School Finance (England) Regulations 2006

– in the House of Lords at 4:26 pm on 16th February 2006.

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Photo of Lord Adonis Lord Adonis Parliamentary Under-Secretary (Schools), Department for Education and Skills, Parliamentary Under-Secretary (Department for Education and Skills) (Schools) 4:26 pm, 16th February 2006

rose to move, That the draft regulations laid before the House on 19 January be approved [15th Report from the Joint Committee and 22nd Report from the Merits Committee].

Photo of Lord Adonis Lord Adonis Parliamentary Under-Secretary (Schools), Department for Education and Skills, Parliamentary Under-Secretary (Department for Education and Skills) (Schools)

My Lords, the draft regulations support the new funding arrangements for schools that we will introduce from April 2006, which demonstrate the continuing high priority that the Government give to schools. By 2007–08, total revenue funding per pupil will have increased nationally by more than £1,400 in real terms since the Government came to power—an increase of some 50 per cent.

In the Statement which my right honourable friend the Minister of State for School Standards made in December she announced details of the funding settlement for schools and local authorities for the next two financial years—from April this year to March 2008. The new arrangements set out in these regulations will provide for three important changes: first, a ring-fenced dedicated schools grant so that the funding intended for education is ring-fenced for that purpose alone within local authority budgets; secondly, multi-year budgets for schools so that they get the full benefit of the multi-year pre-announcement of funding that we made in December; and thirdly, a rationalisation of standards-related grants so that there is less central prescription on how standards funding is spent at school level.

In making provision for those three worthwhile changes we are striking the right balance between national prescription and local flexibility. To achieve the dedicated schools grants, the regulations define two separate budgets—the LEA budget and the schools budget. The LEA budget must include the expenditure on the strategic functions of a local education authority, whereas the schools budget can include only expenditure on provision for schools and pupils. Under the new arrangements the whole of a local authority's dedicated schools grant must be applied to its schools budget. That is the key to ensuring that funding intended for schools actually reaches them.

The vast majority of the budget must be distributed in the form of budget shares for individual schools. However, a local authority may retain necessary expenditure for other key educational functions, including certain types of school support services, nursery education provided outside maintained schools, and support for pupils who cannot be educated in maintained schools. As well as placing restrictions on the type of expenditure for which a local authority may retain money from its schools budget, the regulations limit the amount that can be retained.

The regulations also describe how local authorities must allocate funding to individual schools. They contain a mixture of central prescription and local discretion, which will be familiar to local authorities and schools in most respects. For example, the minimum funding guarantee, which guarantees every school an annual per pupil increase in funding to meet cost pressures, remains a central feature of these regulations. The minimum funding guarantee is an important safeguard for schools, is strongly supported in the schools community and supports the principles of stability and certainty that underpin the new arrangements at large.

There are two new provisions in the regulations. The first relates to the important matter of the relationship between the number of pupils in a school and its budget share. Local authorities can currently use a variety of methods to count pupils for the purpose of setting a school's budget. Such methods often lead to changes in school budgets part way through a year. We know from school representatives that this can be disruptive and create an unnecessary administrative burden. If their budget changes halfway through the year, that of course does not help schools to plan ahead effectively. Under the regulations, every school's budget will be based on the number of pupils on its roll in the January before the financial year to be funded. This change will provide greater stability, as the largest element of a school's budget will not alter during the course of the year.

The second new aspect of the regulations relates to the role of schools forums. Three years ago, all local authorities were required to establish schools forums. Until now, such forums have been purely consultative. They retain that important role, but the regulations now give them limited powers to approve local authority proposals to vary some aspects of the regulations. Regulations cannot account for every local circumstance, so it is necessary to allow local authorities to make minor variations.

The minimum funding guarantee is one example. The calculation of the amount of the minimum funding guarantee depends on a comparison of the funding on a like-for-like basis over two years in a school's budget. However, when a school is changing size, perhaps as a result of adding a new year group or a new class, such a comparison is not possible unless a variation is made to the MFG. Such a variation usually consists either of adjusting the baseline used in the MFG or of adding on any new funding to the school's budget once its MFG calculation has been worked out. Either way, the effect is to ensure that the school's guaranteed funding level is calculated fairly and is consistent with all other schools covered by the local authority.

