Speeches, etc.

Margaret Thatcher

HC S [Education (Expenditure) (Opposition motion)]

Document type: Speeches, interviews, etc.
Venue: House of Commons
Source: Hansard HC [868/39-49]
Editorial comments: 1555-1622.
Importance ranking: Key
Word count: 3565
Themes: Higher & further education, Employment, Labour Party & socialism, Local government finance, Race, immigration, nationality
[column 39]

3.55 p.m.

The Secretary of State for Education and Science (Mrs. Margaret Thatcher)

I beg to move, to leave out from “House” to the end of the Question and to add instead thereof,

“endorses the Government's decision for the reasons given in the statement by the Chancellor of the Exchequer on 17th December to reduce during 1974–75 the demands on resources for the education programme, whilst substantially preserving the Government's essential educational priorities” .

The hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) has just made his usual provocative speech. From what he said one would hardly think that he was a member of the Government which postponed—indeed abandoned—the raising of the school leaving age pro[column 40]gramme which this Government have, in fact, carried out. There are a certain number of ironies about the situation because at that time he was propounding a prices and incomes policy from the Treasury Bench.

The hon. Gentleman asked me to say what this Government had done. They have carried out the policy which his Government abandoned of raising the school leaving age. They have carried out all the associated building requirements. They have also carried out a very big primary school improvement programme. Certainly he could not have cut that in his time; it was not there to cut. In addition, the Government have on their own primary school improvement programme got schools started in 1972–73 and this year to the value of £74 million, which is far more than the Labour Government ever did.

The Government have continued with the improvements in teacher supply. In fact, recruitment has exceeded all expectations this year——

Mr. William Hamilton (Fife, West)

And the teachers are going on strike.

Mrs. Thatcher

We expected it to be an additional 20,000. We are, in fact, 22,315 up on last year. The total number of qualified teachers now in the service is 424,398, which is nearly 80,000 more than there were in February 1970. The hon. Member for Sparkbrook does not like the true figures——

Mr. William Hamilton

Ask the NUT.

Mrs. Thatcher

Neither the hon. Member for Sparkbrook nor the NUT can refute the increase of numbers in the service.

Mr. William Hamilton

Then why are the teachers going on strike?

Mr. Deputy Speaker

Order. The hon. Member for Fife, West (Mr. William Hamilton) must not persist in making sedentary observations.

Mrs. Thatcher

The NUT and every one else will admit that my Department has one of the best and most accurate sets of statistics, and the officials in my Department served the Labour Government as well as they have served me——

Mr. William Hamilton

Ask the NUT.

[column 41]

Mr. Deputy Speaker

Order. Three sedentary remarks are not better than one——

Mr. William Hamilton

Six might be better.

Mr. Hattersley

I asked the right hon. Lady to avoid bogus comparisons. Since she has failed to do so, will she say whether one of the additional teachers recruited by the Government started his or her course of teacher training under her Government or whether he or she entered a college of education when my right hon. Friend the Member for Newcastle-upon-Tyne, Central (Mr. Edward Short) was Secretary of State?

Mrs. Thatcher

There will be some married women returners. [Interruption.] I will give the hon. Member for Sparkbrook an accurate reply. Some married women returners did not, otherwise all of them will have come from the time of the right hon. Member for Newcastle-upon-Tyne, Central (Mr. Edward Short). I wish only that the Opposition had been as generous in their accolades to my predecessor, Lord Boyle, who was responsible for the increases in numbers in the time of the Labour administration. The Opposition expect to collect compliments, but they are prepared to give none. The point is that money has been found to recruit all these extra teachers—in fact, more than we had expected.

All Ministers dislike having to make cuts in their forecast expenditure, and, naturally, my hon. Friends and I are disappointed that we have had to revise our plans for this year and next; but we recognise, as most people do, that we cannot insulate the education service from the economic situation any more than could the Labour Government.

