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Lord Tope moved Amendment No. 2:

Leave out Clause 25.

The noble Lord said: My Lords, I beg to move.

On Question, amendment agreed to.

Clause 28 [Proposals for establishment or alteration of community, foundation or voluntary school]:

Baroness Blatch moved Amendment No. 3:

Page 27, line 8, at end insert--
("( ) Proposals under this section shall include provision to ensure that any school making the transition to foundation, voluntary aided or community status shall retain at least the same level of financial autonomy as it had before that transition.").

The noble Baroness said: My Lords, Amendment No. 3 seeks to ensure that any school making the transition to foundation status, voluntary aided or community status shall retain at least the same level of financial autonomy as it had before that transition. After all the amendments that have gone to and fro and all the amendments that have not been accepted by the Government, which aroused suspicions in the minds of grant-maintained schools about what exactly will happen on transition to another status, this is an opportunity for the Government now to be unequivocal on schools' financial autonomy.

The Government will have seen on Saturday a letter in The Times showing six signatures--there were many other signatures but The Times printed only six. The letter was from a large number of schools saying that the proposals set out in the School Standards and Framework Bill constitute a risk and that some of the proposals could damage some of the country's best schools. The level of financial autonomy enjoyed by grant-maintained schools is a matter they regard very seriously. Those schools fought jolly hard to become grant-maintained schools. They fought for that autonomy and now they wish to retain it.

I have to say at this point that I support very strongly indeed the extension to all schools of the kind of autonomy enjoyed by grant-maintained schools. I hope that that will happen, and very quickly. I am disturbed by the notion that it will be a phased in policy. I do not see any dangers because most of the schools that have enjoyed financial autonomy have dealt with the challenge well. In fact, there are measures both in this Bill and in previous statutes to cater for those schools which, for one reason or another, get into trouble, enabling financial management to be wrested away from them while matters are sorted out. Whatever the risks are, there is provision for dealing with them as they

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arise. However, schools are suspicious about what will happen and what the practice will be when grant-maintained schools change their status to another category.

There are two particular areas of concern. The first, which I have just mentioned, is the phasing in of financial autonomy to schools that have hitherto not enjoyed that degree of autonomy. It would be helpful to hear unequivocally from the Government that, whatever the phasing in system and however long it takes, no grant-maintained school that becomes a foundation school or a voluntary aided school will have to go back to the base of that local authority area, that it will retain all this autonomy and that the other schools will be phased in to meet at least the level of autonomy mooted in the Fair Funding paper--and possibly more. The first assurance I want from the Minister therefore is to say that, however this system is phased in and whatever happens to schools that have not enjoyed this autonomy in the past, it will not affect the level of financial autonomy enjoyed by grant-maintained schools as of today.

The other area which gives cause for concern--the answers we have had to date from the Government only add to that concern and heighten it--is the proposition in the Fair Funding paper that schools, in choosing whether or not to accept local autonomy (local financial management), will be invited to vote on certain aspects of central funding or central services. The primary and/or secondary sectors will vote as a block to decide whether they want to provide the services themselves or have them provided by the local authority.

Suggestions have been put forward as to the kinds of service for which they would be voting. But whatever they are, if the requisite percentage--the document suggests 80 per cent.--of schools vote to have a service provided by the local education authority, there is no good reason, given that the viable economic unit has been reached, for all schools to have to accept that autonomy. If schools that were previously grant-maintained are not part of that 80 per cent.--or the percentage decided at the end of the consultation process--they should retain their autonomy to provide the service. In almost all these services the schools have proven beyond doubt that they are able to secure value for money and make decisions that are better suited to their own schools and their own situations. Therefore, they jealously guard the right to be able to make decisions for themselves.

In those two critical areas therefore, schools are concerned. Because the Government never stop reminding us that they believe that grant-maintained schools received disproportionately favourable funding, which implies--it can imply no other--that funds will be reallocated away from ex-grant-maintained schools, they would like to know what funds will be allocated away from them. The argument either has force or it does not. If it has force, then they will lose money because the Government say that they are going to amortize funding across the whole sector. I do not disagree with that, except to say this. The additional funding that goes to grant-maintained schools and that ought to go to them when they become foundation

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and/or voluntary aided schools represents additional functions that their schools carry out. It is not there for any other reason. There is a rationale for it and, therefore, either the money is taken away and the functions remain or the functions are taken away, in which case it flies in the face of my amendment.

Amendment No. 3 seeks to ensure that during and following any transition, grant-maintained schools will not lose any financial degree of autonomy that they enjoy at this time. I beg to move.

4.15 p.m.

Baroness Blackstone: My Lords, this amendment seeks to pursue essentially the same objectives as the noble Baroness was seeking to pursue by other amendments tabled at the previous stages. Her concern--as she made very clear--is essentially to provide special protection for grant-maintained schools within the new framework.

I have to say that the amendment now tabled seems to be quite out of place in Clause 28, and I shall want to return to that aspect in a moment. But before I do so, I ought to address the issues of policy underlying the amendment, even though we have gone over the ground pretty thoroughly during the Bill's previous stages and I am not sure how much there is to add now. Indeed, the noble Baroness poses exactly the same questions as she has posed on several previous occasions and I felt I had done my best to try to answer them.

