant difference in what is passed on to schools in their budget share. The teachers pay settlement is not known until the end of January or early February. I accept that that creates a difficulty: I would like the settlement to be resolved by the end of December of the previous year. It would be far more sensible to include the School Teachers Pay Review Board's recommendation—and the Government's reasons for supporting or denying its recommendation—in the final RSG so that everything could be wrapped up together.

Currently, the RSG is given and then there is some to-ing and fro-ing. After that, local authorities have to guess the outcome of the teachers' and the manual workers' pay settlement, although that has become slightly easier because of the single status agreement. At least a plethora of different organisations do not have to be managed at one time, but the situation is difficult and much of the information is not known until late January or early February.

It is nonsense to tell local authorities that they have a certain amount to spend and two weeks later to say, ''This is what the teachers' pay settlement will be. We have allocated 2.4 per cent for you, as last year, but we shall implement the teachers' pay settlement of 3.5 per cent.'' At that point, unless authorities have huge reserves to meet the additional pay settlement—schools often have greater reserves than the local authority, but I shall come to that later—they have to reduce the schools' budget share, which immediately affects schools.

I have given two reasons why the Government should accept at least the spirit of the amendment, and I accept that they will need to think about it. The third element is the involvement of the Learning and Skills Council. Most hon. Members' postbags will be full of letters from heads of schools with sixth forms, who say that they were given a real-terms funding guarantee for two years in respect of the LSC, but that they are not getting it.

Some authorities spent less than the £2,600 that the LSC gives, and it is starting to claw back that money from schools to make up the deficit. They were allocated only what they were spending. Schools with additional numbers of sixth formers—particularly because 2000, not 2001, was the baseline figure—that were spending £3,400 or £3,500 now have only £2,600 to spend, which is the new learning and skills element. I do not want to get into that debate, but it is an important factor in the final allocation to schools. The LSC has announced that it will be 2003–04, which will be its first full year with all its costs under control when it will be able to take some decisions, before it will give schools their allocations and local authorities the amounts that are being clawed back. That is an unholy mess.

With the amendment, the Government have an opportunity, instead of creating a mythical date at the end of January that does not meet any of the other requirements, to set a date at the end point when all the information is available to local authorities so that they can provide a school's budget.

I accept that if we went down the road suggested by the hon. Member for Altrincham and Sale, West everything could be decided from Sanctuary house or the No. 10 policy unit, and money could be allocated quite easily. Fortunately, however, the Minister is a decent chap, and the Secretary of State is even more decent. They assured the north of England conference on Friday that that is not their intention and that local authorities will continue to play a pivotal role, and I was delighted to hear the Secretary of State say that. I therefore ask the Government to use this opportunity to do something that everyone is crying out for. Every head and local authority in the land would support them in providing a reasonable timetable. I am sure that the Minister has found my case compelling and will respond accordingly.

Mr Adrian Bailey (West Bromwich West, Labour/Co-operative)

As this is the first time that I have spoken in a formal debate in this Committee, may I belatedly welcome you to the Chair, Mr. Griffiths? First I should declare a non-pecuniary interest. I am an honorary vice-chairman of the Local Government Association, an organisation that was often quoted on Second Reading. My views are totally my own. Indeed, I am not sure what the LGA's position is on this issue. I speak from the perspective of someone who was chair of finance of the large metropolitan authority of Sandwell between 1992 and 1997, and I am concerned about the clause. The amendment is well intentioned, but although it could solve some problems, it might create others. I should like to explore some of the issues with the Minister and seek some reassurances.

The hon. Member for Harrogate and Knaresborough said, quite legitimately, that local authorities have great difficulty in determining the level not just of their education budget, but of other budgets, within the timetable outlined here. The provisional revenue support grant settlement is normally given in early December. There follows a detailed consideration within local authorities of how that should be allocated department by department on the basis of their figures. As the hon. Gentleman said, January is usually taken up with a procession of chairs of finance to the Minister making special pleading for their local authority budget.

Incidentally, there was a far greater problem for local authority finance chairs between 1992 and 1997. None the less, the ever increasing demands upon the services from local authorities do not mean that those budget problems have gone away. Detailed consideration still has to be made of how the annual budget increases are to be allocated by the local authorities. Following those submissions, budgets are occasionally altered, but the local authorities will not normally know that until the end of January. It would therefore be difficult for them, within the time scale outlined, here to make the necessary adjustments to their budget in time to give the Minister a definitive education budget. I should like to hear the Minister's perspective on that.