The economic situation underlying this debate was explained by my right hon. Friend A. Barberthe Chancellor of the Exchequer on 17th December and it is now familiar. However, I should like to stress one short passage from his speech. He said:

“It is important to be clear about the purpose of reducing public expenditure in a situation of energy shortage. Shortage of energy and constraint on economic growth are bound to lead to a rise in unemployment. That cannot be avoided. It is inherent in the situation. But the direction of the cuts in public expenditure must be such as to avoid, as far as is humanly possible, a [column 42]reduction in employment in the public sector being added to the inevitable unemployment created by the energy shortage in the private sector. It is the consumption of fuel and power by the public sector that has to be reduced, not its employment of people. There would be no point, in the wholly unique situation we face, in saving public expenditure by deliberately reducing the number of public servants.”

I think that answers the two points made by the hon. Member for Sparkbrook. We do not wish cuts to be applied to teacher recruitment. The hon. Gentleman implied that increasing taxation would be the alternative. I have specifically quoted that part from my right hon. Friend's speech to show that it would not. The purpose of the public expenditure cuts is to save the consumption of fuel and power by the public sector.

If the situation is indeed serious, as my right hon. Friend said, and calls for drastic measures, it is also uncertain. That is why my right hon. Friend concluded by saying:

“I do not think that any of my predecessors would dispute that, in the face of the many uncertainties ahead of us over the coming year, an economic judgment at this time is—to put it mildly—more difficult than usual. That is why it is important to say quite openly that, while I believe that the judgment I have made is the right one, I shall not hesitate to take, at any time, any further action which may be required in the national interest.” —[Official Report, 17th December 1973; Vol. 866, c. 963–5.]

It is against this background that the cuts made in expenditure in 1974–75, not only in education but across the whole of the public expenditure sector, must be seen. Within the total cuts of £1,200 million in 1974–75 the Chancellor's statement attributed £182 million to the combined programmes for education, arts and science for Great Britain.

Excluding the arts and science, and non-university education in Scotland, the total saving to be found from planned expenditure on education is £157 million. Of this total, reductions in capital expenditure account for £104 million and in recurrent expenditure for £53 million. The £157 million reduction must be set against a projected total expenditure for the year of well over £3,500 million. We must therefore keep the cuts in perspective. Perhaps I should point out that the figures that I am using are calculated on the same basis as those [column 43]used by my right hon. Friend the Chancellor of the Exchequer. In other words, they are based on the 1973 survey prices. I thought it best to keep to those rather than to update some of them, because that might confuse the issue.

I shall now deal in turn with the effects of these reductions, first, on school buildings, second, on the procurement side of local education authorities and, third, on higher and further education.

The steps that we have taken regarding school building relate to two factors. The first is the overheating of the building industry last year leading to the severe increase in building costs referred to by my right hon. Friend Edward Heaththe Prime Minister on 8th October. This led to a deferment of building programmes by three months. I think that the hon. Member for Sparkbrook said August, but it was, in fact, October.

The second is that the Chancellor's statement on 17th December resulted in the reduced programmes for 1973–74 and 1974–75 set out in a recent circular from the Department.

In deciding upon the reduced programmes we have taken into account the need to preserve as far as possible school projects designed to provide additional places, special school projects, nursery education and—an item to which I know local authorities attach particular importance—the minor works programme.

In all, school building projects to the value of over £300 million will be eligible to start in the period between 1st January this year and June 1975. We have also been at pains to assure a programme of school building as far ahead as is possible in the present difficult economic circumstances, and the circular covers work to be started up to June 1975. This should enable local education authorities and the building industry to organise their programmes of building work to the best advantage. Final details of the new schools programmes are now being settled with authorities, and we have already approved a number of projects since the beginning of the month. In fact, there is no difference between the way that basic needs programmes are scrutinised now and the way that they have previously been scrutinised. [column 44]

I turn now to the saving on procurement which affects local education authorities' recruitment expenditure.

Mr. Neil Carmichael (Glasgow, Woodside)

I wonder whether the right hon. Lady could help me. In a reply given by the Under-Secretary at the English Department of Education and Science to the hon. Member for South Angus (Mr. Bruce-Gardyne) it was said that no reduction was to be made in the nursery school capital programme in 1974–75. I have had a reply from the Scottish Office stating that the nursery school programme would be postponed from April 1974 to October 1974. Does the right hon. Lady's figure mean that there is a postponement in capital expenditure? If so, would it not have been better to give that answer in the reply to the hon. Member for South Angus?

