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Baroness Blackstone: I want to move on while trying to be helpful. I have said twice--perhaps three times--in the course of either Second Reading or this afternoon that the Minister for School Standards has made it absolutely clear that a child in an isolated rural village that is some distance from the next one or another school will be able to remain at that school but that we will provide extra resources so that there is an additional teacher to ensure that children in rural areas are not taught in over-large classes any more than children in urban areas.

In many village schools, classes are much smaller because the population does not sustain large class sizes. We are talking about a rare and unusual situation. I know that in some villages the class size might be about 30 and could go to 31, but in most cases the reverse applies. Classes are smaller than classes for the same age group in urban schools.

I repeat that where there are more than 30 children in infant school classes in rural areas the resources will be made available to provide additional teachers in order to ensure that that does not happen and that children are not sent some distance to a school in another village or town.

Baroness Blatch: We welcome everything that the noble Baroness said, but I believe that she is under-estimating the number of areas in which classes will be bigger. To my knowledge, during the past 20 years many small schools have been taken out. I was responsible for taking out a school with fewer than 10 children. I was part of a group which as an experiment set up a federation of three schools whose total number was less than 40. Many experiments have been tried but a large number of small schools have been taken out. Village schools have been amalgamated and therefore three, four, five or more villages feed into the school.

Will it be possible to brick build between now and 2001? My local authority bid this year but has received nothing from the Government. Its bid to address class sizes of 30 was rejected. I do not know whether we will be lucky next year or the year after. I do not know what will happen in 2001 when it has not received its money. However, by 2001 every education authority in the country will need to receive money in order to ensure that they can conform to the proposals. On occasions, children will be moved to another school. Therefore, the definition of poor schools is important. There must be a realistic expectation of building brick extensions for small numbers of children, which is the only way some rural schools will be able to cope.

The whole purpose of opposing the Question that Clause 2 shall stand part of the Bill was to elicit more information. I still believe that we will need yet more information and no doubt I shall return to the matter on Report.

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Clause 2 agreed to.

Clause 3 [Payment of grant in connection with reductions in infant class sizes]:

Baroness Blatch moved Amendment No. 17:

Page 3, line 8, after ("grants") insert ("for the purposes specified in subsection (1)").

The noble Baroness said: I hope that the Government will respond in detail to this amendment. From the outset of the policy, and well before the election, the Government made a firm promise to phase out assisted places--almost to remove them overnight--making available the money saved to meet the pledge. It was not long after the election before the Government realised that capital was separate, whatever they say. No doubt, there will be capital costs which we have heard today will be realised in the form of solid brick buildings. Therefore, the costs will be considerable.

On a previous occasion, the noble Baroness made it clear that money from the assisted places scheme was not meant to fund the capital scheme. I accept that that is a separate issue. However, I wish to know that the money which is being made available this year, the extra money which was made available for education and the money which was made available for all kinds of pet schemes that have been announced during the year are coming from a one-off source. When that one-off source of money dries up, perhaps the noble Baroness will tell me whether the Treasury is standing by to pick up the deficit which will appear. Something must replace that money or the education world must learn to live without it. What forward promise will the Minister give that the one-off money which has been used for many of those schemes will be reimbursed, substituted or made up to education?

In the case of the assisted places scheme, we have some concern as to whether the moneys being saved will completely meet the revenue costs of the pledge. Secondly, I am not absolutely certain that the Government have given us the net figure which must account for all the young people who will be fed back into the system. We must remember that this is mainly secondary education money. There was some in the primary sector but it mainly affects the secondary sector. Therefore, some of that money must pay for returning children back into the state system whose places will be removed from the independent schools.

Furthermore, it is not right to say that those children will go back in and be absorbed by the education authorities, because we now live in a world where money follows the pupil. Therefore, if a school has 1,000 pupils in one year, it will receive the aid-weighted pupil unit money and 1,000 times whatever that amount of money is, according to the age of the child. If the following year, the school has 1,010 pupils, it will receive 1,010 times whatever that unit of money is from the education authority. Therefore, there is a cost for each child returning to the state education system from the independent sector under the assisted places scheme. It would be helpful to know what the Government believe that net figure to be.

The point of my amendments is to make it clear, and abundantly clear to Parliament, that where the amount of money is exceeded--in other words, when and if there is

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a deficit from the money used from the assisted places scheme to provide revenue and it needs to be topped-up--first, the additional costs will be met by government and, secondly, that the specific grant will be dealt with by way of regulations so that we in Parliament can be aware of the costs of meeting the pledge. I beg to move.

Lord McIntosh of Haringey: The noble Baroness asked me to respond in some detail. I find that difficult because the amendments as drafted do not make very good sense. However, I hope that I can reply in sufficient detail to convince the noble Baroness to withdraw the amendment.

Amendment No. 17 sets out to do something which the present wording of the clause already achieves. The amendment relates to the grants that the Secretary of State may withhold when he has not approved an LEA's class size implementation plan. It is to ensure that he may withhold no grants other than those that would be paid for the purpose of reducing infant class sizes.

The amendment is not necessary. Clause 3(2)(a) refers to grants "under the regulations". The Bill states:

    "Regulations under this section shall provide for the Secretary of State ... to withhold grants ... where no proposed arrangements by that authority have been approved by him under section 2"

The regulations to which it refers are those in subsection (2) which relate to "this section"--that is, Clause 3--the clause covering the payment of grants to reduce infant class sizes. The power given to the Secretary of State under subsection (2)(a) would not enable him to withhold any other grants. Therefore, I hope that the noble Baroness will recognise that her amendment adds nothing to the drafting of Clause 3.

Again, I am afraid that we found Amendment No. 18 rather confusing. I understand from what the noble Baroness said that the intention of the amendment is to ensure that the specific grant must cover all the costs that the LEAs will incur, but the drafting does not actually say so. We have said that we will provide the funding that LEAs require to enable them to reduce infant class sizes. We will base the funding, in the initial years at least, upon their plans. However, we will have to be careful how we assess the costs.

If an LEA has under-invested in infant classes so that its problems appear worse than those of comparable LEAs, we should not reward it for past under-investment. That would be a perverse incentive; but we will provide, through specific grant, the costs of meeting the limits on class sizes. We said as early as last June that the assisted places savings would be for revenue expenditure. The Minister for School Standards, Stephen Byers, said then in another place:

    "The assisted places scheme is releasing revenue money which we shall use for the benefit of teachers' salaries ... capital is dealt with differently in terms of public expenditure".

We have already released the first £22 million of savings from assisted places to pay for extra infant teachers from this September, and we have made £40 million of new capital available in 1998-99. The noble Baroness sought a categorical assurance that we

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will provide, through specific grant, the costs of meeting the limits on class sizes. The answer to her question is that we do give that assurance.

10.30 p.m.

Baroness Blatch: I am grateful to the noble Lord for his response. I did not make myself clear on the first point, but I am enlightened by his answer. I wanted to be absolutely certain in that respect. I am still haunted by shades of the Teaching and Higher Education Bill in which the Government have taken a power to withhold grant--the grant being general grant--in order to punish a university or college for charging top-up fees for a course. These regulations apply where a local authority does not conform, or does not live up to its duty to uphold this particular policy and where grant will be withheld. In other words, my understanding, from what the noble Lord said, is not that it will be withheld; the LEA simply will not get it. The grant is not being withheld because, if the LEA does not apply for it and is not doing its duty, it will not receive the grant. If an LEA is not conforming and is then directed to do so, I understand that the money will follow the direction.

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