Throughout the debates on the school funding provisions of the Bill, the noble Baroness seems to have spoken of little else but grant-maintained schools. The Government are concerned to establish a funding system which will meet the needs of all schools, including the vast majority of schools which declined to apply for grant-maintained status despite all the energy with which the GM status was promoted by the previous government.

Our proposals for the detailed implementation of the funding provisions of the Bill have now been set out in the consultation paper Fair Funding, and it would not be right to pre-empt the view which we may take on this or that matter of detail once we have considered the responses we receive. The fundamentals of the new devolved funding system should, however, be clear. In this regard, either directly or indirectly, I shall be answering the question of the noble Baroness.

First, the funding arrangements must treat all school categories impartially. There may, at the margins, be some room for argument as to what that means in practice. In the light of responses to the consultation paper, we shall consider whether there are in fact any grounds for differentiation between one category of school and another. But as I say, this is very much at the margins. On the arguments as they stand so far, impartial treatment for the different categories seems to us--and I would have thought to most sensible people--to imply similar treatment.

Secondly, however, it remains our aim that all schools should receive this impartial treatment within a framework which reflects the experience of the grant-maintained sector as closely as possible, in terms

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of the financial autonomy which schools enjoy. I have said that before to the noble Baroness and would like to reassure her again on that point. Autonomy, of course, has two aspects. On the one hand, it is about the freedom of schools to manage the funding allocated to them, subject only to whatever controls are reasonably necessary to protect the funding bodies' legitimate interests. In the new situation, it would be unrealistic to promise GM schools that nothing whatever will change, in the area of financial procedures and controls. We have to recognise that the LEA is statutorily accountable for ensuring that the funds which it allocates to the schools which it maintains are properly spent. That will apply in future to schools which are at present grant-maintained.

But we shall certainly make it our business to ensure that GM schools' existing arrangements are disturbed as little as possible. Any changes which LEAs may want GM schools to make will need to be justified in terms of necessity rather than convenience. And the Secretary of State will make vigilant use of his powers under Clause 56 and Schedule 14 to ensure that changes do not in any event have the effect of interfering with the right of governing bodies to decide how best to deploy their delegated funding for the purposes of the school. That, after all, is what autonomy is really about.

The other crucial aspect of financial autonomy is of course the balance between funding delegated to schools and funding retained centrally by LEAs. On that, we want the balance between delegated and centrally-retained funding to reflect the principle that funding should follow function: and in considering what that means, we shall wish to take a stringent view of the role of the LEA while ensuring that LEAs have access to the resources which that role requires.

What that will mean in detail necessarily depends on several factors. It will depend on the decisions we finally take on the division of responsibilities and associated funding, in the light of the responses to the consultation paper. It will depend on the level of financial resources available to LEAs, and on the decisions which LEAs take within those constraints. But our aim remains as we stated it last year in the Technical Consultation Paper on the New School Framework: to level up and now down, and to establish a funding regime which maximises self-management for all schools subject only to the need for LEAs to be able to carry out their essential tasks.

I now need to return to the terms of the amendment as tabled by the noble Baroness. Whatever one's view on the policy issues, it seems to me that the amendment misfires in two important respects. First, it assumes that financial autonomy is readily measurable. Of course, it will often be clear whether a particular change, or set of changes, will have the effect of reducing autonomy or increasing it. But that will not always be the case. It is not too hard to visualise a situation in which a funding body might wish to tighten some of its rules while relaxing others. In such a situation it may not be at all self-evident whether the net result is to enhance or reduce the independence of the bodies which are being

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funded. It seems to me to be very unwise to try to write a provision into primary legislation which would leave such a wide margin for doubt and argument.

Secondly, and as I mentioned at the beginning, the amendment is quite out of place in Clause 28. The financing of schools is dealt with in Clauses 53 to 59 and their associated Schedules 14 and 15. Schools' autonomy will be determined mainly by the terms of the regulations made by the Secretary of State under Clause 54, and the terms of the LEA schemes which the Secretary of State is prepared to approve under Clause 56 and Schedule 14. Clause 28, however, is concerned purely with the making of proposals for the establishment or alteration of community, foundation or voluntary schools.

There is no other suggestion in Clause 28, as it stands, that these statutory proposals should say anything at all about the funding of the schools which are to be established or altered; nor is Clause 28 directly concerned with the possible movement of schools from one category to another. It is indeed very difficult to see how the discretions vested in the Secretary of State and LEAs by Clauses 53 to 59 could be constrained by the addition of a subsection of this kind to Clause 28.

I have taken note of the concerns on specific points which have been expressed by the noble Baroness on behalf of the grant-maintained sector at previous stages. We shall take these fully into account in reaching our final conclusions. I know that the noble Baroness in some ways would like me to pre-empt the process of consultation by saying here and now what the conclusions will be on all manner of detailed decisions yet to be taken. But from her experience I am sure she will realise why I cannot do this. I hope also that she will acknowledge that her objective could not in any event be achieved satisfactorily--or indeed at all--by the amendment which she has tabled. I hope very much that she will see fit to withdraw it.

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