Mrs. Thatcher

The postponement arises from the moratorium, which meant only a three-month postponement. That means that the programme to which the hon. Gentleman referred for 1974–75 will start at the beginning of July and run for a year instead of running from 1st April to 1st April. It is a three-month postponement. Otherwise the full nursery school programme will be retained. I am afraid that I cannot answer for Scotland. I have enough problems without that.

Mr. Arthur Lewis (West Ham, North)

Is the right hon. Lady aware that some areas—London, Leicester, and the like—have had an enormous problem thrust upon them regarding immigrant children? Some of these areas, particularly Newham, were already bursting at the seams and in need of more school places, and so on. Will she be careful to do nothing to exacerbate the already difficult problem that we have in my constituency? Otherwise, I assure her, some very serious problems will be created.

Mrs. Thatcher

Increasing immigrant numbers is usually dealt with under the basic needs programme, and it will continue to be dealt with in that way in future.

I turn now to procurement expenditure. Of the saving required, £53 million is due to be met from reductions in procurement expenditure. Most of this saving—£48 million—falls on current expenditure by local authorities. But that figure [column 45]of £48 million must be compared with the expenditure forecast for the same year. The relevant rate support grant expenditure forecasts for education for 1974–75 amount to more than £2,800 million. I should say that the figures in the Rate Support Grant White Paper—hon. Gentlemen might find them confusing because they do not appear to be the same—are not at 1973 survey prices but at November 1974 survey prices, which are higher—£2,800 million rises to £3,100 million.

Even after the procurement reduction, which represents only 1¾ per cent. of the total projected expenditure by local education authorities, these forecasts allow for an increase of about £60 million above the estimated level of expenditure during the current financial year—that is, next year's forecasts are £60 million above the level in the current financial year. The kinds of expenditure which constitute procurement and from which local authorities are, therefore, expected to seek the necessary savings were fully explained in an excellent speech by my hon. Friend Timothy Raisonthe Under-Secretary during the debate on the Consolidated Fund Bill on 16th January. His speech gave a great deal of valuable information, but perhaps I could reiterate the most important points.

In accordance with the Government's overriding strategy, the cuts are calculated from a base which entirely excludes expenditure on staff, notably teachers—we have already dealt with that. Within the strict ambit of procurement, the calculations recognise that the authorities have to meet rent and rates, which by and large are irreducible and so they are not expected to be cut. They thus exclude this expenditure and also the cost of food and some other goods and services for the school meals service. Some things are outside the definition of procurement and, therefore, are not taken into account in reaching the base of £480 million from which the 10 per cent. cut is to be made; for example, maintenance allowances and other grants such as clothing grants to pupils.

The Government will shortly be issuing guidelines to local authorities about the steps they might take to secure the necessary reductions in their current expenditure. These will reinforce what my hon. Friend has already said and the guidance conveyed to the local authority [column 46]associations by my Department during the rate support grant negotiations. I must leave it to individual authorities to decide how best to act in their own individual situations.

I turn now to higher and further education. At 1973 prices the original starts value of the 1973–74 and 1974–75 higher and further education building programmes was about £200 million. In the first half of 1973–74 projects worth about £40 million were started, so work to a total value of about £160 million was affected, first by the three-month suspension announced in October and then by the decisions on public expenditure announced on 17th December.

The Department's circular issued on 18th December said that a limited programme of higher and further education projects would be eligible for approval in the period from 1st July 1974 to 30th June 1975. I cannot give details but it may well mean that about 30,000 to 40,000 fewer purpose-built higher education places will be available by the academic year 1976–77 than had been planned.

In the circumstances the colleges and universities will do their utmost to get the greatest possible use out of the very substantial stock of buildings and equipment already in use or under construction. Where there are buildings originally provided for one teaching purpose, for example, which could now be more intensively used for another, there must be no delay in pressing them into the most profitable service, whether within institutions or by reorganisation in response to Circular 7/73—I shall come to the Robbins point in a moment. Even so, the forward estimates of current expenditure on higher education over the next few years must realistically reflect that the numbers of students to be provided for will be lower than assumed in the plans previously drawn up and this, in turn, will contribute to the public expenditure savings required under the Chancellor's statement.