Similarly, and as I have already mentioned, the amount of funding that a local authority may retain centrally from its schools budget is limited by the regulations. That is an important safeguard to ensure that schools receive the benefit of the Government's year-on-year investment in education. However, there might be exceptional circumstances where the amount of centrally retained funding needs to exceed the limit that is placed on it by the regulations. For example, a local authority might face some significant unexpected costs to provide for the education of a child with severe or complex needs. At present, variations to the regulations such as I have described can be agreed only by the Secretary of State. Under the new regulations, if agreement can be reached over certain matters between a local authority and its schools forum, we believe that there should be no need for the Secretary of State to be involved at all. This is an important devolution of power and responsibility. However, if agreement cannot be reached locally, the Secretary of State retains powers to determine such requests.

That is what in outline the regulations do. We have, of course, consulted widely. There was majority support for all the specific issues raised in the consultation. Inevitably, some concerns were raised. Despite an overall majority in favour of the introduction of school budgets based on a single pupil count, some believe that the new provision as originally drafted did not provide enough flexibility to recognise the immediate financial pressure that might be caused by an exceptional, unplanned change in a school's circumstances. For example, there was concern that a sudden, unexpected influx of pupils into a school would result in immediate costs that would not be recognised by using a single count date for pupils taken prior to the start of the year. In fact, the draft regulations on which we consulted made provision for such instances. However, in the redrafted regulations and the accompanying guidance, we have made the provision more explicit.

A more substantive concern related to the effects of the single pupil counts in January of each year on those primary and nursery schools that admit their nursery and reception children at three points during the year—September, January and April. A number of respondents to the consultation argued that using only a January count date for the purposes of school budgets would mean that pupils admitted in April would not be counted and that therefore no funding would be allocated for them. We think that this is a legitimate concern and, in response, the regulations have been redrafted to account for the financial effects on schools that operate a third admission point. In simple terms, we have allowed local authorities to add the number of nursery or reception pupils admitted in the previous April to a school's January pupil counts in determining its funding. That takes account of the third admission point but also ensures that the schools in question receive the same benefit of being given stable budgets at the start of the financial year as schools that do not have such admission arrangements.

These regulations give schools unprecedented certainty and flexibility in their budgeting. They will enable schools to plan ahead better and to get on better with the essential tasks of teaching and learning. On that basis, I commend them to the House. I beg to move.

Moved, That the draft regulations laid before the House on 19 January be approved [15th Report from the Joint Committee and 22nd Report from the Merits Committee].—(Lord Adonis.)

Photo of Baroness Buscombe Baroness Buscombe Shadow Minister, Education, Shadow Minister (Education) 4:30 pm, 16th February 2006

My Lords, we welcome the regulations and the general direction of the policy on school financing that they represent and deliver. The problems over school funding in 2003–04 were a salutary lesson for the Government and civil servants and, indeed, for us all. It is important that we put in place a system that combines certainty and stability with a degree of local flexibility that does not go on to undermine that certainty and stability.

We welcome the principal policy behind the regulations, the new ring-fenced dedicated schools grant, the multi-year budgets and the rationalisation of standards grants. We also welcome the rationalisation into one set of regulations and the fact that they cover two funding periods—2006–07 and 2007–08—with the intention of having three-year funding periods in the future in line with the spending review cycle.

Despite the simplification, however, school funding is still incredibly complicated. The Minister will know that my honourable friend in another place, Nick Gibb MP, says that, notwithstanding that he is an accountant, he finds the methodology confusing. There is an array of guidance notes on Teachernet. In theory, things should be relatively straightforward, but they are not. There is a guidance note on setting school budgets for 2006–07 and 2007–08 for local authorities and school forums—I find it very hard to say "schools forums"; I am sure that it should be "schools fora". There is a note on the single pupil count. There is guidance on the use of the dedicated schools grant to deliver more practical learning opportunities at key stage 4. There is a central expenditure limit technical guidance note, a central expenditure limit calculator, a minimum funding guarantee technical guidance note, and a minimum funding guarantee calculator. There is a new document—the School Finance Regulations 2006—and a "pupil projection toolkit". There is also a Learning and Skills Council proposal for sixth-form funding in 2006–07.