I can see a further problem in amendment No. 220. By leaving it as late as 15 February, one runs into the timetable determined for the settlement of the council tax and in effect the final putting to bed of the budget. If that determination were not made until 15 February and if it were necessary for the Government to intervene and alter the education budget, the local authority would be hard put to make the necessary adjustments in other departmental budgets prior to the concluding date for the budget process, so leaving it until 15 February would cause a problem.

The problem is not theoretical or hypothetical: one year my local authority had its budget altered by £500,000. Given that education comprised 60 per cent. of the total budget, we are talking about a £300,000 adjustment—a significant figure—in my local authority's budget. If this scenario applies when the local authority has to provide the Minister with figures—by the end of January—it would cause a significant variance. The £500,000 was a cut, where another year saw a slight improvement, but the key point is that many authorities face this scenario and the deadline could present them with real problems. If ministerial intervention were necessary, different problems might arise. Other adjustments would then have to be made to local authority budgets.

Mr Phil Willis (Harrogate & Knaresborough, Liberal Democrat)

The hon. Gentleman makes a powerful case. Does he agree that the January deadline means that local authorities have to determine the education aspects of the budget significantly ahead of the end of January, before the final RSG settlement is announced? Would not the whole local authority budget have to dance to the tune of the education budget and everything fall in line?

Mr Adrian Bailey (West Bromwich West, Labour/Co-operative)

I agree with the hon. Gentleman. Education usually comprises between 55 and 60 per

cent. of a metropolitan authority's budget. It would have to be determined ahead of other budgets, although in practice local authorities might well try to determine the lot at the same time. Either way, the deadline—and, indeed, the 15 February deadline—presents problems. Any adjustments will impact on other departmental budgets.

Will the Minister give an assurance that if adjustments to a local authority budget are made about the time that the figures for the education budget have to be provided, local authorities will not be penalised by any subsequent adjustment? The process must be flexible; otherwise it could make a serious impact on local authority budgets.

Mr Graham Brady (Altrincham & Sale West, Conservative)

I am pleased to follow the hon. Member for West Bromwich, West (Mr. Bailey) whose first contribution to our proceedings has been worth while and helpful to both sides of the Committee. I am sure that we can look forward to further well-informed contributions from him.

Amendment No. 192 sits alongside amendment No. 220. Approaching the problem in a slightly different way should help shed light on some of the difficulties identified with amendment No. 220. That amendment was designed to replace one date set in stone with a more accommodating arrangement for local authorities in setting their budgets. The flaw is that it would have replaced one date set in stone with another, but I accept that the proposed date might have been more realistic. It was a genuine attempt to deal with the problem.

Amendment No. 192 is more flexible. It is designed not to fix a specific date, but to provide a minimum period following the settlement of teachers' pay, which must be known to the local authority and Ministers before such a determination can be made. In theory, the date 21 days after the publication of the teachers' pay settlement might fall before the end of January; that would allow Ministers to proceed according to their timetable. However, if the 21-day date falls after the end of January, the amendment would provide a little cushioning, which might allow some of the identified pitfalls to be avoided. In an earlier speech, possible relevant variables, other than the teachers' pay settlement, were identified. By fixing a degree of flexibility in the system, amendment No. 192 would go some way towards helping in that respect.

Mr Phil Willis (Harrogate & Knaresborough, Liberal Democrat)

May I try to help? The hon. Member for West Bromwich, West made a powerful contribution. He raised an issue that I considered when drafting the amendment and which I discussed with the Local Government Association. The problem with going later into February is that one falls foul of legislation that requires authorities to set their council tax. I have been told that 15 February is the latest one can go without falling foul of other legislation.

Mr Graham Brady (Altrincham & Sale West, Conservative)

I am grateful to the hon. Gentleman. As I have already made clear, I accept the principle of what he is trying to do. I hope that Ministers will reflect on the fact that both the official Opposition and the Liberal Democrats have tabled amendments that are driving towards the same point, and share the concerns raised by the hon. Member for West

Bromwich, West. There are genuine problems with the Bill, and I hope that the Minister will reassure us that he has an alternative solution for tackling them.

Mr Stephen Timms (Minister of State (School Standards), Department for Education and Skills; East Ham, Labour)

Under the terms of the clause, we will ask local authorities to give us their proposed school budgets by the end of January. My hon. Friend the Member for West Bromwich, West rightly said that, in some circumstances, there will not be what he termed a definitive budget by the end of January; I accept that. Like him, I was responsible for some years for a local authority budget. I think that he will agree that there will certainly be a proposed schools budget by the end of January. That is what the clause asks for. In fact, it is a more generous timetable than is now in place.