The local education authorities will be considering how far this helps them to meet the reduction required in their expenditure in 1974–75. For the universities, we have already announced the withholding for that year of supplementation of their grants in respect of 1973 price [column 47]rises and a further reduction of £15 million in the equipment grant. These are exceptional measures, but we think that they are justified by an exceptional situation, and the adjustments required within the institutions will, I recognise, not be easy.

We must not, however, jump too quickly to alarming conclusions about the effect that these reductions will have on the higher education opportunities for young people over the next few years. The Education White Paper went out of its way to emphasise that its 1981 targets left much room for flexibility and variation in response to changes in demand as they became apparent. It is now clear that there has been a falling off in the demand for higher education in 1972 and 1973 on a scale that could not have been foreseen.

The decline since 1969 in the proportion of those with two or more A level passes entering higher education, which was becoming apparent when the White Paper was being prepared, has recently become more marked. Even if the proportion were to fall no further, the 1981 requirement for higher education places might be more like 700,000 than the 750,000 which was the White Paper's longer-term planning basis.

We had begun this reappraisal of the likely future demand for higher education well before the October moratorium. When we have carried it further, we shall consult and give further guidance to the University Grants Committee and the other interests concerned. Meanwhile, it is clear that even by 1976 student numbers will be running appreciably below the levels, explicit and implicit, in the White Paper. Already in this present academic year, the number of university students is 6,500 short of the number assumed in the quinquennial settlement. In the polytechnics and other further education colleges, recruitment is less buoyant than we expected.

My conclusion is that we may be able still, despite the loss of the building programme places to which I have referred, to meet the effective demand for higher education in 1976.

Mr. Hattersley


Mrs. Thatcher

Yes, may—I do not over-emphasise it. The recommen[column 48]dation in the Third Report from the Expenditure Committee, on postgraduate education, published last week—that the number of students doing postgraduate research immediately after taking their first degree should be considerably reduced—is relevant to what I have just been saying. The Government will be considering the report with care and will present their observations in the House in due course.

We cannot quantify the likely effects of the public expenditure reductions on the rest of the further education system, precisely because of those characteristics which are at the same time the sources of its strength—the great variety of different kinds of level of course, the ability of the service to respond to local demand, and so forth. Both the building programme and the current expenditure reductions will force the local education authorities to look critically at the courses they are offering in this sector. But I believe that they will find it possible to protect and maintain the most essential of these activities.

I must say a separate word about the Russell Report on Adult Education. I said just before Christmas that the Chancellor's statement obliged me most reluctantly to postpone for the time being the consultations on the report to which I had been looking forward. It would be unwise, and unfair to those who are charged at the moment with planning reductions in public expenditure programmes up and down the country, to embark on this until we can see the public expenditure prospects a little more clearly. I share the disappointment at having to defer further consideration of the report's explicit recommendations, but at the same time I take comfort in the steady growth of the adult education service that took place even while the committee was still deliberating.

We have tried to manage this substantial and necessary cut in public expenditure in a way which has preserved the essential priorities in the education service. It is a great disappointment to us that we have had to suspend for the time being the programme for the replacement of old primary schools, but the building programmes for necessary school places—basic needs—for special schools and for nursery education and for [column 49]minor works have been preserved. Indeed, it has been our objective to protect the schools as far as possible, particularly in the light of the evidence that I have quoted of the falling off in the demand for higher education.

I recognise that the cuts are serious, but they are not disastrous. The level of expenditure from which they are made is very high. My hon. Friend reminded us in the debate on 16th January of the advances that the education service had made. Over the past 10 years successive Governments have devoted to education a rapidly rising share of our growing national resources—from less than 5 per cent. of GNP in 1962 to nearly 7 per cent. in 1972.

We cannot yet tell how things will go in the months and years ahead, but in the present economic circumstances the Government's essential priorities in education have been substantially preserved and the forecast education expenditure for next year is £3,500 million. I therefore ask the House to approve the amendment.