Complexity adds to the difficulties that head teachers have in managing their budgets. It also decreases accountability and transparency. The complexity of the funding is a contributory cause of large numbers of schools running deficits. Will the Minister confirm that 1,866 schools are currently in deficit and that, of those, state nursery schools had debts totalling £277,000 in 2004–05, primary schools had debts totalling £34 million and secondary schools had debts adding up to £86 million? Will the Minister confirm that those figures on the amount of funds involved are right? Will he also confirm that 10 primary schools are in deficit to the tune of at least £247,000 and that 10 secondary schools had debts exceeding £858,000? Will he deal with the question put in another place by the honourable Member for Weaver Vale, and explain how many schools are sitting on reserves and what is the cumulative total of those reserves?

The Minister talked about the single pupil count. The key regulations before us are Regulations 14 and 15, which require local authorities to use a single pupil count to calculate the individual school budgets. Why any school would want to remain on the five-twelfths and seven-twelfths system baffles me. The single pupil count is defined in Regulation 14(6) as the number of registered pupils at the school on 19 January 2006—a Thursday—for funding period 1, and on 18 January 2007, which is also a Thursday, for funding period 2.

As the Minister explained, there was massive support for the regulations during the consultation. Some 53 per cent of people said that they were in favour of the principles, with 42 per cent against. The Secondary Heads Association, for example, said:

"This is a sensible balance between predictability and flexibility and works well in many authorities already. There may need to be some local sensitivity and flexibility"—

I think the Minister made that clear—

"in the first two years as schools adjust—but eventually it works perfectly well".

The Chartered Institute of Public Finance and Accountancy was also in favour of the proposals, but was unclear about the meaning of Regulation 21(3), which relates to the flexibilities in the formula as a result of changes to pupil numbers partway through the year—an issue, again, to which the Minister referred. Regulation 21(3) has been removed from the final draft of the regulations. Will the Minister therefore confirm that paragraph (3) was removed because it added nothing of substance to the remainder of Regulation 21?

As the Minister said, concern was also expressed during the consultation about primary schools that operators staggered intake in the reception year and how that could affect funding if the count took place in January, with another intake arriving at Easter. In response, the Minister said that those concerns had been addressed in the finalised regulations. It is clear from Regulations 14(7) and 14(8) that pupils admitted in the summer will count towards next year's funding; that is welcome.

When there are unplanned changes to or significant increases in pupil numbers, the Explanatory Note says that the regulations allow local authorities to provide funding from their central resources and that the department will issue explicit guidance about that. That guidance is right when it says:

"In deciding whether a school needs an in-year increase in its budget for a pupil number increase, local authorities should consider the impact on the school's costs, rather than simply applying a percentage threshold increase in pupil numbers".

It goes on:

"Such an approach will take into account the need of schools to put on additional classes, and hence incur significant additional costs, and also what proportion those additional costs are of the overall budget of the school".

That must be the right approach.

The associated issue is that of deductions from funding when pupils are removed from a school's roll and attend alternative provision. The SHA stated:

"A pupil leaving the school for whatever reason after the start of the year does not enable the school to make any appropriate savings. The removal of funding when a pupil leaves does not encourage schools to support the move to an alternative placement; nor is it an efficient way of funding alternative provision".

Will the Minister set out how those concerns were dealt with in the final draft of the regulations?

The Minister will be aware that my honourable friend the Member of Parliament for North Wiltshire, James Gray, was given assurances by the Minister for Schools in another place that the Learning and Skills Council is working on proposals for the expansion of schools. When will the LSC present its findings to Ministers?

