Assembly Committee on School Funding: Report on School Funding Arrangements in Wales

The National Assembly will on 12 July debate the report of the Assembly School Funding Committee published on 14 June.  I welcome the report as a significant contribution to a very important issue.  Along with the Minister for Finance, Local Government and Public Services I am giving detailed and careful consideration to each of the Committee’s 27 recommendations.  I will provide a full written response in September followed by an oral statement a week later.

I am supportive of the aim of the Committee’s recommendations to improve the transparency, objectivity and fairness in the way education funding is distributed to local authorities in Wales.  I have demonstrated my willingness in the past to increase transparency in school funding arrangements, and am committed to making further improvements supported by a strong evidence base.

The Assembly Government is already working to deliver improvements in line with a number of the Committee’s recommendations.  To help inform the Plenary debate on 12 July and ahead of the end of the summer school term, I would like to give the Welsh Assembly Government’s preliminary response to the Committee’s report in four key areas.  

Firstly, in terms of policy direction, we have already indicated that we want to move away from allocation of funding for education within the local government settlement based on the previous aggregate of local authorities’ expenditure on education and move instead towards a more deliberate identification of the future need to spend on education.  

The distribution to individual authorities includes a number of objective indicators, primarily pupil numbers but also indicators relating to deprivation and population dispersal.  We have already initiated a review of these deprivation and population dispersal indicators and their weightings to ensure that the distribution reflects the actual cost of education provision and our social justice objectives. The review is expected to be completed in time for consideration in the 2008-09 settlement.  

Secondly, I have sympathy with the objective behind the Committee’s recommendation for a minimum common basic funding level for schools in Wales, namely to ensure that schools have greater certainty about how the funding they receive relates to need to spend.  However, we need to recognise the difficulty of achieving this objective.  Before taking any action we would need to understand and accept the consequences.        

Pending the outcome of our review of the formula, as an interim measure for 2007-08 I am happy to agree today that the Education IBA for each local authority will be used as the local target for education spend.  Each authority will be asked to report on the reasons why it may have chosen to set a budget for education which differs from its Education IBA, and to make that report available for consideration by its Schools Budget Forum, its full Council and by the Assembly Government.  This will help to assure the public that local budgets are decided on the basis of a thorough analysis of local circumstances and will aid both transparency of funding and local accountability.

Thirdly, alongside these steps, we are also giving greater certainty to local authorities about their future funding.  Work to develop three-year local government settlements started last year. This is a necessary precursor to three-year budgets for schools which I am committed to introducing using powers in the Education Act 2005.  This work is near completion.  I am delighted to report that the Consultative Forum on Finance today [11 July] agreed proposals that will see introduction of local government three-year settlements from 2008-09.  We will now as a priority work with local government to develop similar proposals for three-year budgets for schools, and consult on them so that regulations can be brought in to take effect to the same timescale.

Finally, the Assembly Government fully supports steps to improve the transparency of education funding in Wales both at national and local level. We accepted the relevant recommendations of the recent Wales Audit Office report and the Committee has made additional recommendations of its own which we can also support.  We are committed to working with local government to improve the level and quality of information available about school funding arrangements, as well as the way it is communicated.  We want to ensure we use the most effective means so information is accessible to, and can readily be understood by, by schools, teachers, pupils and parents alike.

It is important that the Assembly Government has time to consider the Committee’s recommendations in detail.  Sue Essex and I will be giving further consideration to all the recommendations – including method and timing of implementation and any financial implications - over the summer.  We will also be seeking the views of the Welsh Local Government Association.  I look forward to providing a detailed written response when the Assembly returns in September.