At present, we approach local authorities early in January and ask them to indicate whether they intend to passport the increase in the education budget. Our experience is that few authorities have difficulty getting that indication to the Department by the middle of January. As my hon. Friend and other members of the Committee know, local authorities prepare their budgets over a considerable period, and much of the work is done a good deal earlier than the dates that we are discussing.

Amendment No. 192 would mean that we would not normally receive information on a local authority's proposed schools budget until the end of February. Amendment No. 220 would make it somewhat earlier than that. However, I suggest that both dates would be too late for the process that is envisaged of setting a minimum budget for an authority's schools before the new financial year. That is the purpose of the measure, and we will debate it shortly. However, for local authorities to take into account the Secretary of State's intention, if she has one, to set up a minimum budget, they must be aware of it before the last date on which they can set their budget and council tax demands. The hon. Member for Harrogate and Knaresborough commented on the date for precepting authorities, which I understand is the end of February. The hon. Gentleman should therefore accept that the Secretary of State cannot receive the information less than a fortnight before the budget and council tax for that authority is fixed.

We are not asking LEAs to tell us how much the teachers' pay award will cost them and their schools. There may be some variation. The pay for other support staff in schools is often not set until well into the financial year, and that uncertainty is part of the system. It is crucial for the Secretary of State, in making her judgment, to know whether authorities are passing on to their schools the increase in resources that we have made available for the schools budget. The initial proposed figure is made before Christmas, typically at the end of November. It is not unreasonable to expect LEAs to declare their intentions by the end of January. I re-emphasise that we are talking about the proposed budget. It may not have gone to members for a final decision by the end of January, but there will be a proposal, on which the clause requires LEAs to report.

Mr Graham Brady (Altrincham & Sale West, Conservative)

The Minister is making a genuine attempt to deal with our concerns. We are clearly talking about a proposed budget that may not even have gone to elected members of the LEA at that point. Could the Secretary of State be making decisions based on a proposed budget that may bear little relation to the final agreed budget?

Mr Stephen Timms (Minister of State (School Standards), Department for Education and Skills; East Ham, Labour)

I do not think so. There may be subsequent variation, but those who have been involved in the processes would recognise that by the end of January most decisions are in place and the room for manoeuvre is limited, given the need to send out council tax bills and to give certainty to various parts of the organisation.

Mr Phil Willis (Harrogate & Knaresborough, Liberal Democrat)

The exchange has been good, and we have raised some important issues. However, I am not satisfied with what the Minister is saying. He is describing an unholy mess, and the clause will make it worse. The bottom line is that if the Minister examined his own records he would know that the anxieties to which he has often referred are not an issue. Passporting is a classic example. He knows that last year only eight LEAs—I think that it is only eight—failed to passport all their education money into the budget. Of those, seven spent significantly above the standard spending assessment.

What the Government were trying to do in relation to the passporting regulations was nonsense, because the LEAs could have passported all the money but cut school budgets by 10 per cent. We must get real, rather than create mythical dragons that must be slain. Only one authority did not passport all the money, but spent less than the SSA, and it had just received a brilliant Ofsted report and a report from the Audit Commission that said that it was delivering—

Mr Graham Brady (Altrincham & Sale West, Conservative)

Which one?

Mr Phil Willis (Harrogate & Knaresborough, Liberal Democrat)

I prefer not to say, because that is not my point. Passporting is not the big issue that the Government and the Minister think it is, because that dragon has already been slain. That was not a Welsh accusation, by the way, Mr. Griffiths.

We should abandon the idea of proposed and actual budgets. Schools need to know when the authority has completed its consultations, in which a school forum will now be involved. Once the consultations are concluded, the school requires to know the School Teachers Pay Review Board's recommendation. For most authorities, teachers' pay accounts for between 73 and 80 per cent. of the education budget. Once that amount is known, elected members can debate what the level of council tax will be and, ultimately, the level of resources allocated to schools. I prefer finality rather than lots of different processes. Authorities already have a process, as the hon. Member for West Bromwich, West pointed out, in which there is an elongated period of uncertainty between the provisional and the actual RSG. To extend that further would be unrealistic.

If the Minister will not agree to my proposals, despite the fact that the Local Government Association feel that my timetable is feasible and achievable, will he consider putting the STPRB conclusions back a month? That would allow local

authorities to have the STPRB results while they were debating their RSG. If they had that information, it would not matter whether the Minister wanted a draft or a final version by the end of January.

I shall not press the amendment to a Division, but the Minister should be realistic about the certainties that schools need and about his expectations of local authorities. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 39, as amended, ordered to stand part of the Bill.