The decision to allocate teachers' pay grant money through the pupil numbers formula might adversely affect schools with a high proportion of experienced and effective teachers. According to initial calculations, the decision, if fully implemented in 2006–07, would mean a loss of revenue to the school of between £15,000 and £18,000 a year. Even if the change were phased in over three years, it would still have a similar impact in three years' time, because no retirements are anticipated in that period. Will the Minister say how such a school should deal with that issue, and whether there is flexibility in the regulations to assist schools in local constituencies, for example?

On schools forums—again, I am sure it should be "fora"—and accountability, the Local Government Association expressed its view well. It stated that:

"the LGA considers that Schools Forums have worked well as consultative bodies. It can see the benefits of giving them power to agree certain regulation changes in order for the local authority not to have to seek the permission of the Secretary of State. However it is against giving them decision making powers which should properly be the province of the local authority".

The LGA makes a serious point about democratic accountability. Yes, there is a case for a formal consultation body made up of local head teachers and other stakeholders, or constituents, to advise policy makers and elected officials on decisions. Ultimately, however, such decisions need to be taken by people who are accountable to the electorate, however technical and detailed that process might be. Today's technical issue is tomorrow's point of principle.

The National Union of Teachers is concerned. It states:

"We do not agree with the proposal that local authorities need only consult their Schools Forum on changes to the local funding formula. Schools forums have an important role to play, but are not the only local stakeholders in education. Local stakeholders that are not represented on the Schools Forum, including unions and individual schools, need to continue to be included in consultation on changes to the funding formula. Such changes will have a potentially significant impact on individual school budgets".

The SHA has also expressed concern in respect of the power that schools forums should have.

Even though it may seem rather unfair to detain the House at such a time, will the Minister explain the changes in the regulations to the rules on prudential borrowing? These are complex issues and perhaps they should not be quite so complex. I hope that the regulations will be a first step towards simplifying the whole funding regime for schools. There is still much further to go, but we support this first step.

Photo of Baroness Walmsley Baroness Walmsley Spokesperson in the Lords (Children), Education & Skills 4:45 pm, 16th February 2006

My Lords, I, too, thank the Minister for outlining and explaining the regulations. We are not quite as enthusiastic as the noble Baroness, Lady Buscombe. My attitude might be described, in the words of WS Gilbert, as "modified rapture". I welcome the fact that these two sets of regulations are to be amalgamated and will cover two financial years, but that makes the regulations very complicated, as the noble Baroness, Lady Buscombe, outlined, with guidebooks, toolkits and all the rest of it. Complexity may be necessary, but it is the enemy of transparency. It also presents problems for the growing army of school bursars. There have been numerous changes to school budgets in recent years, which make my head spin. I feel sorry for the poor heads and bursars who have to deal with them daily. Is the Minister satisfied that they have had enough training?

We welcome the move towards multiple-year funding, since it brings more stability and allows schools and LEAs to plan services. However, it is worrying that more and more control from the centre is proposed in the regulations, cutting out the discretion of LEAs. A little local discretion remains, but the problem with ring-fencing is that LEAs that used to spend more on education than the Government were passporting may decide not to do so any more. According to the LGA, that is happening already.

We must not just think of education spending as money for schools. We on these Benches think of schools as part of a wider education service providing and supporting education for communities. If we leave it entirely to individual schools to decide which of those services to buy into, we might end up with a central service that is not viable. Look at what happened to music services when individual school budgeting first came in. It also takes financial levers away from the LEA, which democratically represents the local community. The Every Child Matters agenda pulls together services to ensure that the child, not institutions, is the centre of spending and policy, which is quite right, but one must not assume that only the school is in a position to know what services local parents and young residents want and need. If all the money is ring-fenced to the schools, the Government will undermine education in its widest sense, so there is a point beyond which it is not sensible to go. I think we are rapidly reaching it.

