7.37 p.m.
The Secretary of State for Education and Science (Mrs. Margaret Thatcher)
The motion moved by the hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) begins by regretting
“the unprecedented increase in building costs.”
That increase is one example—a worrying example—of the effects of inflation. But the House is aware of the determination of the Government to tackle inflation and of the steps that we have already taken to this end.
There have undoubtedly been very rapid rises in construction costs over the last year. The Government's White Paper on the operation of stage 2 of the counter-inflation programme made it clear that the Price and Pay Code was to apply to all construction contracts. In addition, the Government propose that a special construction panel should be established to consider how the requirements of the code could most effectively be applied to the construction industry taking account of the special features of the industry. The panel is to be set up by the two agencies—the Pay Board and the Price Commission—and I understand that they will be making an announcement in the very near future.
The motion goes on to allege that the Government have refused to allow an adequate general increase in the cost ceiling. Let me spell out a few facts about the increases. Cost limits for schools were increased in the spring of the last three years by the Labour Government by 10 per cent., in 1970, and by the present Government by 13 per cent. in 1971 and a further 15 per cent. in 1972. I have just announced a further increase of 22 per cent. for 1973—the largest single increase ever approved. This will bring the cumulative increase authorised by the Government since the beginning of 1971 to more than 58 per cent. I shall return later to the 22 per cent. increase I have just announced. [column 1337]
This really does not sound much like an obstinate refusal to adjust cost limits to take account of changing costs. but let us look a little further at the motion. The Government's supposed obstinacy and inflexibility are alleged to have had two consequences, “damaging deterioration in the standard of new schools” and “the postponement of many educational building projects” . I will deal with these in turn.
First, the standard of new schools. I hope I may explain briefly how the system of cost control works, but before doing so I should say that this system was introduced in 1949 and has continued, by a process of evolutionary development, under Governments of different political complexions, to the present day. In the opinion of virtually all impartial observers the system has played an outstandingly important part in ensuring that we have had good value for the money spent on school building and have been successful in meeting very heavy demands for school accommodation since 1947. Governments of both major parties are entitled to a share in the credit for this, and I do not believe it can be in anyone's interest that the system should break down. What we have to do is to make adjustments to meet changing circumstances.
The system depends on establishing for each project in a major building programme a cost allowance, which must not be exceeded, and minimum accommodation requirements which must be met. The local education authority must provide the minimum accommodation required, but may also provide more, so long as the cost allowance is not exceeded. This gives the maximum of incentive to architects to exercise their professional skill to get the best value for money—and they have exercised it, as my hon. Friend the Member for Tynemouth (Dame Irene Ward) has pointed out. In relation to schools, the minimum accommodation requirements are laid down in the statutory building regulations, and the cost allowance for a project is arrived at by multiplying the cost per place by the number of cost places, which may not be the same as the number of pupils in the school.
There are, therefore, two aspects to the question of standards—the area of accommodation provided and the quality [column 1338]of materials and finishes. So far as schools are concerned, the teaching area required for any given number and age of pupils is laid down in statutory regulations—the Standards for School Premises Regulations 1972, commonly referred to as the building regulations. These regulations also embody certain key requirements for non-teaching accommodation. There are, therefore, definite minimum legal accommodation requirements for schools. Major building projects require the approval of the Department and none is approved that does not satisfy these requirements.
What is true is that the margin by which local education authorities have been able to exceed the regulation requirements has been diminished by inflation. Let me take the average area per cost place in primary schools as an example. The legal minimum requirements for teaching and other areas together amount to about 32 sq. ft. per cost place. The national average figure is still some 4–5 sq. ft. above this. Building bulletins issued by my Department give advice as to how resources could be used to best advantage.
As far as existing primary schools of various kinds are concerned, of course, the declining school population is beginning to ease the space problem.
The building regulations, in addition to specifying accommodation standards, embody some structural and environmental requirements but they do not impose any detailed requirements as to the use of materials or finishes, so that those responsible for school building have a wide discretion. When things are easy they can, within the cost limits, use better finishes than at other times. Lately, as a result of inflation, they have had to cut back to some extent in these respects. But, the 22 per cent. increase in cost limits that I have just announced will put a new complexion on the matter. It means that the major schools programme for 1973–74—that is basic needs plus improvements for both primary and secondary—will be increased in value by £35.4 million to £196.7 million.
The minor works programme will be similarly increased from £22.4 million to £27.3 million. When we took office in 1970 the cost per place for primary schools stood at £227. It will now be increased to £361. The cost per place [column 1339]in secondary schools stood at £435 and will now be £691. After allowing for site works, land, fees and equipment—none of which is included in the cost limits per place—the total costs of primary and secondary places is over £600 and £1,000 respectively under the new limits announced.
In school building as a whole, the net cost allowance for a 560-pupil primary school has risen from about £128,000 in June 1970 to £203,000, and a 1,200-pupil secondary school from £568,000 to £902,000. Again, the total costs, including land, fees and equipment would be about 50 per cent. greater than those figures.
Mr. Ronald Brown
Is the right hon. Lady giving us the London figures?
Mrs. Thatcher
Cost limits do not vary from place to place.
Mr. Brown
What about the cost of building in London?
Mrs. Thatcher
I am giving the average figures. The second part of the motion refers to the postponement of
“the starting dates for the construction of many education building projects.”
The facts tell a different tale. It will be a few weeks before we get the final returns from the local authorities showing the state at the end of the building year, but the general picture is already clear. The great majority of projects in the building programme did start. For schools the figure is likely to be comfortably over 95 per cent. This result was brought about by close liaison between the Department and local authorities so that prompt and sympathetic consideration could be given to cost difficulties on particular projects.
In some cases alternative projects were brought forward for the 1973–74 programme in place of those which were held up. Where a project was held up it was not always because of cost difficulties. Sometimes it was a failure to complete local legal preliminaries in time, or because site negotiations had been delayed. Such matters were not connected with the cost limits. In assessing this achievement it is necessary to remember that this was the biggest school building programme ever, both in real terms and in money terms. There were more than [column 1340]750 major primary projects in 1972–73, compared with 620 in 1970–71. There were more than 980 secondary projects, compared with 706 in the earlier year.
Moreover, these new projects had to be started at a time when local authorities had an unprecedented load of work in progress. This is illustrated not by the number of new starts but by the rising curve of completions. Completions of primary and secondary projects together increased from 786 in 1970–71 to 1,106 in 1971–72. The hon. Member for Sparkbrook makes a number of strictures on our building record, but I must pass quickly over the record of the four Secretaries of State who held office from October 1964. Those were the years of the postponement of the raising of the school leaving age, the decline of the secondary improvement programme from Lord Boyle 's £46 million in 1965–66 to almost nothing in 1970–72, and, in 1968, the cancellation of projects worth £85 million in order to get rid of a backlog.
The Government are tackling inflation both generally and in its specific application to the construction industry. In our period of office we have increased the cost limit by 58 per cent. We have started a record school building programme. We are providing the last stage of the buildings necessary for raising the school leaving age and we are carrying out the biggest programme ever for the renewal and replacement of old schools. On the basis of all these facts, I ask the House to reject this motion.