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Session 2000-01
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Delegated Legislation Committee Debates

Local Government Finance (England) Special Grant Report (No. 74) on Threshold Payments

First Standing Committee on

Delegated Legislation

Tuesday 27 February 2001

[Mr. David Amess in the Chair]

Local Government Finance (England)

Special Grant Report (No. 74)

on Threshold Payments

10.30 am

The Minister for School Standards (Ms Estelle Morris): I beg to move,

    That the Committee has considered the Local Government Finance (England) Special Grant Report (No. 74) on Threshold Payments (HC 209).

First, I welcome you to the Chair, Mr. Amess. You are impartial on this occasion, but as you take a keen interest in education, I hope that you will enjoy the debate and that the rest of us will understand it.

Members of the Committee are probably queuing up to draw my attention to the error in the second formula in paragraph 16. We have issued a correction, but I am told that some members may not have received it. I shall therefore put on the record that the second multiplication sign needs to be replaced with a plus sign, otherwise we shall be in trouble with the Treasury.

Many of us have spent long hours in Committee discussing delegated legislation and other matters concerning the threshold. Without tempting fate, I think that we are towards the end of that series of discussions, which will enable the Government to put in place a system for rewarding good teachers who teach well and encouraging them to stay in the classroom.

The report before us takes up where special grant No. 70 left off. Those who attended that Committee just before Christmas will understand that both grants are part of the way in which local education authorities are being funded to meet the additional costs of teachers who pass the performance threshold and who are entitled to be paid on point 1 of the new pay structure. We are committed to providing all the funds to cover the additional costs of teachers moving on to the upper pay scale. Hon. Members may recall that the special grant that we discussed before Christmas gave us authority to pass money to local authorities until the end of March this year. This report will allow us to pay local authorities until March 2003. Some hon. Members may realise that that is a year longer than was originally stated, but it is in response to requests from head teachers and others, to ensure that the system is embedded before we change the way in which the threshold is financed. It also enables the timing to be smoother if changes in local education authority financing result from the Green Paper.

The threshold was established under the Education (School Teachers' Pay and Conditions) Order 2000 made on 22 November. Nearly all the teachers on this scale will have arrived there by passing the threshold assessment, although heads, deputies and advanced skills teachers who revert to classroom teaching will also normally be paid on that scale.

When we discussed the special grant report last year, we made available to local authorities sufficient money to pay all teachers on the assumption that they might all pass, so that authorities would not be in the position of not having enough money. The sum was based on the £2,001 salary increase, plus the 17.8 per cent. allowance for related national insurance and pension contributions. We knew that when we had an idea of how many teachers were passing the threshold the payments to local authorities would have to be adjusted to reflect the actual number of teachers being paid on the upper pay spine, rather than working on an assumed number. Since that Committee sitting, we made an initial payment in December. LEAs received four times their monthly amount, to cover the period backdated to September. Monthly payments have also been made in January and February.

Clearly, we cannot continue to fund on the basis of applicants when we are beginning to receive reliable data on the actual numbers passing. The report before us will provide grants that are based on emerging and actual success rates. Therefore, the amount of money paid to local authorities will be in line with what is needed to pay actual threshold costs.

From March 2001, payments to local authorities will be adjusted when we have reliable information on the emerging success rates of teachers. That is what the formulae in the report are designed to deliver. At first sight, they may appear to be complicated, but their roots are simple. There are many variables because each local authority will begin to access money through the new formulae at different points.

The system is built around academic years. In each month, we shall use the most up-to-date information available on the full time equivalent number of post-threshold teachers in each local authority. Using that number, we shall calculate the grant that the authority needs to cover the additional salary costs up to, and including, the month that we are in. We shall deduct the grant that has been paid to date and, if the resulting sum is greater than zero, pay that level of grant. That philosophy underpins most of the formulae.

Mr. Richard Allan (Sheffield, Hallam): Will the Minister indicate the trend in emerging success rates, so that the Committee can envisage how balancing up will work in practice?

Ms Morris: We are not in a position to announce those figures. We shall not use the new formulae to adjust payments to a local authority until at least 40 per cent. of its teachers have been assessed. Apart from Bradford and those local authorities that were in the vanguard of the assessment, no local authority has yet reached that point, which is why I shall not name a figure. The figure printed in The Times Educational Supplement was based on a quick ring round of schools that had been visited by assessors. However, it is reasonable to use the new formulae only when 40 per cent. of teachers have been assessed. I hope that the hon. Gentleman will take that as an indication of when we shall announce emerging trends. We want to put the percentage of teachers who are passing in the public domain, but we should prefer it to be an estimate, rather than a guesstimate.

Mr. Gerald Howarth (Aldershot): As the Minister rightly said, the formulae appear to be complex. I was reassured to hear that at root they are simple because I initially thought that the special grant report was an algebraic test for hon. Members. I must admit that I have not had time to get to grips with the formulae. Last night, members of the Committee were given a corrigendum. Could she take it as an example and, with reference to academic year 2001-02, explain the second formula on page 8 of the report so that we can understand the issue in real terms?

Ms Morris: I could spend the remainder of the hour and a half explaining formulae to hon. Members. In short, a multiplication sign at that point would have meant paying local authorities £1 million for each teacher that went through the threshold. The Government value teachers and are committed to investment in education, but we shall not give £1 million to each teacher who crosses the threshold.

Mr. Howarth indicated assent.

Ms Morris: I am glad that the hon. Gentleman has confirmed that he understands that point. I should not want him to leave the Committee under the misapprehension that the Chancellor has suddenly become more generous.

The hon. Gentleman says that he has not had time to come to terms with page 8, which contains the second formula, but my officials have made an excellent job of the written explanation and the signs at the end of the report. The effect of multiplying, rather than adding, is that the sum at the end is much greater than it should be, which is the problem with the second formula.

Two groups of people might need to be paid in line with a slightly different formula. Supply teachers teach when they are required or when they want to. We are keen for them to have the chance to access the threshold assessment and the extra pay that it provides. Part of the formula allows that at five points in the cycle, local authorities will make a retrospective claim for the number of days that post-threshold supply teachers have worked in schools in their area. We will pay grant based on the days worked within schools in the authority or directly within the authority during the analysis period, which will differ from month to month depending on the number of days for which a supply teacher is paid.

We have given teachers the opportunity for a review where they believe that they have been wrongly assessed as having not yet met one or more of the threshold standards. This year, because we are especially busy in assessing the largest number of teachers that will ever apply for the threshold at one time, the reviews may take longer than might otherwise have been the case. However, we hope that they will take place within three or four months. We do not want to penalise teachers who are ultimately successful after a review or whose review takes longer than expected, and we therefore included in the formula a section that permits payments backdated to the September of the academic year in which the teacher originally applied. A teacher who asks for a review and is successful will be entitled to the full value of the payment, so a separate formula is required to analyse that.

The special grant report is an important element of the implementation of our pay reforms. We have argued long and hard throughout the education service and in the House about the details of the assessment, the criteria that are used and the philosophy that underpins our approach. The report gives us the means to pay teachers who have applied for the threshold and have been successful.

Mr. John Hayes (South Holland and The Deepings): I shall make several general points when I speak, but I have three questions about technicalities. First, what will be the position of teachers who are seconded? I was with a teacher this morning who is working half a timetable while doing work for the Department for Education and Employment. Which formula deals with that and how will local authorities make the necessary adjustments?

Secondly, although teachers typically leave their jobs at set times of the year, some—for all kinds of reasons, sometimes emergencies—leave part way through a year. What will happen in those cases?

Thirdly, will the Minister enlighten us about the administrative costs to local authorities, which will be considerable?


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