To some extent, I welcome the new powers given to schools forums, since at least they are local, unlike the Secretary of State. But if one looks at the membership of those forums, one realises that they are dominated by the schools' interests. It brings to mind the saying that "Turkeys don't vote for Christmas" when one realises that the LEA has to ask that body for permission to withhold money from schools for central services under Regulation 5(2). I note that if it can get the approval of its schools' forum, that should enable it to support the broader children's agenda to fund multi-agency activity in support of vulnerable children. I wonder whether that could be extended widely enough to include mental health and counselling services, such as the Place2Be initiative, about which I am very enthusiastic, as the Minister knows. I also wonder whether there is any limit on the amount of such funding that can be spent in the voluntary sector. What guidance will be given to schools about how to balance the purchase of maintained sector services with services from voluntary and for-profit providers who need a flourishing and predictable market or they will go to the wall? I do not think that can be done by individual schools. It has to be left to a body with a strategic overview and the financial levers to make things happen—in other words, a properly funded LEA.

Perhaps I may ask the Minister specifically about music services. I looked carefully at the regulations and notes to see where the funding for these services came from—perhaps the officials in the Box could help us. I looked at Regulation 7 and Schedule 2 and I could not see it mentioned. I came to the conclusion that it must be covered by paragraph 32 of Schedule 2, but perhaps the Minister can confirm that. If so, I am concerned about the upper limit of 0.1 per cent of the school's budget that can be allocated to this group of non-specified services. Does this really give enough flexibility? I use music services as only one example.

Another matter that causes me some concern is the new rule that pupil numbers must be determined at a single point in the year. What is the rationale for that, and is it for the benefit of schools or the LEA? I see that it takes away some of the discretion of local authorities, but, according to the notes, the stakeholder schools consulted thought that it would bring them a desirable element of funding stability. I note also that the regulations allow for changes resulting from staggered intake in primary schools from nurseries and pre-schools and for unusual and significant changes in the school populations to be funded by the LEA from central resources.

However, I doubt whether most hard-strapped authorities' central resources can stand much of that sort of demand. I read in the notes that 53 per cent of consultees were in favour of this change but 42 per cent were opposed. I wonder why, with such a large body of opposition, the Government have not decided to pilot this new arrangement in a few local authorities before rolling it out all over the country. It could well be advantageous to schools. Why have the Government decided not to try it first, just to make sure?

I echo some of the concerns expressed by the noble Baroness, Lady Buscombe, about alternative provision for excluded pupils. I am very concerned when any pupil is excluded from a school and does not go immediately, not after five or six days or whatever it is—I think it is more than that at the moment—into alternative provision. If you are to have that availability, you must have spare capacity. That means that you have to look very carefully at how that alternative provision is funded. It could well be that not enough is going into that alternative provision. I wonder how these regulations will affect that. I hope the Minister can help me with these questions.

Photo of Lord Adonis Lord Adonis Parliamentary Under-Secretary (Schools), Department for Education and Skills, Parliamentary Under-Secretary (Department for Education and Skills) (Schools)

My Lords, the noble Baroness gave these proposals a welcome—what she described as—"modified rapture". From her, I take that to be the highest possible praise for measures being introduced by the Government. I take that compliment in the spirit in which it was intended. I am also very grateful to the noble Baroness, Lady Buscombe, for her remarks. I will not pretend that I can answer all these detailed questions. In particular, I am looking in vain for the note about music services and which regulation they come under, in terms of the ability to retain central funding. Rather than blather, I will give specific replies to a number of the specific points.

On the major points raised, there is clearly a philosophical issue, on which I suspect the noble Baroness, Lady Walmsley, and I will not agree, which is whether having some degree of ring-fencing of local authority budgets in respect of schools is a desirable step. We believe that it is because it protects the interests of schools and ensures that the funding the Government have allocated to education—what they regard as their top priority—is spent in local authority budgets on that basis.

I understand the argument against, which is that this restricts local authority discretion to some extent. I do not believe that, as it were, restricting local authorities' discretion in terms of allowing them to spend less on education than we would like is a worthwhile freedom for local authorities. Naturally most local authorities do not either, which is why I do not detect a great deal of heat in that issue.

