Statement On The Welsh Assembly Government’s Response To The Report Of The Committee On School Funding

I thank the Committee on School Funding for its report on this important topic. The committee made 27 recommendations to improve transparency, objectivity and fairness in how education funding is distributed to local authorities in Wales. I am supportive of the aim of the recommendations, and have accepted the majority of them.

The report must be seen in the context of significant new investment in education, training and children’s services in Wales in the past six years. Direct investment by the Assembly Government has risen from £760 million in 1999-2000 to over £1.5 billion in 2006-07. We have increased revenue support grant funding to local authorities by more than £1 billion in the same period. Total budgeted local authority gross revenue spending on education this year is at an all-time high of over £2.1 billion.

Against that background, I am pleased that the committee’s report acknowledges that funding comparisons with England, or other countries, although useful, should not drive education policies in Wales. In future, I hope that we can also develop comparisons with regions and countries whose size and socio-economic circumstances are similar to those of Wales.

I am pleased, too, that the committee acknowledges that local government’s role in funding schools is vital in sustaining local democracy. The Assembly Government recognises the advantages of the major part of the local government revenue settlement being non-hypothecated. That is the basis of our partnership agreement with local government. We do not wish to move to a situation where local budget decisions—for education or other services—are determined at the centre. Local authorities know their schools and are best placed to fund them. They are accountable to their electorates for the decisions that they make locally.

We have nonetheless initiated a review of the sparsity and deprivation factors, and their weightings, within the standard spending assessment formula for the distribution of revenue support grant. This underlines our policy commitment to move towards distribution based on a more deliberate identification of future need to spend, and a distribution that can also deliver our social justice objectives for Wales.

The figures that I presented to the Education, Lifelong Learning and Skills Committee on 5 July show that, at the all-Wales level, total local authority net revenue spend on education in 2006-07 is budgeted at 0.4 per cent above the total education indicator-based assessment within the distribution formula. Across local authorities the position varies: 12 are budgeting to spend above IBA this year and 10 below it. Until we complete our review of the standard spending assessment formula and its outcomes can be used in the local government settlement—this is expected to be for 2008-09—the education IBA for each authority will be used as the local target for education spend, as an interim measure. This does not mean fettering authorities’ discretion to set education budgets according to local priorities. However, where authorities set a budget that is different from their education IBA, they will be asked to report on the reasons for that to their schools budget forum, their full council and the Assembly Government. This will aid both transparency and local accountability.

I have sympathy with the objective behind the committee’s recommendation that the Assembly Government should establish minimum common basic funding requirements for school staffing, accommodation and equipment. However, we should be under no illusion about the difficulty of achieving this. We would need to weigh up, first, how it could be done, what the consequences might be in terms of affecting the budgets of individual schools, and whether, given the extensive work that would be needed, the outcome would be worthwhile. My first priority must be to deliver on the commitments set out in my written response, while keeping this option under review for the future.


The committee’s report puts great emphasis on tackling deprivation in Wales. There is a strong link between deprivation and attainment: statistics show that, as levels of eligibility for free school meals increase, attainment levels decrease, and we are committed to tackling deprivation and breaking that link. At a national level, the raising attainment and individual standards in education in Wales programme targets substantial additional resources—£16 million this year and the next—at schools with the highest levels of deprivation to improve educational outcomes for pupils who are underachieving. At a local level, following extensive consultation and debate in the Assembly Plenary, we made it a requirement from April 2005 for local authorities to include a deprivation factor in their formula for determining schools’ delegated budgets. We have started to review what authorities have done, and will, in light of that, consider whether the requirement needs to be strengthened. I will report on this to the Education, Lifelong Learning and Skills Committee in November.

Alongside these developments, I am committed to providing greater certainty and stability about schools’ future funding through the introduction of three-year budgets at the same time as we introduce three–year local government settlements. We will be developing proposals with local government with a view to consulting on regulations to take effect for the financial year 2008-09.

Alongside these developments, I am committed to providing greater certainty and stability about schools’ future funding through the introduction of three-year budgets at the same time as we introduce three–year local government settlements. We will be developing proposals with local government with a view to consulting on regulations to take effect for the financial year 2008-09.


The committee’s report pays considerable attention to the so-called education funding fog in Wales. We have taken steps to improve transparency, including introducing school budget fora and publishing details of the education IBA with the local government settlement for the past three years. We accepted the relevant recommendations of the recent Wales Audit Office report to improve the transparency and clarity of education funding, as did the Welsh Local Government Association. We will be working closely with local government to implement the Welsh Audit Office recommendations and those recommendations of the committee that we have accepted.

The report of the Committee on School Funding highlights many of the important and difficult issues that have long been at the centre of the school funding debate in Wales. I believe that the Assembly Government’s response to the committee’s report represents an important and extensive programme of work that will move that debate forward positively for the future.