The noble Baroness said that the fact that we stipulate a minimum that local authorities must now spend means that they will regard that as a maximum and not spend on top. The whole point of elected local authorities is that they are accountable to their voters. My sense is that local authorities in areas where education spending is felt to be inadequate will be under every bit as much pressure to increase that funding and ensure that their schools are properly supported after the minimum guarantee and the ring-fencing is in place as they were before. That is very much a matter between them and their voters. We have local democracy alive and flourishing and do not believe that simply stipulating the minimum that they must spend in any way disincentivises them from spending more.

The noble Baroness, Lady Buscombe, raised two broad issues to do with balances and schools forums. I cannot answer why we have gone for one use of the plural rather than the other, so that is something else about which I shall have to write to the noble Baroness, but I imagine that that was the result of long and anguished deliberations by officials on the appropriate word, and that there is some rationale for it.

First, on financial balances, of which a great deal of play was made in another place, we should get the matter in perspective. The figures given by the noble Baroness this afternoon, repeating those raised in another place, related to the 7 per cent of primary schools and 16 per cent of secondary schools which have deficit balances. That means that the overwhelming majority of schools are not operating in deficit. The noble Baroness asked me for the overall surpluses. The gross surplus at the end of the last financial year across all school budgets was £1.7 billion. When the deficits are included relating to the small minority of schools that are running deficits at the moment, the net surplus was £1.5 billion. That relates to a total spend on schools through local authorities of £27.7 billion, so that figure is not unreasonable, especially given that many schools accumulate balances specifically because they want to fund priorities in the period ahead, including capital and other priorities, for which it is perfectly sensible for them to retain balances from one year to the next. But local authorities have the power to intervene if they believe that balances are excessive. In exceptional circumstances, they can require steps to be taken. In very exceptional circumstances, they can suspend the power of the school to run its delegated budget because they believe that it is not doing so with sufficient prudence.

So if we consider the situation at large, we do not believe that the deficits are unreasonable or that we have a serious problem with excessive numbers of schools running deficit balances. In individual cases where school budgets are not being properly managed, local authorities have a legitimate and very important role to intervene to ensure that management is brought under control.

The noble Baroness, Lady Walmsley, mentioned the important role of bursars. I simply note in passing that until recently, there were very few bursars in schools. We regard it as an immensely worthwhile step forward. After all, secondary schools are in many cases running budgets above £5 million a year and employing more than 100 staff. Because of the development of extended schools and new funding streams to meet the Every Child Matters agenda, which the noble Baroness so rightly emphasised, schools are receiving substantial additional funding from a variety of sources, including regeneration funding. They are managing an ever-expanding workforce and it is immensely important to have proper, professional support to do that.

Through the National College for School Leadership, we are providing dedicated training for bursars. We provided the first ever training course in financial management for schools for the specific training of bursars. The number of bursars in secondary schools, in particular, is rising rapidly. We see that as a thoroughly welcome development. It shares the burden of school management more widely, so head teachers are not solely responsible, as they often were before, and it professionalises the operation enormously. Although I much regret to say that not many schools are lucky enough to have either bursars or governors with the financial expertise of the shadow Minister for schools in another place, to whom the noble Baroness, Lady Buscombe, referred, from many years reporting on the Financial Times, it is not my view that financial reporting and regulation in the private sector is somehow easy to understand, non-complex and that, in stark contrast, we have a morass of complicated guidance and regulations in the public sector.

Photo of Baroness Buscombe Baroness Buscombe Shadow Minister, Education, Shadow Minister (Education)

My Lords, I hope I will be forgiven for intervening. I welcome the fact that the Government are following the example of the private sector in that it is a given that private schools have bursars. I agree that having a bursar makes a huge difference to the role and administration of schools. It is a welcome move.

Photo of Lord Adonis Lord Adonis Parliamentary Under-Secretary (Schools), Department for Education and Skills, Parliamentary Under-Secretary (Department for Education and Skills) (Schools)

My Lords, I agree entirely with the noble Baroness on the point and I believe that this is a welcome professionalisation of the financial management of schools.

Having dealt with the issue of school balances, I turn to school forums and their powers. There has been some misunderstanding in one respect. In no way do we seek to restrict the legitimate powers of local authorities. The decision-making powers for school forums as laid out in these regulations affect the discretion which currently resides with the Secretary of State in terms of variations in arrangements for school budget shares, issues such as the definition of the minimum funding guarantee, the central expenditure limit and the ability of local authorities to vire funding between the schools budget and the other important priorities referred to by the noble Baroness, Lady Walmsley. I know that she has in mind that the great evil in the education system is the Secretary of State and the Department for Education and Skills. In so far as that is indeed the case, we believe that this evil is being reduced by giving school forums additional powers which they can take on and operate in conjunction with local authorities.

I should also stress that we are not talking about local authorities having to agree with schools forums or schools on the retention of any funding for central services. It is funding only over and above those maximum levels prescribed in the regulations. We believe that the levels are quite generous because in recent years school funding and funding for central services have been rising substantially ahead of inflation. So we do not believe that this is an onerous burden. However, it is important that local authorities and schools are engaged in dialogue and that schools are properly represented with a strong voice so that they are able to discuss with their local authorities issues to do with the composition of central budgets where they go beyond a certain level.

Schools have generally welcomed the role of school forums and are playing an increasingly active role in them. They see them as an important way of discussing with their local authorities the planning of services and a wider set of issues relating to the school system. When we produce the forthcoming education Bill, the school forums and the admissions forums, which operate in a similar way, will be strengthened so as to reflect the important role they play in representing the community of schools within an area in their discussions with local authorities.

The noble Baroness, Lady Walmsley, said that turkeys do not vote for Christmas and that schools would not be prepared to see more funding retained centrally for services which take away from their budgets. In my experience of talking to head teachers and local authorities about these issues, in this case the turkeys are quite intelligent. They will not vote for self-mutilation, let alone extinction, and nor would one expect them to do so. However, they recognise that well-planned and properly funded central services are important, especially in the area she mentioned—that of excluded pupils and those whose needs are not adequately being met within schools.

I happen to agree with her strongly that we need to provide much better support, including if necessary organised support at local authority level if not at the level of the school or group of schools, for pupils who are temporarily excluded from school well before we reach the current statutory requirement, which is that they are provided for after 15 days of exclusion. That is an incredibly long time for a pupil to be out of school with no properly organised provision. We announced in the White Paper that we would reduce that 15-day period to five days, which I assume the noble Baroness will support. That will have to be funded and we will ensure that provision is made for it. But where schools want to come together with their local authorities to make provision for less than five days, there is nothing whatever to stop them doing so. It is my belief that school forums provide much better discussion mechanisms between schools and will facilitate that, particularly in conjunction with the other important changes we have made. Those include the requirement that all schools should agree a proper protocol for the treatment of and provision for pupils who have been excluded so that all schools feel that they have a real responsibility for providing for such pupils; not, as has often been the case in the past, that a small minority of schools end up picking up these pupils once they have been excluded from other schools.

So, taking all these factors into account, I do not believe that the incentives are all one way. With much-increased accountability requirements on schools for what happens to their pupils after they have been excluded; with a much more even spread of hard-to-place pupils across schools; and with much higher public expectations of what should be provided for excluded pupils, I believe that in that area as an example, we shall see greater collaboration between schools and a willingness to pool budgets to provide better for pupils than in the past.

I hope that that deals with the main issues. A number of technical issues were also raised. I shall get back to the noble Baroness on music provision, which is as dear to my heart as to hers. As to prudential borrowing, I am assured that, despite the changes to the wording of the regulations, there is no change whatever to the prudential borrowing regime from that which applied before. As to pupils who leave school during the year and how this is dealt with, I am told that there is no change whatever in the treatment of excluded pupils in this respect; it remains a fundamental principle that funding follows the pupils.

In conclusion, I simply reiterate the point on which I started. These regulations are intended to enshrine the Government's commitment to multi-year budgets for schools; to set in place arrangements that will make it possible for those budgets to be delivered to schools; to give schools further stability in their budgetary arrangements; and to strengthen the role of schools forums in representing schools collectively in their discussions with local authorities on these important financial matters. On that basis, I commend the regulations to the House.

On Question, Motion agreed to.